Karuna Therapeutics, Inc.

THERAPEUTICS THIRD QUARTER 2023 FINANCIAL RESULTS CONFERENCE CALL. ALL PARTICIPANTS ARE IN A LISTEN-ONLY MODE. PLEASE NOTE, THIS CALL IS BEING RECORDED. I WILL NOW TURN THE CALL OVER TO ALYSSA SMITH, HEAD OF CORPORATE AFFAIRS AND INVESTOR RELATIONS.

GOOD MORNING, EVERYONE, AND THANK YOU FOR JOINING THE THIRD QUARTER 2023 FINANCIAL RESULTS CONFERENCE CALL. I'M JOINED TODAY BY BILL MURRAY, PRESIDENT AND CHIEF EXECUTIVE OFFICER and Jason Brown, Chief Financial Officer, who will begin our call with a pair of remarks. Andrew Miller, Founder and Chief Operating Officer, and Will Kane, Chief Commercial Officer, will join Bill and Jason for the Q&A portion of our call. Before we begin, I encourage everyone to visit the Investors page of our website at investors.coronatx.com to find our press release and presentation related to today's call. Forward-looking statements related to our product development, regulatory, and commercial innovation plans, our research activities, and financial outlook may be presented during this call. Please refer to today's press release and our FCC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements. And with that, I'll hand it over to Bill.

Thanks, Alexis. Good morning, everyone. I want to begin by thanking our R&D team and our external partners on a high-quality and timely NDA submission for CAR-XT for the treatment of schizophrenia. many long days and weekends over the past several months to write and submit our NDA. It was a major achievement for Karuna and represents the culmination of years of preclinical, clinical, CNC and regulatory work on CAR-XT, detailed across several hundred thousand pages of information. Now, the submission, of course, is just the first step in the NDA review process. There are several other important milestones and activities ahead. including top line data from the phase 1 ABPM trial this month. We expect to hear back from the FDA on their filing decision later this month as well, and we're already preparing information for our day 120 safety update and site inspections, among other things. As we've talked about, we expect a standard review and therefore a potential approval and launch in the second half of next year. As you know, the treatment of schizophrenia has been served by one class of medication for over 30 years, and the potential approval of CAR-XT would change that for patients and their physicians. And I continue to believe this could be one of the most important product launches in biopharma in 2024-25. In terms of our pre-launch activities, they remain on track. We have the capabilities and the funding needed to optimize this program. We've built out our managed care access and MSL teams were focused primarily on pre-approval scientific exchange meetings with payers, which started several weeks ago, and on responding to medical information requests from psychiatrists and nurse practitioners. Interest and participation for CAR-XT is very high in the community right now and will continue to build over the next several quarters. We have and will continue to present and publish new data from our EMERGEN program this year and next year. Last month, we presented data from EMERGEN III at the European College of Neuropsychopharmacology meeting that highlighted CAR XT's differentiated tolerability profile demonstrated in the trial and the potential to provide clinically meaningful symptom relief. The data include New analyses on PANS responders, which was the final pre-specified secondary endpoint in the trial, in immersion three, nearly 60% of patients receiving CAR-ST achieved a 20% reduction of PANS symptoms by week five, the end of the trial. We also shared data on the PANS-MARTA symptom domain, including the PANS-MARTA positive, disorganized thoughts, uncontrolled hostility, excitement, and anxiety-depression factor. where CAR XT demonstrated statistically significant improvements from baseline to week five compared to placebo. On safety, we provided additional data to characterize the adverse events associated with CAR XT. In emergent three, where consistent with emergent one and two, the most common treatment emergent adverse events were GI in nature, primarily occurred within the first two weeks of treatment, mild in severity, and transient over time. Looking ahead, we'll be sharing pooled efficacy and safety analyses from the emergent one, two, and three trials, as well as additional analyses on negative symptoms and adverse events at NEI in Colorado Springs and CNS Summit in Boston this month. On the commercial front, preparations for the anticipated launch are on track, too, including market research, sales force sizing and deployment, and our peer-to-peer and consumer outreach programs. We have a team of people with a great deal of new product launch experience in neuroscience. They know what works and what doesn't and are carefully evaluating all strategic and operational decisions to support the launch. Equally important to our regulatory achievements and pre-commercialization work for CAR-XT is the continued execution of our ongoing phase three program, Arise and Adept, which we believe reinforced the value proposition of CAR-XT. Before ARISE, site activation and recruitment is ongoing with about 50 sites currently active across the United States and Europe. As we maintain our target of sharing top-line data in the second half of 2024, we continue to monitor site activation and enrollment rates very closely and manage factors that may impact enrollment on a day-to-day basis. Although there is no approved therapy for the adjunctive treatment of schizophrenia, The use of antipsychotics as combination treatment is seen in around 30% of patients, despite the lack of clear pharmacological rationale and clinical evidence to support adjunctive use. To arise, we hope to reinforce the uniqueness of CAR-XT's differentiated clinical profile and demonstrate that CAR-XT can be safely and effectively added on top of standard of care. I'm also pleased to share our debt program evaluating for the treatment of psychosis and Alzheimer's is fully underway following the initiation of a depth 2 and 3 in the 3rd course. We remain on track to share data from a depth 1 and 2, a relapse prevention and acute efficacy trials. In 2025, as a reminder, The fundamental concept of CARX-T originates from an Alzheimer's trial, where Zanomoyne demonstrated promising therapeutic benefit in treating psychosis and related behavioral symptoms, as well as cognition. Our ADEPT program is designed based on the insights from that initial study and our Phase 1b trial in Healthy Volunteers. And while our primary objective with ADEPT is to evaluate the efficacy and safety of CAR XT in treating hallucinations and delusions associated with Alzheimer's, we will also be collecting data, providing additional insight into the potential of CAR XT in treating other prominent and clinically relevant symptoms of Alzheimer's, including agitation, aggression, and cognition. The data from ADEPT may not only reinforce CAR XT's promise as a potential treatment for Alzheimer's psychosis, but also help inform future developments with CAR-XT. Outside of CAR-XT, we're also making headway in our early stage and discovery program, most notably with CAR-2618, our TRIP-C45 inhibitor that we acquired from Goldfinch Bio at the start of this year. We plan to evaluate CAR-2618 for the treatment of major depressive disorder and anticipate initiating a Phase 1B clinical trial in 2024 with additional details such as trial design and refined timing to be shared early next year. Now, on an earnings call earlier this year, I had highlighted three strategic and operational priorities that we set out to achieve in 2023. Those priorities were maximize the value of CarXT from a development perspective, two, expand our pipeline, and three, scale the operational capabilities of our company as we transition to a fully integrated R&D and commercial organizations. We've made excellent progress on these three fronts, which reflects the hard work and skill of our organization. With just a couple months left in 2023, we look forward to finishing the year strong. With that, I'll hand it over to Jason. Thank you, Bill. I'm pleased to be with you all today to share our third quarter financial results and to discuss our full year 2023 guidance. Q3 was another strong quarter for the company. driven by continued progress across our ongoing CAR-XT Phase III programs, the submission of our NDA for CAR-XT, pre-commercialization efforts, as well as significant growth across the organization. Total operating expenses for the third quarter were $136.2 million, compared to $81.1 million for the same period in 2022. Operating expenses were slightly offset by $17 million in interest income. resulting in a net loss of 119.1 million. Research and development expenses for the third quarter were 104 million compared to 62 million for the prior year period. The increase to 42 million was primarily driven by expenses related to our ongoing RXT clinical programs, increased employee headcount, and higher stock-based compensation. General and administrative expenses for the third quarter were 32.3 million, compared to the 19.1 million for the prior year period. The increase of 13.1 million was primarily driven by expenses related to our pre-commercialization efforts, increased employee headcount, and higher stock-based compensation. Cash, cash equivalent investment securities totaled 1.3 billion as of September 30th, 2023, compared to 1.1 billion at the end of 2022, providing us with a cash runway comfortably The increase was due to our follow-on public offering in March of this year that resulted in the net proceeds of approximately $437 million. Looking ahead at the rest of the year, we anticipate R&D to decrease in the fourth quarter relative to the third quarter and reiterate our guidance for the full year 2023, with total operating expenses expected to come in towards the top end of the range at around $470 million. Of that, we expect R&D and G&A expenses to be in the range of $355 million and $115 million, respectively, with the increase in R&D guidance being primarily driven by continued enrollment in our long-term safety trials, site activation costs associated with the ADEPT program, and costs related to our ambulatory blood pressure monitoring trials. I'll now hand it back over to Bill.