Biotechnology equities’ extended run towards year-end was helped by positive news-flow in December

Value inflection in biotech: Karuna Therapeutics acquired for USD 14 billion, and Cytokinetics announces clinical trial success in heart dysfunction.

Karuna Therapeutics, an Arctic Aurora LifeScience and Arctic Aurora Biotech Select portfolio company, that on December 22 announced an agreement with Bristol-Myers Squibb to be acquired for USD 14 billion in equity value. The deal corresponded to an approximate 53% premium on the previous closing price of Karuna.

In September this year, Karuna submitted a drug approval application to the US Food and Drug Administration (FDA) for its leading drug candidate for treating schizophrenia. The application comes after two successful Phase 3 trials where Karuna was able show competitive drug profile versus standard-of-care schizophrenia drugs available today. The drug both had a compelling efficacy profile, and importantly, a benign side effect profile which otherwise is an obstacle for the drugs currently used for this disease. The medical need in schizophrenia is profound with an estimated 24 million patients worldwide and relatively little innovation in the field for the past decades.

On December 27, Cytokinetics announced positive Phase 3 results with their lead candidate drug aficamten in obstructive hypertrophic cardiomyopathy (HCM). Measured by patient’s oxygen uptake during exercise, aficamten offered a statistically significant improvement over placebo. But more importantly, the drug profile appears competitive compared to a drug already approved for this patient group. When comparing safety measures, the aficamten also appears to offer a more compelling profile.

HCM is a rare hereditary heart condition whereby the heart muscle walls are thickened, and blood flow becomes restricted. Aficamten work by inhibiting the activity of myosin, a motor protein that makes the heart muscle contract. By relaxing the heart muscle relative to its untreated state this drug class has now shown to increase blood flow through the heart. Like Karuna, Cytokinetics is also held by both Arctic Aurora LifeScience and Arctic Aurora Biotech Select. As a consequence of the positive trial results, Cytokinetics share prices rocketed up 83% on the day of the news release.