Karuna Therapeutics said former Allergan executive Bill Meury will replace its current CEO Steve Paul, a major executive shift that comes as the company prepares to seek approval of its closely watched schizophrenia medicine.
Meury will take over as CEO and president on Jan. 3, at which time Paul will become the Boston-based brain drug developer’s chief scientific officer and president of research and development, Karuna said Tuesday.
The change in leadership comes as Karuna is preparing to seek approval of what could be its first marketed drug, a schizophrenia treatment called KarXT. The drug succeeded in a Phase 3 trial in August. Karuna intends to file for U.S. approval in the middle of 2023.
Meury was most recently a partner at healthcare-focused private equity firm Hildred Capital Management. Before that, he was the chief commercial officer of Allergan, where he oversaw a portfolio of more than 50 products.
In its statement, Karuna called Meury’s appointment “the result of a thoughtful succession plan” Paul had initiated to “follow his passion, the science.” Paul, a veteran neuroscience executive with stints at Eli Lilly and Voyager Therapeutics, will now stay aboard and run Karuna’s pipeline, which is led by KarXT but includes multiple other undisclosed drug candidates.
“As we look to the future with Bill as CEO and Steve continuing to oversee our research and development efforts, Karuna is very well positioned for continued success in the coming years,” lead independent director Christopher Coughlin said in a statement.
Still, the timing of the CEO shuffle appeared to take analysts by surprise. Karuna has been seen as a top buyout candidate because of KarXT, a first-of-its-kind treatment that some analysts believe will become a multibillion-dollar product. Stifel analyst Paul Matteis said a CEO transition had been expected closer to the drug’s launch, and naming a new CEO now suggests the company doesn’t have an imminent buyer.
Brian Abrahams, an analyst with RBC Capital Markets, added that some investors may view the move as a signal the company is “serious about building a commercial organization and operating independently.” Karuna shares fell by about 6% in morning trading, though both Matteis and Abrahams endorsed the hiring given Meury’s commercial experience and the potential for an acquisition down the road.
“The ability to realistically commercialize KarXT would if anything strengthen any negotiating position in a transaction,” Abrahams wrote.
KarXT works differently than approved antipsychotic treatments for schizophrenia. It targets a protein family called muscarinic receptors that control whether another neurotransmitter, acetylcholine, gets released in the brain. Matteis, of Stifel, has estimated the drug class could have a $4 billion market opportunity.
Having already reported positive results in one Phase 3 study, the company is preparing to release data from another Phase 3 trial, EMERGENT-3, next year. That study is one of four ongoing late-stage trials of KarXT.
The company reported a net loss of $77 million in the third quarter, and held $1.2 billion in cash as of Sept. 30.