Read the following answers, then explain whether you agree or disagree with the assessments Also, Can you identify additional economic and market factors that may have influenced the results of the Karuna Therapeutics IPO Did the company value the IPO correctly Karuna Therapeutics went public in June 28 th , 2019, its stock was priced at $16 per share, opened at $18 50 and closed at $20 02 per share on its first day, by December 2019 its stock closed at $81 71 which is a 341 68 increase (Carmichael, 2019) I believe Karuna valued the IPO correctly, Karuna was the best performing U S IPO in 2019 their early holders saw more than 420 returns since the June IPO at $16 per share (Bloomberg, n d ) Was the company able to generate additional value for shareholders via the IPO Yes, Karunas stock has a massive gain in late 2019, investors saw the value of their shares multiply by seven times in a matter of days after Karuna announced positive results from its phase two trial of its schizophrenia drug, KarXT (Carmichael, 2020) What economic and market factors potentially influenced the results of the IPO The economic factors that potentially influenced the results of the IPO were the need to obtain necessary funding for clinical development The IPO also positioned them well to achieve their mission of developing first in class therapeutics that dramatically improve the lives of people living with schizophrenia, Alzheimers disease and pain (Businesswire com) Karuna announced raised $184 7 million to fund clinical development of novel CNS pipeline The market factors that potentially influenced the results of the IPO are strong competitors in the biopharmaceutical industry The schizophrenia drug market was valued at $6 75 billion in 2018 and it is estimated to reach $9 48 billion by 2026 (Carmichael, 2020) Do you think the IPO was a success based on your analysis Yes, Karuna IPO was a success due to its increase in stock price After having a successful phase two trial, the company issued a secondary offering raising $250 million Now, Karuna plans on initiating phase three trial before the end of 2020, and they have $412 million in cash and no debt (Carmichael, 2020)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 30, 2024

Read the following answers, then explain whether you agree or disagree with the assessments. Also, Can you identify additional economic and market factors that may

Read the following answers, then explain whether you agree or disagree with the assessments. Also, Can you identify additional economic and market factors that may have influenced the results of the Karuna Therapeutics IPO?

Did the company value the IPO correctly?

Karuna Therapeutics went public in June 28^th, 2019, its stock was priced at $16 per share, opened at $18.50 and closed at $20.02 per share on its first day, by December 2019 its stock closed at $81.71 which is a 341.68% increase (Carmichael, 2019). I believe Karuna valued the IPO correctly, Karuna was the best-performing U.S. IPO in 2019. their early holders saw more than 420% returns since the June IPO at $16 per share (Bloomberg, n.d.).

Was the company able to generate additional value for shareholders via the IPO?

Yes, Karunas stock has a massive gain in late 2019, investors saw the value of their shares multiply by seven times in a matter of days after Karuna announced positive results from its phase two trial of its schizophrenia drug, KarXT (Carmichael, 2020).

What economic and market factors potentially influenced the results of the IPO?

The economic factors that potentially influenced the results of the IPO were the need to obtain necessary funding for clinical development. The IPO also positioned them well to achieve their mission of developing first-in-class therapeutics that dramatically improve the lives of people living with schizophrenia, Alzheimers disease and pain (Businesswire.com). Karuna announced raised $184.7 million to fund clinical development of novel CNS pipeline. The market factors that potentially influenced the results of the IPO are strong competitors in the biopharmaceutical industry. The schizophrenia drug market was valued at $6.75 billion in 2018 and it is estimated to reach $9.48 billion by 2026 (Carmichael, 2020).

Do you think the IPO was a success based on your analysis?

Yes, Karuna IPO was a success due to its increase in stock price. After having a successful phase two trial, the company issued a secondary offering raising $250 million. Now, Karuna plans on initiating phase three trial before the end of 2020, and they have $412 million in cash and no debt (Carmichael, 2020)