Why Karuna Therapeutics Stock Tumbled This Week

Shares of clinical-stage biotech Karuna Therapeutics (NASDAQ: KRTX) are down by a hefty 10% through the first four days of trading this week, according to data from S&P Global Market Intelligence. Karuna's shares started to slide earlier this week after the company announced a collaboration and licensing agreement with Zai Lab Limited (NASDAQ: ZLAB) for the experimental pysch medication KarXT (xanomeline-trospium) in Greater China.

Per the terms of the deal, Karuna will pocket $35 million in an upfront cash payment. The biotech is also in line to receive up to $80 million in additional development and regulatory milestones. If KarXT is approved in China, Karuna will also take home $72 million in sales milestones, along with low-double-digit to high-teens tiered royalties. Zai Lab is reportedly on the hook for the drug's development, regulatory, and commercialization activities in Greater China.

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Source Fool.com