Karuna Therapeutics : Corporate Presentation – November 2020

Corporate Presentation

N O V E M B E R 2 0 2 0

Legal disclaimer

This presentation and other related material may contain a number of "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including statements regarding Karuna's expectation about any or all of the following: (i) the timing, progress and results of preclinical studies and clinical trials for KarXT and other product candidates it may develop, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work and the period during which the results of the trials will become available; (ii) Karuna's research and development plans, including its plans to explore the therapeutic potential of KarXT in additional indications; (iii) Karuna's plans to develop and commercialize KarXT and other product candidates; (iv) the timing of and Karuna's ability to obtain and maintain marketing approvals for its product candidates; and (v) the rate and degree of market acceptance and clinical utility of any product candidates for which Karuna receives marketing approval. Forward-looking statements can be identified by terms such as "could," "expects," "intends," "may," "plans," "potential," "should," "will," "would," or similar expressions and the negative of those terms. Karuna has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. Although Karuna believes that such statements are based on reasonable assumptions, forward-looking statements are neither promises nor guarantees and they are necessarily subject to a high degree of uncertainty and risk. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond Karuna's control, you should not rely on these forward-looking statements as predictions of future events. These risks and uncertainties include, among others: outcomes of Karuna's planned and ongoing clinical trials and studies may not be favorable; one or more of Karuna's product candidate programs may not proceed as planned for technical, scientific or commercial reasons; availability and timing of results from preclinical studies and clinical trials; uncertainty about regulatory approval to conduct clinical trials or to market products; uncertainties regarding intellection property protection; risks relating to business interruptions resulting from the coronavirus (COVID-19) pandemic; and those risk and uncertainties described under the heading "Risk Factors" in Karuna's Annual Report on Form 10-K for the year ended December 31, 2019 and filed with the Securities and Exchange Commission on March 24, 2020, the Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and filed with the Securities and Exchange Commission on November 5, 2020, and in any other subsequent filings made by Karuna with the U.S. Securities and Exchange Commission, which are available at www.sec.gov. Existing and prospective investors are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date they are made. Karuna disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this presentation, other than to the extent required by law.

LEGAL DISCLAIMER		2

Karuna at-a-glance

Developing first-in- class therapeutics

• Leadership team with successful track record in neuroscience drug discovery and development
• Building a portfolio of differentiated assets led by KarXT, a novel asset with broad therapeutic applicability which enables near- and long-term opportunities
• Developing pipeline of novel drug candidates through in-house discovery efforts and in partnership with strategic collaborators

KarXT

Pipeline-in-a-Product

• KarXT is a new, unique and mechanistically differentiated therapeutic targeting CNS indications
• Evaluating KarXT in indications where standard of care is insufficient, including schizophrenia and dementia-relatedpsychosis
• KarXT demonstrated robust efficacy and was generally well-tolerated in large Phase 2 trial; differentiated safety and tolerability profile not associated with the most common problematic adverse events of current antipsychotic medications
• Advancing Phase 3 program for the treatment of psychosis in adults with schizophrenia by end of year
• Advanced formulation development

INTRODUCTION TO KARUNA		3

Leadership team

Deep expertise in neuroscience and drug development

Steve Paul, M.D.	Andrew Miller, Ph.D.	Troy Ignelzi	Stephen Brannan, M.D.
Chairman and CEO	Founder and COO	CFO	CMO
Former EVP and president at Eli	Founder and inventor of KarXT;	Former CFO at scPharmaceuticals	Former Therapeutic Head of
Lilly Research Labs; Co-founder,	Former VP at PureTech; 2020	and Juventas; Finance, BD,	Neuroscience at Takeda; senior
board member at Sage	Emerging Pharma Leaders from	operations and sales executive at	positions at Novartis (Exelon patch),
Therapeutics & Voyager	Pharmaceutical Executive; 40	Esperion Therapeutics, Insys	Eli Lilly (Cymbalta), Cyberonics, &
Therapeutics; Former scientific	under 40 innovators award from	Therapeutics and Eli Lilly	Forum Pharmaceuticals
director of NIMH	MedTech Boston; Director and
	Former COO at Entrega

INTRODUCTION TO KARUNA		4

Pipeline

Advancing target-directed & target-agnostic discovery efforts & clinical programs

KarXT

Other

INDICATION	DISCOVERY /	PHASE 1	PHASE 2	PHASE 3	UPCOMING
PRECLINICAL	MILESTONE
Schizophrenia					Initiate Ph. 3 Program
Psychosis					YE 2020
Schizophrenia					Initiate Ph. 2 trial
Psychosis in adults with an inadequate					Following initiation of trials
response to standard of care*					within Ph. 3 program
Schizophrenia					Ph. 2 ready
Negative and cognitive symptoms
Dementia-related Psychosis					Ph. 1b topline data
				Early 2Q 2021
Undisclosed					Initiate IND-enabling
Muscarinic-targeted drug candidate					studies
Undisclosed					Candidate declaration
Target-agnostic drug candidate**

The Company continues to monitor the impact of COVID-19 across all clinical trials and will provide updates on enrollment and completion timelines as appropriate

*Trail to evaluate KarXT when added to standard of care; **In collaboration with PsychoGenics

PIPELINE 5

Significant unmet need in large patient populations

Affecting nearly 4M people with psychosis in the U.S.

Schizophrenia	Dementia-related Psychosis
• Positive (psychosis), negative and cognitive	• Antipsychotics prescribed despite black box
symptom domains	warning for increased morbidity and mortality

• Currently approved antipsychotics treat psychosis only and offer modest efficacy in many patients
• Significant side effects including movement disorders, weight gain, sedation, etc.
• >21M patients with schizophrenia worldwide, with ~2.7M in the U.S.

• No approved medicines for treatment of psychosis in Alzheimer's disease, the largest underlying cause of dementia-related psychosis
• Dementia affects ~8.4M people in the U.S., with ~1.2M experiencing symptoms of psychosis

INTRODUCTION TO KARUNA		6

Antipsychotics: Blockbuster sales, but little innovation

• Today's drugs rely on same mechanism as antipsychotic drugs of the 1950s

(first antipsychotic drug, chlorpromazine, discovered in 1952)

• Sales of antipsychotic drugs were >$11B in 2015 and are expected to be >$14B by 2025 worldwide
• Despite limited efficacy, severe side effects, and the availability of generic medicines, antipsychotic drugs such as Zyprexa, Seroquel and Abilify each achieved >$5B peak sales worldwide
• Antipsychotics are a protected Medicare Part D class

1980

2020

INTRODUCTION TO KARUNA		7

Rationale for KarXT

8

Unrealized potential of muscarinic receptors

	Muscarinic receptors in the		Many companies pursued muscarinic		A novel approach is needed to
	brain are promising targets for		drug development, but were stymied		realize potential of muscarinic
	schizophrenia and dementia-		by side effects caused by peripheral		agonists
	related psychosis		muscarinic receptors

RATIONALE FOR KarXT		9

KarXT: Proprietary lead product candidate

xanomeline

(muscarinic agonist)

• Human proof-of-concept in double-blind,placebo-controlled trials in schizophrenia and
  Alzheimer's disease
• Trials enrolled over 800 patients including 68 elderly patients for
  ≥ 1 year
• Exclusively licensed from Eli Lilly

	KarXT	trospium chloride
	(muscarinic antagonist)
			• Does not meaningfully cross
			the blood-brain barrier, limiting
	xanomeline + trospium chloride	effects to peripheral tissues
	• No known metabolic overlap
	KarXT is designed to	with xanomeline
maintain efficacy of xanomeline	• Generic drug for overactive
	while ameliorating	bladder used since the 1960s

its cholinergic adverse events

Sources: Bodick et al. 1997; Shekhar et al. 2008

RATIONALE FOR KarXT		10

Selective activation of muscarinic receptors in the brain

System

Potential Impact on Symptoms

Commentary

xanomeline + trospium =

KarXT

Central Nervous

N/A

Improvement in

System

psychosis and cognition

Salivation

Glands

Sweat Glands

Tolerability from

neutralization of

GI Tract

peripheral activation

Bladder

Increase Activity		Decrease Activity		Offsetting Effect

RATIONALE FOR KarXT		11

KarXT in neuropsychiatry

Multiple positive efficacy and safety studies supporting further development

Three double-blind,placebo-controlled trials supporting therapeutic benefit of xanomeline and KarXT

• KarXT Phase 2 (EMERGENT-1) trial in adults with schizophrenia
• Phase 2 trial in adults with schizophrenia with xanomeline alone
• Phase 2 trial in elderly subjects with Alzheimer's disease with xanomeline alone

Large existing safety database with xanomeline and KarXT

• >1000 subjects enrolled in studies with KarXT or xanomeline across 20 human clinical trials
• 68 elderly subjects with Alzheimer's disease treated with xanomeline for at least one year
• Long-termpreclinical safety data with xanomeline, including 2-year carcinogenicity trials

Multiple clinical trials demonstrating robust efficacy and a large existing

safety database support ongoing clinical development of KarXT in

neuropsychiatric disorders

KarXT IN NEUROPSYCHIATRY		12

KarXT in Schizophrenia

Schizophrenia

Chronic, serious and often disabling brain disorder affecting how a person thinks, feels and behaves

Symptoms of schizophrenia generally fall into three categories:

Positive Symptoms	Negative Symptoms	Cognitive Symptoms
• Hallucinations	• Flat, constricted affect	• Impaired executive function
• Delusions	• Social withdrawal	• Memory deficits
• Confused thoughts and speech	• Loss of motivation	• Reduced processing speed

KarXT IN SCHIZOPHRENIA		14

KarXT in addressing current unmet needs

THE UNMET NEED

• Today's standard of care relies on same mechanism as drugs of the 1950s
• A substantial population of patients achieve a partial, or inadequate, response to atypical antipsychotics
• Current therapies do not address negative and cognitive symptoms; in some cases, current therapies may worsen cognitive symptoms in patients
• In many patients, approved antipsychotics offer only modest efficacy and patients experience significant side effects

THE KarXT OPPORTUNITY

• Novel mechanism of action not mediated via dopamine or serotonin; distinct from currently available therapies
• Potential to address positive, negative and cognitive symptoms as monotherapy or in conjunction with standard of care
• EMERGENT-1demonstrated robust efficacy across primary and key secondary outcome measures on positive and negative symptoms, and improvements in cognition in exploratory endpoint analysis
• Generally well tolerated and not associated with the most common problematic adverse events of current antipsychotic medications in trials conducted to date

KarXT IN SCHIZOPHRENIA		15

EMERGENT Program

On track to initiate Phase 3 program by end of 2020

	EMERGENT-1	EMERGENT-2	EMERGENT-3	EMERGENT-4	EMERGENT-5
Phase	Phase 2	Phase 3	Phase 3	Phase 3	Phase 3
	Evaluate efficacy and	Evaluate efficacy and	Evaluate efficacy and	Evaluate long-term	Evaluate long-term
Objective	safety of KarXT	safety of KarXT	safety of KarXT	safety and tolerability	safety and
	compared to placebo	compared to placebo	compared to placebo	of KarXT	tolerability of KarXT
	Five-week, 1:1	Five-week, 1:1	Five-week, 1:1
	randomized, flexible-	randomized, flexible-	randomized, flexible-	52-week,open-label,	52-week, open-
	dose, double-blind,	dose, double-blind,	dose, double-blind,	outpatient extension
Design	label, outpatient
placebo-controlled	placebo-controlled	placebo-controlled	of EMERGENT-2
	trial
	inpatient trial in 182	inpatient trial in ~250	inpatient trial in ~250	and EMERGENT-3
	adults in the U.S.	adults in the U.S.	adults the U.S. & ex-U.S.
Status	Complete (Nov. 2019)	Initiate YE 2020	Initiate 1H 2021	Rollover from	Initiate 1H 2021
EMERGENT- 2 & 3

EMERGENT-1, one successful Phase 3 efficacy and safety trial, and additional safety data to meet regulatory

requirements, would be acceptable to support a New Drug Application (NDA) filing

KarXT IN SCHIZOPHRENIA		16

EMERGENT-1 trial design overview

Same fundamental trial design used in registrational studies of other antipsychotic drugs

Treatment Period

Randomized, double-blind,placebo-controlled inpatient phase

Days 1 - 35

Screening Period			Flexible dosing
Washout of prior oral lithium
and/or antipsychotics	50/20^ KarXT BID	100/20^ KarXT BID	100/20^ KarXT BID
>2 weeks	Optional increase to 125/30^	KarXT BID*
Days 1 - 2	Days 3 - 7
	Days 8 - 35

KarXT (n=90)

R

Placebo (n=92)

	KEY
	^ xanomeline/trospium (mg/mg)
	* titration based only on tolerability
	Start of trial
	End of trial (Week 5)
ClinicalTrials.gov Identifier: NCT03697252	R Patients randomized

EMERGENT-1 RESULTS		17

Robust results across efficacy endpoints

Prespecified Outcome Measures	KarXT vs. Placebo
P-value (Week 5)
PRIMARY ENDPOINT
Change from baseline in PANSS total score	<0.0001
SECONDARY ENDPOINTS
Change from baseline in PANSS-positive	<0.0001
Change from baseline in PANSS-negative	<0.001
Change from baseline in PANSS Marder negative symptoms factor	<0.001
CGI-S frequency counts	<0.001
Proportion of CGI-S responders (CGI-S ≤ 2)	=0.151

All efficacy analyses performed using the modified intent-to-treat (mITT) analysis set, defined as all randomized participants who received

at least one dose of study medication and had a baseline and at least one post-baseline PANSS assessment

Abbreviations: PANSS: Positive and Negative Syndrome Scale; CGI-S: Clinical Global Impression Severity

EMERGENT-1 RESULTS		18

PANSS total score at week 5

Primary endpoint

Baseline	± SEM)	0
-5
PANSS Change from	(LS mean change
-10	****
		****
-15			****
Placebo	KarXT
		-20
		Baseline	Week 2	Week 4	Week 5
		mITT population			****p<0.0001

Clinically meaningful and statistically significant improvement in total PANSS vs. placebo

• 11.6-pointimprovement at week 5, with p<0.0001 (-17.4 KarXT vs. -5.9 placebo)
• Statistical separation at every assessed time point
• Cohen's d effect size of 0.75

EMERGENT-1 RESULTS		19

Favorable Cohen's d effect size

		COHEN'S d	NUMBER OF	NUMBER OF	PEAK SALES	YEAR
		STUDIES	PATIENTS	APPROVED
	KarXT	0.75	1	182	-	-
	Risperidone	0.58	15	3,036	>$3B	1993
Therapy
Olanzapine	0.55	19	3,298	>$5B	1996
	Quetiapine	0.43	8	2,140	>$6B	1997
	Aripiprazole	0.39	9	1,761	>$9B	2002
	Lurasidone	0.35	7	2,043	>$3B	2010

KarXT Phase 2 effect size of 0.75 compares favorably with meta-analysis

of historical trials of the most commonly used medicines

Source: Leucht et al. 2017 Am J Psych

EMERGENT-1 RESULTS		20

PANSS Positive, Negative, Marder and CGI-S

Secondary endpoints

A. PANSSP

B. PANSSN

C. PANSS Marder Negative

D. CGI-S

Clinically meaningful and statistically significant improvement on secondary endpoints:

• PANSS positive subscale (Panel A)
• PANSS negative subscale (Panel B)
• PANSS Marder negative factor score (Panel C)
• CGI-Sscore (Panel D)

• 1. Note that Panel D is not the prespecified analysis; figure shows analysis of CGI-S as a continuous variable
• Prespecified secondary endpoint 5 was responder analysis, defined as % of CGI-S responders (endpoint CGI-S score of 1 or 2)
• • Percentage of responders for KarXT compared with placebo: 5.6% vs.1.4%, p=0.151

Key: *p<0.05; **p<0.01, ***p<0.001, ****p<0.0001

EMERGENT-1 RESULTS		21

CGI-S: categorical analyses

Secondary endpoints (cont.)

Baseline Distribution

Percentage of Patients

Percentage of Patients

80					KarXT		Placebo						Clinically meaningful and statistically significant
60
													improvement on CGI-S: categorical analyses
40														CGI-S frequency count comparison:
														• P<0.001 at endpoint using non-parametric comparison of KarXT vs.
20														placebo (Mann-Whitney Wilcoxon test)
														• This was the prespecified analysis
0														• Statistical separation at every assessed time point (week 2, 4 and 5)
1	2	3	4	5	6	7
									CGI-S Score					At baseline:
								Week 5 Distribution				• Percentage of patients with scores 5 or 6 for KarXT compared to
80														placebo: 84% vs. 80%
60														At endpoint:
40														• Percentage of patients with scores rated 5-7 for KarXT compared to
													placebo: 33% vs. 60%
20														• Percentage of patients rated mildly ill or better (scores rated 1, 2, or 3)
													for KarXT compared to placebo: 38% vs.11%
0
1	2	3	4	5	6	7
									CGI-S Score

CGI-S score legend: 1 = normal, 2 = borderline ill, 3 = mildly ill, 4 = moderately ill, 5 = markedly ill, 6 = severely ill, 7 = extremely ill

EMERGENT-1 RESULTS		22

Cognition

Exploratory endpoint

Exploratory endpoint analyses show trends towards improvements in cognition for KarXT relative to placebo (Figure 1), with larger benefit seen in patients with greater cognitive impairment at baseline (Figure 2)

• Trial recruited based on psychosis; half of patients had cognitive performance >1 SD below age matched controls
• Post-hoc subgroup analysis of patients with greater impairment at baseline show larger benefit (Figure 2)
• • Cohen's d=0.56, p=0.03 for 1/2 of patients w/greatest impairment
  • Cohen's d=0.83, p=0.02 for 1/3 of patients w/greatest impairment

Assessments in longer-term studies or patients with stable psychosis needed to further evaluate cognitive symptoms

• Plans to further evaluate cognition in the EMERGENT program trials via prespecified subgroup of patients with high baseline cognitive impairment
• Previous xanomeline trial in Alzheimer's disease showed peak cognitive benefit, similar to donepezil (Aricept®), after 2-3 months of treatment in trial completers (Bodick et al)

*Data presented at 33rd ECNP Congress (Sept. 12 - 15, 2020)

Figure 1: Cognitive performance results*

	Cognitive Test	Statistic	Value
	(KarXT vs. placebo)
	Composite Score	p-value	0.11
	Cohen's d	0.24
	Detection	p-value	0.07
	Cohen's d	0.28
	Pediatric Groton Maze	p-value	0.47
	Learning	Cohen's d	0.11
	Identification	p-value	0.40
	Cohen's d	0.13
	International	p-value	0.35
	Cohen's d	0.14
	Shopping List
	One-Back Speed	p-value	0.35
	Cohen's d	0.16
	One-Back Accuracy	p-value	0.92
	Cohen's d	-0.02

Figure 2: Composite score analysis stratification by baseline impairment

Statistic	Impairment Median Split		Impairment Tertile Split*
(KarXT vs. placebo)	High	Low		Highest	Middle	Lowest
p-value		0.53		0.02	0.52	0.87
0.03
Cohen's d	0.56	0.13		0.83	0.19	0.04

EMERGENT-1 RESULTS		23

Summary of safety and tolerability

Well-tolerated with a discontinuation rate equivalent to placebo

Overall completion rate similar between KarXT and placebo (80%)

• The number of discontinuations due to TEAEs was equal in each treatment group (KarXT n=2; placebo n=2)
• All TEAEs were mild or moderate, with the exception of one serious AE: one patient on KarXT discontinued treatment, subsequently sought hospital care for worsening psychosis
• Most common AEs (>5%) were all mild or moderate in severity and did not lead to any discontinuations
• BP and QTc similar to placebo; 5.5 bpm peak mean placebo-adjusted resting HR increase with downward trend after day 8; no syncope

Dose escalation on KarXT was high and similar to placebo

• Dose escalation based on tolerability
• 91% of KarXT subjects escalated to 125/30 KarXT (vs. 97% on placebo)
• 4% percent de-escalated back to 100/20 KarXT dose (vs. 1% on placebo)

Adverse Events (AEs) and Safety During the Treatment Period

	KarXT (n=89)	Placebo (n=90)
	number (%)	number (%)
Patients with any treatment-emergent	48	(53.9%)	39	(43.3%)
adverse events (TEAE)
Patients with a serious TEAE	1	(1.1%)	0 (0%)
Patient with a severe TEAE	1	(1.1%)	1	(1.1%)
Patients with a TEAE leading to	2	(2.2%)	2	(2.2%)
withdrawal
AEs ≥ 5%
Constipation	15	(16.9%)	3	(3.3%)
Nausea	15	(16.9%)	4	(4.4%)
Dry mouth	8 (9.0%)	1 (1.1%)
Dyspepsia	8	(9.0%)	4	(4.4%)
Vomiting	8	(9.0%)	4	(4.4%)
Headache	6	(6.7%)	5	(5.6%)
Somnolence	5	(5.6%)	4	(4.4%)

Safety population received ≥1 dose study medication

EMERGENT-1 RESULTS		24

Tolerability comparison to historical xanomeline trials

Clinically significant improvement observed in the most common xanomeline AEs

Adverse Event

Excessive sweating

Vomiting

Nausea

Excessive salivation

Diarrhea

Placebo-adjusted cholinergic AE rates

xanomeline	KarXT
6-month AD trial	3-week schizophrenia trial	EMERGENT-1
(n=87, 225 mg/d)	(n=10, 225 mg/d)	(n=90, 200/40 mg/d or 250/60 mg/d)
71%	20%	1.1%
34%	50%	4.6%
32%	30%	12.5%
24%	10%	0%
15%	20%	(2.2%)

Sources: Bodick et al. 1997; Shekhar et al. 2008; Abbreviations: AD = Alzheimer's disease; SZ: schizophrenia

EMERGENT-1 RESULTS		25

Rates of adverse events over course of trial

Majority of the most common KarXT-related AEs decreased over the course of the trial

Percentage of Patients

12%

10%

8%

6%

4%

2%

0%

Nausea

Placebo-adjusted nausea

1

2

3

4

5

Treatment Week

Percentage of Patients

12%

10%

8%

6%

4%

2%

0%

Vomiting

Placebo-adjusted vomiting

1

2

3

4

5

Treatment Week

Percentage of Patients

Dry Mouth

12%

10%				Placebo-adjusted dry mouth

8%

6%

4%

2%

0%

1

2

3

4

5

Treatment Week

Most cholinergic and anticholinergic AEs associated with KarXT treatment decreased over the course of the trial

• Rates of nausea, vomiting and dry mouth consistently decreased to rates near placebo by week 5
• All cholinergic and anticholinergic AEs were mild or moderate in severity and did not lead to discontinuations
• Constipation and dyspepsia rates remained essentially constant (data not shown)

Data represent % of subjects with AEs as an AE at any point in that study week interval (safety population: KarXT n=89, placebo n=90)

EMERGENT-1 RESULTS		26

KarXT was not associated with the most common problematic adverse events of current antipsychotic medications

KarXT was not associated with any weight- related changes

• KarXT similar to placebo in mean change in weight, mean change in BMI, % patients with >%7 weight change, and reported AEs of weight increased

KarXT was not associated with somnolence or sedation

• Rates of somnolence and sedation similar to placebo

Weight Related Observations

	KarXT	Placebo
	(n=89)	(n=90)
Reported AE of weight increased - number (%)	3 (3.4%)	4 (4.4%)
Weight change from baseline to Week 5 - kg ± SD	1.5 ± 2.8	1.1 ± 3.5
Patients >7% weight increase at Week 5 - number (%)	2 (2.2%)	5 (5.6%)
BMI change from baseline to Week 5 - kg/m2 ± SD	0.5 ±1.0	0.4 ± 1.2

Sedation and Somnolence

Reported AE of Somnolence - number (%)	5 (5.6%)	4 (4.4%)
Reported AE of Sedation - number (%)	2 (2.2%)	2 (2.2%)

KarXT was not associated with EPS

• Mean changes similar for KarXT and placebo on the Barnes akathisia scale and Simpson-Angus scale
• 3 patients who reported Akathisia in the KarXT arm all resolved spontaneously without changes in study drug and all patients scored a 0 at all time points on the Barnes akathisia scale

Extrapyramidal Symptoms (EPS)

Akathisia - number (%)	3 (3.4%)	0 (0%)
Restlessness - number (%)	0 (0%)	1 (1.1%)
Simpson-Angus score mean change	-0.1± 0.7	-0.1± 0.6
from baseline to week 5
Barnes akathisia mean change	0.0 ± 0.2	0.0 ± 0.4
from baseline to week 5

All analysis on safety population; received ≥1 dose study medication

EMERGENT-1 RESULTS		27

Additional therapeutic opportunities in schizophrenia

KarXT in conjunction with standard of care for the treatment of psychosis in adults who have an inadequate response to current therapies

• A substantial population of patients achieve a partial, or inadequate, response to atypical antipsychotics
• Company plans to evaluate KarXT when dosed in conjunction with standard of care following the initiation of the Phase 3 EMERGENT trials
• Data intended to support a supplemental NDA filing, assuming the successful development of KarXT as a monotherapy for the treatment of adults with schizophrenia

Opportunity to investigate ability of KarXT to address negative and cognitive symptoms as part of ongoing data collection

• KarXT demonstrated improvement on negative symptoms and on cognition in patients with high cognitive impairment in EMERGENT-1 trial; additional data collection to inform next steps in these indications

Source: Miyamoto et al., 2002, p. 775

KarXT IN SCHIZOPHRENIA		28

KarXT in

Dementia-related

Psychosis

KarXT opportunity in DRP

THE UNMET NEED

• Dementia is characterized by the loss of cognitive functioning
  - including thinking, remembering and reasoning - and behavioral abilities to an extent that interferes with the ability to perform everyday activities
• Dementia is caused by a variety of different diseases including Alzheimer's disease, Lewy body dementia, vascular dementia, frontotemporal dementia and Parkinson's disease dementia
• Dementia affects ~8.4M people in the U.S. Despite the prevalence, only 40% of those affected are diagnosed, with ~1.2M experiencing symptoms of psychosis
• Psychosis in patients with dementia is currently treated with antipsychotics, despite black-boxwarnings for increased risk of death in the elderly

THE KarXT OPPORTUNITY

• Novel mechanism of action not mediated via dopamine or serotonin; distinct from currently available therapies
• Xanomeline demonstrated robust, dose-dependentremission of multiple psychotic symptoms, including hallucinations and delusions, in Phase 2 placebo-controlled trial in Alzheimer's disease patients
• Xanomeline was also observed to reduce the emergence of psychotic symptoms, including agitation, in patients who did not have psychotic symptoms at baseline
• In addition, potential applicability in addressing behavioral, psychological and cognitive symptoms
• Currently conducting a Phase 1b trial in healthy elderly volunteers to determine the optimal dose of KarXT (ratios of xanomeline and trospium) to inform Phase 2 trial of KarXT in dementia-related psychosis

KarXT IN DRP		30

Phase 1b healthy elderly trial

Foundation for Phase 2 DRP trial

Dose-ranging trial to select optimal KarXT dose for Phase 2 trial in DRP

• Goals of trial:
• • Demonstrate that volunteers can tolerate the exposure levels that showed antipsychotic benefit in previous Lilly AD trial (150 mg and 225 mg per day of xanomeline)
  • Select dosing and titration scheme for Phase 2 DRP trial
• Similar design to previous Phase 1 multiple dose optimization trial in healthy volunteers used to select dosing for EMERGENT-1
• Flexible-dosed,multiweek design to determine highest tolerated dose on an individual patient basis
• Evaluating different dosing and titration schedule on a cohort by cohort basis; each cohort to consist of
  16 subjects with 3:1 randomization (KarXT or placebo)

KarXT IN DRP		31

Xanomeline in Alzheimer's disease

Findings show therapeutic benefit and inform KarXT DRP program

Trial Design

• Randomized, double-blind, placebo- controlled, 6-month trial in 343 Alzheimer's disease patients
• • Patients randomized (3:1) to receive one of three doses of xanomeline (75, 150, and 225 mg/d) or placebo
• Endpoints
• • Co-primary:ADAS-Cog and CIBIC+
  • Secondary: Behavior (ADSS, includes psychotic symptoms) and Nurses' Observation Scale for Geriatric Patients

Key Findings

• Patients treated with xanomeline were observed to have dose-dependentdecreases in multiple psychotic symptoms and related behaviors, including hallucinations, delusions and agitation, as compared to patients on placebo
• Responses seen as early as two to three weeks after commencement of dosing with xanomeline
• Xanomeline was also observed to reduce the emergence of psychotic symptoms over the course of the six-month trial in patients who did not have psychotic symptoms at the initiation of the trial
• Cognitive benefit on ADAS-cog similar to donepezil (Aricept®) in completers analysis

Source: Bodick et al. 1997

KarXT IN DRP		32

Xanomeline in Alzheimer's disease

Significant remission of psychotic symptoms observed

% of patients with symptom at baseline whose symptoms stopped during treatment (ITT analysis)

60%

50%

40%

30%

20%

10%

0%

p=0.003	p=0.020	p=0.063	p=0.063	p=0.011	p=0.066	p=0.003
(p=0.008)	(p=0.005)	(p=0.021)	(p=0.028)	(p=0.017)	(p=0.012)	(p=0.015)

Hallucinations	Compulsivness	Delusions	Suspiciousness	Vocal Outbursts	Mood Swings	Unsafe Use of
						Appliances

p value is 225 mg/d xanomeline vs. placebo					xanomeline alone
(p value is dose-response analysis)			Placebo		75 mg/d		150 mg/d		225 mg/d

Source: Bodick et al. 1997

KarXT IN DRP		33

Xanomeline in Alzheimer's disease

Significant prevention of psychosis onset observed

% of patients who developed symptom during trial (ITT analysis)

60%		p=0.011	p=0.001	p=0.001	p=0.002	p=0.017	p=0.001	p=0.013
		(p=0.012)	(p=0.001)	(p=0.003)	(p=0.002)	(p=0.019)	(p<0.001)	(p=0.004)
50%
40%

30%

20%

10%

0%

Hallucinations

Delusions

Suspiciousness

Vocal

Agitation

Wandering

Fearfulness

Outburst

p value is 225 mg/d xanomeline vs. placebo

xanomeline alone

(p value is dose-response analysis)

Placebo

75 mg/d

150 mg/d

225 mg/d

Source: Bodick et al. 1997

KarXT IN DRP		34

Pipeline

Advancing target-directed & target-agnostic discovery efforts & clinical programs

KarXT

Other

INDICATION	DISCOVERY /	PHASE 1	PHASE 2	PHASE 3	UPCOMING
PRECLINICAL	MILESTONE
Schizophrenia					Initiate Ph. 3 Program
Psychosis					YE 2020
Schizophrenia					Initiate Ph. 2 trial
Psychosis in adults with an inadequate					Following initiation of trials
response to standard of care*					within Ph. 3 program
Schizophrenia					Ph. 2 ready
Negative and cognitive symptoms
Dementia-related Psychosis					Ph. 1b topline data
				Early 2Q 2021
Undisclosed					Initiate IND-enabling
Muscarinic-targeted drug candidate					studies
Undisclosed					Candidate declaration
Target-agnostic drug candidate**

The Company continues to monitor the impact of COVID-19 across all clinical trials and will provide updates on enrollment and completion timelines as appropriate

*Trail to evaluate KarXT when added to standard of care; **In collaboration with PsychoGenics

PIPELINE 35

Financial information

$344.9M

CASH ON HAND 1

AS OF SEPTEMBER 30, 2020

Current funding supports:

• Filing of an NDA with the U.S. Food and Drug Administration for the treatment of psychosis in schizophrenia, including planned trials in the EMERGENT clinical program
• Completion of Phase 1b healthy elderly trial and potential Phase 2 trial for the treatment of DRP
• Continued investment into pipeline expansion, including evaluating KarXT in patients who have an inadequate response to current standard of care

Cash expected to fund operations for at least the next three years

1Includes cash, cash equivalents and short-term investments

Analyst Coverage

Firm	Analyst
Citigroup Global Markets	Mohit Bansal
Goldman Sachs & Co.	Salveen Richter, CFA
Guggenheim Securities	Yatin Suneja
H.C. Wainwright	Raghuram Selvaraju, Ph.D.
JMP Securities	Jason N. Butler, Ph.D.
Mizuho	Vamil Divan, M.D.
Oppenheimer	Jay Olson, CFA
Stifel	Paul Matteis
Wedbush Securities	Laura Chico, Ph.D.
Wells Fargo Securities	Jacob Hughes
William Blair	Myles Minter, Ph.D.
FINANCIAL INFORMATION		36