A Boston biotech takes on a challenge most companies have avoided: making a better schizophrenia drug

Dr. Steve Paul became an adviser to Karuna after viewing the company’s work; now he is its chief executive.

SAN FRANCISCO — It was impossible to miss if you were one of the thousands of drug company executives and investors at this week’s annual J.P. Morgan Healthcare Conference.

Union Square, the swanky commercial neighborhood where industry executives networked in hotels and restaurants, teemed with homeless people, many of whom appeared mentally unstable, accosting pedestrians and talking to themselves.

But of the hundreds of drug companies represented at the biggest conference in the industry — which ended Thursday — relatively few are working on medicines to treat one of the worst mental disorders, schizophrenia, leaving the research instead to biotech startups like Boston-based Karuna Pharmaceuticals.

Led by Dr. Steve Paul, who was at the San Francisco conference, the company hopes to win approval of a radically different drug to treat schizophrenia. The chronic and complex brain disorder afflicts about 1 percent of the population, or more than 3 million Americans, according to the National Institute of Mental Health.

He said that if Karuna succeeds — a big if, given that drug development leads to far more failures than triumphs — it would be the first truly new antipsychotic treatment in decades.

“Big pharma, with some exceptions, has really abandoned psychiatric drugs despite the fact that there’s still huge unmet medical need, despite the fact that there’s incredible commercial value,” said Paul, 68, Karuna’s chief executive.

The drug that the 10-year-old biotech has in clinical trials is called KarXT. As Paul tells it, KarXT, like many other experimental drugs, has a backstory marbled with serendipity, abandonment, and rediscovery.

In the 1990s, when he was at Lilly, the Indianapolis-based pharmaceutical giant tested a compound called xanomeline on patients with Alzheimer’s to see if it would improve memory. The compound appeared to provide some benefit. But what surprised Lilly researchers was that it dramatically reduced symptoms of psychosis, a not-uncommon feature of Alzheimer’s.

That made the drug an attractive potential treatment for schizophrenia, a severe disease that causes hallucinations, delusions, and disorganized thoughts and behavior. At the time, Paul said, large drug companies were still focusing on developing medicines for mental illnesses, given the success of Prozac and other blockbuster psychotropic drugs.

The problem was that xanomeline caused serious gastrointestinal side effects, including nausea and vomiting. Lilly ended up shelving it.

In 2009, when Karuna was founded, Paul learned that the startup had combined xanomeline with another compound in the hopes of reducing the medicine’s gastrointestinal side effects. That compound was trospium chloride, a drug that treats overactive bladders. It’s been on the market since the 1960s.

Paul was so excited that he began advising the company. Last March, he joined the board as chairman. In August, he became its chief executive.

These days, psychiatric drugs are no longer a hot commodity for big pharma. Many of the drugs that revolutionized the field of psychiatry have gone off patent and are available as cheap generic medicines, said Paul. Drug makers have turned to other areas, in particular oncology, believing they are more promising, and likely to generate hundred of millions — or even billions — of dollars.

But Paul said he believes KarXT could help change that. It was tested in an early-stage clinical trial on 80 healthy patients and appeared to cause relatively few side effects. Now Karuna, which has raised $42 million in venture capital, has begun a midstage trial on 180 patients with schizophrenia to see if it reduces psychotic symptoms.

“We have some Phase 2 data at Lilly from way back that says it should work,” Paul said. But better data are still a ways off.

Other antipsychotic drugs on the market, including Zyprexa, Seroquel, and Abilify, block dopamine and serotonin receptors in the brain, Paul said. KarXT uses a different mechanism. It targets something known as “muscarinic receptors” to reduce symptoms of psychosis.

Several other biotechs that are either based in Massachusetts or have operations in the state were also at the J.P. Morgan conference discussing their progress in developing schizophrenia drugs. Unlike KarXT, however, those medicines don’t appear to use a radically different mechanism to treat the condition.

Alkermes, which is headquartered in Ireland but has operations in Waltham, is trumpeting recent results from a late-stage clinical trial. That study showed that schizophrenia patients treated with an experimental tablet reported significantly less weight gain — a common side effect of psychotropic medicines — compared with the most commonly prescribed antipsychotic in use.

Watertown-based Lyndra Therapeutics says it plans to seek permission from the Food and Drug Administration this year to start clinical trials on a new schizophrenia pill. The medication could be taken once a week, instead of daily, to make sure patients stay on their regimen. Patients being treated for the disease often don’t take their medication regularly because of the side effects, and because the illness affects their judgment.

Dr. Andrew Bellinger, Lyndra’s 41-year-old chief scientific officer, treated homeless people with mental illness as a resident in internal medicine at the University of California San Francisco. That experience showed him that no drugs are effective if patients don’t stick with them.

“That’s where we see our role at Lyndra — coming up with more effective real-world therapies,” he said.