On Monday, JPMorgan issued a downgrade for Rapt Therapeutics (NASDAQ:RAPT), adjusting the stock's rating from Neutral to Underweight. The firm cited a lack of near-term value-creating catalysts and potential underperformance relative to the broader biotech market.
The downgrade follows Rapt Therapeutics' announcement earlier today that it will discontinue its zelnecirnon (RPT193) program, which was focused on treating atopic dermatitis and asthma. The program had been on clinical hold since February. Discussions with the company revealed that future results from both phase 2 studies are planned to be presented at upcoming medical congresses. However, after feedback from the FDA, Rapt Therapeutics concluded that there was no viable path forward for zelnecirnon.
Looking ahead, Rapt Therapeutics has expressed intentions to progress with the development of a new generation CCR4 compound aimed at inflammatory diseases, with expectations set for the first half of 2025. Additionally, the company has indicated that in-licensing clinical assets will play a role in the reconstruction of their pipeline.
Regarding another of the company's treatments, tivumecirnon (FLX475), which is being developed for non-small cell lung cancer (NSCLC), the strategy remains to find a developmental partner. While JPMorgan includes FLX475 in its financial model, noting a potential partnership outside the United States, the firm believes that a validating partnership is necessary for the program to gain market credit. However, JPMorgan also acknowledges that the timing of such business developments and partnerships is unpredictable.
In other recent news, Rapt Therapeutics' financial performance for the second quarter of 2024 has been assessed by H.C. Wainwright. The biopharmaceutical company reported a net loss of $0.71 per share, slightly better than the expected $0.72 per share. The company's research and development expenses were $22.6 million, and its selling, general, and administrative expenses were $6.7 million, both figures coming in under H.C. Wainwright's estimates.
Despite these lower-than-expected expenses, the firm's projection for Rapt Therapeutics' full-year 2024 net loss remains unchanged at $2.70 per share. The company had approximately $114.8 million in cash and equivalents by the end of the second quarter, a reserve that H.C. Wainwright expects will fund operations through mid-2025.
However, Rapt Therapeutics is currently dealing with uncertainty due to a clinical hold on zelnecirnon, a significant asset in its development pipeline. H.C. Wainwright has maintained a Neutral rating for the company, emphasizing the need for more clarity on the status of zelnecirnon before establishing a price target.
InvestingPro Insights
Recent InvestingPro data provides additional context to Rapt Therapeutics' current situation. The company's market capitalization stands at $56.54 million, reflecting the market's reaction to recent developments. Despite the challenging news, RAPT has shown a significant 1-month price total return of 58.79%, indicating some investor optimism.
InvestingPro Tips highlight that RAPT holds more cash than debt on its balance sheet, which could be crucial as the company navigates the discontinuation of its zelnecirnon program and focuses on developing new compounds. However, the tip that RAPT is "quickly burning through cash" underscores the importance of the company's strategy to in-license clinical assets and find a development partner for tivumecirnon.
It's worth noting that InvestingPro offers 12 additional tips for RAPT, providing a more comprehensive analysis for investors considering the stock's potential in light of recent events.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.