On Tuesday, Leerink Partners maintained its Market Perform rating and $2.00 price target for RAPT Therapeutics (NASDAQ:RAPT), following the biopharmaceutical company's announcement of its third-quarter financial results for 2024. The decision comes after RAPT decided to discontinue the development of its drug zelnecirnon due to feedback from the FDA indicating that there was no clear path forward for the program.
RAPT had previously placed zelnecirnon, an oral CCR4 antagonist, on full clinical hold after a case of liver failure, which could be related to the drug, was reported during a Phase 2b trial for atopic dermatitis. Despite this setback, the company plans to present results from the early-terminated Phase 2 studies in both atopic dermatitis and asthma at a medical meeting scheduled for 2025.
Looking to the future, RAPT Therapeutics is preparing to nominate a new oral CCR4 antagonist candidate in the first half of 2025. The company aims to progress this new candidate into the autoimmune disease treatment pipeline. RAPT believes that targeting CCR4 remains a promising strategy in the field of immunology and is working on developing next-generation CCR4 antagonists that feature different chemical structures and offer a broader safety margin.
In addition to its efforts in immunology, RAPT is actively seeking a strategic partnership to support the development and commercialization of another oral CCR4 antagonist, tivumecirnon (FLX475), for use in oncology.
Leerink's reiteration of the Market Perform rating reflects a cautious but watchful stance on RAPT Therapeutics as it navigates through the recent regulatory challenges and continues its work on upcoming drug candidates and partnership opportunities. The financial community will be looking forward to updates regarding the nomination of the new CCR4 antagonist, as well as the presentation of the Phase 2 study results and potential oncology partnerships.
In other recent news, Rapt Therapeutics has seen significant developments regarding its operations and financial outlook. The company recently announced the discontinuation of its Zelnecirnon program, following feedback from the FDA. This decision has led to a shift in focus towards the development of next-generation CCR4 antagonists, with a lead candidate expected to be nominated in the first half of 2025.
In response to these developments, Stifel downgraded Rapt Therapeutics from Buy to Hold and reduced its price target to $2.00, citing the uncertainty surrounding the development of new compounds and the potential need for additional funding. Concurrently, JPMorgan also downgraded the company's stock from Neutral to Underweight, highlighting a lack of near-term value-creating catalysts.
Rapt Therapeutics' financial position was also assessed, with the company reporting a net loss of $0.71 per share for the second quarter of 2024, 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 estimates.
Despite the discontinuation of the Zelnecirnon program, Rapt Therapeutics plans to progress with the development of a new generation CCR4 compound aimed at inflammatory diseases. The company also indicated that in-licensing clinical assets will play a role in the reconstruction of their pipeline. These recent developments underline the dynamic nature of Rapt Therapeutics' operations and the evolving landscape of its financial and strategic outlook.
InvestingPro Insights
RAPT Therapeutics' recent setbacks are reflected in its financial metrics and market performance. According to InvestingPro data, the company's stock has taken a significant hit, with a 28.57% decline in the past week and a staggering 92.96% year-to-date price total return. This aligns with the company's decision to discontinue zelnecirnon and the subsequent market reaction.
InvestingPro Tips highlight that RAPT is quickly burning through cash and is not profitable over the last twelve months. This is consistent with the company's focus on research and development, particularly as it prepares to nominate a new oral CCR4 antagonist candidate in 2025. The company's operating income stands at -$128.98 million for the last twelve months, underscoring the significant investments being made in its drug development pipeline.
Despite these challenges, RAPT holds more cash than debt on its balance sheet, which could provide some financial flexibility as it pursues its new drug candidate and potential partnerships. The company's price-to-book ratio of 0.56 suggests that the stock may be undervalued relative to its book value, potentially reflecting the market's current skepticism following the zelnecirnon setback.
Investors seeking a more comprehensive analysis can find 11 additional InvestingPro Tips for RAPT Therapeutics, offering deeper insights into the company's financial health and market position.
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