On Tuesday, Stifel changed its stance on Rapt Therapeutics (NASDAQ:RAPT), moving its rating from Buy to Hold, with a significant adjustment to the price target, now set at $2.00, a drop from the previous $7.00. This decision comes after Rapt Therapeutics announced the discontinuation of its Zelnecirnon program. The company halted the program based on feedback from the FDA, which indicated challenges in refuting the potential for drug-induced liver failure.
Rapt Therapeutics is now shifting its focus to the development of next-generation CCR4 antagonists, with the expectation of nominating a lead candidate in the first half of 2025. The management believes that the clinical data obtained from the stopped Atopic Dermatitis and Asthma Phase 2 studies support the mechanism of action for CCR4 antagonism. However, they have decided not to release this data soon for competitive reasons.
The firm noted the current financial position of Rapt Therapeutics, highlighting that as of the third quarter of 2024, the company had a cash balance of $97.9 million. The analyst pointed out that the uncertainty surrounding the development of the next-generation compounds and the potential need for additional funding presents a "show-me story" for the company. Investors are expected to seek more clarity on these issues before regaining confidence in the stock.
Stifel's assessment reflects a cautious outlook on Rapt Therapeutics, acknowledging the potential for non-JAK oral treatments in Th2-driven diseases. However, without concrete data, the firm has expressed that it no longer holds conviction in RAPT's stock at this time.
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