On Friday, Barclays (LON:BARC) adjusted its stance on Rapt Therapeutics (NASDAQ:RAPT) stock, downgrading from Overweight to Equalweight and significantly reducing the price target to $4.00 from the previous $13.00.
The decision followed Rapt Therapeutics' announcement that it had discontinued its studies on the drug zelnecirnon for treating Atopic dermatitis and Asthma as stated in their first-quarter 2024 press release.
The analyst from Barclays noted that the most significant development from the update was that only about 110 out of 229 patients completed the 16-week dosing period. This completion rate is less than half of the study's initial sample size.
The analyst expressed that ceasing the trial was the most logical step for Rapt Therapeutics as the company navigates the clinical hold, which is seen as a surmountable obstacle.
The termination of the trial poses a considerable shift in the narrative surrounding Rapt Therapeutics' stock. Barclays expressed low confidence that the incomplete phase 2b data would yield a meaningful, statistically significant result or address investor questions, given the reduced sample size and the existing clinical hold.
Furthermore, the analyst highlighted concerns regarding Rapt Therapeutics' financial runway, which was previously projected to last until mid-2025. The potential need for additional funding, which might be dilutive and possibly at a steep discount, adds to the uncertainty surrounding the company's future.
In summary, due to the updated risk/reward profile following the trial's discontinuation and the financial challenges ahead, Barclays found it difficult to maintain its previous Overweight rating, prompting the downgrade to Equalweight and the lowered price target.
InvestingPro Insights
In light of Barclays' recent downgrade of Rapt Therapeutics, a glance at the real-time metrics from InvestingPro provides additional context. As of the latest data, Rapt Therapeutics holds a market capitalization of $277.7 million and trades near its 52-week low, with the price representing only 17.04% of the 52-week high. The stock's significant price volatility is reflected in a 44.06% drop in the 1-week total price return and a staggering 82.2% decline over the last three months.
Two InvestingPro Tips that are particularly relevant in the wake of the trial discontinuation are: Rapt holds more cash than debt, which could provide some financial cushioning, and the company's liquid assets exceed its short-term obligations, suggesting a degree of short-term financial stability. However, it's important to note that analysts do not anticipate the company will be profitable this year, and the stock's recent performance has been poor, with a significant price decline over the last year.
For those considering an investment in Rapt Therapeutics or seeking a deeper analysis, there are additional InvestingPro Tips available. By visiting https://www.investing.com/pro/RAPT, investors can access an array of insights to better understand the stock's potential. Furthermore, using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of information that could inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.