Key Takeaways
- Rapport Therapeutics shares fell 22% today after it priced about $380 million of stock, pre-funded warrants, convertible notes and a private placement, with the shares sold at $21 each.
- Raising money a week after positive bipolar mania data is the right move for Rapport, even at a steep discount.
- The new money comes close to doubling the $436.1 million Rapport held at the end of June, a quarter in which its cash burn hit a two-year high.
- Next to watch: Rapport’s FDA meeting on bipolar mania in the first quarter of 2027, and the two Phase 3 trials it plans to start in the second half of that year.
Rapport Therapeutics (RAPP) shares sank 22% in premarket trading this morning after it sold stock at a steep discount to pay for its next round of trials.
After Tuesday’s close, Rapport said it planned to raise $200 million in stock and $150 million in convertible notes. Before the open today, it priced the deal at $21 a share. That was the bottom of its $21 to $22 range, and about 24% below Tuesday’s close.
What exactly happened
The deal comes in three pieces…
- About $175 million of common stock at $21 a share, plus about $25 million of pre-funded warrants for investors who wanted them
- $150 million of 2.25% convertible notes due 2032, which convert at about $26.78 a share, 27.5% above the offering price
- About $30 million of stock sold to one investor in a private placement, also at $21
All in, that’s about $380 million before fees, and roughly 11 million new shares. If the notes convert, that adds about 5.6 million more.
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Timing is everything
A week ago, Rapport said its lead drug, RAP-219, beat placebo in a Phase 2 bipolar mania trial. The results had their catches: TIKR’s look at the data flagged a modest 3.1-point edge over placebo and more agitation on the drug. Still, the trial gave RAP-219 a second shot on goal next to epilepsy.
That’s when a biotech that burns cash should raise money, and Rapport wasn’t running low…
Rapport expected its $436.1 million to last into the second half of 2029, past the topline data from its Phase 3 epilepsy program. But two Phase 3 bipolar trials starting in the second half of 2027 means a second late-stage program to pay for, and the burn is already climbing…
More runway, more shares
Rapport says the money will go to its RAP-219 trials, other research and general corporate purposes. Today’s raise comes close to doubling what it had in June (before fees and whatever it has spent since).
The risk is that RAP-219 still has to prove itself in Phase 3, and the bipolar data showed only a modest edge. A company running two late-stage programs could also come back for more cash before either one reads out.
My take: today’s discount hurts, but Rapport just raised the money for both Phase 3 programs while its story is at its strongest. I’d take that trade. Of course, the FDA meeting in the first quarter of 2027 will show how big and costly the bipolar trials will be.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
