On Tuesday, Cantor Fitzgerald downgraded the stock of Rapt Therapeutics (NASDAQ: RAPT) from Overweight to Neutral. The adjustment follows a recent announcement from the company regarding a clinical hold placed by the FDA on its lead inflammation drug, zelnecirnon (RPT193), due to a serious adverse event.
Rapt Therapeutics reported that the FDA has verbally informed them of a full clinical hold on the ongoing trials for zelnecirnon, an oral CCR4 antagonist, after an incident of liver failure in one patient participating in the atopic dermatitis trial. This event has been potentially linked to the drug under investigation. In response to this development, the company's stock price plummeted by 60%, in contrast to the flat performance of the XBI, the biotech index.
The analyst from Cantor Fitzgerald highlighted that there are several confounding factors surrounding this isolated case of liver failure, including the possibility that a herbal supplement, which the patient had been using, could be a contributing factor. The literature suggests some support for herbal supplements as potential causes of liver failure.
However, despite these confounding factors, there remains uncertainty about whether it is possible to conclusively rule out zelnecirnon as the cause of the liver failure. This uncertainty has led to the decision to downgrade the stock rating as the situation unfolds.
The clinical hold and subsequent downgrade represent a significant setback for Rapt Therapeutics, as zelnecirnon was a key drug in their pipeline. The company and regulatory authorities will likely continue to investigate the cause of the adverse event to determine the future of the drug's clinical trials.
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