Rapport Therapeutics, Inc. (RAPP) Earnings Call Transcript & Summary

Okay. Well, welcome, everyone, and thank you for attending the fireside chat for Rapport Therapeutics. My name is Kelly McCarthy. I'm an Executive Director within the Morgan Stanley Healthcare Investment Banking group. And I'm thrilled to be joined in person here today by Rapport's CEO, Ab Ceesay; and CFO, Troy Ignelzi, So thank you. Welcome, Ab and Troy.

Thank you.

Thanks for coming to our conference. Before we get into the Rapport story, I'm just going to read a quick disclaimer. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

So let's get into it. For those in the audience that aren't as familiar with the Rapport story, would you mind just giving us a quick snapshot of the company, where you're focused today?

Sure, sure. So our vision at Rapport is to create the leading precision neuroscience company. We realize that, that word precision is used somewhat loosely in our industry but we have a scientific foundation in a receptor-associated protein platform that we think can really bring precision to life in neuroscience. This is a technology that has significant investment behind it, so roughly a decade at J&J. We formed this company based on a partnership with J&J, and that technology has really led to our lead program, which is RAP-219. This is a gamma-8-TARP AMPAR modulator program, which we'll talk much more about, but also really taking that same science that drove our lead program, RAP-219, really takes us all the way back to our pipeline where we have several other programs really leveraging receptor-associated proteins. And really what receptor-associated proteins do is really twofold. First, with our lead program, RAP-219, by targeting a receptor-associated protein, we are able to modulate a receptor with really unprecedented specificity, so really modulator receptor that is ubiquitous in the brain, which is the AMPA receptor, but we're modulating that receptor by binding to the receptor-associated protein and only modulating the receptor in the areas of the brain that we want to, and that is in the forebrain. The other aspect of receptor-associated protein science, by utilizing receptor-associated protein science, it really unlocks drug targets that were previously undruggable, and that's really what plays out in some of our earlier discovery programs.

Okay. Fantastic. So maybe dive in a little bit further on the history there. You mentioned 10 years at J&J. How did you end up with this lead asset and the platform more broadly? And why is this technology really differentiating in CNS?

Yes, sure. So this technology really dates back to our Chief Scientific Officer and our Scientific Founder, David Bredt. So David discovered the gamma-8-TARP receptor-associated protein, specifically, when he was an academic at UCSF. David had then transitioned in the industry where he was leading neuroscience drug discovery at Eli Lilly and ultimately going to J&J and leading neuroscience drug discovery. And really throughout David's career, his discovery really matured with him in the industry, which really turned a really novel kind of biology discovery into an actual druggable target and actually compounds that can realize the promise of this target. So specifically at J&J, this program was advanced pretty substantially. As with many large pharma companies, they continue to look at their portfolio and they continue to think about what are they focused on and what they believe ultimately can be further validated externally. And if you would talk to J&J, they actually use this term strategic externalization, and that's really how they refer to the creation of Rapport. So specifically, Third Rock Ventures and J&J partnered to really form the company. Under the umbrella of Rapport, we were able to do the final IND enablement work that ultimately enabled our IND, got us into the clinic. And that was really the basis of the formation of the company.

Okay. Terrific. Let's continue down the road with RAP-219. That's your lead program, really the key value driver today, and that's in focal epilepsy. So maybe talk a little bit about the therapeutic landscape in epilepsy today? And where does the unmet need live?

Sure. So focal epilepsy is the largest form or largest population of epilepsy, roughly 1.8 million patients in the United States. This is a patient population that really has significant need, and that need is defined based on the fact that roughly 30% to 40% of epilepsy patients continue to have breakthrough seizures. And what that means is that they are on antiseizure medications, but they continue to have pretty significant breakthrough seizures. There are several drugs available for these patients, but the challenge historically with antiseizure medications is that almost all antiseizure medications are nonspecific in nature. So they are interacting with receptors that are ubiquitous throughout the brain, and what that causes is, yes, you are going to have some efficacy but what's really debilitating for focal epilepsy patients are the tolerability issues as well as the side effects and, sometimes in certain cases, actual safety issues as the potential of SAEs. What we see with RAP-219 is through a validated receptor, an AMPA receptor, that is known to have -- play a very critical role in -- with seizures. What we know with RAP-219 is we can modulate that receptor only in the forebrain, so the areas such as the hippocampus, the amygdala, the prefrontal cortex, and we can spare the hindbrain. And why that's important is because when you're modulating receptors in the hindbrain, that's where you see some of these really debilitating tolerability issues pop up, somnolence, sedation, ataxia. These are really challenging for patients. So what we've seen with RAP-219 in our preclinical work is we've been able to show efficacy with really not seeing any of those sedation issues, motoric issues, which really starts to present a potential unprecedented therapeutic index with RAP-219. And these are really highly validated preclinical models that really translate into the clinic.

So I guess in addition to the potential tolerability benefits, what else gives you confidence in that you found the right RAP target here with gamma-8-TARP?

Great question. So there's really 2 pieces of evidence. The first is, as I mentioned, the preclinical data. What we benefit -- what the industry benefits from in epilepsy drug development is the fact that epilepsy has some of the highest translation from preclinical to clinical. So these are highly validated models, and we see really strong efficacy in those models and then, as I said, on the safety assay, a real differentiated profile with RAP-219. The other piece of data is that there is a pan-AMPA antagonist, and that is a drug by the name of Fycompa. So Fycompa is basically interacting with AMPA receptors throughout the brain. Fycompa is a very effective drug. It's a powerful antiseizure medication. The challenge with Fycompa is, given the fact that it is interacting with AMPA receptors throughout the brain, it has pretty significant tolerability issues. So that really leads us to a place where we believe that the AMPA receptor and AMPA modulation is a validated target. And by only interacting with the receptors in the forebrain and really sparing the hindbrain, that's where we see the true differentiation of RAP-219.

So on that exact point, what was the safety profile that you observed in your first multiple-ascending dose study?

Yes. So we have, today, completed both our single-ascending dose study as well as our multiple-ascending dose study, which has really allowed us to move into our Phase IIa proof-of-concept study that we're just in the throes of getting off the ground right now. We can speak more about that. So in our SAD and MAD study, it's a really interesting dynamic that gave us a lot of confidence in this compound. In our SAD study, we were looking at doses up to the range of 50% receptor occupancy, and we definitely saw some pharmacologic effect with RAP-219. And these are on-target effects. These are things that are very consistent with what was observed in the preclinical animal studies. And what you see with RAP-219 is you see slight anxiety. You see some transient tachycardia. These are all first-dose effects. And what was really encouraging is in the MAD study, what we saw is when you actually approach that receptor occupancy a little bit more gradually, those adverse effects are completely mitigated. So what we saw in our MAD study is in doses that are reaching up to 80% receptor occupancy, we are seeing none of those AEs actually in our last cohort, which is the cohort dosing that we're going to be taking into our proof-of-concept study, which, again, is reaching receptor -- projected receptor occupancy of roughly 80%. We saw no treatment-related AEs.

Can you talk a little bit more about the design of the proof-of-concept study that's about to kick off? And how many patients? What are the dose levels? Is it the same dose level that you used to reach that 80% occupancy? How are you thinking about that design?

Yes. So maybe just take a step back with proof-of-concept studies in epilepsy and talk about what the goals are when you enter a proof-of-concept study. Really, you're looking at a proof-of-concept study to really confirm a pharmacologic effect on efficacy. So traditionally, what has been done with antiseizure medications really comes down to 2 models primarily. The first is an induced model, which is a photosensitive epilepsy model. And then the second is a TMS model, which is really an external EEG model. Both of those have been used successfully historically. The challenge with both of those models is it's really hard to take that data and actually directly translate that to your registrational studies because you're not treating your patients. These are not focal epilepsy patients that are in the study, and you're actually measuring a different outcome. What we are going to be doing in our proof-of-concept study is a novel design but one that we're really excited about. This is a RNS study, and RNS is an implantable neurostimulation device. These are focal epilepsy patients. Demographically, when you look at these patients, these patients look very similar, both in terms of their age, their time with the disease with focal epilepsy, their number of breakthrough seizures, the number of background medications they're on. They look almost identical to those same patients that are enrolled in a Phase III study. So we really are looking at a proof-of-concept study in the patient population that ultimately we will be looking at in registrational trials. The other aspect of the study with this implantable neurostimulation device, it is measuring a -- basically a signature for each patient, which is called the long episode, and this long episode is a biomarker that is highly predictive of clinical seizures. And what the literature has shown, a couple of publications in this area, is that by reducing long episodes at certain thresholds, it is predictive of at least a 50% seizure reduction. So we believe with this data, not only will we be able to see that pharmacologic effect on efficacy, but we'll also have a data set that will translate into our registrational trials.

Do you anticipate the RNS requirement will make enrollment more challenging or harder to find those patients? How do you plan to kind of overcome that?

Yes. So there's roughly 5,000 patients in the U.S. with this RNS device. We have a really solid partnership with the manufacturer of the RNS system, which is a company by the name of NeuroPace. And through that collaboration, we've been able to see some real benefit. One is we've been able to simulate our inclusion criteria and really understand the number of patients that will meet our inclusion criteria, which made us really confident that we can enroll this study. The second is that NeuroPace actually owns every piece of data. So they know, on a site basis, where these patients are. So we've been able to collaborate kind of in a -- kind of real kind of team-based approach with NeuroPace, the investigators themselves as well as Rapport to really be able to identify these patients in a proactive manner. Obviously, we don't see the patient information. That's de-identified to us. But all of those pieces have really made us confident that this is a study that we're going to enroll. The design of the study, it is an open-label trial, approximately 20 patients. We chose an open-label trial because these patients kind of serve as their own control. These patients have a lot of historical data. So what these patients will have is a set of historical data. The device settings will be standardized. Their background medications will be standardized. Then they will roll on to RAP-219 treatment, where we'd be looking at the reduction of long episodes over an 8-week period.

Okay. And this is a little bit longer data, but maybe talk about when you expect actually the first data to be publicly shared from this trial? And then if that data looks positive and encouraging, does this same sort of design apply to a potentially pivotal study as well?

Yes. So as I mentioned at the beginning, we're kind of right in the throes of getting this study off the ground, currently initiating sites and looking to enroll patients here very, very shortly. We are guiding to having that data available in mid-'25. So that data set will allow us to move into registrational studies, Phase IIb/III studies. The study design for Phase IIb/III will not require the RNS patient population or the endpoint. The Phase IIb/III design will be a standard Phase IIb/III design, looking at overall seizure reduction, very similar to the design of the trials that currently Xenon is facilitating as well as the trials that Sonova made.

Okay. Got it. Very helpful. I guess is it too early to ask you about what the addressable market is here, what the commercial potential is here with this program? How are you thinking about that?

So it is a large market and underserved market. As I mentioned, 30% to 40% of these patients, 1.8 million patients, are refractory. So these patients are having breakthrough seizures. That really defines the primary target market at launch for any new antiseizure medication. But what we're really encouraged by is, given the profile that RAP-219 presents, this is a drug that should deliver a high degree of efficacy with an unprecedented therapeutic index or very favorable tolerability profile, once-daily dosing, has extremely long half-life so the drug can be administered and we can kind of slowly titrate up to therapeutic concentrations. But also if a patient misses a dose, that could benefit from the patient from not having quick rebounds of seizures. And what -- with that type of profile, what we've also heard in our market research is that that's a type of profile that physicians, once comfortable with the drug and in that initial patient population, would consider moving up the treatment algorithm. And you could look at various analyst reports, that truly is a multibillion-dollar opportunity in this patient population. What we're also really excited about with RAP 219, both in terms of the biology, but also clinical precedent, is the vision for a pipeline and a product. So given the proceeds of our IPO that we executed this summer, we're going to enable 2 additional proof-of-concept studies: one in neuropathic pain that we look to initiate this year and then bipolar disorder in 2025. The other aspect and the vision of the pipeline in our product is the opportunity to develop a long-acting injectable with RAP-219. So a long-acting injectable has never existed for epilepsy. That is not based on the lack of need. That is based on the limitations of current antiseizure medications. Many antiseizure medications have really complicated titration schedules. They have high doses. And when you look at our profile, the lack of need for titration, no drug-drug interactions, as well as very minimal doses, we're talking about doses for this compound in the 0.75 mg up to 1.25 mg, that opens up the opportunity for a long-acting injectable, which we think would be transformational for epilepsy patients, but also would be applicable for both neuropathic pain as well as bipolar.

So how game-changing would that be from a patient perspective?

It would be game changing for patients with focal epilepsy. If you think about the reality of this patient population, all of these patients are on polypharmacy. So they're taking multiple antiseizure medications. And one of the biggest challenges that these patients have, as well as the clinicians that are managing them, is given the drug-drug interaction profiles of almost all other antiseizure medications, there's a constant monitoring and constant adjustment with antiseizure medications to try to introduce a new therapy. With RAP-219, given its lack of DDIs, we believe that, that will be a therapy that physicians can onboard pretty rapidly and not have to worry about either the dose adjustment, the effect on RAP-219 or RAP-219s effect on other antiseizure medications. So with a long-acting injectable, you can think about actually being able to provide a patient with a long-acting injectable that they don't have to worry about or think about taking a daily pill and have that antiseizure medication onboard for a significant period of time. When you talk to parents and caregivers, adolescents that suffer from focal epilepsy -- I have teenagers. They don't take their medication. That's just the reality of what happens, and that is the reality with focal epilepsy patients. And that is a real concern for these patients because when you forget your antiseizure medication, you have a breakthrough seizure. That's an event that has significant morbidity and, in some cases, mortality.

Okay. Good to know. I think let's go back to the pipeline and the product. What's the rationale on those 2 additional indications, the peripheral neuropathic pain and bipolar? Can we talk a little bit about why you're going there first?

Yes. So there's 2 paths that take us to these indications: one is the biology and then the second is clinical precedents. So if we take neuropathic pain as an example, as our CSO often says, Mother Nature sometimes gives you gifts, and Mother Nature kind of provided a gift with gamma-8-TARP. Gamma-8-TARP is expressed in really 2 areas: one is in the forebrain with AMPA receptors; and also, it's expressed in the dorsal horn of the spinal cord, which is known to really be a main point of no susception, as you think about neuropathic pain. So we believe from a biology standpoint, there's a really strong rationale for neuropathic pain. We've also been very encouraged by our preclinical work here. We have done some extensive preclinical work looking at various pain models and specific pain models of neuropathic pain. And then the last aspect is the clinical precedent. So many antiseizure medications, look at a drug like gabapentin, have been used in neuropathic pain. So we look at all of those pieces in neuropathic pain really starts to line up as the next place to go with this program. Bipolar is our next program. Admittedly, bipolar is an area that lacks translation, meaning there are just no good preclinical models to look at bipolar. And that's something that with many affected disorders, many neuropsychiatric disorders, we really have to deal with in our industry in drug development, that we just don't have strong preclinical models. But one of the things that we're really encouraged by is some biology, which admittedly is a little bit lighter in bipolar, but that is some biology that points you to hyperexcitability in the hippocampus with bipolar mania. But also clinical precedents. There have been a couple, a few, I should say, antiseizure medications that have been approved for bipolar mania. So there's another set of clinical precedents there. And Troy says it all the time, we look at our strategy, with this portfolio and our product, really thinking about our pipeline and the product, really thinking about what is the highest conviction bet going to the lowest conviction bet. We believe in all of them, but clearly, epilepsy has a very strong translation. So we're really confident about that program. We're also confident about the data, the sports neuropathic pain as well as bipolar. But those are lower probability programs, but we're fully enabling those proof-of-concept studies.

And what about beyond 219? How are you thinking about building out the pipeline? And are you looking at external opportunities? Or do you really plan to lean on your platform to continue to build that over time?

One of the benefits that we've had in building Rapport is the way the company was built. And this is somewhat unique when you think about these venture to pharma partnerships, where sometimes it's just the asset that comes out of pharma and that's what the company is created on. We approached it differently. We not only brought out assets, but we also brought out people. So we brought out the core scientists that were working under David's leadership at J&J that really developed RAP-219, but also started to take this receptor-associated protein platform and start to apply it to additional targets. So we have a fully enabled discovery team. That team is based in San Diego. Our development and G&A operations are based in Boston. And we are fully invested in our discovery programs. So we have 2 late-stage discovery programs. This is, again, leveraging receptor-associated proteins, but looking at nicotinic receptors: one program, alpha6, in neuropathic pain; and another program, alpha9, in hearing disorders and vestibular disorders. So our vision is we believe that we are creating a neuroscience company that has a regenerative and self-sustaining pipeline. We believe we have, really, the foundation to be able to do that, not only the scientific foundation, but the people in the organization to do that. This is a team that truly has dedicated a decade of their lives to enable this science, extremely passionate, and that's really where our focus is right now.

Great. Troy, I'm not letting you off the hook. You're one of the -- on a short list of companies that actually braved the IPO markets this year in biotech. So can you talk about the transaction in terms of what that got you in terms of your cash runway and the investment that you're planning to put back into the business?

Yes. Well, the setup was pretty good. I mean, Abe, and the team had completed a Series A and a Series B. Abe talked about the founding of the company with Third Rock and JJDC. ARCH was also part of that. But then the Series B was another $150 million. It included really some of the pillars of institutional investment that are now sitting at the top of our 13Fs. And what we did was we went into this IPO with the idea that we wanted to fund through the 3 proof-of-concept trials. So what we've done is we did the $170 million IPO, which did, again, bring in additional institutional investors as well as some, I think, folks that have been around either Abe's prior company or mine and understood the story and helped us get through now, which will be at least through the end of 2026, but importantly, the Phase II proof of concepts across the focal onset, the pain and the bipolar.

So if you're an investor today, looking at Rapport, those are the kind of key milestones you're thinking about.

Yes. Middle of next year. As I mentioned, we'll have the focal onset. The pain trial will start up by the end of this year. We haven't given guidance yet specifically on the time line for completion of that. And then the bipolar trial will start next year.

Okay. So how do you think about just your capital allocation, your R&D spend? How are you managing that over these various trials that are being run?

P As I've mentioned, we have a discovery pipeline that we think is important for the long term of the company. But as all of us know, all eyes are on RAP-219 in that first readout. So as we think about both the human resource as well as the capital allocation, that's our first focus. We have the San Diego site where the development is being done on the discovery, and we think that's being managed very well. We're building it though off of this RAP platform, if you will, that we're just applying to different areas. So it is a very efficient development process early on.

All right. Very helpful. Just zooming out a little bit for both of you on the CNS arena more broadly. I think you've both been in this space for a long time. You mentioned both of you have been in the neuro space at your previous employers and very experienced in the field. But why is now a good time for investors to be investing here? And the CNS arena has been without challenges clinically. So why is this a great time to be getting involved?

Yes, I can share my perspective and hand it over to Troy. One of the dynamics that I think has happened in neuroscience, specific with -- specifically with small molecules, is chemistry and biology have actually come together. So if you were to look at companies like Karuna, if you look at companies like Cerevel and if you were to look at a company like Rapport, these are targets that are known. These are targets that are known. These are targets that have a clear role in disease. But the challenge has always been, can you drug these targets in a manner that allows efficacy and really mitigate some of the tolerability issues that these patients suffer from. And I think that's one common thread is that we're starting to see chemistry that really enables that. In our case, we're seeing chemistry that really allows us, in a very precise manner at very low doses, extremely potent, be able to modulate the gamma-8 -- the AMPA receptor via gamma-8-TARP, which really unlocks the whole opportunity. And I think when you look at our entire pipeline, that's really a common thread across our pipeline is that we have not only this really interesting biology, the fact is some of this biology has been understood for a long time, but it's the chemistry that has really caught up with it that really opens up a real huge opportunity for us.

The only thing I would add to that is patients. There is a clear need here, and no different from our previous companies, there is a need. If you look at these patients with focal onset, we said 30% to 40% of these patients or more are still suffering from breakthrough seizures. I mean -- and/or they're trying to constantly figure out that balance between efficacy and side effect. Those lines cross. So I think the patient is now coming to the forefront because we have the science is caught up with it.

Fantastic. We only have a minute left. So anything else you're excited about you want to share with the group here?

I think what has our undivided attention is seeing the profile of RAP-219 in a patient population. And we think that, that data and that experience will really be -- will really start to round out the picture of RAP-219 and start to really bring to light what we see as a highly differentiated program, one with kind of an unprecedented therapeutic index. So that's really got our undivided attention.

All right. Well, thank you both for spending time with me today and for attending our conference, and thanks to everyone in the audience for joining us as well. Thank you.

Thank you.

Thanks for having us.