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

Hi, everyone, and thank you for joining us at our 2025 Fifth Annual Novel Mechanisms in Neuropsychiatry & Epilepsy Summit. I'm Joe Thome, one of the senior biotech analysts here on the team at TD Cowen. And it's my pleasure to have with us today the team from Rapport Therapeutics. We have Abe Ceesay, the CEO; and we have Troy Ignelzi, CFO of the company. So thanks, guys, for taking the time.

Maybe just to kick things off, obviously, impressive Phase II data readout last week that investors were looking for. Maybe at a topline, can you just briefly summarize, I guess, first, how this trial was conducted? And if you want to try and touch on the novel trial design and then maybe hit the high points of the efficacy that you saw and then you can kind of drill down into the details.

Sure. Happy to, Joe, and I really appreciate the opportunity to be here today and continue to share the story of Rapport, but also share the story on our most recent data. I think prior to getting into kind of the trial design, just a couple of comments. One, just taking a really big step back. I mean, we are extremely excited about this data, most importantly for patients. This is a very large market, 1.8 million patients in the U.S., defined by the fact that 40% or roughly 560,000 patients continue to be treatment resistant. So these are patients that have been through multiple antiseizure medications, and continue to have breakthrough seizures, although the fact that they're currently treated. When we think about the emerging profile with RAP-219, we see it as a best-in-class profile, one that we believe starts to translate into a multibillion-dollar market opportunity. And that's really defined by a novel MOA with RAP-219; two, efficacy that we think is really best-in-class from what we've seen from our proof-of-concept study, a drug that's generally well tolerated and consistent with precision biology. And then finally, a drug that has a dosing and administration profile, once daily dosing, low to no risk of drug-drug interactions, long half-life to protect against breakthrough seizures. That ultimately, what we have heard feedback from the community starts to translate to a drug that will not only be used by epileptologists, but more importantly by general neurologists and internists, which really changes the trajectory that we think about for this program commercially. In terms of the trial design, as you mentioned, we had a pretty unique trial design and an innovative trial design, one that was highly informed by the KOL community and the epilepsy community at large. This trial enrolled drug-resistant or treatment-resistant focal epilepsy patients. So from a demographic standpoint, these patients look very similar to your traditional treatment resistant focal onset seizure patients. The difference is that these patients had an implantable RNS device. This is a neurostimulation device. What the neurostimulation device allows for in clinical trials is the ability to leverage an electrographic biomarker. That through our work as well as work that's done in the community and has been published, really correlates well to the reduction of clinical seizures. And that threshold was roughly a 30% reduction in long episodes or electrographic seizures, can predict a greater or at least or greater of 50% reduction in clinical seizures. So the study enrolled these patients, what we're able to see in this study is very robust results. We are able to see a meaningful and statistically significant reduction in the primary endpoint of long episodes or electrographic seizures. We are also able to see a statistically significant and robust reduction in clinical seizures. Roughly 78% median reduction and then a 24% seizure freedom rate. And as I mentioned, we really believe that this starts to emerge as a best-in-class profile for an antiseizure medication.

Perfect. And maybe can you talk a little bit about the next steps for moving into a Phase III? And maybe specifically, how -- you alluded to it a little bit in the opening remarks, but how translatable is the patient population that you enrolled in the Phase II to some of the more "traditional" Phase III focal onset seizure studies that we've seen?

Yes. Maybe I'll start with your second question first and then move into our next steps. Because I think, the second question informs kind of the next steps. So one of the questions we've quite frankly, had enrolling this study is to ensure that the demographics were translatable. So when we saw this patient population and ultimately, the results that we believe that it was going to be translatable into registrational studies that ultimately improve the probability of success in registrational studies. We think we've really confirmed that in this study. So specifically, when you look at this patient population that we enrolled, one could almost see this patient as more refractory than the traditional patient that they enrolled in Phase III trials. On average, our patients in this study were on three anti -- background antiseizure medications. Actually, 70% of the patients were on three or four background antiseizure medications. 37% of patients were on Cenobamate. So these are patients that have really tried many antiseizure medications and we're on some of the most powerful currently marketed antiseizure medications. In addition to that, they have the RNS device that historically is a treatment for these patients. In our study, it really wasn't a treatment given the fact that they could not change the settings of the device and really their baseline was what's consistent through not only the baseline period, but also through the treatment period. So when you look at this patient population and then you look at the results that we've seen, we think that the data is highly translatable going into Phase III studies. And we also think that, that's really corroborated by the novelty of this design, given the fact that when you look at clinical seizure reductions in our study, unlike any study that has ever been done in proof-of-concept, you can corroborate all of your clinical seizure reduction with a highly objective really non-placebo affected electrographic biomarker. And we saw that biomarker and clinical seizures move in the exact direction as we predicted, but also as the community has predicted in the publications. So we're really pleased with that. And as I said, we think it's highly translatable going into Phase III. So for us, next steps, we want to have an end of Phase II meeting with the FDA, which we're on track to do that by the end of this year. And then we're looking to initiate our Phase III studies, which will be two parallel Phase III studies in the third quarter of '26. We've been conservative in our trial initiation based on the fact that we really just want to make sure we get in front of the FDA and have the discussion, but what we can say is that there are no gating items at this point to get us into Phase III from a CMC and a drug product perspective, we're in a great shape. We've also completed what we believe is all the necessary items from a tox standpoint to really put us in a position for Phase III.

Perfect. And the one question that we did get going into the study, and it's a little bit -- maybe a little bit more specific to the long episode design, but is the positioning of the leads for patients. And in the study, you did have five patients with a lead outside of the mesial temporal lobe. I guess what do we know about those patients? Was there a seizure reduction similar to the broader population? And maybe how do those data give you confidence on sort of the overall expression of TARP-gamma-8 and the efficacy of RAP-219?

Yes. So our confidence in the expression of TARP-gamma-8 and the target of RAP-219 really starts with what we know about the target, and we confirm this in our human PET study. And what we know about this target is that, it's broadly expressed through the -- throughout the mesial temporal lobe as well as the neocortex. That's the exact areas of the brand that you want to be in for focal seizures, both from an origination perspective as well as a propagation perspective. Really, there's no role for targeting areas outside of the neocortex, in the mesial temporal lobe, because quite frankly, focal seizures are originating or propagating in areas such as the brainstem or the cerebellum. And what that also allows for is, we believe, and we think we've confirmed this in our Phase I work as well as this study is that by not targeting those areas, we really see a differentiated tolerability profile as well. So specifically in this study, patients had to have at least one lead in the mesial-temporal lobe. That is not by coincidence given the fact that the majority of focal seizures have a focus within the mesial temporal lobe. And then one lead could be either another lead in the mesial temporal lobe or outside of the mesial temporal lobe. Specifically, in this patient -- in this study, we had five patients, as you mentioned, that had that second lead outside of the mesial temporal lobe and what we were really encouraged by, and again, it wasn't a surprise to us, because we believe in this target biology. But in all five of those patients, those patients were all clinical seizure responders. So it really gives us real great confidence that the target is where it needs to be for the broad patient population. And as we think about kind of, for lack of a better term, all-comer study in Phase III that the drug is going to be very well positioned. And we're not really conceding any decrement in efficacy. Now you're going to have natural variability as you think about more sites and a larger patient population in Phase III. That's just the nature of clinical trials and variability, but we don't believe that there should be a significant decrement in terms of efficacy.

Perfect. And one of the differentiating factors for the design of 219 is obviously on the safety profile versus Fycompa. And so maybe we can dive in a little bit to the tolerability profile that you did see in the Phase II. I guess overall, maybe to put it into context, what would you have expected from these 30 patients if they were treated with Fycompa? And maybe what did you see that was potentially differentiated? And just a reminder to investors, because we are getting some questions through the chat. Feel free to send us questions through the Wall Street Webcasting Chatbox or my e-mail.

Yes. So a couple of things here. One is, I think, to think about the drug-resistant focal onset seizure patient population overall. These patients are sick patients. They've been living with the disease for a significant amount of time, and they all have been through many antiseizure medications by the time they are enrolled in a trial. So there is a natural kind of background AE rate in this patient population. When you think of nervous system disorders, psychiatric disorders, both as a function of their disease, but also as a function of their previous medications as well as our background medications, there is always kind of this background rate that exists in this patient population. What we were really encouraged by as we think about our study and the results from our study is, again, remind you that these patients run an average of three medications. 70% were on three or four in addition to the device. And what we saw is a highly differentiated tolerability profile. And that was defined by not only the AEs we saw, but the rate of AEs we saw, the severity of AEs we observed, which none were greater than Grade 2. The majority of those were greater than Grade 1. And then ultimately, what I think clinicians are most interested in is the discontinuation rate, both in terms of the rate as well as those AEs that are driving discontinuation. And what we saw was a 10% discontinuation rate, which is one of the lowest that has been seen in proof-of-concept studies or any studies in this patient population. So specific to our mechanism, what we're looking for to really confirm the target biology first, is when you think about Fycompa being a pan-AMPAR antagonist, but this, I think, also applies to almost all other antiseizure medications when they're modulating receptors in areas like the cerebellum, in the brainstem, and some of the most burdensome AEs that patients have are really around sedation, somnolence as well as gait impairment, ataxia, or tremor. And we really just did not see the rates nearly close to what you would see with Fycompa or other antiseizure medications. The other AE of interest that we often get questions about is the aggression or rage that is a associated with Fycompa. What we should say is, first of all, with Fycompa, that is at a very low rate. It's actually higher with levetiracetam, the most utilized antiseizure medication. But we did not see any aggression or a rage in this study. So we think the tolerability profile is very consistent with what we assume based on the target biology and also very consistent with what we saw in our preclinical models.

And on that point, just because this is something that investors are drilling down on. I mean, if you look back at the Fycompa studies, it does look like anxiety, anger and aggression are kind of documented as separate presentations of neuropsychiatric AEs. I guess what has your team and maybe the feedback from KOLs that you've spoken to, since the data, are they confident that the panic attack AEs and the anxiety AE, I think it was one of each in the study that those are differentiated from what you would have seen, I guess, with the Fycompa.

Yes, completely. These are distinct MedDRA terms, in distinct classification. So what I think is really important for everyone -- for people to understand is, to look again at kind of the baseline of these patients. If you look at every trial that has been done in refractory focal onset seizure patients, there are psychiatric AEs, and there are nervous system disorder AEs. When you look at anxiety as an example, that is kind of a baseline condition or co-morbid condition that many of these patients live with as well as cognitive impairment or memory impairment. So specifically, when you look at the AEs that we highlighted, and we did that to be highly transparent and objective, we had three discontinuations. One was worsening of memory based on a patient's baseline memory impairment. Second was worsening anxiety based on a patient's baseline anxiety. And then the third was a panic attack. All of these are distinct. They're not the same AE. And what's important also to understand it as well as the overall AEs, these three discontinuations were all Grade 2 or less. So we're, again, really pleased with the tolerability profile. We think this is a tolerability profile that really meets the bar of being highly differentiated. And one that, again, most importantly, you want to compound that the general neurologist or an internist is comfortable using. And we think that this profile really meets that mark.

And maybe on that latter point, because I do think it's important because that has come up a lot with Xcopri, is that often the epileptologist that we talk to actually recommend that neurologists don't necessarily manage their patients with Xcopri. Because it is difficult. I guess how has your, I guess, peak sales opportunity or kind of overall commercial impact of 219 changed at all, pre-data and then kind of post the level of efficacy that you saw in the study? I guess has anything changed? Obviously, you blew away the bars on long episodes and clinical seizures that you're even hoping for a target product profile. So just kind of curious, a, has your internal opportunity changed? And second, I guess, how big is that jump from the general neurologist from just an epileptology audience?

Yes. It shifted significantly in our opinion. And it's not just our opinion. It's really an opinion that is based on feedback from the community as well as the market research that we have done. So you're right, when you look at multibillion-dollar brands in focal onset seizures, the real distinguishing factor is, will the drug be used and adopted by the neurologist as well as the internist and do you have a profile that supports that. And that's really the distinguishing point. So when we -- what we believe was a given, and I think the kind of key census around peak sales prior to data was in the $1.5 billion range, which is a very successful product. But now I think everyone has shifted to this could be a much bigger drug, a levetiracetam type of drug in terms of utilization. And we should remind people that this is a multibillion-dollar market opportunity, 560,000 patients that are treatment-resistant as being the immediate TAM and then increasing from that as you think about moving up the treatment algorithm or moving into more secondary care such as -- not tertiary care, which would be the epileptologist, but secondary care that may be something like the general neurologist. So, when we think about the profile, what really drives that is the robust efficacy that we've seen. The second is a novel mechanism of action. If you were to ask the community what do they want. They want a novel MOA. Their belief that another GABAergic drug, another sodium channel drug, another calcium channel agent on top of what they've already -- patients already failed in those existing mechanisms, the belief that they're going to get additional efficacy is somewhat limited. And then, you want a drug that is well tolerated and then can be added to rational polypharmacy. And the key there is obviously, the tolerability profile, but also the drug-drug interactions. And when you have a drug that has DDIs, the general neurologist is somewhat hesitant to use that drug, because it just becomes really challenging adjusting the dose of other background medications. So we think, again, this profile fits the middle of kind of a drug that would be widely adopted across the spectrum. The last opportunity here that we're really excited about and this is on top of what we already believe is a multibillion-dollar opportunity, is the opportunity for a long-acting injectable. There's never been a long-acting injectable in epilepsy, and that is not based on the lack of need. That's based on the limitations of current antiseizure medications. So if you have a drug that is not that potent, which means more drug on board in terms of volume. Second, has drug-drug interactions. Third has a very complex titration schedule. It's just not amenable to a long-acting injectable. RAP-219 is unique. It's a highly potent drug. So really low drug volumes, low or no risk of drug-drug interactions, the titration in terms of long-acting injectable, it really self-titrates just given the long half-life of the compound. We've done some feasibility work here. We think we're on a path to develop a long-acting injectable. And what we hear from the community is that would be transformational for patients. You think about parents managing or taking care of an adolescent with focal onset seizures. It's a daily fear of these parents and patients that they miss a dose, breakthrough seizure. Not only is there morbidity associated with that, there's actually mortality associated with that. So we think a long-acting injectable would be transformational as to how these patients are managed and would just be additive to the overall market opportunity.

That's great. And I do want to touch a little bit on the pace of enrollment for epilepsy studies. This has obviously been a big focus for investors. For your Phase II is almost helpful that they had the RNS device, because they feel like you almost call them up and offer the trial to patients which made it a little -- maybe a little comparably easier to at least locate the patients. I guess what sort of best practices as the team focused on for the Phase III enrolling? Obviously, you want the right kind of patient, but also kind of delivering the results in a reasonable time frame. I guess how are you thinking about that? And what are you hearing from KOLs?

Yes. So quality of patients is paramount. You really want to make sure that you're enrolling the right patient primarily based on the baseline seizure frequency that patients have. So you're able to detect a clinically meaningful difference and think about that just from an effect size and statistical power assumptions. But taking a step back from this, and I can speak to this based on my previous experience at Cerevel, where we had a program in darigabat for focal onset seizures, there's a few really important aspects as you think about what drives enrollment or what limits enrollment in the recruitment of these studies. The first is the competitive context. How many trials are ongoing at a given time to recruit these studies? And these are all global studies by nature. We believe we're going to be in a very good position, because a lot of those investigational programs will either be completed or at their tail ends as we think about enrolling our study. The second is the profile of the drug. And I think this often goes overlooked. When you have a drug that has drug-drug interactions, when you have a drug that has a tolerability profile that may exacerbate the current background AEs that the patients have with their existing antiseizure medications, you really limit top of your funnel significantly. So if you have to exclude a whole bunch of drugs based on a DDI profile. Patients aren't willing to come off of their background seizure medications. They just don't want to do that as well as they don't want to be more sedated or have greater impairment on motor function. And then the last piece that is, I think, often overlooked as well is, how does the community really look at your drug? Are they aware of your drug? And we've been very thoughtful in the design of our proof-of-concept study in a manner which we believe the receptivity around our drug, the awareness around drug is really high, especially with these results, which we think will be a motivating factor for both clinicians, investigators as well as patients to enroll. Ultimately, there's kind of wide error bars here. You have one program that's taken a really long time. You have a few other programs that are saying they're going to enroll in record time. I don't think we're going to be on either end of those error bars. We're going to be somewhere in the middle. And I think we'll have a little bit more specific guidance here in the beginning of the year after we get out of our end of Phase II meeting and once we finalize our protocols.

Perfect. And I want to dive into the translatability to some other indications, but maybe a way to get there is to bring Troy into the conversation a little bit, obviously, just completed the -- that how could you raise last week and kind of just curious where your current cash balance stands now? And when you think about catalysts for the company, kind of what are you funded through and kind of walk us through, I guess, what that recent raise got you in terms of runway?

Joe, so we ended Q2 with $260 million. We'll obviously update that number along with the net proceeds of the financing that we completed last week. But the whole objective was to ensure that we had enough cash to get to the end of 2021, basically. That allows under all conservative scenarios of starting the trials for focal onset in third quarter. And as Abe mentioned, even on the outlier timelines that we've seen on both ends of the spectrum to get through the focal onset pivotal programs. That was the primary objective. It also allows us to advance the LAI, that Abe referenced, because we think that brings a lot to the opportunity, both from a loss of exclusivity, extension of the IP rights but also as you think about the market opportunity with both a small molecule and a long-acting injectable with the profile like RAP-219. It also will allow us obviously to get through bipolar mania trial and some discovery work. So we're very well funded now, as I said, into the second half of 2029.

Perfect. And maybe on some of those next indications, how much does the Phase II in epilepsy help derisk, I guess, bipolar and pain? What were you able to kind of learn from that study that you maybe didn't know 2 weeks ago for those indications? Or are you kind of viewing them as sort of discrete populations at this point?

They're definitely discrete populations. But I do think that we have raised internally our probability of success for other indications based on what we see -- what we've seen and observed with these results. There are a couple of things on that. One is really confirming target engagement. I think what we know from our proof-of-concept study in epilepsy is that, we have a pharmacologically active dose clearly. But what's really important there, again, it's the benefit of the study that we did is that we're able to define that not only by clinical seizure reduction, but also by electrographic activity. So as you think about bipolar as an example, really where does the biology take you and it takes you to excitability in four brain regions, specifically the amygdala and the hippocampus. We know based on the electrographic readings from our epilepsy study, we are having a robust and immediate effect on electrographic activity, an excitatory transmission in the brain. So we think that, that puts us in a really good position as we think about bipolar and also ultimately getting there in a rapid fashion, which you need to do in bipolar mania studies. And the second is the tolerability profile. When you look at the unmet needs in bipolar, you have drugs that are marginally effective, but the problem with these drugs, as you think about atypical antipsychotics or mood stabilizers such as lithium or the anticonvulsants that are lamotrigine, lamictal, and carbamazepine that are approved either as anti-mania agents or mood stabilization agents. These are drugs that have very poor tolerability profiles. And ultimately, patients come off of their meds and cycle back through a manic phase. So we think the tolerability profile here would be very supportive in this patient population.

Perfect. Awesome. With that, unfortunately, we are at time, but thank you both for a great discussion and best of luck on continued development.

Thanks, Joe.

Great. Thank you so much, Joe. I appreciate the time.

Thank you. Talk to you soon.

Bye-bye.