J&J-backed Rapport Therapeutics valued at $636.8 million in lukewarm debut

(Reuters) -Johnson & Johnson-backed Rapport Therapeutics' shares rose nearly 6% above the initial public offering price on Friday, in a tepid debut for the early-stage therapy developer.

The Boston-based biotech is valued at $636.8 million. The stock surged as much as 15% to $19.49 in afternoon trading.

U.S. IPOs are seeing a rebound this year, after an almost two-year dry spell when high interest rates, market volatility and geopolitical turmoil marred investors' risk appetite. But the recovery has been uneven so far and investors remain cautious.

Among other healthcare companies that debuted this year, CG Oncology jumped 52.6% at the open, while KKR-backed BrightSpring Health Services slipped 7.7%.

Rapport, backed by J&J's venture capital arm, debuted at $18 per share on the Nasdaq, above its IPO price of $17 — the midpoint of its indicated range of $16 to $18 apiece.

The biotech, formed in February 2022 with the support from Third Rock Ventures and Johnson & Johnson Innovation-JJDC, on Thursday raised $154 million in its IPO.

IPO investments in biotechs nearly doubled to $2.9 billion in 2023, after falling dramatically by 93% in 2022, and are showing signs of further recovery this year, according to a recent report from consulting firm EY.

Rapport is developing treatments for several central nervous system disorders, including focal onset epilepsy, pain, bipolar disorder and hearing loss.

The company plans to use some of the IPO proceeds to advance its lead therapy, RAP-219, for treating focal epilepsy, where seizures affect only a part of a patient's brain, into a mid-stage trial.

The proceeds will also be used to develop the therapy for other disorders such as peripheral neuropathic pain, which affects the nerves outside the brain or spinal cord.

Rapport had raised $150 million in a Series B funding round last year. Its net loss widened to $34.8 million in 2023, from $10.7 million a year earlier.

The company's investors include ARCH Venture Partners and fund manager Fidelity.

(Reporting by Sriparna Roy and Mariam Sunny in Bengaluru; Editing by Shilpi Majumdar)