Form 4: ARCH Venture Partners XII, LLC Reports Conversion of Preferred Stock to Common Stock in Rapport Therapeutics, Inc. Following IPO

ARCH Venture Partners XII, LLC reports the conversion of Series A and Series B Preferred Stock to Common Stock in Rapport Therapeutics, Inc. upon the closing of the company's initial public offering.

Summary

• This Form 4 filing details changes in beneficial ownership for ARCH Venture Partners XII, LLC and related entities in Rapport Therapeutics, Inc. (RAPP).
• The filing reports the conversion of Series A and Series B Preferred Stock into Common Stock upon the closing of Rapport Therapeutics' initial public offering (IPO) on June 10, 2024.
• Each share of Preferred Stock converted into Common Stock at a ratio of one-for-8.5648 without any additional payment.
• ARCH Venture Fund XII, L.P. directly holds the shares, with ARCH Venture Partners XII, L.P. as its sole general partner and ARCH Venture Partners XII, LLC as the general partner of the latter.
• Keith Crandell, Kristina Burow, Steven Gillis, and Robert Nelsen, as members of the investment committee of AVP XII LLC, may be deemed to share power to direct the disposition and vote of the shares held by ARCH XII.
• The filing includes disclaimers of beneficial ownership by AVP XII LP, AVP XII LLC, and the AVP XII LLC Committee Members, except to the extent of their pecuniary interest.

Sentiment

Score: 7

Explanation: The sentiment is neutral to positive. The conversion of preferred stock to common stock is a standard procedure following an IPO, indicating a successful transition to a publicly traded company. The involvement of a reputable venture firm like ARCH Venture Partners is also a positive signal.

Positives

• The conversion of preferred stock to common stock typically simplifies the capital structure of the company post-IPO.
• The conversion at $0.00 suggests that the investors are confident in the future performance of the company.

Future Outlook

The document does not contain specific forward-looking statements beyond the details of the stock conversion related to the IPO.

Industry Context

This filing is a standard part of the IPO process, where preferred stock held by venture capital firms like ARCH Venture Partners is converted to common stock, aligning their interests with public shareholders. This is a common practice in the biotech industry after a company goes public.

Comparison to Industry Standards

• The conversion of preferred stock to common stock upon an IPO is a standard practice in the venture capital and biotech industries.
• Similar conversions occur when venture-backed companies like Moderna, BioNTech, and CRISPR Therapeutics go public, where early investors convert their preferred shares to common shares.
• The specific conversion ratios and terms vary depending on the initial investment agreements and company performance.

Stakeholder Impact

• Shareholders: The conversion simplifies the capital structure, potentially making the stock more attractive.
• Employees: The IPO and subsequent conversion can boost morale and align employee incentives with company performance.
• Creditors: A successful IPO strengthens the company's financial position, improving its creditworthiness.

Key Dates