Biotech Boundless skyrockets 90% on merger with Serapha, bucking broad selloff

Shares of Boundless Bio, a micro-cap developer of novel cancer therapies, surged around 90% on Tuesday to their highest level since late 2024. The company announced a merger with privately held biotech Serapha Bio, a dividend payout, and a $230 million financing from healthcare investors.

Boundless Bio shares jumped 87% on the Nasdaq on Tuesday to $2.60 apiece, a one-and-a-half-year high. The rally came despite a broader selloff in U.S. equities, with all major indexes closing lower on Monday.

The catalyst for Boundless Bio's Tuesday gains was the announcement that the firm will merge with Serapha Bio, which is developing a treatment for a rare genetic disorder in which the liver produces a defective form of the AAT protein. This can lead to hepatitis and cirrhosis, as well as emphysema and chronic obstructive pulmonary disease (COPD), due to insufficient levels of functional AAT in the bloodstream. Existing treatments are limited to supportive care, while Serapha aims to correct the underlying genetic mutation, according to the press release.

The transaction will be structured as an all-stock merger. Existing Boundless shareholders will get approximately 3.7% of the combined company, and Serapha shareholders 96.3%.

For Boundless, the deal provides a path forward after early clinical data failed to support continued development of its cancer therapy. For Serapha, the merger offers a route to the public markets without going through a traditional IPO process, according to the press release.

The combined company will operate under the Serapha Bio brand, and its shares will trade on the Nasdaq under the ticker symbol AATD. The companies expect to complete the transaction in the fourth quarter.

Before the merger closes, Serapha will complete a $230 million private placement with a syndicate of investors led by RA Capital Management and RTW Investments, according to the announcement. The company has already received approximately $138 million, while the remaining $92 million is expected to close concurrently with the merger.

The proceeds will fund the combined company's operations into the second half of 2029, support completion of phase II trials of its lead therapy, SERP-01, and allow the initiation of phase III research. The company is currently enrolling patients in China for clinical trials.

Boundless, meanwhile, plans to distribute excess cash of approximately $44-48 million to existing shareholders through a dividend.

Boundless shares are now up around 117% year to date. Wall Street coverage of the company is limited, with two analysts covering the stock, and both rate it a "hold." The average target price is $4 per share, implying 54% upside versus the last close.