Shares of biotech company Boundless soared 90% amid a market sell-off. What's the reason?

Shares of Boundless Bio, a micro-cap developer of new cancer therapies, soared nearly 90% on June 23—reaching their highest level since late 2024. The company announced a merger with private biotech firm Serapha Bio, a dividend payment, and the raising of $230 million from industry investors.

Boundless Bio shares rose 87% on the Nasdaq on June 23, reaching $2.6—their highest level since late 2024. This occurred amid a broad sell-off in the U.S. stock market: on Monday, all major indices closed lower.

The rally was triggered by the company’s announcement of a merger with another biotech firm—Serapha Bio, a developer of a treatment for a rare genetic disorder in which the liver produces an abnormal form of the AAT protein. This can lead to hepatitis, cirrhosis, as well as emphysema and chronic obstructive pulmonary disease (COPD)—due to insufficient levels of the correct protein in the blood. Existing treatments offer supportive care, whereas Serapha aims to edit the gene, according to the press release.

The merger will take the form of a stock-for-stock exchange. As a result, current Boundless shareholders will receive approximately 3.7% of the combined company, while Serapha shareholders will receive 96.3%.

For Boundless, this is an opportunity to continue its operations after initial clinical data failed to support the feasibility of further developing its cancer therapy; Serapha, in turn, will go public without an IPO, according to the press release.

The combined company will operate under the Serapha Bio brand, and its shares will trade on Nasdaq under the new ticker symbol AATD, according to the press release. The parties plan to complete all procedures in the fourth quarter of 2026.

According to the statement, Serapha will conduct a $230 million private placement of shares for a syndicate of investors led by RA Capital Management and RTW Investments prior to the completion of the transaction. The company has already received approximately $138 million and expects to receive the remaining $92 million upon completion of the merger.

The parties believe that these funds will be sufficient to finance the new Serapha’s operations through the second half of 2029, allowing the company to complete the second phase of trials for its drug, SERP-01, and begin the third and final phase. The company is currently recruiting patients in China to participate in clinical trials.

Boundless, for its part, plans to distribute the surplus funds—amounting to approximately $44–48 million—to its current shareholders in the form of dividends.

Since the beginning of the year, Boundless's stock price has soared by nearly 117%.

Two Wall Street analysts are tracking the company's performance, and both recommend holding its stock. The average price target is $4, which is 54% higher than the last closing price.