Ann: Impressive Preclinical Bisantrene Breast Cancer Results, page-24

DYOR. Not advice. Analysis is highly speculative and not intended as specific financial advice.
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Bottom-line: fair value (heavily risked) $8.41 (potential rerate level over next few months)
Buyout potential: (unrisked) ~ $33.00 to ~ $94.00 ( USD $4.9B to USD $14B buyout )

I think RACE could rerate 200% to 500% as first an AML trial and in parallel a Breast Cancer trial commence and then complete recruitment in H1 2021. Readouts for these trials would then follow in H2 2021.

I expect we will get more details on RACE's clinical timelines at the AGM on Monday 30 November (next week).

I think RACE will rerate to recognise the tremendous clinical maturity and rapid pathway to approval. As a comparison in the US we have Black Diamond Therapeutics still at preclinical stage and with a market cap of USD $1.2B!

https://www.blackdiamondtherapeutics.com/
https://www.blackdiamondtherapeutics.com/pipeline/

This demonstrates how undervalued Bisantrene and RACE are. Black Diamond Therapeutics has a pipeline unlikely to complete approval trials for 5 years. They are still at Phase I.

Bisantrene has been historically trialled in over 2,000 patients. Over 40 Phase II and III trials in the US and Europe. It has an average complete response of ~47% in 6 historic AML trials from 1980s and 1990s. A level that would be good enough for FDA approval. See below case studies for examples of complete response needed for FDA approval and rapid approvals that can occur:




Expect a rapid (and low-risk) path to approval on the back of AML trials expected to start in the near future. I expect that RACE will pursue a trial in AML in the US via the 505(b)(2) pathway, enabling fast path FDA approval. This approval will then open up an off-label use of Bisantrene for Breast Cancer whilst Breast Cancer trials are completed.

RACE may also seek breakthrough therapy designation due to the heart safety and it's niche capability to treat Extramedullary AML (this could further accelerate approval).

Assuming a second AML trial commences recruitment in Israel in January and given the great results from the first trial (particularly in Extramedullary AML) I think recruitment will complete as early as end June, which would allow for a key first readout in September.

I expect a trial in Breast Cancer to commence in Australia with first dosing sometime in Q1. Assuming 6 months recruitment we could have first readouts sometime in Q4 of 2021.

I think RACE will kick off a trial in AML MRD in the United States, although this may not commence until Q2 or Q3 of 2021. We still need the IND. I expect we’ll hear more on the status of this at the AGM.

I’ll revisit all of this analysis following the AGM.

So what’s significant about this announcement:

1. Bisantrene is now on a path to take on the backbone of Breast Cancer Chemotherapy (which is dominated by Doxorubicin).
   
   This opens up a large blockbuster market for Bisantrene in one of the most high-profile of cancers.
   
   From my quick count:
   
   https://www.cancertherapyadvisor.co...ns/breast-cancer-invasive-treatment-regimens/
   
   12 combinations use Doxorubicin
   1 combination uses epirubicin
   16 combinations use Cyclophosphamide (which is the planned drug for use in combination with Bisantrene)
   
   https://www.drugs.com/mtm/doxorubicin.html
   https://www.drugs.com/mtm/epirubicin.html
   https://www.drugs.com/mtm/cyclophosphamide-oral-and-injection.html
   
2. Bisantrene in a 1991 Phase III trial demonstrated similar overall survival to Doxorubicin, but with less serious side effects ( damage to the heart )
   
   
3. Bisantrene is much safer for the heart than Doxorubicin. So Bisantrene will have particular strengths because of heart safety - this is important for both young and older patients.
   
   - For older patients that may have problems with their hearts, treatment with Doxorubicin could have a potentially serious impact.
   
   - For younger patients, you ideally want to give them a drug that won’t do other long-term damage
   
   This means that from a medical perspective, oncologists will likely be quite keen to a much safer drug combination.
   
   
4. The University of Newcastle has independently confirmed the correlation between the Fat and Obesity-associated protein (FTO) expression level and cancer sensitivity to Bisantrene.
   
   This is more evidence that confirms the incredible potential of Bisantrene as a powerful cancer inhibitor.
   
   
   
   
   
   (this along with Breast Cancer puts Bisantrene at the extreme end of potential in terms of revenue - potentially Keytruda Levels of revenue ).
   
   
   
   
5. Bisantrene has strong potential to open up a niche indication for treatment of Extramedullary AML. Compelling solid-tumour regression was demonstrated in the Israel trial in AML completed earlier in the year.
   
   

There is a very high probability for Bisantrene to achieve rapid approval on the back of upcoming trials for AML and what would then rapidly follow is off-label use for Breast Cancer once approved ( although in parallel to AML trials I expect RACE to run a Breast Cancer proof of concept trial ).

The following factors associated with clinical maturity are indicators of a high probability of success:

1. The 40% overall response that was achieved in the Israel trial completed in June 2020, in 10 extremely sick patients that relapsed multiple rounds of earlier chemo.
2. The 23% complete response in a Phase I trial in 17 adults in 1985.
3. The 50% complete response in a Phase II trial in 40 adults in 1987.
4. The 46% complete response in a Phase II trial in 22 children in 1994.
5. The 40% complete response in a Phase II trial in 10 adults in 1989.
6. The 50% complete response in a Phase II trial in 15 adults in 1989.
7. The 72% complete response in a Phase II trial in 7 adults in 1993.
8. From historic trials Bisantrene is safe for the heart making it a compelling alternative to mainstream chemo drugs such as Doxorubicin
9. 2 x French girls treated in 80s and 90s achieved long-term survival after successful treatment with Bisantrene. Both are still alive today and were well enough to have their own children which is also evidence of the heart safety.
10. Previously approved in France around 1990.
11. Bisantrene in historic trials achieved similar overall survival to Doxrubicin in treatment for Breast Cancer. Doxorubicin is a mainstream chemo treatment for Breast Cancer.
12. RACE's now have 2 x regulatory strategy advisors engaged for review of their clinical plans ...

So what’s the potential … ?

A blockbuster buyout up to USD $21B given the very large size of the Breast Cancer market and also Bisantrene’s Keytruda-levels of revenue potential.



We can use the Forty Seven transaction for their AML pipeline as a bottom-end potential for buyout.

Here's the background to the transaction:

https://www.fiercebiotech.com/biotech/how-do-you-get-acquired-by-gilead-forty-seven-explains

I have aggressively risked the fair-value target below to arrive at a fair value $8.41.



A scenario that we could see is a partnership for a region such as Asia. This could open up avenues for funding. Alternatively RACE might achieve a partnership with big Pharma as a stepping-stone to a buyout (although this might limit price competition in a bidding war that could occur).

Big Pharma need to keep their pipelines stocked with high-value drugs. It's the YoY revenue growth that they are chasing from big new high-potential drugs.



Will revisit this analysis following the AGM as I expect an update on clinical strategy and plans, particularly relating to FTO.