Ann: Race Strategic Update August 2023, page-48

A question I had regarding the cancelling of the non-interventional phase of the cardio-protection trial was, how do RAC plan to show an improvement (or a reduction) in cardiotoxicity when for most patients, it takes many years to manifest. Often well after the cancer is in remission or years after any trial follow up has finished. Taken from the strategic update itself "several studies have estimated that over half of the patients exposed to anthracyclines will develop some form of heart disease within six years of treatment."

6 years is far too long to follow up and show benefit in any trial, the RAC team must have found some sort of surrogate marker that indicates the likelihood of future cardiotoxicity but manifests far earlier (i.e. during or shortly after treatment) than the late stage LV dysfunction and heart failure in patients further down the track. Maybe reduced LVEF or cardiobiomarkers during treatment can signal future cardiotoxicity and therefore comparison between doxo and doxo + bisantrene groups where cardiac function is maintained might be enough to show cardioprotection to the satisfaction of the FDA but who knows. In vitro studies will not be enough.

We need clear communication as to how cardiotoxicity is going to be demonstrated in the trials.


Strategic Update:

There is going to be some short term pain here for long-term holders. But I will say that, I think RAC is closer to partnerships/commercialisation than it has ever been. At this stage, I do believe the right people are at the helm to deliver the value we're looking for. It is disappointing that that timeframe has been pushed back again, but its important that these decisions are made now, before any mistakes are made and they become too costly to rectify.

Clearly defining two target indications is important. The team can now focus exclusively on generating the data that will eventually lead to commercialization. I think they have chosen the correct indications also. mBC and AML are both areas of high unmet need. Many of the most successful oncology therapies start first with initial indications and use their success to reinvest into indication extensions, funding further trials to expand the label and eligible patient populations. As evidenced by the plan to go after early stage breast cancer in the future. Several key extended indications have been highlighted i.e. ccRCC, sarcoma etc. This is important as it provides any potential partner with a "pipeline in a molecule" that can be used to create continued value over the longer term.

Positives:
- Race seems to be engaging KOLs and regulatory, market access consultants and commercial partners appropriately for this stage in its lifecycle.
- I will wait for further detail about the design of the proposed trials before commenting on them further.
- IP and publication strategy is designed to create the highest impact in the medical community which will be important for commercial success
- continuous partnership engagement to occur throughout clinical development process
- focus on understanding the MoA (may help unlock further indications, better dosing, clearer eligible patient identification etc)


Negatives:
- timeframe to commercialization extended significantly, end of ph2 mBC trial in 2028
- US trials signalled (whilst I think this is the right move for the company, I'm highlighting it as a negative from a fundraising and dilution point of view) - despite the company attempting to obtain non-dilutive funding I'm not sure how feasible this is
- FTO deprioritised behind AML and mBC
- still no firm idea of when RC220 will be ready for use in clinical trials (although supposedly later this year)


Regarding today's price action: it's quite obviously very disappointing, yet understandable. The timelines have been pushed back yet again due to trial redesigns and delays with RC220. US trials are coming as evidened on the clinical development plan slide. This is expensive and signals further fundraising and dilution. Many holders may find themselves not willing to wait until 2026-28 when the meaningful data will be ready. The timeline shift also decreases the present value of the company by extending the timeframe between now and when free cash flow is realised, meaning future revenues are discounted more reflecting a lower present value in DCF models and rNPVs.


Overall thoughts:
I think now the strategy has been clearly defined, we are in a stronger position to reach commercialization, but theres likely dilution and a hell of a lot of patience required to get there.
Race looks more like some of the established US biotechs now with clear pipelines and commercial strategies. Partnership to help with development costs would be fantastic at this stage.

I don't think the price is going anywhere until RC220 is ready, as that will signal the go ahead for the new trials. I think only then, and with a few data readouts will we start to see the value of bisantrene reflected in the SP.

Looks like I'll be holding this for another few years.