"Our base case valuation of $94.2 million is 44 cents per share"
"Key point 1 – Bisantrene is a safe and effective drug for the treatment of Acute Myeloid Leukaemia (AML). Compared with the regular anthracyclines that have been the standard of care for AML, Bisantrene has considerably less cardiotoxicity. The drug gained approval in France after a number of studies showing that around half of relasped and refractory AML patients could enjoy a Complete Response.
Key point 2 - Demand for the drug is likely to be favourable, given the fact that there have been relatively few new treatment options for AML over the last three decades, particularly for ‘salvage’ patients that have failed first line chemotherapy.
Key Point 3 - Bisantrene is an early revenue opportunity, with Race believing that it will be able to launch the product in Europe through a Named Patient Programme (NPP) during 2017/18. The market potential of this NPP could be in the order of US$30-50m.
Key Point 4 - Bisantrene’s path to a US launch is relatively straightforward, with the company envisaging a Phase II bridging study under an IND from the FDA, potentially using the 505(b)(2) pathway, to be followed by, potentially, a single Phase III. Race envisages that subject to clinical and regulatory success Bisantrene could be ready to launch around 2020/21. As an Orphan Drug, it would then enjoy seven years’ US exclusivity in AML.
Key Point 5 - Bisantrene is one of a newly defined class of chemotherapeutic agents with immunostimulatory properties. This aspect of the drug not only increases its potential efficacy but opens the door to synergies with other immune-oncology agents.
Key Point 6 - There is potential to expand the usage of Bisantrene given the effectiveness which the original drug showed in breast and ovarian cancer and in lymphoma.
Key Point 7 - Race has a solid management team. Chairman Bill Garner has helped build a number of US drug development companies. CEO Peter Molloy has a marketing background likely to be valuable for the building of the NPP and has built value in a number of biotech companies including the anti-microbial drug developer Biota. CSO Dr John Rothman has a number of successful drugs to his credit as well as valuable experience in immune-oncology with Advaxis.
Key Point 8 - The Bisantrene programme may prove the base for a larger specialty pharma company, with the Race leadership team likely to look for other programmes to bolt on."
RAC Price at posting:
24.5¢ Sentiment: Buy Disclosure: Held
