My thoughts on some of the SPP discussions:
1) Underwriting the SPP
This will incur an underwriting fee. For a relatively small raise ($30m is small in the investment banking world), this will likely be a 7% fee. 7% of $29.7m = $2,079,000. I for one am glad 7% of my SPP money ($2m in total) is not going to bankers/brokers and will go directly to fund cancer trials.
2) BG selling
Just a reminder note: Bill Garner isno longeran insider, director or management. He does not have anymore insight into the direction of the company or the stock than the rest of us (non-insiders).
There are many reasons why Directors/Insiders sell... e.g. diversification, fund option conversion, margin calls, tax payments, house purchase, private school fees, divorce, funding pet projects, charitable purposes, buy new expensive toys etc etc... many reasons have no link to their view of the stock they are selling.
But there is only one valid reason why Directors/insiders buy their own company shares, with their own hard earned money! Especially when they already have plenty of shares and options. That reason is that they are extremely bullish on the prospects.
For me (and some other markets participants), I will consider insider buying as extremely bullish, insider selling as neutral or marginally bearish (depending on the other indicators) and non-insider (which is what BG is now) selling as neutral (in terms of indicating results of future company direction) but of course there will be overhang in terms of sell volume, which makes for a good accumulation opportunity for those so inclined.My guess is that Bill Garner wants to redirect his resources (time and money) to other endeavours. Being a successful early stage biotech investor, BG has access to multiple other investment opportunities - early stage, pre-IPO, VC etc, where he is looking at potential 100x his investment. We already know BG is an earlier investor in ASX.ILA. So taking some profit in RAC (where he probably already made 100x being a founding director and investor, pre-IPO) and recycling into new investments make sense.
For us mere mortals, we can only access listed equities and are more than happy with 10x going forward, if we are lucky enough to find them. And RAC has this potential.
Here is an extract of an RAC ASX announcement from October 2020:
28 October 2020 –Race Oncology Limited (ASX: RAC) wishes to advise that Dr Bill Garner and Mr Chris Ntoumenopoulos have resigned from the roles of Non-Executive Director.
Non-Executive Chairman, Dr John Cullity commented, “Bill and Chris as founding directors have been an asset to Race and we thank them both for their longstanding commitment to the Company. We are immensely grateful of the service provided and contributions they have
made, both as Directors and shareholders, and wish them both all the best for the future.”
Dr Bill Garner commented, “Since founding Race in 2016, Chris and I have watched Race grow; progress the strategy of bringing Bisantrene back to the clinic and now with current clinical data and new strategic prospects, the Company is prospering.Given the time commitments required of other venturesthat we're each involved with, we are stepping out at a time when the business is in a solid funding position and a strong state.We both wish the Company every success.”
Full disclosure: I have paid for my full SPP and topping up on-market in the $3's. I hope I don't get scaled back in this SPP, but even if we do get scaled back, it will be an even better outcome for us all, as it means the SPP was so successful that there will be excess demand wanting to buy more on-market.
I look forward to the SPP closing (over-subscribed) next week and I argue that the RAC sp will continue to grind higher after the SPP overhang/discussions/refunds are worked through. Not to mention more near term (surprise) announcements to come. IMO, the support and floor for the sp is now set at $3 (the result of the SPP will confirm this) ... Risk is to the upside plus watch out for FOMO to come.
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