RAC - Charts & Price Action, page-12587

Hi @dalts66,

All your comments are valid. I think they have all been addressed in the various discussions on this forum. In a nutshell:

1) RAC has a decent amount of cash, having raised $29.7m 6 months ago. It is very lucky to have the cash to finance activities in such a bear market. This finances all current activities to progress the drug for a year. I am sure more trials could be initiated by allocating extra money, but management has decided that we had enough ongoing trials (I trust their decision).

2) Having extra cash in the bank (on top of the $29.5m) that is not going to be used for R&D, RAC needed to find the best allocation for return on capital. Cash in the bank will be eaten by inflation. A buyback can be as good an option as any other, if it provides good return on capital. Bad market conditions offer an opportunity to buy shares cheaply which has been deemed best for ROC.

3) A low share price doesn't stop a pipeline. True, but there is a consensus that a low market cap coupled with weak sentiment exposes the company to low-ball acquisitions and would undermine the value of a potential buyout for a company that is heavily held by retail investors.

4) From various discussions on HotCopper, I understand that the funds used in buyback were originally planned for trials, but RAC will receive a greater R&D rebates than originally planned. In other words, the extra funds were additional buffer.

5) About market confidence, I think it is important to point out that the RAC share price has been impacted to a large extend by a single seller and SP went down in spite of positive results throughout the year. The selling activity is actually quite predictable, and it is expected selling will continue for months to come. Without a buyback or similar, we may have another 6 months of losses until confidence can slowly build up again. Low sentiment may not do justice to clinical progress with some important results due Q3/Q4 this year. I think without going into too much details, this strongly justifies a share buyback to at least put the SP to neutral gearing.

Hope this make sense. Happy to hear your thoughts on this, if any.