If Race had been sold off individually, I'd definitely be more...

If Race had been sold off individually, I'd definitely be more worried about this outcome. However, lots of biotech stocks both in Australia and internationally are down heavily. IMU released a letter to shareholders recently and stated that April 2022 was the worst month on record for US biotech stocks since 1997, down 22%. Add to that we know we have a big shareholder reducing his position, possible tax loss selling and probably other retail selling from the failure to break out of the consolidation Race has been undergoing. In this context the selloff in RAC could well be totally unrelated to anything about the company. Is the market right about most biotech stocks being a dud? Unlikely.

Also, the market definitely doesn't always get things right about RAC. Prior to Sheba 1 results, RAC peaked in February 2020 at $0.48 and was sold off to as low as $0.23 in March 2020 (52% down from the high). The day before Sheba 1 results were released in June 2020, RAC was at $0.32 (33% down from the Feb high). RAC hit $1.17 over the next month.

I've said before that I think we have many reasons to be positive about the Sheba trial, but the recent price action has certainly soured people's opinions and made them think that something must be seriously wrong. Having said that, there's no guarantees of course and I do have my fingers and toes crossed as I don't think negative news will be well received by the market, regardless of how much the share price has dropped recently.