Fantastic post! It's so great to have you back posting Mason. You always manage to distil all important information into single posts.
The Doan et. al paper has taken what was already a monumental opportunity and turned it into something with the potential to be a global paradigm shift in cancer care. I can't help but think of the overlap of bisantrene's burgeoning utility profile with that of Keytruda. A drug which has consistently been able to add label extensions over the years, expanding into further tumor types as more evidence is generated, resulting in continued revenue growth over a decade.
When I first invested in Race, like many the end goal was a single M&A transaction. As bisantrene's potential future market continues to expand I don't think a single M&A transaction will be sufficient to capture its potential value for shareholders any longer. Instead I think what I would prefer to see now is a licensing deal with a large pharma, with relevant milestone payments and royalties that pump funds back into RAC to enable the continual pursuit of additional indications. Many here have suggested that geographical licensing is a potentially attractive option. I would agree but, with the exception of China, I don't think any pharma company who sees the true potential of bisantrene, would be willing to part with global rights, and instead would prefer to commercialise globally themselves. This drastically reduces the number of companies that will have a large enough global footprint to succeed (this isn't a bad thing either, the largest companies have the deepest pockets.)
If we look at Keytruda as an example, it's revenues since launch in 2014 have grown at an astonishing rate. From $556Mn USD in its first full year of sales (2015) to over $25Bn USD in 2023, a CAGR of 53% from 2015-2023. (1) Over those 9 years, Keytruda's revenue grew 4398% in absolute terms.
Yet, if you look at the Merck and Co. stock price, from Keytruda's first approval in September 2014, it has only risen from USD $56.60 to today's USD $129.90. (2) An increase of ~130% excluding dividends. (Note: I'm not sure if this graph includes a 1048:1000 stock split that occurred in 2021, but I don't think that is meaningfully relevant and the figures still illustrate my point)
It shows that, even with a blockbuster in the portfolio, the share performance of large pharmas are still influenced by the rest of the portfolio, which is harder to separate from the performance of said blockbuster. If a company like Merck and Co. were to acquire RAC, I'm not sure shareholders would be able to realise it's full potential if they were offered Merck and Co. stock or chose to purchase in the aftermath of an acquisition to retain a stake in bisantrene's success.
Instead, a licensing deal which allowed a large pharma to commercialise bisantrene globally, whilst either co-developing with RAC in additional indications, or providing the relevant cash flow to RAC in the form of milestones and royalties to do it themselves, is preferable in my opinion. Something similar to the way Neuren has licensed trofenetide, has allowed far greater appreciation in investment value (NNZ-2591 notwithstanding).
As the potential value of bisantrene grows, I hope that we shareholders are able to capture as much value as possible in any future transactions. I personally no longer think that a single M&A transaction is suitable. I think the future of RAC as a standalone biotech is far more valuable, allowing the continued development of bisantrene, and any additions to the pipeline resulting from the Monash collaboration, or others.
1.
https://www.statista.com/statistics/1269401/revenues-of-keytruda/2.
https://companiesmarketcap.com/merck/stock-price-history/
(20min delay)
