Fully diluted RAC market cap is now under AUD216 million, minus cash on hand of AUD21 million gives RAC an Enterprise Value of around AUD195 million - USD132 million at current exchange rates.
Back in 2018, Merck paid USD394 million for Viralytics and it's drug candidate Cavatek (which was pretty much completely unproven at the time and incidentally was recently shelved completely). This was a 160% premium to the share price at the time.
In contrast, RAC has a drug that is currently (and has in the recent past) bridging 40-50% of very sick R/R AML patients it treats (both standalone and in combination) to a stem cell transplant. Even if you think the recent RAC developments are mostly fluff (cardio-protect, FTO, IV formulation, Triangle report, etc.), the historical data behind bisantrene and pre-clinicals done since then would have to give you some confidence that you're getting the (possibly low) potential for much higher payoff in one or more other indications also.
I must admit I'm somewhat surprised that no one has considered lobbing a similar offer at RAC. At current exchange rates that would amount to about AUD580 million, or about $3.30 per share (assuming 174 million shares fully diluted), and coincidentally also a 160% premium to the current RAC share price. Although many here would disagree, it would be pretty hard for the board to reject this "low ball", given the premium involved and the fact that it's been 18 months since we've seen RAC trade at this price. Yes, it would be opportunistic, and they probably wouldn't get DT's shares at that price, and there may well be some other hold outs, but my gut feel is that they would get enough acceptances to be in a pretty good negotiating position and have significant board representation.
The market may not be seeing the value of RAC here at these levels, but should we be concerned that no one else apparently is either? Unless we're all off with the fairies, there must be a fundamental minimum value to RAC and it surely can't be too far off here.
Note this is also completely ignoring the effect of inflation since 2018... USD 394 million then is worth around USD 327 million now adjusted for inflation...
Expand
