RACE Oncology Valuation - June 2020

DYOR. No specific buy or sell recommendation intended.
M&A peer comparisons have been used as basis for calculating risked and unrisked perspective of value based on previous buyouts of Drug-Development Biotechs. Valuations assume a future buyout transaction to a Big Pharma based on positive readouts from one or more Phase II trials (assumed timeframe 18 to 36 months). Estimates assume trials are funded from Research Grants, Partnerships or Equity Raises within a 30% cap of additional dilution on current share structure.
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Valuation

Risked peer-based valuation $4.60 recognises very strong clinical maturity from historic AML trials recently validated by a trial in heavily pre-treated (very difficult to treat) Adult R/R AML patients in Israel. This valuation is against potential for 3 x AML pipelines and excludes compelling additional upside for pathways for Breast Cancer and Ovarian Cancer among other forms of cancer.

(see PDF for full valuation)



Summary

• Market cap: $72M, fully-diluted share issue ~ 153M, cash at end of last quarter $2.56M
• Current pipelines for Acute Myeloid Leukemia (AML), Breast Cancer and Ovarian Cancer
• Clinical maturity from over 40 Phase II & III trials in the 1980s and 1990s (over 2,000 patients)
• Compelling Clinical Probability Profile
  • “Orphaned Drug” previously approved in France in 1988
  • Average 47% Complete Response in 6 x Phase II AML trials in 1980s and 1990s
  • Overall Response 40% in recent Israel Trial for heavily-pretreated R/R AML patients
  • Recent research at City of Hope also indicates strong potential in other forms of cancer
  • Long-term survival of two children (now women) treated with Bisantrene in 80s and 90s. These women are still alive and have their own children
• Management with drug approvals experience and buy-side transactional experience
• Unique efficacy and safety profile with low cardiac toxicity may allow Bisantrene to displace Doxorubicin in a wide range of chemotherapy regimens for AML and solid tumours (such as Breast and Ovarian Cancer). Doxorubicin is one of the most commonly used chemotherapy agents.
• Recent growth and focus on cancer M&A by Biopharma
• RACE have successfully manufactured Bisantrene
• Strong commercial position
  • through 3 granted patents
  • 7 years commercial exclusivity through FDA / US Orphan Drug Designation
• FDA Rare Disease Designation supports potential to secure a Priority Review Voucher (value ~ USD $100M+)

Potential Catalysts

• Video interviews expected to further elaborate on Bisantrene performance, Bisantrene potential and RACE Strategy
• Results of Preclinical combination study for Breast Cancer
• Firming up and further detail for planned trials
• Possible grant funding for AML MRD trial in the United States, application potentially “in the fall”
• Start of R/R Adult AML trial and Breast Cancer Trial (Q4)