The Cancer fighting biotech company Race Oncology Ltd [ASX:RAC] share price is up 4.23% today.
Rising higher after coming out of trading halt, and announcing the successful completion of a share placement. A heavily oversubscribed share placement at that. Attracting plenty of sophisticated and professional investor attention, according to management.
Because of that, they’ve managed to drum up $5.4 million in fresh capital. Money that will help this aspiring small-cap fund some exciting new trials, studies, and manufacturing for their key drug: Bisantrene.
Let’s take a closer look at the details…
More funds, more interest, more progress
As mentioned, Race’s share placement was heavily oversubscribed. Showcasing the fantastic demand and interest from existing and new shareholders.
At an offer price of $3.00 per share, the terms were fairly favourable for retail investors too. Ensuring they aren’t having their holding diluted by a flood of cheap shares. Which again, speaks volumes as to the demand for this stock.
Which is good news because it seems as though Race won’t be extending this offer to retail investors.
Instead, what Race is deciding to do is utilise a ‘Bonus Option’. Announcing a one for every 20-share bonus offer at an exercisable price of $4.50 per share, with an expiry date of 16 May 2022.
Meaning long-time shareholders may have the chance to cash in on some gains if Race’s share price exceeds this $4.50 point anytime within the next year. An unusual, but perhaps a telling move from the company. Suggesting that management is clearly expecting a strong performance over the coming months.
Which is precisely why they’ve sought out more funds right now.
Stating that the money will go towards a Phase 1 dose escalation trial for Bisantrene. As well as some preclinical studies for the drug’s effects on heart safety. Not to mention further studies in Europe and the US in anticipation of clinical trials for Acute Myeloid Leukaemia. And last but not least, scaled manufacturing of Bisantrene for their Phase II and III trials.
As CEO and Managing Director Phil Lynch notes:
‘This new funding supports efforts to deliver outsized returs to shareholders via our Three Pillar strategy, where we are investing Bisantrene as both a potential precision oncology agent, and as a heart-friendlier chemotherapeutic.
‘We appreciate the amount of interest shown in both Race and Bisantrene through this process and thank all those who participated in the Placement.’
What’s next for Race?
So, with these funds now secured, Race’s attention will no doubt turn to the ongoing drug development.
Delving into the ongoing and forthcoming studies/trials that will either validate their drug or not. A product that they’re clearly anticipating to be a game changer for a variety of cancer treatments.
For that reason, it is easy to see why new and existing shareholders are excited. With plenty of potential for Bisantrene to become a commercial success if it lives up to its potential.
As well throwing a nice little cherry on top via the bonus issue.
However, investors should be aware that as a biotech in the development stage, this is a business that is making zero revenues right now. All of their value comes from the IP and potential of their key drug: Bisantrene.
For that reason, it is not going to be a suitable investment for everyone. With biotech stocks being notorious for their volatile trading.
Therefore, if you’re looking for investment ideas with a little more substance we suggest looking elsewhere. And for ideas on where to start, why not take a look at our latest report on overlooked and potentially overvalued small-caps. Including four ripe picks to get you started.
You can get a free copy for yourself, right now, right here.
For Money Morning