Race Oncology Ltd (ASX:RAC) has retained its valuation of A$3.4 billion base case and A$6.1 billion bull case from Pitt Street Research as it continues to advance the development of its key drug, Zantrene.
Zantrene is a small molecule anti-cancer drug which has clinical and preclinical efficacy as both a low dose, highly targeted precision oncology agent and cardio-protective chemotherapeutic.
Pitt Street remains optimistic about RAC on the back of Zantrene’s dual blockbuster potential and the company’s three-pillar long-term growth strategy.
The following is an extract from Pitt Street’s research update:
Encouraging developments on the AML front
RAC received positive guidance during a pre-Investigational New Drug (pre-IND) meeting with the US FDA for Zantrene in September 2022. The FDA agreed that the clinical hold issues with RAC’s previous IND submission in 2019 had been satisfactorily addressed. The guidance from the FDA and its acknowledgement that acute myeloid leukaemia (AML) continues to have significant unmet needs is encouraging. Although RAC is not planning on conducting clinical trials in the US in the near term, having the necessary optionality is valuable and provides a viable path for Zantrene’s clinical development in the US in the long run.
Additionally, the company is progressing towards its Australian Phase 1/2 Extramedullary AML (EMD AML)- focussed trial with the support of the contract research organisation Parexel. RAC will be modifying the trial design in Q1 2023 to speed up patient recruitment.
New CEO to accelerate execution of growth strategy
RAC appointed Damian Clarke-Bruce as its new Managing Director and CEO. With this, the need for a full-time CEO with global exposure has been fulfilled. Mr. Clarke has strong commercial execution capabilities in global healthcare, and he has held executive roles at all stages of the drug development process – from pre-clinical evaluation to successful commercial launches. We strongly believe that the new CEO will be critical to the execution of RAC’s three-pillar growth strategy.
Reiterating valuation of A$6.61–11.91 per share
We remain optimistic on RAC on the back of Zantrene’s dual blockbuster potential and the company’s three-pillar longterm growth strategy. Thus, we reiterate our valuation of A$3.4bn base case and A$6.1bn bull case, as outlined in last October’s initiation report. These valuations equate to $6.61 per share and $11.91 per share respectively Key risks to our model (as outlined on page 6) include clinical, regulatory, commercial and competition risks.