Race Oncology Raises $3.2m at 6% Premium: Is RAC Still a Buy After 87% Rally?

Race Oncology’s (ASX: RAC) latest capital raise sends a strong signal. The company secured A$3.2 million from sophisticated investors at $2.83 per share, a 6% premium to its last close. For a small-cap biotech, that’s unusual; most need to offer discounts to attract funding. This premium placement shows investors are confident about the upcoming HARNESS-1 lung cancer trial, with patient enrolment expected in Q1 2026.

The stock’s performance has been remarkable: up 87% over the past year and beating the ASX All Ordinaries Index by 139% in six months. The stock has climbed 87% over the past year and outperformed the ASX All Ordinaries Index by 139% over six months. With shares now trading around $3.10, the key question for investors is whether there’s still runway left or if the easy gains are behind us.

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Why Investors Paid a Premium for Race Oncology

The placement funds Race Oncology’s HARNESS-1 Phase 1a/b clinical trial, targeting patients with EGFR-mutated non-small cell lung cancer who have stopped responding to standard treatments. This represents a significant unmet medical need; patients who develop resistance to frontline therapies have limited options, making effective second-line treatments highly valuable.

Race Oncology’s approach combines its lead drug, RC220, with AstraZeneca’s Tagrisso, aiming to overcome treatment resistance through a different mechanism. Ethics approval has already been secured from St Vincent’s Hospital, Melbourne, and the company expects to enrol its first patient in early Q1 2026 at Monash Health.

In our view, the fact that sophisticated investors paid above market price suggests they wanted exposure before clinical data emerged. CEO Dr Daniel Tillett has also committed to converting his own $1.25 options, adding a personal vote of confidence that management believes in the story. In biotech, the period leading into trial readouts often drives share price movement, and these investors appear to be positioning ahead of that catalyst window.

Race Oncology’s Pipeline and Cash Position

Beyond the placement, Race Oncology’s balance sheet received a boost from an A$2.8 million R&D tax refund for FY2025, with an additional overseas refund expected in early 2026. We believe this strengthens the company’s cash runway and reduces the likelihood of near-term dilution, a common concern for pre-revenue biotechs.

RC220 itself is a reformulated version of bisantrene, designed to bind to G-quadruplex DNA structures and target resistance pathways that allow cancer cells to survive standard therapies. The company is also exploring RC220 for acute myeloid leukaemia, providing optionality beyond the lung cancer program.

With the placement and tax refunds combined, Race Oncology appears well-funded to reach its key milestones without immediate pressure to raise additional capital.

The Investor’s Takeaway

The bull case is straightforward: institutional investors paid a premium to participate, management is putting their own money in, there’s a clear catalyst timeline with first patient enrolment in Q1 2026, and RC220 targets a genuine gap in cancer treatment. The strong price momentum over the past year reflects growing market interest in the story.

However, investors should approach with caution. Race Oncology remains a speculative, pre-revenue biotech with no guarantee of clinical success. After an 87% rally, much of the near-term optimism may already be reflected in the share price, leaving a limited margin of safety if trial results disappoint. Clinical trials carry inherent risks, including delays, adverse events, and efficacy questions that could derail even promising candidates.

We believe that for risk-tolerant investors comfortable with biotech volatility, the premium placement and upcoming trial milestones make RAC worth watching. But after this run, position sizing matters. New investors may consider waiting for a pullback or scaling in gradually rather than taking a full position at current levels. This is a high-conviction, high-risk opportunity where the potential reward comes with a meaningful downside if things don’t go to plan.