Here's why the Race Oncology (ASX:RAC) share price is leaping higher

The Race Oncology share price is leaping higher in late morning trade after emerging from a trading halt. We take a closer look…

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The Race Oncology Ltd (ASX: RAC) share price is gaining today, up 5% in late morning trade.

The ASX healthcare share entered a trading halt on Monday prior to disclosing the details of a capital raising, which it released this morning.

Race Oncology's primary focus is its cancer drug, Bisantrene. Bisantrene has been shown to inhibit overexpression of the fat mass and obesity associated (FTO) protein, linked to a wide range of cancers.

What did Race Oncology report on its capital raising?

The Race Oncology share price is moving higher today after the company reported it had raised $5.4 million from institutional and sophisticated investors in an oversubscribed placement. The capital raise is not subject to shareholder approval.

Race will issue approximately 1.8 million new shares at $3.00 per share. The stock is currently trading for $3.22 per share.

The company also revealed that participants in the capital raising will get 1 attaching option (exercisable at $4.50 and expiring 16 May 2022) for every 20 new shares they subscribed to at no cost.

Existing shareholders are also eligible for the 1 bonus option per 20 shares they hold on a pro-rata non-renounceable basis. Race reported it wants to reward its loyal shareholders while also helping grow the company.

Race plans to use the new capital to help develop Bisantrene.

Commenting on the successful capital raising, Race's CEO, Phil Lynch said:

This new funding supports efforts to deliver outsized returns to shareholders via our Three Pillar strategy, where we are investigating Bisantrene as both a potential precision oncology agent, and as a heart-friendlier chemotherapeutic.

Daniel Tillett, Race's CSO added, "We believe that this raise will accelerate our plans and rewards our loyal shareholders."

The company said it expects the new shares and placement options will be allotted and issued by 14 May.

Race Oncology share price snapshot

It's been a truly stellar year for Race Oncology shareholders, with shares up 794% over the past 12 months. For some perspective, the All Ordinaries Index (ASX: XAO) has gained 34% over that same time.

Year-to-date the Race Oncology share price has continued to outperform, with shares up 66% so far in 2021.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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