There are five compelling reasons why Recce represents an attractive investment opportunity.

• Firstly, Recce’s lead drug candidate, R327, has a unique mechanism of action, making it the only anti-infective drug recognised by the World Health Organization as an ATP production disruptor. Even after exhaustive testing, no strains of drug-resistant bacteria, including the deadly ESKAPE pathogens, have shown resistance to it. This would be a game-changer in the fight against antibiotic resistance.
• Secondly, Recce’s key targeted indications are areas that are not well served by existing drug treatments. Sepsis, in particular, which affects nearly 50 million people worldwide, is also the US’s most expensive condition to treat in hospitals, costing the US healthcare system US$57bn in inpatient costs. Recce is also actively developing R327 for complex urinary tract infections, as well as a topical gel treatment for diabetic foot infections, burn wound infections and broader acute bacterial skin and skin structure infections. Recce’s pipeline offers a substantial opportunity for commercialisation, as all these areas can provide significant global demand.
• Thirdly, Recce benefits from significant support from multiple international governments, reflecting the global recognition of Recce’s pipeline and the public need for novel anti-infective treatments. The company received a binding, underwritten guarantee for up to A$55m in future cash rebates from the Australian Government to cover 43.5% of Recce’s global R&D activities for three years. The company also has a memorandum of understanding with the Indonesian government and leading Indonesian biomedical company, Pt Etana Biotechnologies, which provides significant funding and infrastructure support for upcoming late-stage clinical trials in the region. The US Department of Defense has also recognised R327’s potential and awarded the company a grant for further development. These arrangements help de-risk future development costs while enabling Recce to maximise the commercial potential of its products.
• Fourthly, Recce is about to start a Phase III registrational clinical trial for topical R327 in Indonesia. If successful, the study should allow for Recce’s transition into a commercial-stage company within two years, leading to recurring revenue in the Association of Southeast Asian Nations markets, which have a high prevalence of diabetes and related complications.
• Finally, the company will need additional capital to fund its R&D programmes. It has consistently succeeded in seeking and completing capital raises while consistently maintaining a cash runway greater than 12 months. Recce has a strong representation of institutional investors within its shareholding and maintains a good relationship with these investors. The company can also seek non-dilutive funding activities, including licensing, partnerships and/or additional funding from government agencies.

In conclusion, Recce presents a compelling investment opportunity. The company’s innovative approach to advancing synthetic anti-infectives, including scalable in-house automated good manufacturing practices, strengthened by encouraging clinical data and support from multiple international governments, underscore a promising clinical pipeline that positions Recce at the forefront to address the urgent global need for new anti-infective drugs.

Published 21 November 2024.