Daily Brief Australia: Orica Ltd, Recce Ltd and more

• Orica Ltd (ORI AU) is looking to raise up to A$400m (US$260m) in its primary placement. The proceeds will be used to partially fund the acquisition of Cyanco. 
• The deal is a large one to digest, representing 21.3 days of three month ADV and 5.2% dilution. 
• In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

Recce Pharmaceuticals has announced several positive developments in recent weeks relating to its therapeutic programmes, particularly for lead anti-infective candidate RECCE® 327 (R327). It entered a strategic collaboration with an Indonesian biomedical company, PT Etana Biotechnologies (Etana), which may support the engagement of relatively lower-cost clinical trial sites with potentially deep patient pools in South-East Asia (SEA). The company also recently disclosed positive efficacy results among five patients treated in its Phase I/II study of topical R327 in patients with diabetic foot infections (DFI), and it now plans to expand this programme to additional domestic and global sites. We have raised our valuation to reflect the rolling forward of our estimates and reductions in our R&D and SG&A cost projections, following the most recent quarterly cash flow update. We now obtain a risk-adjusted net present value (rNPV) of A$652.6m (or A$3.20/share), versus A$551.1m previously.