Recce Pharmaceuticals - Landmark commitment helps fund R&D costs

Recce recently reported that the Australian government has committed to providing up to A$55m in future cash rebates to reimburse upcoming R&D expenditure directed towards the company’s proprietary synthetic anti-infective programmes to June 2025. Notably, this binding agreement with the Australian government’s Department of Industry, Science and Resources (AusIndustry) extends the rebate programme that customarily reimburses 43.5% of eligible R&D expenditures incurred within Australia, to cover the anti-infective R&D activities Recce undertakes anywhere in the world. We view this as key given our expectation that US and global clinical trials will be needed to maximise the commercial potential of Recce’s products, notably lead candidate RECCE® 327 (R327). While our model already assumed the Australian government would reimburse 43.5% of Recce’s overseas R&D costs, there was a minor degree of uncertainty on whether this would be the case. Hence, the signing of this binding commitment with AusIndustry helps de-risk future funding needs for Recce as it advances its anti-infective programmes, notably R327 in sepsis/urosepsis and in complicated urinary tract infection (UTIs).