Recce Pharmaceuticals has signed a non-binding term sheet with a major Middle Eastern pharma player for exclusive rights to commercialise its R327 Topical Gel across the MENA region, targeting a high diabetes burden market.
- 10-year exclusive licensing term sheet signed
- Upfront and milestone payments up to USD 3.5 million
- Royalties include 30% net sales plus 6% on sales above USD 50 million
- Regulatory submission to leverage ongoing Phase 3 trial data
- Targets markets with 84 million diabetics and high DFI prevalence
Strategic Licensing Deal Targets High-Prevalence Diabetes Region
Recce Pharmaceuticals (ASX:RCE) has taken a significant step towards commercialising its synthetic anti-infective R327 Topical Gel with a non-binding term sheet signed with a leading Middle Eastern pharmaceutical company. The proposed 10-year exclusive licensing agreement covers key markets across the Middle East and North Africa (MENA), including Saudi Arabia, the Gulf Cooperation Council countries, Egypt, Algeria, and Morocco.
The deal is structured to include an upfront signing fee and milestone payments potentially totalling USD 3.5 million (around AUD 5 million), alongside royalties that start at 30% of the net selling price and increase by an additional 6% annually on sales exceeding USD 50 million. Recce plans to manufacture and supply the gel, which is proposed to be sold at USD 1,500 per treatment, subject to regulatory approval in Saudi Arabia.
Clinical Trial Progress Fuels Regulatory Confidence
This licensing arrangement hinges on Recce’s ongoing Phase 3 clinical trial in Indonesia targeting Diabetic Foot Infections (DFI), a serious complication affecting millions of diabetics. The trial aims for full enrolment of 310 patients, with an approvable interim readout expected after 155 patients. Recce anticipates using this data to support regulatory submissions in Saudi Arabia, potentially avoiding the need for additional trials in the region.
The Indonesian trial's progress has been steady, with the company recently passing a key regulatory inspection, positioning it well for the anticipated regulatory review and commercial approval targeted by year-end. This milestone aligns with Recce’s broader clinical and commercial momentum, including its recent $5.3 million AUD R&D rebate and ongoing collaborations with the U.S. Army for burn wound treatments Phase 3 diabetic foot infection trial and $5.3M R&D rebate.
Addressing a Critical Unmet Medical Need in MENA
The MENA region presents a compelling market opportunity given its diabetes prevalence of 17.6%, with Saudi Arabia alone reporting a staggering 23.1% among adults; translating to over 5 million diabetics. Diabetic Foot Infections represent a significant healthcare challenge in this population, underscoring the demand for innovative anti-infective therapies like R327G.
Recce’s CEO James Graham emphasised the strategic importance of this agreement, highlighting the role of R327G in tackling antimicrobial resistance in a region with a high burden of diabetes-related infections. The deal also reflects Recce’s broader ambition to commercialise its synthetic polymer anti-infectives, which have attracted recognition from the World Health Organization and the US FDA for their potential to overcome antibiotic resistance.
Next Steps and Commercialisation Pathway
The parties are actively negotiating the definitive licensing agreement, aiming to finalise it next quarter, subject to due diligence and customary approvals. The agreement will include standard provisions on intellectual property, termination rights, and warranties. If executed, this deal will mark Recce’s first major commercial partnership in the MENA region, leveraging the licensee’s established distribution network across 30 international markets.
Recce’s pipeline includes multiple synthetic anti-infectives targeting bacterial and viral infections, with R327G positioned as a flagship product addressing a critical unmet need. The company’s manufacturing capabilities and clinical progress provide a solid foundation for scaling commercial operations in the region.
Bottom Line?
Recce’s MENA licensing deal could unlock a lucrative market for R327G, but final agreement and regulatory approvals remain key hurdles.
Questions in the middle?
- Will the definitive licensing agreement be executed on the proposed terms next quarter?
- How will the ongoing Phase 3 trial data influence regulatory approval timelines in Saudi Arabia?
- What commercial milestones and sales trajectories will Recce’s partner achieve in the MENA markets?