Recce Pharmaceuticals secured A$4 million through an institutional placement and launched a Share Purchase Plan to raise up to an additional A$4 million, bolstering funds for commercial licensing and ongoing clinical programs.
- A$4 million raised via institutional placement at A$0.40 per share
- Share Purchase Plan offers up to A$4 million on same terms
- Funds target commercial licensing with Middle Eastern pharma partner
- Ongoing Phase 3 trials and Investigational New Drug activities funded
- Attaching and piggyback options included, subject to shareholder approval
Capital Raise Supports Commercial and Clinical Momentum
Recce Pharmaceuticals (ASX:RCE) has successfully raised A$4 million through an institutional placement priced at A$0.40 per share, representing a roughly 13% discount to the last closing price. Alongside this, the company has announced a Share Purchase Plan (SPP) to raise up to an additional A$4 million on identical terms, offering existing shareholders the chance to participate in the capital raising effort. The combined proceeds aim to underpin Recce’s commercial licensing ambitions and clinical development pipeline.
Strategic Use of Funds for Licensing and Trials
The bulk of the capital; A$3.2 million; is earmarked to strengthen Recce’s balance sheet in support of a commercial licensing deal with a leading Middle Eastern pharmaceutical company. This follows the company’s recent non-binding term sheet for exclusive rights to commercialise its RECCE® 327 topical gel in the MENA region, a market with a significant diabetes burden. The raise also allocates A$2 million towards ongoing Phase 3 clinical trials targeting diabetic foot infections in Indonesia and Australia, as well as a US Department of War burn wound program. Another A$2 million will fund Investigational New Drug enabling activities with the US and Indonesian regulatory authorities.
Options Incentivise Participation Amid Shareholder Approval
Participants in both the placement and the SPP will receive attaching unlisted options; one for every two new shares; exercisable at A$0.60 and expiring in June 2027. Exercising these attaching options grants holders two piggyback options exercisable at A$1.00 with a 2028 expiry. However, issuance of the SPP options requires shareholder approval at an upcoming Extraordinary General Meeting, adding a layer of regulatory oversight to the capital structure expansion.
Healthy Cash Position and Additional Funding Prospects
Upon completion of the placement and SPP, Recce expects pro forma cash liquidity of approximately A$29.5 million, before costs. This is bolstered by anticipated R&D rebates estimated at A$7.5 million and potential non-dilutive R&D advances of A$10 million. The company also has access to a debt facility with Avenue Capital, with a further A$10 million drawdown possible, collectively extending the cash runway to support its clinical and commercial objectives.
Upcoming Milestones and Shareholder Engagement
CEO James Graham highlighted the capital raise as timely, coinciding with interim data readouts from the Indonesian Phase 3 trial and the ongoing progress towards commercialisation of R327G. The company plans to keep shareholders informed as key milestones unfold over the next 12 months. The SPP offers retail investors a chance to maintain their exposure on equal footing with institutional participants, reflecting Recce’s commitment to shareholder inclusivity.
Bottom Line?
Recce’s capital raise bolsters its war chest ahead of critical clinical readouts and commercial licensing, but shareholder approval hurdles for option issuance remain a key next step.
Questions in the middle?
- Will the SPP attract the full A$4 million given current market conditions and investor appetite?
- How will the upcoming interim Phase 3 data from Indonesia influence Recce’s licensing negotiations and share price?
- What impact might shareholder approval outcomes at the EGM have on Recce’s capital structure and investor confidence?