Recce Pharmaceuticals Ltd (ASX:RCE, OTC:RECEF)Ltd has secured a non-dilutive debt facility of up to approximately A$30 million (US$20 million) from global investment firm Avenue Capital Group, marking a significant milestone in the company’s growth strategy. An initial commitment of around A$11.5 million (US$7.5 million) will support Recce’s registrational Phase 3 clinical trials in Australia and Indonesia, which are focused on its lead candidate R327G for the treatment of diabetic foot infections (DFI) and acute bacterial skin and skin structure infections (ABSSSI).
The debt facility complements Recce’s recent A$15.8 million equity raise, bringing its pro-forma financial position to A$27.5 million. In addition, the company expects to receive an A$8.5 million research and development rebate in November 2025, further bolstering its cash reserves. Taken together, these funding sources provide Recce with an effective cash runway of approximately A$36 million, enabling it to progress clinical development and prepare for market launch without diluting existing shareholders.
Chief executive officer James Graham said the Avenue Capital partnership allows the company to advance critical programs while preserving shareholder value.
“This facility marks a significant step in strengthening our capital position at a critical juncture,” Recce Pharmaceuticals CEO James Graham said.
“With our lead candidate R327G now in registrational trials and targeting commercial launch in 2026, this strategic partnership with Avenue Capital Group allows us to advance our clinical programs while preserving shareholder value. Avenue’s support reinforces the commercial potential of our synthetic anti-infectives and their transformative role in combating antimicrobial resistance.”
Facility to advance clinical and commercial milestones
The initial tranche of funding will be directed towards Phase 3 clinical trials of lead candidate R327G for the treatment of diabetic foot infections (DFI) and acute bacterial skin and skin structure infections (ABSSSI).
The funds will also support manufacturing, regulatory submissions, and market launch preparations. Avenue Capital has committed to a further A$19 million (US$12.5 million) subject to conditions.
This financing strengthens Recce’s balance sheet at a key development stage.
Mark Lasry, chairman and CEO of Avenue Capital Group said, “We are pleased to support Recce Pharmaceuticals as it pursues the commercialisation of its novel anti-infective therapies. Recce has a differentiated platform technology, strong leadership, and strategic focus on high-burden regions that aligns with our philosophy of backing innovative companies with the potential for global impact.”
Warrants and terms of the facility
The company will issue warrants to Avenue representing 8% warrant coverage based on an exercise price linked to recent valuation metrics or upcoming capital raises. These warrants are exercisable over five years and subject to ASX approval. Avenue is also granted a right to invest up to US$1 million in future equity rounds.
The facility comprises an initial US$7.5 million tranche, a US$5 million second tranche (available from April to September 2026), and a US$7.5 million discretionary tranche (available in 2027). The loan carries an interest rate of 12.75% per annum with up to 24 months of interest-only payments and a final 5% payment due on maturity or prepayment.
The loan is secured against Recce’s global assets, including intellectual property. Any additional debt must be subordinated and approved by Avenue. Prepayment is allowed with scaled penalties depending on timing. Recce must provide regular financial reporting and investor communications throughout the term of the agreement.
About Avenue Capital and Recce Pharmaceuticals
Avenue Capital Group is a global investment firm managing over US$11 billion in assets across specialty lending and opportunistic credit strategies. Recce Pharmaceuticals is developing a new class of synthetic anti-infectives, including R327, R435, and R529, all recognised by global health bodies for their potential in combating antimicrobial resistance.