Recce Pharmaceuticals Ltd (ASX:RCE, OTC:RECEF) earlier this week outlined a major commercial milestone after signing a non-binding term sheet with a leading publicly listed Middle Eastern pharmaceutical company for the proposed distribution of its R327 Topical Gel across the MENA region.
Speaking with Proactive, chief executive James Graham said the proposed 10-year exclusive licensing agreement would cover Saudi Arabia, GCC countries, Egypt, Algeria and Morocco, targeting diabetic foot infections — a rapidly growing healthcare challenge linked to rising diabetes rates.
Graham said diabetic foot ulcer infections represent a significant unmet medical need globally, noting that around 60% of people living with diabetes experience diabetic foot ulcers during their lifetime, while approximately 80% of those ulcers become infected.
The proposed deal includes a net royalty structure ranging from 30% to 36% based on an estimated treatment value of approximately US$1,500 per patient. Graham said the agreement still remained subject to regulatory approvals and completion of definitive documentation.
Recce’s R327 Topical Gel is being positioned as part of the first new class of antibiotics developed in more than 40 years. Graham said the company aimed to establish a new standard of care for difficult-to-treat bacterial infections, particularly diabetic foot infections where traditional oral and intravenous antibiotics often struggle to effectively reach wound sites.
The company is currently producing approximately 5,000 doses per week and said it remained confident in its ability to rapidly scale manufacturing capacity through its existing reaction vessel production process.
Graham also pointed to broader international growth opportunities. Clinical data generated in Indonesia may support approvals across ASEAN markets through regional data harmonisation pathways, potentially opening access to populations of hundreds of millions of people.
He additionally highlighted the scale of opportunity in China and the United States. Graham noted that the US Department of Veterans Affairs alone spends approximately US$3.5 billion annually treating diabetic foot ulcers, underscoring the significant healthcare burden associated with these infections.
Beyond diabetic ulcers, Recce said R327 has demonstrated potential applications across broader bacterial skin infections, including burn wounds, puncture wounds and bite wounds.
Graham described the company’s positioning as a rare opportunity within the anti-infectives sector, stating that Recce represented “the first new class of antibiotics in over 40 years”.
Interview highlights
- Recce Pharmaceuticals signed a non-binding term sheet with a major Middle Eastern pharmaceutical company.
- Proposed agreement covers a 10-year exclusive licence for R327 Topical Gel in MENA markets.
- Target indications include diabetic foot infections across Saudi Arabia, GCC countries, Egypt, Algeria and Morocco.
- Proposed royalty structure ranges from 30% to 36% net royalty.
- Estimated treatment value is approximately US$1,500 per patient.
- Recce positions R327 as the first new class of antibiotics in more than 40 years.
- Company highlighted diabetic foot infections as a major unmet medical need globally.
- Current manufacturing output stands at approximately 5,000 doses per week.
- Management said the company can scale production rapidly using its reaction vessel manufacturing process.
- Indonesian clinical study data may support approvals across ASEAN and potentially MENA markets through harmonisation protocols.
- China, India and the US were identified as major future commercial opportunities.
- Recce stated R327 may also be effective for broader bacterial skin infections including burn wounds and puncture wounds.
Proactive: Welcome back to Proactive Investors. Ladies and gentlemen, I'm your host, Kerry Stevenson. I've asked James Graham, managing director and CEO of Recce Pharmaceuticals. ASX code is RCE. What do they do? Well, they tackle the global threat of antibiotic-resistant superbugs. We all know that superbugs can be pretty bad and they've got a topical gel. We've had you on before, James, but I've noticed that you're doing a very strong global rollout, and today you're expanding into the Middle East and North Africa.
We'll call it MENA with a licensing agreement, quite a long licensing agreement. What fascinated me is your product, especially for that region, treats diabetic foot infections. There are more than 84 million people in that region living with diabetes. So this is a really important product to be distributed in this area.
Thanks for coming on. I want to find out a little bit about the terms of the deal and why this global rollout is important for Recce.
James Graham: Thank you for having me. It's good to be with you.
Really, the rise of diabetes is the rise of the infectious disease challenge that comes with the nature of diabetes itself. So we're tackling the challenge that is diabetic foot ulcer infections. In fact, 60% of persons who have diabetes will have a diabetic foot ulcer in their lives, and around 80% of those ulcers will become infected.
Millions and millions of people worldwide each year have this challenge, and there's no specific standard of care of which we are positioned to be that first standard of care for the treatment of diabetic foot ulcer infections.
Today’s term sheet is with really one of the largest, if not the largest, Middle Eastern pharmaceutical company. It is a proposed 10-year licence agreement across the MENA group of countries, and it represents a proposed net royalty of 30% to 36% on approximately US$1,500 per patient treatment basis.
That obviously needs to play through from a regulatory approval perspective and consummating the deal with the parties, but it's an incredibly positive position to be in. It's no surprise when we are the first new class of antibiotics in over 40 years.
Proactive: Wow. That's amazing. Middle East, North Africa is a big area. I mentioned before that there are 84 million people living with diabetes in that region. Talk to us about manufacturing supply and how you scale.
James Graham: Manufacturing and supply are fundamental to our business. We currently produce at about 5,000 doses per week. You can multiply that by a cost per patient and by a number of doses on a present yield.
I would expect we are now quite motivated to increase our production. If it goes to the size of the market available, I think we'd better increase that production pretty quickly.
Proactive: Can you do that? Do you have the ability to scale quickly?
James Graham: Most definitely. We use a reaction vessel process. We take common materials in their raw form, purify those, and we have 100% yield out of that.
The reaction vessel process is tried and true in pharmaceuticals and other industries. We’re very confident in that ability.
Proactive: You are continuing to expand globally. Where else are you expanding?
James Graham: This study is actually founded out of Indonesia. Indonesia has approximately an 11% diabetes rate. That extrapolates up to about a 30% diabetes rate across the MENA group of countries.
The study data becoming available out of Indonesia is applicable not only in Indonesia but potentially across ASEAN countries with populations of around 800 to 900 million people.
Through data harmonisation protocols, other countries including the MENA group are expected to accept this data package. So one study creates a multiple-country opportunity on a licensing basis through regional marketing deals.
Proactive: Do you look at places like China and India with their massive populations?
James Graham: We look at them, but I think they’re really looking at us.
China alone has around 220 million people living with diabetes. The challenge with diabetes is collapsed vasculature, meaning oral or IV antibiotics often never reach the wound site.
In our case, it’s a topical applied directly on the wound itself. It works in minutes rather than hours or days and works broader than any other antibiotic known to date.
Those regions are very attractive to us, but there’s nothing to announce just yet. It would be reasonably expected in our late-stage phase three studies to be having those discussions.
Proactive: The US must also be an enormous market.
James Graham: It is an enormous market. I was in Congress recently with the Department of Veterans Affairs, and in Veteran Affairs alone they spend US$3.5 billion a year treating diabetic foot ulcers.
That gives an indication of just one portion of the US market. It’s a very attractive unmet medical need with a large patient population.
Proactive: Ulcers are not just diabetic-related, are they? Does your topical gel work for other types of ulcers?
James Graham: Most definitely. It works for any type of skin infection so long as it's bacterial. We intentionally avoid fungal and healthy eukaryotic cells, which is why we have such a good safety profile.
We’ve shown through our phase two studies on complicated skin and skin structure infections that it works on bite wounds, puncture wounds and burn wounds.
The enemy is bacteria. Any bacteria in a wound or bloodstream is not a good place to be, and that’s where we target treatment.
Proactive: What would you say to investors about why they should sit up and take notice of Recce Pharmaceuticals right now?
James Graham: This is the opportunity to participate in the first new class of antibiotics in over 40 years. What that represents is being the first standard of care for indications that haven’t been catered to previously.
When we look to the MENA group of countries, we’re seeing a market expectation of around US$1,500 per treatment. Look at the growth of the diabetes market globally, the infectious disease challenges, and the only product positioned for approval to treat that — and that’s us.
Proactive: There you have it from James Graham, managing director and CEO of Recce Pharmaceuticals. ASX code RCE. Make sure you check them out. This is a really important step forward as they move into that global footprint. Thanks so much James.
James Graham: Many thanks.