Highlights

  • Recce and Arrotex signed a binding, unconditional exclusive licence to register and commercialise RECCE® 327 topical gel (R327G) in Australia and New Zealand.
  • Recce will receive a significant profit share of gross margin on sales, paid quarterly, and remains exclusive manufacturer and supplier.
  • There are no upfront or milestone payments, and Arrotex bears all commercialisation costs in the territory.
  • R327G is in registrational Phase 3 development for diabetic foot infections in Australia and Indonesia, and remains investigational.

Recce Pharmaceuticals Ltd (ASX:RCE) (FSE:R9Q) has signed an exclusive licence and commercialisation agreement with Arrotex Pharmaceuticals Pty Ltd, which describes itself as Australia’s largest and most diversified pharmaceutical company. The agreement covers RECCE® 327 topical gel (R327G) for diabetic foot infections (DFIs) in Australia and New Zealand, subject to successful clinical development and regulatory approval.

Key Terms of the Agreement

The agreement is binding and not subject to any conditions precedent. It covers R327G for DFI and acute bacterial skin and skin structure infection in humans in Australia and New Zealand. Arrotex has exclusive rights in the territory, and Recce will not appoint another partner for any RECCE® 327 presentation there, with new presentations such as intravenous or inhaled formulations subject to good-faith negotiation and a right of first refusal if terms are not agreed within 90 days.

Recce keeps ownership of all intellectual property, all rights outside the territory and outside human pharmaceutical use, and the right to run clinical trials in the territory. There are no upfront or milestone payments. Instead, Recce receives a significant profit share of gross margin, being net sales less Recce’s cost of goods, paid quarterly.

Manufacturing, Costs and Regulatory Pathway

Recce will manufacture R327G and be Arrotex’s exclusive supplier at cost plus margin, credited against its profit share. Arrotex bears all commercialisation costs in the territory, including regulatory filings, PBS and Pharmac submissions and sales and marketing, while Recce continues to fund global clinical development, manufacturing and filings outside the territory.

Arrotex is only required to apply for TGA approval after R327G is approved by the US FDA, the European Medicines Agency or another regulator recognised by the TGA. The term runs until the later of the last licensed patent expiring and 10 years after first commercial sale in Australia, then year to year. Arrotex may terminate without penalty if Recce discontinues its FDA or EMA pathway.

The Opportunity in Diabetic Foot Infections

Diabetic foot infections can be hard to treat because of impaired circulation, neuropathy and antimicrobial resistance, and may lead to hospitalisation, surgery or amputation. In Australia, about 50,000 people are estimated to live with a diabetes-related foot ulcer, with about 300,000 more at risk.

RECCE® 327 is a synthetic anti-infective being developed for infections caused by Gram-positive and Gram-negative bacteria, including antibiotic-resistant pathogens. It is investigational and not approved for commercial use in Australia, New Zealand or the United States. Managing Director James Graham said Arrotex has the infrastructure and healthcare relationships needed to prepare R327G for market, subject to clinical success and approval.

Key Takeaways

Recce has secured a commercial partner for Australia and New Zealand without giving up IP or taking on commercialisation costs, but with no upfront payments, so income depends on future sales. Everything hinges on Phase 3 success and regulatory approval, and TGA filing follows approval by a recognised overseas regulator. This article is general information only and is not financial advice.