Key Highlights

  • Recce Pharmaceuticals has signed a binding, unconditional licence and commercialization agreement with Arrotex Pharmaceuticals covering Australia and New Zealand.
  • Recce will receive a profit share of gross margin on R327G sales, paid quarterly, with no upfront or milestone payments.
  • Arrotex bears all commercialisation costs in the territory, while Recce remains exclusive manufacturer and supplier.
  • R327G is in registrational Phase 3 development for diabetic foot infections in Australia and Indonesia.

Recce Pharmaceuticals Ltd (ASX:RCE) has entered an exclusive license and commercialization agreement with Arrotex Pharmaceuticals Pty Ltd, under which Arrotex will register and commercialize RECCE 327 topical gel, known as R327G, for the treatment of diabetic foot infections in Australia and New Zealand.

Under the terms, Arrotex obtains exclusive commercialization rights in both countries, while Recce remains the exclusive manufacturer and supplier of the product. Recce will receive what it describes as a significant profit share of gross margin from product sales. The agreement is binding and is not subject to any conditions precedent.

Financial Terms and Cost Allocation

The agreement contains no upfront or milestone payments. Recce's return comes through a profit share calculated on gross margin, defined as net sales less Recce's cost of goods, on Arrotex's sales of R327G in the territory. That share is paid quarterly.

Product is supplied by Recce at its cost plus a margin, and that supply margin is credited against Recce's profit share. Arrotex carries all costs of commercialisation in the territory, including Australian and New Zealand regulatory filings, submissions to the PBS and Pharmac, and sales and marketing. Recce continues to fund global clinical development, manufacturing and regulatory filings outside the territory.

Scope, Exclusivity and Retained Rights

The licensed product is R327G for the treatment in humans of diabetic foot infection and acute bacterial skin and skin structure infection. Arrotex holds exclusive rights across Australia and New Zealand, and Recce will not appoint another commercial partner in the territory for any presentation of RECCE 327.

New presentations, such as intravenous or inhaled formulations, are subject to good faith negotiation. If terms are not agreed within 90 days, Arrotex holds a right of first refusal.

Recce retains ownership of all intellectual property, all rights outside the territory and outside human pharmaceutical use, and the right to conduct clinical trials in the territory.

Regulatory Pathway, Term and Development Status

Arrotex is only required to apply for TGA approval after R327G has been approved by the US Food and Drug Administration, the European Medicines Agency or another regulator recognised by the TGA as a comparable overseas regulator.

The term runs until the later of the expiry of the last licensed Recce patent covering R327G in the territory and ten years after first commercial sale in Australia. It then continues from year to year unless either party gives 12 months' notice.

R327G is currently in registrational Phase 3 clinical development for diabetic foot infections in Australia and Indonesia. R327 remains investigational and has not been approved for commercial use in Australia, New Zealand or the United States. Any future availability in Australia or New Zealand will be subject to successful completion of clinical development and applicable regulatory approvals.

Alongside customary termination rights, Arrotex may terminate without penalty if Recce discontinues its FDA or EMA regulatory pathway for R327G. Recce may terminate the agreement, or make the licence non-exclusive, if Arrotex fails to apply for approval or launch within the required timeframes.

The announcement describes diabetic foot infections as bacterial infections involving the skin, soft tissue or bone of the foot in people with diabetes. In Australia, approximately 50,000 people are estimated to be living with a diabetes-related foot ulcer, with about 300,000 more considered at risk.

Recce Managing Director and Chief Executive Officer James Graham said the agreement brings together Recce's anti-infective development platform and Arrotex's regulatory, market access and commercial capabilities in the two countries. Arrotex Chief Medical Officer Dr Melinda Munns said the company expects R327G, on approval, to represent an innovative approach to a serious and costly complication of diabetes.

Where the Agreement Leaves Recce

The arrangement assigns commercial responsibility and cost in Australia and New Zealand to Arrotex, while Recce keeps its intellectual property, its manufacturing role and its global development obligations. Recce's income under the deal depends on quarterly profit share payments once sales occur, as no upfront or milestone payments are included. Arrotex's obligation to seek TGA approval follows overseas approval, and termination rights are tied to that regulatory pathway and to launch timeframes. The announcement states that Recce is headquartered in Sydney, with research and development operations in Perth and operations in the United States.