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Highlights

  • Recce Pharmaceuticals has secured up to AUD 30 million (US$20 million) in non-dilutive debt funding from Avenue Capital Group.

  • An initial AUD 11.5 million tranche will support Phase 3 trials of R327G in Australia and Indonesia.

  • Combined with equity funding and rebates, Recce’s effective cash runway now stands at approximately AUD 36 million.

Recce Pharmaceuticals (ASX:RCE; OTC:RECEF) has announced a non-dilutive debt facility of up to AUD 30 million (US$20 million) from global investment firm Avenue Capital Group, a move that marks a pivotal step in supporting the company’s clinical and commercial objectives.

The facility provides Recce with immediate access to AUD 11.5 million (US$7.5 million), which will be allocated to the advancement of Phase 3 registrational trials in Australia and Indonesia. These trials focus on Recce’s lead synthetic anti-infective candidate, R327G, targeting diabetic foot infections (DFI) and acute bacterial skin and skin structure infections (ABSSSI).

This development complements Recce’s recent AUD 15.8 million equity raise, resulting in a pro-forma financial position of AUD 27.5 million. Additionally, the company anticipates receiving an AUD 8.5 million research and development rebate by November 2025. Combined, these funds provide Recce with a cash runway of approximately AUD 36 million, enabling further progress without shareholder dilution.

Recce’s Chief Executive Officer, James Graham, described the Avenue Capital partnership as strategically timed to support the company’s lead program at a crucial development stage.

“This facility marks a significant step in strengthening our capital position at a critical juncture,” 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.”

The initial tranche of the loan will be used for clinical trial operations, manufacturing scale-up, regulatory submissions, and market launch planning. A further AUD 19 million (US$12.5 million) in additional funding remains available under the agreement, contingent upon meeting specific milestones.

Avenue Capital Chairman and CEO Mark Lasry highlighted Recce’s innovation and potential for global impact, stating:

“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 Loan Terms

Under the terms of the agreement, Recce will issue warrants to Avenue representing 8% warrant coverage. These are exercisable over five years, with pricing based on recent valuation metrics or future capital raises, subject to ASX approval. Avenue also retains the right to invest up to US$1 million in future equity rounds.

The loan is structured in three tranches: an initial US$7.5 million, a US$5 million tranche available between April and September 2026, and a discretionary US$7.5 million tranche available in 2027. The debt carries a 12.75% annual interest rate, with up to 24 months of interest-only payments and a 5% final payment due upon maturity or prepayment.

The facility is secured against Recce’s global assets, including its intellectual property. Any future debt must receive Avenue’s approval. The agreement also requires Recce to provide regular financial reporting and investor updates during the term.