R327G reaches a key milestone
Recce has dosed its first patient in its Phase III Indonesian-focused study on the
topical gel formulation (R327G) of its lead anti-infective therapeutic drug candidate,
R327, for the treatment of DFIs. This marks a key milestone for the company as its
strategic focus for CY25 has been on advancing R327G towards pivotal registration-enabling
studies. The company expects that it will report interim data in H1 CY26; if positive
signs of efficacy are shown, this could lead to regulatory clearance and commercialisation
of R327G in Indonesia and other Association of Southeast Asian Nations (ASEAN) territories, marking Recce’s potential transition into a commercial-stage pharma
company.
The Indonesian Phase III study has a double-blinded, placebo-controlled design, with
a planned total enrolment of up to 310 patients, where R327G will be compared to placebo.
The study has activated five clinical study sites across one of the world’s largest
DFI patient populations. The company expects the study to run for approximately 12
months. However, given the high efficacy response rates shown in the Phase II ABSSSI
study, Recce anticipates the Indonesian registrational Phase III DFI study may reach
a statistically significant efficacy result after the completion of treatment on c
155 patients (compared to the trial’s planned enrolment of up to 310 patients). Recce
expects to report interim data (on c 106 patients) from the Phase III study, consistent
with the BPOM (Indonesian Food and Drug Authority) approved study protocol, by Q1
CY26. If results are positive, our model continues to assume a potential launch in
Indonesia and other ASEAN territories (which include Malaysia, the Philippines, Singapore
and Thailand) in H2 CY26.
Recce is receiving significant infrastructure support for the registrational Phase
III programme from key Indonesian stakeholders, including the Indonesian Ministry
of Health and Indonesian biomedical company PT Etana Biotechnologies (as part of a
strategic collaboration announced in Q1 of CY24).
Review of DFI market characteristics
DFIs are frequent complications of patients who have diabetes mellitus, particularly
if the condition is not adequately controlled. Approximately 38 million people have diabetes in the US (and Recce estimates c 21 million adults in Indonesia alone,
or c 11% of the country’s adult population). Of this population, about 2–4% will experience foot ulceration each year, of which 50–60% will result in DFIs due
to the invasion and multiplication of surrounding microorganisms in the area, resulting
in an inflammatory response and tissue damage. DFIs are the leading cause of foot
morbidity in diabetic patients as well as the most common complication from diabetes
leading to hospitalisation. About 20% of moderate to severe DFIs lead to amputation.
| Exhibit 1: Background on ABSSSI and DFIs |
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| Source: Recce Pharmaceuticals KOL presentation, March 2025 |
While most DFIs are located at relatively superficial layers upon initial clinical
presentation, the infecting microorganisms can spread to deeper tissues, such as fascia,
tendons, muscles, joints and bones. Generally, targeted systemic (oral or IV) antibiotic
or anti-infective therapy is the primary approach for treating DFIs, but certain more
complex forms, such as osteomyelitis (inflammation of the bone), require surgical
debridement. Topical agents (such as silver preparations, antiseptics, bacteriophage
therapy and honey dressings) have been used (usually off-label) in many cases, but
these are typically adjunctive to the systemic treatments and thus not likely to be
used as a standalone therapy. R327G is well-differentiated from these topical agents
as it has distinct and multi-faceted mechanisms of action and is being advanced as a front-line standalone therapy.
Supportive R327G clinical data for DFIs and ABSSSI
The first material clinical evidence of R327’s potential efficacy as a treatment for
DFIs was data in early 2024 from Recce’s Phase I/II study assessing topical R327 in DFIs. This study met all
primary endpoints on five patients, providing proof-of-concept for topical R327 in
this indication. In the trial, patients with mild skin and soft tissue DFIs were treated
with topical R327, either daily or every second day, for 14 days. Recce reported that
the study’s independent safety committee confirmed the study achieved its primary
safety, tolerability and efficacy endpoints (including resolving or curing bacterial
DFIs). In 80% (four of five) of patients, R327G led to complete cure at the end of
the 14-day therapy period, and in all cases, at the midpoint of therapy (day seven),
a significant reduction of the infection was shown.
In February 2025, the company reported positive results from its open-label Phase II Australian study for R327G in the treatment of ABSSSI. ABSSSI comprise a broader range of indications
than the DFIs and burn wound infections assessed in prior topical R327 human trials.
The Phase II study was primarily conducted by Barwon Health, one of Australia’s largest comprehensive regional health services centres. The trial
was designed to assess R327G’s effectiveness and safety in treating a broad range
of ABSSSI indications, which, in addition to DFIs, can include necrotising fasciitis,
post-operative wound infections, simple abscesses, boils, cellulitis and others. In
the Phase II ABSSSI trial, R327G was applied once daily for seven days to the site
of infection, followed by safety and efficacy evaluations. A possible additional seven-day
R327G treatment period was considered at the investigator’s discretion if indicated,
with repeated safety and efficacy evaluations.
| Exhibit 2: Phase II ABSSSI study results |
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| Source: Recce Pharmaceuticals, September 2025 presentation |
The study achieved all primary and secondary efficacy endpoints and met plasma pharmacokinetics
(PK) expectations. After seven days of treatment, 86% of patients (25 of 29) treated
with R327G had a successful clinical response, and at 14 days of treatment, 93% (27
of 29) had achieved a primary efficacy endpoint. Clinical outcomes were assessed using
the Lipsky Clinical Resolution of Infection Scale and/or the Bates Jensen Wound Assessment Tool, both FDA-recognised measures. Importantly, R327G was reported to be safe and well tolerated, with no
serious adverse events. The study enrolled 30 patients in total, with one withdrawing
due to pre-existing pain at the wound site that was deemed unrelated to R327G.
The global ABSSSI market was valued by Fortune Business Insights at
US$12.5bn in 2024 and is projected to reach
US$25.7bn in 2032. Drug-resistant bacterial strains, particularly methicillin-resistant Staphylococcus aureus (MRSA), remain an area of particular concern in many skin and skin structure infections.
To our knowledge, no topical antibiotic has specific globally-recognised approval
for usage for the treatment of DFIs. Treatment guidelines from the International Working Group on the Diabetic Foot and the Infectious Diseases
Society of America indicate that currently available topical therapies or antibiotics
have limited effectiveness in the treatment of DFIs (and, as stated above, none has
regulatory approval for DFIs, as far as we are aware). Hence, we believe there is
an opportunity for a novel topical therapeutic such as R327G, as we expect a standalone
topical therapeutic option would be convenient for patients (given the relative ease
of drug administration), aid in treatment compliance, provide a concentrated dose
at the presumed site of interest and also lower the risk of systemic side effects
often associated with oral or IV antibiotics.
Australian Phase III on ABSSSI expected to start shortly
Recce expects to start a registrational Phase III ABSSSI study in Australia in Q4
CY25, although details (enrolment target, endpoints, duration) have not yet been made
public. The company also plans to submit an IND application with the US FDA in H1
CY26 for R327G, and we expect such clearance would enable Recce to either expand this
planned Phase III Australia ABSSSI R327G study to include US study sites or start
a separate US Phase III ABSSSI study. In either case, the company expects US clinical
trial sites to be assessing R327G in ABSSSI in CY26, and it plans a US New Drug Application
in this indication in CY27.
| Exhibit 3: Commercialisation pathway for R327G |
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Altogether, we continue to anticipate potential commercialisation for R327G in ABSSSI
in CY28 in the US and Australia. We believe the company’s near-term focus on advancing
the ABSSSI and DFI indications for R327G provides a clear path to future revenues.
Burn wounds R327G programme supported by US DoD grant
Recce is also advancing R327G for the treatment of burn wounds, and in early FY25
it received material external validation from the US Department of Defense (DoD),
which awarded the company a
US$2m grant. This funding is designed to accelerate development of R327G to treat acute burn
wound infections and prevent downstream complications such as sepsis or bacteraemia.
We believe the DoD’s intent would be for the development of an effective and rapidly
deployable product that can be used in military (eg combat) settings.
Recce was one of only three recipients and the only non-US entity to receive this
grant in the applicable funding round. The funding is being directed towards a series
of preclinical efficacy studies in rat and pig thermal wound infection models. Recce
in August 2025 reported positive R327G burn wound data in a preclinical rat infection model, where R327G’s performance against Methicillin-resistant
Staphylococcus aureus and Pseudomonas aeruginosa consistently outperformed soframycin, promoting significantly faster healing.
Recce had previously conducted a Phase I/II clinical trial for topical R327 in burn wound infections, sponsored by the West Australian health department and conducted at Fiona Stanley
Hospital; stage 1 of the study has been completed with positive safety and tolerability.
Clinical investigators are preparing a new protocol for the next clinical study stage,
which is expected to be a randomised trial in patients with infected burn wounds,
where R327G treatment will be compared to existing treatment standard of care.
Beyond the DoD collaboration for burn wounds, Recce in April 2025 entered into a separate Cooperative Research and Development Agreement (CRADA) with
the US Army Medical Research Institute of Infectious Diseases (USAMRIID) whereby the
USAMRIID will assess R327 against a panel of highly virulent pathogens of biodefence
concern under high biocontainment conditions. R327 will first be assessed in in vitro
infection models, which, if successful, will lead to further testing in small animal
models. Recce reported data on R327’s effectiveness on certain Category A and Category
B bioterrorism threats including Bacillus anthracis (anthrax) at the 2025 Military Health System Symposium in August 2025. Both DoD agreements (the burn wounds-directed grant and the CRADA with the USAMRIID)
reflect a validation of Recce’s technology platform and highlight the potential for
the technology to be deployed in military and civilian infection control settings.
IV R327 provides longer-term potential in sepsis and cUTIs
While R327G provides the clearest path to near-term commercialisation revenue and
pipeline de-risking, we continue to view the IV formulation as Recce’s strongest long-term
commercial R327 opportunity, specifically in the sepsis (and/or urosepsis) and cUTI
indications. The company in June 2024 reported it had completed the Phase I/II ‘rapid infusion’ study (trial ID ACTRN12623000448640
at anzctr.org.au) assessing the safety, tolerability and PK of IV R327 in healthy
volunteers. This Phase I/II rapid infusion study met all of its primary endpoints
and demonstrated significant antibacterial activity (please refer to our previous note for details).
The Centers for Discease Control and Prevention estimates that at least 1.7 million American adults develop sepsis annually, with
350,000 of them dying of the acute disease or being discharged to hospice (‘end of
life’) care. One in three people who die in a hospital have sepsis. The Sepsis Alliance reiterates that sepsis is the leading cause of death in US hospitals, and that timely
diagnosis and treatment are critical, as the risk of mortality from death increases
by 4–9% for every hour that treatment is delayed. Globally, sepsis results in over 11 million annual deaths worldwide.
Recce continues to plan a Phase II study of IV R327 in patients with cUTIs (including
urosepsis patients) that may include US study sites. Given that management’s near-term
priority is on the two Phase III R327G studies discussed above, and that its initial
R327 drug IND application (as discussed above) will focus on the topical (R327G) formulation,
we have pushed back our expectation for the commencement of this cUTI/urosepsis study
into Q4 CY26 (vs H1 CY26 previously). We expect the IND clearance of R327G (planned
for H1 CY26) will nonetheless inform development steps for the subsequent submission
(later in CY26) of a separate IND for the IV R327 formulation. As this IND will need
to be cleared by the FDA prior to the commencement of the Phase II IV R327 study,
we believe our new timing assumptions for the IV programme are sensible.
For conservatism, we now assume potential approval and commercialisation of IV R327
in sepsis and cUTI in CY30 (versus H2 CY29 previously). However, the company expects
that H2 CY29 commercialisation of IV R327 remains feasible and, hence, we may revisit
our assumptions once the relevant US IND has been cleared by the FDA and/or greater
clarity is provided by management on the expected data points and timelines for the
US-centric studies.
