CRADA with USAISR (2/2/26)
Recce has announced an expansion of it’s work with the DoD (now Dept of War…), having previously received a US$2.2m grant (Announced 8Apr24 and further details on 15Jul24). The Cooperative Research and Development Agreement (CRADA) is with the United States Army Institute of Surgical Research (USAISR) and will see R327G validation testing using the USAISR’s Walker-Mason rat model of burn wound infections.
The direction seems to be to develop R327G into an amorphous gel wound dressing that would be available in military field kits and for use in clinical and post-operative care. Details are scant with no timelines and no funding is mentioned.
Given most of the work being done with the DoD/DoW is classified, we are unlikely to get much of a clue until cheques start being written. The work was discussed at the AGM, but in the context that they couldn’t provide any details, but provided a positive impression of both the effectiveness of R327G and the scope of the conditions it was being tested in.
A positive announcement that will likely help the price near term, also supportive of the investment thesis in that things seem to be on track.
Disc: I own RL+SM
4C Q2 FY26 (30/1/26)
I feel like RCE needed to borrow from the cover of the Hitchhikers Guide to the Galaxy and have the words “Don’t Panic” in large, friendly letters at the start before investors raced to the cash balance (only $425k). The subsequent receipt of A$5.4m and another $3.5m expected later this quarter in R&D grants was buried on page 4 and tells investors more about the current cash position of the business than the 4C, and the reason not to panic.
The operational update for the quarter mostly repeated announcements I have already covered:
Also, the awarding of a Hong Kong patent for Recce Anti-infectives (to 2041) that I didn’t bother writing about and the sad passing of Dr Graham Melrose the inventor of the technology platform, vale Dr Melrose.
The funds available are being focused on the Phase 3 clinical trial in Indonesia for R327 Topical Gel (R327G) and U.S. Department of Defense Burn Wound Program. “With these initiatives advancing in parallel, Recce is actively pursuing regulatory, partnering, and potential market entry opportunities aimed at unlocking near‑term shareholder value.”
Which has been the plan for quite a while now, so no new information but it must be recognised that solid progress and milestones were reached last quarter. I wouldn’t hold your breath but it’s starting to look more like a case of when not if they commercialise or get a buyout offer.
Disc: I own RL+SM
A$5.3m R&D Rebate Received (14/1/26)
Today RCE announced it has received A$5,339,202 in R&D rebates from the Australian Government relating to FY25 and has submitted and expects to receive an additional A$3.0m from further lodgments. I agree it’s market sensitive as marked given they only had A$3.2m cash at the end of the September quarter.
The 4C is due at the end of the month, so we will see how they are traveling for cash, but as of the July 4C they had A$39.6m in funding available:
The A$10.5m cash at the end of the quarter was welcome, but the cash runway is dominated by the additional ~A$19m available in the debt facility and ~A$8.5m in R&D rebates expected in November to give a cash runway of ~A$39.6m is a great place to be in, but old news. [31/7/25]
So this A$5.3m plus the additional A$3.0m is the ~A$8.5m in R&D rebates flagged. Later than anticipated and slightly smaller. They will have burnt most of that A$10.5m cash on hand, so we are looking at around ~A$27.3m (19+8.3) of financing and cash currently available going forward.
Excluding R&D they are burning around A$2m a quarter so they should have around A$20m available for R&D over the next year. A strong runway given R&D spend will mostly be eligible for the 43.5% rebate and make up most of the spending over the next year.
James Graham (CEO) has a pathological (and financial) objection to capital raising, so I expect they will run cash as tight as possible and only do a relatively small cap raise if/when needed.
Disc: I own RL+SM
A$85m Advanced Overseas R&D Finding (16/12/25)
Today RCE announced it has been awarded an Advanced Overseas R&D Finding from AusIndustry for up to A$85m over the next 3 years. In December 2023 they announced a $43.8m finding, which at the time was the largest or one of the largest ever issued.
Note this is not a grant and the rebates available through it are subject to R&D spend in line with the terms being conducted for up to 43.5% of that spending being received as a rebate.
Despite not being upfront cash there are several good take aways (similar to those for the first such finding):
1. RCE is able to claim rebates for R&D spending overseas, not just in Australia which is very important given the DFI Indonesian Phase 3 research but also important for the ABSSSI Phase 3 in Australia because some work to get FDA approval is likely to occur overseas. Hence all this is notionally 43.5% cheaper to do now.
2. Overseas research may also attracted similar rebates or support in the jurisdiction being conducted (as occurred in Canada), so it allows for some double dipping, further lowing the cost of research.
3. Confidence in the form of Government support continues to be very strong in supporting RCE and this assists with the international links required to get R327 globally approved and commercialised.
4. Financing for further research will be easier in the form of R&D rebate advances, reducing the reliance on capital raises and delaying them until value inflection events occur, allowing raising at higher prices and lowering dilution (something James hates).
It is good news, but also a sober reminder that more capital is needed. RCE probably has enough to complete DFI Phase 3 in Indonesia and get to an initial data readout for ABSSSI Phase 3 in Australia, but commercialising these and exploiting the rest of the pipeline for R327 (including DoD work) is going to take more money. When they do raise I hope they continue to offer a SPP so I have the option to participate.
Disc: I own RL+SM