Pinned straw:
Initial details and thoughts on the capital raise (deeper look later in the week/weekend):
Details summary:
- Offer closes 31 July.
- Total A$10m: A$8.0 million institutional placement and A$2.0 million SPP
- Offer Price of A$0.45 (Offer Price), a 25% discount to last close $0.60
- Funds raised under the Offer will see Recce through to the completion of Phase II/III trials and potential for commercialisation in South East Asia with immediate catalysts to announce to market
- $27m cash position post raise (including non-dilutive funding pending) to fund RCE to FY26. Note debt of $9m for R&D rebate advances should be offset from this, but there will also be a lot more R&D rebates generated as the cash balance is spent (so mostly net out).
Initial Thoughts:
· SPP is standard ($30k per shareholder, may extend offer if over sub)
· 25% Raise discount: more than anyone ever wants but reasonable given market and being a biotech. Confident management are not giving things away and have a keen eye on dilution which is only ~15%.
· Use of Funds: all value increasing activities and most of it should attract R&D rebates and or additional grants, so a multiplier on shareholder funds.
· Balance sheet: Is now very strong and allows them to go hard on accelerating the key programs. I like that they are playing it safe on the cash runway.
· Participate: I will most likely participate, I was holding off some of the funds I wanted to invest in RCE for the next capital raise, just thought it would be another 6mths away.
· Addition of new institutional shareholders and increased liquidity is generally a positive.
I will have a much closer look later in the week or on the weekend, most info is old, but the planned program over the next year is new and needs a closer look.
Disc: I own RL+SM
Recce has launched a $15.8m capital raise to fund ABSSSI Phase 3 trials in Australia and Phase 3 DFI Registrational Topical Clinical Trials in Indonesia. I thought we may get this in March, but it seems to have taken a while to line up the first $5m commitment from an Australian private investor (good result in this market). $10.8m is being raised by a non-renounceable entitlement offer to existing shareholders, with a shortfall facility enabling investors to take up more than their entitlement, so may end up getting a reasonable amount of the $10.8m, but it will be a tough slog in this market.
They are expecting another $8.5m in R&D tax rebates and to be able to borrow $10m against future R&D tax rebates to also help fund the Phase 3 trials.
So they may end up with $36m (pre costs) in the bank and are seemingly on track for some revenues in 2026 from Indonesia.
The pain point is the $0.28 raise price, but as much as the dilution hurts, it’s a small price to pay to move forward into Phase 3. Their share price has had a lot of pressure from US issues in the current market as all Biotech’s have had and the Opthea result I sure hasn’t helped confidence for Australian late stage Biotech investors.
Entitlement closes 5th of May, so I expect the share price will revolve around the 28c offer price in the meantime. Hopefully they have some positive news to share before then to support the raise.
Disc: I own RL+SM