Recce’s Shares Plunged By Over 8% Following The A$1.8 Million Placement Update

Recce Pharmaceuticals Ltd (ASX:RCE) is an Australia-based biotech company which is pioneering the development along with the commercialisation of a new kind of synthetic antibiotics. It has a broad-spectrum activity which is designed to address the urgent global health problem of superbugs which is incurable through antibiotics. RECCE 327, Recce’s patented product, has been developed for the treatment of sepsis and blood infections.

Sepsis is a life-threatening illness which is derived from S. aureus and E. coli bacteria, including the superbug forms. Recce has performed and demonstrated positive results in Australia and overseas from the pre-clinical testing in animal models and laboratories. It has a manufacturing facility in Australia and now it is exploring for clinical research partners in the United States. Moreover, RCE has also developed an automated process ahead of first-in-human clinical trials.

Today, Recce has announced that it has successfully raised approx. A$1.8m (before costs) by issuing 12,857,143 fully paid ordinary shares to the sophisticated and institutional investors. The shares were issued at a price of A$0.14 per share. Recce will utilise the funds for further pre?clinical programs, general working capital and the repayment of loans by the Directors for A$200,000.

The placement will be completed utilising Recce’s existing capacity to issue 7,114,553 shares and 1,800,000 options under ASX Listing Rule 7.1, and 5,742,590 shares under ASX Listing Rule 7.1A.

Recce expects the funds raised under the placement would strengthen the balance sheet as it advances its new class of broad-spectrum antibiotic towards approval to start human clinical trials. It has received Qualified Infectious Disease Product designation from the US Food and Drug Administration under the Generating Antibiotics Initiative Now (GAIN) Act.

The lead manager of the placement was DJ Carmichael Pty Limited who received strong support from new and existing shareholders. He will be paid a fee of 6% of the total amount raised along with 1,800,000 unlisted options issued under ASX Listing Rule 7.1. These options will have an exercise price of a 20% premium to the issue price of the shares offered under the placement with an expiry date four years from issue.

Recce anticipates that the shares and fee options will be issued on or around 15 February 2019. All the placement will reportedly rank equally with all existing ordinary shares.

As per the founder and Chairman of Recce, Dr Graham, the company is encouraged by the substantial support for the capital raising. Mr Davide Bosio, the Managing Director and CEO of DJ Carmichael, also commented that they are pleased to have led Recce’s successful financing.

Looking at Recce Pharmaceuticals Limited’s stock performance, it has generated a negative return of 10.53% during the past six months. Recce’s securities were placed in a trading halt on 6 February 2019, pending the placement announcement. Today, the halt has been lifted, and it is currently trading at A$0.155 (at the close of the market on 08 February 2019) with a plunge of 8.824% in the price during the day’s performance. Currently, RCE has approx. 89.34 million shares outstanding with a market cap of circa A$15.19 million.

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