Small Cap Healthcare Stock on A Tear as two leading candidates are tested against SARS-CoV-2

  • Aug 07, 2020 AEST
  • Team Kalkine
Small Cap Healthcare Stock on A Tear as two leading candidates are tested against SARS-CoV-2

A small cap healthcare company, whose stock has zoomed up 7x since the March lows, has embarked upon the race to undertake initial study of its drug candidates RECCE® 327 and RECCE® 529. The company’s two leading candidates are being tested against SARS-CoV-2, the causative agent of COVID-19. 

RECCE® 327, the patented lead candidate has been chosen for a SARS-CoV-2 Antiviral Screening Program conducted by CSIRO and The Peter Doherty Institute for Infection and Immunology (Doherty Institute). Further, RECCE® 327 and RECCE® 529 are to be tested against SARS-CoV-2 in an international study led by Path BioAnalytics undertaken in a laboratory at a leading academic institution in the U.S.

ASX Listing

Founded in 2007, Recce Pharmaceuticals develops and commercialises new classes of Synthetic Anti-Infectives indicated for antibiotic resistant superbugs and emerging viral pathogens. 

RCE got listed on ASX in January 2016 and raised $5.0 million from IPO. The company recorded its all-time high on 16 July 2020 at $1.520 and is currently trading at $1.325 with a market capitalization of $194 million.

Banking on Innovative Product Pipeline

RCE operates as a drug manufacturer and marketer focused on treating a wider range of bacteria and viruses. The company has three candidates in its pipeline RECCE® 327, RECCE® 529, and RECCE® 435.

  • RECCE® 327 is its lead candidate product which is currently in Phase 1 trial indicated for Sepsis. The antibody is meant to treat bacterial infections.
  • Other product candidates, RECCE® 529, and RECCE® 435, are currently at pre-clinical stages
  • RECCE® 327 and RECCE® 529 to be tested against SARS-CoV-2 in an international study led by Path BioAnalytics and conducted in a laboratory at a leading academic institution in the U.S.

Image Source: Company’s Report

The company has made considerable capital expenditure to scale up its infrastructure and manufacturing capabilities to manufacture RECCE products at mass scale including supporting planned Phase I and II human clinical trials

The company is on the quest to achieve technical leadership by protecting its product portfolio and manufacturing by securing wholly owned patents and intellectual property encompassing composition of matter, therapeutic applications, and manufacturing.

The company uses inexpensive raw materials that are abundantly available to scale up manufacturing cost-effectively.

Cash Position

RCE boasts of a strong cash position. The Company ended the quarter with a cash balance of $2.6 million.

Cash outflows from operations were $4.12 million with investment in research and development recorded at $3.6 million, the primary source of expenditure with staff costs and administration and corporate costs at $0.35 million and $1.25 million respectively. The Company currently has no long term debt.

COVID-19 -A Battle to be Collectively Won 

Australia is experiencing the second wave of coronavirus with 464 new cases reported in last 23 hours 7,942 estimated active cases with around 632 hospitalized (as on 7 Aug 2020). Unless a proven medical treatment option is available, the situation is expected to remain grave.

Companies that have any semblance to fight COVID-19 and help the global community cross the bridge are closely tracked by the stock market participants. RCE’s products RECCE®327 and RECCE® 529 have gained attention as the company is undertaking initial study to identify any potential therapeutic effect against SARS-CoV-2, the virus responsible for ‘COVID-19’ disease. 

Deep-diving on Product Candidates

RECCE® 529

RECCE® 529 is being developed to treat viral infections. The company recently launched a new RECCE® 529 antiviral compound with patent lodged to exhibit higher efficacy in treating Viral cells. The compound has been dispatched to the USA for an international COVID-19 study by Path BioAnalytics. The patent, if secured, will be valied untill 2040.

  • The COVID-19 pandemic with no proven vaccine or therapeutics available, has created a potential market for the RECCE® 529 candidate, which is indicated for treating Viral infections. Company is conducting initial studies of RECCE® 529 to identify any potential therapeutic effect against SARS-CoV-2, the virus causing ‘COVID-19’ disease.

 

RECCE®327

The lead candidate RECCE®327 is an abroad-spectrum antibiotic formulated using synthetic polymer technology to treat bacterial sepsis (blood poisoning) and other bacterial infections, including superbugs. Key differentiators of the leading candidate are

  • RECCE® 327 is well posited to treat Sepsis, with 48.9 million incident cases of sepsis getting recorded globally and one in three patients are dying in hospital because of sepsis. According to the investor report, there are no drugs therapies currently available specifically for treating sepsis, a life-threatening inflammatory response to infection that has spread in the body. Sepsis treatment has been the most expensive one in the last 8 years.
  • Additionally, RECCE® 327 has been given rights to be used in Australia as a last resort for patients with sepsis under the Therapeutic Goods Administration (TGA) Special Access Scheme – Category A.

RECCE® 327 has received the Qualified Infectious Disease Product (QIDP) designation under the Generating Antibiotic Initiatives Now (GAIN) Act by The U.S Food and Drug Administration (FDA) has awarded. 

The QIDP designation fast tracks RECCE® 327 through the FDA regulatory review process so it can be available to treat patients with serious or life-threatening conditions sooner.

RECCE® 327 has received 10 years of market exclusivity (post approval).

Recce’s patent portfolio includes more than 15 issued patents and patent applications in the world’s major markets, including the United States, Europe, Japan, China and Australia.

After repetitive use, the commercial antibiotic loses activity; however, RECCE® 327 does not lose effectiveness even after 25 repeats

RECCE® 327 has been chosen for a SARS-CoV-2 Antiviral Screening Program conducted by CSIRO and The Peter Doherty Institute for Infection and Immunology (Doherty Institute).

Key Differentiators of RECCE® 327

Image Source: Company’s Report

Current achievements and updates on RECCE® 327

  • RCE has highlighted that it has executed Phase I Human Intra-Venous Clinical Trial Agreement on a Phase I Human Clinical Trial with PAREXEL, a leading clinical research organisation, for assessing the safety and tolerability of intravenous infusion of RECCE® 327 in 40 healthy subjects. The company further communicates that the Australian trial is on track and first patients are expected to be dosed in the H2 CY20.
  • RCE has presented the Phase I/II topical efficacy study application for treating burn wound infections to West Australian (WA) Human Trial Ethics Committee. The study revealed superior wound healing (closure) along with repeated efficacy against topical pathogens and superbugs when different dosing levels were administered.  RCE is waiting upon the decision from West Australian Department of Health Human Ethics Trial Committee.
  • RCE announced positive efficacy data at a preclinical study evaluating RECCE® 327 against Neisserie gonorrhoeae bacteria in mice.
  • An independent anti-viral study evaluating RECCE® 327 against Influenza A respiratory virus Infection revealed that the anti-bacterial drug led to a drastic reduction in viral load in the lungs of mice indicating RECCE® 327 capable of treating both bacterial cells and enveloped viruses

RECCE® 435

RCE has revealed positive oral data on New RECCE® 435 against Helicobacter pylori (H. pylori) bacteria isolated from a patient with a duodenal ulcer compared to control vehicle in independent study model in rats against Helicobacter Pylori in Animal Model. The company is in discussion with world leading H. pylori experts to assess commercial pathway.

Bottomline

RCE has promising drug candidates in its product pipeline and has established a manufacturing process that can facilitate quick production as soon as commercialization phase is reached. The company is focusing on bacterial infections and two lead are tested for Sars-COV-2, pulling the market participants interest towards this stock. However, caution is called for as these studies are still in the preliminary stage.

 


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