Recce Pharmaceuticals Ltd (ASX:RCE, OTC:RECEF) has received a valuation of $A2.79 per share, according to a research report from Edison Investment Research.
The analyst believes that the company’s breakthroughs in IV R327, its novel anti-infective platform for sepsis, is the lead value driver in the A$497 million valuation.
Apart from sepsis, Reece is also assessing other infection indications, such as complicated urinary tract infections (UTIs), a spray-on formulation of R327 for burn wound infections, and a new study for diabetic foot infections which is expected to start shortly.
The company’s shares are currently trading at A$0.59 per share with a market cap of $105.17 million.
Following are excerpts from Edison Investment’s research report:
Broad-spectrum anti-resistant anti-infectives
Preclinical studies using lead candidate R327 have shown broad-spectrum activity against a wide range of gram-positive and gram-negative bacteria as well as COVID-19 and influenza.
R327’s lead indication is the treatment of sepsis and bacteremia (ie the presence of bacteria in circulating blood). Sepsis is the United States’ most expensive condition in the aggregate to treat in the hospital, costing the healthcare system US$57 billion in inpatient costs, according to a recent review in Critical Care Medicine.
This includes about 1.7 million sepsis cases in the US (49.8 million globally) and 270,000 deaths in the US (11 million globally).
Robust clinical program expected in CY23
Recce’s Phase I single ascending dose study in Australia of the IV formulation of lead candidate R327 in healthy volunteers showed favourable safety in dosing up to 6,000mg (in a one-hour infusion).
The company expects to start a multiple ascending dose study in H1 CY23, as well as a study in UTIs. A Phase I/II study in Australia of a spray-on topical R327 formulation is ongoing for the treatment of infected burn wounds, and Recce intends to start dosing in a Phase II study in H1 CY23 of the topical formulation in diabetic foot infections.
Valuation: A$497 million
We value Recce at A$497 million or A$2.79/share using a risk-adjusted NPV with a 12.5% discount rate, with IV R327 in sepsis being the lead value driver.
We believe the novel anti-infective platform has wide potential in several indications.
We note significant additional funding (modelled at A$220 million, including an estimated requirement of c A$20 million in H223) will be needed to advance R327 to the commercial stage, which we project in FY28, and ongoing profitability.