Recce Signs 10-Year MENA Deal to Sell Diabetic Foot Gel Across 84M Patient Market
Recce signs 10-year exclusive MENA licensing term sheet for R327G Topical Gel
Recce Pharmaceuticals (ASX: RCE) has signed a non-binding term sheet with a leading, publicly listed Middle Eastern pharmaceutical company for a 10-year exclusive licensing agreement covering the commercial sales and distribution of R327G Topical Gel for Diabetic Foot Infections (DFIs) across the MENA region. The proposed deal includes an upfront signing fee plus milestone payments totalling up to USD 3.5M (~AUD $5M), a 30% share of the net selling price, and a 6% annual royalty on net sales exceeding USD $50M per year. The parties are targeting completion of the definitive agreement next quarter.
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Understanding the commercial terms and what they mean for investors
What the deal structure looks like
The proposed agreement establishes a three-layer revenue structure for Recce, providing exposure to both upfront capital and ongoing commercial performance across the licensed territories.
The key financial terms are:
- Upfront signing fee plus milestone payments: totalling up to USD 3.5M (~AUD $5M)
- 30% of the net selling price per treatment, based on a proposed selling price of USD $1,500 per treatment, subject to agreement with the KSA Regulatory Authority
- Additional 6% annual royalty on net sales exceeding USD $50M per year
Recce retains responsibility for the manufacture and supply of R327G under the proposed agreement. The licensed territories span ten markets across the MENA region.
| Term | Detail | Value / Rate | Trigger | Notes |
|---|---|---|---|---|
| Upfront & Milestones | Signing fee plus milestone payments | Up to USD $3.5M (~AUD $5M) | Agreement execution and defined milestones | Non-binding term sheet; subject to finalisation |
| Net Selling Price Share | 30% of net selling price per treatment | 30% of USD $1,500 proposed price | Per unit sold | Subject to KSA Regulatory Authority agreement on price |
| Annual Royalty | 6% royalty on annual net sales | 6% per annum | Net sales exceeding USD $50M/year | Threshold-based; activates at scale |
| Agreement Duration | 10-year exclusive licence | 10 years | Execution of definitive agreement | Targeting completion next quarter |
| Licensed Territories | KSA, UAE, Kuwait, Oman, Bahrain, Qatar, Iraq, Egypt, Algeria, Morocco | 10 MENA markets | Upon execution | Recce responsible for manufacture and supply |
Why the Licensee is a strategic fit
The Licensee is a publicly listed MENA pharmaceutical company with an established portfolio spanning dermatology, endocrinology, and infectious diseases. Its existing regional distribution infrastructure, covering over 30 international markets, positions it to accelerate the adoption and distribution of R327G across key MENA markets.
The Licensee’s combination of therapeutic expertise and established market access is a meaningful commercialisation enabler for Recce, removing the need to build out a regional sales and distribution capability independently.
Why MENA is one of the world’s most critical diabetes markets
Diabetic Foot Infections are serious bacterial infections that develop in the feet of people living with diabetes. Poor circulation and nerve damage associated with diabetes make these infections difficult to heal, and they frequently involve bacteria that have developed resistance to conventional antibiotics, a problem known as antimicrobial resistance (AMR). AMR occurs when bacteria evolve to survive antibiotic treatment, making infections harder and costlier to manage.
The scale of the diabetes burden in the MENA region underscores the commercial opportunity:
- 84 million people are living with diabetes across the MENA region
- 17.6% diabetes prevalence across the region
- Saudi Arabia: adult diabetes prevalence of 23.1%, equating to 5.3 million diabetics
- Saudi Arabia ranks in the top 10 countries globally for diabetes prevalence in adults aged 20–79
This creates a large addressable patient population with high unmet clinical need. There is currently no existing synthetic anti-infective solution on the market for DFIs in the region, meaning R327G, if approved, would enter a market with no direct synthetic-class competitor.
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Clinical pathway and next steps
How existing Phase 3 data supports MENA registration
Recce’s ongoing Phase 3 Registrational Clinical Trial, currently underway in Indonesia, is expected to generate the data package required to support a regulatory submission in KSA. The trial is enrolling 310 DFI patients randomised to receive either R327G or placebo.
A key interim data readout is expected following enrolment of 155 patients, which the company has described as an approvable interim milestone. Subject to the outcome of the Phase 3 trial, no additional clinical trials are anticipated to be required for a marketing authorisation application in KSA. Commercial approval is anticipated by year end.
What comes next
The definitive licensing agreement is targeted for completion next quarter, subject to ongoing negotiations, due diligence by the Licensee, final agreement, and customary approvals. The near-term milestone sequence is as follows:
- Finalise and execute the definitive licensing agreement (next quarter target)
- Interim Phase 3 data readout at 155 patients
- KSA regulatory submission using Indonesian Phase 3 trial data
- Anticipated commercial approval by year end
CEO James Graham
“This is a major milestone in the development and commercialisation of Recce’s anti-infective platform. The proposed establishment of marketing and distribution channels for R327G across the MENA region highlights the growing demand for novel, innovative, and groundbreaking treatments for addressing antimicrobial resistance. This term sheet represents a positive step in the commercialisation pathway of Recce’s innovative pipeline as a next-generation solution for addressing the infectious disease challenges associated with the global pandemic of diabetes.”
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