Recce and Arrotex sign exclusive R327G licence for diabetic foot infections
Recce Pharmaceuticals (ASX: RCE) has signed an exclusive license and commercialization agreement with Arrotex Pharmaceuticals Pty Ltd (Arrotex) for RECCE® 327 topical gel (R327G) in Australia and New Zealand. The agreement covers the treatment of diabetic foot infections (DFIs) and was announced on 22 October 2026.
The deal is a binding agreement that is not subject to any conditions precedent. Arrotex is described in the announcement as Australia’s largest and most diversified pharmaceutical company.
Recce will receive a “significant profit share of gross margin” from product sales. The percentage is not disclosed, and the agreement includes no upfront or milestone payments, so Recce’s returns are tied to future sales.
James Graham, Managing Director and Chief Executive Officer, Recce Pharmaceuticals
“This agreement brings together Recce’s anti-infective development platform and Arrotex’s established regulatory, market access and commercial capabilities in Australia and New Zealand…”
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Key terms: how the Recce and Arrotex deal works
Commercial structure
Arrotex obtains exclusive commercialisation rights for R327G in Australia and New Zealand (the Territory). Recce remains the exclusive manufacturer and supplier.
Product is supplied at Recce’s cost plus margin, which is credited against Recce’s profit share. The profit share is calculated on gross margin (net sales less Recce’s cost of goods) on Arrotex’s sales in the Territory, and is paid quarterly.
Arrotex bears all costs of commercialisation in the Territory. These include Australian and New Zealand regulatory filings, PBS and Pharmac submissions, and sales and marketing. Recce continues to fund global clinical development, manufacturing and regulatory filings outside the Territory.
Recce’s earlier non-binding MENA licensing term sheet for ten markets proposed up to USD $3.5 million in milestone payments plus a 30% share of net selling price, a structure that contrasts with the Arrotex deal’s absence of upfront payments.
Terms at a glance
| Term | Detail |
|---|---|
| Status | Binding agreement that is not subject to any conditions precedent |
| Licensed product | RECCE® 327 topical gel (R327G) for the treatment in humans of diabetic foot infection (DFI) and acute bacterial skin and skin structure infection (ABSSSI) |
| Territory | Australia and New Zealand |
| Upfront and milestone payments | **None** |
| Term | Until the later of expiry of the last licensed Recce patent covering R327G in the Territory and **10 years** after first commercial sale in Australia, then from year to year unless either party gives **12 months’** notice |
Rights Recce retains
Recce retains the following rights under the agreement:
- Ownership of all intellectual property
- All rights outside the Territory and outside human pharmaceutical use
- The right to conduct clinical trials in the Territory
- Exclusivity applies to any presentation of RECCE® 327, as Recce will not appoint another commercial partner in the Territory. New presentations, such as intravenous or inhaled formulations, are subject to good faith negotiation and, if terms are not agreed within 90 days, a right of first refusal in favour of Arrotex
Understanding diabetic foot infections and the opportunity
Diabetic foot infections are bacterial infections involving the skin, soft tissue or bone of the foot in people with diabetes. They commonly develop in association with diabetes-related foot ulcers.
They can be difficult to treat because of impaired circulation, neuropathy (nerve damage) and antimicrobial resistance, where bacteria no longer respond to standard antibiotics. If not effectively managed, DFIs may lead to hospitalisation, surgery or amputation.
In Australia, approximately 50,000 people are estimated to be living with a diabetes-related foot ulcer, with about 300,000 more considered at risk. For investors, this describes the patient population relevant to a partner that is funding all local commercialisation costs. The announcement does not provide market size or revenue estimates.
RECCE® 327 (R327) is a synthetic anti-infective being developed for serious and potentially life-threatening infections caused by Gram-positive and Gram-negative bacteria, including antibiotic-resistant pathogens. R327G, the topical gel formulation, is currently in registrational Phase 3 clinical development for diabetic foot infections in Australia and Indonesia.
For readers wanting to see how the pivotal study is structured, our detailed coverage of the Phase 3 trial amendment explains the active-controlled arm, the 208-patient design and the interim analysis trigger at 104 participants.
What the agreement means for investors and what comes next
Investment significance
Recce gains a commercial partner in the Territory, with Arrotex bearing all local commercialisation costs. Recce retains ownership of all intellectual property and remains the exclusive manufacturer and supplier.
Dr Melinda Munns, Chief Medical Officer of Arrotex, commented on the partnership:
Dr Melinda Munns, Chief Medical Officer, Arrotex Pharmaceuticals
“We are pleased to partner with Recce to help advance a potential new treatment for diabetic foot infections in Australia and New Zealand…”
Regulatory pathway and conditions
The agreement sets out the following regulatory and termination provisions:
- Arrotex is only required to apply for TGA approval after R327G is approved by the US Food and Drug Administration, the European Medicines Agency or another regulator recognised by the TGA as a comparable overseas regulator.
- Arrotex may terminate without penalty if Recce discontinues its FDA or EMA regulatory pathway for R327G.
- Recce may terminate, or make the licence non-exclusive, if Arrotex fails to apply for approval or launch within the required timeframes.
The announcement states that R327 remains investigational and has not been approved for commercial use in Australia, New Zealand or the United States. Any future availability in Australia or New Zealand is subject to successful completion of clinical development and applicable regulatory approvals.
No launch dates, revenue forecasts or profit share percentages are disclosed. Progress in the registrational Phase 3 programme and the associated regulatory milestones are the next developments to watch.
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