Annual
Report
2024
ASX: RCE, FSE: R9Q
is developing a New Class of Synthetic Anti-
Infectives designed to address the urgent global
health problems of antibiotic-resistant superbugs
and emerging viral pathogens.
Recce’s anti-infective pipeline includes three
patented, broad-spectrum, synthetic polymer anti-
infectives: RECCE® 327 (R327) as an intravenous
and topical therapy that is being developed for the
treatment of serious and potentially life-threatening
infections due to Gram-positive and Gram-negative
bacteria, including their superbug forms; This lead
asset is currently undergoing multiple clinical studies.
RECCE® 435 (R435) as an orally administered therapy
for bacterial infections; and RECCE® 529 (R529)
for viral infections. Through their multi-layered
mechanisms of action, Recce’s anti-infectives have
the potential to overcome the processes utilised by
bacteria to overcome resistance – a current challenge
facing existing antibiotics.
The World Health Organization (WHO) added R327,
R435, and R529 to its list of antibacterial products
in clinical development for priority pathogens,
recognising Recce’s efforts to combat antimicrobial
resistance. The Food and Drug Administration
(FDA) has rewarded R327 Qualified Infectious
Disease Product designation under the Generating
Antibiotic Initiatives Now (GAIN) Act, providing
Fast Track Designation and 10 years of market
exclusivity post approval. R327 is also included on
The Pew Charitable Trusts’ Global New Antibiotics in
Development Pipeline as the sole synthetic polymer
and sepsis drug candidate in development.
Recce wholly owns the automated manufacturing of
its active, supporting current clinical trials. Recce’s
anti-infective pipeline aims to address synergistic,
unmet medical needs by leveraging its unique
technologies.
Recce Pharmaceuticals Ltd
(ASX: RCE, FSE: R9Q)
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Contents
2 Business Highlights
4 Letter from Chairman
6 Letter from CEO
8 Overview of Company Activities
10 Intravenous Programs
11 Topical Programs
14 Pre-clinical
16 Conference Engagement
18 Board of Directors and Key Management Personnel
19 Financial Report
79 Corporate Directory
2
Listed below are the main corporate developments
for the Financial Year (FY24) ending 30 June 2024.
Business Highlights
Commercial and Operational
RECCE® 327 (R327) added to the World Health
Organization’s list of Antibacterial Products in
Clinical Development
Delivered the Opening R&D Address at the World
Antimicrobial Resistance (AMR) Congress 2023
Presented abstracts at the Military Health System
Research Symposium (MHSRS) 2023 and American
Society for Clinical Pharmacology & Therapeutics
(ASPCT) 2024
Received a total of A$11.17m from R&D Rebate
Advance Payments
Secured Capital Raise of up to ~A$12.4m (Q3 CY23)
Australian Government awarded AUD $54,947,284
Advanced Overseas Finding across Recce infectious
disease portfolio
Established strategic partnership in South-East Asia
to accelerate clinical anti-infective portfolio
New Family 4 patent granted for RECCE® Anti-Infectives
in Australia, Canada and Israel
New Family 2 patent granted for RECCE® Anti-Infectives
in China
RECCE® Trademark registered in Vietnam and Canada
Completed the production of 5,000 manufactured R327
doses per week, under GMP for each campaign
Regulatory
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Clinical and Pre-Clinical
Urinary Tract Infection (UTI)/Urosepsis
•
Completed Phase I intravenous (I.V.) clinical trial of R327 in 80 human subjects
(60 received R327, 20 placebo) and reported positive independently verified results
•
Completed Phase I/II UTI/Urosepsis Rapid Infusion Trial and reported positive efficacy
data from the urine of dosed participants
•
Dosed five cohorts across various infusion times (15, 20, 30 and 45 minutes)
at 2,500-4,000 mg of R327
•
R327 was shown to be safe and well-tolerated in healthy participants
Acute Bacterial Skin and Skin Structure Infections (ABSSSI)
•
Received Human Research Ethics Committee (HREC) approval received to commence a
Phase II clinical trial assessing R327 as a topical, broad-spectrum gel applied to
patients with ABSSSIs
Diabetic Foot Infections (DFI)
•
Reported positive human efficacy data from Phase I/II trial evaluating R327 Gel (R327G)
in patients with DFIs and expanded trial to additional domestic and international sites
Burn Wound Infections
•
Completed a Stage 1 data analysis in Phase I/II trial of R327 in patients with burn wound
infections
•
Received US$2 million (approx. A$3 million) in grant funding from the U.S. Department
of Defense for Recce’s burn wound program
Pre-Clinical
•
Reported positive pre-clinical results of R327 against Neisseria gonorrhoeae, Escherichia coli
and Mycobacterium abscessus lung infections
•
Recce to continue its strategic partnership with Murdoch Children’s Research Institute
(MCRI)
Therapeutic Goods Administration (TGA) Special Access Scheme
•
Dosed five (5) patients experiencing complex, resistant infections – surgery/amputation
was averted, and wound healing was observed across all patients
•
Reported positive results from patients with patients suffering antibiotic-resistant
Gram-positive and Gram-negative bacterial infections, treated with treated with R327G
under the TGA Special Access Scheme – Category A
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Letter from the
Chairman
Dear Shareholders,
We are pleased to present Recce Pharmaceuticals’ annual report
for the year ended 30 June 2024. The year has been marked by
significant achievements and progress in Recce’s research and
clinical development programs, manufacturing capabilities and
human resources. One of the most gratifying highlights was the
recognition of one of Recce’s research and development programs
by the United States Government Department of Defense that
awarded the Company a US$2 million grant to study burn
wound infections.
Clinical progress
It is important to bring attention that the threat of antibiotic
resistance continues to grow at alarming rates with recalcitrant
infections continuing to rise dramatically in certain regions of
the world. Addressing this crisis requires a multifaceted, global
approach. Recce firmly believes the need for a paradigm shift in
the approach to new antimicrobial treatments. Our novel synthetic
anti-infective platform represents a potential critical advance in this
ongoing silent battle.
To this end, we are working diligently to advance the clinical
development of our synthetic anti-infective compounds highlighted
this year by impressive initial safety and efficacy data. Recce has
made significant strides in the clinical and commercial development
of its lead candidate, RECCE® 327 (R327). The completion of our
Phase I/II rapid infusion trial and subsequent release of safety and
efficacy data was a major company milestone achieved this period.
These results from the first new class of antibiotic in the past
40 years underscore the potential of our approach and the
opportunity for our assets to transform public health and medical
practice is significant.
As the only new class of antibiotic in the
past 40 years, the opportunity for our
assets to transform public health and
medical practice is significant.
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The release of this data generated global interest from medical opinion leaders with the team continuing to
capitalise on this interest as Recce prepares to initiate a number of late-stage clinical trials.
The Company also released five patient case studies, with R327G treating patients suffering from life threatening
infections. This was conducted through the Therapeutic Goods Associations (TGA) Special Access Scheme -
Category A. The scheme gives qualified medical practitioners use of unapproved antibiotic treatments for
complex life-threatening infections not responding to existing treatments.
Further global recognition of our technology’s unique potential came with the World Health Organization (WHO)
citing Recce in its yearly report on Antibacterial Products in Clinical Development. R327 has been defined by the
WHO as an adenosine triphosphate (ATP) production disruptor and is the only compound under this category.
The WHO has classified Recce’s anti-infective compounds as critical to helping combat one of the most urgent
public health challenges of our time. The UK Government Innovation Agency’s AMR Mission 2024 also recognised
Recce’s significant contributions to antimicrobial resistance research and development (R&D).
We approach our work with a sense of urgency, knowing the importance of the task. By leveraging novel
mechanisms of action, overcoming existing resistance pathways, enhancing efficacy, expanding the treatment
arsenal and enabling scalable production, Recce’s revolutionary synthetic antibiotics and applications provide a
multifaceted approach to addressing the problem.
Manufacturing foundations for growth
In 2023 Recce’s manufacturing team demonstrated the ability to manufacture 5,000 doses of R327 per week
under Good Manufacturing Practice (GMP). This marks a first for Recce’s full-spectrum manufacturing capability
including demonstrating the versatile, reproducible nature of its patented manufacturing process. In the coming
year, our expanded manufacturing capabilities will be able to match the output required to supply our present and
anticipated clinical trials ahead.
Our people and future prospects
The calibre of talent at Recce is impressive. As the business continues to deliver results, we are able to attract more
specialists in the field with the experience to help take the company through its next phase of growth.
The coming year is shaping up to be another significant one for Recce. We have a clear plan, an exciting clinical
pipeline, a strong balance sheet and a team of dedicated professionals with the skills, experience and motivation to
make a global impact.
Finally, and most importantly, I want to thank all our shareholders, our clinical and business partners, and our
growing dedicated team for their unwavering support and commitment to this exciting challenge. This collective
commitment gives us the best possible chance of ensuring our future successes.
Sincerely,
Dr John Prendergast
Executive Chairman
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Letter from the
CEO
I am pleased to present the commercial initiatives undertaken
by Recce in FY24. To support our clinical progress, the Company
has materially strengthened its financial, commercial, intellectual
property and global strategic partnerships in response to the clinical
advancements made over the financial year.
Funding and financial support
The Company’s commitment to fiscal responsibility is evident with
sufficient capital to fund priority pipeline opportunities.
Managing Recce’s funding needs is a critical function and during
the reporting period our active focus was on securing capital to
progress clinical milestones where Recce has a clear competitive
advantage.
Government grants and strategic partnerships also provide Recce
with non-dilutive capital to fund its programs. Supporting that,
Recce received an Advanced Overseas Finding of A$54.94m across
the infectious disease portfolio from the Australian Government,
extending our R&D rebates from locally, to globally and assuring
the rebate status to support our research and development costs.
It is one of the largest awarded in Australian history as a pillar of
the R&D Tax Incentive Program administered by the Australian
Government.
A new initiative was established with Sydney-based Endpoints
Capital, which provided the business with an advance payment
of A$11.17m against R&D refunds.
An overseas R&D rebate of A$98,428 from the Canadian
Government was received to support research and development
along with US$2m (approx. A$3m) from the US Department of
Defense (Army) to facilitate the development of our burn
wound program.
Intellectual property is crucial for early-
stage medical innovators with a global
focus like Recce. The Company’s extensive
and robust intellectual property portfolio
underlines the value of its assets and
potential future success.
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
The Company has a clear vision for the future and the capital raise of A$12.4m completed in Q3 CY23 has provided
the funding to implement the next phase of clinical development for Recce’s clinical pipeline.
Recce’s ability to raise the required capital is a direct result of extensive market engagement and investor outreach
efforts throughout the year. Investors and our existing shareholders have been proven to understand the Company,
its growth strategy and commercial potential.
Intellectual property and recognition
Intellectual property is crucial for early-stage medical innovators with a global focus like Recce. Recce is the 100%
owner of >40 granted patents among an extensive and robust intellectual property portfolio, underlining the value
of its assets and potential future success.
During the reporting period Recce furthered its patent estate, through the grant of patents in Australia, Israel,
Canada (Family 4), and China (Family 2) for its anti-infective drugs, significantly strengthening its position in these
major markets.
Strategic partnerships and collaborations
Recce has been commercially active in terms of collaborations and partnerships with leading firms in the
biopharmaceutical and drug manufacturing fields.
One of the most significant strategic partnerships developed this year was our collaboration and signed
Memorandum of Understanding (MoU) with Indonesia’s PT Etana Biotechnologies in Jakarta.
Etana is a significant player in the Indonesian and Southeast Asian biopharmaceutical landscape. Etana is a leading
contributor to the Indonesian government’s health initiatives and Recce looks forward to sharing developments
of the partnership over the coming year.
The Company also established several important relationships with leading clinical research partners and hospitals
in Australia who play a key role in the expansion and coordination of our clinical programs.
We continued our engagements with the prestigious Murdoch Children’s Research Institute in Melbourne which
saw the establishment of a dedicated anti-infective research unit, producing very promising pre-clinical data.
Tests to date have shown efficacy against a range of hard-to-treat World Health Organization (WHO) drug-resistant
priority pathogens.
We look forward to sharing the next phase of our journey with you and thank shareholders for their continued
support.
James Graham,
Managing Director & Chief Executive Officer
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Overview of
Company Activities
Recce has made substantial progress in its clinical programs, completing, and
expanding, new trials across multiple indications. The Company’s clinical trials include
both intravenous and topical programs, targeting indications such as UTI/urosepsis,
diabetic foot infections, burn wound infections, and acute bacterial skin and skin
structure infections.
The Company’s key clinical objectives were met, with the completion of multiple clinical
trials, including a Phase I intravenous trial and a Phase I/II UTI/urosepsis rapid infusion trial.
The Company also initiated a Phase II trial evaluating R327 as a topical gel in patients with
acute bacterial skin and skin structure infections (ABSSSI). Recce is preparing to initiate a
Phase III registrational trial in Indonesia, following a signed Memorandum of Understanding
(MoU) with PT Etana Biotechnologies (Etana), a leading Indonesian biomedical organisation.
Recce’s Anti-Infective Research (AIR) Unit at Murdoch Children’s Research Institute
continued to produce strong preclinical data, demonstrating efficacy against multiple
World Health Organization (WHO) priority pathogens, including Mycobacterium abscessus,
Neisseria gonorrhoeae, and Escherichia coli. This efficacy data further supports the potential
of new indications for Recce’s platform technology to progress into the clinic.
Recce has materially strengthened its financial position to progress its ongoing to progress its
ongoing clinical programs and to continue the development of its preclinical portfolio, following
a successful capital raise, raising a total of approximately A$10.7 million (before costs) through
an entitlement offer (A$2.7 million before costs) and placement (A$8 million before costs) to
institutional, sophisticated and professional investors announced 29 September 2023. CEO
James Graham, took up his full entitlement, investing a further A$102.7k into the Company, with
Directors taking up approximately A$110,000 (~250,000 Shares) of entitlement shortfall.
Asset and
Route of Administration
Discovery
Pre-clinical
Phase I
Phase II
Phase III
Market
R327 Intravenous
R327 Topical Gel
Acute Bacterial Skin
and Skin Structure Infections*
* Including post-operative infection, wound infections and diabetic foot infections.
US Department
of Defense Program**
Indications
UTI/Urosepsis
Burn Wound Infections
** The US Department of Defense has Recommended R327 Gel (R327G) as a topical treatment for Burn Wound Infections for grant funding of USD $2.0 million (AUD 3.0 million).
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Recce Pharmaceuticals announced a significant milestone with the signing of a
Memorandum of Understanding (MoU) with PT Etana Biotechnologies, a leading
biomedical organisation in Indonesia. This strategic partnership is designed to
accelerate the clinical development of Recce’s anti-infective treatments in Indonesia,
representing a crucial advancement in the global fight against antimicrobial
resistance.
Supported by both the Australian and Indonesian governments, this
collaboration opens the door to the broader ASEAN region, which
includes 10 member states and a population of approximately 670
million people. Both governments have independently introduced
several support initiatives to propel this historic bilateral effort,
underscoring their commitment to advancing public health through
innovative solutions.
The Indonesian government has further endorsed the partnership
by providing access to hospitals for clinical trials and pre-clinical
research.
The MoU outlines a collaborative effort between both parties to
research, develop, produce, distribute, and commercialise a first-in-
class therapeutic with broad-spectrum anti-infective capabilities.
This is intended for potential regulatory approval and use across
Indonesia, and possibly other jurisdictions as agreed by the parties,
to address the critical global health challenge of antimicrobial
resistance.
Strategic Opportunity
in South-East Asia
“The global health challenge of antimicrobial resistance is a pressing issue on the world stage.
Indonesia welcomes collaborative initiatives and supports efforts to combat antimicrobial
resistance, including the development of innovative therapeutics for infectious diseases.”
- Mr. Budi Sadikin, Indonesian Minister of Health
Recce Pharmaceuticals CEO James Graham (left)
and Indonesian Minister of Health Budi Sadikin (right).
Indonesian Minister of Health Budi Sadikin addressing Her Excellency Penny Williams and RCE CEO James Graham.
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Human Clinical Trials
Summary of results
RECCE® 327 (R327) Intravenous (I.V.) Programs
Phase I I.V. Clinical Trial – Completed
The Company completed its first-in-human Phase I trial of R327. The Phase I trial was an ascending dose,
randomised, placebo-controlled, parallel, double-blind, single-dose study.
Following the completion of the study, the Company released positive and independently verified results of
R327 as an I.V. infusion formulation in 80 healthy male subjects (60 received R327, 20 placebo). In concurrence
with the TGA clinical trial regulatory procedures, the recruitment for the study is closed and marked ‘Complete’
with no ‘Serious Adverse Events’ reported.
Phase I/II Urinary Tract Infection/Urosepsis Rapid Infusion Clinical
Trial – Completed
The Phase I/II study included 25 participants who received R327 at doses up to 4,000mg as an I.V. formulation
over a range of infusion times (15, 20, 30, and 45 minutes). The highest dose cohort included six participants,
all receiving 4,000mg of R327 over a 20-minute infusion period.
The trial met all primary endpoints, demonstrating R327’s tolerability and significant antibacterial efficacy.
Building on these promising results, the Company plans to commence a Phase II trial to further validate these
findings and explore additional therapeutic indications for R327.
• Concentrations of R327 increased with dose, half-life (t1/2) increased with dose: 3-5 hours at higher doses
• Urine concentrations were up to 20 times higher than plasma concentrations
• The successful Phase I safety and tolerability study of R327 I.V. in healthy male volunteers has paved the
way for the next stage of R327’s clinical development in sepsis and UTIs
Safe and well tolerated
at doses up to 6,000mg
given as a 1-hour
intravenous infusion
No Serious Adverse Events
All AE’s mild or moderate
No significant changes
in any laboratory test,
electrocardiogram
(EKG) or telemetry
15 min
20 min
30 min
45 min
Did you know?
Antibiotics administered as an I.V. infusion, usually over
30 minutes, have benefits such as savings in nursing time,
reduced costs, and improved safety. The 2021 Surviving Sepsis
Campaign (SCC) guidelines strongly recommend administering
I.V. broad-spectrum antibiotics as soon as possible, preferably
within an hour of sepsis recognition.
Key Findings from Clinical Trial at Highest Dose of 4,000 mg of R327 include;
consistent efficacy across participants, clear impact on bacterial growth build-up
over time in human urine, sustained effectiveness and rapid reduction in bacteria
when mixed with urine of participants (ex-vivo).
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Phase II Acute Bacterial Skin and Skin Structure Infections (ABSSSI)
Clinical Trial
RECCE® 327 (R327) Topical Programs
Phase I/II Diabetic Foot Infection (DFI) Clinical Trial
The Phase I/II trial is an interventional study assessing the safety and efficacy of R327 as a topical broad-spectrum
anti-infective treatment for patients with mild skin and soft tissue DFI. Patients were treated either daily or every
second day for 14 days.
The Company announced that the study achieved its primary endpoint of resolving/curing bacterial infections in
DFIs. Following this success, Recce has expanded clinical sites domestically and internationally in the interest of
accessing a greater patient population.
“We are pleased that the Phase I/II clinical trial has met all primary endpoints, and
produced efficacy data to support R327 to be used as topical agent.”
- James Graham, CEO
(18 January 2024)
The Company received Human Research Ethics Committee (HREC) approval
to commence a Phase II trial assessing R327 as a topical, broad-spectrum
gel applied to patients with ABSSSIs.
The Phase II trial is an open-label, efficacy study and exploratory evaluation
of the systemic bioavailability of single and/or multiple doses of R327 topical
gel applied to ABSSSIs. The study aims to provide critical data on R327
Gel’s effectiveness in treating a broad range of ABSSSI indications. ABSSSI
refers to a bacterial infection of the skin and its related tissues, such as DFI,
necrotizing fasciitis, and post-operative wound infections.
This ethics approval allows the Company to combine the clinical studies of
DFIs, wound infections, and more under one essential centralised regulatory
category of ABSSSI for a broad range of unmet medical needs in the topical
bacterial infection landscape. This centralised study approach to the broad
category of ABSSSI has been made possible by building upon and validating
study data to date, including compelling patient outcomes under the TGA
Special Access Scheme Category A initiatives. The study aims to evaluate
the clinical efficacy and toxicity of R327G.
The global ABSSSI treatment
market size was valued
at US$7.3B in 2018 and is
projected to reach US$26B
by 2032, representing a
CAGR of 9.5% between
2019 and 2032.
*Patient was on systemic therapy prior to commencing R327 treatment. Patient suffered from several comorbidities and escalated to systemic therapy.
Age (yrs)/Sex
Wound Location
Pathogen Identified
Clinical Response
Application
Frequency
Patient 1
Daily
32/M
Left forefoot
lateral aspect
Methicillin-Resistant
S. aureus
Escalated therapy*
Infection resolved/cured
Infection resolved/cured
Infection resolved/cured
(in half the treatment time)
Infection resolved/cured
S. aureus, mixed skin
flora and coliforms
S. aureus, mixed skin
flora and coliforms
Mixed skin flora
Mixed skin flora and
coliforms
Right hallux
plantar aspect
Left forefoot
plantar aspect
Left forefoot
plantar aspect
Right hallux
dorsal aspect
55/M
51/M
70/M
64/M
Second Daily
Second Daily
Daily
Daily
Patient 2
Patient 3
Patient 4
Patient 5
Summary of patients
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Phase I/II Topical Burn Wound Infection
Clinical Trial – Stage 1 Completed
The data analysis is complete for the Phase I/II trial of R327 in patients with
burn wound Infections.
Clinicians reported a visible reduction in bacterial infection within the first 24
hours of R327 treatment, demonstrating broad-spectrum antibiotic activity
against Gram-positive and Gram-negative pathogens listed on the WHO
Priority Pathogen list of antibiotic-resistant bacteria, defined as multidrug-
resistant and difficult-to-treat. All patients treated with R327 showed good
indications of safety and tolerability to the compound.
United States Department of Defense Grants
US$2 million for RECCE® 327 Gel
The U.S. Department of Defense awarded Recce a substantial grant of
US$2 million to accelerate the development of R327G, emphasising its
potential in acute treatment scenarios, particularly in military settings.
This funding underscores the innovative nature of R327G as a synthetic
anti-infective designed to rapidly resolve burn wound infections and
minimise the onset of bacteraemia complications, such as sepsis.
The grant, awarded through the US Department of Defense
Congressionally Directed Medical Research Programs (CDMRP),
highlights R327G’s potential to replace traditional antimicrobial dressings
and enhance the quality of care for military personnel.
This recognition reinforces the Company’s commitment to advancing
medical solutions critical to military and civilian populations.
Did you know?
Aggressive infection is the leading cause of death and
morbidity of burn wound sufferers. The most relevant
and dangerous of burn wound infections are those involving
Staphylococcus aureus, a Gram-positive bacteria located
on the skin and mucous membranes (most often the
nasal area).
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Therapeutic Goods Administration (TGA) Special Access Scheme –
Category A
The Company reported on five cases under the TGA SAS-Category A. In this program, R327G was utilised by a
qualified medical practitioner in patients suffering antibiotic-resistant Gram-positive and Gram-negative bacterial
infections.
Age (yrs)/Sex
Patient
Wound Details
Clinical Response (Post R327G Treatment)
Patient A
70-75/M
Patient B
72/M
Patient C
51/F
Patient E
84/M
Patient D
51/M
Puncture wound from metal spike.
Unresponsive to all prior antibiotics,
infection spreading, preparing for surgery.
• 24 hours after one dose of R327G, the infection
clinically responded (no pre-treatment debridement
needed).
• Redness and swelling reduced, no stinging reported.
• 30 days post-treatment, wound successfully healed
and closed.
Type 2 diabetes, unresponsive to all prior
antibiotics. Peripheral Vascular disease and
neuropathy.
• Day 7: redness and swelling minimised; wound
healing and drying.
• Day 10: no infection, no pus, wound clearing and
healing.
• Day 14: significant improvement, well tolerated.
Significant wound infection post-ankle infusion
surgery. Diagnosed with arthritis in the right
ankle due to talar avascular necrosis.
• Day 7: redness and swelling minimised, wound
drying.
• Day 14: no bacterial growth around wound.
• Day 21: wound healed, closed, and dried with
no infection.
Involved in a motor bike accident in 2017, was
required to have an amputation above the knee.
The patient received an osseointegration (bone
ingrowth metal implant). Recurrent infection on
the left femoral (thigh).
• Day 3: redness and swelling minimised, wound
healing and drying.
• Day 14: wound dried, improved with no redness
or swelling.
Osteomyelitis (serious infection of the bone) on
his left big great toe, not responding to
antibiotics.
• Day 3: wound drying, infection clearing, toe
responding well.
• Day 7: wound dried, no biofilm, swelling reduced.
• Surgical intervention averted.
GMP Manufacturing Capabilities Supporting Clinical Trials
The Company completed the production of 5,000 R327 doses per
week under the Good Manufacturing Practice (GMP) campaign.
Due to the increased demand for R327 required for clinical
studies, producing 5,000 doses of R327 per week is a significant
achievement that provides surplus sample material for the
TGA Special Access Scheme, Phase I, Phase II, and anticipated
registrational Phase III opportunities ahead.
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Pre-Clinical Efficacy Results Produced by Murdoch Children’s Research
Institute (MCRI) Anti-Infective Research (AIR) Unit
The Company has continued its strategic partnership with Murdoch Children’s Research Institute, following key
pre-clinical efficacy data received for multiple WHO priority pathogens. This data will support clinical trials for
new indications.
Neisseria gonorrhoeae (N. gonorrhoeae)
Study Outline: The study was conducted to test the efficacy of R327
treatment against N. gonorrhoeae in a mouse vaginal infection model.
Key results: By the end of the treatment period, R327 was successful in
significantly reducing vaginal gonococcal shedding. In this study, a two-log
reduction was observed (99% kill), commonly considered a significant effect.
The mice in this study displayed no clinical signs of gonococcal infection.
Mycobacterium abscessus (M. abscessus)
Study Outline: A pilot study was conducted on the efficacy of nebulised
R327 for treating lung infections in a mouse model.
Key results: R327 demonstrated efficacy in treating Mycobacterium abscessus
(M. abscessus) lung infections using a recently developed nebulizer delivery
method: >99% log reduction (>2.5 log reduction) observed. The pilot study
demonstrated a significant reduction of M. abscessus colonisation in both lungs
of mice treated with nebulized R327. Notably, nebulised R327 significantly
decreased M. abscessus bacterial colonisation, and the mice maintained a stable
body weight throughout the study period, indicating the treatment’s safety and
tolerability. The results represent a significant milestone in the development of
nebulised treatments for lung infections.
Escherichia coli (E. coli) in Urinary Tract Infection
Study 1 Outline: Two studies were conducted to investigate R327’s bactericidal
activity in E. coli UTI in rat models via I.V. infusion and direct-to-bladder delivery.
Study 1 Results: a >99% reduction (>2-log reduction) of E. coli UTI was
observed in a rat model, and a reduction of bacterial load in urine at 6 hours
post-infection.
Study 2 Outline: Measured the bacterial shedding of E. coli in the urine, where a
2-log reduction (99% kill) for R327 bladder delivery compared to the untreated
control group. The bacterial burden of E. coli in kidney tissue was also analysed.
Study 2 Results: A 2-log (99% kill) reduction for R327 direct-to-bladder delivery
was observed. Bacterial burden was analysed for E. coli in bladder tissue, with a
bactericidal 3.5-log (>99.9% kill) and statistically significant reduction observed
for the bladder delivery, compared to the untreated control group.
Pre-Clinical
Image credit to CDC.
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Distribution of traditional agents according to their antibiotic class
Cell wall
inhibitors
Cell membrane
disruptors
Protein
synthesis
inhibitors
β-Lactams & β-lactam/
BLI combinations
Polymyxins
Host defence peptides
Tethered macrocyclic peptides
Tetracyclines (aminomethylcyclines)
Aminoglycosides
Macrolides/ketolides
Novel bacterial type II
topoisomerase inhibitors (NBTIs)
Fabl inhibitors
FtsZ inhibitors
RECCE 327
ATP production disruptors
Antibiotic hybrids
15
3
2
2
1
1
1
1
1
1
1
3
®
RECCE® 327 added to World Health Organization List
of Antibacterial Products in Clinical Development
• R327 has been added to the World Health
Organization’s report on Antibacterial Agents
in Clinical Development and Pre-clinical
Development.
• The report covers traditional and non-traditional
antibacterial agents in development worldwide
and evaluates to what extent the present
pipeline addresses infections caused by priority
pathogens, according to the updated 2024
WHO bacterial priority pathogens list.
• Unique Mechanism of Action – R327 is uniquely
classified as an adenosine triphosphate (ATP)
production disruptor, the only compound under
this category.
ATP is crucial for energy use
and storage at the cellular level,
and R327’s targeted disruption
of ATP production presents a
groundbreaking approach in the
fight against both Gram-positive
and Gram-negative pathogens.
16
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Conference Engagement
Connecting with Investors and Key Opinion Leaders at Global Conferences
The Company continued its presence at global conferences and interactions with Key Opinion Leaders to increase
investment opportunities and engagement within the infectious disease and antimicrobial resistance community.
Attending global investor and industry events has allowed the Company to expand its business development
programs, and network with potential partners.
See below key conferences the Company participated in throughout the financial year:
2023
2024
August
September
World AMR
Congress 2023
Sepsis Alliance
Summit 2023
Military Health
System Research
Symposium 2023
Florida, USA
March
Wholesale Investor
Emergence Sydney
Sydney, AUS
June
BIO International
Convention 2024
Boston, USA
Washington, DC
April
Sepsis Alliance
AMR Conference
Virtual
Sepsis Awareness
Month
Virtual
November
AusBiotech
Conference 2023
Brisbane, AUS
May
BIO KOREA
Inward AMR Innovation
Mission UK 2024
United Kingdom
Virtual
Virtual
World AMR Congress
2023
BIO USA
2024
UK AMR Inward Mission
2024
17
Board of Directors and
Key Management Personnel
Dr John Prendergast
Executive Chairman
BSc (Hons), MSc (UNSW),
PhD (UNSW), CSS (HU)
James Graham
Managing Director and
Chief Executive Officer
BCom (Entrepreneurship), GAICD
Michele Dilizia
Executive Director and
Chief Scientific Officer
BSc (Med Sci), Grad Dip Bus
(Mkting), BA (Journ), GAICD,
MASM
Dr Prendergast, based in the US, is a renowned executive
in the pharmaceutical industry. Currently serving as
the Chairman and Co-founder of Palatin Technologies,
Inc. (NYSE: PTN) and the Lead Director of Nighthawk
Biosciences (NYSE: HHWK), he brings over three decades
of expertise in the commercialisation of pharmaceutical
technologies.
Dr Prendergast has lead the approval of three new drug
applications and played a pivotal role in the successful
sale of Vylessi® to Cosette Pharmaceuticals for USD $12M,
marking a significant achievement in the pharmaceutical
landscape.
Mr Graham is the Chief Executive Officer of Recce
Pharmaceuticals. He was formerly Executive Director
and has extensive experience in marketing, business
development and commercialisation of early-stage
technologies with global potential. Mr Graham serves on
Recce’s Board of Directors and has invested in almost
every capital raise to date with a focus on expanding
Recce’s commercial opportunities and clinical initiatives.
Dr Alan Dunton
Non-Executive Director &
Chief Medical Advisor
BSc (BioChem) Hons, M.D. (NYU)
Based in the US, Dr Dunton, as the Director of Palatin
Technologies, brings a wealth of experience with over three
decades in senior pharmaceutical roles. Notably, he served
as the President and Managing Director of the Janssen
Research Foundation (J&J Research).
Dr Dunton successfully advanced multiple blockbuster
antibiotics through to commercialisation at Fortune 500
companies, such as J&J and Roche, where he played
instrumental roles in shaping the commercial success of
pharmaceutical products. Dr Dunton played a key role
in the recent sale of Vylessi® to Cosette Pharmaceuticals
for USD $12M, continuing his track record of fostering
advancements in drug development and successful
commercialisation efforts.
Ms Dilizia is a co-inventor and qualified medical scientist
with a specialisation in medical microbiology and regulatory
affairs. She successfully co-led the research and development
of Recce’s suite of anti-infective compounds, resulting in a
portfolio of granted patents across the globe, including a
Qualified Infectious Disease Product designation with the
U.S. Food and Drug Administration (FDA).
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
18
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Arthur Kollaras
Principal Engineer &
Head of Manufacturing
BSc, BEng (Chem), PhilEng
(Enviro), MIEAust, MISPE
Justin Reynolds
Chief Financial Officer
(Pitcher Partners)
Alistair McKeough
Non-Executive Director
(Prandium)
Maggie Niewidok
Company Secretary
(Kardos Scanlan)
Mr Kollaras is highly qualified in chemical engineering
and microbiology. He has significant experience taking a
new technology concept from a pilot plant to full-scale
international production under FDA standards.
Mr Reynolds is a Partner at Pitcher Partners Sydney.
His experience with multinational companies has led him
to develop expertise as an Outsourced Financial Controller.
Mr McKeough is an experienced executive and solicitor.
Before being appointed as a non-executive director
on 1 September 2022, Mr McKeough served as Recce’s
company secretary and he has been involved with the
company since 2017. Alistair, who is a practising solicitor,
has extensive experience serving as a director in many
sectors, including for companies involved in professional
services, corporate services, regulatory technology,
sports technology, charities, health, biotech, child care
and education.
Ms Niewidok is an admitted lawyer with the firm Kardos
Scanlan Corporate Lawyers. She is an experienced corporate
lawyer and is the Company Secretary to various ASX-Listed
and unlisted companies, across a range of industries.
Dr Justin Ward
Executive Director and
Principal Quality Chemist
BSc (Chem), PhD (Chem),
MRACI, CChem, MPharm
Dr Ward is a qualified Chemist and Pharmacist with over
20 years of pharmaceutical and biotech industry experience
in quality control, quality assurance, product research and
development with leading pharmaceutical companies,
including Pfizer. Dr Ward previously held a technical
role with Pfizer, involving providing data for regulatory
submissions to the FDA and TGA.
19
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
20 Directors’ Report
34 Auditor's Independence Declaration
35 Corporate Governance Statement
48 Consolidated Statement of Profit or Loss and
Other Comprehensive Income
49 Consolidated Statement of Financial Position
50 Consolidated Statement of Changes In Equity
51 Consolidated Statement of Cash Flows
52 Notes to the Consolidated Financial Statements
71 Consolidated Entity Disclosure Statement
72 Directors’ Declaration
72 Independent Auditor’s Report
76 ASX Additional Information
Financial Report
Recce Pharmaceuticals Ltd
(Formerly Recce Ltd) and Controlled
Entities ABN 73 124 849 065 Consolidated
Financial Report for the year ended
30 June 2024
20
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Directors’ Report
For the year ended 30 June 2024
Information on Directors
Dr John Prendergast
Chairman (Executive)
Qualifications
BSc (Hons), M.Sc. and Ph.D., C.S.S. (Admin & Mgmt)
Experience
Dr Prendergast is currently Non-Executive Chairman
and Co-Founder of Palatin Technologies developing
targeted therapeutics for the treatment of diseases with
significant unmet medical need and Lead Director of
Nighthawk Biosciences, Inc., a publicly traded, clinical
stage immunomodulatory company.
He was previously a member of the board of the life
science companies, Avigen, AVAX Technologies and
MediciNova Inc and also as a member of the Advisory
Board for the Institute for the Biotechnology of Infectious
Diseases (IBID) at the University of Technology Sydney,
now called the ithree Institute.
Prior to that he was a Managing Director of The Castle
Group Ltd., a New York medical venture capital firm.
Dr Prendergast held Post-Doctoral Fellowships in the
Department of Biochemistry and Molecular Biology,
Harvard University and at the Center for Research on
Blood Diseases in Paris with Professor Jean Dausset
(Nobel Prize, 1980).
During his career, Dr Prendergast has been responsible
for the approval of three (3) New Drug Applications.
Dr Prendergast received his M.Sc. and Ph.D. from the
University of New South Wales, Sydney, Australia and a
C.S.S. in administration and management from Harvard
University.
Interest in Shares and Options
306,819 Ordinary Shares
2,175,000 Unlisted Options
Special Responsibilities
Member of the Audit & Risk Management Committee
Member of the Nomination & Remuneration Committee
Directorships held in other listed entities during
the last three years
Palatin Technologies, Inc. (NYSE: PTN)
Heat Biologics, Inc. (NASDAQ: HTBX)
Your Directors present their report on Recce
Pharmaceuticals Ltd (the ‘Company’) and controlled
entities (the ‘Group’) for the year ended 30 June 2024.
Directors
The following persons held office as Directors of
the Company during the year and up to the date
of this report:
Dr John Prendergast
Executive Chairman
Mr James Graham
Managing Director & Chief Executive Officer
Ms Michele Dilizia
Executive Director and Chief Scientific Officer
Dr Justin Ward
Executive Director and Principal Quality Chemist
Dr Alan Dunton
Non-Executive Director & Chief Medical Advisor
Mr Alistair McKeough
Non-Executive Director
Directors have been in office since the start of the
financial year to the date of this report unless otherwise
stated.
21
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Mr James Graham
Director (Executive) and Chief Executive Officer
Qualifications
BCom (Entrepreneurship), GAICD
Experience
Mr Graham is Chief Executive Officer and Executive
Director of the Company.
Mr Graham has a background in marketing, business
development and commercialisation of early stage
technology with global potential.
Mr Graham continues to work closely with the growth
and direction of Company, routinely investing alongside
shareholders in capital rounds to date.
Interest in Shares and Options
Direct ownership
2,250,000 Unlisted Options
Indirect ownership
6,765,362 Ordinary Shares
Special Responsibilities
Nil
Directorships held in other listed entities during
the last three years
Nil
Ms Michele Dilizia
Director (Executive) and Chief Scientific Officer
Qualifications
BSc (Med Sci), Grad Dip Bus (Mkting), BA (Journ),
GAICD, MASM
Experience
Ms Dilizia is a Qualified Medical Scientist with
specialisation in medical microbiology. Previously, she
had a successful executive career in public relations and
marketing for a leading retail chain.
Ms Dilizia was a market research consultant, which
included marketing development of health-care and
pharmaceutical products.
Interest in Shares and Options
Direct ownership
2,828,485 Ordinary Shares
1,500,000 Unlisted Options
Indirect ownership
256,000 Ordinary Shares
Special Responsibilities
Nil
Directorships held in other listed entities during
the last three years
Nil
22
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Directors’ Report Continued
For the year ended 30 June 2024
Dr Justin Ward
Director (Executive)
Qualifications
BSc (Chem), PhD (Chem), MRACI, Chartered Chemist
Experience
Dr Ward is qualified chemist with specialisation in
pharmaceutical quality management and product
development.
Before Recce Pharmaceuticals, he held a technical
speciality and special project leadership role with
Pfizer Pharmaceuticals, involving providing data for
the regulatory submissions to the FDA and TGA.
After Pfizer, he was the Laboratory Manager for Solbec,
involving, again as presently, drug specifications and
pharmaceutical trials for the ASX-Listed company.
Most recently, he was Quality Manager at Phebra and
responsible for product quality and release of all drugs
of the company with the TGA.
Interest in Shares and Options
Direct ownership
301,444 Ordinary Shares
600,000 Unlisted Options
Special Responsibilities
Nil
Directorships held in other listed entities during
the last three years
Nil
Dr Alan Dunton
Director (Non-Executive) and Chief Medical Officer
Qualifications
M.D. New York University School of Medicine
B.S. Biochemistry. (Magna cum laude) State University
School of New York at Buffalo
Experience
Dr Dunton has held leadership positions at various
biotechnology and pharmaceutical companies
including serving as president and chief executive
officer at Panacos Pharmaceuticals, Inc., Metaphore
Pharmaceuticals, Inc., and chief operating officer at
Emisphere Technologies, Inc.
Dr Dunton served in several positions at Johnson and
Johnson including president and managing director at the
Janssen Research Foundation where he was responsible
for leading over 2,000 professionals worldwide and
prior to this as vice president of global clinical research
and development at the R.W. Johnson Pharmaceutical
Research Institute. During his career, Dr Dunton has been
responsible for the approval of approximately 20 New
Drug Applications; an amalgamation of prescription and
OTC products.
Dr Dunton earned his medical degree from New York
University School of Medicine following his bachelor’s
degree in biochemistry from the State University of New
York at Buffalo. Dr Dunton then completed his fellowship
in clinical pharmacology at New York Hospital/Cornell
University Medical Center and, in 1987, was awarded The
Nellie Westerman Prize from the American Federation for
Clinical Research (AFCR) for his work in medical ethics.
Interest in Shares and Options
Direct ownership
116,819 Ordinary Shares
1,125,000 Unlisted Options
Indirect ownership
10,000 Ordinary Shares
Special Responsibilities
Chairman of the Nomination & Remuneration Committee
Member of the Audit & Risk Management Committee
Directorships held in other listed entities during
the last three years
Palatin Technologies, Inc. (NYSE: PTN)
Oragenics, Inc. (NYSE: OGEN)
CorMedix, Inc. (NYSE: GRMD)
Regeneus Ltd (ASX: RGS)
23
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Mr Alistair McKeough
Director (Non-Executive)
Qualifications
BA, LLB, LLM
Experience
Mr McKeough is an experienced executive and solicitor.
Before being appointed as a non-executive director
on 1 September 2022, Mr McKeough served as Recce’s
company secretary and he has been involved with the
company since 2017.
Alistair, who is a practising solicitor, has extensive
experience serving as a director in many sectors,
including for companies involved in professional services,
corporate services, regulatory technology, sports
technology, charities, health, biotech, child care and
education.
Interest in Shares and Options
Indirect ownership
25,961 Ordinary Shares
1,125,000 Unlisted Options
Special Responsibilities
Chairman of the Audit & Risk Management Committee
Member of the Nomination & Remuneration Committee
Directorships held in other listed entities during
the last three years
Nil
Chief Financial Officer
Justin Reynolds
Experience
Justin Reynolds is a Partner at Pitcher Partners Sydney.
Mr Reynolds’ experience with multinational companies
has led to him developing particular expertise as an
Outsourced Financial Officer. He and his team provide
their clients with the peace of mind that comes from high
quality, technically expert outsourced accounting.
Mr Reynolds’ has a broad range of experience having
dealt with a variety of different sized organisations from
small family business to multinational companies and high
net worth individuals.
Company Secretary
Maggie Niewidok
Maggie is an admitted lawyer and employee of Kardos
Scanlan Corporate Lawyers. Maggie is an experienced
corporate lawyer who works closely with a number of
boards of both listed and unlisted public companies
across a range of industries.
Principal Activity
The Group is pioneering the development and
commercialisation of a drug discovery and development
business commercialising new Classes of synthetic
anti-infectives with broad spectrum activity designed
to address the urgent global health threat of antibiotic
resistant superbugs and emerging viral pathogens.
Its patented lead candidate, RECCE® 327 has been
developed for the treatment of blood infections and
sepsis derived from E. coli and S. aureus bacteria –
including their superbug forms.
Review of Operations
On 10 July 2023, the Company announced its Phase I/II
UTI clinical trial evaluating RECCE® 327 (R327) at faster
infusion rates has successfully dosed its first cohort of
both male and female subjects with No Serious Adverse
Events.
On 12 July 2023, the Company announced non-dilutive
funds from Radium Capital (Radium) for A$801,604 of
Recce’s future Research and Development (R&D) tax
incentive.
On 19 July 2023, the Company announced positive
complete and independently verified results from its Phase
I (R327-001) study of RECCE® 327 (R327) as an intravenous
infusion formulation in 80 healthy male subjects.
On 20 July 2023, the Company announced potentially
understating the Urine and Plasma concentration of
RECCE® 327 (R327), as the table under the heading
‘Positive Unexpected Findings’ reported on only one
oligomer (being, Oligomer 5, which is of specific
importance) as part of the suite of oligomers that
make the total R327 polymer.
24
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Directors’ Report Continued
For the year ended 30 June 2024
On 24 July 2023, the Company announced Scientia
Clinical Research had successfully begun dosing both
male and female subjects in its Phase I/II UTI clinical trial
evaluating RECCE® 327 (R327) at faster infusion rates.
On 27 July 2023, the Company received confirmation
a research Abstract and Poster presentation will be
published at the 2023 Military Health System Research
Symposium (MHSRS).
On 28 July 2023, the Company reported Scientia Clinical
Research had successfully completed cohort dosing of
both male and female subjects in its Phase I/II UTI clinical
trial evaluating RECCE® 327 (R327) at faster infusion
rates.
On 28 July 2023, the Company announced the
international cash receipt of A$98,428.27 from the
Government of Canada as part of its Scientific Research
& Experimental Development (SR&ED) Tax Incentive
program. This amount is the second rebate the Company
has received from the Government of Canada.
On 3 August 2023, the Company announced the
Australian Patent Office had formally granted the
first of Recce’s new Patent Family 4 for RECCE’s anti-
infectives ‘Process for Preparation of Biologically Active
Copolymer’, expiry 2041.
On 8 August 2023, the Company announced an update
upon Therapeutic Goods Administration (TGA) Special
Access Scheme (SAS) Category A utilisation of RECCE®
327 Gel (R327G) by a qualified medical practitioner
across patients suffering antibiotic-resistant Gram-
positive and Gram-negative bacterial infections.
On 21 August 2023, the Company announced Data
Analysis complete for its Phase I/II topical clinical trial
of RECCE® 327 (R327) for the treatment of burn wound
infections.
On 22 August 2023, the Company announced its Phase
I/II Diabetic Foot Infections (DFI) clinical trial has
commenced dosing of patients at Liverpool Hospitals
South West’s Sydney Limb Preservation and Wound
Research Unit.
On 28 August 2023, the Company reported an
Independent Safety Committee approved next cohort
dosing at two faster infusion rates of 3,000mg.
Furthermore, the committee unanimously agreed R327
at two faster infusion rates of 2,500mg is safe and well
tolerated in male and female subjects. The next cohort
of subjects have been recruited with dosing to begin
imminently.
On 6 September 2023, the Company announced it had
been issued Trademark Registration for RECCE® from
the Intellectual Property Office of Vietnam.
On 11 September 2023, the Company announced a capital
raising of up to approximately A$11 million (before costs)
consisting of placement of approximately 18.2 million new
fully paid ordinary shares in the Company at A$0.44 per
New Share, with commitments received totalling A$8.0
million from institutional, sophisticated and professional
investors and a pro-rata non-renounceable entitlement
offer of one (1) New Share for every twenty six (26)
existing fully paid ordinary shares in the Company held
by eligible shareholders at the same Offer Price as the
Placement to raise up to a further A$3 million.
On 22 September 2023, the Company reported Scientia
Clinical Research has successfully completed cohort
dosing of both male and female subjects in its Phase I/II
UTI/Urosepsis clinical trial evaluating RECCE® 327 (R327)
at faster infusion rates.
On 29 September 2023, the Company announced
completion of a successful entitlement offer to
shareholders raising approximately $2.7 million (before
costs). The Company raised a total of approximately
$10.7 million (before costs) through the entitlement
offer and placement to institutional, sophisticated, and
professional investors which completed on 18 September
2023.
On 24 October 2023, the Company reported an
Independent Safety Committee had approved next
cohort dosing at a faster infusion rate of 15 minutes of
3,000mg. Furthermore, the committee unanimously
agreed R327 at an infusion rate of 30 minutes of
3,000mg is safe and well tolerated in male and female
subjects. The next cohort of subjects have been recruited
with dosing to begin imminently.
On 7 November 2023, the Company reported the first
male and female subjects had completed dosing at the
highest concentration of RECCE® 327 (R327) (3,000mg
I.V.), within a fast infusion rate of 15- minutes in its Phase
I/II UTI/Urosepsis clinical trial.
On 23 November 2023, the Company announced the
Canadian Patent Office had formally granted a new
Patent Family 4 for Recce’s anti-infectives ‘Process for
Preparation of Biologically Active Copolymer’ in Canada,
expiry 2041.
On 14 December 2023, the Company announced positive
efficacy of RECCE® 327 (R327) showing significant
antibacterial activity against Neisseria gonorrhoeae
(N. gonorrhoeae). The study was conducted by Murdoch
Children’s Research Institute to test the efficacy of R327
treatment against N. gonorrhoeae in a mouse vaginal
infection model.
On 14 December 2023, the Company announced the
Australian Government had Awarded an Advanced
Overseas Finding for AU$43,774,907 of Synthetic
Antibiotic Research & Development (R&D) applicable
expenditure by AusIndustry (a division of the Australian
Government’s Department of Industry, Innovation and
Science).
On 15 December 2023, the Company announced the
Australian Government had awarded AU$11,172,377
Advanced Overseas Finding for its Synthetic Anti-Viral
Research & Development (R&D) applicable expenditure
by AusIndustry (a division of the Australian Government’s
Department of Industry, Innovation and Science) –
AU$54,947,284 across the infectious disease portfolio.
25
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
On 28 December 2023, the Company announced further
positive efficacy data, with RECCE® 327 (R327) showing
significant antibacterial activity against Escherichia
coli (E. coli) urinary tract infections (UTI) by Murdoch
Children’s Research Institute in a physiologically relevant
rat UTI model.
On 18 January 2024, the Company announced an update
on its Phase I/II diabetic foot infection clinical trial.
On 6 February 2024, the Company announced a signed
Memorandum of Understanding (MoU) with PT Etana
Biotechnologies (Etana), a leading Indonesian biomedical
organisation, to accelerate the clinical development of
Recce’s anti-infective portfolio across Indonesia, with the
aim of addressing the critical global health challenge of
antimicrobial resistance (AMR).
On 13 February 2024, the company clarified the
announcement released 6 February 2024 surrounding
the Memorandum of Understanding (MoU) between
the Company and PT Etana Biotechnologies Indonesia
(Etana). The purpose of the MoU was for both parties
to work collaboratively on the research, development,
production, distribution, and commercialisation of a first-
in-class therapeutic agent designed with broad spectrum
anti-infective capabilities for potential registrational use
across Indonesia (and in other jurisdictions as otherwise
agreed by the parties) to address the critical global health
challenge of antimicrobial-resistance.
On 26 February 2024, the Company announced an
Independent Safety Committee had unanimously agreed
that the ongoing Phase I/II Diabetic Foot Infection (DFI)
clinical trial was achieving its primary endpoints and
recommended to expand based on the interim data
analysis of the patients that were successfully treated
with RECCE® 327 (R327).
On 27 February 2024, the Company announced the
continuation of the work within the Company’s Anti-
Infective Research (AIR) Unit located within Murdoch
Children’s Research Institute (MCRI).
On 8 March 2024, the Company announced AUD
$11,178,965 as an R&D Advance with Endpoints
Capital (Endpoints) capturing Recce’s Research and
Development (R&D) tax incentive for FY23/24 & FY25.
On 12 March 2024, the Company announced it has
successfully dosed the next cohort of human participants
with RECCE® 327 (R327) at 3,000mg intravenously at
a fast infusion rate of 20-minutes in its Phase I/II UTI/
Urosepsis clinical trial.
On 15 March 2024, the Company announced it had
successfully completed dosing of its latest cohort in its
Phase I/II UTI/Urosepsis clinical trial, evaluating RECCE®
327 (R327) at fast infusion rates.
On 21 March 2024, the Company announced it had been
issued a Trade Mark Registration for RECCE® from the
Canadian Intellectual Property Office.
On 3 April 2024, the Company announced the State
of Israel Patent Office had formally Granted Recce’s
new Patent Family 4 for RECCE’s anti-infectives: Patent
Number 295116, ‘Process for Preparation of Biologically
Active Copolymer Comprising an Acrolein Derivative and
a Polyalkylene Glycol Oligomer’ in Israel, expiry 2041.
On 16 April 2024, the Company announced the successful
batch completion under Good Manufacturing Practices
(GMP) for RECCE® 327 (R327) with the patented
manufacturing process now producing 5,000 GMP
doses of R327 per week.
On 26 April 2024, the Company announced an
Independent Safety Committee had approved an
increase of R327 to 4,000mg (I.V.) over a fast infusion
of 30 minutes.
On 7 May 2024, the Company announced the China
National Intellectual Property Administration had formally
Granted a new Patent Family 2 for Recce’s anti-infectives
‘Copolymer and Method for Treatment of Bacterial
Infection’ in China, expiry 2035.
On 9 May 2024, the Company announced promising
results from its latest pilot study on the efficacy of
nebulised RECCE® 327 (R327) for treating lung infections
in a mouse model. The study was conducted at Recce’s
Anti-Infective Research (AIR) unit within Murdoch
Children’s Research Institute.
On 15 May 2024, the Company announced it had
successfully dosed first male and female participants
in the next cohort with RECCE® 327 (R327) at 4,000mg
intravenously (I.V.) at a fast infusion rate of 20- minutes
in its Phase I/II UTI/Urosepsis clinical trial.
On 3 June 2024, the Company announced it had received
confirmation a research Abstract and Poster presentation
will be published at the 2024 Military Health System
Research Symposium (MHSRS).
On 11 June 2024, the Company announced it had
successfully completed dosing of its latest cohort in its
Phase I/II UTI/Urosepsis clinical trial, evaluating RECCE®
327 (R327) at fast infusion rates.
On 18 June 2024, the Company announced a further cash
refund of AUD $2,624,860.47 Research and Development
(R&D) Tax Incentive rebate from the Australian Tax Office
for the financial year ending 30 June 2023.
On 18 June 2024, the Company announced its primary
anti-infective candidate, RECCE® 327 (R327), had been
added to the World Health Organization’s (WHO) report
of Antibacterial Agents in Clinical Development and
Preclinical Development.
On 24 June 2024, the Company announced it had
received Human Research Ethics Committee (HREC)
approval to commence a Phase II clinical trial assessing
RECCE® 327 (R327) as a topical, broad-spectrum gel
applied to Acute Bacterial Skin and Skin Structure
Infections (ABSSSI).
26
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Directors’ Report Continued
For the year ended 30 June 2024
On 28 June 2024, the Company announced positive data
from a Phase I/II clinical trial for urinary tract infections
(UTIs) and urosepsis, demonstrating that RECCE® 327
(R327) administered intravenously is safe and efficacious
against Escherichia coli (E. coli).
The operating loss has increased to $17,661,714 (2023:
loss of $13,077,422) as a result of increased expenditure
in consulting and research and development costs. The
annual loss was after a R&D tax incentive of $4,906,010
(2023: $4,311,202).
The loss per share has increased during the year to
9.97 cents (2023: 7.52 cents).
The Group’s focus is on progressing RECCE® 327's
multiple ongoing human clinical trials, in parallel to the
suite of pre-clinical programs.
Dividends Paid or Recommended
No dividends have been paid or declared for payment
during the year and at the date of this report.
Options
During the financial year, the Company issued Nil
(2023: 1,125,000) options to acquire ordinary shares in
the Company at exercise prices and dates as disclosed
in Note 19 to the consolidated financial statements.
396,565 options were exercised for $123,730 during the
financial year (2023: 607,400 options were exercised
for $102,043).
Significant Changes in State of Affairs
No significant changes in the Group's state of affairs
occurred during the year.
Environmental Issues
The Group’s operations are not subject to significant
environmental regulations under the law of the
Commonwealth or of a State or Territory. The policy is
to comply with or exceed its environmental obligations
in each jurisdiction in which it operates. No known
environmental breaches have occurred.
Future Developments, Prospects and
Business Strategies
The Group continues its strategy of having its antibiotic
drug tested for safety, efficacy and chemistry to enable
the Group to lodge its application for Investigational
New Drug (IND) status with the Food and Drug
Administration (FDA) in the USA.
The current economic model for developing new
antibiotics has failed. There are virtually no practical
economic incentives and most regulatory authorities
have not prioritised these. Accordingly, there are
significant opportunities for the Company in developing
a new class of Synthetic Anti-Infectives designed to
address the urgent global health problems of antibiotic-
resistant superbugs and emerging viral pathogens.
There are many risks associated with this:
(a) Research and development – May not be successful
or commercially exploitable
(b) Changes in laws and regulations – The introduction of
new legislation or amendments to existing legislation
may adversely impact the Company’s operations
(c) Competition – The pharmaceutical industry is
intensely competitive and the Company may be
beaten to market by one or more of its competitors
(d) Intellectual property – May not be capable of being
legally protected
(e) Risk of delay and continuity of operations – Any
disruption or delay to any key inputs could impact
adversely on the Company
(f) Research and Development Grant – There is no
guarantee the program will continue. The eligibility
criteria may change or an audit may require
repayment in certain circumstances
(g) Key personnel – Key personnel may leave and be
difficult to replace or may leave to work with a
competitor
(h) Product liability and uninsured risks – The Company
is exposed to potential product liability risks which
are inherent in the research and development,
manufacturing and marketing and use of its
technology or products developed.
Events Subsequent to Reporting Period
On 5 August 2024, the Company announced that it had
raised $12.4 million (before costs) via a placement and
share purchase plan.
Other than the above, no matters or circumstances
have arisen since the end of the financial year, which
significantly affected, or may significantly affect, the
operations of the Group, the results of those operations,
or state of affairs of the Group in future financial years.
Going Concern
The Directors believe that the Group is in a position
to meet all its commitments as and when they fall due.
Refer to Note 3 to the consolidated financial statements
for further details.
Insurance of Officers
During the financial year, the Company paid a premium
for an insurance policy insuring all Directors and Officers
against liabilities for costs and expenses incurred by
them in defending any legal proceedings arising out of
their conduct while acting in their capacity as Director
or Officer of the Company, other than conduct involving
a wilful breach of duty in relation to the Company. In
accordance with common commercial practice, the
insurance policy prohibits disclosure of the nature of the
liability insured against the amount of the premium.
27
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Proceedings on Behalf of Group
No person has applied for leave of Court to bring
proceedings on behalf of the Group or intervened in
any proceedings to which the Group is a party for the
purpose of taking responsibility on behalf of the Group
for all or any part of those proceedings.
The Group was not a party to any other such proceedings
during the year.
Remuneration Report (Audited)
The remuneration report details the Key Management
Personnel (KMP) remuneration arrangements for the
Group, in accordance with the requirements of the
Corporations Act 2001 and its Regulations.
KMP are those persons having authority and
responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including
all Directors.
For the purposes of this Remuneration Report, KMP
includes the following Directors and Senior Executives
who were engaged by the Company at any time during
the year ended 30 June 2024:
(i) Directors
Dr John Prendergast
Executive Chairman
Dr Alan Dunton
Non-Executive Director
Mr Alistair McKeough
Non-Executive Director
Mr James Graham
Managing Director &
Chief Executive Officer
Ms Michele Dilizia
Executive Director and
Chief Scientific Officer
Dr Justin Ward
Executive Director and
Principal Quality Chemist
(ii) Key Management Personnel
Mr Arthur Kollaras
Principal Engineer & Head
of Manufacturing
The Remuneration Report covers the following matters:
(A) Principles used to determine the nature and amount
of remuneration;
(B) Executive service agreements;
(C) Details of remuneration;
(D) Share-based remuneration;
(E) Other transactions with Key Management Personnel;
and
(F) Other information.
(A) Principles Used to Determine the Nature
and Amount of Remuneration
In determining competitive remuneration rates, the Board
seeks independent advice on local and international
trends among comparative companies and industry
generally. It examines terms and conditions for employee
incentive schemes, benefit plans and share plans.
Independent advice may also be obtained to confirm that
executive remuneration is in line with market practice
and is reasonable in the context of Australian executive
reward practices.
Executive Remuneration
The Group’s Remuneration Policy for Executive and
Non-Executive Directors is designed to promote superior
performance and long-term commitment to the Group.
Executives receive a base remuneration which is market
related, and may be entitled to performance based
remuneration at the ultimate discretion of the Board.
Overall remuneration policies are subject to the discretion
of the Board and can be changed to reflect competitive
market and business conditions where it is in the interests
of the Group and shareholders to do so.
Executive remuneration and other terms of employment
are normally reviewed annually by the Board having
regard to performance, relevant comparative information
and expert advice.
The Group’s reward policy reflects its obligation to align
executive’s remuneration with shareholders’ interests and
to retain appropriately qualified executive talent for the
benefit of the Group. The principles underpinning the
Group’s remuneration policy are that:
– Reward reflects the competitive global market in
which we operate;
– Rewards to executives are linked to creating value
for shareholders;
– Remuneration arrangements are equitable and facilitate
the development of senior management across the
consolidated entity; and
– Where appropriate senior managers may receive a
component of their remuneration in equity securities
to align their interests with those of the shareholders.
28
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Directors’ Report Continued
For the year ended 30 June 2024
The total remuneration of executives and other senior
managers consists of the following:
(a) Salary – Executive Directors and senior managers
receive a sum payable monthly in cash;
(b) Long-term incentives – Executive Directors may
participate in share option/performance right
schemes with the prior approval of shareholders.
Other senior managers may also participate in
employee share option/performance right schemes,
with any option/performance right scheme, with
any option/performance rights issues generally
being made in accordance with thresholds set in
plans approved by shareholders. The Board however,
considers it appropriate to retain the flexibility to
issue options/performance rights to executives
outside of approved employee option/performance
right plans in exceptional circumstances; and
(c) Other benefits – Executive Directors and senior
managers are eligible to participate in superannuation
schemes and other appropriate additional benefits.
Cash bonuses are not subject to any specific
performance terms and conditions.
Non-Executive Remuneration
Shareholders approve the maximum aggregate
remuneration for Non-Executive Directors. The full Board
recommends the actual payments to Directors and the
Board is responsible for ratifying any recommendations,
if appropriate. The maximum approved aggregate
remuneration approved for Non-Executive Directors is
currently $250,000.
It is recognised that Non-Executive Directors’
remuneration is ideally structured to exclude equity based
remuneration. However, whilst the Group remains small,
and the full Board, including the Non-Executive Directors
are included in the operations of the Group more closely
than may be the case with larger companies, the Non-
Executive Directors are entitled to participate in equity
based remuneration schemes subject to shareholders
approval.
The Directors’ believe that as at this stage, there is
no relationship between the remuneration policy and
performance.
All Directors are entitled to have their indemnity
insurance paid by the Group.
29
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
(B) Service Agreements
Name
Base Salary
Performance-
Based Incentives
Term
Notice Period
Dr John Prendergast¹
–
Nil
No fixed term
3 months
Ms Michele Dilizia
$350,000 pa
Nil
No fixed term
3 months
Mr James Graham
$450,000 pa
Nil
No fixed term
3 months
Mr Justin Ward²
$280,000 pa
Nil
No fixed term
4 weeks
Mr Arthur Kollaras³
–
Nil
No fixed term
4 weeks
Dr Alan Dunton⁴
–
Nil
No fixed term
4 weeks
Mr Alistair McKeough⁵
–
Nil
No fixed term
4 weeks
1 Entered into a consultancy agreement with the Company effective 26 February 2023. Remunerated monthly consulting
and services fee of US $20,833.33 totalling US$250,000 per annum.
2 Entered into an employment agreement with the Company effective 10 March 2023. Total remuneration excluding super
is $280,000 plus superannuation.
3 Entered into a consultancy agreement with the Company effective 1 October 2021. Remunerated at the rate of $400
per hour.
4 Remunerated monthly consulting fees of US$468.75 per hour plus fixed monthly consultant fees of $6,250.
5 Entered into a consultancy agreement with the Company effective 1 September 2022. Remunerated monthly consulting
fees of $6,770.83.
(C) Details of Remuneration
Director and other KMP Remuneration
Details of the nature and amount of each element of the remuneration of each KMP are shown in the table below:
Year ended 30 June 2024
Name
Short-term
benefits,
cash salary and
other fees
$
Accrued
Long
Service
Leave
$
Superannuation
(post-
employment
benefit)
$
Termination
payments
$
Bonus
$
Share-
based
payments
$
Total
$
Percentage
Performance
Related
%
Directors
M Dilizia
374,475
6,367
27,500
–
122,500
–
530,842
23.1
J Graham
524,118
12,891
27,500
–
270,000
–
834,509
32.4
J Prendergast
380,547
–
–
–
–
–
380,547
–
J Ward
280,000
7,730
30,800
–
–
–
318,530
–
A Dunton
75,000
–
–
–
–
–
75,000
–
A McKeough
81,250
–
–
–
–
–
81,250
–
Executives
A Kollaras
504,640
3,863
55,510
–
–
–
564,013
2,220,030
30,852
141,310
–
392,500
–
2,784,692
30
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Directors’ Report Continued
For the year ended 30 June 2024
Year ended 30 June 2023
Name
Short-term
benefits,
cash salary and
other fees
$
Accrued
Long
Service
Leave
$
Superannuation
(post-
employment
benefit)
$
Termination
payments
$
Bonus
$
Share-
based
payments
$
Total
$
Percentage
Performance
Related
%
Directors
M Dilizia
367,650
64,191
27,500
–
80,000
–
539,341
14.8
J Graham
550,849
69,455
19,423
–
135,000
–
774,727
17.4
J Prendergast
369,848
–
–
–
–
–
369,848
–
J Ward
249,620
30,928
26,210
–
–
–
306,758
–
A Dunton
72,500
–
–
–
–
–
72,500
–
A McKeough
66,937
–
–
–
–
325,217
392,154
–
Executives
A Kollaras
288,800
–
30,324
–
–
–
319,124
1,966,204
164,574
103,457
–
215,000
325,217 2,774,452
(D) Share-Based Remuneration
Year ended 30 June 2024
(i) Issue of ordinary shares
There were no ordinary shares issued to Directors or KMP as part of their compensation during the year ended
30 June 2024.
(ii) Issue of options
There were no options issued to Directors or KMP as part of their compensation during the year ended 30 June 2024.
(iii) Issue of performance shares
There were no performance shares issued to Directors or KMP as part of their compensation during the year ended
30 June 2024.
Year ended 30 June 2023
(i) Issue of ordinary shares
There were no ordinary shares issued to Directors or KMP as part of their compensation during the year ended
30 June 2023.
31
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
(ii) Issue of options
The following options were issued on 15 November 2022 as part of remuneration under a share-based payment.
Name
Options issued
No.
$
Executives
A McKeough
1,125,000
325,217
1,125,000
325,217
The terms and conditions of each grant of options affecting remuneration in the current reporting period are as follows:
– exercise price: $1.56
– grant date 15 November 2022
– grant date share price: $0.69
– value per option at grant date $0.28908
– grant date 15 November 2022
– dividend yield: 0.0%;
– risk-free rate based on the Australian Treasury bond rate for five years, to align with the term of the options: 3.44%;
– expected volatility derived from the share volatility of compatible listed companies over five years, to align with
the term of the options: 70%; and
– expected life of the Share Option: five years.
(iii) Issue of performance shares
There were no performance shares issued to Directors or KMP as part of their compensation during the year ended
30 June 2023.
Equity Instrument Disclosures Relating to KMP
(a) Ordinary Shares
The movement of the numbers of shares in the Company for the year ended 30 June 2024 held by the Directors of
the Company and other KMP of the Group, including their personally related parties, are set out below:
Name
Balance at
1 July 2023
Net Change
Other
Share-based
Payment
Balance at
30 June 2024
Directors
M Dilizia
3,543,485
(459,000)
–
3,084,485
J Graham
6,531,932
233,430
–
6,765,362
J Prendergast
250,000
56,819
–
306,819
J Ward
158,966
142,478
–
301,444
A Dunton
70,000
56,819
–
126,819
A McKeough
25,000
961
–
25,961
Executives
A Kollaras
67,155
25,000
–
92,155
10,646,538
56,507
–
10,703,045
32
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Directors’ Report Continued
For the year ended 30 June 2024
(b) Performance Shares
There are no performance shares outstanding as at 30 June 2024.
(c) Options
The movement of the numbers of options in the Company for the year ended 30 June 2024 held by the Directors of
the Company and other KMP of the Group, including their personally related parties, are set out below:
Name
Balance at
1 July 2023
Options
Expired
Balance at
30 June 2024*
Directors
J Graham
2,250,000
–
2,250,000
M Dilizia
1,500,000
–
1,500,000
A Dunton
1,125,000
–
1,125,000
J Prendergast
2,175,000
–
2,175,000
J Ward
600,000
–
600,000
A McKeough
1,125,000
–
1,125,000
Executives
A Kollaras
600,000
–
600,000
9,375,000
–
9,375,000
* All options as at 30 June 2024 are vested and exerciseable.
(E) Other Transactions with KMP
During the financial year, consulting fees for technical services totalling $1,111,952 (2023: $1,029,537) were paid to
an entity associated with Mr A Dunton. Additionally consulting fees for professional services totalling $Nil (2023:
$105,000) were paid to an entity associated with Mr A McKeough. All payments were made on normal commercial
terms and conditions. There were no other related party transactions during the financial year other than loans to key
management personnel (refer below).
(F) Other Information
Loans to key management personnel
An amount of $162,548 (2023: $104,388) was advanced to Mr James Graham as an unsecured loan. The amount
outstanding at reporting date including accrued interest was $291,088 (2023: $112,836). The loan is interest bearing at
the rate of 8.77% per annum. Interest accrued on the loan amounted to $15,704 (2023: $8,448). The loan is repayable
within 12 months of reporting date.
At year end, expense advances repayable by Mr James Graham totalled $Nil (2023: $Nil).
There were no other loans, payables, receivables or other transactions at the end of the financial year with Directors
and other KMP and their related parties of the Company or the Group.
Two strikes Rule in Respect to the Adoption of the Remuneration Report
The Corporations Act 2001 includes a ‘two strikes’ rule with regard to the adoption of Remuneration Reports. The
‘two strikes’ rule provides that if 25% or more of the votes cast on the resolution to adopt the Remuneration Report at
two consecutive Annual General Meetings are against the resolution, the Company must at the later Annual General
Meeting put a resolution to the shareholders proposing to convene another shareholder meeting to consider the spill
of the Board (‘Spill Resolution’).
Under the Corporations Act 2001, the Company must have a minimum of three Directors at all times. The Corporations
Act 2001, provides guidance in circumstances where either or both of the Directors are not re-elected by way of
ordinary resolution, then they will be taken to have been appointed as Directors by resolutions passed at the Spill
Meeting so that the Company maintains the required three Directors.
For the purposes of determining the length of time in office for future retirements by rotation, each Director who is
re-elected at the Spill Meeting is considered to have been in office from the time of their previous rotation.
33
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
At the Annual General Meeting held in November 2023, the Company received a ‘For’ vote of 41.6% on its
Remuneration Report for the 2023 financial year (2022: 94.2%). As more than 25% of the votes cast on this resolution
were against the adoption of the 2023 Remuneration Report, this constitutes a ‘first strike’ for purposes of the
Corporations Act 2001 (Cth). The Group did not receive any specific remuneration related feedback from shareholders
at either meeting however the Company has subsequently engaged with certain institutional shareholders who voted
against the Remuneration Report to discuss the issues.
No remuneration consultants were engaged during the year.
End of remuneration report.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts
in the Directors' Report have been rounded to the nearest dollar, unless otherwise stated.
This report is made in accordance with a resolution of the Board of Directors.
Dr John Prendergast
Executive Chairman
30 August 2024
34
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form
part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth, WA 6000
PO Box 700 West Perth WA 6872
Australia
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF RECCE
PHARMACEUTICALS LTD
As lead auditor of Recce Pharmaceuticals Ltd for the year ended 30 June 2024, I declare that, to the
best of my knowledge and belief, there have been:
1.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2.
No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Recce Pharmaceuticals Ltd and the entities it controlled during the
period.
Jarrad Prue
Director
BDO Audit Pty Ltd
Perth
30 August 2024
Auditor’s Independence Declaration
35
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
This corporate governance statement sets out Recce
Pharmaceuticals Ltd’s (Company) current compliance
with the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (Fourth
Edition) (ASX Principles and Recommendations). The
ASX Principles and Recommendations are not mandatory.
However, this corporate governance statement discloses
the extent to which the Company has followed the
ASX Principles and Recommendations. This corporate
governance statement is current as at 30 August
2024 and has been approved by the board of the
Company (Board).
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
1: Lay solid foundations for management and oversight
1.1
A listed entity should have and disclose a
board charter setting out:
YES
The Board is responsible for the corporate
governance of the Company.
(a) the respective roles and responsibilities of its
board and management; and
YES
The Board has adopted a Board Charter which
outlines the manner in which its powers and
responsibilities will be exercised, discharged or
delegated, having regard to principles of good
corporate governance and applicable laws.
(b) those matters expressly reserved to the board
and those delegated to management.
YES
A copy of the Board Charter is available on the
Company’s website at the following URL: https://
www.recce.com.au/index.php/company/corporate-
governance.
1.2
A listed entity should:
YES
(a) undertake appropriate checks before
appointing a director or senior executive, or
putting someone forward for election as a
director; and
(a) The Nomination and Remuneration Committee
is responsible for recommendations to the
Board for the selection and appointment
of members of the Board. The Company’s
Nomination and Remuneration Committee
Charter requires the Nomination and
Remuneration Committee to undertake
appropriate checks before the Board appoints
a person or puts forward a candidate to
security holders for election as a director.
(b) provide security holders with all material
information in its possession relevant to a
decision on whether or not to elect or re-elect
a director.
(b) All material information relevant to the decision
on whether or not to elect any potential
directors, including information relating to their
qualifications, experience and proposed roles
within the Board are provided to shareholders
in the Company’s notices of meetings.
1.3
A listed entity should have a written
agreement with each director and senior
executive setting out the terms of their
appointment.
YES
Directors and senior executives of the Company
are given letters of appointment and/or service
agreements prior to their engagement with
the Company which sets out the terms of their
appointment.
1.4
The company secretary of a listed entity
should be accountable directly to the board,
through the chair, on all matters to do with the
proper functioning of the board.
YES
The Company Secretary position is directly
accountable to the Board through the Chairperson
on all matters relevant to the proper functioning
of the Board. The Company Secretary is accessible
to all Directors.
Corporate Governance Statement
36
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Corporate Governance Statement Continued
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
1.5
A listed entity should:
NO
(a) Have and disclose a diversity policy which
includes requirements for the board or a
relevant committee of the board to set
measurable objectives for achieving gender
diversity and to assess annually both the
objectives and the entity’s progress in
achieving them;
(a) The Company has adopted a Diversity Policy
which complies with the guidelines prescribed
by the ASX Corporate Governance Council. The
Diversity Policy is available on the Company’s
website at https://www.recce.com.au/index.
php/company/corporate-governance
(b) through its board or a committee of the
board set measurable objectives for achieving
gender diversity in the composition of its
board, senior executives and workforce
generally; and
(b) The Diversity Policy:
(i) provides a framework for the Company
to set and achieve measurable objectives
for achieving diversity;
(ii) provides for the monitoring and evaluation
of the scope and currency of the Diversity
Policy. The Company is responsible for
implementing, monitoring and reporting
on the measurable objectives.
A copy of the Diversity Policy is available
on the Company’s website at: https://
www.recce.com.au/index.php/company/
corporate-governance.
(c)
disclose in relation to each reporting period:
(1) the measurable objectives set for that
period to achieve gender diversity;
(2) the entity’s progress towards achieving
those objectives; and
(3) either:
A. the respective proportions of men
and women on the board, in senior
executive positions and across the
whole workforce (including how the
entity has defined ‘senior executive’
for these purposes); or
B. if the entity is a ‘relevant employer’
under the Workplace Gender Equality
Act, the entity’s most recent ‘Gender
Equality Indicators’, as defined in and
published under that Act.
If the entity was in the S&P/ASX 300 Index at
the commencement of the reporting period,
the measurable objective for achieving gender
diversity in the composition of its board
should be to have not less than 30% of its
directors of each gender within a specified
period.
(c) As of 30 June 2024, the respective proportions
of men and women on the Board, in Senior
Executive positions and across the whole
organisation are set out below:
(i) 5 Directors of the Company’s Board were
male and 1 female;
(ii) 63% of the Company’s Senior Executives
were male and 37% were female; and
(iii) 56% of the Group’s entire workforce
(including Board members) were female
and 44% were male.
Senior Executives are defined as the Executive
Directors and those with a direct report into
the CEO.
37
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
1.6
A listed entity should:
YES
(a) have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(a) The Nomination and Remuneration Committee
is responsible for evaluating the performance
of the Board and individual Directors on an
annual basis. The process for this is set out in
the Company’s Nomination and Remuneration
Committee Charter which is available on the
Company’s website at: https://www.recce.com.
au/index.php/company/corporate-governance.
(b) disclose, for each reporting period, whether a
performance evaluation has been undertaken
in the reporting period in accordance with that
process during or in respect of that period.
(b) An informal evaluation of the performance of
the Board, its committees and its individual
Directors was conducted in relation to the
reporting period.
1.7
A listed entity should:
YES
(a) have and disclose a process for periodically
evaluating the performance of its senior
executives at least once every reporting
period; and
(a) The Nomination and Remuneration Committee
is responsible for evaluating the performance
of Senior Executives on an annual basis in
accordance with the Company’s Nomination
and Remuneration Committee Charter which
is available on the Company’s website at:
https://www.recce.com.au/index.php/company/
corporate-governance.
(b) disclose, in relation to each reporting period,
whether a performance evaluation has
been undertaken in the reporting period in
accordance with that process during or in
respect of that period.
(b) An evaluation of the Company’s Senior
Executives was conducted in relation to the
reporting period
38
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Corporate Governance Statement Continued
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
2: Structure the Board to be effective and add value
2.1
The board of a listed entity should:
YES
(a) have a nomination committee which:
(1) has at least three members, a majority
of whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
The Company has established a Nomination and
Remuneration Committee with Dr Alan Dunton, an
independent Director, as Chair of the Committee.
The Committee has three members, who are:
(a) Dr Alan Dunton – Independent Non-executive
Director;
(b) Dr John Prendergast – Executive Director; and
(c) Mr Alistair McKeough – Independent Non-
executive Director.
The Committee met 5 times during the FY24
financial reporting period and the attendance of
each member at those meetings is as follows:
(a) Dr Alan Dunton – 5;
(b) Dr John Prendergast – 5; and
(c) Mr Alistair McKeough – 3.
A copy of the Nomination and Remuneration
Committee Charter is available on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
(b) if it does not have a nomination committee,
disclose that fact and the processes it employs
to address board succession issues and to
ensure that the board has the appropriate
balance of skills, knowledge, experience,
independence and diversity to enable it
to discharge its duties and responsibilities
effectively.
N/A
2.2 A listed entity should have and disclose a
board skills matrix setting out the mix of skills
and diversity that the Board currently has or is
looking to achieve in its membership.
YES
The Board strives to ensure that it is comprised
of Directors with a blend of skills, experience and
attributes appropriate for the Company and its
business. The Company has a board skills matrix,
setting out the mix of skills and diversity of the
current Directors of the Company. A copy of the
Board Skills Matrix is available on the Company
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
39
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
2.3 A listed entity should disclose:
YES
(a) the names of the directors considered by
the board to be independent directors;
(a) Dr Alan Dunton and Mr Alistair McKeough,
are the only Directors of the Company
considered independent.
(b) if a director has an interest, position,
association or relationship of the type
described in Box 2.3 but the board is of the
opinion that it does not compromise the
independence of the director, the nature of the
interest, position, association or relationship in
question and an explanation of why the board
is of that opinion; and
(b) Dr Alan Dunton and Mr Alistair McKeough,
are the only two Directors of the Company
considered independent and do not have an
interest, position, association or relationship
of the type described in Box 2.3 of the ASX
Principles and Recommendations. The Board
assesses the independence of new Directors
upon appointment and reviews Director
independence as appropriate.
(c)
the length of service of each director.
(c) The date of appointment of each Director is
as follows:
• Dr John Prendergast – appointed on 23-04-
2018;
• Mr James Graham – appointed on 23-06-2015;
• Ms Michele Dilizia – appointed on 26-06-2015;
• Dr Justin Ward - appointed on 08-07-2019;
• Dr Alan Dunton – appointed on 14-07-2020;
and
• Mr Alistair McKeough – appointed on 01-09-
2022.
2.4 A majority of the board of a listed entity
should be independent directors.
NO
The Board Charter requires that where practical
the majority of the Board will be independent. The
Board currently comprises a total of six Directors,
of whom two are considered to be independent,
being Dr Alan Dunton and Mr Alistair McKeough.
The Board does not currently consider an
independent majority of the Board to be
appropriate given:
(a) the magnitude of the Company’s operations;
and
(b) the relevant skills and experience of Ms Dilizia,
Dr Dunton, Mr Graham, Mr McKeough, Dr
Prendergast and Dr Ward mean that the Board
is appropriately skilled at this stage, to further
the progress and development of the Company.
2.5 The chair of the board of a listed entity should
be an independent director and, in particular,
should not be the same person as the CEO of
the entity.
NO
The Company’s Executive Chairman,
Dr Prendergast, does not satisfy the ASX
Principles and Recommendations definition
of an independent director. Mr James Graham
is the CEO of the Company.
40
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Corporate Governance Statement Continued
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
2.6 A listed entity should have a program for
inducting new directors and for periodically
reviewing whether there is a need for
existing directors to undertake professional
development to maintain the skills and
knowledge needed to perform their role as
directors effectively.
YES
The Nomination and Remuneration Committee
is responsible to the Board for reviewing and
recommending to the Board induction and
professional development programs and
procedures for Directors to ensure that they can
effectively discharge their responsibilities.
As a result, the Company has in place a program
for the induction of new Directors which is tailored
to each new Director depending on their personal
requirements, background skills, qualifications
and experience and includes the provision of a
formal letter of appointment and an induction
pack containing sufficient information to allow
the new Director to gain an understanding of the
business of the Company, and the roles, duties and
responsibilities of Directors and the Executive Team.
All Directors are encouraged to undergo continual
professional development and, subject to prior
approval by the Chairman, all Directors have
access to numerous resources and professional
development training to address any skills gaps
3: Instill a culture of acting lawfully, ethically and responsibly
3.1
A listed entity should articulate and disclose
its values.
YES
The Company values are:
(a) Integrity;
(b) Inclusivity;
(c) Innovation;
(d) Respect; and
(e) Accountability.
The Company values are published on the
Company’s website at: https://www.recce.com.au/
index.php/company/corporate-governance.
3.2 A listed entity should:
YES
(a) The Board is committed to the establishment
and maintenance of appropriate ethical
standards in order to instil confidence in
both clients and the community in the way
the Company conducts its business. These
standards are encapsulated in the Code of
Conduct which outlines how the Company
expects each person who represents it to
behave and conduct business. The Company
has a Code of Conduct which applies to all
Directors, senior executives and employees
and is available on the Company’s website at:
https://www.recce.com.au/index.php/company/
corporate-governance.
(b) ensure that the board or a committee of the
board is informed of any material breaches of
that code.
(b) The Company ensures that the Board is
informed of any material breaches under the
Code of Conduct Policy.
41
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
3.3 A listed entity should:
YES
(a) have and disclose a whistleblower policy; and
(a) The Company has adopted a Whistleblower
Protection Policy which establishes a system
for the reporting, investigation and rectification
of wrongdoing. A copy of the Whistleblower
Policy is available on the Company’s website at:
https://www.recce.com.au/index.php/company/
corporate-governance.
(b) ensure that the board or a committee of the
board is informed of any material incidents
reported under that policy.
(b) Through ongoing reporting, whilst preserving
confidentiality, the Board is provided
periodic reports on any disclosures under
the Whistleblower Policy.
3.4 A listed entity should:
YES
(a) have and disclose an anti-bribery and
corruption policy; and
(a) The Company has adopted an Anti-bribery
and Corruption Policy which sets out the
Company’s policy in relation to bribery,
corruption and related improper conduct and
establishes a process for the reporting of such
conduct. The Anti-bribery and Corruption
Policy is available on the Company’s website at:
https://www.recce.com.au/index.php/company/
corporate-governance.
(b) ensure that the board or committee of the
board is informed of any material breaches
of that policy.
(b) Through on-going reporting, the Company
ensures that the Board is informed of any
material breaches under the Anti-bribery and
Corruption Policy.
42
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Corporate Governance Statement Continued
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
4: Safeguard the integrity of corporate reports
4.1
The board of a listed entity should:
NO
(a) have an audit committee which:
(1) has at least three members, all of whom
are non-executive directors and a majority
of whom are independent directors; and
(2) is chaired by an independent director, who
is not the chair of the board, and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience
of the members of the committee; and
(5) in relation to each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
The Company has established an Audit and
Risk Management Committee with Mr Alistair
McKeough, an independent Director, as Chair of the
Committee. The Committee has three members,
who are:
(a) Mr Alistair McKeough – Independent Non-
executive Director;
(b) Dr Alan Dunton – Independent Non-executive
Director; and
(c) Dr John Prendergast –Executive Director.
The Committee met 5 times during the FY24
financial reporting period and the attendance of
each member at those meetings is as follows:
(a) Mr Alistair McKeough – 3;
(b) Dr Alan Dunton – 5;
(c) Dr John Prendergast – 5.
A copy of the Audit and Risk Management
Committee Charter is available on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
(b) if it does not have an audit committee,
disclose that fact and the processes it employs
that independently verify and safeguard
the integrity of its corporate reporting,
including the processes for the appointment
and removal of the external auditor and the
rotation of the audit engagement partner.
N/A
4.2 The board of a listed entity should, before
it approves the entity’s financial statements
for a financial period, receive from its CEO
and CFO a declaration that, in their opinion,
the financial records of the entity have been
properly maintained and that the financial
statements comply with the appropriate
accounting standards and give a true and fair
view of the financial position and performance
of the entity and that the opinion has been
formed on the basis of a sound system of risk
management and internal control which is
operating effectively.
YES
Prior to the execution of the financial statements
of the Company, the Company’s Executive
Director and CFO provided the Board with
written assurances that the declaration provided
in accordance with section 295A of the
Corporations Act is founded on a sound system
of risk management and internal controls which
is operating effectively in all material aspects in
relation to the Company’s financial reporting risks.
43
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
4.3
A listed entity should disclose its process to
verify the integrity of any periodic corporate
report it releases to the market that is not
audited or reviewed by an external auditor.
YES
The Board ensures that any periodic corporate
report the Company releases to the market that
has not been subject to audit or review by an
external auditor discloses the process taken to
verify the integrity of its content.
The Company releases Half Year Financial Reports
which are reviewed by external auditor, BDO, and
Full Year Financial Reports which are audited by
external auditor BDO.
The Company is committed to providing clear,
concise and effective disclosure in its corporate
reports. The Company’s goal is that periodic
corporate reports will be accurate, balanced and
provide investors with appropriate information
to make informed investment decisions. The
Company’s process for verifying unaudited
periodic corporate reports is as follows:
• reports are prepared by or under the supervision
of subject matter experts;
• material statements in the reports are reviewed
for accuracy and material requirements and
appropriately interrogated;
• other than administrative announcements all the
announcements must be approved by the Board.
This process is intended to ensure that all
applicable laws, regulations and Company policies
have been complied with and that the source of
the information is able to be verified and that
appropriate approvals have been obtained before
a report is released to the market.
5: Make timely and balanced disclosure
5.1
A listed entity should have and disclose
a written policy for complying with its
continuous disclosure obligations under
listing rule 3.1.
YES
The Company is committed to providing timely,
complete and accurate disclosure of information
to allow a fair and well-informed market in its
securities and compliance with the continuous
disclosure requirements imposed by law, including
the Corporations Act and the ASX Listing Rules.
A copy of the Company’s Continuous Disclosure
Policy is available at: https://www.recce.com.au/
index.php/company/corporate-governance.
5.2 A listed entity should ensure that its board
receives copies of all material market
announcements promptly after they have
been made.
YES
The Company has a procedure in place to ensure
that the Board receives copies of all material
market announcements promptly after they
have been made.
5.3 A listed entity that gives a new and
substantive investor or analyst presentation
should release a copy of the presentation
materials on the ASX Market Announcements
Platform ahead of the presentation.
YES
The Company has a procedure in place to ensure
that ahead of any new and substantive investor or
analyst presentations, a copy of the presentations
materials are released to ASX Announcement
Platform.
44
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Corporate Governance Statement Continued
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
6: Respect the rights of security holders
6.1
A listed entity should provide information
about itself and its governance to investors
via its website.
YES
The Company provides information about itself and
its governance to its investors on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
The Company will regularly update the website and
contents therein as deemed necessary.
6.2 A listed entity should have an investor
relations program that facilitates effective
two-way communication with investors.
YES
The Company has adopted a Shareholder
Communications Strategy which aims to promote
and facilitate effective two-way communication
with its investors. The Strategy outlines a range
of ways in which information is communicated to
shareholders.
A copy of the Company’s Shareholder
Communications Strategy policy is available on the
Company’s website at: https://www.recce.com.au/
index.php/company/corporate-governance.
6.3 A listed entity should disclose how it facilitates
and encourages participation at meetings of
security holders.
YES
The Company encourages shareholder participate
at the Company’s general meetings through various
means including:
(a) having the opportunity to ask questions of
Directors at all general meetings;
(b) ensuring that the auditor is present at AGMs
to take shareholder questions on any issue
relevant to their capacity as auditor;
(c) ensuring that Directors answer shareholder
questions submitted prior to a general meeting
that are relevant to the business of the
meeting; and
(d) providing Shareholders with the option of
appointing a proxy to vote on their behalf.
Traditionally, the key forum for two-way
communication between the Company and its
shareholders is its AGM.
6.4 A listed entity should ensure that all
substantive resolutions at a meeting of
security holders are decided by a poll rather
than by a show of hands.
YES
All resolutions at a meeting of security holders are
decided by a poll rather than a show of hands.
6.5 A listed entity should give security holders the
option to receive communications from, and
send communications to, the entity and its
security registry electronically.
YES
Shareholders can register with the Company to
receive email notifications when an announcement
is made by the Company to the ASX.
Shareholders can also elect to receive electronic
communications via the Company’s registry,
Automic Registry Services.
45
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
7: Recognise and manage risk
7.1
The Board of a listed entity should:
(a) have a committee or committees to oversee
risk, each of which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
YES
The Company has established an Audit and Risk
Management Committee with Mr Alistair McKeough,
an independent Director, as Chair of the Committee.
The Committee has three members, who are:
(a) Mr Alistair McKeough – Independent Non-
executive Director;
(b) Dr Alan Dunton – Independent Non-executive
Director; and
(c) Dr John Prendergast – Executive Director.
The Committee met 5 times during the FY24
financial reporting period and the attendance of
each member at those meetings is as follows:
(a) Mr Alistair McKeough – 3;
(b) Dr Alan Dunton – 5;
(c) Dr John Prendergast – 5.
A copy of the Audit and Risk Management
Committee Charter is available on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
(b) if it does not have a risk committee or
committees that satisfy (a) above, disclose
that fact and the processes it employs for
overseeing the entity’s risk management
framework.
N/A
7.2
The board or a committee of the board should:
YES
(a) review the entity’s risk management
framework at least annually to satisfy itself
that it continues to be sound and that the
entity is operating with due regard to the risk
appetite set by the board; and
The Audit and Risk Management Committee
Charter sets out a requirement for the Audit
and Risk Management Committee to review the
Company’s risk management framework on an
annual basis.
The Company monitors, evaluates and seeks to
improve its risk management and internal control
processes in line with the processes set out in
its Risk Management Policy, a copy of which is
available on the Company’s website at: https://
www.recce.com.au/index.php/company/corporate-
governance.
In addition, the Company has a number of other
policies that directly or indirectly serve to reduce
and/or manage risk, including:
(a) Continuous Disclosure Policy;
(b) Code of Conduct; and
(c) Trading Policy.
46
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Corporate Governance Statement Continued
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
(b) disclose in relation to each reporting period,
whether such a review has taken place.
The Audit and Risk Management Committee
completed such a review during the current
reporting period. Having conducted such reviews
throughout the reporting period the Audit and
Risk Management Committee resolved that the
Company’s risk management framework continues
to be sound.
7.3
A listed entity should disclose:
YES
(a)
if it has an internal audit function, how
the function is structured and what role it
performs; or
N/A
(b) if it does not have an internal audit function,
that fact and the processes it employs
for evaluating and continually improving
the effectiveness of its governance, risk
management and internal control processes.
The Audit and Risk Management Committee
Charter provides for the Audit and Risk
Management Committee to monitor the need for
an internal audit function. At this stage, due to the
current size and nature of the existing Board and
the magnitude of the Company’s operations the
Company does not have an internal audit function.
The Company has adopted a Risk Management
Policy which the Company follows. The Board of
the Company and the Audit and Risk Management
Committee will periodically review the Company’s
operations to evaluate the effectiveness of risk
management and internal control processes of
the Company. In addition, the Audit and Risk
Management Committee will directly monitor the
potential exposures facing the Company through
ongoing reporting by the CFO.
For each reporting period the Company’s external
auditor also conducts a control review to consider
and report on the risks facing the Company and
the controls the Company has in place to mitigate
those risks
7.4
A listed entity should disclose whether it has
any material exposure to environmental or
social risks and, if it does, how it manages or
intends to manage those risks.
YES
All material risks to economic, environmental and
social sustainability risks will be announced to the
market, in accordance with the requirements of the
ASX Listing Rules and otherwise within the Annual
Report.
8: Remunerate fairly and responsibly
8.1
The Board of a listed entity should:
YES
(a) (1) have a remuneration committee which:
has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director, and
disclose:
(3) the charter of the committee;
(4) the members of the committee; and
The Company has established a Nomination and
Remuneration Committee with Dr Alan Dunton, an
independent Director, as Chair of the Committee.
The Committee has three members, who are:
(a) Dr Alan Dunton – Independent Non-executive
Director;
(b) Mr Alistair McKeough - Independent Non-
executive Director; and
47
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
(5) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(c) Dr John Prendergast – Independent
Nonexecutive Director.
The Committee met 5 times during the FY24
financial reporting period and the attendance of
each member at those meetings is as follows:
(a) Dr Alan Dunton – 5;
(b) Dr John Prendergast – 5; and
(c) Mr Alistair McKeough – 3.
A copy of the Nomination and Remuneration
Committee Charter is available on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
(b) if it does not have a remuneration
committee, disclose that fact and the
processes it employs for setting the level and
composition of remuneration for directors
and senior executives and ensuring that such
remuneration is appropriate and not excessive.
N/A
8.2 A listed entity should separately disclose
its policies and practices regarding the
remuneration of non-executive directors and
the remuneration of executive directors and
other senior executives.
YES
The structure and details of Directors’ remuneration
is disclosed in the 2024 Annual Report.
8.3 A listed entity which has an equity-based
remuneration scheme should:
YES
(a) have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating
in the scheme; and
The Company’s Nomination and Remuneration
Committee is responsible for the review and
recommendation to the Board of any equity-based
remuneration schemes offered to Directors and
employees of the Company. Further, in accordance
with the Nomination and Remuneration Committee
Charter, the Nomination and Remuneration
Committee is also responsible for recommending,
on a case by case basis, for scheme participants to
enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic
risk of participating in the Scheme.
(b) disclose that policy or a summary of it.
The Company’s policy in this regard is set out in
the Company’s Nomination and Remuneration
Committee Charter, a copy of which is available on
the Company’s website at: https://www.recce.com.
au/index.php/company/corporate-governance.
48
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Note
2024
2023
$
$
OTHER INCOME
5
5,236,375
4,431,406
EXPENSES
Laboratory expenses
(7,042,034)
(7,167,133)
Employee benefits expenses
6
(5,148,242)
(3,610,301)
Share-based payments expense
23
(20,167)
(325,217)
Depreciation and amortisation expenses
13
(65,465)
(47,039)
Travel expenses
(571,724)
(962,910)
Patent related costs
(116,763)
(162,684)
Rental outgoings expenses
(334,151)
(176,994)
Finance costs
6
(806,614)
(172,623)
Other expenses
6
(7,210,193)
(3,585,001)
Amortisation: Leases
14
(301,303)
(170,116)
Interest expense: Leases
(40,238)
(10,642)
Advertising and marketing
(1,241,195)
(1,118,168)
(22,898,089)
(17,508,828)
LOSS BEFORE INCOME TAX
(17,661,714)
(13,077,422)
Income tax expense
8
–
–
LOSS FOR THE YEAR
(17,661,714)
(13,077,422)
Other comprehensive income for the year
–
–
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(17,661,714)
(13,077,422)
Cents
Cents
LOSS PER SHARE ATTRIBUTABLE TO THE OWNERS OF RECCE PHARMACEUTICALS:
Basic loss per share for the year
9
(9.97)
(7.52)
Diluted loss per share for the year
9
(9.97)
(7.52)
The above consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes
Consolidated Statement of
Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2024
49
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
2024
2023
Note
$
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
10
4,415,185
1,561,579
Trade and other receivables
11
159,428
90,667
Other current assets
12
561,859
295,213
TOTAL CURRENT ASSETS
5,136,472
1,947,459
NON-CURRENT ASSETS
Plant and equipment
13
439,268
362,837
Right of use asset
14
793,873
245,573
TOTAL NON-CURRENT ASSETS
1,233,141
608,410
TOTAL ASSETS
6,369,614
2,555,869
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
15
14,394,767
4,319,719
Provisions for employee benefits
16
450,874
299,201
Other provisions
17
–
83,054
Lease Liabilities
18
224,085
147,878
TOTAL CURRENT LIABILITIES
15,069,726
4,849,852
NON-CURRENT LIABILITIES
Provisions for employee benefits
16
236,551
192,133
Lease Liabilities
18
587,105
102,688
TOTAL NON-CURRENT LIABILITIES
823,656
294,821
TOTAL LIABILITIES
15,893,382
5,144,673
NET LIABILTIES
(9,523,768)
(2,588,804)
EQUITY
Share capital
19
54,838,713
44,111,963
Reserves
20
5,713,390
8,834,557
Accumulated losses
(70,075,871)
(55,535,324)
TOTAL DEFICIENCY IN EQUITY
(9,523,768)
(2,588,804)
The above consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
Consolidated Statement of
Financial Position
As at 30 June 2024
50
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Share
Accumulated
Capital
Reserves
Losses
Total
$
$
$
$
BALANCE AT 1 JULY 2022
43,968,321
8,550,939
(42,457,902)
10,061,358
COMPREHENSIVE INCOME:
Loss for the year
–
–
(13,077,422)
(13,077,422)
Other comprehensive loss
–
–
–
–
–
–
(13,077,422)
(13,077,422)
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS:
Options issued to KMPs and employees
–
325,217
–
325,217
Conversion of option into ordinary shares
102,043
–
–
102,043
Transfer from reserve to share capital
41,599
(41,599)
–
–
143,642
283,618
–
427,260
BALANCE AT 30 JUNE 2023
44,111,963
8,834,557
(55,535,324)
(2,588,804)
BALANCE AT 1 JULY 2023
44,111,963
8,834,557
(55,535,324)
(2,588,804)
COMPREHENSIVE INCOME:
Loss for the year
–
–
(17,661,714)
(17,661,714)
Other comprehensive loss
–
–
–
–
–
–
(17,661,714)
(17,661,714)
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS:
Issuance of shares (net of cash-settled share issue costs)
10,461,090
–
–
10,461,090
Options issued to KMPs and employees
–
–
–
–
Options issued to lead manager
–
–
–
–
Conversion of options into ordinary shares
123,730
–
–
123,730
Shares issued to employees and consultants (net of costs)
141,930
–
–
141,930
Transfer from reserve to share capital
–
(3,121,167)
3,121,167
–
10,726,750
(3,121,167)
3,121,167
10,726,750
BALANCE AT 30 JUNE 2024
54,838,713
5,713,390
(70,075,871)
(9,523,768)
The above consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
Consolidated Statement of
Changes in Equity
For the year ended 30 June 2024
51
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
2024
2023
Note
$
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Australian Taxation Office
4,906,010
4,311,202
Payments to suppliers and employees
(18,144,393)
(15,694,642)
Interest received
172,690
59,583
Other income
140,089
54,014
Other (legal dispute settlement)
(83,054)
(1,417,527)
NET CASH USED IN OPERATING ACTIVITIES
21
(13,008,658)
(12,687,370)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment
(141,895)
(38,633)
NET CASH USED IN INVESTING ACTIVITIES
(141,895)
(38,633)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances to directors
24
(162,963)
(104,388)
Repayment of lease liabilities
(301,304)
(170,116)
Proceeds from issue of equity securities
11,022,445
–
Proceeds from exercise of options
123,730
102,043
Proceeds from borrowings
10,089,358
2,878,107
Repayment of borrowings
(4,203,762)
–
Transaction costs related to issues of equity or
convertible securities
(563,343)
–
NET CASH PROVIDED BY FINANCING ACTIVITIES
16,004,161
2,705,646
Net (decrease)/increase in cash and cash equivalents held
2,853,608
(10,020,357)
Cash and cash equivalent at the beginning of the year
1,561,577
11,581,934
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
10
4,415,185
1,561,577
The above consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
Consolidated Statement of
Cash Flows
For the year ended 30 June 2024
52
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
1: Corporate Information
The consolidated financial statements of Recce
Pharmaceuticals Ltd (‘the Company’) and together
with its controlled entities (‘the Group’) for the year
ended 30 June 2024.
The Company is a company limited by shares
incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange (ASX: RCE)
and the Frankfurt Stock Exchange (FSE: R9Q).
2: Material Accounting Policies
(a) New or amended Accounting Standards and
Interpretations adopted
The Company has adopted all of the new or amended
Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) that
are mandatory for the current reporting period.
Any new or amended Accounting Standards or
Interpretations that are not yet mandatory have not
been early adopted.
(b) Basis of Preparation of the Financial Report
The consolidated financial statements are general
purpose financial statements which have been prepared
in accordance with Australian Accounting Standards,
other authoritative pronouncements of the Australian
Accounting Standards Board and the Corporations
Act 2001.
The financial statements comprise the consolidated
financial statements of the Group. For the purposes of
preparing the consolidated financial statements, the
Company is a for profit entity.
Accounting Standards include Australian Accounting
Standards. Compliance with Australian Accounting
Standards ensures that the consolidated financial
statements and notes of the Company and the Group
comply with International Financial Reporting Standards
(IFRS).
The consolidated financial statements have been
prepared in accordance with the significant accounting
policies disclosed below as adopted by the Group. Such
accounting policies are consistent with the previous year
unless stated otherwise.
(c) Foreign Currency Translation
The individual financial statements of each Group entity
are presented in the currency of the primary economic
environment in which the entity operates (its functional
currency). For the purpose of the consolidated financial
statements, the results and financial position of the Group
are expressed in Australian dollars, which is the functional
currency of the Company and the presentation currency
for the consolidated financial statements.
The functional currency of the subsidiaries is United
States Dollars and British Pounds. At the end of the
reporting year, the assets and liabilities of these overseas
subsidiaries are translated into the presentation currency
of Recce Pharmaceuticals Ltd at the closing rate at the
end of the reporting year and income and expenses are
translated at the weighted average exchange rates for the
year. All resulting exchange differences are recognised in
other comprehensive income as a separate component of
equity (foreign currency translation reserve). On disposal
of a foreign entity, the cumulative exchange differences
recognised in foreign currency translation reserves
relating to that particular foreign operation is recognised
in profit or loss.
(d) Revenue Recognition
Interest Income
Revenue is recognised as interest accrues using the
effective interest method. The effective interest method
uses the effective interest rate which is the rate that
exactly discounts the estimated future cash receipts over
the expected life of the financial asset.
Research and Development (R&D) Tax Incentive
R&D tax incentives from the government (both Australian
and overseas) are recognised when received or when the
right to receive payment is established.
(e) Plant and Equipment
All plant and equipment is stated at historical cost,
including costs directly attributable to bringing the
asset to the location and condition necessary for it to
be capable of operating in the manner intended by
management, less depreciation and any impairments.
All plant and equipment is stated at historical cost,
including costs directly attributable to bringing the
asset to the location and condition necessary for it to
be capable of operating in the manner intended by
management, less depreciation and any impairments.
Depreciation on other assets is calculated on a reducing
balance basis over the estimated useful life, or in the case
of leasehold improvements and certain leased plant and
equipment, the shorter lease term, as follows:
– Certain laboratory machinery
and equipment
10 – 15 years
– Office improvements
3 – 8 years
Each class of plant and equipment is stated at historical
cost, including costs directly attributable to bringing
the asset to the location and condition necessary for it
to be capable of operating in the manner intended by
management, less depreciation and any impairments.
Depreciation
Depreciation is calculated on a diminishing value basis
over the estimated useful life as follows:
Class of Fixed Asset
Depreciation Rate
– Laboratory machinery
and equipment
8% – 40%
– Office furniture and equipment
5% – 33%
– Computer equipment
33% – 67%
– Library and website costs
20% – 40%
53
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
The assets’ residual values and useful lives are reviewed
and adjusted, if appropriate, at the end of each
reporting year.
Gains and losses on disposals are calculated as the
difference between the net disposal proceeds and the
assets' carrying amount and are included in profit or loss
in the year that the item is derecognised.
(f) Research Expenditure
Research costs are expensed as incurred.
(g) Trade and Other Payables
Trade and other payables represent liabilities for goods
and services provided to the Group prior to the year end
and which are unpaid. These amounts are unsecured and
have 30-60 day payment terms. They are recognised
initially at fair value and subsequently measured at
amortised cost using the effective interest method.
(h) Borrowings
All loans and borrowings are initially recognised at fair
value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference
between the proceeds (net of transaction costs) and the
redemption amount is recognised in profit or loss over
the year of the loans and borrowings using the effective
interest method.
Borrowings are derecognised from the statement of
financial position when the obligation specified in the
contract has been discharged, cancelled or expires. The
difference between the carrying amount of the borrowing
derecognised and the consideration paid is recognised in
profit or loss as other income or finance costs.
All borrowings are classified as current liabilities unless
the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the end of the
reporting year.
(i) Employee Benefit Provisions
Short-term employee benefit obligations
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and accumulating sick leave
expected to be settled wholly within 12 months after the
end of the reporting year are recognised in other liabilities
in respect of employees' services rendered up to the
end of the reporting year and are measured at amounts
expected to be paid when the liabilities are settled.
Liabilities for non-accumulating sick leave are recognised
when leave is taken and measured at the actual rates paid
or payable.
Other long-term employee benefits obligations
Liabilities for long service leave and annual leave are not
expected to be settled wholly within 12 months after the
end of the reporting year. They are recognised as part of
the provision for employee benefits and measured as the
present value of expected future payments to be made
in respect of services provided by employees to the end
of the reporting year. Consideration is given to expected
future salaries and wages levels, experience of employee
departures and years of service. Expected future
payments are discounted using Australian corporate
bond rates at the end of the reporting year with terms to
maturity and currency that match, as closely as possible,
the estimated future cash outflows.
Regardless of when settlement is expected to occur,
liabilities for long service leave and annual leave
are presented as current liabilities in the statement
of financial position if the entity does not have an
unconditional right to defer settlement for at least
12 months after the end of the reporting year.
(j) Share-Based Payments
Equity-settled and cash-settled share-based
compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or
options over shares, that are provided to employees in
exchange for the rendering of services.
The cost of equity-settled transactions are measured
at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes
option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the
share price at grant date and expected price volatility of
the underlying share, the expected dividend yield and the
risk free interest rate for the term of the option, together
with non-vesting conditions that do not determine
whether the consolidated entity receives the services that
entitle the employees to receive payment. No account is
taken of any other vesting conditions.
The cost of equity-settled transactions are recognised
as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to profit
or loss is calculated based on the grant date fair value
of the award, the best estimate of the number of awards
that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss
for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in
previous periods.
Market conditions are taken into consideration in
determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective
of whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum
an expense is recognised as if the modification has
not been made. An additional expense is recognised,
over the remaining vesting period, for any modification
that increases the total fair value of the share-based
compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the
consolidated entity or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition
is not within the control of the consolidated entity or
employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised
over the remaining vesting period, unless the award is
forfeited.
54
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
If equity-settled awards are cancelled, it is treated as
if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new
replacement award is substituted for the cancelled award,
the cancelled and new award is treated as if they were a
modification.
(k) Accounting Standards Issued But Not Yet Effective
The AASB has issued a number of new and amended
Accounting Standards and Interpretations that have
mandatory application dates for future reporting years,
some of which are relevant to the Group. The Group has
decided not to early adopt any of the new and amended
pronouncements.
(l) Rounding of Amounts to Nearest Dollar
In accordance with ASIC Corporations (Rounding of
Financial/Directors' Reports) Instrument 2016/191, the
amounts in the consolidated financial statements have
been rounded to the nearest dollar.
(m) Critical Accounting Judgements and Key Sources
of Estimation Uncertainty
The preparation of the consolidated financial statements
requires management to make judgements, estimates
and assumptions that affect the reported amounts in
the consolidated financial statements. Management
continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements,
estimates and assumptions on historical experience and
on other various factors, including expectations of future
events, management believes to be reasonable under
the circumstances. The resulting accounting judgements
and estimates will seldom equal the related actual results.
The judgements, estimates and assumptions that have
a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities (refer to
the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The Company measures the cost of equity-settled
transactions with employees by reference to the fair value
of the equity instruments at the date at which they are
granted. The fair value is determined by using either the
Trinomial or Black-Scholes model taking into account
the terms and conditions upon which the instruments
were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would
have no impact on the carrying amounts of assets and
liabilities within the next annual reporting year but may
impact profit or loss and equity.
3: Going Concern
For the year ended 30 June 2024 the Group recorded a
loss of $17,661,714 (2023: $13,077,422) and had net cash
outflows from operating activities of $13,008,658 (2023:
$12,687,370). As at 30 June 2024, the Company had a
deficiency of total assets to total liabilities of $9,523,768
(2023: $2,588,804) and a deficiency in working capital
of $9,933,253 (2023: $2,902,393). The ability of the
Group to continue as a going concern and being able to
continue to fund its operating activities is dependent on
securing additional funding through a share placement to
new or existing investors and financial support through
short-term loans, together with continuous receipt of the
R&D tax rebate.
These conditions indicate a material uncertainty that
may cast significant doubt about the Group's ability to
continue as a going concern and, therefore, that it may be
unable to realise its assets and discharge its liabilities in
the normal course of business.
The Directors believe there will be sufficient funds to
meet the Company’s working capital requirements. Based
on the success of current progress in the Group, it is
considered that re-financing through equity funds would
be well supported. Additional funds will be raised via share
placements and/or other financing options as required.
The financial statements have been prepared on the basis
that the Group is a going concern, which contemplates
the continuity of normal business activity, realisation of
assets and settlement of liabilities in the normal course of
business for the following reasons:
– As disclosed in Note 27, subsequent to year end, the
Company has raised $12.4 million before costs via a
placement;
– The Company believes it can raise additional funding
through debt or equity as required in the next twelve
months from the date of this financial report;
– The Company has a recent proven history of
successfully raising capital;
– Cash spending can be reduced or slowed below its
current rate if required; and
– The Company continually receiving its Australian R&D
tax rebates for R&D expenditure incurred in Australia
and overseas.
Should the Group not be able to continue as a going
concern, it may be required to realise its assets and
discharge its liabilities other than in the ordinary course
of business, and at amounts that differ from those stated
in the financial statements. The financial report does not
include any adjustments relating to the recoverability and
classification of recorded asset amounts or liabilities that
might be necessary should the Group not continue as a
going concern.
55
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
4: Segment Reporting
(a) Reportable segments
The Directors have considered the requirements of AASB 8 Operating Segments and the internal reports that are
reviewed by the chief operating decision maker (the Board of Directors) in allocating resources and have concluded
that at this time there are no separate identifiable segments as the Group operates in only one business segment being
research and development of pharmaceutical drugs. However, the Group operates in three geographic segment being
Australia, UK and USA.
(b) Segment results
The following is an analysis of the Group’s results by reportable segments:
Segment revenue and other
Segment loss after tax
income for the year
for the year
2024
2023
2024
2023
$
$
$
$
Australia
3,834,751
4,340,868
(6,056,242)
(4,532,459)
USA
1,374,818
58,470
(2,171,258)
(61,051)
UK
26,806
32,068
(42,335)
(33,483)
Central Administration
–
–
(9,391,879)
(8,450,429)
5,236,375
4,431,406
(17,661,714)
(13,077,422)
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note
2. Segment loss represents the loss after tax incurred by each segment. This is the measure reported to the Board of
Directors for the purposes of resource allocation and assessment of segment performance.
(c) Segment assets and liabilities
Segment assets
Segment liabilities
at end of the financial year
at end of the financial year
2024
2023
2024
2023
$
$
$
$
Australia
389,894
314,837
1,236,664
374,716
Central Administration
5,979,720
2,241,033
14,656,719
4,769,957
6,369,614
2,555,870
15,893,383
5,144,673
There are no assets or liabilities in other countries.
(d) Segment net assets/(liabilities)
2024
2023
$
$
Australia
(846,770)
(59,879)
Central Administration
(8,676,998)
(2,528,925)
(9,523,768)
(2,588,804)
56
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
2024
2023
Note
$
$
5: Revenue and Other Income
Other Income:
Research and Development (R&D) tax incentive
4,906,010
4,311,202
Interest income
187,003
66,190
Rental income (sublease)
21,014
–
Other income
122,348
54,014
Total other income
5,236,375
4,431,406
6: Expenses
Employee Benefits Expenses:
Salaries and wages
4,518,979
3,176,995
Superannuation expenses
380,916
241,149
Long service leave expenses
44,418
76,820
Payroll taxes
203,929
115,337
Total employee benefit expenses
5,148,242
3,610,301
Finance Costs:
Interest from short-term borrowings
797,292
167,395
Bank fees and charges
9,322
5,228
Total finance costs
806,614
172,623
Other Expenses:
Audit and review fees
65,902
59,880
Communication expenses
6,547
7,487
Computer maintenance and consumables
57,746
83,660
Consulting fees
24
5,362,886
1,775,074
Insurance expenses
104,893
88,538
Legal expenses
134,864
189,203
Legal dispute settlement (Note 17)
–
83,054
Listing and regulatory fees
83,731
80,373
Overseas listing and regulatory fees
69,141
65,551
Printing and stationery expenses
34,809
50,083
Roadshows and conferences
208,339
221,137
Sundry expenses
1,081,335
880,961
Total other expenses
7,210,193
3,585,001
57
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
2024
2023
$
$
7: Auditor's Remuneration
During the year, the following fees were paid or payable for services to BDO Audit Pty Ltd (BDO) and its related
practices (also referred to hereafter as BDO, network firms of BDO and non BDO firms):
Audit services
– BDO for audit and review of the consolidated financial statements
65,902
59,880
The BDO entity performing the audit of the group transitioned from BDO Audit (WA) to BDO Audit Pty Ltd on 11 July
2024. The disclosures include amounts received or due and receivable by BDO Audit (WA) Pty Ltd, BDO Audit Pty Ltd
and their respective related entities.
8: Income Tax Expense
Loss before income tax
(17,661,714)
(13,077,422)
The prima facie tax on loss from ordinary activities before
income tax is reconciled to income tax as follows:
– Prima facie tax payable on loss from ordinary activities before
income tax at 30% (2023: 30%)
(5,298,514)
(3,923,227)
Add:
Non-allowable items:
– Share-based payments expense
43,175
97,565
– Expenses subject to R&D tax incentive
4,625,517
2,622,292
– Other non-allowable items
3,569
55,033
Less:
– Non assessable income
(1,471,803)
(1,294,816)
– Tax losses and deferred tax not recognised
2,098,056
2,443,153
Income tax attributable to the Group
–
–
Deferred tax attributable to the Group
Tax losses carried forward
7,918,383
6,445,746
Accruals and provisions
58,410
183,666
Blackhole expenses
276,623
294,573
8,253,416
6,923,985
Tax losses carried forward at 30 June 2024 total approximately $26,394,610 (2023: $20,399,258). The Group's ability to
use losses in the future is subject to the companies in the Group satisfying the Continuity of Ownership Test or failing
that, the Similar Business Test.
58
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
2024
2023
$
$
9: Loss Per Share
The following reflects the loss and share data used in the
calculations of basic and diluted losses per share:
Loss attributable to the members of the Company
(17,661,714)
(13,077,422)
Weighted average number of shares
Weighted average number of ordinary shares used in
calculating basic losses per share
177,099,787
173,978,170
177,099,787
173,978,170
Loss per share (cents per share):
Basic loss for the year attributable to the members of the Company
(9.97)
(7.52)
Diluted loss for the year attributable to the members of the Company
(9.97)
(7.52)
10: Cash and Cash Equivalents
Cash at bank
4,207,324
1,561,579
Cash on hand
–
–
Term Deposits
207,861
–
4,415,185
1,561,579
Cash at bank and on hand bear floating interest rates between 0.05% and 4.25% depending on the amount on deposit.
Refer to Note 22 for additional risk exposure analysis.
11: Trade and Other Receivables
CURRENT
Sundry debtors
8,160
85
Net GST receivable
151,268
90,582
159,428
90,667
Refer to Note 22 for additional risk exposure analysis.
59
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
2024
2023
Note
$
$
12: Other Current Assets
Prepayments
221,671
135,377
Rental deposits
49,100
47,000
Director loans
24
291,088
112,836
561,859
295,213
13: Plant and Equipment
Laboratory machinery and equipment
– at cost
675,958
559,825
– accumulated depreciation
(324,651)
(285,801)
351,307
274,024
Office furniture and equipment
– at cost
70,480
66,461
– accumulated depreciation
(49,794)
(45,034)
20,686
21,427
Computer equipment
– at cost
95,248
73,504
– accumulated depreciation
(66,571)
(46,950)
28,677
26,554
Office improvements
– at cost
78,646
78,646
– accumulated depreciation
(40,737)
(38,680)
37,909
39,966
Library
– at cost
4,379
4,379
– accumulated depreciation/amortisation
(3,702)
(3,533)
677
846
Website Development
– at cost
2,797
2,797
– accumulated depreciation/amortisation
(2,785)
(2,777)
12
20
Total plant and equipment
439,268
362,837
60
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
Reconciliations
Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the current
and previous financial year are set out below:
Laboratory
machinery and
equipment
$
Office
furniture and
equipment
$
Computer
equipment
$
Office
improvements
$
Library and
website
costs
$
Total
$
2024
Beginning of the year
274,024
21,427
26,554
39,966
866
362,837
Additions
116,133
4,019
21,744
–
–
141,896
Depreciation
(38,850)
(4,760)
(19,621)
(2,057)
(177)
(65,465)
End of the year
351,307
20,686
28,677
37,909
689
439,268
2023
Beginning of the year
289,049
23,622
15,316
42,165
1,091
371,243
Additions
17,672
2,229
18,732
–
–
38,633
Depreciation
(32,697)
(4,424)
(7,494)
(2,199)
(225)
(47,039)
End of the year
274,024
21,427
26,554
39,966
866
362,837
2024
2023
$
$
14: Right of Use Assets
Land and buildings – right-of-use
1,095,176
415,689
Less: Current year amortisation
(301,303)
(170,116)
793,873
245,573
The Company leases land and buildings for its offices under agreements of between one to five years. On renewal, the
terms of the leases are renegotiated.
15: Trade and Other Payables
CURRENT
Unsecured liabilities
Trade payables
3,967,379
948,887
Employee related payables
118,568
111,153
Sundry creditors
619,681
211,418
4,705,628
1,271,458
Secured liabilities
R&D advances – EndPoints Capital (2023: Radium Capital)
9,689,139
3,048,261
9,689,139
3,048,261
14,394,767
4,319,719
The above advances are secured against the R&D refunds due from the Australian Taxation Office (ATO). The advances
attract interest at rates of between 14 and 15 percent per annum and are expected to be repayable in quarter 1 of 2025,
as soon as the ATO refund is received.
61
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
2024
2023
$
$
16: Provisions for Employee Benefits
CURRENT
Unsecured liabilities
Annual leave
450,874
299,201
450,874
299,201
NON-CURRENT
Long service leave
236,551
192,133
17: Other Provisions
CURRENT
Provision for legal settlement
–
83,054
Movement in other provisions
Opening balance
83,054
–
Provision for legal dispute settlement
–
83,054
Settlement of legal dispute
(83,054)
–
–
83,054
In 2022 an unfavourable judgement was handed down with respect to the non-issue of ordinary shares to holders of
1,356,249 Class C Performance Shares and 1,356,249 Class D Performance Shares, despite the employee's tenure having
ended many years prior to the performance hurdles being achieved. After taking appropriate legal advice, the directors
appealed the decision. The appeal was subsequently lost resulting in a payment of $1,417,527 the 2023 financial year.
An additional $83,054 was paid in 2024 to cover the plaintiff's legal costs with the matter now settled.
18: Lease Liabilities
CURRENT
Lease liability
224,085
147,878
NON-CURRENT
Lease liability
587,106
102,688
62
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
19: Share Capital
2024
2023
No.
$
No.
$
Movements in ordinary shares on issue:
Opening balance
178,254,310
44,111,963 177,646,910
43,968,321
Shares issued during the year:
– shares issued to employees and consultants (net of costs)1
285,381
141,930
–
–
– new shares issued from placement (net of costs)2
25,050,988
10,461,090
–
–
– new shares issued on options exercised
396,565
123,730
607,400
102,043
25,732,934
10,726,750
607,400
102,043
– Transfer from reserves to share capital
–
–
–
41,599
–
–
–
41,599
Total3
203,987,244
54,838,713 178,254,310
44,111,963
1
Refer to Note 23 for a summary of shares issued to consultants and employees during the period.
2 On 11 September 2023, the Company issued 18,181,819 ordinary shares raising $8,000,000 (before capital raising costs). Total
capital raising costs were $563,343. A further 6,869,169 ordinary shares were issued raising $3,022,445.
3 At 30 June 2024, 203,987,244 ordinary shares on issue were quoted on the ASX.
Options from shares issued
The following options remain outstanding at each respective reporting date:
Particulars
Issue Date
Exercise Date
Exercise Price
(cents)
Expiry Date
2024
No.
2023
No.
Options
15-Feb-19
15-Feb-23
16.80
15-Feb-23
–
–
Options
19-Dec-19
19-Feb-23
31.20
19-Dec-23
–
603,435
Options
30-Sep-20
30-Sep-23
156.00
30-Sep-23
–
3,750,000
Options
22-Feb-21
22-Feb-26
156.00
22-Feb-26
8,415,000
8,415,000
Options
11-Feb-22
11-Feb-27
156.00
11-Feb-27
435,000
435,000
Options
15-Nov-22
15-Nov-27
156.00
15-Nov-27
1,125,000
1,125,000
9,975,000
14,328,435
63
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
2024
2023
Note
$
$
20: Reserves
Options reserve
20(a)
5,713,390
8,834,557
5,713,390
8,834,557
(a) Options reserve
The options reserve is used to recognise the fair vale of options issued.
Movements of options reserve
At beginning of year
8,834,557
8,550,939
Options issued to KMPs and employees¹
–
325,217
Options expired
(3,121,167)
–
Conversion of options into ordinary shares
–
(41,599)
At end of year
5,713,390
8,834,557
1
Refer to Note 23.
21: Cash Flow Information
Reconciliation of liabilities arising from financing activities:
Loss for the year
(17,661,714)
(13,077,422)
Adjustments and non-cash items:
– Depreciation and amortisation
65,465
47,039
– Share-based payments expense
20,167
325,217
– Accounting for lease assets and liabilities
301,303
170,116
Change in operating assets and liabilities
– Increase in trade and other receivables
60,792
91,807
– Increase in other current assets
47,317
233,884
– Increase in trade and other payables
3,814,798
766,042
– (Decrease)/Increase in provisions for employee benefits
(196,091)
173,474
– Increase/(Decrease) in other provisions
539,305
(1,417,527)
Net cash outflow from operating activities
(13,008,658)
(12,687,370)
Reconciliation of liabilities arising from financing activities:
Liabilities arising from financing activities are liabilities for which cash flows are, or will be, classified as ‘cash flows from
financing activities’ in the statement of cash flows. Changes in the carrying amounts of such liabilities, which comprise
the Radium loan, EndPoints Capital and lease labilities are summarised below:
Radium Capital
EndPoints Capital
Lease liabilities
Carrying amount at 1 July 2022
2,878,107
–
74,762
Net cash flow during the year
–
–
(170,116)
New lease arrangements
–
–
345,920
Carrying amount at 30 June 2023
2,878,1071
–
250,566
Net cash flow during the year
(2,878,107)
9,689,139
(301,304)
New lease arrangements
–
–
861,929
Carrying amount at 30 June 2024
–
9,689,139
811,191
1
Net of accrued interest of $170,154.
64
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
Non-cash transactions
During the financial year, the Group entered into the following non-cash financing transactions (which are not included
in the statement of the cash flows):
(a) The Group entered into new leases of commercial premises during the financial year resulting in the recognition of
additional lease assets of $687,505 and corresponding lease liabilities of $687,505 (2023: $208,979).
22: Financial Risk Management
The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest
rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of
the financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The
Group uses different methods to measure and manage different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate and foreign exchange risk and assessments of markets forecasts for
interest rate and foreign exchange prices. Liquidity risk is monitored through the development of future cash flow
forecasts.
Risk management is carried out by Management and overseen by the Board of Directors.
The main risks arising for the Group are foreign exchange risk, interest rate risk, credit risk and liquidity risk. The
carrying values of
2024
2023
$
$
Financial Assets
At amortised cost
Director loan
291,088
112,836
Cash and cash equivalents
4,415,186
1,561,579
Trade and other receivables
159,428
90,667
4,865,701
1,765,082
Financial Liabilities
At amortised cost
Trade payables and sundry creditors
4,587,060
1,160,305
R&D ADVANCE
9,689,139
3,048,261
14,276,199
4,208,566
(a) Market Risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the US dollar.
Foreign exchange risk arises from future commercial transactions denominated in a currency that is not the Group's
functional currency. Over the next 12 months the Group will enter into contracts with various research organisations
in the USA, Canada and Netherlands to perform numerous laboratory tests as well as use the services of expert
consultants in the USA, Canada and The Netherlands that will result in approximately USD $5,091,000 and CDN
$790,000 in expenditure.
65
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
(ii) Interest Rate Risk
The Group is exposed to interest rate risk due to variable interest being earned on its interest-bearing bank accounts
and loans. The Group is also exposed to interest on its R&D advances. At the end of the reporting year, the Group had
the following interest-bearing financial instruments:
2024
2023
Weighted
average
Balance
$
Weighted
average
Balance
$
Cash and cash equivalents
0.33%
4,207,324
1.33%
1,561,579
Director loan
8.77%
291,088
5.00%
112,836
EndPoints loan
14.34%
9,689,139
14.34%
3,048,261
(b) Credit Risk
Credit risk is the risk of financial loss to the Group if a counter party to a financial instrument fails to meet its
contractual obligations. During the year credit risk has principally arisen from the financial assets of the Group, which
comprises cash and cash equivalents and trade and other receivables. The Group's exposure to credit risk arises from
potential default of the counter party, with the maximum exposure equal to the carrying amount of the instruments.
The carrying amount of financial assets included in the Consolidated Statement of Financial Position represents the
Group's maximum exposure to credit risk in relation to those assets. The Group does not held any credit derivatives to
offset its credit exposure. The Group trades only with recognised and credit worthy third parties. Receivable balances
are monitored on an ongoing basis with the result that the Group does not have a significant exposure to bad debts.
The Group has no significant concentrations of credit risk within the Group except for the following:
2024
2023
Rating
$
$
Cash held with Macquarie Bank
A+
4,306,949
–
Cash held with BankWest Bank
AA-
77,393
697,860
Cash held with Commonwealth Bank
AA-
159,791
–
Cash held with National Australian Bank
AA-
–
2
Cash held with ME Bank
BBB
–
1,012,874
Cash held with American Express
N/A
(128,948)
(149,157)
4,415,185
1,561,579
The Group's primary banker is Macquarie Bank. The Board considers the use of this financial institution, which has a
rating of AA- from Standards and Poors, to be sufficient in the management of credit risk with regards to these funds.
(c) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
The Directors and Management monitor the cash outflow of the Group on an on-going basis against budget and the
maturity profiles of financial assets and liabilities to manage its liquidity risk.
The financial liabilities the Group had at reporting date were trade payables, employee related payables, sundry
creditors, loan payables, R&D advance and lease liability incurred in the normal course of the business. Trade payables
were non-interest bearing and were deducted within the normal 30-60 day term of creditor payments.
66
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
The table below reflects the respective undiscounted cash flows for financial liabilities existing at end of reporting year:
Contractual maturities of
financial liabilities
<6
months
$
>6-12
months
$
>12 months
$
Total
contractual
cash flows
$
Carrying
amount
$
30 June 2024
Trade payables
3,967,379
–
–
3,967,379
3,967,379
Employee related payables
118,568
–
–
118,568
118,568
Sundry creditors
619,681
–
–
619,681
619,681
Lease liability
76,207
484,417
250,566
811,190
811,190
4,781,835
484,417
250,566
5,516,818
5,516,818
In addition to the above, there are advances from EndPoints of $9,689,138. The advances attract interest at rates of
between 14 and 15 percent per annum and are expected to be repayable in quarter 1 of 2025, as soon as the ATO
refund is received.
30 June 2023
Trade payables
948,887
–
–
948,887
948,887
Employee related payables
111,153
–
–
111,153
111,153
Sundry creditors
211,418
–
–
211,418
211,418
Lease liability
153,658
93,658
10,219
257,535
250,566
1,425,116
93,658
10,219
1,528,993
1,522,024
At 30 June 2024, the Group had sufficient cash to meet the financial liabilities as and when they are due and payable.
(d) Fair Value Hierarchy
Fair value of assets and liabilities approximates carrying value given their short-term nature.
67
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
2024
2023
$
$
23: Share-Based Payments
Share-based payments expense recognised during the financial year:
Issue of 1,125,000 options to Alistair McKeough³
–
325,217
Issue of 35,381 shares to Phil Sutton¹
20,167
–
Issue of 250,000 shares to consultant²
123,750
–
Total share-based payments recognised through P&L
143,917
325,217
Less listing fees
(1,987)
–
141,930
325,217
1 Issued 35,381 shares on 10 May 2024 to Phil Sutton under the Company's employee incentive plan pursuant to the
terms of an employment contract.
2 Issued 250,000 shares on 16 April 2024 to a consultant for services provided to the Company in lieu of a cash
payment.
Fair value of share options granted to executive and employees
3 The fair value of the 1,125,000 Share Options was calculated using the Black-Scholes model. The assumptions used in
calculating the fair value of Share Options, were:
– exercise price: $1.56
– grant date 15 November 2022
– grant date share price: $0.69
– value per option at grant date $0.2908
– dividend yield: 0.0%;
– risk-free rate based on the Australian Treasury bond rate for five years, to align with the term of the options: 0.32%;
– expected volatility derived from the share volatility of compatible listed companies over five years, to align with the
term of the options: 70.0%; and
– expected life of the Share Option: five years.
68
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
24: Related Party Transactions
Parent entity
The ultimate parent entity within the Group is Recce Pharmaceuticals Ltd.
Subsidiaries
Interests in subsidiaries are disclosed in Note 26.
2024
2023
$
$
Key management personnel compensation
Short-term employee benefits
2,220,030
1,966,204
Post-employment benefits
172,162
268,031
Bonus
392,500
215,000
Share-based payments
–
325,217
2,784,692
2,774,452
The following transactions occurred with related parties:
Superannuation contributions
Contributions to superannuation funds on behalf of employees
141,310
103,457
Loans to key management personnel
An amount of $162,548 (2023: $104,388) was advanced to Mr James Graham as an unsecured loan. The amount
outstanding at reporting date including accrued interest was $291,088 (2023: $112,836). The loan is interest bearing at
the rate of 8.77% per annum. Interest accrued on the loan amounted to $15,704 (2023: $8,448). The loan is repayable
within 12 months of reporting date.
At year end, expense advances repayable by Mr James Graham totalled $Nil (2023: $Nil).
Other transactions with key management personnel
During the financial year, consulting fees for technical services totalling $1,111,952 (2023: $1,029,537) were paid to
an entity associated with Mr A Dunton. Additionally consulting fees for professional services totalling $Nil (2023:
$105,000) were paid to an entity associated with Mr A McKeough. All payments were made on normal commercial
terms and conditions. There were no other related party transactions during the financial year.
69
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
25: Parent Entity Information
The following information relates to the parent entity, Recce Pharmaceuticals Ltd, as at 30 June 2024. The information
presented hereto has been prepared using accounting policies consistent with those presented in Note 2.
2024
2023
$
$
(a) Summarised statement of financial position
Current assets
5,153,735
1,947,459
Non-current assets
1,233,141
608,410
Total assets
6,386,876
2,555,869
Current liabilities
15,069,726
4,849,852
Non-current liabilities
823,656
294,821
Total liabilities
15,893,382
5,144,673
Share capital
54,838,713
44,111,963
Reserves
5,713,390
8,834,557
Accumulated losses
(70,058,609)
(55,535,324)
Net Assets / (Liabilities)
(9,506,506)
(2,588,804)
(b) Summarised consolidated statement of profit or loss and other comprehensive income
Loss for the year
(17,644,452)
(13,077,422)
Total comprehensive loss for the year
(17,644,452)
(13,077,422)
26: Interest In Subsidiaries
Percentage Owned
2024
2023
Country of Incorporation
%
%
Parent entity
Recce Pharmaceuticals Ltd
Australia
–
–
Subsidiaries
Recce (USA) LLP
United States
100
100
Recce (UK) Limited
United Kingdom
100
100
Gramele Pty Ltd
Australia
100
–
70
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Notes to the
Consolidated Financial Statements
For the year ended 30 June 2024
27: Events Subsequent to Reporting Period
On 5 August 2024, the Company announced that it had raised $12.4 million (before costs) via a placement and share
purchase plan.
Other than the above, no matters or circumstances have arisen since the end of the financial year, which significantly
affected, or may significantly affect, the operations of the Group, the results of those operations, or state of affairs of
the Group in future financial years.
28: Commitments and Contingent Liabilities
There were no commitments and contingent liabilities as at 30 June 2024.
In the prior year, there was a dispute in relation to the non-conversion of Performance Shares to Ordinary Shares.
Refer to Note 17.
71
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Name of entity
Type of entity
% of share
capital held
Country of
incorporation
Australian
resident or
foreign resident
Foreign tax
jurisdiction of
foreign residents
Recce Pharmaceuticals Ltd
Body Corporate
N/A
Australia
Australian
N/A
Recce (USA) LLP
Body Corporate
100%
United States
Foreign
United States
Recce (UK) Limited
Body Corporate
100%
United Kingdom
Foreign
United Kingdom
Gramele Pty Ltd
Body Corporate
100%
Australia
Australian
N/A
Basis of Preparation
This Consolidated Entity Disclosure Statement (CEDS) has been prepared in accordance with the Corporations Act
2001. It includes certain information for each entity that was part of the consolidated entity at the end of the
financial year.
Determination of Tax Residency
Section 295 (3A) of the Corporation Acts 2001 defines tax residency as having the meaning in the Income Tax
Assessment Act 1997. The determination of tax residency involves judgement as there are currently several different
interpretations that could be adopted, and which could give rise to a different conclusion on residency. It should
be noted that the definitions of ‘Australian resident’ and ‘foreign resident’ in the Income Tax Assessment Act 1997
are mutually exclusive. This means that if an entity is an ‘Australian resident’ it cannot be a ‘foreign resident’ for the
purposes of disclosure in the CEDS.
Australian Tax Residency
The consolidated entity has applied current legislation and judicial precedent, including having regard to the Tax
Commissioner's public guidance in Tax Ruling TR 2018/5.
Consolidated Entity
Disclosure Statement
For the year ended 30 June 2024
72
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Directors’ Declaration
The Directors of the Company declare that:
1.
The consolidated financial statements comprising the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity,
consolidated statement of cash flows and accompanying notes, as set out on pages 48 to 70, are in accordance
with the Corporations Act 2001, including:
a. complying with Accounting Standards and the Corporations Regulations 2001; and other mandatory reporting
requirements; and
b. give a true and fair view of the financial position as at 30 June 2024 and of the performance for the year ended
on that date of the Group;
2. The Executive Chairman and Chief Financial Officer have each declared that:
a. the financial records of the Company for the financial year have been properly maintained in accordance with
section 286 of the Corporations Act 2001;
b. The financial statements and notes for the financial year comply with the Accounting Standards;
c. The financial statements and notes for the financial year give a true and fair view; and
d. The information disclosed in the attached consolidated entity disclosure statement is true and correct;
3. In the Directors’ opinion there are reasonable grounds to believe that the Group will be able to pay its debts
as and when they become due and payable (refer to Note 3).
This declaration is made in accordance with a resolution of the Board of Directors.
John Prendergast
Executive Chairman
30 August 2024
73
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Independent Auditor’s Report
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form
part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth, WA 6000
PO Box 700 West Perth WA 6872
Australia
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
INDEPENDENT AUDITOR'S REPORT
To the members of Recce Pharmaceuticals Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Recce Pharmaceuticals Ltd (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at
30 June 2024, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the financial report, including material accounting policy information, the
consolidated entity disclosure statement and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 3 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
74
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Independent Auditor’s Report Continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Recognition of Research and Development Tax Incentive
Key audit matter
How the matter was addressed in our audit
The Group receives a 43.5% refundable tax offset
of eligible expenditure under the Research and
Development (R&D) Tax Incentive scheme.
Note 5 of the financial report discloses the
“Research and development (“R&D”) tax
incentive” and note 2(d) discloses the accounting
policy used by the Group for its recognition of the
R&D tax refund.
We have considered this a key audit matter due to
the amounts involved being material and the
inherent subjectivity associated with the
calculation of the R&D Tax Rebate.
Our audit procedures in this area included, but were not
limited to:
•
Obtaining an understanding of management’s
process around the R&D claim;
•
Comparing the eligible expenditure included in the
calculation to the expenditure recorded in the
general ledger;
•
Comparing the amount of R&D rebate recognised
to the total amounts that offset the R&D advances
received;
•
Obtaining management’s experts R&D rebate
calculations and performing the following
procedures:
o
Reviewing the scope of work of the
management expert;
o
Reviewing the expenditure methodology
employed by management and applied by
management’s expert to the R&D rebate
calculation; and
o
Reviewing inputs, source data and tested
the mathematical accuracy of
management’s expert’s workings.
•
Assessing the adequacy of disclosures in the notes
to the financial report.
75
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2024 but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of:
a) the financial report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001 and
b) the consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i) the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error; and
ii) the consolidated entity disclosure statement that is true and correct and is free of misstatement,
whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 27 to 33 of the directors’ report for the
year ended 30 June 2024.
In our opinion, the Remuneration Report of Recce Pharmaceuticals Ltd, for the year ended
30 June 2024, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
Jarrad Prue
Director
Perth, 30 August 2024
Independent Auditor’s Report Continued
77
RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Shareholder Information as at 29 August 2024
Additional information required by the Australian Securities Exchange listing rules and not shown elsewhere in this
report is as follows:
(a) Distribution of equity securities (as at 29 August 2024)
The number of shareholders, option holders and performance right holders by size of holding are:
Holding
Number of Shareholders
Number of Shares
% Issued Share Capital
1 – 1,000
903
564,518
0.24
1,001 – 5,000
1,379
3,830,925
1.65
5,001 up – 10,000
636
5,110,021
2.21
10,001 – 100,000
1,274
43,303,932
18.70
100,001 and over
272
178,799,932
77.20
Total
4,464
231,609,328
100.00
Holding
Option Holders
Number of Options
% Issued Share Capital
1 – 1,000
–
–
–
1,001 – 5,000
–
–
–
5,001 up – 10,000
–
–
–
10,001 – 100,000
2
200,000
2.01%
100,001 and over
9
9,775,000
98.00%
Total
11
9,975,000
100.00%
Holding
Performance Right Holders
Number of Shares
% Issued Share Capital
1 – 1,000
–
–
–
1,001 – 5,000
–
–
–
5,001 up – 10,000
–
–
–
10,001 – 100,000
3
168,750
1.93%
100,001 and over
7
8,585,673
98.07%
Total
10
8,754,423
100.00%
ASX Additional Information
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
(b) Twenty largest shareholders (as at 29 August 2024)
The names of the twenty largest holders of quoted shares are:
Name
Number of Shares
%
1
Mr Graham John Hamilton Melrose & Ms Olga Mary Melrose
32,353,311
13.97
2 HSBC Custody Nominees (Australia) Limited
14,970,467
6.46
3 Buttonwood Nominees Pty Ltd
9,720,451
4.20
4 Mr Mark Anthony Rogers & Mr Arthur Nicholas Veliss
7,700,000
3.32
5 BNP Paribas Noms Pty Ltd
7,076,356
3.06
6 Acuity Capital Investment Management Pty Ltd
4,500,000
1.94
7 Acewood Investments Pty Ltd
3,537,101
1.53
8 Pejay Pty Limited
3,300,000
1.42
9 Mr John James Liddelow
3,200,000
1.38
10 BNP Paribas Nominees Pty Ltd
2,986,111
1.29
11 Ms Michele Keryn Dilizia
2,828,485
1.22
12 Mr Arthur Nicholas Veliss & Mr Mark Anthony Rogers
2,500,000
1.08
13 Mr Graham Melrose & Ms Olga Melrose
2,475,000
1.07
14 J P Morgan Nominees Australia Pty Limited
2,177,007
0.94
15 Querion Pty Ltd
2,100,000
0.91
16 Seneschal (WA) Pty Ltd
2,066,666
0.89
17 Citicorp Nominees Pty Limited
1,964,710
0.85
18 LDU Pty Ltd
1,933,219
0.83
19 Haultrans Management Pty Limited
1,870,000
0.81
20 Mr John James Liddelow
1,605,000
0.69
Total
110,863,884
47.87
Total issued capital - selected security class(es)
231,609,328
100.00
(c) Substantial shareholders
Substantial holders in the Company are set out below (based on voting interest in fully paid ordinary shares)
as at 29 August 2024.
Name
Number of Shares
% IC
Mr Graham John Hamilton Melrose & Ms Olga Mary Melrose
32,353,311
13.97
FIL Limited*
15,144,466*
6.54
HSBC Custody Nominees (Australia) Limited
14,970,467
6.46
*Information obtained from the Notice of Initial Substantial Holder lodged with ASX on 20 September 2023 by FIL
Limited.
(d) Voting rights
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each Share shall have one vote. On a poll, every person present who is a Shareholder or a proxy, attorney or
representative of a Shareholder shall, in respect of each fully paid Share held by them, or in respect of which they
are appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid Shares,
shall have such number of votes being equivalent to the proportion which the amount paid (not credited) is of the
total amounts paid and payable in respect of those Shares (excluding amounts credited). There are no voting rights
attached to any Options or Performance Shares on issue.
(e) Share buyback
There is no current on-market share buy-back.
(f) Unmarketable parcels
There were 919 Shareholders holding less than a marketable parcel, totalling 580,752 shares.
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RECCE PHARMACEUTICALS ANNUAL REPORT 2024
Directors
Dr John Prendergast
Executive Chairman
Ms Michele Dilizia
Executive Director and Chief Scientific Officer
Mr James Graham
Managing Director and Chief Executive Officer
Dr Justin Ward
Executive Director and Principal Quality Chemist
Dr Alan Dunton
Non-Executive Director and Chief Medical Advisor
Mr Alistair McKeough
Non-Executive Director
Company Secretary
Maggie Niewidok
Chief Financial Officer
Justin Reynolds
Registered Office
Suite 10, 3 Brodie Hall Drive
Bentley WA 6102
Phone: +61 8 9362 9860
Share Register
Automic Pty Limited
Level 5, 126 Phillip Street
Sydney NSW 2000
Phone: 1300 288 664
Auditors
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth WA 6000
Internet Address
www.recce.com.au
ASX Code
RCE
FSE Code
R9Q
Annual General Meeting
The Annual General Meeting will be held
on the 6 November 2024.
Kardos Scanlan
Level 5, 44 Martin Place
Sydney NSW 2000
Corporate Directory
For the year ended 30 June 2024
recce.com.au