Recce Pharmaceuticals (ASX: RCE) Secures A$85M R&D Backing: Is It a Buy Before Phase 3 Results?

Recce secures A$85m R&D backing as Phase 3 nears

Recce Pharmaceuticals (ASX: RCE) hit a one-week high after landing an A$85 million Advanced Overseas Finding from AusIndustry. This ruling is among the largest reported under Australia’s R&D Tax Incentive program. The finding means Recce’s international clinical programs now qualify for the government’s 43.5% tax rebate over the next three years. For investors watching the antimicrobial resistance space, we believe this represents meaningful de-risking of the company’s global development costs at a critical time. A Phase 3 trial is now underway in Indonesia, with results expected in early 2026.

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What the A$85M R&D Finding Actually Means for Recce

This A$85 million is not cash that Recce is getting right now. It refers to the amount of R&D spending that qualifies for a tax rebate. Recce can claim back 43.5% of its overseas research costs, which means it can recover almost half the money it spends on international clinical trials over the next three years.

This support covers all of Recce’s global work, including:

• The Phase 3 trial in Indonesia
• Burn wound research with the US Department of Defence
• Other programs with USAMRIID

Recce has already benefited from the scheme, receiving a significant R&D rebate in late 2024. In our view, the big advantage here is strategic. This funding allows Recce to run large international trials without paying the full cost itself. Because this money doesn’t require issuing new shares, it may reduce the need to raise capital, which helps protect existing shareholders from dilution during a very important growth stage.

Phase 3 Trial in Indonesia Could Unlock 2026 Commercial Launch

The catalyst investors should really be watching Recce’s Phase 3 trial for its RECCE 327 topical gel in diabetic foot infections. Patient dosing is now underway across multiple Indonesian clinical sites, with several hundred participants expected.

Why Indonesia? About 20.9 million adults in the country live with diabetes, giving access to a large patient pool. Recce reports it has secured expedited review status from Indonesia’s drug authority (BPOM), creating a quicker pathway to approval. The foundation looks encouraging. Phase 2 results showed strong efficacy signals over 14 days, with a well-tolerated safety profile. Recce could pursue fast-track approval, with a potential commercial launch in 2026 if Phase 3 results are positive and regulators agree.

We believe success in Indonesia could open doors to broader Asian and Middle Eastern markets, where antibiotic resistance is a growing healthcare crisis. Analysts estimate the global acute bacterial skin infections market could reach the low-to-mid US$20 billion by 2032, providing substantial upside if the product gains approval.

The Investor’s Takeaway for Recce Pharmaceuticals

Recce Pharmaceuticals remains a speculative, pre‑revenue biotech. As of 17 December 2025, Recce’s market cap stood at approximately A$175 million.
As of mid-2025, Recce reported cash holdings in the low tens of millions and access to a non-dilutive A$30 million facility. Together, this meaningfully extends Recce’s runway when combined with expected R&D rebates.

The bull case is straightforward. Success in the Phase 3 trial could pave the way for a commercial launch in 2026. Partnerships with the US Department of Defence add credibility, while access to expedited regulatory pathways, such as Fast Track designations, if confirmed, could provide meaningful advantages by potentially shortening timelines and reducing costs.

The bear case is equally clear. Failure in clinical trials would severely undermine the investment thesis, and there is no guaranteed path to profitability.

For investors comfortable with binary outcomes, the interim Phase 3 readout in Q1 2026 is the key milestone to watch. Risk‑averse investors may prefer to wait for that data before committing capital. Ultimately, whether today’s rally proves justified depends entirely on Recce’s Phase 3 execution.