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Recce Pharmaceuticals (ASX:RCE) CEO James Graham presenting at Meet the CEO
March 9, 2022
RCE, Recce, Recce Pharmaceuticals, video
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CEO James Graham presneted at the Opentrader / Stocks Down Under Meet the CEO event on 3 March 2022 and talked about the potential of the company’s RECCE 327 compound in sepsis, where it has been granted QIDP status by the FDA.
Full transcription below.
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Stuart: Our next speaker takes us into the area of that antimicrobial resistance. If you’ve been watching the news anytime of the last decade or so, you’ll probably have seen a news article or two on how antibiotics have stopped being effective. The last big one to gain approval before a recent rush was Vancomycin way back in 1987, and suddenly, all sorts of bugs were becoming resistant to that most powerful antibiotic. Well, the man who’s about to speak to us, James Graham, has the potential solution to that. Go way back in time in Perth in the early 2000s, there was a company called Chemeq, founded by a man called Dr. Graham Melrose, and he had some ideas about how you could develop drugs with strong antimicrobial properties. But what wouldn’t then prompt the bugs to evolve and get around that. James has inherited in Recce Pharmaceuticals that know-how, and he’s taking it forward a long way, as you would have seen from some of the data that he’s published. James was initially an executive director, took the mantle of managing director. I think it was 2019. James, am I right? 2019. Moving to Florida, so this is what the last conference he probably speaks in Australia before he moves to Florida to build the opportunity over there. Please welcome James Graham.
Woman: I just [inaudible 00:01:32.880]
James: Yeah, please. Go ahead.
Woman: I’ll just… You just move the arrows back and forth. And then press the red button.
James: Very good. Excellent. Well, hello, everybody, and I wish to start by thanking particularly Stocks Down Under, OMG, and Open Trader for the opportunity of presenting to you today. I’m here in regards to Recce Pharmaceuticals Limited. We are an ASX listed company focused on the global health threat of antibiotic resistance and emerging viral pathogens. A usual disclaimer. So really what is the company built upon? It’s good people supporting a great technology, and that technology is the invention of former head of research of Johnson & Johnson Australasia of a decade, executive director of their board and really the skill set of antibiotic resistance or developing new compounds to tackle that emerging health threat.
As Stuart quickly says in a previous many years ago, a veterinary animal antibiotic company had a significant commercial success there until obviously his retirement. And a few years later as these things sometimes evolve, change in management, change in business model. And what do they say? Take the flame away from the fire and things can certainly evolve. Nevertheless, this is a significantly different company and this is supported by good people. In particular, I’ll reference Dr. John Prendergast, who is our New York Stock Exchange listed chairman in the context of he’s over there, but really he has a doctorate in blood poisoning, bacteria, and emerging diseases. Michele Delizia is co-inventor of Recce Antibiotics or Recce Pharmaceuticals, and she was really there from that breakthrough eureka moment where the 327 by example is scientific journal number 3, page 27, because each step of the way in this process or what was the process of identifying the optimum compounds to overcome that hypercellular mutation, which is antibiotic resistance that we discovered that and then now moving it through the commercial drug development process.
So the company is really a platform technology built upon a new class of antibiotics with emerging viral pathogen capabilities. We take a portfolio approach as that is the case, and that our compound is attracted to, binds to, and inter-reacts with the bacteria regardless of its gram stain, regardless of its lipid outer layer, and regardless of its hypermutated form. What that really means is a portfolio approach. We have a number of key candidates or key clinical focuses. The two in clinical stage at this moment is sepsis, septicemia or blood poisoning. For those who don’t know, that really is the end stage outcome of bacteria getting into your blood system. So whether it starts as a general surgery, that bacteria gets in and spreads quickly, or from an accident, you know, you bump yourself on the table and off you go. We are the only qualified infectious disease designated company in the world at a clinical stage for sepsis, and that QRDP is an award of the USFDA. That provides us of 10 years of market exclusivity above and beyond our patent position which is broad and well-encompassing by example out to about November of 2037.
We are in a Phase I study at Adelaide, CMAX clinical trial facility at this moment where we dose escalating patients and we’ve gotten tenfold above our original dose. And we’ll discuss the problem of sepsis in more detail. Our second clinical study is working in parallel. That is a burn wound infection study. So utilizing the same compounds, but as a spray on antibiotic solution, tackling the broad spectrum of bacteria that can exist and does exist on burn wound patients. That study is led by Dr. Ed Rabbi and Professor Fiona Wood, who was former Australian of the Year for her burns work, and many would know of her from her spray on skin capability and invention back in the day. We obviously have a suite of pre-clinical candidates, many in their advanced stages that we seek to bring on to their clinical stages as the company continues to evolve.
This is really more of a snapshot from a traditional pipeline perspective. Clinical candidates, obviously, each cohort they go through or each milestone that they achieve has a news flow event, and I’d expect a number of those to certainly continue for our intravascular side of things. And I’ve just returned from Perth, Western Australia. Of course, I had to do the seven-day quarantine due to the infectious disease crisis that exists among us. I focused upon meeting with Professor Fiona Wood and colleagues there and I’m sure there’ll be some updates that surround that. Usual pre-clinical candidates and that’s only touching upon a few there.
So let’s talk sepsis. What is sepsis or what is bacterial blood poisoning? It is the number one most expensive condition treated in health, double the second most expensive. It affects around 50 million people worldwide each year, and currently about 10 million persons, or 1 in 5 death rate, or 1 in 3 in hospital. It is a major unmet medical need and the reason why sepsis is such an unmet medical need is there’s no antibiotics or no drug therapies approved specifically for sepsis. Basically, and I’ve been a sepsis patient, thank goodness for me the antibiotics worked. In this instance, they’re increasingly not. You present to the clinician, the clinician looks at you, by example in the emergency or to the hospital. And they go, “Look, buddy, you’re showing signs of sepsis or blood poisoning.” They take a blood draw, they rush it off to the laboratory, and they’re trying to determine two things, what type of bacteria is in your blood and what type of antibiotics that bacteria is susceptible to.
Up until that stage of determination, it’s absolute clinical guess work. Every hour left untreated, the life of people of survival decreases by 8% each hour. So they’ve got to work quickly. They’ve got to take a guess and they really hope for a positive outcome. Because there is no such thing as good bacteria in the blood, every bacteria or any bacteria in the blood is bad bacteria. This is designed for an intravascular administration, at patient presentation with the goal of getting on top of the infection the moment that patient presents. We don’t care what type of bacteria that patient has, staph, E. coli, pseudomonas aerognosis, streptococcus pyogenes. There’s about 100 different types of bacteria that patient could be suffering from and typically, and in fact generally speaking, the clinicians have this antibiotic for that type of bacteria. We don’t care. The quicker you can get on top of that patient infection at presentation, the better the patient outcome. And as I mentioned, Phase I intravascular study at this moment running in the background.
We touched a little upon the treatment paradigm. We really covered that. And really, why are we different? Why haven’t existing drugs been able to tackle this major unmet medical need? And the reason is all antibiotics are naturally derived. They’re bacteria or fungi, cultivate it out, put against the bacterial fungi they’re seeking to treat. And the outcome of that is you’re only as good as what’s found in nature. You’ve got singular mechanisms of action, unwanted toxicities, a terribly expensive method of manufacture, and as the bacteria to survive, which they always have, and they always will, the antibiotics don’t evolve. They don’t keep up. What we or what Dr. Melrose did is he began the first principles in mind, “Create through a synthetic process a technology that is what we want, not reliant on what’s given to us in nature.” That therefore meaning we have specific mechanisms of action able to overcome that hypocellular mutation of the bacteria, the survival mechanism, able to inter-react regardless of its gram stain, regardless of the type of mutated form, and able to work and keep on working with repeated use, something all existing antibiotics are no longer able to do. And heaven forbid, an extremely economic method of manufacture.
So this is really getting a deep technical from a position of mechanism of action studies. The company is built upon technology. Mechanism of action is basically the engine to the car how this thing works, and Stewart correctly says the last class of antibiotics created was Vancomycin. And if we look along the bottom of the screen there in very little writing, we’d be looking for Linnaeus Biosciences. They were actually the group who identified the mechanism of action for Vancomycin. They also identified and characterized the mechanism of action for Cubist, Cubist with that mechanism of action at around a Phase I, went on to sell their drug or that antibiotic, I should say to Merck, MSD for about $10 billion. So with good drugs, there’s money and there’s major market.
And what this really demonstrates, and it’s more dedicated to the scientific in the room, a unique mechanism, a unique mechanism identified by those I just mentioned. We permeabilize or we enter the bacterial cell membrane. We shut down the MTP synthesis or ATP synthesis, I should say, which is basically the beating heart of the bacteria, and we shut it down one, faster than any other antibiotic known to date and two, shut it down irreversibly. Again, something in every antibiotic to date is not able to do and that exists obviously in stagnant or hypermutating cells. And, you know, keeping it really simply, we stop the cells from dividing. What’s dividing? Multiplying. What’s multiplying? Increasing infection. So keeping it really simple as well as then of course a fourth mechanism which is causing taking advantage of the high metabolic processes that exist in bacteria. We’re causing only those cells to burst through those 10 atmospheres of pressure. Healthy cells do not have that.
So I won’t get too deep into it unless of course, somebody wishes to dive into the full mechanics of the compound. But what it really means is a capability above and beyond anything that exists to date, a capability that works against the fullest suite of ESKAPE pathogens. ESKAPE is an acronym for the different types of bacteria that result in about 50% of blood poisoning infections and here particularly interestingly, you’ve got a suite of them as, again, all of our studies are independently done. We don’t do research, for research sake. This is to demonstrate an ability to have efficacy and work regardless of its standard form or its hypermutated state.
I like looking at these colors particularly because the blue color means a standard bacteria. The red color is the hypermutated or the drug resistant bacteria. Interestingly, on the first one there which I think is enterococcus fascium, we worked better against the hypermutated form. That’s a little weird. You don’t see that every day and that’s in the same time with the same concentration. Why is that? Because we don’t care whether it’s a mutated or a superbug form. To us it’s just bacteria and we’re attracted, bind to, inter-react, and keep on working with repeated use.
This is showing it from a time perspective and ability to work in a time and a strong consistent manner. We have what’s called a BLOQ, or a below limit of quantification, meaning no more bacteria after about an hour of exposure to our compound. This is comparing to amoxicillin. Amoxicillin sells at about $10 billion per annum and basically after eight cycles or eight exposures of amoxicillin to staph, it stops working. Well, the drugs don’t work, the superbugs win. Two cycles against E. coli. In the early days and for those who weren’t aware, I was the founding investor. I funded this study. It was for our patent purposes. We demonstrated an ability to work the first time, second time, third time through to a minimum of 25 repeat cycles, above and beyond anything existing, and each cycle is time and money. We’re in heaven forbid, that’s enough. Let’s lodge the patent. Thankfully, the patents were granted and we’ve informally since done that many, many hundreds of times. And we’ve never come across a bacteria, one, that we don’t work at, and two, we don’t continue to work in the same time with the same concentration with repeated use.
This is our Phase I intravascular study. There is no more invasive indication or exposure of a compound to the human body then putting it straight into your veins through intravenous administration. This study is happening at Royal Adelaide Hospital CMAX clinical trial facility. It’s basically…well, it is a Phase I study according to international protocol from a regulatory perspective and it’s a dose escalation study determining pharma economics, safety parameters, and tolerability of the compound. Really, we started at 50 milligrams of intravascular dose. We’ve gone up to 150, 500, 500 being a tenfold increase on the initial dose, and we’ve seen an excellent safety profile among these healthy human volunteers which we would expect over the very, very near weeks stepping into the higher dosing cohort, which I believe it says about 1,000 milligrams there.
We are in efficacious territory according to our pre-clinical studies that we’re enabling studies to launch this clinical program. So I would say from this, there would be a very high chance. They’re not certain until obviously approved and announced to move into a Phase II study beyond. This study is to be concluded within the first half of this calendar year which, obviously, we are about halfway through.
This is our second clinical study running in parallel. Intravascular administration from a Phase I safety perspective is important. You’ve got to do it. It’s interesting. It’s for regulatory purposes, but I love the speculation of an efficacy upshot, patients who are overburdened or burdened with reoccurring drug resistant bacteria. And in this case, the studies are sponsored by the West Australian Health Department. It doesn’t cost us a penny, but we pay for the files and we send it across. It has been utilized as a Phase I/Phase II on patients which has demonstrated a complete clinical response in all candidates treated to date. These are the types of bacteria that patients have had. You know, your typical gram-positives or your hypermutated drug resistant, gram-negatives in some instance. One of the questions people ask is, “How do you work against biofilms?” Well, there have been a particular biofilm bacteria and pseudomonas aeruginosa. I usually see on screen there is one that many would consider a difficult bacteria to treat. They’ve halved the protocol treatment time because there’s no more bacteria to treat and all patients have had a complete clinical response.
Just for expediency of time, I’m going to breeze through the next few slides. We basically have naturally a suite of pre-clinical candidates. This one touches on helicobacter pylori which is utilizing the same compound from an oral administration. So we’ve talked intravascular being sepsis, we’ve talked to topical administration being burned or potentially skin infections along the way, diabetic ulcer infections and similar potential along the way. Here, we talk about oral administration from a pre-clinical context working at a leading institute.
COVID. Well, don’t use antibiotics for virals, full stop. Don’t do it. We call our compound an antiviral compound for simplicity and communication. There’s no bio or a traditional antibiotic in our compound. It’s an anti-infective and the commonality in these viral cells, COVID cells is they’re attracted to the outer… To the proteins of enveloped viruses. COVID is an enveloped virus and in this instance, we have demonstrated or… When I say we’ve demonstrated, we don’t do this internally. We send a compound to experts and they give us the results back, and we lodge it with the regulators. We’ve demonstrated a dose-specific efficacy against the COVID cells without undue toxicity to the healthy cells, meaning a targeted efficacious approach.
Patents. I believe this is one of the last slides here. We really have taken a land grab opportunity from the patentability perspective. We are capturing the value that exists as a new class of synthetic polymeric antibiotics. Our Family 1 is a composition of matter, obviously, these patents are, manufacturing claims and curative claims. Family 2, preventative purposes. So preventing infections taking place, as well as various methods of administration, i.e., topical, oral, nasal, and hairless on, and so forth. And as you can see, independently… By the way, the country’s leading pharmaceutical markets of the world, these have been granted to, you know, a very long way ahead of us. Family 3 is viral claims. So if there was any guesses to do we have viral capability, well, certainly there’d be international examiners to support that and that gives our market monopolies or position out to 2037 or so. When I say viruses, you’re talking naturally coronaviruses, but Ross River, HIV, influenza, so on and so forth.
Before I touch these last few slides, the other unique ability related to our compound or unique protection is we have that qualified infectious disease designation awarded by the USFDA. That 10 years of market exclusivity for the designation of sepsis and the market of the U.S. which is about 48% of the global antibiotic market. That’s government-backed market exclusivity. You can bomb patents, you can stop paying the fees, you can do anything. No one’s gonna be able to take away that above and beyond protection that the QRDP designation provides. This is our facility out at Pill Hill or Macquarie Park here in Sydney. We make our products. We don’t outsource that. We make it to GMP specification. We’re making or producing at about 500 doses per hour. We’ve got no inexpensive waste. Extremely unique economical method of reproducibility and manufacture there. And I think along the way, that’ll be one of our particularly key valuable assets.
Here, what’s our capital snapshot? Well, we’ve got about 5,000 shareholders. I’m about number two. Dr. Graham Melrose is the largest shareholder. Institutional investors exist throughout the shareholder structure, but particularly Fidelity International, many… Oh, I’m not supposed to say their name, but shh, just don’t tell anyone. They’re in there at number three. They always hide behind these nominee accounts. Everyone goes, “Who’s behind it? There must be a hundred shareholders.” Well, we have a very good cash position. This ain’t no capital raising. We’re funded according to our disclosures for many, many years to come. Our intervascular program costs us a couple of million. It’s already paid for. So it’s not coming too much out of the budget. Our fixed monthly burn rate is about $150,000 a month. Our variable costs are obviously well budgeted for. It puts us in a position where we have a unique and new class of antibiotics or anti-infectives. We’re tackling unmet medical needs. Unmet because there’s not… It provides price monopoly and significant patient populations.
As Stewart correctly says, which I haven’t really shared, but there we go, we’re moving to the United States as the company continues to expand its positioning and its opportunity. Australia is about 3% of the antibiotic market, and there’s obviously many opportunities we continue to aspire or move towards that exist in the United States. We’ve got a good financial position, a good investor base, and I really thank everybody for the opportunity of presenting Recce Pharmaceuticals.
Stuart: There’ve been a few questions. I’ll just jump to the online, and then we’ll answer the live audience. A question from Simon has come through. “Have you found any naturally derived antibiotics that outperform your synthetic products? And if so, which illnesses?”
James: No, there ain’t none, and I can say that with absolute confidence. Look, I do appreciate the question, Simon. Thank you. By example to just to have our QRDP designation for our indication, one of the prerequisites the FDA does is they look at the full suite of candidates coming through, and they go, “Is this like anything that exists currently?” If not, which of course, it doesn’t, it’s not like anything and it has unique merit and tackling the global health problem of antibiotic resistance, they award it or provide the incentive to continue and develop through the award of that designation. What that really means is it’s easy for me to say, “Oh, there’s no competitors.” Well, frankly, the leading regulator supports that positioning and statement. Why? Well, heck you’re only as good as you find in nature what may work today and every day there’s a new professor who’s found the breakthrough. It doesn’t work tomorrow. The bacteria mutate. The mechanism of action with that what’s found in nature just doesn’t keep up. So we’re really confident in our competitive positioning there.
Stuart: Okay. And a question from Bob. James: COVID is a portfolio approach to us. It’s a part of our overall strategy. The leading government authority, which I’m not allowed to say their name, but I think we all recognize who the leading scientific organization, Commonwealth CS is…they chose us as a Priority 1 test candidate against COVID. They are doing the studies with our compound at their facilities. Please ask them to hurry up. It’s not us that’s dragging our feet there and I’m not suggesting they are. But I’m suggesting that it is taking longer than expected. For the avoidance of doubt, we’re therapeutic focused. So we’re focused not as the vaccine, but treating those who potentially have COVID. I really see it is as our patent support a valuable, but not put all your eggs in the one basket candidate. And we will continue as that is the same drug used for intravascular, and now, other purposes to advance that in viruses and bacteria along the way.
Man: You’re discussing and moving all your operations were all [inaudible 00:24:17.852] States. Does that [inaudible 00:24:19.751] Nasdaq listing? And if so, do you intend to keep full registry in Australia?
James: Yes. Look, for absolute clarity, our company… I’m from Perth. I got in from Perth last night. There’s great innovation in Perth, but there ain’t no pharmaceuticals. I moved to Sydney originally to develop our Sydney manufacturing site and our little corporate office. It’s done, it’s working, onto the next frontier. I’m moving to the United States to advance the company amongst the major capital markets, but I’m not gonna say Nasdaq. But I’m gonna say major capital markets to be under their regulator’s nose, the FDA particularly. They do like U.S.-centric, they’ll say otherwise, but they do like U.S.-centric positioning. Dr. Alan Dunton, who was former global head of research for Janssen, the R&D arm of Johnson & Johnson, he’s a fellow director. He lives in Boston. Dr. John Prendergast, he lives in New York. So when I move there, over half of our board is U.S.-centric, and the majority of our activity despite how, pardon me, our clinical studies initially happening here, happen in the U.S. So we are not for any purpose of investing additional capital cost or infrastructure there. Good people with a technology created here creates the opportunity, and I’m going over there to broaden that.
Stuart: Please thank James Graham.
James: Thank you.