Announcement PDF Spark Plus - Healthcare Investor Day 2018 James Graham Vice President September 2018 Disclaimer DISCLAIMER This presentation has been prepared by Recce Pharmaceuticals Ltd (the “Company”). It does not purport to contain all the information that a prospective investor may require in connection with any potential investment in the Company. You should not treat the contents of this presentation, or any information provided in connection with it, as financial advice, financial product advice or advice relating to legal, taxation or investment matters. 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Given the risks and uncertainties that may cause the Company’s actual future results, performance or achievements to be materially different from those expected, planned or intended, recipients should not place undue reliance on these intentions, expectations, future plans, strategy and prospects. The Company does not warrant or represent that the actual results, performance or achievements will be as expected, planned or intended. US DISCLOSURE This document does not constitute any part of any offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of any “US person” as defined in Regulation S under the US Securities Act of 1993 (“Securities Act”). The Company’s shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration including an exemption for qualified institutional buyers. 1 About Recce Pharmaceuticals Ltd Founded in 2008 Publicly listed on ASX 2016 (ASX:RCE) Whole new class of antibiotic RECCE® 327 – broad spectrum antibiotic for sepsis Qualified Infectious Disease Product (QIDP) designation RECCE® 327 labelled under GAIN Act for: ─ 10 years market exclusivity (post approval) ─ Fast track (life of regulatory process) Patented manufacturing to Phase I & II volumes Recce is a drug discovery and development business, commercialising a new class of synthetic antibiotics to address the global health challenge of antibiotic resistant superbugs. In discussion with US Food & Drug Administration 2 Recce Pharmaceuticals Ltd - Capital structure Major shareholders 31 March 2018 1. G. & O. Melrose* 2. Foord Asset Management 3. J. Graham* 4. M. Dilizia* 5. State One Equities ASX:RCE 6 months Snapshot 35.0% 5.2% 4.1% 3.3% 2.9% ASX code RCE Shares on issue 89.34 million Share price AUD 19 cents Market Cap (approx.) USD $12.1 million Cash and deposits USD $0.5 million 30 June 2018 Trading range AUD 14-26.0 cents 52 week Average daily volume 84.4K 3 months * Held by Executive Directors 3 Tackling Superbugs – RECCE® 327 (Video) https://youtu.be/9TWj9VVru_E 4 Antibiotic Resistance - Asia 1 4.73 million deaths attributable to AMR in Asia every year by 2050 2 A new superbug infection reported every 18 minutes! 1/3 of Hong Kong’s elderly care home residents carry MRSA superbugs 3 times that rate in Shanghai 3 AMR in Hong Kong FAR exceeds that other countries - 20 times higher 4 than UK or Sweden 5 Antibiotic consumption increased 79% in mainland China – 103% in India (2000-15) 6 ½ of all S.aureus bacteria in Hong Kong are drug resistant - 4x higher than the percentage of Britain 7 Community carriage rates for E. coli (ESBL) superbug dangerously high in South East Asia from 30-60% 1 WHO – Antimicrobial Resistance in the Western Pacific Region 2016 2 South China Morning Post – Published May 2014 3 South China Morning Post – Published Aug 2018 4 The Guardian – Published June 2018 5 Sci Dev Net – Published April 2018 6 The Standard – Published Nov 2017 5 7 The Hong Kong College of Pathologists – Published July 2018 H. Pylori in Asia – a real problem! H. pylori is one of the most common bacterial pathogens, estimated to infect 1 about 60% of the world’s population - 4.4 billion people - much higher rates in countries such as China and India. 2 70-90% population of developing countries infected with H. pylori About 20% of infected individuals with H. pylori develop gastroduodenal 3 disorders, including gastric cancer. 4 US FDA believe that H. pylori has the potential to pose a serious threat to public health H. pylori has been added to the list of pathogens, which qualify under its QIDP (Qualified 5 Infectious Disease Product) designation, to facilitate specific antibiotic drug development. RECCE® antibiotics has demonstrated in-vivo efficacy against H. pylori bacteria – data synergies with lead compound - expanding markets (H. Pylori) – Drug portfolio opportunity 1 MIMS Multidisciplinary Article – Published July 2017 2 Federation of European Microbiological Societies Article – Published 2009 3, 4, 5 – Department of Health and Human Services FDA 21 Code of Federal Regulations Part 317 6 Natural antibiotics vs synthetic antibiotics Overuse of antibiotics has led to antibiotic resistant bacteria in humans and animals (superbugs) Antibiotic resistance is widely acknowledged as an urgent global health issue Commercial antibiotics are naturally derived – superbugs have been forming for millennia – and will continue to do so! RECCE® 327 is a new class of broad-spectrum antibiotic ‒ Entirely man-made and designed with purpose – not reliant on what’s found in nature. ‒ Unique mechanism of action – many ‘Active-sites’, as opposed to the traditional (natural) antibiotics ‘few’. ‒ Universal mechanism of action - detailed experimentation demonstrates it does not succumb to superbugs. 7 Independent study* example treating sepsis Three groups of 10 mice were each infected with MRSA (S.aureus superbug) All ten mice treated with RECCE® antibiotic survived Nine mice treated with current antibiotic (Oxacillin) survived Four mice that had no treatment at all, survived Note: Oxacillin was chosen for its known activity against MRSA. It is however a ‘narrow-spectrum’ antibiotic. In a clinical context, where diagnostics cannot immediately determine bacterial type, use in combatting any number of other bacteria, may likely see a less favorable patient outcome… RECCE® 327, with it’s proven ‘broad-spectrum’ activity, has shown strength against a range of bacteria including superbug forms, delivering rapid kill of deadly germs. * Results from an independent laboratory in USA 8 RECCE® 327 – how it works (in more detail) RECCE® antibiotics, attracted by protein in a bacteria’s outer membrane, non-specifically attach through hydrophobic interaction Weakening the outer cell wall, internal pressure causes the bacteria to burst and lose viability RECCE® 327 Enters the blood stream RECCE® 327 Adsorbs to outer membrane of Bacteria Bacteria bursts Redundant bacteria is absorbed Outer protein can mutate as much as it likes (superbug) RECCE® antibiotic will still kill it! 9 RECCE® 327 mechanism of action in practice 00:00 minutes Before application of RECCE® 327, the E.coli bacteria cells are healthy, smooth and intact This is a high-definition electron microscope image generated in February 2017 by Dr Peta Clode and Lyn Kirilak of the Centre for Microscopy, Characterisation and Analysis, University of Western Australia. It was taken to demonstrate RECCE® 327’s unique mechanism of action 10 RECCE® 327 mechanism of action in practice Burst! – others already redundant and breaking down 20 minutes After application of RECCE® 327, the E.coli bacteria cell membrane begins to weaken and is disrupted This is a high-definition electron microscope image generated in February 2017 by Dr Peta Clode and Lyn Kirilak of the Centre for Microscopy, Characterisation and Analysis, University of Western Australia. It was taken to demonstrate RECCE® 327’s unique mechanism of action 11 RECCE® 327 mechanism of action in practice Bacteria compromised – now consumable by healthy blood cells 180 minutes E. coli bacteria cells (10e6 cfu/ml) having their outer membrane weakened – and bursting from treatment with RECCE® 327 (1000 ppm) This is a high-definition electron microscope image generated in February 2017 by Dr Peta Clode and Lyn Kirilak of the Centre for Microscopy, Characterisation and Analysis, University of Western Australia. It was taken to demonstrate RECCE® 327’s unique mechanism of action 12 ® 327 – Safety* RECCE RECCE® 327 – Safety and Efficacy (detail) 13 What is Qualified Infectious Disease Product? Legal status awarded under US Generating Antibiotic Incentives Now (GAIN) Act Labeled for fast track designation – speed the FDA’s review process 10 years market exclusivity, starting from the date of New Drug Application approval if RECCE® 327 completes the necessary clinical trials and is approved by the FDA QIDP designated drugs to treat serious or life-threatening conditions and fill an unmet medical need, are labeled for expedited review in order to facilitate their development Qualified Infectious Disease Product (QIDP) designation is awarded if FDA considers the drug to treat “serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant pathogen.” 14 Patents and trademarks Patent portfolio covers all key geographies, manufacturing and modes of use Filed Australia USA Europe Germany Spain France United Kingdom Italy Sweden Japan China Patent Family 1 Granted ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Expiry Patent Family 2/3 Expiry Trademarks registered 2028 ✓ 2035 2029 Pending 2035 2028 Pending 2035 ✓ 2028 Pending 2035 - 2028 Pending 2035 - 2029 Pending 2035 - 2028 Pending 2035 - 2028 Pending 2035 - 2028 Pending 2035 - 2028 Pending 2035 ✓ 2028 Pending 2035 ✓ ✓ ✓ Patent Family 1 – granted Unique and highly economical manufacturing process Patent Family 2 – pending Applications (Multi-drug delivery) Patent Family 3 – pending Anti-viral uses Trademarks RECCE® for use on pharmaceutical products and services 15 Manufacturing and production Wholly owned automated manufacturing facility in Sydney’s Macquarie Park Raw materials plentiful and CHEAP - few $/kilogram Automated manufacture process taking around 1¼ hours No expensive waste – 99.9% product yield Currently producing in volumes to support planned Phase I and Phase II clinical trials Facility built to pharmaceutical specification Principal Engineer Arthur Kollaras & Executive Chairman/Chief Research Officer Dr Graham Melrose assess finished product 16 The Clinical Pathway to Antibiotic Approval Three distinct phases of clinical evaluation prior to approval for new drugs Multiple legislative and regulatory initiatives available to a new antibiotic developer ‒ Facilitates and expedite drug development and review ‒ Potential time/cost opportunities available along the way Medical observation is simple ‒ Fast acting, highly symptomatic nature Patient outcomes are obvious and associated development costs to reach reg. approval may be less 17 Board and management structure Dr Graham Melrose – President & CRO BSc (Hons), PhD (UWA), MBA (Macq), FRACI, C Chem, FAICD Founder and inventor. Former Executive Director and Chief Research at Johnson & Johnson (Aust) Pty Ltd in Sydney, with global responsibilities, particularly in Asia-Pacific Michele Dilizia – Vice President BSc (Med Sci), Grad Dip Bus (Mkting), BA (Journ), GAICD, MASM Co-inventor and qualified medical scientist; specialisation in medical microbiology and regulatory affairs James Graham – Vice President Alistair McKeough – Company Secretary (Outsourced - Whittens & McKeough) Alistair is a qualified lawyer and Principal/Managing Director of McKeough & Whittens, Alistair has broad experience as a commercial litigator and Company Secretary to ASX Listed companies Justin Reynolds – CFO (Outsourced - Pitcher Partners Sydney) Justin is a qualified accountant and Partner of Pitcher Partners Sydney, Justin has broad experience covering all areas of accounting, taxation and assurance. Particularly, Justin’s areas of expertise are business services and outsourced accounting BCom (Entrepreneurship), GAICD Extensive experience in marketing, business development and commercialisation of early stage technologies with global potential Dr John Prendergast – Non-Executive Vice President Arthur Kollaras – Principal Engineer BSc Beng (Chem), PhilEng (Enviro), MIEAust, MISPE Highly qualified in chemical engineering and microbiology, has significant experience taking a new technology concept to pilot plant and full scale FDA standards and production internationally BSc (Hons), MSc (UNSW), PhD (UNSW), CSS (HU) US based, current Chairman and Co-founder of Palatin Technologies, Inc. (NYSE: PTN) and Lead Director of Heat Biologics, Inc. (NASDAQ: HTBX) – extensive experience in the international commercialisation of pharmaceutical technologies Dr Justin Ward – Principal Quality Chemist BSc (Chem), PhD (Chem), MRACI, CChem A quality control expert who has worked with leading pharmaceutical companies, he is bringing Recce’s research and development, and manufacturing up to US FDA requirements 18 Economics of antibiotic development A challenged business model – the antibiotic industry: ─ Traditionally the more effective an antibiotic, the less likely it is to be used by clinicians who want to ‘save it’. Less use – less sales… ─ Conventional antibiotics commonly suffer resistance quickly; investment in ‘new’ drug candidates a risk ROI ─ Pharmco’s cutting antibiotic R&D – yet market need has never been greater How might one ‘unlock’ the anti-infectives industry? A new class of antibiotics – having a unique mechanism of action that DOES NOT lose effectiveness with ‘bacterial mutation’ – superbugs – even with repeated use Broad spectrum capabilities against ALL deadly bacteria, Gr +/- and superbugs A drug that can be administered quickly, without impractical diagnostic delays, where clinical ‘guess-work’ could be a thing of the past! Indications suggest RECCE® 327 may just be this needed change 19 US Legislative Support of Antibiotic Development US Right-to-Try Act passed in May/June 2018 Designed to give US patients with life threatening diseases, immediate and direct access to potentially lifesaving drugs - that have completed Phase I clinical trials New legislation mitigates possibility of weeks of procedural delay Previous legislation termed Compassionate Use Potentially resulting in improved patient outcomes ‒ With reduced risk to those providing them ‒ Potential to build earlier ‘direct’ distribution – diluting late-stage pharma market access model Further evidence of evolving regulatory environment in the US - Largest antibiotic market in the world Potential aimed at expediting new drugs with lifesaving potential Legislation does not affect Company’s business at present 20 Global market interest in antibiotic resistant treatments – M&A activity Date Company Acquired/merger/ acquisiton by Deal value (US$) Phase acquired Dec-14 Cubist Merck $8.4bn Ph III Antibiotics - one marketed - Cubicin for G-pos $625m (revenue in 2010, over $1bn in 2013) – mostly MRSA Aug-16 Astra Zeneca (antibiotics) Pfizer Inc $1.5bn Ph II-NDA Late-stage small molecule antibiotics business – most markets outside the US only Jan-15 Meiji Seika Pharma & Fedora Roche Up to $750m Ph I Beta-lactamase inhibitor (ex. Japan) Oct-17 Warp Drive Bio Roche Up to $387m Device Potential natural antibiotic identification technology Dec-17 Summit Therapeutics Eurofarma Up to $27m Ph II Clostridium difficile infection (Latin America only) May-16 Vertex Pharma Spero Therapeutics Not disclosed Ph I Bacterial infections Jan-18 Prokaryotics Merck Not disclosed Preclinical Bacterial cell envelope enzymes Mar-18 Redx Pharma Deinove Not disclosed Preclinical Gram-negative bacteria Detail Data extracted from 21 RECCE® antibiotics – a technology Recce’s technology enjoys the added opportunity of multiple markets and product categories. 22 Investment summary Qualified Infectious Disease Product Designation (QIDP) Generating Antibiotics Now (GAIN) Act approved Proprietary technology as a new class of antibiotics Lead compound addressing the most expensive condition faced by hospitals worldwide Early commercialisation potential Initial focus on sepsispotentially the first treatment for sepsis Favourable legislative and financial landscape Experienced commercial management and board Creating value by meeting key milestones Established manufacturing (volumes suitable for Ph I/II) 23 Thank you James Graham Vice President +61 2 8075 4585 +61 431 978 682 james.graham@recce.com.au 24