Source: Recce Pharmaceuticals
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  • The misuse and overuse of antibiotics have led to the rapid growth of superbugs – a type of bacteria resistant to conventional treatments
  • Serious infections such as pneumonia, tuberculosis and salmonella are becoming difficult to treat as the antibiotics used to combat the bacteria become less effective
  • ASX-listed Recce Pharmaceuticals (RCE) has developed one of the world’s first new classes of synthetic anti-infectives in over 30 years to address this issue
  • The company’s patented suite of drug candidates has been designed to tackle the growing global health threat posed by both superbugs and emerging viral pathogens
  • This means comparatively, the antibiotic market is 10 times larger and growing at more than twice the rate of the lithium market, making for a unique investment opportunity

While lithium and tech stocks have hogged the investment spotlight for the past several years, the antibiotic market is a quiet overachiever as drug developments drive massive growth.

Since the world-famous discovery of penicillin, the first true antibiotic, by Alexander Fleming in the late 1920s, antibiotics have developed to be able to treat all kinds of bacterial infections.

Antibiotics have become so effective that bacterial infections are now typically easier to cure than viral infections.

However, the misuse and overuse of antibiotics have led to the emergence and rapid growth of a new health threat: superbugs. This type of bacteria is often resistant to antibiotics, rendering the drugs ineffective.

This is because bacteria are alive. Like other living organisms, they can evolve and adapt to overcome certain adverse situations — which, for bacteria, includes antibiotics.

Novel treatments need to be developed to overcome the rapid growth of anti-microbial resistant (AMR) superbugs.

This is where ASX-listed Recce Pharmaceuticals (RCE) comes in.

The company has developed one of the world’s first new classes of synthetic anti-infectives in over 30 years, designed to target the global health threat posed by multi-drug resistant superbugs.

Why new antibiotics matter

According to market researcher Grand View, the global antibiotic market was worth a whopping US$40.7 billion (A$55 billion) in 2020 and is expected to expand at a compound annual growth rate of 4.5 per cent through to 2028.

The sector’s growth is largely being driven by the rising incidence of infectious diseases and AMR superbugs.

In fact, the World Health Organisation last year called antibiotic resistance “one of the biggest threats to global health”.

Serious infections such as pneumonia, tuberculosis, gonorrhoea and salmonella are becoming increasingly difficult to treat as the antibiotics typically used to combat the bacteria are becoming less effective. This leads to longer hospital stays, greater medical costs and higher mortality rates.

The Australian Commission on Safety and Quality in Healthcare found in 2019 that antimicrobial resistance shows “little sign of abating” and poses an ongoing risk to patient safety.

While bacteria evolve naturally, an overprescription of antibiotics is expediting the process — meaning new superbugs are appearing faster than new antibiotics are being developed.

A 2015 report from the US National Center for Biotechnology Information said the rise of superbugs threatened the extraordinary health benefits antibiotics had brought about over the past century.

“This crisis is global, reflecting the worldwide overuse of these drugs and the lack of development of new antibiotic agents by pharmaceutical companies to address the challenge,” the report said.

All this points to a major gap in the antibiotic market thanks to the growing need for medicine that can stem the rapid growth of AMR superbugs and treat antimicrobial-resistant infections.

Recce’s new class of anti-infectives

Recce Pharmaceuticals has developed three primary drug candidates to tackle the growing global health threat posed by both superbugs and emerging viral pathogens.

RECCE 327 is the company’s lead candidate in the fight against AMR superbugs. This unique synthetic anti-infective has been proven effective against several families of bacteria, including the full suite of ESKAPE pathogens and more.

These are all bacteria designated by the World Health Organisation as critical- or high-priority for treatment.

Multiple toxicity and mutagenicity studies have proven the drug safe to use in small and large animals, leading to the US Food and Drug Administration awarding RECCE 327 Qualified Infectious Disease Product (QIDP) status.

This QIDP status gives the drug fast-track designation and 10 years of market exclusivity post-approval.

On top of this designation, RECCE 327 has been included in The Pew Charitable Trusts’ Global New Antibiotics in Development pipeline as the only synthetic polymer and sepsis drug candidate in development.

What’s more, in 2021, RCE reported success in using RECCE 327 to treat a human patient with a debilitating multidrug-resistant sinusitis infection.

Recce’s intellectual property (IP) for its RECCE 327 product is protected by a string of patent grants and applications in various jurisdictions.

According to Recce, the manufacturing process of the drug, as well as its multi-drug delivery applications and anti-viral use, is protected with over 40 global patents in major anti-infective markets.

RECCE 327 has been developed for intravenous administration, while RECCE 435 is a synthetic antibiotic formulated for oral use.

Meanwhile, Recce is developing its RECCE 529 drug candidate, which is being tested against viral infections, including influenza and COVID-19.

Both the RECCE 327 and RECCE 529 drug candidates have been progressing through stages in COVID-19 trials in Australia and overseas.

Though the healthcare market is rife with opportunities for investors, punters can often be deterred by the fact that many drugs in development never make it to market.

For big pharmaceutical companies, there are often dozens of drugs in early stages of development at any time, but most of these are kept hidden from the public until they reach certain development milestones. Still, of those announced to the public, only a handful ever see the shelves of a pharmacy.

This is particularly true for the antibiotics industry given bacteria can often develop a resistance to treatment during the trial phases — meaning a drug that was effective in early-stage development becomes redundant during testing.

This is why Recce believes its new class of synthetic anti-infectives is so important in the fight against multi-drug resistant infections.

The antibiotics opportunity

So, what do investors have to gain from companies developing novel antibiotic therapies if new treatments prove successful?

It might be pertinent to compare the market to one of the aforementioned “hot” sectors of the moment: lithium.

Grand View pegged the global lithium market at US$4.23 billion (A$5.7 billion) in 2019, with a predicted CAGR of 1.9 per cent through to 2027.

This means comparatively, the antibiotic market is 10 times larger and growing at more than twice the rate of the lithium market.

There is risk involved with any investment, and no bet is a sure thing.

However, for the shrewd investor looking to capitalise on a major growth opportunity, health care — and the antibiotic market, in particular — could be the unsung hero.

RCE by the numbers
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