RECCE PHARMACEUTICALS LTD — Capital/Financing Update 2019

Feb 14, 2019

Issue of Securities and Appendix 3B

Recce Pharmaceuticals Ltd (ASX:RCE) (Company) the company developing a New Class of Broad Spectrum antibiotics, advises that the Company has today completed the issue of the Placement shares and unlisted options as detailed in the announcement released on the ASX on 8 February 2019.

In addition to the securities noted above, the Company wishes to advise that it has also completed the issue of fully paid ordinary shares to:

• Dr John Prendergast, as approved by shareholders at the Annual General Meeting of the Company on 28 November 2018 (2018 AGM);
• Certain employees of the Company under the Company's newly adopted Employee Incentive Plan, which was approved by shareholders at the 2018 AGM; and
• Acuity Capital Pty Ltd (Acuity) pursuant to the Controlled Placement Deed as previously announced and detailed below.

Please find attached the Appendix 3B relating to issue of the aforementioned securities, which includes the Placement shares.

As announced to the ASX on 1 November 2018, the Company entered into a Controlled Placement Deed (CPD) with Acuity. The CPD provides the Company with up to $3 million of standby equity capital until 31 December 2020. Importantly, the Company retains full control of all aspects of the placement process: having sole discretion as to whether or not to utilise the CPD, the quantum of issued shares, the minimum price of shares and the timing of each placement tranche (if any).

There are no requirements on the Company to utilise the CPD and the Company may terminate the CPD at any time, without cost or penalty. Acuity and the CPD do not place any restrictions at any time on the Company raising capital through other methods. If the Company does decide to utilise the CPD, the Company is able to set a floor price (at its sole discretion) and the final issue price will be calculated as the greater of that floor price set by the Company, and a 10% discount to the Volume Weighted Average Price (VWAP) over a period of the Company's choosing (again, at the sole discretion of the Company).

As collateral for the CPD, the Company has agreed to place 4.5 million shares from its ASX Listing Rule 7.1 capacity, at nil consideration to Acuity (Collateral Shares), but may, at any time, cancel the CPD and buy back the Collateral Shares for no consideration (subject to shareholder approval).

For further information please visit www.recce.com.au or contact:

Investor Relations

James Graham Executive Director Recce Pharmaceuticals Ltd Tel: +61 (02) 8075 4585

Media (Australia) Andrew Geddes CityPR Tel: +61 (02) 9267 4511 Media (International)

Sue Charles/Gemma Harris Instinctif Partners Tel: +44 (0)20 7866 7860 E: recce@instinctif.com

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Recce Pharmaceuticals Ltd (Company)

ABN

73 124 849 065

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

• 1 +Class of +securities issued or to be issued Fully paid ordinary shares (Ordinary Shares) Unlisted options (Options)
• 2 Number of +securities issued or to be issued (if known) or maximum number which may be issued
• 3 Principal terms of the +securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

17,787,501 Ordinary Shares

1,800,000 Options

17,787,501 Ordinary Shares, which rank equally with existing fully paid ordinary shares.

1,800,000 Options with an exercise price of 16.8 cents per Option ($0.168) and which expire on 15 February 2023.

+ See chapter 19 for defined terms.

4	Do the +securities rank equallyin all respects from the +issuedate with an existing +class ofquoted +securities?If the additional +securities donot rank equally, please state:•the date from which they do•the extent to which theyparticipateforthenextdividend, (in the case of atrust,distribution)orinterest payment•the extent to which they donot rank equally, other thaninrelationtothenextdividend,distributionorinterest payment	The Ordinary Shares rank equally with existingOrdinary Shares.The Options do no rank equally with existingOrdinary Shares. However, upon exercise of anOption, the resultant Ordinary Share will rankequally with the existing Ordinary Shares onissue.
5	Issue price or consideration	4,930,358OrdinarySharesand1,800,000
		Options were issued for nil cash consideration.
		12,857,143 Ordinary Shares were issued at $0.14per Ordinary Share.
6	Purpose of the issue(If issued as consideration forthe acquisition of assets, clearlyidentify those assets)	12,857,143OrdinaryShareswereissuedtosophisticated and institutional investors underthe Placement, as announced to the ASX on 8February 2019, which raised $1.8m (before c0sts).Funds raised will be used to strengthen theCompany's balance sheet, to further pre-clinicalprograms,forgeneralworkingcapitalandrepayment of director loans.
		1,800,000 Options were issued to DJ Carmichaelas part of the fees for acting as Lead Manager forthe Placement, as announced to the ASX on 8February 2019.
		180,358 Ordinary Shares were issued to certainemployeesundertheCompany'sEmployeeIncentive Plan.
		250,000 Ordinary Shares were issued to Dr JohnPrendergast,non-executivedirectoroftheCompany,followingreceiptofshareholderapprovalattheCompanyAnnualGeneralMeeting on 29 November 2018.
		4,500,000 Ordinary Shares were issued to AcuityCapital as collateral shares pursuant to theControlled Placement Deed.

+ See chapter 19 for defined terms.

6a	Is the entity an +eligible entitythathasobtainedsecurityholder approval under rule 7.1A?	Yes
	If Yes, complete sections 6b – 6hin relation to the +securities thesubject of this Appendix 3B, andcomply with section 6i
6b	The date the security holderresolution under rule 7.1A waspassed	29 November 2018
6c	Number of +securities issuedwithoutsecurityholderapproval under rule 7.1	4,500,000OrdinaryShareswereissuedascollateral shares pursuant to the ControlledPlacement Deed7,114,553 Ordinary Shares were issued under thePlacement1,800,000 Options
6d	Number of +securities issuedwith security holder approvalunder rule 7.1A	5,742,590 Ordinary Shares were issued under thePlacement
6e	Number of +securities issuedwith security holder approvalunderrule7.3,oranotherspecific security holder approval(specify date of meeting)	250,000 Ordinary Shares (approval under ListingRule 10.11, Resolution 6, AGM on 29 November2018)
6f	Number of +securities issuedunder an exception in rule 7.2	180,358 Ordinary Shares (exception 9)
6g	If +securities issued under rule7.1A, was issue price at least 75%of 15 day VWAP as calculatedunder rule 7.1A.3?Include the+issue date and both values.Include the source of the VWAPcalculation.	Yes, the securities were issued on 15 February2019, which had a 15 trading day VWAP (up to 14February 2019) of $0.1624. 75% of this VWAP is$0.1218, which is less than the issue price (of theshares under the Placement) of $0.14 (source:IRESS).
6h	If +securities were issued underrule7.1Afornon-cashconsideration,statedateonwhichvaluationofconsideration was released toASX Market Announcements	N/A

+ See chapter 19 for defined terms.

6i	Calculate the entity's remainingissue capacity under rule 7.1 andrule 7.1A – complete Annexure 1andreleasetoASXMarket	See Annexure 1
	Announcements
7	+Issue dates	15 February 2019

Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A.

Cross reference: item 33 of Appendix 3B.

+ See chapter 19 for defined terms.

8	Number	and	+class	of	all
	+securities		quoted	on	ASX
	(including	the	+securities		in
	section 2 if applicable)

Number	+Class
107,129,919	FullyPaidOrdinaryShares

9 Number and +class of all +securities not quoted on ASX (including the +securities in section 2 if applicable)

Number	+Class
641,000	Options
59,880	Tranche 1 Options
104,167	Tranche 2 Options
109,569	Tranche 3 Options
127,470	Tranche 4 Options
124,069	Tranche 5 Options
130,804	Tranche 6 Options
65,617	Tranche 7 Options
1,800,000	Options, with anexercise price of $0.168per option, and anexpiry date of 15February 2023.
8,754,423	Class B PerformanceShares
8,754,423	Class C PerformanceShares
8,754,423	Class D PerformanceShares

10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

N/A

+ See chapter 19 for defined terms.

Part 2 - Pro rata issue

11	Issecurityholderapprovalrequired?	N/A
12	Is the issue renounceable or nonrenounceable?	N/A
13	Ratio in which the +securitieswill be offered	N/A
14	+Class of +securities to which theoffer relates	N/A
15	+Recorddatetodetermineentitlements	N/A
16	Willholdingsondifferentregisters(orsubregisters)beaggregatedforcalculatingentitlements?	N/A
17	Policy for deciding entitlementsin relation to fractions	N/A
18	Names of countries in which theentity has security holders whowillnotbesentnewofferdocumentsNote: Security holders must be told how theirentitlements are to be dealt with.Cross reference: rule 7.7.	N/A
19	Closingdateforreceiptofacceptances or renunciations	N/A
20	Names of any underwriters	N/A
21	Amount of any underwriting feeor commission	N/A
22	Names of any brokers to theissue	N/A
23	Fee or commission payable tothe broker to the issue	N/A

+ See chapter 19 for defined terms.

24	Amount of any handling feepayable to brokers who lodgeacceptances or renunciations onbehalf of security holders	N/A
25	If the issue is contingent onsecurity holders' approval, thedate of the meeting	N/A
26	Date entitlement and acceptanceform and offer documents will besent to persons entitled	N/A
27	If the entity has issued options,and the terms entitle optionholderstoparticipateonexercise,thedateonwhichnotices will be sent to optionholders	N/A
28	Date rights trading will begin (ifapplicable)	N/A
29	Date rights trading will end (ifapplicable)	N/A
30	How do security holders selltheir entitlements in full througha broker?	N/A
31	How do security holders sell partof their entitlements through abrokerandacceptforthebalance?	N/A
32	How do security holders disposeof their entitlements (except bysale through a broker)?	N/A
33	+Issuedate	N/A

+ See chapter 19 for defined terms.

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of +securities (tick one)
• (a) +Securities described in Part 1

(b) All other +securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the +securities are +equity securities, the names of the 20 largest holders of the additional +securities, and the number and percentage of additional +securities held by those holders
• 36 If the +securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

37 A copy of any trust deed for the additional +securities

+ See chapter 19 for defined terms.

Entities that have ticked box 34(b)

38 Number of +securities for which +quotation is sought 39 +Class of +securities for which quotation is sought 40 Do the +securities rank equally in all respects from the +issue date with an existing +class of quoted +securities? If the additional +securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another +security, clearly identify

that other +security)

42 Number and +class of all +securities quoted on ASX (including the +securities in clause 38)

Number	+Class

+ See chapter 19 for defined terms.

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.
• 2 We warrant the following to ASX.
  • The issue of the +securities to be quoted complies with the law and is not for an illegal purpose.
  • There is no reason why those +securities should not be granted +quotation.
  • An offer of the + securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any +securities to be quoted and that no-one has any right to return any +securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the +securities be quoted.
• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the +securities be quoted.
• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Company secretary

Sign here: Date: 15 February 2019

Print name: Alistair McKeough

+ See chapter 19 for defined terms.

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 –Issues exceeding 15% of capitalStep 1: Calculate "A", the base figure from which the placementcapacity is calculated
Add the following:Number of fully paid +ordinary securities•issued in that 12 month period under anexception in rule 7.2	328,084 shares issued on 16 February 20181,591,090 shares issued on 1 May 2018430,358 shares issued on 15 February 2019
Number of fully paid +ordinary securities•issued in that 12 month period withshareholder approval
Number of partly paid +ordinary•securities that became fully paid in that12 month period
Note:•Include only ordinary securities here –other classes of equity securities cannotbe added•Include here (if applicable) thesecurities the subject of the Appendix3B to which this form is annexed•It may be useful to set out issues ofsecurities on different dates as separateline items
Subtract the number of fully paid +ordinarysecurities cancelled during that 12 monthperiod	Nil
"A"	89,772,776

+ See chapter 19 for defined terms.

Step 2: Calculate 15% of "A"
"B"	0.15
	[Note: this value cannot be changed]
Multiply "A" by 0.15	13,465,916 (rounded down)
Step 3: Calculate "C", the amount of placement capacity under rule7.1 that has already been used
Insert number of +equity securities issuedor agreed to be issued in that 12 monthperiod not counting those issued:•Under an exception in rule 7.2•Under rule 7.1A•With security holder approval under rule7.1 or rule 7.4Note:•This applies to equity securities, unlessspecifically excluded – not just ordinarysecurities•Include here (if applicable) thesecurities the subject of the Appendix3B to which this form is annexed•It may be useful to set out issues of	11,614,553 fully paid ordinary shares issuedon 15 February 2019.1,800,000 unlisted options issued on 15February 2019.
securities on different dates as separateline items
"C"	13,414,553
Step 4: Subtract "C" from ["A" x "B"] to calculate remainingplacement capacity under rule 7.1
"A" x 0.15	13,465,916
Note: number must be same as shown inStep 2
Subtract "C"	13,414,553
Note: number must be same as shown inStep 3
Total ["A" x 0.15] – "C"	51,363

+ See chapter 19 for defined terms.

Part 2

Rule 7.1A –Additional placement capacity for eligible entities
Step 1: Calculate "A", the base figure from which the placementcapacity is calculated
"A"	89,772,776
Note: number must be same as shown inStep 1 of Part 1
Step 2: Calculate 10% of "A"
"D"	0.10
	Note: this value cannot be changed
Multiply "A" by 0.10	8,977,277 (rounded down)
Step 3: Calculate "E", the amount of placement capacity under rule7.1A that has already been used
Insert number of +equity securities issuedor agreed to be issued in that 12 monthperiod under rule 7.1A	5,742,590 fully paid ordinary shares issuedon 15 February 2019.
Notes:•This applies to equity securities – notjust ordinary securities•Include here – if applicable – thesecurities the subject of the Appendix3B to which this form is annexed•Do not include equity securities issuedunder rule 7.1 (they must be dealt within Part 1), or for which specific securityholder approval has been obtained•It may be useful to set out issues ofsecurities on different dates as separateline items
"E"	5,742,590

+ See chapter 19 for defined terms.

Step 4: Subtract "E" from ["A" x "D"] to calculate remainingplacement capacity under rule 7.1A
"A" x 0.10	8,977,277
Note: number must be same as shown inStep 2
Subtract "E"	5,742,590
Note: number must be same as shown inStep 3
Total ["A" x 0.10] – "E"	3,234,687

+ See chapter 19 for defined terms.