RECCE PHARMACEUTICALS LTD — Investor Presentation 2017

Dec 10, 2017

December 2017

Dr Graham Melrose, Executive Chairman James Graham, Executive Director

ASX: RCE

Recce Pharmaceuticals Ltd©

Tackling Superbugs – RECCE® 327 (Video)

Corporate summary

• Recce is focused on commercialising its promising new class of synthetic antibiotics to target superbugs
• Head Office is in Sydney; an additional office in the United States (Washington DC)
• New manufacturing facility in Sydney; R&D in Perth
• Successful oversubscribed listing on ASX in January 2016
• Current focus is on scale-up of manufacturing (in USA) and Investigational New Drug submission to US Food & Drug Administration (FDA)
• Overuse of antibiotics has led to antibiotic resistant bacteria in humans and animals (superbugs)
• Antibiotic resistance is now acknowledged as an urgent and major world health issue

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

Investment summary

Major shareholders Snapshot

1.	G. & O. Melrose*	35.0%
2.	D. Foord	5.3%
3.	J. Graham*	4.1%
4.	M. Aarons	3.4%
5.	M. Dilizia*	3.3%
6.	State One	2.9%
7.	The ASOF LP	1.4%
8.	F. Graham	1.3%
9.	QuerionPty Ltd	1.2%
10.	Frank McClmont	1.2%

ASX code: RCE Shares on issue: 86.7 million Share price: 17.5 cents Market cap (approx.) $15.18 million Escrowed shares: 42.8 million Cash and deposits: $1.1 million 30 June 2017 Trading range: 14.0 – 37.0 cents 52 week Average daily volume 167.9K 3 months

* Held by Executive Directors

Natural antibiotics vs synthetic antibiotics

• Founded on pioneering work of former J&J Australia Executive Director and Chief Research Executive Dr. Graham Melrose
• Commercial antibiotics are naturally derived superbugs have been forming for millennia and will continue to do so
• RECCE® 327 is a man-made synthetic compound

Economics of antibiotic development

• The need for additional and new antibiotics is urgent and huge because Big pharma has largely ignored development of new antibiotics for the past decade.
• One reason is that the more effective an antibiotic is the less it is likely to be used by clinicians.
• Another reason is conventional antibiotics suffer resistance against them, soon after their expensive development.
• RECCE® synthetic antibiotics are designed to overcome antibiotic resistance
• To our knowledge, we have the only technology in the world to do this. Uniquely this is the "essence" of Recce and its technology.
• Governments around the world, along with the United Nations (WHO) are working to urgently address the growing threat from antibiotic resistance - and we are gratified that in this context we have been recognised by the grant of Qualified Infectious Disease Designation.

Recce synthetic antibiotic and patent portfolio

• Recce has synthesized and patented a new class of man-made synthetic antibiotics
• Demonstrated safety and efficacy in a range of preclinical tests against common drug resistant bacteria
• Positive activity against a broad range of multi-drug resistant gram-negative and gram-positive bacterial infections
• RECCE® 327 is our leading synthetic antibiotic candidate before the US FDA
• Extensive pre-clinical studies have demonstrated positive in vitro (in the lab) and in vivo (in animals)
• Data show RECCE® 327 has significant in vivo antiinfective properties against S. aureus and E. coli

Patent portfolio covers all key geographies, manufacturing and modes of use

	Filed	Status	Expiry
Patent Family 1	Australia	Granted	2028
	USA	Granted	2029
	Europe	Granted	2028
	Germany	Granted	2028
	Spain	Granted	2028
	France	Granted	2029
	United Kingdom	Granted	2028
	Italy	Granted	2028
	Sweden	Granted	2028
	Japan	Granted	2028
	China	Granted	2028
Patent Family 2	All PCT Countries	Pending	2034
Patent Family3		Pending	2034

US FDA Grants QIDP Designation for RECCE® 327

Qualified Infectious Disease Designation (QIDP) awarded if the FDA considers the drug to treat "serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant pathogen."

• Legal status awarded under US Generating Antibiotic Incentives Now (GAIN) Act
• Labeled for Fast Track designation Speed the FDA's review process
• 10 years of market exclusivity, starting from the date of New Drug Application approval (QIDP designation plus five years through Hatch-Waxman Act) - 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.

In its letter to Recce Ltd, the FDA wrote:

"We have reviewed your request and conclude that it meets the criteria for QIDP designation for the requested indication. Therefore, we are designating your RECCE 327 product for intravenous use as a QIDP for the following indication: Bacteremia caused by Escherichia coli and Staphylococcus aureus*."*

RECCE® 327 – how it works

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.

RECCE® 327 – how it works

00:20 minutes

After application of RECCE® 327, the E.coli bacteria cell membrane begins to weaken and is disrupted.

RECCE® 327 – how it works

180 minutes

E. coli bacteria cells (10e6 cfu/ml) having their outer membrane weakened – and finally collapsing from treatment with RECCE® 327 (1000 ppm).

RECCE® 327 – Demonstrated efficacy and safety

Efficacy

• Multiple tests demonstrate efficacy against Staph (Gr +ve) and E.coli (Gr –ve), including superbug forms
• Rate and MIC/MKC data demonstrate high potency and broad spectrum activity against range of bacteria
• In vivo (mice) study against Influenza virus.

Safety

• Multiple studies of toxicity completed in small and large animals
• Multiple tests of mutagenicity (cancer) are clear

What does this all mean? Over 30 pre-clinical studies to date indicate RECCE® 327:

• Does not cause healthy cells to mutate (to cause cancer)
• Destroys Gram positive and Gram negative bacteria broad spectrum
• Acts against bacteria in both normal and mutated superbug forms with the same ease
• Contains a patented polymeric structure, intentionally designed to overcome the traditional challenges of bacterial mutation/resistance (superbugs)
• Is suited to administration against sepsis by intra-venous drip
• Has a wide and safe therapeutic dosing window.

Market Landscape – new antibiotic developers

Motif Bio plc (NASDAQ: MTFB) (AIM:MTFB.LN)

• AIM listed April 2015 raising $5m ($20m Mcap)
• 165% first year capital gain on AIM
• Duel listed on NASDAQ 18 months later, peak market cap of $304m
• Now Phase 3 MRSA (Gram +) only

RedX Pharma plc (LON: REDX)

• Anti-cancer and re-purposing of existing antibiotics ALL pre-clinical
• AIM Listed March 2017 raised $20m; before forced $56m anti-cancer sale
• April announced US$1m in CARBX grants
• Market cap at listing $91m

Auspherix Ltd

• Urinary tract infection treatment focus
• Brandon Capital (Australia) / Touchstone Innovations (AIM:IVO) over $13m invested to date
• Aspiration for clinical trials early 2019

RECCE® 327 – Advantages over competitors

Advantages unique to RECCE® antibiotics

• Broad spectrum activity avoids time-consuming diagnosis / guess work immediate treatment possible
• Active against superbug forms of bacteria previously untreatable now treatable kills all superbugs
• Does not lose efficacy with repeated use unique mechanism of action doesn't lose strength
• New synthetic with NO superbugs against it
• Whole new class of antibiotic
• Meets the criteria of World Health Organization (WHO) and other international organizations
• Eligible for international awards and extended patent/market monopolies potential 10 year addition
• First drug designed specifically for the treatment of sepsis

Corporate advantages unique to Recce

• Extraordinary economy of production in only a few steps little more than 1 hour to produce
• Production method very easily varied to produce different antibiotics for specific purposes
• Many variants to the Recce technology opens the opportunities and securities of alternative uses e.g. H. Pylori, E. coli, veterinary and antiseptic markets; all huge markets and positive results already achieved - not a one product company

Sepsis – our first clinical target

• Sepsis is a life threatening inflammatory response to infection that has spread in the body
• In the US, + 750,000 cases of severe sepsis are recorded every year
• 215,000 deaths from sepsis are recorded in the US every year
• Sepsis is the single most expensive condition treated in US hospitals
• Leading cause of death in intensive care units and top 10 cause of mortality worldwide
• Two per cent of hospitalisations are for sepsis but they make up 17 per cent of in hospital deaths
• Care is improving but the incidence of severe sepsis is increasing rapidly
• High incidence means the potential market for effective treatments is sizeable
• Represents a significant pharmaco-economic burden of >US$20 billion in annual hospital costs
• There are currently no drug therapies specifically for the treatment of sepsis
• There is a desperate and unmet medical need for new safe and efficacious products

WHO – an urgent need for new antibiotics

Global priority list of antibiotic – resistant bacteria to guide research, discovery and development of new antibiotics

• February 2017 WHO publishes a global priority pathogens list of antibiotic-resistant bacteria to help in prioritizing the R&D of new and effective antibiotic treatments
• The purpose was to identify the most important resistant bacteria at a global level for which there is an urgent need for new treatments
• The list includes 12 pathogens prioritized in three categories - Critical, High and Medium.

RECCE 327
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1. Active in vitro against Recce's own superbug of this bacterium

2. Active in vivo against a member of this family CRE E. coli

3. Active in vitro against a very closely related species*, Enterococcus faecalis,* Vancomycin resistant

4. Active both in vitro and in vivo against MRSA*,* Methicillin-resistant Staphyloccocus aureus

5. Active both in-vitro and in vivo against three strains (2 of which were superbugs)

6. Active in vitro against the normal bacterium (superbug form unavailable)

7. Active in vitro against related superbug Klebsiella pneumoniae

Established record of achieving goals

Announcements FY 16/17

• 13 July 2016 RECCE® 327 showed efficacy in vitro against Influenza virus
• 20 July 2016 Three genetic toxicity tests indicated that RECCE® 327 is not carcinogenic (does not cause cancer)
• 28 July 2016 Scaled-up manual manufacturing capabilities in its Perth facilities, producing nine litres of RECCE® 327 a week
• 15 August 2016 In vivo (mice), wide dosing window confirmed at least four times therapeutic dose
• 20 December 2016 Anti-viral test showed efficacy in vivo using RECCE® 327 against Influenza virus
• 12 January 2017 RECCE® 327 reduced illness in mice infected by resistant E. coli bacteria.
• 24 February 2017 Captured RECCE® 327 in action against E.coli bacteria reinforcing our unique and patented mechanism of action at a cellular level
• 27 March 2017 Further in vivo (dogs) safety results showed intravenous infusion of RECCE® 327 at 70 mg/Kg over four hours was well tolerated
• 19 May 2017 Completed chemical analysis and structural study. Tests confirmed the compound's structure, chemical stability and mode of action
• 16 June 2017 Secured up to AU$6.05 million agreement with US institutional investor over 24 months
• 22 June 2017 Completed construction of a wholly owned production facility in Macquarie Park Sydney

Achievements so far in FY 17/18

• Delivered automated manufacturing facility for Ph1 & Ph2 clinical trials
• Completed pre-clinical study in small/large species at least 4 fold therapeutic window
• Share Purchase Plan raises A$946,500 twice the objective
• Qualified Infectious Disease Designation granted by US FDA for RECCE® 327. 16

Financials

	Year Ended30 June 2017AU $'000	Year Ended30 June 2016AU $'000	Year Ended30 June 2015AU $'000
Total Assets	1,465	3,721	546
Total Liabilities	963	207	272
Net Assets	502	3,514	274
Contributedequity	8,052	7,419	1,586
Reserves	1,628	2,248	-
AccumulatedLosses	(9,178)	(6,153)	(1,312)
Loss forperiod	3,025	4,840	450

Additional Capital Raised in FY 17/18

Share Purchase Plan - $947.5K

ASOF (The Lind Partners) - $425K

Supportive legislative and financial incentives

Discussions with Recce's FDA consultants and patent attorneys as part of preparation of the IND application have confirmed key opportunities, representing up to 15 years' extended global production and marketing monopolies:

• US GAIN Act Regulatory Fast Track and extra 10 years market exclusivity GRANTED for RECCE® 327
• New Chemical Entity (NCE) A further five years for new molecules

The rapid development of new antibiotics is also supported by a range of other initiatives globally

Non-dilutive grants

• The US Biomedical Advanced Research & Development Agency (BARDA) Broad Spectrum Antimicrobials program and the European Innovative Medicines Initiative (IMI) New Drugs For Bad Bugs (ND4BB) program
  • ‒ Both provide direct financial support to nearly 20 percent of all antibiotics currently under development globally
• CARB-X is a public-private partnership focused on preclinical discovery and development of new antimicrobial products
• CARB-X funds come from the US Govt (BARDA) and a public-private initiative in the United Kingdom
  • ‒ US$44 million in first year and up to $350 million in the next five years in grants to companies developing new antibiotics and diagnostics.

Multiple paths to profitability

Key focus during next 12 months

Regulatory

• •Continue regulatory initiatives with the FDA, aimed at approval of RECCE® 327
• •With world leading FDA consultants, design and recruit a small number of participants for initial clinical trials of RECCE® 327.
• •Enter into clinical trials of RECCE® 327
• •Present initial Phase 1 data to US FDA

Operational

• •Launch 'Recce Pharmaceuticals' as we broaden applications of technology
• •Expand existing wealth in intellectual properties by securing additional patents
• •Build international interest with leading life sciences communications group Instinctif Partners
• •Begin US manufacturing opportunities commercial scale

Board and management in place to deliver

Dr Graham Melrose: Executive Chairman

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: Executive Director

BSc (Med Sci), Grad Dip Bus (Mkting), BA (Journ), GAICD, MASM Co-inventor and qualified medical scientist; specialisation in medical microbiology & regulatory affairs.

James Graham: Executive Director

BCom (Entrepreneurship), GAICD

Extensive experience in marketing, business development and commercialisation of early stage technologies with global potential.

Arthur Kollaras: Principal Engineer

BSc Beng (Chem), PhilEng (Enviro)

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.

Dr Justin Ward: Principal Quality Chemist

BSc (Chem), Ph.D (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.

Alistair McKeough (McKeough & Whittens): Outsourced Company Secretary

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 (Pitcher Partners Sydney): Outsourced CFO

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.

Investment summary

• Pipeline of new synthetic antibiotics based on powerful validated proprietary technology
• Initial focus on treating drug resistant sepsis (blood poisoning) RECCE® 327
• A high unmet clinical need supported by favorable legislative and financial incentives
• Lead candidate with significant pre-clinical validation demonstrating safety and efficacy
• Experienced Board and management with a track record of delivering commercial outcomes
• Focused on creating value by continuing to meet milestones
• Currently in discussions with the US FDA, having been granted QIDP designation.

Thank you

Contact

James Graham Executive Director

T: + 61 2 8075 4585 M: +61 431 978 682 E**:** james.graham@recce.com.au

Appendix: RECCE® 327 is rapid acting*

Rate RECCE® 327 acts against standard bacteria in vitro

S. aureus	E. coli	P. aeruginosa	S. pyogenes	C. difficile
20 –	20 –	1 –	20 –	20 –
60	60	24	60	60
minutes	minutes	hours	minutes	minutes

Rate RECCE® 327 acts against a number of superbugs in vitro

S. aureus	E. coli	P. aeruginosa	Same rapid rate forstandard bacteria and
20 –	20 –	1 –	their superbugs
60	60	24
minutes	minutes	hours

*Using concentrations of 1000ppm

Appendix: RECCE® 327 does not fall to superbugs

Number of repetitive uses before displaying loss of antibiotic activity

After repetitive use, the commercial antibiotic lost activity; RECCE® 327 did not