Antibiotic maker Recce (ASX:RCE) has secured up to $6.05 million in an agreement with a US institutional investor.
Recce is a pre-clinical company engaged in the development of a new class of synthetic antibiotics.
The agreement for a funding commitment of up to $6.05 million with The Australian Special Opportunity Fund LP (ASOF) will provide capital to support development of the company's new synthetic antibiotic.
ASOF is managed by New York-based institutional asset manager The Lind Partners.
The share purchase and convertible security agreement gives Recce access to capital through a flexible convertible instrument and the ability to secure additional funding in monthly stages.
It allows Recce to issue shares at prices linked to the share price prevailing at the time. The company said this will minimise dilution for existing shareholders while supporting anticipated financing needs to strengthen its pursuit of developmental milestones.
Lind will make an initial upfront investment of $300,000 by way of a $250,000 24-month interest-free unsecured convertible security and a $50,000 equity investment.
Subsequent investments will be made in monthly equity tranches of $50,000 that can be increased up to $250,000 by mutual consent.
According to Recce executive chairman Dr Graham Melrose, “These funds provide our business with some additional certainty over the next 24 months as we focus on delivering on our clinical development milestones for our lead candidate antibiotic as a potential solution to the problem of drug resistant antibiotics. The investment structure secured minimises dilution for existing shareholders while allowing the business to maintain a routine cash flow”.
Lind Partners managing director Phillip Valliere said, “We look forward to working with Recce as management continues to deliver on its milestones. We acknowledge the significant potential of their important work to develop new options to treat antibiotic resistant infections, and are happy to be able to provide the business with capital that will help achieve its goals.”