Expansion into the Middle East and North Africa (MENA) region is now firmly in Recce Pharmaceuticals Ltd (ASX:RCE, OTC:RECEF)'s sights after it took a step toward commercialising its R327 Topical Gel, signing a non-binding term sheet with a leading publicly listed Middle Eastern pharmaceutical company.

The proposed 10-year exclusive licensing agreement covers commercial sales and distribution of R327G for diabetic foot infections across Saudi Arabia, GCC countries, Egypt, Algeria and Morocco.

MENA represents a high-need market for diabetes-related treatments, with more than 84 million people living with diabetes across the region and Saudi Arabia recording adult diabetes prevalence of 23.1%.

“This is a major milestone in the development and commercialisation of Recce’s anti-infective platform. The proposed establishment of marketing and distribution channels for R327G across the MENA region highlights the growing demand for novel, innovative, and groundbreaking treatments for addressing antimicrobial resistance. This term sheet represents a positive step in the commercialisation pathway of Recce’s innovative pipeline as a next-generation solution for addressing the infectious disease challenges associated with the global pandemic of diabetes,” Recce CEO James Graham said.

Under the proposed terms, Recce would receive an upfront signing fee and potential milestones totalling up to US$3.5 million, around A$5 million, as well as 30% of the net selling price. It would also receive an additional 6% annual royalty on net sales above US$50 million per year.

The proposed selling price is US$1,500 per treatment, subject to agreement with the Saudi regulatory authority. Recce would retain responsibility for manufacturing and supply.

The company said its ongoing Phase 3 diabetic foot infection trial in Indonesia is expected to support a regulatory submission in Saudi Arabia, with no further clinical trials currently anticipated for a marketing authorisation application, subject to trial outcomes.

Recce and the proposed licensee are working to finalise a definitive agreement next quarter, subject to due diligence, negotiations, final documentation and customary approvals.

The MENA deal is just another example of Recce advancing its global rollout, which has also included new patent protection in Brazil and expanded US military-backed research.

Recce has recently secured a Family 4 patent in Brazil. Awarded by Brazil’s National Institute of Industrial Property, the patent covers lead compounds RECCE® 327 (R327) and RECCE® 529 (R529), including manufacturing processes, therapeutic use and multiple delivery methods.

It marks Recce’s 7th granted patent in the Family 4 portfolio, adding Brazil to existing jurisdictions including Australia, Canada, China, Hong Kong, Israel and Japan.

Separately, the United States Army Institute of Surgical Research has entered a 2nd agreement with Recce to evaluate R327G as a treatment for infected burn wounds using a battlefield-relevant burn wound infection model.

Under the agreement, USAISR will test R327G in its validated Walker-Mason rat model of burn wound infection, designed to replicate battlefield injuries and the systemic response to burns and subsequent infection.

The work adds another development pathway for R327G alongside Recce’s diabetic foot infection program and proposed MENA commercial rollout.