RECCE uses innovative method to bring forward R&D incentive

The federal government’s Research and Development (R&D) tax incentive may have highly restrictive rules and definitions which cut the number of companies eligible for assistance, but for early stage and start up companies it can be a godsend.

Available to companies turning over less than $20 million – itself a bone of contention with innovative companies – the incentive supports SMEs in their research phase, when they have the least financial capacity.

Many an Australian company would have not grown from micro to small, let along be set on the path for bigger success without the incentive.

But it is something paid after the expenditure is already made, stretching cash flow for many.

Anti-infective drug development company Recce Pharmaceuticals is one of a growing group of companies using an innovative way of bringing forward payments expected through the R&D tax incentive

The company, which is developing a new class of Synthetic Anti-Infectives, today announced approval for $11,178,965 as an R&D Advance payment from Endpoints Capital capturing tax incentive for FY23/24 and FY25.

Receiving $11.17 million in non-dilutive cash before it could be expected from the ATO enables the Company to leverage its R&D expenditure benefits of the past, present and future R&D applicable expenditure on a here today basis, according to a statement.

Recce also had another win, announcing it had received an Advanced Overseas finding awarded by the Australian Government of $54.9 million – the largest ever awarded.

This extends the the 43.5 percent R&D rebate from only applying locally, to cover those undertaken by the company anywhere in the world for a period of three years, from 1 July 2022 to 30 June 2025.

Of course like any financial service Recce will be paying for it – through a 15 percent per annum interest rate, payable by way of offset against R&D refunds and secured against accrued R&D credits only.

The Chief Executive Officer of Recce Pharmaceuticals James Graham said: “This non-dilutive funding not only extends our financial runway but facilitates the acceleration of our multiple clinical programmes”

Further reading:
R&D companies should beware too much success

Picture: Recce Pharmaceuticals