Invested in tomorrow
Annual Report 2022
Acrux (ASX: ACR) is a specialty
pharmaceutical company with
a successful track record of
developing and commercialising
a pipeline of topically applied
pharmaceutical products.
Drawing on 25 years of experience, Acrux
has successfully marketed through our
licensees a number of products worldwide,
with an emphasis on the United States.
Acrux is formulating and developing a range
of topical generic products through leverage of
its highly skilled workforce, on-site laboratories,
GMP manufacturing suite, technical, clinical
and commercial experience to bring affordable
products to market.
Acrux encourages collaboration and is well
positioned to discuss commercial partnering
and product development opportunities.
For further information on Acrux, visit
www.acrux.com.au
CONTENTS
2 Operating and Financial Review
6 Chairman & CEO Report
12 Environment, Social and Governance
20
Directors’ Report, including
Remuneration Report
30 Auditor’s Independence Declaration
31 Consolidated Financial Statements
35
Notes to the Consolidated
Financial Statements
52 Directors’ Declaration
53
Independent Auditor’s Report
59 Shareholder Information
62 Glossary
64 Corporate Directory
ABOUT THIS REPORT
This Annual Report combines Acrux’s financial and
non-financial performance into a single document
which links strategic priorities to our operational
results. Forward looking statements are subject
to risks and uncertainties and have been made
throughout this report. Such statements involve
known and unknown risk and important factors
that may cause future actual results, performance
or achievements of Acrux to differ from
statements made in this report.
Acrux Annual Report 2022
1
Cover:
Senior formulation scientist,
Jean, visually inspecting
uniformity of blend of a cream.
Acrux Annual Report 2022 Operating and Financial Review
Revenue from licensing and customer contracts was up by 32%
in FY22, predominantly due to Lenzetto which continues to gain
market share in existing territories and is being launched into
new territories.
In FY22 and we have worked to progress the pipeline through
development and regulatory phases to have further products
to launch in FY23 and beyond.
Highlights
1
Product
launched
1
Product
approved by
the FDA
1
Dossier
accepted for
FDA review
3
Dossiers under
FDA review
FY21
Portfolio
progression
FY22
On market
Approved for launch
Under FDA review
Under development
2
On market
Approved for launch
Under FDA review
Under development
Our key operational focus for the coming year is to achieve
FDA approval for the 3 products currently under review
and to have further products accepted.
The launch of these products will build a reliable and
sustainable revenue stream to fund future portfolio
development.
The period to the end of 2023 is transformative.
The key objective is to build a sustainable and robust revenue stream.
One product to launch 1HFY23
2 products to be accepted for FDA review in FY23
Pending FDA approval, 2 products to launch in 2023
Launching these products will drive sustainable revenues and generate
cash for future profitability and provide funding for the product pipeline
through operating cashflows.
Acrux Annual Report 2022
Analytical Development Team Leader,
Philippa, inspecting samples.
3
Product Development Pipeline
Our key focus is to progress our products through the stages of
formulation and development, to demonstrate bioequivalence,
to be reviewed and approved by the regulatory agency and
to commercialise our products.
Generic Drug, FDA definition
Product Development Phase
A generic drug is identical to the brand name drug
in dosage, safety, strength, how it is taken, quality,
performance, and intended use. Before approving
a generic drug product, the FDA requires many
rigorous tests and procedures to be conducted to
assure the generic drug can be safely substituted
for the brand name drug. The FDA bases their
evaluations of substitutability, or “therapeutic
equivalence,” of generic drugs on scientific
evaluations. By law, a generic drug product
must contain the identical amounts of the same
active ingredient(s) as the brand name product.
Drug products evaluated as “therapeutically
equivalent” can be expected to have equal effect
and no difference when substituted for the
brand name product.
The timeline presented below is not strictly
sequential and there is overlap between project
phases, eg. elements of Formulation Development
and Process Development can be performed
concurrently rather than sequentially.
An average product development timeline is 4 to
5 years with 3 years being the perfect scenario for
a simple formulation.
Timeline factors
Complex generics such as topical, otic, and
ophthalmic products which Acrux develops
have a more challenging pathway to demonstrate
therapeutic equivalence compared to simple
generics (eg tablets taken orally).
FY22 Progress
Status FY21
Typical Duration
Activity
Outcome
4
18–36 months
18 to 36 months
4 to 12 months
12 to 24 months
3 to 6 months
FORMULATION DEVELOPMENT
PROCESS DEVELOPMENT
BIOEQUIVALENCE/
CLINICAL TRIAL
REGULATORY
SUBMISSION
APPROVAL/
LAUNCH
ON MARKET
Inhouse laboratory, determine characteristics
of the formulation and interaction of ingredients
Scale up to commercial
manufacturing
Proof the product is
Submit dossier and data
Review of dossier
Launched by partner
therapeutically bioequivalent
to support approval
after approval
Determine the product formulation
Making the formulation at
commercial scale
Demonstrate equivalence to
Review and approval by
Approved
Revenue Stream
brand name product
regulator (FDA)
Testosterone
Topical
Solution
Evamist®
Lenzetto®
ON MARKET
Efinaconazole Topical Solution, 10%
Lidocaine 2.5% and Prilocaine 2.5% Cream
Dapsone Gel, 7.5%
Dapsone Gel, 5%
Acyclovir
Cream, 5%
Typical Duration
18–36 months
18 to 36 months
4 to 12 months
12 to 24 months
3 to 6 months
FORMULATION DEVELOPMENT
PROCESS DEVELOPMENT
BIOEQUIVALENCE/
CLINICAL TRIAL
REGULATORY
SUBMISSION
APPROVAL/
LAUNCH
ON MARKET
Activity
Outcome
Inhouse laboratory, determine characteristics
of the formulation and interaction of ingredients
Scale up to commercial
manufacturing
Proof the product is
therapeutically bioequivalent
Submit dossier and data
to support approval
Review of dossier
Launched by partner
after approval
Determine the product formulation
Making the formulation at
commercial scale
Demonstrate equivalence to
brand name product
Review and approval by
regulator (FDA)
Approved
Revenue Stream
APPROVED
REGULATORY
SUBMISSION
BIOEQUIVALENCE
PROCESS
DEVELOPMENT
FORMULATION
DEVELOPMENT
5
Acrux Annual Report 2022 Chairman & CEO Report
Our key focus is on the continuing evolution of Acrux into a
company with a diversified on-market portfolio and a broad
development pipeline of commercially valuable products.
We enter our
25th year at a
pivotal point in
the Company’s
evolution
We enter our 25th year at a pivotal point in the
Company’s transformation as we progress our
near-term product development candidates
through the regulatory approval process and
into commercialisation.
Acrux has several exciting product launches
planned for the new financial year and two
regulatory approvals are expected, which will
lead to product launches.
THE PRODUCT DEVELOPMENT PIPELINE
Acrux has three commercialised products,
two products nearing regulatory approval and
an additional product that has recently been
accepted for review by the FDA1.
We are advancing our product pipeline through
the varying stages of development, either at
Acrux or with our contracted manufacturing
partners. Our main priority is on later stage
projects that will reach commercialisation in the
short term, while continuing development of
earlier-stage products to ensure breadth of our
product pipeline.
The Company now has 16 products in its portfolio,
including 5 approved products and 3 dossiers
currently being reviewed by the FDA, and intends
to maintain 10–12 products in development. Since
the date of the last Directors’ Report, we added
1 new development project to the pipeline and
ceased development on 2 projects where it was
considered that the estimated future commercial
returns were unlikely to adequately cover
development costs.
The Operating and Financial Review on pages
2 to 5 expands on the operational and pipeline
progress made in FY22.
Our corporate strategy is reflected in our
operational structure and the processes in place
to deal efficiently and effectively to meet our
revenue generation objectives.
STRATEGY
Acrux’s strategy focuses
on the development
and commercialisation
of topically applied
pharmaceutical products.
Our three key strategic priorities are:
1. Revenue realisation
2. Operational efficiency
3. Optimal portfolio management
Revenue realisation is the transformation driver
for the Company. We have one product which
has been approved with prelaunch activities are
in progress plus a further 2 products which are
in late-stage review by the FDA. We continue to
develop earlier-stage products to ensure the
breadth of our pipeline.
Operational efficiency supported by resource
and cost management to deliver a diversified
portfolio of products to commercialisation with
revenue generation over the next three years.
Portfolio management to maximise commercial
returns based on strategic product selection.
A key component of successful portfolio
management is the ongoing intelligence
gathering and assessment in a rapidly changing
product and market landscape.
The Company has invested to secure
and maintain the necessary blend of skills,
knowledge and experience to deliver on our
strategic priorities.
6
1.
Refer ASX Announcement dated 8 August 2022 on the Company’s website under the Investor Centre tab.
FINANCIAL PERFORMANCE
Acrux’s total revenue was $5.103 million for the
financial year ended 30 June 2022 and which was
consistent with the prior financial year. The net
loss after tax was $9.834 million, which was lower
by 23% from the prior financial year, primarily
driven by a reduction in external research and
development expenditure.
Whilst the year on year external research
and development expenditure was lower
by $2.557 million, progress on the product
development pipeline has been maintained.
The value of research and development
expenditure incurred in any period is dependent
on the stage of projects, with late stage project
costs associated with products at the FDA
submission stage being materially lower than
costs incurred at the process development or
bioequivalence testing phases.
Through the period to the end of 2023 we plan:
Six topical generic
— Continued revenue growth of the Estradiol
product;
— Launching one product which has received
FDA approval in 1HFY23;
— Obtaining FDA approval and launching
2 further products in 2023; and
— The continued eligibility of product
development expenditure for the research
and development tax incentive rebate.
products are
either approved
or under FDA
review and
that number is
expected to grow
in the near term
Cash on hand reported at the end of June 2022
totalled $5.831 million. Acrux’s future cash
requirements have been carefully considered and
the timing and commercial success of product
launches over the next 12 months are critical
to these estimates. Due to the dependence on
the timing of FDA approval for new products,
additional capital management strategies which
may include monetisation of receivable assets or
the deferral of product development expenses
can be implemented if required.
Technical Affairs
Manager, Visal, reviewing
formulation blend.
7
Acrux Annual Report 2022 Chairman & CEO Report (continued)
Formulation Scientist, Hemang,
mixing a test formulation.
8
Ross Dobinson
Chairman (L)
Michael Kotsanis
CEO & MD (R)
BOARD AND CORPORATE GOVERNANCE
In June 2021 Acrux was pleased to welcome
Mr Don Brumley to the Board of Directors.
Don was previously a Senior Partner at Ernst
and Young. He brings significant, highly relevant
financial skills and experience to the Board,
particularly to his role as Chairman of the
Company’s Audit and Risk Committee. We refer
you to page 16 for Don’s biography alongside
those of other members of our Board.
During the year, the Board has reviewed and
updated all Corporate Governance policies as
part of the routine review cycle. Our Corporate
Governance policies are published on the Acrux
website under the Corporate Governance tab.
The Board also reviewed the skills that each
Director brings to the Board through the Board
Skills Matrix. This is a necessary process to
identify potential gaps in Board skill sets, areas
for improvement and future skill requirements.
The Directors consider that Acrux has complied
with all applicable environmental laws and
regulations throughout the year ended
30 June 2022 and no related issues have arisen
between the end of the financial year and the
date of this report.
The Company promotes a supportive, equitable
and inclusive culture where the need for diversity
is recognised.
The Environment, Social and Governance (ESG)
Report can be found on page 12.
INVESTED IN TOMORROW
Acrux has a number of exciting products in its
pipeline. The majority of our pipeline products
are already licensed for the US market with
recognised commercial generic companies. We
continue to receive enquiries from prospective
licensees indicating the strong interest in
our topical dosage product range, which is
characterised by high development complexity
relative to other generics. This results in lower
commercial competition than is typical in the oral
solid dose sector of the US market for generics.
FY23 OBJECTIVES
Our key objectives in FY23 are:
— One product is approved, licensed and
ready for launch as soon as product batches
have been manufactured and released for
sale. An additional product is planned to be
launched, following regulatory approval and
manufacturing. Acrux will receive quarterly
profit share payments for these products
— Receive approval for two products from the
FDA to facilitate product launches in FY23 and
FY24. Each product is licensed on the basis of
a quarterly profit share payable to Acrux
— Submit two products for FDA review in FY23.
Revenue growth will accelerate in FY23 with
several products progressing through regulatory
review and into the commercialisation phase.
We would like to personally thank the Acrux team
of employees and the Board for their valuable
contributions, sustained efforts and focus on the
company’s revenue growth objectives.
Finally, we would like to thank you, our
shareholders, for maintaining faith in Acrux
which will be warranted as we enter the revenue
growth phase.
9
Acrux Annual Report 2022 Our Strategy
Our three key strategic
priorities are:
1. Revenue realisation
2. Operational efficiency
3. Optimal portfolio
management
Revenue realisation
is the transformation
driver for the Company.
We are in the
commercialisation phase
of several late-stage
products. We will
continue to develop
earlier-stage products
to ensure the breadth
of our pipeline.
Operational efficiency
supported by resource
and cost management
to deliver a diversified
portfolio of products to
commercialisation with
revenue generation over
the next three years.
Portfolio management
to maximise future
commercial returns
based on strategic
product selection. A key
component of successful
portfolio management is
the ongoing intelligence
gathering and
assessment in a rapidly
changing product and
market landscape.
Our business model
1.
2.
3.
4.
5.
6.
7.
GENERIC DRUG IDENTIFICATION, OPPORTUNITY ASSESSMENT
FORMULATION DEVELOPMENT
PROCESS DEVELOPMENT AND TECHNOLOGY TRANSFER TO
CONTRACT MANUFACTURERS
BIOEQUIVALENCE – DEMONSTRATE THERAPEUTIC
BIOEQUIVALENCE
REGULATORY SUBMISSION AND REVIEW OF DOSSIER AND DATA
PRODUCT APPROVAL AND LAUNCH
ON-MARKET – PROFIT SHARE REVENUE FROM COMMERCIAL
PARTNERS
10
Our Business
The success of Acrux’s
strategy and execution
will be driven and
measured by:
— commercial launch and cash flow generation from new topical generic drugs
— licensing and profit share agreements with generic pharmaceutical companies
— FDA approvals for new products
— ongoing screening and initiation of new products in development
Acrux Annual Report 2022
Formulation Scientist,
Iasmin, reviewing samples.
11
Environment, Social and Governance
Acrux is developing a range of topically applied generic medicines
that improve affordability for patients and which conform with
the highest possible product safety and regulatory requirements.
The Company is committed to operating in a socially responsible
manner, which we consider in three key operational tenets:
TENETS
Environmental Tenet – includes
preservation of our natural
environment.
Social Tenet – consideration
of the safety and wellbeing of
patients and our employees.
Governance Tenet – practising
good corporate governance.
We are responsible to the
communities in which we operate
as well as our stakeholders.
12
ENVIRONMENTAL TENET
Acrux strives to minimise its environmental
impact by minimising the use of consumables
such as paper, avoiding single use vessels and
recycling materials where possible. We will
continue to identify and implement initiatives in
both the laboratory and office to minimise our
environmental footprint.
Acrux’s operations are subject to environmental
regulations under the laws of the Commonwealth
and of the State of Victoria, including:
— Laboratory Waste – all waste, including
laboratory waste, is safely collected,
transported and disposed of and is recycled
where possible. To ensure compliance
with the Environment Protection Act 1970
an external waste management consultant
with ISO 14001:2015 Certification for
Environmental Management is used and an
EPA Transport Certificate is issued for each
waste collection.
— Trade Water Waste – Acrux has an agreement
with City West Water under the Water Industry
Act 1994 and Water Industry Regulations 2006,
to ensure trade waste is managed effectively
and responsibly.
The Directors consider Acrux has complied with
all applicable environmental laws and regulations
throughout the year ended 30 June 2022 and no
related issues have arisen since the end of the
financial year to the date of this report.
We seek to partner with organisations who share
these environmental values.
SOCIAL TENET
Acrux deeply values its highly skilled team and
is committed to providing a healthy and safe
work environment for all employees as well as
our contractors and visitors. Health, safety and
wellbeing is a key priority as well as ensuring
our employees have the necessary skills and
resources to perform their roles to a high
standard. We promote a supportive, equitable
and inclusive culture where diversity is embraced.
Acrux’s diversity policy is integral to our talent
management and recruitment strategies. Diversity
is defined broadly to include gender, nationality,
ethnicity, disability, sexual orientation, gender
identity, age, socioeconomic status, family status,
religious beliefs and language. Our diversity
objectives support our employees to be valued
and respected in the workplace (inclusion) and
to experience fair treatment and access to
opportunities (equity).
We seek to partner with organisations who share
these social values.
COVID-19 impacts
The challenges Acrux continues to face with the
pandemic are similar to those experienced by
many companies. During government-imposed
lockdowns our laboratory team continued their
work from the company’s laboratory and our
administrative staff worked from home.
Acrux’s diversity policy
is integral to our talent
management and
recruitment strategies.
Project planning and execution had already
become more complex in recent years with many
contract manufacturers, raw material suppliers
and commercial partners located outside
Australia. The COVID pandemic has exacerbated
that complexity and contributed to certain cost
increases and time delays. Some service providers
have been disrupted and were unable to provide
a continuous service.
Acrux has proactively planned for contingencies
including the assessment of alternate service
providers and operational locations. The Acrux
team has successfully progressed the development
pipeline with minimal disruption while also dealing
with the personal and professional challenges
that COVID-19 has provided to the healthcare
and general community in Australia and globally.
GOVERNANCE TENET
Acrux is committed to good corporate
governance, including ethical conduct. Further
to Acrux’s corporate governance policies which
are published on the Company’s website,
https://www.acrux.com.au, the Company’s RIOS
– Together Anything is Possible model articulates
our Company values and the core behaviours are
expected of all employees. These core Company
values are: Round the clock, Innovation, Openness
and Standout. Commitment to these values
underpins how our employees work together to
solve problems and make decisions and must
be demonstrated in order for an employee to
be invited to participate in short and long term
incentive programs.
Governance structure
Acrux’s corporate governance framework
reflects the Company’s values and culture and
stands alongside legislative requirements in
the Corporations Act 2001 and guidance in the
ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations
(4th edition). Our Corporate Governance
Statement has been considered and approved
by the Board and can be viewed in the Investor
Relations section of our website,
https://investors.acrux.com.au/investor-centre.
The Board Charter is the central tenet to Acrux’s
corporate governance framework as it lays out
the principles under which the Board of Directors
operates and this document can be viewed in the
Investor Relations section of our website,
https://investors.acrux.com.au/investor-centre.
The Board of Directors is responsible for
overseeing management, providing strategic
direction, capital planning, risk management,
monitoring operational and financial performance,
strategic human resource matters and approval
of budgets and business plans. Day-to-day
management as well as the implementation
of approved strategies and business plans, is
delegated to the CEO and Managing Director as
well as the leadership team.
13
Acrux Annual Report 2022 Environment, Social and Governance (continued)
To ensure it can perform its responsibilities, the
Board maintains an appropriate mix of skills in
its membership, including individual experience
and background in the pharmaceutical industry,
international business, finance and accounting,
risk management, corporate governance,
organisation and talent development as well as
team fit.
The Board has established an Audit and Risk
Committee to assist the Board fulfil its corporate
governance and oversight responsibilities
relating to financial accounting practices,
internal control systems, risk management,
external reporting and audit. The Audit and Risk
Committee is responsible for the evaluation
of Acrux’s risk profile and assessment of the
risks and mitigation strategies which have been
identified by management.
The Human Capital and Nominations Committee
is in place ensure the Board is comprised
of individuals who can best discharge the
responsibilities of Directors and ensuring the
Company recruits and retains employees of
high quality and motivation to drive long term
growth. Responsibilities include recruitment
as well as the establishment of the short and
long term remuneration framework and other
people-related policies.
Where appropriate, these committees make
recommendations for consideration by the Board.
These committees each have Charters which
formally outline their responsibilities and
membership requirements and can be viewed
in the Investor Relations section of our website,
https://investors.acrux.com.au/investor-centre.
ETHICS AND VALUES
Our Code of Conduct provides the ethical
framework for the way Acrux conducts business
and relates to its stakeholders, including
shareholders, employees, business partners,
customers, suppliers, the community and the
environment in which the Company operates.
We expect third parties with which we work to
comply with the local laws and regulations of
the countries in which they operate, and to also
observe the principles outlined in our Code of
Conduct. Acrux’s Code of Conduct can be viewed
in the Investor Relations section of our website,
https://investors.acrux.com.au/investor-centre.
Corporate Governance framework
Reflects legislative and regulatory requirements as well as Company ethics, values and culture
Documented in the Code of Conduct, RIOS and other Corporate Governance Policies
Board of Directors, supported by:
CEO and Managing Director
Audit and
Human Capital and
Risk Committee
Nominations Committee
Senior Management
Employees
14
Responsibility: Overseeing management and setting the strategic direction Responsibility: Day to day management and implementation of strategy BOARD OF DIRECTORS
The following persons were Directors of Acrux during and since the end of the financial year:
Chairman
Ross Dobinson
Geoffrey Brooke Non-executive Director
Don Brumley
Non-executive Director
Timothy Oldham Non-executive Director
Michael Kotsanis Managing Director and Chief Executive Officer
There were five directors throughout the year, comprising four independent, Non-Executive directors and one Executive director.
All Directors have held office from the commencement of the financial year through to the date of this report.
INFORMATION ON DIRECTORS AND COMPANY SECRETARY
The qualifications, experience and special responsibilities of each person who has been a Director of Acrux Limited since
1 July 2021 is provided below, together with details of the Company Secretary as at the year end.
Responsibilities
Non-executive Chairman
Qualifications
BBus (Acc)
Ross Dobinson
appointed
March 1998
Experience
Ross has been a Director since 1998, was appointed Chairman in January 2006 and then
Executive Chairman from July 2012 to October 2014. He is a founder and former CEO of Acrux.
Ross has a background in investment banking and stockbroking. He was formerly a Director of
Reliance Worldwide Corporation (ASX: RWC). He was also a founding Director of Starpharma
Holdings Limited (ASX: SPL), Executive Director of Hexima Limited (ASX: HXL), Chairman of TPI
Enterprises Limited (now Palla Pharma Ltd. ASX: PAL), Director of Roc Oil Company Limited
(ASX: ROC) and a Director of Racing Victoria Limited.
Tim Oldham
appointed
October 2013
Responsibilities
Non-executive Director, member of the Audit and Risk Committee and Chair of the Human Capital
and Nomination Committee.
Qualifications
BSc (Hons), LLB (Hons), PhD
Experience
Tim has 20 years of life sciences business development, alliance management and sales and
marketing experience in Europe, Asia and Australia. Tim is the CEO and Managing Director at AdAlta
Ltd (ASX: 1AD), a clinical stage biotech company developing an innovative range of new antibody-like
drugs. Prior to this, he led Tijan Ventures, an life sciences advisory business focussed on strategic
advisory and leadership services and acquiring cell and gene therapy assets. He was CEO and
Managing Director of Cell Therapies Pty Ltd and President of Asia Pacific for Hospira, Inc., having held
a variety of senior management roles with Mayne Pharma Ltd prior to its acquisition by Hospira which
encompassed the development and commercialisation of generic pharmaceuticals, devices, biologics
and cellular therapies. Tim began his career as an engagement manager with McKinsey & Company.
Tim is a Non-executive Director of BioMelbourne Network Inc and has chaired the European
Generic Medicines Association Biosimilars and Biotechnology Committee, Non-executive Director
of the Alliance for Regenerative Medicine and Non-executive Director of the Generic Medicines
Industry Association.
15
Acrux Annual Report 2022
Environment, Social and Governance (continued)
Responsibilities
Non-executive Director, member of the Audit and Risk Committee and Human Capital and
Nomination Committee.
Qualifications
MBBS, MBA
Experience
Geoff founded GBS Venture Partners in 1996 and has more than 30 years of venture capital
experience. In 2014, he reduced his involvement in GBS and is now special adviser to the firm
and its funds. Geoff was formally President of Medvest, a US-based early-stage venture capital
group he founded with Johnson & Johnson. Geoff’s experience includes company formation and
acquisitions, as well as public listings on the NYSE, NASDAQ and ASX exchanges. He commenced
in 2017 as Chairman of Actinogen Medical Limited (ASX: ACW) and has been a founder, executive
and director of private and public companies. In 2020 Geoff commenced as Chairman of Cynata
Therapeutics Limited (ASX: CYP). From 2009 until 2015, he was an independent director of the
Victoria WorkCover Authority.
Geoff is licensed in clinical medicine by the Medical Board of Victoria, Australia and his
post-graduate work was in anaesthetics and intensive care. He earned his Bachelor of
Medicine/Surgery from the University of Melbourne and a Master of Business Administration
from IMEDE (now IMD) in Lausanne, Switzerland.
Responsibilities
Non-executive Director, Chair of the Audit and Risk Committee and member of the Human Capital
and Nomination Committee.
Qualifications
FCA, AICD
Experience
Don has 30 years’ experience as a senior partner of Ernst & Young, Oceania. He has extensive
experience in IPOs, transactions and audit and has advised and worked with Boards of
organisations ranging from some of the largest in Australia to fast growing entrepreneurial and
medium sized organisations. Don was the Oceania IPO Leader at Ernst & Young and worked
with clients listing on the Australian, US, UK and key Asian stock exchanges. He held positions as
Biotech Markets Leader, National Leader of Strategic Growth Markets and on the Board of Partners
of Ernst & Young.
He is a Fellow of Chartered Accountants Australia & New Zealand and is a member of the
Australian Institute of Company Directors. He was previously Chairman and non-executive director
of Bio-Gene Technology Ltd (ASX: BGT).
Geoff Brooke
appointed
June 2016
Don Brumley
appointed
June 2021
16
Michael Kotsanis
appointed
November 2014
Responsibilities
Managing Director and Chief Executive Officer
Qualifications
BSc, Grad Dip Bus, MBus
Experience
Michael has more than 30 years of experience in the global pharmaceutical industry including
significant senior leadership experience. He was formerly the Chief Commercial Officer and a Board
Member of Synthon Holding BV, a Dutch based pharmaceutical company with global revenue over
EUR250 million. He has served as President, Europe, Middle East and Africa, for Hospira and where
he was responsible for delivering over US$500 million in annual revenue. Hospira was the global
leader in generic injectable pharmaceuticals prior to its acquisition by Pfizer. Michael joined Hospira
following its acquisition of Mayne Pharma in 2007, where he had served as President, Asia Pacific.
He joined Mayne following their acquisition of FH Faulding in 2001, where he led the commercial
activities in Australia and New Zealand. Prior to Faulding, Michael held a variety of sales and
marketing positions with a German multinational pharmaceutical company over an 11 year period.
Michael has been a Board Member of the European Generics Association and a Director of the
Generic Medicines Industry Association of Australia. He earned a Bachelor of Science from Monash
University, Melbourne, a Graduate Diploma in Business from Edith Cowan University, Perth and
a Master of Business from the University of Technology, Sydney. Michael is also a Non-executive
Director of IDT Australia Limited (ASX: IDT).
Responsibilities
Chief Financial Officer and Company Secretary
Qualifications
CA, BEc, Grad Dip Management
Joanna Johnson
appointed as Company
Secretary, June 2021
Experience
Joanna is an experienced Company Secretary and a member of the Institute of Chartered
Accountants Australia and New Zealand. She has more than 25 years’ experience in the
pharmaceuticals industry, having held senior financial leadership positions at IDT Australia Ltd,
Generic Health Pty Ltd, Hospira Inc, Mayne Pharma Ltd and FH Faulding Ltd.
She has led both small and large finance teams, both nationally and internationally, through all
aspects of reporting, business planning, budgeting, forecasting and analysis as well as equity
capital raising, taxation, corporate compliance and investor relations.
17
Acrux Annual Report 2022 Environment, Social and Governance (continued)
INFORMATION ON SENIOR MANAGEMENT
Qualifications
BSc (Hons), MBA
Experience
Felicia has a broad background in pharmaceutical operations, topical drug development, analytical
development and production. Felicia leads and facilitates all technical aspects of pharmaceutical
product development including R&D, formulation development, analytical development, CMC
development and Technology Transfer, with a focus on generic topical product development and
exploiting the company’s drug delivery technology.
Felicia has 30 years’ experience in the pharmaceutical/biotech industry, joining Acrux in 2001.
Felicia has previously held positions at Faulding Pharmaceuticals, the Department of Clinical
Pharmacology and Therapeutics at the Austin Hospital, Silliker-Microtech Laboratories and was an
Adjunct Appointee Lecturer with the Faculty of Pharmacy and Pharmaceutical Sciences at Monash
University. Felicia has a Bachelor of Science degree (with Honours) from La Trobe University and
an MBA from the Australian Institute of Business.
Qualifications
BSc
Experience
Mark has a diverse background in the pharmaceutical and medical device industry. Following a
pharmacokinetic research role with Melbourne University, Mark joined Acrux in 2015 and has
more than 30 years’ industry experience, previously holding leadership positions in Quality,
Manufacturing, Logistics & Operations, Product Development, Project Management and
Commercial Development.
Mark’s experience spans prescription and consumer health, proprietary and generic products
across topical, oral and injectable dose forms and drug infusion systems. With specialty expertise
in project and technical management, Mark has a deep background in technology transfer and
organisation development to establish comprehensive product development, portfolio and project
management processes. Mark has a Bachelor of Science degree in Chemistry and Pharmacology
from Monash University.
Qualifications
BPharm
Experience
Charles is an experienced healthcare executive with senior and international roles in scientific
affairs, medical affairs, health economics and government affairs. Prior to Acrux, Charles was Asia
Pacific Director of Medical and Government Affairs for Hospira (now Pfizer). Other pharmaceutical
industry roles were at Mayne Pharma (Pricing and Reimbursement Manager), GSK and Zeneca
Pharmaceuticals. Additional external roles include former Director of the Generic Medicines
Industry Association of Australia (now the Generic and Biosimilar Association) and membership of
several industry and government working parties.
As a qualified pharmacist, Charles has senior experience in the public hospital sector including
pharmacy management and key committee membership including Bio-Ethics Committees and
Drug and Therapeutics Committees. Charles has a Bachelor of Pharmacy degree from Monash
University and a Graduate Diploma of Epidemiology and Biostatistics from Melbourne University.
Felicia Colagrande
Product Development
and Technical Affairs
Director since
February 2015
Mark Hyman
Project and Technical
Development Director
since July 2020
Charles O’Sullivan
Portfolio Director
since July 2015
18
Directors’ Report (including Remuneration Report)
and Financial Statements
Acrux Annual Report 2022
Formulation Scientist, Matthew,
testing a product formulation.
19
Directors’ Report
For the year ended 30 June 2022
The Board of Directors of the consolidated entity consisting of Acrux Limited (‘Acrux’) and its controlled entities
(collectively the ‘Group’) has pleasure in presenting this report for the financial year ended 30 June 2022. Complying
with the provisions of the Corporations Act 2001, the Directors report as follows:
DIRECTORS
The following persons were Directors of Acrux during or since the end of the financial year:
Ross Dobinson
Chairman
Geoffrey Brooke
Non-executive Director
Don Brumley
Non-executive Director
Timothy Oldham
Non-executive Director
Michael Kotsanis
Managing Director and Chief Executive Officer
All Directors have been in office from the commencement of the financial year to the date of this report. Additional details of the
Board of Directors and the Company Secretary is set out in the Governance Section of this Annual Report. These details include the
period they have held office, their qualifications, independence, experience, particular responsibilities and other directorships.
DIRECTORS ATTENDANCE OF MEETINGS
Attendance of Directors at Board and Board Committee meetings is set out in the table below:
Ross Dobinson
Geoffrey Brooke
Don Brumley
Timothy Oldham
Michael Kotsanis
BOARD
AUDIT AND RISK
HUMAN CAPITAL AND
NOMINATION
HELD(1)
ATTENDED
HELD (1)
ATTENDED
HELD(1)
ATTENDED
6
6
6
6
6
6
6
6
5
6
–
2
2
2
–
2*
1
2
2
2*
–
2
2
2
–
2*
2
2
2
2*
(1) The number of meetings held during the period and where the Director was a member of the Board or Committee. Directors who are not members
of Committees are invited to attend Committee meetings. Where a Director has attended a Committee Meeting of which they are not a member their
attendance is denoted with an asterix (*).
PRINCIPAL ACTIVITIES
Acrux is a specialty pharma company with a successful track record of developing and commercialising a pipeline of topically
applied pharmaceutical products which use dermal and transdermal drug delivery technology. There has been no significant
change in the nature of these activities during the financial year.
REVIEW OF OPERATIONS
A review of the operations of the Group during the year and the results of these operations are as follows:
Operating review
Acrux has continued to progress its product pipeline during the reporting period. Of the 5 currently approved products, 3 have
been commercialised, one product has been approved and is planned for launch later in 2022 and launch plans for the fifth
approved product Efinaconazole topical solution, 10% will progress within the terms of the confidential settlement agreement.
Within the development pipeline, 3 products are currently under review by the FDA. There are 8 products at various stages of
active development.
20
Key milestones achieved in FY22 include:
— Lidocaine 2.5% and Prilocaine 2.5% Cream was approved by the FDA. This is Acrux’s third Abbreviated New Drug Application
(‘ANDA’) to receive approval and is a generic version of EMLA® cream indicated as a topical anaesthetic for use on normal
intact skin for local analgesia, genital mucous membranes for superficial minor surgery and as a pre-treatment for infiltration
anaesthesia. IQVIA reports annual sales of US$29 million for the 12 months to December 2021 for this product;
— Testosterone Topical Solution USP, 30mg per actuation was launched through our partner Dash Pharmaceuticals. For the
12 months to December 2021 IQVIA reports an addressable market of US$15 million per year for this product and there are
5 marketed generics;
— The generic equivalent to Aczone® (dapsone) Gel, 5% was Acrux’s fifth ANDA application to be accepted for review by the FDA
in September 2021. IQVIA reports sales for the product for the 12 months to December 2021 of US$25 million for this product.
The product is used to treat acne;
— Patent litigation relating to the ANDA for a generic equivalent to Aczone® (dapsone) Gel, 7.5% has been concluded in Acrux’s
favour. This product was accepted by the FDA for review in April 2021 and once regulatory review is complete and FDA approval
received, Acrux will launch this product in conjunction with its commercial licensee. IQVIA reports sales for the 12 months to
December 2021 of US$124 million for this product; and
— In August 2022, Acrux’s application for a generic version of cold sore treatment, Acyclovir Cream, 5% was accepted by the
FDA for review following Acrux’s regulatory ANDA submission to the FDA for the product in June 2022. This is the sixth ANDA
application to be accepted for review by the FDA.
The Acrux portfolio of products is advancing
Acrux portfolio of topical prescription products
Commercialised(1)
Approved
Under review by FDA
Under development
Total products in portfolio
AUGUST
2020
(2)
AUGUST
(2)
2021
AUGUST
2022
(2)
2
2
3
10
15
2
4
2
11
17
3
5
3
8
16
(1) Commercialised products are also included in the Approved category.
(2) Being the number of active projects reported as at the date of the Directors’ Report.
At present, Acrux has 3 products commercialised with two of those in the United States. Acrux licensed its estradiol product in
Europe and many other countries to Gedeon Richter who market the product as Lenzetto® in its broad territory. Acrux also has
a licensing agreement with Padagis for its estradiol product in the United States which Padagis markets as Evamist®. Acrux has
licensed its testosterone solution product to Dash who launched the product earlier in the FY22 financial year.
Acrux currently has 2 dapsone gel products under FDA review. These products were accepted for review in April 2021 and
September 2021 respectively. The Company believes it has satisfactorily addressed all questions received from the FDA in relation
to both products. The Company also announced a patent challenge for dapsone gel, 7.5% in June 2021 which was subsequently
resolved to the satisfaction of Acrux in May 2022. ANDA approvals were received for efinaconazole solution in June 2021 and
prilocaine/lidocaine cream in July 2021. Acyclovir Cream, 5% is the third product currently under review by the FDA having been
accepted in August 2022.
As outlined in the timeline of the Acrux pipeline on page 4, Acrux is dependent on timely outcomes from its internal development
activities, its technical transfer and support activities with its contracted manufacturing partners and also from the US regulator
for review of its regulatory submissions. A number of products in the pipeline have taken longer than anticipated to progress
through each phase of development. The Company remains dependent on timely outcomes from regulatory submissions for its
near term outcomes.
Acrux also executed a licensing agreement with Padagis for a near term product launch of an already approved product. Further
details will be disclosed at the time of the launch of this product.
21
Acrux Annual Report 2022 Directors’ Report (continued)
Financial Performance
The following table summarises the Group’s performance and key performance indicators:
Revenue ($000’s)
2022
5,103
2021
5,156
(Loss)/profit before tax ($’000)
(9,582)
(12,432)
Dividends to shareholders
Share Price at end of the year (cents)
Basic earnings/(loss) per share (cents)
–
5.2
(3.46)
–
13.0
(5.75)
2020
3,945
(9,385)
–
14.5
(5.65)
2019
5,286
2018
3,432
(8,335)
(16,125)
–
18.0
(5.00)
–
14.5
(8.52)
Number of Ordinary Shares on Issue
285,364,669
283,305,394
168,583,515
166,577,711
166,521,711
Market Capitalisation ($ million)
14.84
36.83
24.44
29.98
24.15
The consolidated loss before tax totals $9.582 million and this loss is 23% lower than the consolidated operating loss before tax
for the prior corresponding period of $12.432 million. This is due to a reduction of operating expenses relating to the timing of
milestones within key product development projects resulting in a year on year reduction in costs incurred to progress the Group’s
generic pipeline $2.557 million. Project activities remain on track and this timing of project expenses within projects does not
reflect any adjustment to project timelines.
Revenue
Revenue and other income for the year was stable at $5.103 million (2021: $5.156 million).
Revenue from product licensing agreements is derived from partner sales of Estradiol and testosterone and totalled $1.719 million,
an increase of 29% over $1.337 million reported in the prior period. This revenue growth is predominantly comprised of:
— Revenue share income of $1.456 million (up by 33%) from licensee sales of Estradiol spray. This increase has been driven
by continuing growth of sales of Lenzetto® by our partner, Gedeon Richter, for territories in Europe and other countries,
contributing $1.421 million, an increase of 39%;
— $0.263 million for the sale of an active pharmaceutical ingredient to a commercial partner for use in commercial manufacture
(2021: nil); and
— No contractual milestones were achieved in the current reporting period (2021: $0.245 million).
Other Revenue predominantly reflects the research and development tax incentive rebate, including overseas finding, receivable
from the Australian Taxation Office and has been estimated at $3.050 million for the year ended 30 June 2022 bringing the income
from the research and development tax incentive rebate reported for the current reporting period to $3.366 million. This is
consistent with $3.421 million recorded in the prior reporting period.
In the prior reporting period $0.364 million was received from the Australian Federal Government in the form of COVID-19 relief
programs. No such government support was received in the current reporting period.
Further information about Revenue is reported in Note 4.
Expenses
Due to the timing of external development expenses associated with the progression of pipeline projects, such as bioequivalence
studies and manufacturing scaleup, total operating expenditure for the year was lower than the prior corresponding period by
$2.903 million, 17%, declining to $14.685 million. Employee benefits expense totaled $5.245 million (2021: $5.418 million).
Further information about Expenses is reported in Note 5.
22
Significant changes in the state of affairs
On 11th March 2020 the World Health Organisation declared the global outbreak of COVID-19 as a global pandemic. While
the global economy has been impacted significantly, Acrux has experienced limited financial impact although at times has
had difficulties with raw material supply and disrupted operations at contract research organisations (CROs’) and contract
manufacturing organisations (‘CMOs’) resulting in some minor delays to product development project timelines.
In the opinion of the Directors, there have been no significant changes in the state of affairs of the Group during the financial year
not otherwise disclosed in this report or the financial statements.
After balance date events
In August the FDA accepted Acrux’s sixth ANDA application for review for its generic version of cold sore treatment, Acyclovir Cream, 5%.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected the Group’s operations, results or
state of affairs, or may do so in future years.
Future Developments
Acrux will continue to pursue and execute its strategy of developing a diversified, financially attractive portfolio of marketed generic
topical prescription products. Acrux’s future financial results will be materially influenced by the timing and commercial success of
product launches, timely achievement of development milestones and receipt of regulatory approval from FDA for products in the
development pipeline, as well the evaluation and selection of attractive new development opportunities.
Indemnification and insurance of Directors, Officers and Auditors
During the financial year, the consolidated entity paid a premium in respect of an insurance contract to indemnify officers against
liabilities that may arise from their positions as officers of the Group. Officers who are indemnified include the Company Secretary,
all Directors and executive officers participating in the management of the Group to the extent permitted by the Corporations Act
2001. The contract of insurance prohibits public disclosure of the nature of the liability and the amount of the premium.
The company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or
agreed to indemnify an officer or auditor of the consolidated entity against a liability incurred as such an officer or auditor.
REMUNERATION REPORT (AUDITED)
The Directors of the Group are pleased to present the following Remuneration Report forming part of the Report of Directors,
prepared in accordance with s300A of the Corporations Act 2001.
The Remuneration Report has been audited as required by s308 (3C) of the Corporations Act 2001 and sets out remuneration
information for the Group’s Key Management Personnel (‘KMP’) who have authority and responsibility for planning, directing and
controlling the Group’s activities, directly or indirectly, including any Director (whether executive or otherwise) and explains the
remuneration policies and philosophy adopted by the Board.
Remuneration Policy
The Human Capital and Nomination Committee is responsible for recommending the framework of the Group’s remuneration,
including participation in any employee security or other incentive plan, to the Board. The Charter of the Human Capital and
Nomination Committee can be viewed on the Company website; www.acrux.com.au.
The main principles of the Group’s remuneration policy are to:
— remunerate at levels intended to attract, retain, motivate and reward good performance;
— structure remuneration to reward employees for superior performance and for increasing long term shareholder value; and
— formally link rewards to the achievement of business objectives as determined and assessed by the Board.
There were no significant changes to remuneration policies during the year.
23
Acrux Annual Report 2022 Directors’ Report (continued)
Remuneration Structure
Employee remuneration is structured in two parts:
— fixed remuneration, comprising salary, superannuation and other benefits which may be provided in lieu of salary; and
— variable remuneration, which may comprise a short term incentive in the form of a cash bonus and a long term incentive in the
form of an equity instrument issued under the Omnibus Equity Plan.
The Group seeks to establish fixed remuneration at a level which is consistent with market rates for comparable jobs in the
industry sector. Incentive plans are in place to reward superior performance and are awarded subject to achievement of objectives
which are set and assessed by the Board.
Short Term Incentive Plan
The short term incentive plan is designed to reward the achievement of business and personal objectives as established at the
beginning of each year by the Board and in consultation with senior management. Selected objectives create long term value
for shareholders and include clearly defined outcomes for product development, regulatory approval and commercialisation.
Achievement or non-achievement of objectives is objectively measured at the end of the financial year.
Subject to the assessed achievement of objectives, senior management, other than the Chief Executive Officer, may receive annual
cash incentives of up to 24% of their fixed remuneration. The Chief Executive Officer may receive annual cash incentives of up to
25% of his fixed remuneration, and this can be varied at the Board’s discretion.
Long Term Incentive Plan
The long-term incentive plan is designed to align the interests of senior management with shareholders to achieve sustainable,
long term superior performance. The long term incentive plan has been designed to comply with both the requirements of
ASX Listing Rules and the Pooled Development Funds Act 1992.
The Omnibus Equity Plan (‘OEP’) governs the issue of securities to all employees and Directors and was approved by shareholders
at the 2020 Annual General Meeting (‘AGM’).
Grants of securities under the OEP are as follows:
A. Chief Executive Officer (‘CEO’)
— At the 2021 AGM, 6 million performance rights over 4 tranches were approved. Each tranche vests after 12 months
over 4 successive years, provided the total shareholder return (‘TSR’) over that period equals or is greater than 10% and
employment is continuous;
— Unvested tranches may be “rolled over” into the next year but are subject to an additional 10% TSR hurdle for each year.
Each tranche may be rolled over up to 3 times;
— Each performance right carries the right to one ordinary share in Acrux Ltd; and
— Performance rights expire 7 years after granting and are expensed over the life of the instrument.
B. Senior management, including KMP
— Directors may approve an annual grant of Performance Rights to management;
— Each grant of performance rights vests after one year, provided the TSR over that period equals or is greater than 10% and
employment is continuous;
— Unvested tranches may be “rolled over” into following years, but are subject to an additional 10% TSR hurdle for each year.
There will be no “roll-over” after the fourth year;
— Each performance right carries the right to one ordinary share in the Acrux Ltd; and
— Performance rights expire 7 years after granting and are expensed over the life of the instrument.
C. Directors
— At the 2018 AGM, shareholders approved the issue of rights equivalent to 10% of annual fees payable to Directors in lieu of an
increase in cash fees. These rights are now fully vested;
— At the 2019 AGM, shareholders resolved that 50% of fees due to Directors would be paid in the form of rights. The final
tranches of these rights vest in November 2022;
— Each right carries the right to one ordinary share in the Acrux Ltd;
— Rights vest quarterly, provided that the Director has been continuously engaged from the grant date to the vesting date; and
— Rights expire 7 years after grant.
24
D. Employees, other than KMP
— The Board may approve the issue of up to $1000 value of tax exempt ordinary shares to employees, each year at nil cost;
— Each grant of tax exempt ordinary shares is held in escrow for 3 years;
— There are no vesting conditions; and
— If an employee ceases employment the shares are immediately released from escrow.
Further information about Share based payments is reported in Note 18 to the accounts.
Remuneration of Directors
The Human Capital and Nomination Committee determines the level of remuneration necessary to attract and retain Directors
who have the skills and experience required by the Group at its stage of development. The Committee makes recommendations
to the Board.
The total value of remuneration payable to Non-executive Directors has been set at $70,000 per annum plus superannuation and
plus the annual value of rights which vest over a four year period to January 2022 which were granted in lieu of a fee increase of
10%, approved by shareholders at the 2018 AGM. The Non-executive Chairman, Ross Dobinson, received Director’s fees inclusive
of superannuation to a value of $132,400 per annum, also payable in both cash and rights.
At the 2019 AGM shareholders resolved for Directors’ remuneration to be paid in both cash and equity. Equity is issued to
Directors in the form of rights which vest quarterly over a 3 year period, subject to service criteria. Rights which are unvested at the
time of retirement of a Director are cancelled and rights are issued to newly appointed Directors after shareholder approval has
been received at the AGM following their appointment.
The maximum aggregate value of Non-executive Directors’ annual fees is $450,000, as approved at the 2004 Annual General Meeting.
Non-executive Directors are entitled to be reimbursed for reasonable expenses incurred on Group business. No short term
incentives or retirement allowances are paid and Non-executive Directors do not receive additional remuneration for membership
of Board Committees.
Remuneration of each person who held the position of Non-executive Director at any time during the financial year is outlined below:
2022
Ross Dobinson (Chair)
Geoff Brooke
Don Brumley
Timothy Oldham
2021
Ross Dobinson (Chair)
Geoff Brooke
Don Brumley(1)
Norman Gray(2)
Timothy Oldham
Director Fee
Payments
$
Post Employment
Superannuation
$
Share based
Payments
(Rights)
$
Total
Remuneration
$
57,212
35,000
35,000
35,000
1,788
7,000
7,000
7,000
65,631
35,997
24,334
35,997
162,212
22,788
161,959
59,000
35,000
2,558
32,622
35,000
–
6,650
486
6,198
6,650
74,358
43,314
2,917
59,500
43,314
124,631
77,997
66,334
77,997
346,959
133,358
84,964
5,961
98,320
84,964
164,180
19,984
223,403
407,567
(1) Appointed Non-executive Director 4 June 2021.
(2) Resigned as Non-executive Director 4 June 2021.
Michael Kotsanis has served as CEO and Managing Director since November 2014. As an Executive Director his remuneration
details are disclosed in the senior management remuneration table.
25
Acrux Annual Report 2022 Directors’ Report (continued)
Remuneration and termination entitlements of Key Management Personnel
Senior management do not have a fixed term of employment and employment contracts may be terminated by either party based
on notice periods ranging between one and six months. Employment contracts contain no entitlement to termination benefits
beyond statutory entitlements.
Names and positions held by KMP of the Group in office during the financial year are:
Michael Kotsanis
Felicia Colagrande
Mark Hyman
Joanna Johnson
Charles O’Sullivan
Chief Executive Officer and Managing Director
Product Development and Technical Affairs Director
Project and Technical Development Director
Chief Financial Officer & Company Secretary
Portfolio Director
All KMP have been in office since the start of the financial year until the date of this report.
Details of the remuneration of the Group’s KMP is provided in the following table:
Primary
Movement
Annual
Leave
Provision(4)
$
Salary
$
Post
Employment
Long Term
Benefit
Share Based
Payments
Short
Term
Incentive(5)
$
Super-
annuation
$
Long
Service
Leave
Accrued
$
Perfor-
mance
Rights
$
Total
Remuner-
ation
$
Other
$
Equity as
% Total
%
Bonus as
% Total
%
158,618
669,806
24%
10%
2022
Michael Kotsanis
445,683
(28,459)
64,522
Felicia Colagrande
225,485
(533)
19,843
23,568
22,549
5,874
5,623
Mark Hyman
217,863
6,247
19,172
21,786
10,457
Joanna Johnson
227,229
9,003
20,000
Charles O’Sullivan(1)
174,222
966
15,332
23,689
17,422
687
4,474
1,290,482
(12,776) 138,869
109,014
27,115
2021
Michael Kotsanis
434,862
33,451
92,408
21,694
8,153
–
–
–
–
–
–
–
26,974
299,941
19,781
295,306
4,363
284,971
26,102
238,518
235,838 1,788,542
54,852
645,420
Deborah Ambrosini(2) 251,667
19,089
–
27,088
(4,532) 62,044
5,306
360,662
Felicia Colagrande
220,271
16,942
31,468
Mark Hyman
212,804
16,369
30,404
Joanna Johnson(3)
9,659
–
–
21,151
20,709
966
5,006
6,296
–
Charles O’Sullivan
212,804
16,369
30,404
20,619
4,018
–
–
–
–
20,714
315,552
7,726
294,308
–
10,625
20,714
304,928
1,342,067 102,220
184,684
112,227
18,941
62,044
109,312 1,931,495
9%
7%
2%
11%
13%
8%
1%
7%
3%
–
7%
6%
7%
6%
7%
6%
8%
14%
–
10%
10%
–
10%
10%
(1) Effective 1 July 2021, Charles O’Sullivan’s standard work hours reduced from 5 days per week to 4 days and his salary was adjusted accordingly.
(2) Chief Financial Officer and Company Secretary until 25 June 2021. Other remuneration includes salary paid in lieu of notice and final payment of annual leave.
(3) Chief Financial Officer and Company Secretary commenced 16 June 2021.
(4) Employees do not accumulate excessive Annual Leave balances. An expense is recorded where a KMP has used less than their full Annual Leave
entitlement in a given year.
(5) A short term incentive may be paid based on assessment of achievement of corporate objectives as established at the beginning of the financial year. For
the financial year ended 30 June 2021, achievement of corporate objectives were assessed by the Board at 85% and the reported balances were accrued
and then paid in August 2021. For the financial year ended 30 June 2022, achievement of corporate objectives were assessed by the Board at 55% and
these reported balances were accrued and then paid in August 2022.
26
Equity instruments held by Key Management Personnel
Ordinary Shares
The number of ordinary shares held by Directors and KMP at financial year end is set out in the following table:
Directors
Ross Dobinson
Geoff Brooke(1)
Don Brumley(1)
Tim Oldham(1)
Senior Management
Michael Kotsanis
Felicia Colagrande
Mark Hyman
Joanna Johnson
Charles O’Sullivan
Balance
1 July 2021
On Market
Transactions
Rights
exercised
Balance
30 June 2022
3,308,284
474,221
500,000
223,539
1,511,083
126,500
27,882
–
405,000
–
–
275,000
–
–
–
–
–
–
407,776
3,716,060
–
229,160
646,110
474,221
1,004,160
869,649
–
1,511,083
280,000
–
–
–
406,500
27,882
–
405,000
6,576,509
275,000
1,563,046
8,414,555
(1)
Includes relevant interests under the control of the KMP, these ordinary shares are held both directly and through controlled entities.
Rights
(a) Compensation Performance Rights: Granted and vested during the year
6,000,000 performance rights were issued to the Chief Executive Officer, Mr Michael Kotsanis, following shareholder approval
received at the 2021 Annual General Meeting. 3,000,000 unvested performance rights issued in November 2017 were cancelled
because performance conditions were not achieved. Performance rights vest in 4 annual tranches, provided the total shareholder
return (TSR) over that period is equal to or greater than 10% and continuous employment. Performance Rights expire after 7 years
and are expensed over the life of the instrument.
1,136,039 performance rights were issued to eligible employees on 10 February 2022, including but not limited to KMP.
Performance rights vest after one year, provided the total shareholder return (TSR) over that period equals or is greater than
10% and continuous employment. Performance Rights expire after 7 years and are expensed over the life of the instrument.
(b) Rights issued to Directors as a component of remuneration
347,624 rights were granted to Mr Don Brumley after being approved by shareholders at the 2021 Annual General Meeting.
Mr Brumley, who was appointed to the Board in June 2021, receives approximately half of his remuneration as equity in the form
of rights vesting on a quarterly basis in arrears in accordance with service.
27
Acrux Annual Report 2022 Directors’ Report (continued)
The number of rights held by Directors and KMP is set out in the following table:
Balance at
1 July 2021
Granted as
remuneration
Rights
exercised
Cancelled
Balance at
30 June 2022
571,670
663,332
–
–
–
347,624
743,332
–
407,776
–
229,160
646,110
–
–
–
–
163,894
663,332
118,464
97,222
Value of
Rights
Granted
$(1)
–
–
36,501
–
Directors
Ross Dobinson
Geoff Brooke
Don Brumley
Tim Oldham
Senior Management
Michael Kotsanis
3,000,000
6,000,000
–
3,000,000
6,000,000
436,930
Felicia Colagrande
Mark Hyman
Joanna Johnson
Charles O’Sullivan
420,000
178,595
–
140,000
210,000
210,000
210,000
168,000
280,000
–
–
–
–
–
–
–
350,000
388,595
210,000
308,000
13,020
13,020
13,020
10,416
5,716,929
7,145,624
1,563,046
3,000,000
8,299,507
522,907
(1) Value of rights granted in current reporting period to be recognised over the life of the instrument.
Unissued ordinary shares of Acrux Limited under rights at the date of this report are as follows:
Date rights granted
25 January 2018
23 November 2018
4 February 2019
9 December 2019
3 February 2020
4 February 2021
30 November 2021
30 November 2021
10 February 2022
Number
rights
64,000
80,000
138,000
844,448
82,595
575,298
6,000,000
118,464
1,126,949
9,029,754
Value at
grant date
$0.17
$0.19
$0.18
$0.185
$0.185
$0.17
$0.114
$0.114
$0.103
Minimum
Exercise
price(5)
$0.1579(2)
–(4)
Rights
expiry date
January 2025
January 2023
$0.2081(2)
February 2026
–(4)
November 2026
$0.1996(2)
$0.2706(2)
February 2027
February 2028
$0.1258 – $0.1502(1)
December 2028
–(4)
November 2026
$0.1128(3)
February 2029
(1) Exercise price is subject to a 10% performance hurdle applied each year for 4 equal annual tranches.
(2) Exercise price is subject to a 12% performance hurdle over a volume weighted price for the 30 days prior to the rights issue.
(3) Exercise price is subject to a 10% performance hurdle over a volume weighted price for the 30 days prior to the rights issue.
(4) Rights issued to directors vest each quarter in arrears and are not subject to an exercise price.
(5) Minimum exercise price is the hurdle which must be achieved after 12 months for the Performance Rights to vest. If the original hurdle target is not
achieved, additional uplift hurdles are applied each year for the right to vest over the life of the instrument.
Voting and comments made at the Company’s 2021 Annual General Meeting (AGM)
Last year’s Remuneration Report was supported at the 2021 AGM with 88% of votes cast in favour of acceptance. No questions
relating to the Remuneration Report were received from shareholders.
This is the end of the audited remuneration report
28
Non-audit services
Non-audit services are recommended by the Audit and Risk Committee and approval is resolved by the Board of Directors.
Non-audit services provided by the auditor, Pitcher Partners (Melbourne) and their network firms are detailed below.
Amount paid or payable to Pitcher Partners (Melbourne) for non-audit services
Amount paid or payable to network firms of Pitcher Partners for non-audit services
2022
$
2021
$
32,855
48,730
–
–
32,855
48,730
Directors are satisfied that the provision of the non-audit services during the year by the auditors is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001 for the following reasons:
— all non-audit services were subject to the Group’s corporate governance procedures and have been reviewed and approved by
the Audit and Risk Committee to ensure they do not impact on the integrity and objectivity of the auditor; and
— the non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants (including independence standards) issued by the Accounting Professional & Ethical Standards
Board, including reviewing or auditing the auditors’ own work, acting in a management or decision making capacity for the
Group, acting as an advocate for the Group, or jointly sharing economic risks and rewards.
Auditor independence declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporation Act 2001 in relation to the
audit for the financial year is included after this report.
Rounding of amounts
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191,
dated 24 March 2016, and in accordance with that Corporations Instrument, amounts in the Directors’ Report and the financial
statements have been rounded to the nearest one thousand dollars, unless otherwise indicated.
Directors Resolution
This report is made in accordance with a resolution of the Directors made pursuant to s298(2) of the Corporations Act 2001.
Ross Dobinson
Non-executive Chairman
Melbourne
25 August 2022
Don Brumley
Non-executive Director
Melbourne
25 August 2022
29
Acrux Annual Report 2022
Auditor’s Independence Declaration
To the Directors of Acrux Limited
ACRUX LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF ACRUX LIMITED
In relation to the independent audit for the year ended 30 June 2022, to the best of my knowledge
and belief there have been:
(i)
(ii)
No contraventions of the auditor independence requirements of the Corporations Act 2001;
and
No contraventions of APES 110 Code of Ethics for Professional Accountants (including
Independence Standards).
This declaration is in respect of Acrux Limited and the entities it controlled during the year.
N R BULL
Partner
25 August 2022
PITCHER PARTNERS
Melbourne
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
30
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2022
Revenue from licensing agreements
Other revenue
Total revenue
Employee benefits expense
Directors’ fees
Securities based payment expense
Depreciation and amortisation expenses
Occupancy expenses
External research and development expenses
Professional fees
Other expenses
Total expenses
Loss before income tax
Income tax expense
Net loss for the year
Total comprehensive loss for the year
Total comprehensive loss attributable to:
Members of the parent entity
Loss per share for loss attributable to the equity holders of the parent entity:
Basic loss per share
Diluted loss per share
Note
4
4
5
18(a)
5
Consolidated
2022
$’000
1,719
3,384
5,103
2021
$’000
1,337
3,819
5,156
(5,245)
(5,418)
(185)
(450)
(660)
(201)
(6,371)
(454)
(1,119)
(184)
(507)
(665)
(247)
(8,928)
(644)
(995)
(14,685)
(17,588)
(9,582)
(12,432)
6
(252)
(197)
(9,834)
(12,629)
(9,834)
(12,629)
19
(9,834)
(12,629)
8
8
(3.46) cents
(5.75) cents
(3.46) cents
(5.75) cents
The statement should be read in conjunction with the notes to these financial statements.
31
Acrux Annual Report 2022 Consolidated Statement of Financial Position
As at 30 June 2022
Current Assets
Cash and cash equivalents
Receivables
Other current assets
Total Current Assets
Non-Current Assets
Plant and equipment
Intangible assets
Deferred tax asset
Lease assets
Total Non-Current Assets
Total Assets
Current Liabilities
Payables
Provisions
Lease liabilities
Total Current Liabilities
Non-Current Liabilities
Provisions
Lease liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Retained earnings/(losses)
Total Equity
Consolidated
30 June
2022
$’000
5,831
3,765
420
30 June
2021
$’000
15,270
3,159
165
10,016
18,594
682
375
1,355
1,874
4,286
538
482
1,607
2,106
4,733
14,302
23,327
2,219
875
224
1,780
801
185
3,318
2,766
40
1,854
1,894
5,212
9,090
41
2,049
2,090
4,856
18,471
114,563
114,213
8,250
8,147
(113,723)
(103,889)
9,090
18,471
Note
9
10
11
12
13
6
14
15
16
14
16
14
17
19
19
The statement should be read in conjunction with the notes to these financial statements.
32
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Balance as at 1 July 2020
Total comprehensive loss for the year
Transactions with owners in their capacity as owners
Employee share scheme
Performance rights exercised
Capital Raising
Balance as at 30 June 2021
Balance as at 1 July 2021
Total comprehensive loss for the year
Transactions with owners in their capacity as owners
Employee share scheme
Performance rights exercised
Capital Raising
Balance as at 30 June 2022
Retained
earnings/
(losses)
$’000
Total equity
$’000
(91,260)
(12,629)
12,849
(12,629)
Contributed
equity
$’000
Note
96,137
–
28
301
17,747
19
17(b)
17(b)
Reserves
$’000
7,972
–
175
–
–
–
–
–
203
301
17,747
18,471
Total equity
$’000
18,471
(9,834)
114,213
8,147
(103,889)
Contributed
equity
$’000
Note
Reserves
$’000
Retained
earnings/
(losses)
$’000
114,213
8,147
(103,889)
–
(9,834)
–
28
322
–
19
17(b)
17(b)
103
–
–
–
–
–
131
322
–
114,563
8,250
(113,723)
9,090
The statement should be read in conjunction with the notes to these financial statements.
33
Acrux Annual Report 2022 Consolidated Statement of Cashflows
For the year ended 30 June 2022
Cashflows from operating activities
Receipts from product agreements
Payments to suppliers and employees
Interest received
Finance costs
Research and development tax incentive rebate
Government support received
Net cash used in operating activities
Cashflows from investing activities
Payment for property, plant and equipment
Net cash used in investing activities
Cashflows from financing activities
Proceeds from capital raising
Lease liability principal repayments
Net proceeds from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Consolidated
30 June
2022
$’000
30 June
2021
$’000
Note
1,357
1,228
(13,144)
(15,785)
26
(172)
3,114
–
40
(185)
2,924
364
20(a)
(8,819)
(11,414)
(465)
(465)
(102)
(102)
–
17,747
(155)
(155)
(9,439)
15,270
(167)
17,580
6,064
9,206
Cash at the end of the year
20(b)
5,831
15,270
The statement should be read in conjunction with the notes to these financial statements.
34
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
This financial report covers Acrux Limited and controlled
entities as a Group. Acrux Limited is a for-profit entity,
incorporated and domiciled in Australia. It is a company limited
by shares publicly traded on the Australian Securities Exchange.
The address of Acrux Limited’s registered office and principal
place of business is 103–113 Stanley Street, West Melbourne,
Victoria, 3003.
The financial report was approved by the Directors as at the
date of the Directors’ report.
1. STATEMENT OF SIGNFICANT ACCOUNTING POLICIES
The following are the significant accounting policies adopted by
the Group in the preparation and presentation of the financial
report. Accounting policies have been consistently applied,
unless otherwise stated.
(a) Basis of preparation
This general purpose financial report has been prepared in
accordance with Corporations Act 2001, Australian Accounting
Standards, Interpretations and other applicable authoritative
pronouncements of the Australian Accounting Standards Board
(‘AASB’), International Accounting Standards Board (‘IASB’) and
International Financial Reporting Standards (‘IFRS’). Material
accounting policies adopted in the preparation of this financial
report are presented below.
Historical cost convention
The financial report has been prepared under the historical
cost convention, except for certain instruments which have
been measured at fair value, as described in the accounting
policies. Fair value is the price that would be received to sell
an asset, or paid to transfer a liability, in an orderly transaction
between market participants (under current market conditions)
at measurement date, regardless of whether that price is
directly observable or has been estimated using another
valuation technique.
When estimating the fair value of an asset or liability, the
entity uses valuation techniques as are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
Inputs to valuation techniques used to measure fair value are
categorised into three levels according to the extent to which
inputs are observable:
— Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that can be
accessed at measurement date.
— Level 2 inputs are inputs other than quoted prices within
Level 1 that are observable for the asset or liability, either
directly or indirectly.
— Level 3 inputs are unobservable inputs for the asset
or liability.
Significant accounting estimates and judgements
The preparation of the financial report requires the use of
certain estimates and judgements in applying the Group’s
accounting policies. Estimates and judgements significant to the
financial report are disclosed in the Notes to the consolidated
financial statements.
(b) Going Concern Basis of Preparation
The financial report has been prepared on a going concern
basis which contemplates continuity of normal business
activities and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The Group incurred a loss after tax from ordinary activities
of $9,834 million during the year ended 30 June 2022
(30 June 2021: loss after tax from ordinary operations
$12.629 million) and produced a negative cash flow from
operating activities for the year ended 30 June 2022 of
$8.819 million (30 June 2021: negative cash flow from operating
activities $11.414 million). The ability of the Group to continue
as a going concern is dependent on its ability to generate
future revenues which will support improved cash flows from
operating activities and the management of cash reserves.
The Directors are of the opinion the Group is a going concern
based on the cashflow projections prepared for twelve months
beyond the date of approval of these financial statements,
which incorporate the following factors:
— Continued revenue growth of the Estradiol product;
— Launching one product which has received FDA approval;
— Obtaining FDA approval and launching further products,
which are currently undergoing the FDA review process;
and,
— The continued eligibility of product development
expenditure for the research and development tax
incentive rebate.
Additionally, the Directors continue to monitor expenditure
against budget and are exploring other options should the
cashflows be materially different to those forecast. In the event
of a product launch which may be delayed, the Company could
implement cash management strategies which could include:
— Deferral of current year project development expenditure;
— Management of operating expenses; or
— Monetisation of assets, such as actioning advance receipt
of research and development tax incentive rebate or other
revenue streams.
On this basis no adjustments have been made to the financial
report relating to the recoverability and classification of the
carrying amount of assets or the amount and classification
of liabilities that might be necessary should the Group not
continue as a going concern. Accordingly, the financial report
has been prepared on a going concern basis.
Should the Group be unsuccessful with the initiatives detailed
above then, there is a material uncertainty as to whether
the Group may be able to continue as a going concern and
may therefore be required to realise assets and extinguish
liabilities other than in the ordinary course of business with
the amount realised being different from those shown in the
financial statements.
35
Acrux Annual Report 2022 1. STATEMENT OF SIGNFICANT ACCOUNTING
POLICIES CONTINUED
(c) Principles of Consolidation
The consolidated financial statements are those of the Group,
comprising the financial statements of the parent entity and
all entities controlled by the parent entity. The Group controls
an entity when it is exposed to, or has rights over, variable
returns from its involvement with the entity and has the ability
to affect those returns through its power to direct the entity’s
activities. Financial statements of subsidiaries are prepared
for the same reporting period as the parent entity, using
consistent accounting policies. All inter-company balances and
transactions, including unrealised profits or losses, between
Group companies are eliminated on consolidation. A list of
controlled entities is contained in Note 26.
(d) Impairment of non-financial assets
In accordance with AASB 136 Impairment of assets, assets
subject to annual depreciation or amortisation are reviewed
for impairment at least annually or whenever events or
circumstances arise that indicate the carrying amount may be
impaired. An impairment loss is recognised where the carrying
amount of the asset exceeds its estimated recoverable amount.
The estimated recoverable amount is the higher of its fair
value less costs to dispose and its value in use. An Impairment
loss is disclosed as a separate line item on the Consolidated
Statement of Comprehensive Income.
(e) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
instrument. For financial assets, this is equivalent to the date
that the Group commits itself to either the purchase or sale of
the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value
adjusted for transaction costs, except where the instrument
is classified as fair value through profit or loss, in which case
transaction costs are immediately recognised as expenses in
profit or loss.
Classification of financial assets
Financial assets recognised by the Group are measured in their
entirety at either amortised cost or fair value, subject to their
classification and whether the Group irrevocably designates
the financial asset on initial recognition at fair value through
other comprehensive income (‘FVtOCI’) in accordance with the
relevant criteria in AASB 9 Financial Instruments.
Financial assets not irrevocably designated on initial recognition
at FVtOCI are classified and measured at amortised cost,
FVtOCI or fair value through profit or loss (‘FVtPL’) on the basis
of both the Group’s business model for managing the financial
assets and the contractual cash flow characteristics of the
financial asset.
Impairment of financial assets
Receivables from contracts with customers and contract
assets are tested for impairment using the ‘expected credit
loss’ impairment model. The simplified approach under AASB 9
Financial Instruments is applied to measure the allowance
for credit losses for both receivables from contracts with
customers and contract assets. The allowance for credit losses
is determined based on the lifetime expected credit losses of
the financial asset which represent the credit losses expected
to result from default events over the expected life of the
financial asset.
Financial Liabilities
Non-derivative financial liabilities include trade payables, other
creditors and inter-company balances. Liabilities are recognised
for future payments for goods and services received, whether
or not they have been billed to the Group. Trade liabilities are
usually settled within 30 days of period end.
(f) Foreign currency translation and balances
Functional and presentation currency
Items included in the Group’s financial statements are
measured using the currency of the primary economic
environment in which that entity operates (‘the functional
currency’). Consolidated financial statements are presented
in Australian dollars, which is the functional and presentation
currency of the Group and each subsidiary.
Transactions and balances
Transactions in foreign currencies are translated into functional
currency at the rate of exchange prevailing at the date of the
transaction. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation of
foreign currency denominated monetary assets and liabilities
at period end exchange rates are recognised in profit or loss.
All resulting exchange differences arising on settlement or
re-statement are recognised as revenues or expenses for the
financial year.
(g) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of GST,
except if the amount of GST incurred is not recoverable from
the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as
part of an item of expense.
Receivables and payables in the balance sheet are shown
inclusive of GST. The net amount of GST recoverable from,
or payable to, the Australian Tax Office is included with other
receivables or payables in the balance sheet.
Cashflows are presented in the Consolidated Statement
of Cashflows on a gross basis.
36
Notes to the Consolidated Financial Statements (continued) (h) Rounding amounts
The Company and the Group is of a kind referred to in
ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, dated 24 March 2016, issued by the
Australian Securities and Investments Commission relating
to the “rounding off” of amounts in the financial statements.
Amounts in the financial statements have been rounded off
in accordance with the Class Order to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
(i) New and revised Accounting Standards effective at
30 June 2022
All new and revised Australian Accounting Standards
applicable to be adopted for the first time in the annual
reporting period commencing 1 July 2022 have been applied
with immaterial effect.
(j) Accounting Standards issued but not yet effective
Certain new standards and interpretations have been issued
but are not yet mandatory and have not yet been applied by the
Group. These standards are not expected to have a material
effect on the Group in current or future reporting periods.
2. SIGNIFICANT ACCOUNTING ESTIMATES AND
JUDGEMENTS
Preparation of these financial statements requires the Group
to make estimates and judgements that may affect the
reported values of assets, liabilities, revenues and expenses.
Management continually evaluates such estimates and
judgements based on historical experience and other factors
it believes reasonable under the circumstances, including
expectations of future events that may financially impact the
entity. The following critical judgements have been made in
application of the Group’s accounting policies and have the
most significant effect on amounts recognised in the Group’s
financial statements:
(a) Income tax
Income tax benefits are recognised based on assumptions that
no adverse change will occur in income tax legislation, that the
Group will derive sufficient future assessable income to enable
the benefit to be realised and it will comply with the conditions
of deductibility imposed by the law. Deferred tax assets
are recognised for deductible temporary differences where
management considers that it is probable that future tax profits
will be available to utilise those temporary differences.
(b) Impairment testing
The Group prepares discounted cash flow models to evaluate
and determine that capitalised product development costs and
other assets are not carried at a value that materially exceeds
the recoverable value. Future cash flows are estimated and
are discounted for risks specific to the assets as well as for the
time value of money. The following approach and assumptions
have been applied:
— product revenue is estimated using current market data
and projections of future market volumes, product pricing
trends and market share, adjusted for the impact of
potential competitors entering the market and the market
impact of those competitors;
— cash flow forecasts are over 10 years; and
— cash flows have been discounted using an after tax rate
of 12%.
(c) Employee benefits
Long term employment benefits are valued at the present
value of estimated future cash outflows, calculated based
on assessment of trends relating to retention of staff,
future remuneration levels and the timing of the settlement
of the benefits.
(d) Share based payments
The OEP is the legal framework for issuing securities to
Directors and employees. The value of securities issued is
recognised as an expense in the Consolidated Statement
of Profit or Loss and Other Comprehensive Income in the
period(s) the benefit is earned over the life of the instrument.
The total value of the share or right is calculated at the time
of issue and performance rights are valued using Monte Carlo
or Black and Scholes pricing models which require input of a
number of variables including estimated future volatility and
a risk free interest rate. Volatility is estimated based on the
movements in Acrux Limited’s share price on the Australian
Securities Exchange over the past 12 months. The risk free
interest rate is the Reserve Bank of Australia’s cash rate as
at the instrument’s grant date.
37
Acrux Annual Report 2022 (c) Credit risk
Credit risk refers to the risk a counterparty defaults on its
obligations, resulting in a financial loss to the Group. The
maximum exposure to credit risk at balance date is the
carrying amount of receivable assets net of any provisions
for impairment of those assets, as disclosed in Consolidated
Statement of Financial Position and notes to the Consolidated
Financial Statements.
Credit risk is closely managed and procedures are in place to
deal with credit worthy counterparties. Credit worthiness is
reviewed and exposure to any one party is monitored. Potential
credit loss is regularly assessed and a provision would be raised
if there was evidence that a debt was no longer collectible. The
Company does not have a history of defaulted balances nor are
there any presently overdue debtor balances.
(d) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in
meeting its obligations associated with financial liabilities and
other operating cashflow requirements.
The Group reports cash reserves of $5.831 million (2021:
$15.270 million), which as outlined in Note 1(b) above is, in
the opinion of Directors, sufficient to settle existing liabilities
and fund operating expenditure at planned levels for at
least 15 months from the balance date based on current
cashflow projections.
The maturity profile of the Group’s cash term deposits is
actively managed and compared with forecast liabilities to
ensure that sufficient short term liquidity is available to settle
liabilities as and when they fall due. The Group does not
maintain an overdraft or loan facility.
3. FINANCIAL RISK MANAGEMENT
The Group is exposed to a variety of financial risks comprising:
(a)
Interest rate risk
(b) Currency risk
(c) Credit risk
(d) Liquidity risk
The Board of Directors has overall responsibility for identifying
and managing operational and financial risks. Sensitivity analysis
and other methods are used to measure financial risks and to
determine whether further mitigation strategies are required to
protect the Group’s financial security.
(a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate due to changes in
market interest rates. As forecasted cashflows do not project
the use of bank debt facilities the Group is not exposed to a
material sensitivity from interest rate fluctuations.
(b) Currency risk
Currency risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate due to changes in foreign
exchange rates. The Group is exposed to currency risks due
to certain revenues and expenses being denominated in
a foreign currency, typically US dollars and Euro. Currency
risk management strategies are regularly reviewed and the
Company expects to have future foreign currency denominated
cashflows in place from future revenues and to offset
expenditure and protect against the impact of short term
currency fluctuations.
Bank accounts denominated in US dollars and Euro are
maintained to facilitate foreign currency receipts and payments
and manage foreign exchange risk. As at 30 June 2022,
US dollar denominated cash reserves totalled A$0.008 million
(2021: A$0.032 million) and Euro denominated cash reserves
totalled A$0.369 million (2021: A$0.263 million).
The balance of receivables as at 30 June 2022 includes
US$0.181 million (2021: US$0.01 million) and EUR 0.392 million
(2021: EUR 0.182 million). The balance of payables includes
US$0.161 million (2021: US$0.153 million) and EUR nil (2021:
EUR 0.001 million). A change in the AUD/USD and AUD/EUR
exchange rates would therefore have little financial impact
on the consolidated net profit/(loss) and equity of the Group
(2021: immaterial).
The Group does not enter forward exchange contracts.
38
Notes to the Consolidated Financial Statements (continued) 4. REVENUE
Revenue from contracts with customers
Revenue from licensing agreements
Other revenues
Interest
Grant revenue – R&D tax incentive rebate
Grant revenue – Other
Total other revenue
Total revenue from continuing operations
2022
$’000
2021
$’000
1,719
1,337
18
3,366
–
3,384
5,103
34
3,421
364
3,819
5,156
Key Accounting Policies
Revenue from contracts with customers
Revenue is derived from licensing agreements with customers in the form of revenue and profit share receipts, sale of active
pharmaceutical ingredients and also contractual milestones. Revenue is recognised in the period in which product sales occur.
Revenue from contractual milestones is recognised at completion of the milestone.
Other revenues
Other revenue is recognised as it has been received or, if it can be reliably estimated, over the period to which it relates. Grants
from the Government are recognised at fair value where there is reasonable assurance that the grant will be received, it can be
reliably measured and the Group will comply with all conditions. As the Group can reliably estimate its R&D tax incentive rebate
an accrual has been recognised. In the prior reporting period $0.364 million other grant revenue was received from the Australian
Federal Government in the form of COVID-19 relief programs, including the JobKeeper allowance.
All revenue is stated net of the amount of goods and services tax (GST).
5. LOSS FROM CONTINUING OPERATIONS
Loss from continuing operations before income tax has been determined
after the following specific expenses:
Employee benefits expense
Wages and salaries
Superannuation costs
Other employee benefits expense
Total employee benefits expense
Depreciation of non-current assets
Right of use asset
Plant and equipment
Total depreciation of non-current assets
Amortisation of non-current assets
Leasehold improvements
Capitalised research and development
Total amortisation of non-current assets
Total depreciation and amortisation of non-current assets
2022
$’000
2021
$’000
4,448
4,574
418
379
400
444
5,245
5,418
200
344
544
9
107
116
660
233
322
555
3
107
110
665
39
Acrux Annual Report 2022
6. INCOME TAX
(a) Income tax recognised in profit and loss
Current tax
Deferred tax
Over/under provision in prior years
Income tax (benefit)/expense attributable to profit and loss
(b) Reconciliation of income tax (benefit)/expense
The prima facie tax payable on loss before income tax is reconciled to the income tax
(benefit)/expense as follows:
Loss before tax from continuing operations
Prima facie income tax payable on loss before income tax
Add/(subtract) tax effect:
Non-deductible expenses
Research and development tax incentive rebate
Non-assessable income
Impact of change in tax rate on Deferred tax asset
Tax losses not brought to account
Parent entity net rate adjustment and tax losses and temporary differences not brought to account
Income tax (benefit)/expense attributable to loss
(c) Current tax
Current tax (asset)/liability
(d) Deferred Tax
Deferred tax assets is comprised:
Accruals and provisions
Leasehold improvements and Plant and equipment
Plant and equipment under lease
Intangible Assets
Exchange differences
Tax losses and research and development offset
Deferred tax liabilities is comprised:
Plant and Equipment and Intangible assets
Prepayments
Exchange differences
Net deferred tax assets/(liabilities)
(e) Deferred tax assets not brought to account
Temporary differences
Tax losses
40
2022
$’000
2021
$’000
–
252
–
252
(9,582)
(2,919)
140
(1,010)
–
28
3,824
189
3,171
252
–
197
–
197
(12,432)
(3,232)
132
(890)
(13)
38
4,106
56
3,429
197
–
–
318
–
51
1,023
2
932
2,326
(942)
(29)
–
(971)
1,355
197
108
33
1,068
–
1,076
2,482
(844)
(26)
(5)
(875)
1,607
(106)
(123)
22,784
22,678
19,385
19,262
Notes to the Consolidated Financial Statements (continued)
Key accounting policies
Current income tax expense/benefit is the tax payable on the current period’s taxable income at the applicable income tax rate
adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Deferred tax assets and liabilities are recognised as temporary differences at the applicable tax rate when the assets are expected
to be recovered or liabilities to be settled. No deferred tax asset or liability is recognised in relation to temporary differences if they
arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit
or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only when
it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
The parent entity, (Acrux Limited), is a Pooled Development Fund (PDF):
— PDFs are taxed at 15% on income and gains from investments in small to medium enterprises;
— PDFs are taxed at 25% on other income; and
— PDFs are not permitted to consolidate for tax purposes.
Subsidiary companies of Acrux Limited are subject to the general company tax rate.
7. DIVIDENDS
(a) Dividends paid and declared
2022
$’000
2021
$’000
Nil dividends were declared or paid during the financial year (2021: $nil)
–
–
(b) Franking account
Balance of franking account at financial year end, adjusted for franking credits arising from payment
of income tax, franking debits from payment of dividends and any credits that may be prevented
from distribution in subsequent years.
43,835
43,835
8. LOSS PER SHARE
Loss from continuing operations
Loss used in calculating basic and diluted earnings per shares
2022
$’000
(9,834)
(9,834)
2021
$’000
(12,629)
(12,629)
No. of
shares
No. of
shares
Weighted average number of ordinary shares used in calculating basic earnings per share
283,881,613 219,726,077
Effect of dilutive securities:
–
–
Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share 283,881,613 219,726,077
Basic loss per share (cents)
Diluted loss per share (cents)
9. CASH AND CASH EQUIVALENTS
Cash on hand and at bank
Term Deposits
3.46
3.46
2022
$’000
2,831
3,000
5,831
5.75
5.75
2021
$’000
7,270
8,000
15,270
Key accounting policies
Cash and cash equivalents include bank term deposits which are readily convertible to cash on hand and are used in the cash
management function on a day-to-day basis.
41
Acrux Annual Report 2022 10. RECEIVABLES
Receivables from contracts with customers
Other receivables
2022
$’000
262
3,503
3,765
2021
$’000
288
2,871
3,159
Key accounting policies
Trade and other receivables arise from the transactions with customers and are normally settled on terms of 45 days from the
date of invoice.
The Group applies the simplified approach under AASB 9 Financial Instruments to measure the allowance for credit losses for
receivables from contracts with customers and other assets. Under this simplified approach, the Group determines losses based
on the expected life of the instrument. After initial measurement, the collectability of receivable balances is reviewed on an ongoing
basis and a provision raised if collection in full is not considered probable. Debts which are known to be uncollectable are written
off. The Company does not have a history of collection delays, defaulted balances or client dispute and does not consider a
provision for expected credit losses is necessary at this time.
11. OTHER CURRENT ASSETS
Prepayments
12. PLANT AND EQUIPMENT
Leasehold improvements
At cost
Accumulated amortisation
Total leasehold improvements
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
Reconciliations of the carrying amounts of plant and equipment at the beginning and end of the
current financial year:
Leasehold improvements
Carrying amount at the start of the year
Additions
Amortisation expense
Carrying amount at the end of the year
Plant and equipment
Carrying amount at the start of the year
Additions
Depreciation expense
Carrying amount at the end of the year
42
2022
$’000
420
2021
$’000
165
2022
$’000
2021
$’000
47
(24)
23
2,319
(1,660)
659
682
32
–
(9)
23
506
465
(312)
659
47
(15)
32
1,916
(1,410)
506
538
24
11
(3)
32
737
91
(322)
506
Notes to the Consolidated Financial Statements (continued) Key accounting policies
Cost and valuation
Each class of plant and equipment is carried at historical cost less applicable accumulated depreciation and accumulated
impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. At each balance
date the carrying amount of each asset classification is reviewed to ensure that it does not differ materially from the asset
classification’s fair value at reporting date. Where necessary, assets are revalued to reflect fair value.
Depreciation
The depreciable amounts of all fixed assets are calculated on a straight line basis over the estimated useful lives to the entity,
commencing from the time the assets are held ready for use.
Leasehold improvements are depreciated over the shorter of the unexpired period of the lease or the estimated useful lives
of the improvements.
The useful lives for each class of assets are:
Leasehold improvements
Plant and equipment
13. INTANGIBLE ASSETS
External development expenditure capitalised
Accumulated amortisation
Total intangible assets
Carrying amount of Estradiol at the start of the year
Additions
Amortisation
Carrying amount of Estradiol at the end of the year
2022
2021
5 to 20 years
5 to 20 years
1 to 16 years
1 to 16 years
2022
$’000
1,071
(696)
375
482
–
(107)
375
2021
$’000
1,071
(589)
482
589
–
(107)
482
Key accounting policies
Product development costs are capitalised only when all of the following criteria can be demonstrated:
— Technical feasibility of completing development of the product and obtaining approval by regulatory authorities;
— Ability to secure a commercial partner for the product;
— Availability of adequate technical, financial and other resources to complete development of the product, obtain regulatory
approval and secure a commercial partner;
— Reliable measurement of expenditure attributable to the product during its development; and
— High probability of the product entering a major pharmaceutical market.
Capitalised development costs have a finite life and are amortised on a systematic basis from the time the product becomes
available for use until the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is
classified as held for sale) in accordance with AASB 5 Non-current assets held for sale and discontinued operations and the date that
the asset is derecognised.
The remaining estimated useful life and total economic benefit for each asset is reviewed at least annually.
43
Acrux Annual Report 2022 14. LEASE ASSETS AND LEASE LIABILITIES
The Group has an operating lease for occupancy of its office, laboratory and warehouse facilities. The lease was renewed by
Acrux DDS Pty Limited for a period of 4 years from 1 June 2018, with 3 options to extend for 3 years each. There is no option to
purchase at the end of the lease period.
Leased assets
Carrying amount of lease assets, by class of underlying asset:
Buildings under lease arrangements
At cost
Accumulated depreciation
Plant and equipment under lease arrangements
At cost
Accumulated depreciation
2022
$’000
2021
$’000
2,409
(602)
1,807
142
(75)
67
2,409
(402)
2,007
142
(43)
99
Total carrying amount of Leased assets
1,874
2,106
Reconciliation of carrying amount of Leased assets at the beginning and end of the financial year:
Buildings under lease arrangements
Carrying amount at the beginning of the period
Depreciation
Carrying amount at the end of the period
Plant and equipment under lease arrangements
Carrying amount at the beginning of the period
Depreciation
Carrying amount at the end of the period
Lease Liabilities
Lease liabilities (current)
Lease liabilities (non-current)
Total carrying amount of lease liabilities
Lease expenses and cashflows
Interest expense on lease liabilities
Depreciation expense on lease assets
Total cash outflow in relation to leases
Future commitments
Future minimum lease payments to be made:
— Not later than 1 year
— Later than 1 year and not later than 5 years
Aggregate of lease payments contracted for at reporting date
44
2,007
(200)
1,807
99
(32)
67
224
1,854
2,078
172
201
327
335
1,295
1,630
2,208
(201)
2,007
131
(32)
99
185
2,049
2,234
185
233
352
344
1,317
1,661
Notes to the Consolidated Financial Statements (continued) Key accounting policies
The Group recognises a Leased asset at the date of lease commencement, representing its right to use the underlying asset and
a Lease liability representing its obligation to make lease payments.
Leased assets are initially recognised at cost, comprising the amount of the initial measurement of the lease liability, any lease
payments made at or before date of lease commencement, less any lease incentives received, any initial direct costs incurred by
the Group and an estimate of costs to be incurred by the Group in dismantling and removing the underlying asset, restoring the
site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
Leased assets are depreciated over the shorter of the lease term and the estimated useful life of the underlying asset, consistent
with the estimated consumption of the economic benefits of the underlying asset.
Subsequent to initial recognition, Leased assets are measured at cost (adjusted for any remeasurement of the associated lease
liability), less accumulated depreciation and any impairment loss.
Lease liabilities are initially recognised at the present value of the future lease payments which are unpaid at the date of lease
commencement. These lease payments are discounted at the interest rate implicit in the lease.
Subsequent to initial recognition, Lease liabilities are measured at the present value of the remaining lease payments which are
unpaid at the reporting date. Lease liabilities are remeasured to reflect changes to lease terms, changes to lease payments and
any lease modifications not accounted for as separate leases.
Interest expense on lease liabilities is recognised in profit or loss, presented as a component of finance costs.
Variable lease payments not included in the measurement of lease liabilities are recognised as an expense when incurred.
15. PAYABLES
Current
Trade payables
Sundry creditors and accruals
2022
$’000
789
1,430
2,219
2021
$’000
312
1,468
1,780
Key accounting policies
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which
are unpaid. Balances are unsecured and are usually paid within 30 days of recognition. Payables are presented as current liabilities
if payment is within 12 months of the reporting period.
16. PROVISIONS
Current
Employee entitlements
Non-current
Employee entitlements
Aggregate employee entitlements
2022
$’000
2021
$’000
875
40
915
801
41
842
Key accounting policies
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable
that an outflow of economic benefits will result and the outflow can be reliably measured.
Provision is made for employee entitlements arising from employees rendering services up to the reporting date, including annual
leave and long service leave. Liabilities expected to be settled within twelve months of the reporting date are measured at their
nominal amounts based on remuneration rates expected to be paid when the liability is settled and are presented as current
employee entitlements on the balance sheet. All other employee benefit liabilities are measured at the present value of the
estimated future cash outflows in respect of services provided up to the reporting date and presented as a non-current liability
on the balance sheet.
45
Acrux Annual Report 2022 17. CONTRIBUTED EQUITY
(a) Issued and paid up capital
Ordinary shares fully paid
(b) Movements in ordinary shares on issue
Beginning of the financial year
Issued during the year:
Issue of shares – two tranche placements
Issue of shares – Share Purchase Plan
Conversion of rights under the Omnibus Equity Plan
Share issues under Omnibus Equity Plan
Ordinary shares issued during the year
2022
2021
No. of
shares
000’s
$
No. of
shares
000’s
$
285,364,669
114,563 283,305,394
114,213
283,305,394
114,213 168,583,515
96,137
–
–
1,776,641
282,634
2,059,275
–
–
49,777,982
63,298,095
322
28
1,498,438
147,364
7,815
9,932
301
28
350 114,721,879
18,076
Ordinary shares on issue at reporting date
285,364,669
114,563 283,305,394
114,213
(c) Rights
During the financial year 7,483,663 rights were issued under the OEP (2021: 1,451,418). Rights hold no participation rights,
but shares issued on exercise of rights rank equally with existing shares. At 30 June 2022, 8,299,507 rights were held by key
management personnel (2021: 5,716,929).
The closing market value of an ordinary Acrux Limited share on the Australian Securities Exchange at 30 June 2022 was 5.2 cents.
(i) Movement in the number of rights held under Omnibus Equity Plan are as follows:
Opening balance
Granted during the year
Exercised during the year
Lapsed during the financial year
Closing balance
2022
2021
6,353,348
6,943,556
7,483,663
1,451,418
(1,776,641)
(1,498,438)
(3,030,616)
(543,188)
9,029,754
6,353,348
2022
$’000
2021
$’000
(ii) Details of rights exercised during the financial year:
Fair value as at issue date of shares issued during the financial year
322
301
(iii) Details of lapsed and cancelled rights
Key management personnel
Other employees
Total rights lapsed or cancelled during the year
3,000,000
489,998
30,616
53,190
3,030,616
543,188
46
Notes to the Consolidated Financial Statements (continued)
18. SHARE BASED PAYMENTS
(a) Expenses recognised from share-based payment transactions
The expense recognised within securities based payments expense in the statement of
comprehensive income was as follows:
Rights under the OEP
Issue of tax exempt ordinary shares to eligible employees
Total expenses recognised from securities based payment transactions
2022
$’000
2021
$’000
422
28
450
479
28
507
Share-based payments
The fair value of rights is recognised as an employee benefit expense in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income in the period(s) over which the benefit to the employee or Director is accrued over the life of the instrument.
Fair value is determined using an appropriate pricing model to value Performance Rights during the period depending on the exercise
conditions, with both the Black Scholes option-pricing model and the Monte Carlo Simulation option-pricing model utilised.
In addition to rights, and within the provisions of the OEP, employees who are neither Directors nor KMP, may be issued with tax
exempt ordinary shares to a maximum value of $1,000 per employee at the discretion of the Directors. Exempt ordinary shares are
escrowed for a period of 3 years from the date of issue.
(b) Omnibus Equity Plan
Details of movements in rights during the reporting period are provided below:
Grant date
Expiry date
Balance at
beginning
of the year
Granted
Exercised
Cancelled
or forfeited
Balance
at the end
of the year
Exercisable
at the end
of the year
80,000
80,000
844,448
665,276
118,464
–
–
Non-executive Directors – rights issued as a component of remuneration
23 November 2018
1 January 2023
320,000
9 December 2019
28 November 2026
1,658,334
–
–
(240,000)
(813,886)
30 November 2021
30 November 2028
–
347,624
(229,160)
–
–
–
Performance Rights – issued to CEO, KMP and other senior management
14 November 2017
14 November 2024
3,000,000
25 January 2018
25 January 2025
4 February 2019
4 February 2026
3 February 2020
3 February 2027
4 February 2021
4 February 2028
97,000
381,000
300,190
596,824
–
–
–
–
–
30 November 2021
30 November 2028
10 February 2022
10 February 2029
–
–
6,000,000
1,136,039
–
(3,000,000)
–
(33,000)
(243,000)
(217,595)
–
–
–
64,000
64,000
138,000
138,000
82,595
82,595
–
–
–
(21,526)
575,298
–
6,000,000
(9,090)
1,126,949
–
–
–
6,353,348
7,483,663
(1,776,641)
(3,030,616)
9,029,754
1,031,813
The Group operates an OEP which was approved by shareholders on 12 November 2020.
Within the terms of the OEP and as approved by shareholders, rights were issued to Directors in 2019 to comprise approximately
50% of the value of their remuneration. These rights have no performance conditions, vest on a quarterly basis and will be fully vested
in November 2022. Following his appointment in June 2021 and after the following AGM, 347,237 rights were approved and issued to
Don Brumley in December 2021. Assuming his continued service these rights vest on a quarterly basis until November 2022.
On 26 November 2021, 6,000,000 performance rights were issued to the Managing Director and CEO, Michael Kotsanis. These
performance rights vest in 4 annual tranches subject to achievement of Total Shareholder Return of at least 10% per annum and
including roll over provisions. 3,000,000 performance rights issued to him in 2017 did not vest and were cancelled.
Other senior employees, including KMP are offered performance rights which vest subject to achievement of performance hurdles.
On 10 February 2022, 1,136,039 performance rights were issued to senior employees, including KMP. These rights vest 12 months
after issuance subject to achievement of Total Shareholder Return of at least 10% per annum and include rollover provisions.
Ordinary shares issued on exercise of rights rank equally with existing ordinary shares.
47
Acrux Annual Report 2022 18. SHARE BASED PAYMENTS CONTINUED
Overview of Rights issued during the period:
Date of Issue
Type of Rights
Number of Rights issued
Fair value Measure
30 November
2021
30 November
2021
10 February
2022
Non executive
Directors
Remuneration
CEO
Performance
Rights
Employee
Performance
Rights
347,624
6,000,000
1,136,039
Direct Value
Black Scholes
Black Scholes
Weighted average share price at date of issue
11.4 cents
11.4 cents
10.3 cents
Exercise price
Volatility
Dividend yield expectations
Term
Risk free interest rate
19. RESERVES AND ACCUMULATED LOSSES
Share based payment reserve
Profit reserve
Total Reserves
Accumulated losses
Share based payment reserve
(i) Nature and purpose of Share based payment reserve
n/a
n/a
n/a
7 years
n/a
12.58–16.75 cents
11.33–12.46 cents
67.75%
Nil
7 years
1.14%
2022
$’000
860
7,390
8,250
64.57%
Nil
7 years
1.14%
2021
$’000
757
7,390
8,147
(113,723)
(103,889)
This reserve is used to record the value of equity benefit provided to employees and Directors
as part of their remuneration.
(ii) Movement in Share based payment reserve
Balance at the beginning of year
Employee performance rights expense for the year
Balance at end of year
Profit Reserve
Nature and purpose of Profit reserve
This reserve is used to record the profits which have been generated by the Group.
Accumulated losses
Movement in Accumulated losses
Balance at the beginning of year
Net loss attributable to members of Acrux Limited
Balance at end of year
757
103
860
582
175
757
(103,889)
(91,260)
(9,834)
(12,629)
(113,723)
(103,889)
48
Notes to the Consolidated Financial Statements (continued) 20. CASHFLOW INFORMATION
(a) Reconciliation of the cashflow from operations with loss after income tax:
Loss from ordinary activities after income tax
Non-Cash Items
Depreciation and amortisation
Share based payments expense
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other current assets
Increase/(decrease) in payables
Increase/(decrease) in employee entitlements
Increase/(decrease) in deferred tax assets
Net cash (outflows)/inflows from operating activities
(b) Reconciliation of cash
Cash at the end of the financial year as shown in the Statement of Cashflows and the Statement of
Financial Position is as follows:
Cash at bank
At call deposits with financial institutions
Closing cash balance
2022
$’000
2021
$’000
(9,834)
(12,629)
660
450
(606)
(255)
441
73
252
664
507
(600)
415
(103)
135
197
1,015
1,215
(8,819)
(11,414)
2,831
3,000
5,831
7,270
8,000
15,270
(c) Credit stand-by arrangement and loan facilities
The Group has credit card facilities with financial institutions available to the extent of $120,000 (2021: $120,000). At 30 June 2022
the Group had unused facilities of $109,009 (2021: $101,311).
21. KEY MANAGEMENT PERSONNEL COMPENSATION
Details of Key Management Personnel compensation are contained within the Remuneration Report section of the Director’s
Report. A breakdown of the aggregate components of Key Management Personnel’s compensation is provided below:
Short-term employment benefits
Post-employment benefits
Equity
Total KMP compensation
$
$
1,578,787
1,793,151
158,917
213,196
397,797
332,715
2,135,501
2,339,062
22. LOANS TO KEY MANAGEMENT PERSONNEL
No loans were made to Key Management Personnel during the financial year.
23. RELATED PARTY DISCLOSURES
Wholly owned Group transactions
Loans
Loans were made between Acrux Limited and its subsidiaries under normal terms and conditions. The aggregate amounts receivable
from controlled entities by the parent entity at the end of the reporting period was $18.188 million (2021: $13.399 million).
Non-interesting bearing loans were made by Acrux Commercial Pty Ltd to its subsidiary, Fempharm Pty Ltd. The aggregate amount
receivable from Fempharm Pty Ltd at the end of the reporting period was $0.866 million (2021: $0.366 million).
Other transactions with Key Management Personnel and their personally related entities
Transactions of Directors and Key Management Personnel concerning shares in accordance with the OEP are disclosed the
Directors’ Report and in Notes 17 and 18. There were no other transactions or contracts between the Company and Directors
and Key Management Personnel in 2022 (2021: nil).
49
Acrux Annual Report 2022
24. AUDITOR REMUNERATION
Amounts paid and payable to Pitcher Partners for:
An audit or review of the financial report of the entity and any other entity in the Group
Taxation compliance and consulting
Other non-audit services
2022
$’000
2021
$’000
88
33
–
121
78
49
–
127
25. SEGMENT REPORTING
The Group operates as a single operating segment. Internal management reporting systems present financial information as a
single segment. The segment derives revenue from developing and commercialising pharmaceutical products which administer
drugs topically.
Geographical segment information
Australia
Europe and other countries
United States
Revenue by product group and services provided
Revenue from licensing agreements
Contractual milestones received in relation to development products
R&D Tax Incentive rebate
Other, including other government support and interest received
2022
$’000
3,383
1,421
299
5,103
1,719
–
3,366
18
5,103
2021
$’000
3,819
1,025
312
5,156
1,092
245
3,421
398
3,945
26. CONTROLLED ENTITIES
Parent Entity
Acrux Limited
Subsidiaries of Acrux Limited
Acrux DDS Pty Ltd
Acrux Pharma Pty Ltd
Acrux Commercial Pty Ltd
Subsidiaries of Acrux Commercial Pty Ltd
Fempharm Pty Ltd
COUNTRY OF INCORPORATION
2022
2021
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
50
Notes to the Consolidated Financial Statements (continued)
27. PARENT ENTITY DETAILS
(a) Summarised statement of financial position of the parent entity, Acrux Limited
Assets
Current assets
Non-current assets(1)
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Profit reserve
Accumulated losses
Share based payments reserve
Total equity
PARENT ENTITY
2022
$’000
2021
$’000
5,139
25,299
30,438
314
–
314
10,946
20,510
31,456
381
–
381
30,124
31,075
114,563
114,213
7,390
7,390
(92,689)
(91,285)
860
757
30,124
31,075
(1)
Investment in subsidiaries are initially recognised at cost and subsequently carried at the lower of cost or recoverable amount. If the carrying value
exceeds the recoverable amount, an impairment loss is recognised in the profit or loss of the parent.
(b) Summarised statement of comprehensive income
Loss for the financial year
Other comprehensive income for the financial year
Total comprehensive income for the financial year
28. CONTINGENCIES
There were no contingencies at 30 June 2022 (2021: nil).
(1,404)
–
(1,404)
(875)
–
(875)
29. SUBSEQUENT EVENTS
In August the FDA accepted Acrux’s sixth ANDA application for review for its generic version of cold sore treatment, Acyclovir Cream, 5%.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected the Group’s operations, results or
state of affairs, or may do so in future years.
30. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 11th March 2020 the World Health Organisation declared the global outbreak of COVID-19 as a global pandemic. While
the global economy has been impacted significantly, Acrux has experienced limited financial impact although at times has
had difficulties with raw material supply and disrupted operations at contract research organisations (CROs’) and contract
manufacturing organisations (‘CMOs’) resulting in some minor delays to product development project timelines.
In the opinion of the Directors, there have been no significant changes in the state of affairs of the Group during the financial
year not otherwise disclosed in this report or the financial statements.
51
Acrux Annual Report 2022 Directors’ Declaration
The Directors of the company declare that:
1.
In the Directors’ opinion, the financial statements and notes thereto, as set out on pages 31 to 51, are in accordance with the
Corporations Act 2001 including:
(a)
complying with Australian Accounting Standards and the Corporations Regulations 2001, and other mandatory
professional reporting requirements;
(b)
as stated in Note 1(a) the consolidated financial statements also comply with International Financial Reporting Standards;
and
(c)
giving a true and fair view of the financial position of the Group as at 30 June 2022 and of its performance for the year
ended on that date.
2.
In the Directors’ opinion there are reasonable grounds to believe that Acrux Limited will be able to pay its debts as and when
they become due and payable.
This declaration has been made after receiving the declarations required to be made by the Chief Executive Officer and
Chief Financial Officer to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ending
30 June 2021.
Signed in accordance with a resolution of the Directors made pursuant to S295(5) of the Corporations Act 2001.
Ross Dobinson
Non-executive Chairman
Melbourne
25 August 2022
Don Brumley
Non-executive Director
Melbourne
25 August 2022
52
Independent Auditor’s Report
ACRUX LIMITED
AND CONTROLLED ENTITIES
ABN 72 082 001 152
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ACRUX LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Acrux Limited “the Company” and its controlled entities “the
Group”, which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of profit and loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies, and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(a) giving a true and fair view of the Company’s financial position as at 30 June 2022 and of its
financial performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of a
Financial Report section of our report. We are independent of the Company in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) “the Code” that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Company would be in the same terms if given to the directors as
at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1(b) in the financial report, which indicates that the Group incurred a net
loss of $9.834m during the year ended 30 June 2022 (2021: $12.629m loss) and has produced a
negative cash flow from operating activities for the year ended 30 June 2022 of $8.822m (2021
negative cash flow: $11.414m). As stated in Note 1(b), these events or conditions, along with other
matters as set forth in Note 1(b), indicate that a material uncertainty exists that may cast significant
doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of
this matter.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
53
Acrux Annual Report 2022 Independent Auditor’s Report (continued)
ACRUX LIMITED
AND CONTROLLED ENTITIES
ABN 72 082 001 152
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ACRUX LIMITED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter
Assessment of impairment of Intangible Assets
How our audit addressed the key audit matter
Refer to page 32 consolidated statement of
financial position, note 2(b) on page 37 and
note 13 on page 43.
The Group has $0.37 million ($0.48 million as at
30 June 2021) of capitalised development costs
as at 30 June 2022 after accumulated
amortisation and impairment loss. We view
intangible assets in relation to capitalised
development costs to be a Key Audit Matter
due to the management judgement required in
making Discounted Cash Flow (DCF) model key
assumptions such as discount rate, growth rate,
foreign exchange rate and forecast cashflows.
Our procedures included amongst others:
• Critically evaluating management’s DCF
model methodology and their key
assumptions utilised;
Testing the mathematical accuracy of the
DCF model and assessing forecast cash
ows to external data;
•
• Performing sensitivity analysis around the
discount rate, growth rates and foreign
exchange rate used in the DCF model;
• Understanding and evaluating the design
and implementation of management’s
processes and controls around the
impairment of intangible assets; and,
• Assessing the appropriateness of the
disclosures included in Notes 2 and 13 to
the nancial report in respect of
impairment testing and sensitivity analysis.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
54
ACRUX LIMITED
AND CONTROLLED ENTITIES
ABN 72 082 001 152
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ACRUX LIMITED
How our audit addressed the key audit matter
Our procedures included amongst others:
•
•
Tax expert review of the deferred tax
calculation;
Reviewing and assessing management’s
key assumptions relating to the
forecasts of future taxable prot and
evaluating the reasonableness of these
assumptions;
• Understanding and evaluating the
design and implementation of
management’s processes and controls
around the recognition of deferred tax
assets; and
Assessing the appropriateness of the
disclosures included in Note 6 in respect
of current and deferred tax balances.
•
Key Audit Matter
Recoverability of Deferred Tax Assets
Refer to note 1(d) on page 36, note
2(a) on page 37 and note 6 on page 40.
The Group has $1.356 million ($1.607 million
as at 30 June 2021) of deferred tax assets
recognised as at 30 June 2022 relating to
timing differences and Research and
Development offset incurred by the
subsidiary Acrux DDS Pty Ltd.
The ability to recognise the deferred tax
assets is dependent upon the probable
generation of sufficient future taxable prot
in order for the benefits of the deferred tax
assets to be realised, in accordance with
AASB 112. These benefits are realised by
reducing tax payable on future taxable
profits.
We view the deferred tax assets as a Key
Audit Matter due to the key management
assumptions required in forecasting future
taxable prot. Management’s key
assumptions include but are not restricted
to:
• Ongoing profitable contract research
•
•
and development activities;
Successful commercialisation of
generics; and
The number of competitors in the
market, market share and profit
commercial
sharing
partners.
rates with
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
55
Acrux Annual Report 2022 Independent Auditor’s Report (continued)
ACRUX LIMITED
AND CONTROLLED ENTITIES
ABN 72 082 001 152
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ACRUX LIMITED
Other Information
The directors are responsible for the other information. The other information comprises the Directors
Report which was obtained as at the date of our audit report, and any additional other information
included in the Company’s annual report for the year ended 30 June 2022 but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard.
When we read the other information not yet received as identified above, if we conclude that there
is a material misstatement therein, we are required to communicate the matter to the directors and
use our professional judgment to determine the appropriate action to take.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
56
ACRUX LIMITED
AND CONTROLLED ENTITIES
ABN 72 082 001 152
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ACRUX LIMITED
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion.
• The risk of not detecting a material misstatement resulting from fraud is higher than for one
intentional omissions,
involve collusion, forgery,
resulting from error, as fraud may
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
57
Acrux Annual Report 2022 Independent Auditor’s Report (continued)
ACRUX LIMITED
AND CONTROLLED ENTITIES
ABN 72 082 001 152
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ACRUX LIMITED
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 23 to 28 of the directors’ report for the
year ended 30 June 2022. In our opinion, the Remuneration Report of Acrux Limited and its
controlled entities, for the year ended 30 June 2022, complies with section 300A of the Corporations
Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
N R BULL
Partner
25 August 2022
PITCHER PARTNERS
Melbourne
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
58
Shareholder Information
Additional information required by Australian Securities Exchange Listing Rules and not disclosed elsewhere in this report,
as at 8 August 2022.
SHAREHOLDERS
The Company has 285,364,669 ordinary fully paid shares on issue, held by 5,078 shareholders, and 9,029,754 rights held by
30 people. The Company has no other equity securities on issue. Holders of ordinary shares are entitled to receive dividends as
declared from time to time and are entitled to one vote per share at shareholders’ meetings. No voting rights attach to rights.
All fully paid ordinary shares are quoted on the Australian Securities Exchange. No other equity securities of the Company are
quoted on the Australian Securities Exchange.
DISTRIBUTION SCHEDULE
The following is a distribution schedule of the number of holders of fully paid ordinary shares in the Company within the bands of
holding specified by the ASX Listing Rules:
Category
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
Total
Number of
Shareholders
1,016
1,457
651
1,467
Securities
514,121
4,254,158
5,266,311
52,209,523
463
11,120,556
5,054
285,364,669
2,869 shareholders hold less than a marketable parcel of fully paid ordinary shares, based on the market price at the date set
out above.
SUBSTANTIAL HOLDERS
The following parties have declared a relevant interest in the number of ordinary shares under Part 6C.1 of the Corporations Act 2001.
Name
Phillip Asset Management Ltd atf BioScience Managers Translation Fund I
Number of fully
paid ordinary
shares
31,847,134
Under the ASX Listing Rules “Substantial Holder” means, in general terms, a person who either alone or with their associates, has
an interest in 5% or more of the voting shares of the Company.
59
Acrux Annual Report 2022 Shareholder Information (continued)
TWENTY LARGEST HOLDERS OF FULLY PAID ORDINARY SHARES IN ACRUX LIMITED
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
PHILLIP ASSET MANAGEMENT LIMITED
DDH GRAHAM LIMITED
HISHENK PTY LTD
DR THOMAS VUI CHUNG CHAI
CITICORP NOMINEES PTY LIMITED
ASHWOOD RIVER PTY LTD
MR ROSS DOBINSON
MR PAUL COZZI
MR CHRISTOPHER MURRAY ABBOTT
PACIFIC CUSTODIANS PTY LIMITED
TSO PTY LTD
ALMIKE PTY LIMITED
MR IAN VICTOR LANCINI & MRS DEBRA ANN LANCINI
DURBIN SUPERANNUATION PTY LTD
ADAM JAMAL
ASIA UNION INVESTMENTS PTY LIMITED
MR ALAN JEBB & MRS SANDRA JEBB
MR MICHAEL JOHN KOTSANIS
NEWECONOMY COM AU NOMINEES PTY LIMITED
MR BIKASH KAJI BANIYA
Number of fully
paid ordinary
shares
31,847,134
10,950,000
4,500,000
4,460,560
4,101,513
3,800,000
3,716,060
3,159,121
3,000,000
2,384,901
2,325,734
2,162,456
2,045,000
2,035,000
1,905,719
1,691,083
1,514,041
1,511,083
1,481,634
1,475,773
Percentage of
issued capital
11.16
3.84
1.58
1.56
1.44
1.33
1.30
1.11
1.05
0.84
0.82
0.76
0.72
0.71
0.67
0.59
0.53
0.53
0.52
0.52
Total of Top 20 shareholders
90,066,812
31.56
60
POOLED DEVELOPMENT FUND
The information set out below is of a general nature only and may vary from person to person (dependent on their circumstances).
Any shareholder or prospective shareholder should obtain their own taxation advice rather than relying on this general summary.
Acrux Limited is a Pooled Development Fund (PDF) registered under the Pooled Development Fund Act 1992 (“the PDF Act”) since
7 July 1999. A PDF is a company that is resident in Australia which is registered and regulated by the PDF Registration Board in
accordance with the PDF Act.
Shareholders in the Company are entitled to concessionary tax treatment in Australia for income and capital gains derived in
connection with their shareholding. The concessionary tax treatment should be available to investors that hold their interests
directly and indirectly through non-corporate trusts and partnerships.
Gains realised by an investor from disposal of shares in the Group will not be included in the investor’s assessable income in
Australia because:
— Where the gain on sale would be ordinary income of the investor, the gain will be treated as exempt income; and
— Where the gain on sale would be a capital gain it is specifically excluded from the capital gains tax provisions of the Tax Act.
Equally, an investor will not be entitled to any deduction or capital loss on the sale of the Company’s shares. Shares held in a PDF
cannot be held as trading stock. Accordingly, share traders cannot treat PDF shares as trading stock.
Unfranked dividends received by an Australian resident shareholder from the Company will be exempt from tax in the hands of the
shareholder. Franked dividends will also be exempt from tax unless the shareholder elects to treat the franked dividend as taxable.
Broadly, Australian resident shareholders who hold the Company’s shares at risk (in accordance with the Tax Act) for 45 days or
more may elect to treat franked dividends paid by the Company as assessable income and claim the tax offset available in respect
of the dividend. The tax offset will be equal to the franking credit attaching to the dividend received. Where the tax offset available
exceeds the shareholder’s highest marginal tax rate, the shareholder may be entitled to receive a refund of tax in respect of the
excess franking credit.
Australian corporate tax entities are entitled to benefit from the franking credits attaching to the franked portion of the dividends
paid by the Company, irrespective of whether the corporate tax entity treats the dividend as exempt income or elects to treat it
as assessable income. Accordingly, an Australian corporate may credit its franking account with franking credits attaching to a
dividend from the Company regardless of whether or not they have elected to treat the dividend as exempt or assessable income.
Dividends paid by Acrux to non-residents will not be subject to withholding tax regardless of whether or not they are franked
or unfranked.
Should the Company cease to be a PDF, each shareholder will be deemed to have sold their shares immediately before the
Company ceased to be a PDF and to have acquired the shares at their market value immediately after the Company ceased to be a
PDF. Any gain or loss realised on the sale after that time, calculated by reference to the deemed acquisition cost, will be subject to
the general provisions of the Tax Act and any such gain may be included in the shareholder’s assessable income.
61
Acrux Annual Report 2022 Glossary
Term
Abbreviation Description
Abbreviated New
Drug Application
ANDA
ANDAs are termed “abbreviated” because they are generally not required to include
preclinical (animal) and clinical (human) data to establish safety and effectiveness of a
generic drug product. Instead, applicants must scientifically demonstrate bioequivalence to
the innovator drug. Once approved, an applicant may manufacture and market the generic
drug product as a safe, effective, low cost alternative. All approved products, both innovator
and generic, are listed in FDA’s Orange Book.
Active
Pharmaceutical
Ingredient
Addressable
market
Bioequivalence/
Bioavailability
Contract
Manufacturing
Organisation
API
Also known as drug substance. A substance used in a finished pharmaceutical product,
intended to furnish pharmacological activity.
Total market sales value of a pharmaceutical product and dosage form. The data is
purchased from IQVIA for products for which an Acrux product will directly compete
when approved.
Bioequivalence studies compare the bioavailability of the proposed drug product with
the Reference Listed Drug (RLD) containing the same active ingredient. Bioequivalence is
the absence of a significant difference in the rate and extent to which the drug substance
becomes available at the site of drug action when administered at the same dose under
similar conditions.
CMO
A CMO is a company that serves other companies in the pharmaceutical industry on a
contract basis to provide services that include commercial manufacturing.
Contract Research
Organisation
CRO
A CRO is a company that provides support to the pharmaceutical, biotechnology, and
medical device industries in the form of research services outsourced on a contract basis.
Estradiol
Evamist®
Food and Drug
Administration
FDA
Gedeon Richter
Generic medicine
Estradiol is a form of estrogen, a female sex hormone produced by the ovaries. Estrogen is
necessary for many processes in the body.
Brand name for Acrux’s unique Estradiol spray product in the United States. The Evamist®
trademark is owned by Lumara Health and sublicensed to Padagis.
The FDA is responsible for protecting and promoting public health through the regulation
and supervision of prescription, over-the-counter pharmaceutical drugs (medications),
vaccines, biopharmaceuticals and veterinary products in the United States.
Gedeon Richter Plc. is Acrux’s licensee for Lenzetto® and is a major pharmaceutical
company headquartered in Hungary. Consolidated sales for 2021 exceeded EUR 1.75 billion
and market capitalisation exceeds EUR 4.4 billion. Richter is a significant global player in
female healthcare.
A generic medicine provides the same quality, safety and efficacy as the original brand
name product and undergoes strict scrutiny before it is licensed and given market approval
by national regulatory authorities.
62
Term
Abbreviation Description
Good
Manufacturing
Practice
GMP
Set of manufacturing principles and procedures that when followed helps ensure
therapeutic goods are of high quality.
In-vitro Permeation
Testing
IVPT
In-vitro Release
Testing
IVRT
IQVIA
Lenzetto®
Omnibus Equity
Plan
Orange Book
Product-Specific
Guidance
PSG
In-vitro permeation testing studies across biological membranes for formulations that
are applied to the skin are vital to guide product development and establish product
bioequivalence. IVPT is a critical tool for understanding drug delivery into the various layers
of skin and can aid in formulation selection.
Measurement of drug release from complex dosage forms applied topically for the
purpose of drug product bioequivalence testing. IVRT allows for targeted and systematic
drug development and guides the establishment of therapeutic equivalence. IVRT involves
subjecting the drug formulation to conditions that will induce drug release across a
membrane and quantitating the amount of drug released under those conditions. In
development, it is an essential test in assessing differences between formulations,
predicting the timeframe of API release and modelling in vivo behaviour.
IQVIA, formerly Quintiles and IMS Health, Inc., is a US based multinational company
which provides, on a subscription basis, pharmaceutical industry-leading sales data
from over 90 countries.
Brand name for Acrux’s unique Estradiol spray in the European Union. The Lenzetto®
trademark is owned by Gedeon Richter.
The publication Approved Drug Products with Therapeutic Equivalence Evaluations is
commonly known as the Orange Book and identifies drug products approved on the basis
of safety and effectiveness by the Food and Drug Administration (FDA) and related patent
and exclusivity information.
To facilitate generic drug product availability and identify the most appropriate
methodology for developing drugs and generating evidence to support ANDA approval,
FDA publishes product-specific guidance describing their current thinking and expectations
on how to develop generic drug products therapeutically equivalent to specific reference
listed drugs.
OEP
Approved at 2020 AGM to govern the issue of securities to employees and Directors.
Total Shareholder
Returns
Transdermal
Topical
TSR
Total Shareholder Returns, measured by the annual share price increase.
Transdermal is a route of administration wherein active pharmaceutical ingredients are
delivered across the skin for systemic distribution. Examples include Axiron®, Evamist®
and Lenzetto®.
Topical is a route of administration wherein active pharmaceutical ingredients are applied
to or affect a localised area of the body.
63
Acrux Annual Report 2022 Corporate Directory
COMPANY INFORMATION
Directors
Share Registry
R Dobinson – Non-executive Director and Chairman
Link Market Services
G Brooke – Non-executive Director
D Brumley – Non-executive Director
T Oldham – Non-executive Director
M Kotsanis – CEO and Managing Director
Level 13, Tower 4
727 Collins Street
Docklands
Victoria 3008
Australia Toll-free: 1300 554 474 (Australia only)
International: +61 1300 554 474
E: registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
Australian Securities Exchange Listing
Australian Securities Exchange Limited
(Home Exchange: Melbourne, Victoria)
ASX Code: ACR
For further information about Acrux and its operations,
refer to Company Announcements of the Australian Securities
Exchange and to the Company website: Acrux.com.au
Company Secretary
Joanna Johnson
Registered Office
103–113 Stanley Street
West Melbourne
Victoria 3003
Principal Business Address
103–113 Stanley Street
West Melbourne
Victoria 3003
Telephone: (03) 8379 0100
Website: www.acrux.com.au
Australian Business Number
72 082 001 152
Auditor
Pitcher Partners
Level 13,
664 Collins Street
Docklands,
Victoria 3008
64
www.acrux.com.au
Notes to the Consolidated Financial Statements (continued)