Annual Report 2023
A Pivotal Year
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 a number
of products worldwide,
Acrux is formulating and
Acrux encourages
developing a range of
collaboration and is well
topical generic products
positioned to discuss
through leverage of its
highly skilled workforce,
commercial partnering
and product development
with an emphasis on
on-site laboratories,
opportunities.
the United States.
GMP manufacturing suite,
technical, clinical and
commercial experience
to bring affordable
products to market.
Acrux Formulation Scientist, Kayla.
CONTENTS
2 Operating and Financial Review
4 Product Portfolio and Pipeline
6 Chairman & CEO Report
10 Environment, Social and Governance
17
Directors' Report, including
Remuneration Report
30 Auditor’s Independence Declaration
31 Consolidated Financial Statements
35
Notes to the Consolidated
Financial Statements
54 Directors’ Declaration
55
Independent Auditor’s Report
60 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 state-ments made in this
report. Download here:
www.acrux.com.au/annualreport
Acrux Cover: Formulation
Scientist, Kara.
1
Acrux Annual Report 2023 Operating and Financial Review
FY23 has been a pivotal year for Acrux which saw:
— Prilocaine 2.5% and Lidocaine 2.5%, Cream launched with
superior market share achieved
— Dapsone 5%, Gel approved by the FDA, to be launched in FY24
— Nitroglycerin 0.4%, Ointment submitted for FDA review
— Acyclovir 5%, Cream submitted for FDA review
— Executed royalty buyout of Lenzetto® to release working
capital to fund portfolio progression
With 5 year CAGR of revenue of almost 30% and with 3 products
currently under FDA evaluation including 1 planned for launch
in FY24, Acrux is achieving sustainable revenue growth which
is capable of funding future portfolio development.
FY23 PORTFOLIO PROGRESSION
PORTFOLIO PROGRESSION FY22–FY23
Launched
Prilocaine 2.5%
and Lidocaine 2.5%,
Cream
Approved
Dapsone 5%, Gel
Accepted by FDA for review
Nitroglycerin 0.4%,
Ointment
Accepted by FDA for review
Acyclovir 5%, Cream
3 dossiers currently
under FDA review
On market
Approved
Under FDA Review
Under development
8
FY22
3
3
7
2
FY23
4
2
3
2
CASE STUDY
Prilocaine 2.5% and Lidocaine
2.5%, Cream was launched in
the US in December 2022 by our
partner Padagis. This product 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
reported annual sales of this
product of US$37.9 million for
the 12 months to April 2023.
Early in 2023 a key competitor
filed for bankruptcy and withdrew
from the market. Since then
Padagis has achieved superior
market share and Prilocaine 2.5%
and Lidocaine 2.5%, Cream is
exceeding expectations.
Acrux Senior Formulation Scientist, Jean.
3
Acrux Annual Report 2023 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.
GENERIC DRUG, FDA DEFINITION
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 it 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 when substituted for the
brand name product.
PRODUCT DEVELOPMENT PHASE
The timeline presented on this page 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).
FY23 Progress
at end June
FY22 progress
at end June
Typical Duration
18 to 36 months
18 to 36 months
4 to 12 months
12 to 24 months
3 to 6 months
Activity
Outcome
FORMULATION
DEVELOPMENT
Inhouse laboratory, determine
characteristics of the
formulation and interaction
of ingredients
PROCESS
DEVELOPMENT
Scale up to commercial
manufacturing
Determine the
product formulation
Making the formulation
at commercial scale
BIOEQUIVALENCE
REGULATORY
SUBMISSION
APPROVAL/
LAUNCH
ON MARKET
Proof the product
is therapeutically
bioequivalent
Submit dossier and data
Review of dossier
to support approval
Launched by partner
after approval
Demonstrate
equivalence to
brand name product
Review and approval
by regulator (FDA)
Approved
Revenue Stream
4
Testosterone Topical Solution
Eva mist®
Lidocaine 2.5 %, Crea m
Prilocaine 2.5 % and
Lenzetto®
Efinaconazole 10%, Topical Solution
Dapsone 5%, Gel
Dapsone 7.5%, Gel
Acyclovir 5%, Cream
Nitroglycerin 0.4%, Ointment
Typical Duration
18 to 36 months
18 to 36 months
4 to 12 months
12 to 24 months
3 to 6 months
FORMULATION
DEVELOPMENT
PROCESS
DEVELOPMENT
Activity
Inhouse laboratory, determine
Scale up to commercial
manufacturing
characteristics of the
formulation and interaction
of ingredients
BIOEQUIVALENCE
Proof the product
is therapeutically
bioequivalent
REGULATORY
SUBMISSION
Submit dossier and data
to support approval
APPROVAL/
LAUNCH
Review of dossier
ON MARKET
Launched by partner
after approval
Outcome
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
ON MARKET
APPROVED
REGULATORY
SUBMISSION
BIOEQUIVALENCE
PROCESS
DEVELOPMENT
FORMULATION
DEVELOPMENT
5
Acrux Annual Report 2023 Chairman & CEO Report
Product launches, approvals
and ANDA submissions drive
strengthening of Acrux’s portfolio.
Since 2017,
Acrux has
been pursuing
a strategy of
developing a
product portfolio
capable of
generating
broadly based
and sustainable
revenue.
6
Our long term objective is to create a
diversified portfolio capable of generating a
consistent stream of regulatory submissions for
pharmaceutical product approvals and launches.
The Company’s strategy is beginning to bear
fruit, with the recent regulatory submission of
our seventh product to the FDA since 2017.
Three of those products are currently under
FDA review and our portfolio of products on
market is continuing to grow following approvals
granted by the FDA
Prilocaine 2.5% and Lidocaine 2.5%, Cream was
launched late in 2022. This product is indicated
for use as a local anaesthetic and it is directly
substitutable into an existing market for a widely
used product. Over 230,000 tubes of this product
are currently used on patients each month in the
United States, based on twelve months of IQVIA
data. Following our product’s commercial launch,
the major supplier for that market announced in
February 2023 that they were immediately ceasing
operations due to their unfortunate bankruptcy.
As a result, Acrux together with its commercial,
manufacturing and raw materials partners have
been focussed on procurement, manufacturing
and supply of this product to the United States
market. The increased product demand and
supply generated following these developments
are considerably above Acrux’s expectations when
the product was initially launched.
Early in 2023 Acrux monetised its royalty stream
for Lenzetto®, its Estradiol Spray product that is
sold in Europe and a number of countries outside
Europe. That transaction optimised this product’s
value to Acrux and provided Working Capital
to be invested into product development and
regulatory activities supporting the progression of
the commercialisation of several products for the
United States market.
In June 2023, the FDA’s approval of the Company’s
generic Dapsone 5%, Gel product for the
treatment of acne was announced and launch
preparations are well underway for this product.
In early July 2023, Acrux announced that its
seventh Abbreviated New Drug Application
(ANDA) was accepted for review by the FDA.
The product is a generic of Nitroglycerin 0.4%,
Ointment which is used for moderate to severe
pain as a result of chronic anal fissure.
The Company relaunched Testosterone
Topical Solution, 30mg/1.5mL as a generic
in August 2021, with modest expectations at
the time, as the market had been significantly
eroded by generic competition which began
in July 2017 when the first generic of Axiron®
(Testosterone Topical Solution) was launched
and which lead to withdrawal of the product by
Acrux’s licensee. The US market for testosterone
replacement therapies has been in decline
on a year on year basis since 2014 and with
significant levels of generic competition evident
for Testosterone Solution and other transdermal
versions of testosterone the commercial viability
of this market is diminished.
FINANCIAL PERFORMANCE
Acrux’s reported revenue totalled $11.928 million
which was up by $6.825 million or 134%, over
the prior financial year. Monetisation of the
Lenzetto® royalty stream added $6.337 million.
After excluding this transaction, the underlying
annual growth of Acrux’s total revenue was 10%.
The 5 year Compound Annual Growth Rate (CAGR)
of revenue from licensing arrangements for the
period FY18 to FY23 is 26% and for total revenue
the 5 year CAGR is 28%.
With the strong opportunity for Prilocaine 2.5%
and Lidocaine 2.5%, Cream and with launch plans
well under way for Dapsone 5%, Gel we expect
revenue from licensing arrangements to continue
to grow through FY24.
Strong revenue growth achieved in FY23 was the
key driver behind the material reduction of Acrux’s
reported Loss after tax. The Net loss for the year
for FY23 totalled $0.764 million, which represents
an improvement of $9.070 million over the prior
financial year.
Cash and cash equivalents on hand at year
end totalled $6.232 million, representing an
increase of $0.401 million over the prior year
end, without needing to draw on either external
debt or equity funding.
Revenue
Profit/(loss) before tax
Cash reserves
Increase/(Decrease)
in Cash reserves
Annual FY22
6 months to
December 2022
6 months to
June 2023
Annual FY23
Seven topical
generic products
5,103
(9,582)
5,831
(8,819)
3,249
(3,083)
4,350
(1,481)
8,679
2,871
6,232
1,882
11,928
have been
submitted to the
FDA for review
since 2017.
(212)
6,232
401
A comparison of the annual and half year
operating financials shows Acrux’s achievement
of strong progress and growth particularly in
the second half of FY23 with significantly higher
revenue resulting in a profitable second half
which in turn supported the generation of positive
cashflows for the 6 month period as well as
increased cash on hand for the year ended
30 June 2023.
THE PRODUCT DEVELOPMENT PIPELINE
Acrux has three products currently under FDA
review and an additional two products which have
been approved but which have not yet launched.
Our product pipeline is progressing through
varying stages of development, both at Acrux and
with our contract manufacturing partners. We
are working on both later-stage products that are
expected to reach commercialisation in the short
term and are progressing the development of
earlier-stage products to ensure breadth of our
product pipeline.
The Company continues to have 16 products in its
portfolio. This includes 6 approved products and
3 dossiers which are currently being reviewed by
the FDA and over time intends to maintain 10–12
products in development.
The product development pipeline is shown in an
infographic on pages 4 and 5, and FY23 progress
is expanded on in the Operating and Financial
Review on pages 2 to 3.
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.
Acrux Analytical Development Scientist, Ebenezer.
7
Acrux Annual Report 2023 Chairman and CEO Report (continued)
The Company has invested to secure and maintain
the necessary blend of skills, knowledge and
experience to deliver on our strategic priorities.
STRATEGY
Acrux’s strategy focuses on the development
and commercialisation of topically applied
pharmaceutical products
Within our strategy there are three key priorities:
1. Revenue realisation
2. Operational effectiveness
3. Optimal portfolio management
Revenue realisation is the transformation
driver for the Company to be self-funding and
consistently profitable. In FY23 we reported a
134% increase in total revenue, which is reflected
an increase on cash and cash equivalents of
$0.401 million.
The number of commercialised products will
continue to expand following the launch of
Prilocaine 2.5% and Lidocaine 2.5%, Cream,
with Dapsone 5%, Gel launch activities underway
following its approval in June 2023 and ANDAs
of a further 3 products currently being reviewed
by the FDA.
Operational effectiveness is supported
by project management, resource and cost
management to enabling Acrux to continue to
submit ANDA’s for FDA review and commercialise
our diversified portfolio of topically applied
pharmaceutical products.
Portfolio management to maximise commercial
returns based on strategic product selection
of commercially attractive products and for
which we have the technical capability to
develop. Ongoing market intelligence gathering
and assessment in a rapidly changing product
and market landscape is a key component of
successful portfolio management.
The Company has invested to secure and
maintain the necessary blend of skills,
knowledge and experience to deliver on
our strategic priorities.
Acrux Analytical Development Scientist, Amal.
8
$6.232m
Cash on hand
Increased by
$0.401m
Ross Dobinson
Chairman (l)
Michael Kotsanis
CEO & MD (r)
Through FY24 we plan:
— Continued revenue growth of Prilocaine 2.5%
and Lidocaine 2.5%, Cream
— To launch Dapsone 5%, Gel
— To obtain FDA approval to support the future
launches of products which are currently
progressing through the FDA review process;
specifically
• Dapsone 7.5%, Gel
•
Acyclovir 5%, Cream and
• Nitroglycerin 0.4%, Ointment
— To continue eligibility of product development
expenditure for the research and
development tax incentive rebate.
BOARD AND CORPORATE GOVERNANCE
During the year, the Board has reviewed
and where necessary updated all Corporate
Governance policies as part of the routine
review cycle. Current Corporate Governance
policies can be viewed on the Acrux website
under the Corporate Governance tab. The
Board has also reviewed the skills that each
Director brings to the Board through the Board
Skills Matrix in order to ensure Directors with
appropriate skills and experience are in place to
lead the Company and to identify potential gaps
in skill sets, areas for improvement and to plan
for future skill requirements.
The Directors consider that Acrux has
complied with all applicable laws and regulations
throughout the year ended 30 June 2023 and no
related issues have arisen between the end of the
financial year and the date of this report.
The detailed Environment, Social and Governance
(ESG) Report can be found on page 10.
FY23 OBJECTIVES
Our key objectives in FY23 were:
— Launch two additional topical generic
products.
•
Acrux launched one product in
December 2022. Approval for the
second product was achieved in
June 2023 and launch preparations
are now well underway.
— Receive approval from the FDA for two
products to facilitate product launches in
FY23 and FY24. Each product is already
licensed on the basis of a quarterly profit
share to Acrux.
•
Acrux received regulatory approval
for one product (Dapsone 5%, Gel)
in June 2023 and currently has three
further products under evaluation by
the FDA.
— Submit one further product for FDA approval
in the second half of FY23.
•
Acrux submitted its ANDA for
Nitroglycerin 0.4%, Ointment in
June 2023 and this dossier was
formally accepted for review by
the FDA in July 2023.
We would like to personally thank the Acrux
team and the Board for their valuable
contributions through FY23 with the progression
of ANDAs through the FDA review process to
commercialisation and focus on the Company’s
revenue growth objectives.
We believe the 2023 financial year was a pivotal
period for Acrux and we would like to thank
our shareholders for maintaining faith in our
progress. This is an exciting time for Acrux. We
thank you for your support.
9
Acrux Annual Report 2023 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.
TENETS
At the heart of Acrux’s Environment, Social and Governance
(ESG) framework is our commitment to long term economic and
environmental sustainability and to conducting business in a
responsible and ethical manner. We consider this commitment
to be important to the way we develop and commercialise our
range of topically applied generic medicines which are both
affordable and meet the highest possible product safety and
regulatory standards. Our purpose is closely aligned with our
culture, values, behaviours and strategy.
This report outlines Acrux’s ongoing commitment to ESG
objectives and to the enhancement of the economic, social
and environmental wellbeing in and of our community.
Acrux’s commitment to operating in a socially responsible
manner is considered through three key operational tenets:
1.
2.
Environmental Tenet – includes preservation of our
natural environment through minimising the use of energy
and the discharge of waste,
Social Tenet – includes consideration of Acrux’s
relationships in its community such as employee diversity,
equity, equality and inclusion priorities and care for
the safety and wellbeing of our employees and other
stakeholders, and
3.
Governance Tenet – practising good corporate
governance and conducting business in an ethical and
socially accountable manner.
Through our Code of Conduct, corporate values and policies
our ESG framework is embedded throughout our operations
and we prioritise activities and initiatives to achieve high
standards in each of these tenets.
We are responsible to the
communities in which we operate
as well as our stakeholders.
10
Environmental Tenet
Acrux is committed to conducting operations in an
environmentally responsible manner and we adopt practices to
guide our actions to lead to sustainable outcomes through the
minimisation of energy usage and reduction of emissions which
are associated with our building operations, laboratory and
office equipment.
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 is ensuring our employees
have the necessary skills and resources to perform their roles
to a high standard.
Acrux applies strategies to minimise general office waste such
as the use of consumables, avoiding single use vessels, reusing
office supplies where practical and maximising the use of digital
document management and shareholder communication
strategies to reduce our use of paper based products. Across
our laboratory, office and staff kitchen recycling bins collect
common recyclables to facilitate the recycling of waste which
could otherwise become landfill.
Acrux’s employees are trained in standard operating
procedures to manage the types of laboratory waste which
are generated in our laboratory and we have documented
procedures to ensure all hazardous, controlled and
non-hazardous waste is disposed of strictly in accordance
with relevant environmental regulations, standards and codes.
Acrux holds licences to store and use hazardous and controlled
substances and an agreement is in place with City West Water
under the Water Industry Act 1994 and Water Industry Regulations
2006, to ensure our trade water waste is managed effectively
and responsibly. 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
hazardous or controlled waste collection.
The Directors consider Acrux has complied with all applicable
environmental laws and regulations throughout the year ended
30 June 2023 and no issues have arisen since the end of the
financial year to the date of this report.
Together with practicing safer systems of work, occupational
health and safety is deeply ingrained into Acrux’s company
culture and we have proactive and well developed processes
of capturing safety data, including near misses. In the event that
a near miss incident is reported it is thoroughly investigated
and corrective measures are put in place where necessary.
We have not recorded a Lost Time Injury since 2016.
Our culture is supportive, equitable and inclusive. Diversity is
embraced and celebrated as we believe this not only promotes
safety, productivity and wellbeing but also enhances our ability
to attract and retain skilled employees. We seek to attract and
retain a workforce that represents our broader community
and to remove unconscious biases from all of our behaviours,
policies and processes.
Acrux’s Diversity and Inclusion Policy can be viewed
in the Investor Relations section of our website,
https://investors.acrux.com.au/investor-centre and this policy is
integral to our talent management and recruitment strategies.
Diversity is broadly defined to include gender, nationality,
ethnicity, disability, sexual orientation, gender identity,
age, socioeconomic status, family status, religious beliefs
and language.
Our Diversity and Inclusion objectives support our employees
to be valued and respected in the workplace and to experience
fair treatment and merit based access to opportunities. Our
Diversity and Inclusion priorities include fostering an inclusive
culture as well as building the skills and confidence of our
leaders to manage diverse teams to improve diversity amongst
our leadership and to ensure our workplace is safe for and
attractive to a diverse range of people.
11
Acrux Annual Report 2023 Environment, Social and Governance (continued)
Governance Tenet
Acrux is committed to good corporate governance, including
ethical conduct.
Acrux’s corporate governance policies are published on
the Company’s website, https://www.acrux.com.au and the
Company’s RIOS – Together Anything is Possible model articulates
our Company Values and the core behaviours expected of
all employees. These core Company Values are: Round the
clock, Innovation, Openness and Standout. Commitment to
these Company 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.
be viewed in the Investor Relations section of our website,
https://investors.acrux.com.au/investor-centre.
It is important that Acrux’s employees and other stakeholders
feel safe and empowered to report concerns about behaviour
which may appear to be inconsistent with our Code of Conduct
or other corporate policies. Our Whistleblower Policy ensures
such reports can be made in good faith and with the confidence
they will be investigated fairly and confidentially whilst the
person who made the report is protected. Our Whistleblower
Policy can be viewed in the Investor Relations section of our
website, https://investors.acrux.com.au/investor-centre.
No breaches of the Code of Conduct, Whistleblower or the
Antibribery, Corruption and Fraud Policies have been reported.
GOVERNANCE STRUCTURE
Ethics and Values
Acrux has a well established governance program. All Directors,
employees and other parties representing the Company are
required to follow the Company’s principles, moral, legal and
ethical standards as consistent ethical behaviour promotes
both inclusion and trust.
Our Code of Conduct documents and communicates the
framework for the way Acrux conducts business and relates
to its stakeholders, including shareholders, employees,
business partners, customers and suppliers as well as the
wider community and the environment in which the Company
operates. We expect third parties with which we work to comply
with the principles outlined in our Code of Conduct which can
Structure of the Board and Board Committees
Acrux’s corporate governance and risk and compliance
framework reflects and supports the Company’s values and
culture and stands alongside the legislative requirements of the
Corporations Act 2001 and the guidance in the ASX Corporate
Governance Council’s Corporate Governance Principles and
Recommendations (4th edition).
All governance practices as recommended by the ASX have
been implemented by Acrux, unless otherwise stated in the
Corporate Governance Statement. Our Corporate Governance
Statement is considered and approved by the Board annually
and it can be viewed in the Investor Relations section of our
website, https://investors.acrux.com.au/investor-centre.
12
The Board Charter is central 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. In summary, the
Board of Directors is responsible for overseeing management,
providing strategic direction, capital planning, risk management,
monitoring 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.
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, leadership and strategy, international
business, legal, finance and accounting, risk management,
corporate governance, organisation and talent development
as well as team fit and balance within the Board. Directors
are required to demonstrate commitment to the Company’s
RIOS – Together Anything is Possible values.
Details of the members of the Board, their experience and
personal qualifications are stated in this Annual Report.
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 financial reporting and audit. The Audit and Risk
Committee is responsible for the evaluation of Acrux’s
risk profile and the assessment of risks and mitigation
strategies which have been identified and implemented by
management. The Audit and Risk Committee Charter can
be viewed in the Investor Relations section of our website,
https://investors.acrux.com.au/investor-centre.
The Human Capital and Nominations Committee has been
established by the Board to ensure the Board is comprised
of individuals who can best discharge the responsibilities of
Directors and to ensure the Company recruits and retains
employees of high quality and motivation to drive long
term growth. Responsibilities of the Human Capital and
Nomination Committee include recruitment as well as the
establishment of the short and long term remuneration
framework and other people-related policies. The Human
Capital and Nominations Committee Charter can be
viewed in the Investor Relations section of our website,
https://investors.acrux.com.au/investor-centre.
Where appropriate, these Board Committees make
recommendations for consideration by the Board.
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
13
Responsibility: Overseeing management and setting the strategic direction Responsibility: Day to day management and implementation of strategyAcrux Annual Report 2023 Environment, Social and Governance (continued)
BOARD OF DIRECTORS AND SENIOR MANAGEMENT
The following persons were Directors of Acrux during
and since the end of the financial year:
Ross Dobinson
Chairman, Non-executive Director
Michael Kotsanis
Managing Director and Chief Executive Officer
Geoffrey Brooke
Non-executive Director
Don Brumley
Non-executive Director
Timothy Oldham
Non-executive Director
There were five directors throughout the year, comprising
four independent, Non-Executive directors and one
Executive director. All Directors 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 2022 is provided below, together with details
of the Company Secretary as at the year end.
14
Ross Dobinson
Appointed March 1998
Responsibilities
Chairman, Independent
Non-executive Director
Qualifications
BBus (Acc)
Michael Kotsanis
Appointed November 2014
Responsibilities
Managing Director and Chief
Executive Officer
Qualifications
BSc, Grad Dip Bus, MBus
Experience
Ross has been a Director since
1998, was first appointed as
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.
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 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 a former Non-executive
Director of IDT Australia Limited
(ASX: IDT).
Geoff Brooke
Appointed June 2016
Don Brumley
Appointed June 2021
Tim Oldham
Appointed October 2013
Responsibilities
Independent Non-executive
Director, member of the
Audit and Risk Committee
and Human Capital and
Nomination Committee
Responsibilities
Independent Non-executive
Director, Chair of the Audit and
Risk Committee and member
of the Human Capital and
Nomination Committee
Responsibilities
Independent Non-executive
Director, member of the Audit
and Risk Committee and Chair
of the Human Capital and
Nomination Committee
Qualifications
MBBS, MBA
Qualifications
FCA, AICD
Qualifications
BSc (Hons), LLB (Hons), PhD
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).
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 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.
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, a
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 and been a
Non-executive Director of
the Alliance for Regenerative
Medicine and Non-executive
Director of the Generic
Medicines Industry Association.
15
Acrux Annual Report 2023 Environment, Social and Governance (continued)
INFORMATION ON
SENIOR MANAGEMENT
Joanna Johnson
Appointed as Company
Secretary, June 2021
Responsibilities
Chief Financial Officer and
Company Secretary
Qualifications
CA, BEc, Grad Dip Management
Felicia Colagrande
Appointed February 2015
Mark Hyman
Appointed July 2020
Responsibilities
Product Development and
Technical Affairs Director
Responsibilities
Project and Technical
Development Director
Qualifications
BSc (Hons), MBA
Qualifications
BSc
Experience
Joanna is an experienced Chief
Financial Officer and Company
Secretary and is a member
of the Institute of Chartered
Accountants Australia and
New Zealand. She has more
than 25 years of 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, risk management,
corporate compliance and
investor relations.
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
bioequivalence, with a focus
on generic topical product
development and exploiting
the company’s drug delivery
technology.
Felicia has over 25 years
of experience in the
pharmaceutical/biotech
industry and she joined
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.
Experience
Mark has a diverse background
in the pharmaceutical and
medical device industry.
Following a pharmacokinetic
research role with Melbourne
University, Mark has more
than 30 years’ industry
experience and has held
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.
16
Directors' Report (including Remuneration Report)
and Financial Statements
Acrux Formulation Scientist, Steven.
17
Acrux Annual Report 2023 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 2023. Complying with the provisions of
the Corporations Act 2001, the Directors report as follows:
DIRECTORS
The following persons were Directors of Acrux during and since the end of the financial year:
Ross Dobinson
Geoffrey Brooke
Don Brumley
Timothy Oldham
Michael Kotsanis
Chairman, Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Managing Director and Chief Executive Officer
All Directors have held office from the commencement of the financial year to the date of this report. Biographical details of each
of the Directors and the Company Secretary are provided in the Governance Section of this Annual Report, including their period of
office, qualifications, independence, experience, particular responsibilities and other directorships.
ATTENDANCE OF MEETINGS
Ross Dobinson
Geoffrey Brooke
Don Brumley
Timothy Oldham
Michael Kotsanis
BOARD OF DIRECTORS
AUDIT AND RISK
COMMITTEE
HUMAN CAPITAL AND
NOMINATION COMMITTEE
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
6
6
6
6
6
6
5
6
5
6
–
2
2
2
–
2*
2
2
2
2*
–
2
2
2
–
2*
2
2
2
2*
Directors who are not Committee members 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.
18
Directors’ ReportFor the year ended 30 June 2023 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 continues to work towards its objective of developing a pipeline of topically applied generic pharmaceutical products for
commercialisation through licensees and with an emphasis on the US market. Progression of product development projects
within this pipeline towards submission, regulatory approval and commercial launch is fundamental to Acrux’s strategic success.
Key portfolio progression milestones achieved this year include:
— Prilocaine 2.5% and Lidocaine 2.5%, Cream was launched in the US in December 2022 by our partner Padagis. This product is
a generic version of EMLA® Cream which is 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 this product totalling US$37.9 million for the 12 months to April 2023.
Early in 2023 a key competitor announced the immediate withdrawal of its product after filing for bankruptcy creating greater
opportunity for our product. To capitalise on this opportunity Acrux and its partners have focused on materials sourcing
and manufacturing capacity in order to support product demand which is now anticipated to considerably exceed Acrux’s
expectations when the product was initially launched;
— In June 2023, Dapsone Gel 5%, was approved by the FDA. Dapsone Gel, 5% is the generic equivalent of Aczone® Gel, 5%
which is used to treat acne vulgaris. IQVIA reports sales for the product for the 12 months to April 2023 of US$17.6 million.
A commercial partner has been licensed for this product and process validation batches are being manufactured to support
launch in FY24;
— In July 2023, Acrux’s application for a generic version of AbbVie’s Rectiv 0.4%, Ointment, Nitroglycerin 0.4%, Ointment, was
accepted by the FDA for review. This product treats pain caused by chronic anal fissure and is Acrux’s seventh ANDA application
to be accepted for FDA review. IQVIA reports sales for the product for the 12 months to April 2023 of US$19.9 million;
— In August 2022, Acrux’s application for a generic treatment for cold sores located on the lips and face, Acyclovir 5%, Cream
was accepted by the FDA for review. This was the Acrux's sixth ANDA application to be accepted by the FDA and IQVIA reports
product sales for the 12 months to April 2023 of US$15.5 million; and
— In January 2022 the FDA conducted a Remote Regulatory Assessment (RRA) of Acrux’s laboratory and did not identify any
objectionable conditions nor did they make any adverse observations. The FDA conducts RRA’s to support their regulatory
decisions and they are performed in lieu of a physical inspection.
In support of these key milestones and the progression of the pipeline portfolio, two important funding events were achieved:
— Gedeon Richter Plc’s advance buy out of the Lenzetto®’s future royalty stream for their contracted territories, which was due
to conclude at the beginning of 2025, for EUR4.1 million; and
— Receipt of $3.731 million in relation to the Research and Development Tax Incentive for FY22, including Overseas Findings,
of $0.455 million.
Consequently, Acrux has achieved an increase of Cash Reserves for FY23 totalling $0.401 million without drawing on debt or raising
equity funding.
19
Acrux Annual Report 2023 Directors' Report (continued)
Progression of Acrux’s portfolio of products
Commercialised(1)
Approved
Under review by FDA
Under development
Total products in portfolio
FY20
FY21
FY22
FY23
2
2
5
8
15
2
4
2
11
17
3
5
3
8
16
4
6
3
7
16
(1) Commercialised products are also included in the Approved category.
Acrux currently has three products which have received FDA approval and are currently marketed in the US:
— Prilocaine 2.5%, and Lidocaine 2.5% Cream, which was launched in December 2022 and is a topical anaesthetic marketed
by Padagis,
— Estradiol Spray, which is used to treat symptoms associated with menopause and is marketed as Evamist® by Padagis, and
— Testosterone Topical Solution, 30mg/1.5ML, which is used to treat conditions in males caused by a lack of testosterone and
is marketed by Dash Pharmaceuticals.
Furthermore, internationally Estradiol Spray is approved for sale and is marketed as Lenzetto®.
Two further products have been approved by the FDA but are yet to be launched:
— Dapsone 5%, Gel was approved in June 2023 and is a treatment for acne vulgaris. This product is planned for launch in FY24
and launch plans are progressing with our commercial partner and manufacturer, and
— A generic of Jublia® (efinaconazole) 10%, Topical Solution, which is used to treat fungal infections of toenails. Acrux will
commercialise this product in the future in accordance with the terms of the Settlement Agreement of the Paragraph IV
patent litigation.
The FDA has accepted and is currently reviewing the following dossiers:
— Nitroglycerin 0.4%, Ointment, which is a treatment for pain caused by chronic anal fissure,
— Acyclovir 5%, Cream, which is a treatment for cold sores, and
— Dapsone 7.5%, Gel, which is a treatment for acne vulgaris.
The FDA’s guidelines for the approval of products which seek to demonstrate their bioequivalence through IVPT and IVRT
techniques are evolving and this is being reflected in product approval timelines in some cases. The Company believes it has
provided the necessary evidence to support approval and the three products currently under review are expected to be approved
once the FDA’s assessments are complete.
Beyond these approved and commercialised products, Acrux continues to advance its pipeline of products through projects which
are in varying stages of development, both in our in house laboratory and with our contracted development and manufacturing
partners. The Company’s key focus is on later stage projects that can be submitted for review in the nearer term, while continuing
to identify new opportunities and to progress development on earlier stage products to ensure the breadth of the product pipeline
is maintained over time.
Overall, Acrux now has 16 products in its portfolio various stages of development and commercialisation.
20
Financial Performance
Acrux reports a materially improved consolidated loss before tax totalling $0.212 million which is $9.370 million lower than the
consolidated operating loss before tax for the prior corresponding period (2022: $9,582 million). This turn around is due to both an
increase in reported revenue and a reduction of operating expenses.
Acrux’s cash reserves have increased by $0.401 million to $6.232 million, with this increase achieved without drawing on any
external debt or equity funding. Significant funding events achieved through the year include Gedeon Richter Plc.’s advance buy out
of the future Lenzetto® royalty stream, which was due to conclude early in 2025 in the contracted territories, for EUR4.10 million.
This advance royalty buy out and the receipt of $3.731 million in relation to the Research and Development Tax Incentive (RDTI) for
FY22 have supported Acrux’s capacity to provide the necessary working capital to fund the progression of the product pipeline whilst
also adding to Acrux’s total available cash reserves through the current reporting period.
Further information about the consolidated loss before tax is reported in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income and Notes 4, 5 and 6.
Revenue
At $11.928 million, Revenue and other income for the year was $6.825 million higher than the prior corresponding period
(2022: $5.103 million).
The most important individual revenue transaction for FY23 was the buy out of the future Lenzetto® royalties which were due
to conclude at the beginning of 2025 for a contracted sum of EUR4.1 million in January 2023. The future royalties received as
a settlement sum received totalled $6.337 million plus $0.949 million for Lenzetto® royalties received for the period up to the
buyout date.
Prilocaine 2.5%, and Lidocaine 2.5%, Cream was launched at the end of December 2022. Due to a key competitor exiting this
market in February 2023, Padagis has successfully scaled up manufacture and won key new accounts resulting in strong market
share gains and Acrux’s profit share revenue to the end of June totalling $0.573 million. Furthermore, Acrux is currently responsible
for the procurement of ingredients required for the manufacture of Prilocaine 2.5% and Lidocaine 2.5%, Cream and the
consequent sale of these ingredients to our commercial partner totalled $0.532 million (2022: $0.263 million).
Dapsone 5%, Gel received FDA approval in June 2023 and plans are underway to launch this product in FY24.
Other Revenue predominantly reflects the RDTI, including overseas finding, which is receivable from the Australian Taxation Office
and is estimated at $2.722 million for the year ended 30 June 2023. During September and October 2022, $3.731 million was
received in relation to the FY22 RDTI claim, which was $0.654 million higher than had been estimated in the financial statements of
the prior reporting period.
Further information about Revenue is reported in the Consolidated Statement of Profit or Loss and Other Comprehensive Income
and Note 4.
Expenses
Expenses for the year totalled $12.140 million and were 17% lower than $14.685 million reported in relation to the prior
corresponding period. This reduction was achieved despite recognition of the one time impairment of Estradiol® ($0.321 million)
following the Lenzetto® royalty buyout and purchases relating to the sale of ingredients required for the manufacture
of Prilocaine 2.5% and Lidocaine 2.5%, Cream, ($0.558 million). Externally incurred product Research and Development
expenses totalled $3.812 million and were $2.599 million lower than the prior corresponding period. This is due to the timing
of external development expenses associated with the progression of pipeline projects, such as bioequivalence studies and
manufacturing scaleup.
Employee benefits expense totaled $4.960 million (2021: $5.245 million).
Further information about Expenses is reported in the Consolidated Statement of Profit or Loss and Other Comprehensive Income
and Note 5.
21
Acrux Annual Report 2023 Directors' Report (continued)
Significant changes in the state of affairs
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 July 2023, Acrux’s application for a generic version of AbbVie’s Reactiv 0.4%, Ointment, Nitroglycerin 0.4%, Ointment was
accepted by the FDA for review. This product treats pain caused by chronic anal fissures and is Acrux’s seventh ANDA application to
be accepted for the FDA review.
No other matter or circumstance has arisen since 30 June 2023 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 of receipt of regulatory
approval from FDA for products in the development pipeline and the timing and commercial success of product launches, as well
the progression of the pipeline including evaluation and selection of attractive new 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 Remuneration Report which forms part of the Report of Directors and has
been prepared in accordance with s300A of the Corporations Act 2001.
The Remuneration Report sets out remuneration information for the Group’s Key Management Personnel (‘KMP’), including any
Director, who have authority and responsibility for planning, directing and controlling the Group’s activities, either directly or
indirectly and explains the remuneration policies and philosophy adopted by the Board. It has been audited as required by s308
(3C) of the Corporations Act 2001.
Remuneration Policy
The Human Capital and Nomination Committee is responsible for recommending the Group’s remuneration framework to the
Board, including participation in the Group’s employee security and incentive plans. The Charter of the Human Capital and
Nomination Committee can be viewed on the Company website; www.acrux.com.au.
The key objectives of the Group’s remuneration policy are to:
— remunerate at levels to attract, retain and motivate employees and to reward good performance;
— structure incentives to reward superior performance and increasing long term shareholder value; and
— formally link remuneration to the achievement of business objectives.
There were no significant changes to remuneration policies implemented during the year.
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, which is
benchmarked against remuneration for comparable jobs in the industry sector; and
— variable remuneration which is paid at the discretion of the Board and may comprise a short term incentive paid as a cash
bonus and a long term incentive granted in the form of an equity instrument issued under the company’s Omnibus Equity Plan.
22
Short Term Incentive
The short term incentive plan rewards achievement of Company objectives which are established by the Board in consultation
with senior management at the beginning of each year and, for some employees, personal objectives which are also established
in consultation with line management at the beginning of the year. Company objectives are selected because they create long
term value for shareholders and include clearly defined outcomes, such as a product launch, dossier submission or approval or
achievement of a key development milestone. Achievement of company and personal objectives are assessed after the end of the
financial year.
Subject to assessed achievement of objectives, senior management, other than the Chief Executive Officer, may receive a cash
incentive of up to 24% of their fixed remuneration. The Chief Executive Officer may receive a cash incentive up to 25% of his fixed
remuneration, and this percentage can be varied at the Board’s discretion.
Long Term Incentive
The long-term incentive plan has been designed to align the interests of senior management with shareholders for the
achievement of sustainable, long term superior performance and is compliant with the requirements of ASX Listing Rules and the
Pooled Development Funds Act 1992.
The Omnibus Equity Plan (‘OEP’) governs the issue of Company securities to employees and Directors and was approved by
shareholders at the 2020 Annual General Meeting (‘AGM’).
Grants of securities to employees under the OEP are summarised as follows:
A. Chief Executive Officer ('CEO')
— At the 2021 AGM the issue of 6 million performance rights was approved. Equal tranches vest annually over 4 successive
years, provided the total shareholder return (‘TSR’) over that period equals is at least 10% and employment is continuous;
— Unvested tranches may be ‘rolled over’ to following years but are subject to an additional 10% TSR hurdle for each additional
year. Each tranche may be rolled over up to 3 times; and
— Subject to achievement of vesting conditions, each performance right carries the right to one ordinary share in Acrux Ltd,
expires 7 years after granting and is expensed over the life of the instrument.
B. Senior management, including KMP
— Directors may grant performance rights to senior management, including KMP;
— Grants of performance rights are typically made on an annual basis, subject to the Board’s discretion;
— Each grant of performance rights vests after one year, provided the TSR over that period equals is at least 10% and
employment is continuous;
— Unvested tranches may be “rolled over” to following years but are subject to an additional 10% TSR hurdle for each additional
year. Each tranche may be rolled over up to 3 times; and
— Subject to achievement of vesting conditions, each performance right carries the right to one ordinary share in Acrux Ltd Ltd,
expires 7 years after granting and is expensed over the life of the instrument.
C. Employees, excluding KMP
— The Board at its discretion may approve the issue of up to $1000 value of tax exempt ordinary shares to employees who are
not KMP each year at nil cost to the employee;
— There are no vesting conditions; and
— Shares are held in escrow for the lesser of 3 years or cessation of employment.
Further information about Share based payments is reported in Note 18 to the accounts.
23
Acrux Annual Report 2023 Directors' Report (continued)
The following table summarises the Group’s earnings and other key performance indicators to 30 June 2023:
Revenue ($000’s)
Loss before tax ($’000)
2023
11,928
2022
5,103
2021
5,156
2020
3,945
2019
5,286
2018
3,432
(212)
(9,582)
(12,432)
(9,385)
(8,335)
(16,125)
Dividends paid to shareholders
Share Price at end of the year (cents)
–
4.2
–
5.2
Basic earnings/(loss) per share (cents)
(0.27)
(3.46)
–
13.0
(5.75)
–
14.5
(5.65)
–
18.0
(5.00)
–
14.5
(8.52)
Number of Ordinary Shares on Issue
288,175,456 285,364,669 283,305,394 168,583,515 166,577,711 166,521,711
Market Capitalisation ($ million)
12.10
14.84
36.83
24.44
29.98
24.15
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.
Remuneration of Non-executive Directors is currently $77,000 per annum plus superannuation, which is paid in equal proportions
of cash and rights. The Non-executive Chairman, receives Director’s fees inclusive of superannuation of $132,400 per annum,
which is also paid in equal proportions of cash and rights.
The maximum aggregate value of Non-executive Directors’ annual remuneration 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 Directors do not receive additional remuneration for membership of Board Committees.
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.
24
Remuneration of each person who held the position of Non-executive Director at any time during the financial year is outlined below:
2023
Ross Dobinson (Chair)
Geoff Brooke
Don Brumley
Timothy Oldham
2022
Ross Dobinson (Chair)
Geoff Brooke
Don Brumley
Timothy Oldham
Post
Employment
Super-
annuation
$
Share based
Payments
(Rights)(1)
$
Director Fee
Payments
$
45,098
35,000
35,000
35,000
13,902
10,199
8,827
8,672
41,322
24,032
32,993
24,032
Total
Remun-
eration
$
100,322
69,231
76,820
67,704
150,098
41,600
122,379
314,077
57,212
35,000
35,000
35,000
1,788
7,000
7,000
7,000
65,631
35,997
24,334
35,997
124,631
77,997
66,334
77,997
162,212
22,788
161,959
346,959
(1) The accounting treatment of share based payments can differ to the way the remuneration arrangements are described above. This difference is mainly
associated with the rights which were issued in 2019 for which the accounting expense was heavily weighted and recorded at the beginning of the period
of the instruments meaning that the expense recorded over the final vesting periods to November 2022 was comparatively low. For the purposes of
calculating the remuneration value of the rights issued to Mr Brumley in 2022 a valuation of 18cents per share was used but for the purpose of recording
the accounting expense the prevailing VWAP at the time the rights were issued was applied as this was the true value of the benefit received.
Remuneration and termination entitlements of Key Management Personnel
Senior management do not have fixed terms of employment. Employment contracts may be terminated by either party
based on notice periods which range between one and six months. There is no entitlement to termination benefits beyond
statutory entitlements.
Names and positions of 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 (retired 30 March 2023)
All KMP held office from the start of the financial year to the date of this report, other than Charles O’Sullivan.
25
Acrux Annual Report 2023 Directors' Report (continued)
Remuneration of the Group’s KMP is detailed in the following table:
POST
EMPLOY-
MENT
LONG
TERM
BENEFIT
SHARE
BASED
PAYMENTS
PRIMARY
Movement
Annual
Leave
Provision(2)
Short
Term
Incentive(3)
Super-
annuation
$
$
$
Long
Service
Leave
Accrued
$
Perfor-
mance
Rights(4)
$
Total
Remun-
eration
$
Equity as
% Total
%
Bonus as
% Total
%
Salary
$
2023
Michael Kotsanis
462,729
(12,371)
30,501
Felicia Colagrande
233,444
Mark Hyman
Joanna Johnson
225,552
235,294
1,594
6,497
3,633
Charles O'Sullivan(1)
172,234
(2,008)
9,019
8,715
9,091
–
25,292
24,512
23,683
24,706
14,204
11,707
192,380
710,238
27%
6,977
8,960
1,202
4,348
20,808
296,354
13,243
286,650
11,240
285,166
(40,271)
148,507
7%
5%
4%
1,329,253
(2,655)
57,326
112,397
33,194
197,400 1,726,915
11%
4%
3%
3%
3%
0%
3%
2022
Michael Kotsanis
445,683
(28,459)
64,522
Felicia Colagrande
225,485
(533)
19,843
Mark Hyman
Joanna Johnson
217,863
227,229
Charles O'Sullivan(1)
174,222
6,247
9,003
966
19,172
20,000
15,332
23,568
22,549
21,786
23,689
17,422
5,874
5,623
26,974
299,941
10,457
19,781
295,306
687
4,363
284,971
4,474
26,102
238,518
1,290,482
(12,776)
138,869
109,014
27,115
235,838 1,788,542
9%
7%
2%
11%
13%
7%
6%
7%
6%
8%
158,618
669,806
24%
10%
(1) Charles O’Sullivan’s standard work hours were 4 days per week until his retirement on 30 March 2023. His reported salary includes payment of $36,956
for unused Annual and Long Service Leave which had been accumulated over the term of his employment and was paid to him following his retirement.
In accordance with Australian Accounting Standards, the accounting value which has been attributed to performance rights which were not vested at the
time of his retirement has been reversed to Profit or Loss.
(2) 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.
(3) A short term incentive may be paid to a KMP based on achievement of Corporate objectives which were established at the beginning of the year.
For the financial year ended 30 June 2022, Corporate objectives achievement was assessed by the Board at 55% and these reported short term incentive
balances were paid in August 2022. For the financial year ended 30 June 2023, Corporate objectives achievement was assessed by the Board at 25%
and these short term incentive balances were paid in August 2023.
(4) Performance rights have been issued to senior employees, including KMP, annually since 2019 with the accounting expense for this share based payment
recognised over the life of the instrument. Accordingly, an employee with a longer tenure who has participated in more allocations will report a relatively
higher share based payments expense for the reporting period even if similar quantities of performance rights have been allocated in recent years.
26
Equity instruments held by Key Management Personnel
Ordinary Shares
Ordinary shares held by Directors and KMP at financial year end is detailed 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(2)
Balance
1 July 2022
On Market
Transactions
Rights
exercised
Balance
30 June 2023
3,716,060
474,221
–
–
639,114
4,355,174
939,706
1,413,927
1,004,160
1,455,000
394,838
2,853,998
869,649
1,511,083
406,500
27,882
–
405,000
–
–
–
–
–
–
235,409
1,105,058
–
–
38,595
–
–
1,511,083
406,500
66,477
–
n/a
8,414,555
1,455,000
2,247,662
11,712,217
Includes relevant interests under the control of the KMP, these ordinary shares are held both directly and through controlled entities.
(1)
(2) Charles O’Sullivan’s equity instruments are reported to the date of his retirement in March 2023 when he ceased to be a KMP.
Rights
(a) Compensation Performance Rights: Granted and vested during the year
1,276,000 performance rights were issued to eligible employees on 13 February 2023, including but not limited to KMP.
These performance rights vest after one year, provided the TSR over that period is equal to or is greater than 10% and
employment is continuous. They expire after 7 years and are expensed over the life of the instrument.
(b) Rights issued to Directors as a component of remuneration
2,608,684 rights representing approximately half of Non-executive Director remuneration for the next 12 months were issued
to Non-executive Directors on 25 November 2022 after approval by shareholders at the 2022 Annual General Meeting.
These rights have no performance conditions other than continuous service and they vest quarterly.
The number of rights held by Directors and KMP is set out in the following table:
Directors
Ross Dobinson
Geoff Brooke
Don Brumley
Tim Oldham
Senior Management
Michael Kotsanis
Felicia Colagrande
Mark Hyman
Joanna Johnson
Charles O’Sullivan(2)
Balance at
1 July 2022
Granted
as remun-
eration
Rights
exercised
Cancelled
Balance at
30 June 2023
163,894
663,332
118,464
97,222
6,000,000
350,000
388,595
210,000
308,000
950,440
552,748
552,748
552,748
–
235,000
235,000
235,000
180,000
639,114
939,706
394,838
235,409
–
–
38,595
–
–
–
–
–
–
–
–
–
–
488,000
475,220
276,374
276,374
414,561
6,000,000
585,000
585,000
445,000
–
Value
of Rights
Granted(1)
$
66,200
38,500
38,500
38,500
–
11,280
11,280
11,280
8,640
8,299,507
3,493,684
2,247,662
488,000
9,057,529
224,180
(1) Value of rights granted in current reporting period is recognised over the life of the instrument.
(2) Charles O’Sullivan’s equity instruments are reported to the date of his retirement in March 2023 when he ceased to be a KMP. In accordance with the
provisions of the OEP, performance rights which were not exercised at the time of his retirement have been cancelled.
27
Acrux Annual Report 2023 Directors' Report (continued)
Rights which have been issued but are neither exercised nor cancelled as at 30 June 2023, are as follows:
Date rights granted
25 January 2018
4 February 2019
4 February 2021
30 November 2021
10 February 2022
25 November 2022
13 February 2023
Value
at grant
date
$0.17
$0.18
$0.17
$0.114
$0.103
$0.069
$0.072
Number
rights
15,000
15,000
429,893
6,000,000
958,949
1,442,529
1,096,000
9,957,371
Minimum
Exercise
price(5)
Rights expiry date
$0.1579(2)
$0.2081(2)
$0.2706(2)
January 2025
February 2026
February 2028
$0.1258–$0.1675(1)
December 2028
$0.1133(3)
February 2029
–(4)
November 2023
$0.0792(3)
February 2030
(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 Non-executive Directors comprise approximately half of their remuneration. Rights vest quarterly in arrears and are not subject
to an exercise price or performance hurdle.
(5) Minimum exercise price is the hurdle which must be achieved for the Performance Rights to vest. If the original hurdle target is not achieved,
additional uplift hurdles are applied each subsequent year for up to seven years for the right to vest.
Voting and comments made at the Company’s 2022 Annual General Meeting (AGM)
At the 2022 AGM the Remuneration Report for the year ended 30 June 2022 received 74.22% of votes cast in favour of acceptance
which is less that the 75% threshold required to avoid a ‘First Strike’. In the case that fewer than 75% votes are cast in favour of
accepting the Remuneration Report for the year ended 30 June 2023 as is included in this Annual Report at the 2023 AGM a ‘Second
Strike’ would be recorded and shareholders would then be asked to vote to determine whether the Non-executive Directors would be
required to stand for re-election.
After receiving this ‘First Strike’ at the 2022 AGM the Company has discussed the company's strategy and key elements of the
Remuneration Report with numerous shareholders including the way remuneration of Directors, KMP and other company
employees is linked to company performance.
As detailed earlier in this Remuneration Report, remuneration is linked to company performance through three key elements:
1.
Approximately 50% of the value of Non-executive Director remuneration is granted in the form of Rights. This practice
commenced in 2018 in response to shareholder feedback which requested improved alignment of the perspective of
Non-executive Directors with shareholders through increased share ownership and additionally as a strategy to preserve the
company’s cash reserves.
2.
3.
Rights are issued to Non-executive Directors after they have been approved by shareholders at the relevant AGM. The value
of the Right is detailed in the Notice of Meeting and is established at the prevailing VWAP at the time of shareholder approval.
As the Rights issued to Non-executive Directors vest on a quarterly basis in accordance with completion of service, the value
of the security in the Director’s hands is highly sensitive to subsequent increases or decreases in the Company’s share price.
Subject to Board approval and the conditions of the OEP, KMP and other senior managers may receive an allocation of
Performance Rights. These Performance Rights do not vest unless the Company’s share price increases and the TSR threshold
is achieved. Performance Rights which were issued to KMP and other senior managers in 2020, 2021 and 2022 are currently
unvested because the TSR threshold has not been achieved.
KMP and other employees may be eligible to receive an annual cash bonus depending on Directors’ assessment of
achievement of Corporate objectives which are established at the beginning of the year and selected based on expected
contribution to shareholder value. Corporate objectives are always tied to material pipeline progression and achievement of
key development milestones which could include product approval by the FDA, commercial launch of a product, acceptance
of a dossier by the FDA for review, successful completion of a bioequivalence study or manufacture of a pilot batch. In FY22
this percentage was assessed by the Board at 55% and for FY23 25% has been assessed as achieved.
The total value of Remuneration of Directors, KMP and other company employees, which includes cash payments, rights and bonus
potential, is benchmarked against comparable industry roles to ensure it is competitive and is sufficient to attract and retain well
qualified and high calibre individuals.
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
2023
$
2022
$
23,320
32,855
–
–
23,320
32,855
Non-audit services relate to the provision of corporate tax advice and completion of company tax returns and as such Directors
are satisfied that non-audit services provided during the year 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 Corporations 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
24 August 2023
Don Brumley
Non-executive Director
Melbourne
24 August 2023
29
Acrux Annual Report 2023
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 2023, to the best of my knowledge
and belief there have been:
(i) No contraventions of the auditor independence requirements of the Corporations Act 2001;
and
(ii) 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
24 August 2023
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 2023
Revenue from licensing agreements
Other revenue
Total revenue
Cost of goods sold
Employee benefits expense
Directors’ fees
Securities based payment expense
Depreciation and amortisation expenses
Impairment expense
Occupancy expenses
External research and development expenses
Professional fees
Other expenses
Total operating expenses
Profit/(loss) before income tax
Income tax expense
Net profit/(loss) for the year
Total comprehensive profit/(loss) for the year
Total comprehensive profit/(loss) attributable to:
Members of the parent entity
Loss per share for loss attributable to the equity holders of the parent entity:
Basic profit/(loss) per share
Diluted profit/(loss) per share
Note
4
4
5
18(a)
5
13
CONSOLIDATED
2023
$’000
8,429
3,499
11,928
2022
$’000
1,719
3,384
5,103
(558)
–
(4,960)
(5,245)
(192)
(370)
(595)
(321)
(244)
(3,812)
(340)
(748)
(185)
(450)
(660)
–
(201)
(6,371)
(454)
(1,119)
6
(11,582)
(14,685)
(212)
(552)
(764)
(764)
(9,582)
(252)
(9,834)
(9,834)
19
(764)
(9,834)
8
8
(0.27) cents
(3.46) cents
(0.27) cents
(3.46) cents
The statement should be read in conjunction with the notes to these financial statements.
31
Acrux Annual Report 2023 Consolidated Statement of Financial Position
As at 30 June 2023
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
2023
$’000
30 June
2022
$’000
Note
9
10
11
12
13
6
14
15
16
14
16
14
17
19
19
6,232
3,306
353
9,891
559
–
803
2,032
3,394
5,831
3,765
420
10,016
682
375
1,355
1,874
4,286
13,285
14,302
1,372
2,219
826
192
875
224
2,390
3,318
38
2,161
2,199
4,589
8,696
40
1,854
1,894
5,212
9,090
114,884
114,563
8,299
8,250
(114,487)
(113,723)
8,696
9,090
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 2023
Balance as at 1 July 2022
Profit/(loss) for the year
Other comprehensive income/(loss) for the year
Total comprehensive income/(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 2023
Balance as at 1 July 2021
Profit/(loss) for the year
Other comprehensive income/(loss) for the year
Total comprehensive income/(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
Contributed
equity
$’000
Note
Reserves
$’000
Retained
earnings/
(losses)
$’000
Total equity
$’000
114,563
8,250
(113,723)
–
–
–
25
296
–
–
–
–
49
–
–
(764)
–
(764)
–
–
–
9,090
(764)
–
(764)
74
296
–
114,884
8,299
(114,487)
8,696
114,213
8,147
(103,889)
18,471
–
–
28
322
–
–
–
103
–
–
(9,834)
(9,834)
–
–
(9,834)
(9,834)
–
–
–
131
322
–
114,563
8,250
(113,723)
9,090
19
17(b)
17(b)
19
17(b)
17(b)
The statement should be read in conjunction with the notes to these financial statements.
33
Acrux Annual Report 2023 CONSOLIDATED
30 June
2023
$’000
30 June
2022
$’000
Note
8,534
1,357
(11,445)
(13,144)
84
(201)
3,731
703
(119)
(119)
–
(183)
(183)
401
5,831
6,232
26
(172)
3,114
(8,819)
(465)
(465)
–
(155)
(155)
(9,439)
15,270
5,831
Consolidated Statement of Cashflows
For the year ended 30 June 2023
Cashflows from operating activities
Receipts from product agreements
Payments to suppliers and employees
Interest received
Finance costs
Research and development tax incentive rebate
Net cash generated/(used) in operating activities
20(a)
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 used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at the end of the year
20(b)
.
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 2023
This financial report covers Acrux Limited and its controlled
entities as a Group. Acrux Limited is a for profit entity which is
incorporated and domiciled in Australia. It is a company limited
by shares which are publicly traded on the Australian Securities
Exchange. The address of Acrux Limited’s registered office
and its 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 SIGNIFICANT
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 their fair value, and which have been
described in the accounting policies. Fair value is the price that
would be expected to 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
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 is available to
maximise the use of relevant observable inputs and minimise
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 which are
significant to the financial report are explained and 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 the 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
$0.764 million during the year ended 30 June 2023 (30 June 2022:
loss after tax from ordinary operations $9.834 million) and
produced a positive cash flow from operating activities for the year
ended 30 June 2023 of $0.703 million (30 June 2022: negative cash
flow from operating activities totalled $8.819 million). The ability
of the Group to continue as a going concern is dependent on its
ability to generate future revenues which will support 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 a period of
twelve months beyond the date of approval of these financial
statements, and which incorporate the following factors:
— Continued revenue growth of products currently on
market, particularly Prilocaine 2.5% and Lidocaine 2.5%,
Cream which was launched in December 2022;
— Obtaining FDA approval and launching pipeline products,
including Dapsone Gel, 5% which was approved in
June 2023 and,
— The continued eligibility of product development
expenditure for the research and development tax
incentive rebate.
Directors closely monitor revenue and expenditure against
budget and have identified several options which could be
implemented should revenues be materially lower than
forecasted. Cash management strategies could include:
— Deferral of project development activities and expenditure;
— Management of operating and capital expenses; or
— Monetisation of assets, such as actioning advance receipt
of research and development tax incentive rebate or other
revenue streams.
On this basis the financial report has been prepared on a going
concern basis and no adjustments have been made 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.
Should the Group’s revenues be materially lower than modelled
and the initiatives detailed above could not be implemented,
there could be 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 potentially different from those shown in the
financial statements.
35
Acrux Annual Report 2023 Notes to the Consolidated Financial Statements (continued)
1.
STATEMENT OF SIGNIFICANT
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
between Group companies are eliminated on consolidation.
A list of controlled entities is contained in Note 26 Controlled
Entities.
(d) Impairment of non-financial assets
In accordance with AASB 136 Impairment of assets, assets which
are subject to depreciation are reviewed for impairment at
least annually or when events or circumstances arise that could
indicate the carrying amount may be impaired. An impairment
loss is recognised where the carrying amount of the asset
exceeds its estimated recoverable amount at the higher of its
fair value less costs to dispose and its value in use.
Following the buy out of Lenzetto® royalties by Gedeon Richter
Plc., it was considered that the future revenue from Estradiol
spray is reasonably expected to be insufficient to support the
remaining carrying value of the Intangible Asset. Accordingly,
an Impairment loss for this item has been recorded in the
current financial period and disclosed as a separate line item
on the Consolidated Statement of Profit or Loss and Other
Comprehensive Income and in Note 13 Intangible Assets.
(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 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.
36
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 the 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
restatement 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,
unless 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.
(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 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
as at 30 June 2023
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.
(c) Employee benefits
Long term employment benefits are valued at the present value
of estimated future cash outflows which are calculated based
on assessment of trends relating to retention of staff, future
remuneration and the timing of the settlement of the benefits.
(j) Accounting Standards issued but not yet effective
Certain new standards and interpretations have been issued
but as they are not yet mandatory they 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 certain
estimates and judgements that may affect the reported values
of assets, liabilities, revenues and expenses. Management
continually and critically evaluates such estimates and judgements
based on historical experience and other factors it believes to be
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 having the
most significant effect on amounts recognised in the Group’s
financial statements.
(a) Income tax
Income tax benefits are recognised based on the assumption
of no adverse change in income tax legislation and also that the
Group will derive sufficient future assessable income to enable
the benefit to be realised. Deferred tax assets are recognised
for deductible temporary differences where management
considers 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 ensure
assets are not carried at a value that materially exceeds their
recoverable value. Future cash flows are discounted for risks
specific to the assets and for the time value of money. The
following approach and assumptions have been applied:
— Product revenue is estimated using current market
data and projected future sales volumes, product
pricing, market share, the potential market impact of
new competitors and anticipated launch dates for new
products;
— Expenses are estimated based on projected product
development activities and a CPI uplift factor has been
applied to operating overheads and salaries; and
— Cash flow forecasts are prepared over 10 years and are
discounted using an after tax rate of 12%.
(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 period(s) the benefit is earned
over the life of the instrument. The total value of the instrument
is calculated at the time of issue and performance rights are
valued using the Black and Scholes pricing models which
considers 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 prior 12 months. The
risk free interest rate is the Reserve Bank of Australia’s cash
rate prevailing at the instrument’s grant date.
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 of a financial
instrument will fluctuate due to changes in foreign exchange
rates. The Group is exposed to currency risks due to revenues
and certain expenses being denominated in foreign currencies,
predominantly US dollars. Currency risk management strategies
are regularly reviewed and the Company expects future foreign
currency denominated cashflows from revenues will be largely
offset by expenditure, protecting Acrux from the impact of
short term currency fluctuations.
37
Acrux Annual Report 2023 3. FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank accounts denominated in US dollars and Euro are maintained to facilitate foreign currency receipts and payments and
to assist in the management of foreign exchange risk. As at 30 June 2023, US dollar denominated cash reserves totalled
A$0.005 million (2022: A$0.008 million) and Euro denominated cash reserves totalled A$0.006 million (2022: A$0.369 million).
The balance of foreign currency denominated receivables as at 30 June 2023 totals US$0.357 million (2022: US$0.181 million)
and EUR nil (2022: EUR 0.392 million). The balance of payables totals US$0.169 million (2022: US$0.161 million) and EUR 0.011
(2022 EUR nil).
A change in the exchange rates would therefore have immaterial impact on the consolidated net profit/(loss) and equity of the
Group (2022: immaterial).
The Group does not enter forward exchange contracts.
(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. Potential credit losses are
regularly evaluated and a provision would be raised if there was evidence that a debt was unlikely to be 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 $6.232 million (2022: $5.831 million), which as outlined in Note 1(b) 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 operating projections.
Funds are held in high interest bearing accounts and term deposits which are managed to ensure liquidity is available to settle
liabilities as and when they fall due. The Group does not maintain an overdraft or loan facility.
Future cash outflows for the settlement of financial liabilities
Lease Liabilities
Not later than 1 year
Later than 1 year and not later than 5 years
Aggregate of lease payments contracted for at reporting date
Payables
Not later than 1 year
2023
$’000
374
1,557
1,931
2022
$’000
335
1,295
1,630
1,372
2,219
38
Notes to the Consolidated Financial Statements (continued)
4. REVENUE
Revenue from contracts with customers
Revenue from licensing agreements
Other revenue
Interest
Grant revenue – research and development tax incentive rebate
Total other revenue
Total revenue from continuing operations
2023
$’000
2022
$’000
8,429
1,719
122
3,377
3,499
11,928
18
3,366
3,384
5,103
Key Accounting Policies
Revenue from contracts with customers
Revenue is derived from licensing agreements with customers in the form of royalty and profit share income as well as the
sale of active pharmaceutical ingredients. Revenue is recognised in the period in which product sales occur or when it can be
reliably estimated.
Other revenue
Other revenue is recognised as it is received or where it can be reliably estimated over the period to which it relates. The Research
and development tax incentive rebate is recognised at fair value as it is reasonably assured the grant will be received, it can be
reliably measured and the Group complies with all conditions.
All revenue is reported net of any applicable 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
2023
$’000
2022
$’000
4,200
4,448
438
322
418
379
4,960
5,245
282
255
537
5
53
58
595
200
344
544
9
107
116
660
39
Acrux Annual Report 2023
6.
INCOME TAX
(a) Income tax recognised in profit and loss
Current tax
Deferred tax
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:
Profit/(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
Impact of change in tax rate on Deferred tax asset
Tax losses not brought to account
Parent 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
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
2023
$’000
2022
$’000
–
552
552
–
252
252
(212)
(174)
(9,582)
(2,919)
111
140
(1,013)
(1,010)
–
1,382
246
726
552
28
3,824
189
3,171
252
–
–
317
80
318
51
1,019
1,023
–
401
2
932
1,817
2,326
(967)
(42)
(5)
(1,014)
803
(942)
(29)
–
(971)
1,355
4
(106)
21,895
21,899
22,784
22,678
Notes to the Consolidated Financial Statements (continued)
Key accounting policies
Current income tax expense/(benefit) is the tax payable on current period taxable income at the applicable income tax rate adjusted
by changes in deferred tax assets and liabilities attributable to temporary differences and 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 for temporary differences arising in a
transaction, other than a business combination, if the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences 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
Nil dividends were declared or paid during the financial year (2022: $nil)
(b) Franking account
Balance of franking account at financial year end.
43,835
43,835
2023
$’000
2022
$’000
8. LOSS PER SHARE
Loss from continuing operations
Loss used in calculating basic and diluted earnings per shares
2023
$’000
(764)
(764)
2022
$’000
(9,834)
(9,834)
No. of shares No. of shares
Weighted average number of ordinary shares used in calculating basic earnings per share
286,461,099 283,881,613
Effect of dilutive securities:
–
–
Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share
286,461,099 283,881,613
Basic loss per share (cents)
Diluted loss per share (cents)
0.27 cents
3.46 cents
0.27 cents
3.46 cents
41
Acrux Annual Report 2023
9. CASH AND CASH EQUIVALENTS
Cash on hand and at bank
Term deposits
2023
$’000
3,232
3,000
6,232
2022
$’000
2,831
3,000
5,831
Key accounting policies
Cash and cash equivalents include bank term deposits and high interest bearing accounts which are readily convertible to cash on
hand and used in the day-to-day cash management function.
10. RECEIVABLES
Receivables from contracts with customers
Other receivables
2023
$’000
385
2,921
3,306
2022
$’000
262
3,503
3,765
Key accounting policies
Trade 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 approach, the Group determines the allowance for credit
losses for receivables on the basis of the lifetime expected credit losses of the financial asset. Lifetime expected credit losses
represent the expected credit losses that are expected to result from default events over the expected life of the financial asset.
Expected credit losses are determined based on the Group’s historical credit loss experience adjusted for factors specific to
the financial asset as well as relevant current and expected economic conditions. There has been no change in the estimation
techniques or significant assumptions made during the reporting period. As there is no history of collection delays, defaulted
balances or client dispute no provision for expected credit losses is considered necessary at this time.
Other receivables reflects the estimated Research and development tax incentive rebate for the year ended 30 June 2023,
recognised at fair value as there is reasonable assurance the grant will be received, it can be reliably measured and the Group
complies with all conditions.
11. OTHER CURRENT ASSETS
Prepayments
Other current assets
2023
$’000
316
36
352
2022
$’000
420
–
420
42
Notes to the Consolidated Financial Statements (continued) 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
Transfer from Leased assets
Depreciation expense
Carrying amount at the end of the year
2023
$’000
47
(29)
18
2,491
(1,950)
541
559
23
–
(5)
18
659
119
11
(248)
541
2022
$’000
47
(24)
23
2,319
(1,660)
659
682
32
–
(9)
23
506
465
–
(312)
659
Key accounting policies
Cost and valuation
Each class of plant and equipment is carried at historical cost less applicable accumulated depreciation and impairment losses.
Historical cost includes expenditure that is directly attributable to the acquisition and installation 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
Depreciation expense is calculated on a straight line basis over the assets’ estimated useful lives 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.
Useful lives
Leasehold improvements
Plant and equipment
2023
2022
5 to 20 years
5 to 20 years
1 to 16 years
1 to 16 years
43
Acrux Annual Report 2023 13. INTANGIBLE ASSETS
External development expenditure capitalised
Accumulated amortisation
Total intangible assets
Carrying amount of Estradiol at the start of the year
Additions
Amortisation
Impairment
Carrying amount of Estradiol at the end of the year
2023
$’000
1,071
(1,071)
–
375
–
(54)
(321)
–
2022
$’000
1,071
(696)
375
482
–
(107)
–
375
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 resources to complete development, 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 systematically amortised from the time the product becomes available for use.
On 23 January 2023 Acrux executed an agreement with Gedeon Richter Plc. to buy out the future royalties of Estradiol for
EUR4.1million, which is sold as Lenzetto® in most markets other than US. As the royalties from Gedeon Richter Plc for Lenzetto®
represent the majority of Acrux’s income in relation to Estradiol, the Intangible Asset was impaired in full as at the time of the buyout.
44
Notes to the Consolidated Financial Statements (continued) 14. LEASE ASSETS AND LEASE LIABILITIES
The Group leases its office, laboratory and warehouse facilities. The lease was renewed by Acrux DDS Pty Limited for an initial
period of 4 years from 1 June 2018 and the first of three options to extend for further three year periods was exercised from the
effective date of 1 June 2022. Acrux has two remaining options to extend for periods of three years. 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
2023
$’000
2022
$’000
2,867
(854)
2,013
89
(70)
19
2,409
(602)
1,807
142
(75)
67
Total carrying amount of Leased assets
2,032
1,874
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
Restatement of Leased assets following lease extension
Carrying amount at the end of the period
Plant and equipment under lease arrangements
Carrying amount at the beginning of the period
Depreciation
Leases paid out
Assets transfered to Plant and equipment
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
1,807
(252)
458
2,013
67
(30)
(7)
(11)
19
192
2,161
2,353
196
282
379
374
1,557
1,931
2,007
(200)
–
1,807
99
(32)
–
–
67
224
1,854
2,078
172
232
327
335
1,295
1,630
45
Acrux Annual Report 2023 14. LEASE ASSETS AND LEASE LIABILITIES (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 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
2023
$’000
488
884
1,372
2022
$’000
789
1,430
2,219
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 typically paid within 30 days of being incurred. Payables are presented as current
liabilities where settlement is required within 12 months of the reporting period.
46
Notes to the Consolidated Financial Statements (continued) 16. PROVISIONS
Current
Employee entitlements
Non-current
Employee entitlements
Aggregate employee entitlements
2023
$’000
2022
$’000
826
38
864
875
40
915
Key accounting policies
Provisions are recognised when the Group has a legal or constructive obligation 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 to the reporting date, including annual
leave and long service leave. Liabilities which are 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.
Other employee benefit liabilities are measured at the present value of the estimated future cash outflows.
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:
Conversion of rights under the OEP
Shares issued under OEP
Ordinary shares issued during the year
2023
2022
No. of
shares
000’s
$
No. of
shares
000’s
$
288,175,456
114,884 285,364,669
114,563
285,364,669
114,563 283,305,394
114,213
2,463,662
347,125
2,810,787
296
25
321
1,776,641
282,634
2,059,275
322
28
350
Ordinary shares on issue at reporting date
288,175,456
114,884 285,364,669
114,563
47
Acrux Annual Report 2023
17. CONTRIBUTED EQUITY (CONTINUED)
(c) Rights
During the financial year 3,884,684 rights were issued under the OEP (2022: 7,483,663). Rights hold no participation rights, but
shares issued on exercise of rights rank equally with existing ordinary shares. At 30 June 2023, 9,057,529 rights were held by
KMP (2022: 8,299,507).
The closing market value of an ordinary Acrux Limited share on the Australian Securities Exchange at 30 June 2023 was 4.2 cents
(2022: 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 year
Closing balance
2023
2022
9,029,754
6,353,348
3,884,684
7,483,663
(2,463,662)
(1,776,641)
(493,405)
(3,030,616)
9,957,371
9,029,754
2023
$’000
2022
$’000
(ii) Details of rights exercised under the OEP during the financial year:
Rights exercised into shares, measured at Fair Value as at the issue date of the rights
296
322
(iii) Details of the number of lapsed rights
Key management personnel
Other employees
Total rights lapsed during the year
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 issued under the OEP
Issue of tax exempt ordinary shares to eligible employee under the OEPs
Total expenses recognised from securities based payment transactions
2023
2022
488,000
3,000,000
5,405
30,616
493,405
3,030,616
2023
$’000
2022
$’000
345
25
370
422
28
450
48
Notes to the Consolidated Financial Statements (continued) 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 using the Black Scholes option pricing model.
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 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
Non-executive Directors – rights issued as a component of remuneration
23 November 2018
1 January 2023
9 December 2019
28 November 2026
30 November 2021
30 November 2028
80,000
844,448
118,464
–
–
–
80,000
844,448
118,464
25 November 2022
25 November 2029
–
2,608,684
1,166,155
Performance Rights – issued to CEO, KMP and other senior management
Balance at
the end
of the year
Exercisable
at the end
of the year
–
–
–
–
–
–
1,442,529
138,187
25 January 2018
25 January 2025
64,000
4 February 2019
4 February 2026
138,000
3 February 2020
3 February 2027
82,595
4 February 2021
4 February 2028
575,298
30 November 2021
30 November 2028
6,000,000
10 February 2022
10 February 2029
1,126,949
–
–
–
–
–
–
13 February 2023
23 February 2030
1,276,000
49,000
123,000
82,595
15,000
15,000
–
–
–
–
–
145,405
429,893
–
6,000,000
168,000
958,949
180,000
1,096,000
15,000
15,000
–
–
–
–
–
9,029,754
3,884,684
2,463,662
493,405
9,957,371
168,187
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 have been issued to Non-executive Directors since 2019
to comprise approximately 50% of the total value of their remuneration. These rights have no performance conditions other than
continuous service and they vest on a quarterly basis in arrears.
On 26 November 2021 and as approved by shareholders, 6,000,000 performance rights were issued to the Managing Director and
CEO, Michael Kotsanis. These rights vest in 4 equal annual tranches subject to achievement of Total Shareholder Return of at least
10% per annum and include roll over provisions.
Other employees, including KMP, are offered performance rights which vest subject to achievement of performance hurdles.
On 13 February 2023, 1,276,000 performance rights were issued to 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 following the exercise of rights rank equally with existing ordinary shares.
49
Acrux Annual Report 2023 25 November 2022
13 February 2023
Non executive Directors Remuneration
Employee Performance Rights
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
Weighted average share price
at date of issue
Exercise price
Volatility
Dividend yield expectations
Term
Risk free interest rate
2,608,684
Direct Value
6.96 cents
n/a
n/a
n/a
7 years
n/a
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
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
50
1,276,000
Black Scholes
7.20 cents
7.92–10.54 cents
67.69%
Nil
7 years
3.77%
2022
$’000
860
7,390
8,250
2023
$’000
909
7,390
8,299
(114,487)
(113,723)
860
49
909
757
103
860
(113,723)
(103,889)
(764)
(9,834)
(114,487)
(113,723)
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 and term deposits
Closing cash balance
2023
$’000
2022
$’000
(764)
(9,834)
916
370
459
67
(847)
(50)
552
1,467
703
3,232
3,000
6,232
660
450
(606)
(255)
441
73
252
1,015
(8,819)
2,831
3,000
5,831
(c) Credit stand-by arrangement and loan facilities
The Group has credit card facilities with financial institutions totalling $120,000 (2022: $120,000). At 30 June 2023 the Group had
unused capacity on these facilities of $115,607 (2022: $109,009).
21. KEY MANAGEMENT PERSONNEL COMPENSATION
KMP compensation is detailed in the Remuneration Report section of the Director’s Report.
A breakdown of the aggregate components is provided below:
Short-term employment benefits
Post-employment benefits
Equity
Total KMP compensation
22. LOANS TO KEY MANAGEMENT PERSONNEL
No loans were made to KMP during the financial year.
2023
$
2022
$
1,534,022
1,578,787
187,191
319,779
158,917
397,797
2,040,992
2,135,501
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 $26.202 million (2022: $18.188 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 (2022: $0.866 million).
Other transactions with Key Management Personnel and their personally related entities
Transactions with Directors and KMP concerning securities made 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, Directors and KMP in 2023 (2022: nil).
51
Acrux Annual Report 2023
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
2023
$’000
2022
$’000
102
23
–
125
88
33
–
121
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
Research and development tax incentive rebate
Other, including other government support and interest received
26. CONTROLLED ENTITIES
Parent Entity
Acrux Limited
Subsidiaries of Acrux Limited
Acrux DDS Pty Ltd
Acrux Pharma Pty Ltd
Acrux Commercial Pty Ltd
Subsidiary of Acrux Commercial Pty Ltd
Fempharm Pty Ltd
2023
$’000
3,499
7,286
1,143
11,928
8,429
3,377
122
11,928
2022
$’000
3,383
1,421
299
5,103
1,719
3,366
18
5,103
COUNTRY OF
INCORPORATION
2023
2022
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
Australia
100%
100%
52
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
2023
$’000
2022
$’000
3,258
33,344
36,602
249
7,142
7,391
5,139
25,299
30,438
314
–
314
29,211
30,124
114,884
114,563
7,390
7,390
(93,972)
(92,689)
909
860
29,211
30,124
(1)
Investment in subsidiaries re 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 2023 (2022: nil).
PARENT ENTITY
2023
$’000
2022
$’000
(1,283)
(1,404)
–
(1,283)
(1,404)
29. SUBSEQUENT EVENTS
In July 2023, Acrux’s application for a generic version of AbbVie’s Rectiv 0.4%, Ointment, Nitroglycerin 0.4%, Ointment was accepted
by the FDA for review. This product treats pain caused by chronic anal fissure and is Acrux’s seventh ANDA application to be
accepted for FDA review.
No other matter or circumstance has arisen since 30 June 2023 that has significantly affected the group’s operations, results or
state of affairs, or may do so in the future years.
30. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
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.
53
Acrux Annual Report 2023
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 53, 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 2023 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 2023.
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
24 August 2023
Don Brumley
Non-executive Director
Melbourne
24 August 2023
54
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 2023, 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 2023 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.
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 2023
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.
How our audit addressed the key audit matter
Our procedures included amongst others:
• Reviewing and assessing management’s
key assumptions relating to the
forecasts of future taxable profit 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(b) on page 35, note
2(a) on page 37 and note 6 on page 40.
The Group has $803k ($1.356 million as at 30
June 2022) of deferred tax assets recognised
as at 30 June 2023 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 profit
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 profit. 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
sharing
commercial
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
56
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 2023 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
57
Acrux Annual Report 2023
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
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
58
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 22 to 28 of the directors’ report for the
year ended 30 June 2023. In our opinion, the Remuneration Report of Acrux Limited and its controlled
entities, for the year ended 30 June 2023, 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 PITCHER PARTNERS
Partner Melbourne
24 August 2023
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
59
Acrux Annual Report 2023
Shareholder Information
Additional information required by Australian Securities Exchange Listing Rules and not disclosed elsewhere in this report,
as at 17 August 2023.
SHAREHOLDERS
The Company has 288,188,456 ordinary fully paid shares on issue, held by 4,797 shareholders, and 9,944,371 rights held by 25 people.
The Company has no other equity securities on issue. Holders of ordinary shares are entitled to receive dividends as declared and are
entitled to one vote per share at shareholders’ meetings. No voting rights or dividend entitlements 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
Securities
990
493,167
1,376
4,012,839
604
4,882,535
1,351
48,222,515
476 230,577,400
4,797 288,188,456
2,978 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
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. 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
60
TWENTY-FIVE LARGEST HOLDERS OF FULLY PAID ORDINARY SHARES IN ACRUX LTD
Number of Fully Paid
Ordinary Shares
Percentage
of issued Capital
TSO PTY LTD
PHILLIP ASSET MANAGEMENT LIMITED
CITICORP NOMINEES PTY LIMITED
HISHENK PTY LTD
DR THOMAS VUI CHUNG CHAI
MR ROSS DOBINSON
PACIFIC CUSTODIANS PTY LIMITED
ASHWOOD RIVER PTY LTD
DDH GRAHAM LIMITED
MR PAUL COZZI
THE POOLE FAMILY SUPERANNUATION FUND PTY LTD
1
2
3
4
5
6
7
8
9
10
10 MR CHRISTOPHER MURRAY ABBOTT
11 MR DONALD CHARLES BRUMLEY
12
13 MR ALAN JEBB & MRS SANDRA JEBB
14 WILLOUGHBY CAPITAL PTY LTD
15 MR IAN VICTOR LANCINI & MRS DEBRA ANN LANCINI
16 MR BIKASH KAJI BANIYA
17 ADAM JAMAL
18 DURBIN SUPERANNUATION PTY LTD
19 ASIA UNION INVESTMENTS PTY LIMITED
20 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
21 NEWECONOMY COM AU NOMINEES PTY LIMITED
22 MR MICHAEL JOHN KOTSANIS
23 MR DAVID ANDREW SLOBOM & MRS LINDA JANE SLOBOM
24 MR STEPHEN EDWARD MAHNKEN & MRS DIOR LEONE MAHNKEN
25 MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
Total Top 25 shareholders
31,847,134
4,831,059
4,500,000
4,460,560
4,355,174
3,849,912
3,800,000
3,682,818
3,259,121
3,000,000
3,000,000
2,853,998
2,625,734
2,430,707
2,300,000
2,045,000
2,012,119
1,905,719
1,727,640
1,691,083
1,657,801
1,511,799
1,511,083
1,409,596
1,319,986
1,306,852
98,894,895
11.05
1.68
1.56
1.55
1.51
1.34
1.32
1.28
1.13
1.04
1.04
0.99
0.91
0.84
0.80
0.71
0.70
0.66
0.60
0.59
0.58
0.52
0.52
0.49
0.46
0.45
34.32
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 of PDFs are entitled to concessionary tax treatment in Australia. Typically no capital gains tax is payable in relation
to the sale of PDF shares and dividends are exempt from income tax. This means profits derived by shareholders from their
investment are typically tax free and this 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 Income Tax
Assessment Act 1997.
Equally, an investor will not be entitled to any deduction or capital loss on the sale of the Company’s shares.
Australian resident shareholders can elect to treat dividends as exempt from tax. Unfranked PDF distributions and the unfranked
part of a franked distribution are exempt from tax and a franked portion of a PDF distribution is also exempt from income tax
unless the shareholder elects to be taxed on it.
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 Income Tax Assessment Act 1997 and any such gain may be included in the shareholder’s assessable income.
61
Acrux Annual Report 2023 Glossary
Term
Abbreviation
Description
Abbreviated New
Drug Application
ANDA
An ANDA is an application for a generic drug approval for an existing approved
drug. The ANDA is submitted for review to the FDA’s Centre for Drug Evaluation and
Research, Office of Generic Drugs. Once approved, an applicant may manufacture and
market the generic drug product to provide a safe, effective, low cost alternative to the
American public. All approved products are listed in FDA’s Orange Book.
In order to achieve approval, applicants must demonstrate bioequivalence to the
innovator drug.
Active Pharmaceutical
Ingredient
API
Also known as active drug substance and is the therapeutically active component in a
medicine's final formulation which is responsible for its physiological action.
Acyclovir 5%, Cream
Addressable market
Bioequivalence/
Bioavailability
Indicated in the United States for the topical treatment of coldsores.
Total market sales value and volume of a pharmaceutical product in a specific dosage
form. This market data is purchased from IQVIA.
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.
Contract
Manufacturing
Organisation
CMO or CDMO A CMO serves other companies in the pharmaceutical industry on a contract basis
to provide services that may range from drug development services and commercial
manufacturing.
Contract Research
Organisation
CRO
Dapsone Gel
Estradiol
Evamist®
Food and Drug
Administration
FDA
Gedeon Richter
Generic medicine
Good Manufacturing
Practice
GMP or cGMP
In-vitro Permeation
Testing
IVPT
A CRO provides support to the pharmaceutical, biotechnology, and medical device
industries in the form of research services outsourced on a contract basis. CROs
may be involved in all aspects of the clinical development process, from initial drug
discovery through pre-clinical and clinical trials and regulatory approval.
Indicated in the United States for the topical treatment of acne vulgaris.
Estradiol is a form of estrogen, a female sex hormone produced by the ovaries and is
used to treat symptoms of menopause.
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 the government body that ensures safe and effective drugs are available
to improve the health of people in the United States. It regulates and supervises
prescription, over-the-counter pharmaceutical drugs (medications), vaccines,
biopharmaceuticals and veterinary products.
Gedeon Richter Plc. is Axrux’s licensee for Lenzetto® and is a major international
pharmaceutical company headquartered in Hungary.
A generic medicine provides the same quality, safety and efficacy as the original
brand name product and undergoes strict scrutiny before it is approved by national
regulatory authorities.
Good Manufacturing Practices (GMP, also referred to as 'cGMP' or 'current Good
Manufacturing Practice') is the aspect of quality assurance that ensures medicinal
products are consistently produced and controlled to the quality standards
appropriate to their intended use and as required by the product specification.
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.
62
Term
Abbreviation
Description
In-vitro Release
Testing
IVRT
IQVIA
Lenzetto®
Measurement of drug release from dosage forms applied topically for the purpose
of 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.
IQVIA Inc, is a US based multinational company which provides, on a subscription
basis, pharmaceutical industry-leading sales data.
Brand name for Acrux’s unique Estradiol Spray in the European Union and other
countries. The Lenzetto® trademark is owned by Gedeon Richter.
Nitroglycerin 0.4%,
Ointment
Indicated in the United States for moderate to severe pain associated with chronic
anal fissure.
Omnibus Equity Plan
OEP
Approved at 2020 AGM to govern the issue of securities to employees and Directors.
Orange Book
Padagis
Pooled Development
Fund
PDF
Prilocaine 2.5% and
Lidocaine 2.5%, Cream
Product-Specific
Guidance
PSG
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.
Padagis US LLC is a pharmaceutical manufacturer that offers high quality generic and
specialised pharmaceutical and OTC products that meet strict standards of quality
and safety. Padagis’ line of extended topicals includes prescription creams, ointments,
suspensions, gels, foams, sprays, patches, nasal, and suppositories and is a market
leader in that segment in the United States.
The Pooled Development Fund Act 1992 was established by the Federal Government
to increase the supply of capital to Australian small and medium-sized enterprises to
enable those businesses to grow and develop their own markets, creating industry and
jobs for Australia. To incentivise investors, a concessional tax regime was established
for those companies that were registered as Pooled Development Funds (PDFs).
Indicated in the United States topical anesthetic for use on normal intact skin for
local analgesia or genital mucous membranes for superficial minor surgery and as
pretreatment for infiltration anesthesia.
To facilitate generic drug product availability and identify the most appropriate
methodology for developing drugs and generating evidence to support ANDA
approval, the 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.
Total Shareholder
Returns
Transdermal
Topical
Volume Weighted
Average Price
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.
Topical is a route of administration wherein active pharmaceutical ingredients are
applied to or affect a localised area of the body.
VWAP
Being a commonly used abbreviation for the Volume Weighted Average Share Price.
63
Acrux Annual Report 2023 Corporate Directory
COMPANY INFORMATION
Directors
Ross Dobinson – Non-executive Director and Chairman
Geoff Brooke – Non-executive Director
Don Brumley – Non-executive Director
Tim Oldham – Non-executive Director
Michael Kotsanis – CEO and Managing Director
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
Share Registry
Link Market Services
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
64
www.acrux.au