ACTINOGEN MEDICAL LIMITED
ABN 14 086 778 476
ANNUAL REPORT
YEAR ENDED 30 JUNE 2019
ACTINOGEN MEDICAL LIMITED
C O N T E N T S P A G E
Contents
Page
Corporate Directory
Chairman’s Address
Corporate Gov ernance Statement
Directors’ Report:
Information on Directors
Operations and Financial Rev iew
Remuneration Report (Audited)
Auditor’s Independence Declaration
Statement of Comprehensiv e Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
1
2
3
11
16
23
39
40
41
42
43
44
81
82
87
ACTINOGEN MEDICAL LIMITED
C O R P O R A T E D I R E C T O R Y
Board of Directors
Auditors
Non-Executiv e Chairman – Dr Geoffrey Brooke
Ernst & Young
Managing Director – Dr Bill Ketelbey
Ernst & Young Building
Non-Executiv e Director – Dr George Morstyn
11 Mounts Bay Road
Non-Executiv e Director – Mr Malcolm McComas
Perth W A 6000
Company Secretary
Mr Peter W ebse
Lawyers
K&L Gates
Lev el 25 South Tower
Principal Place of Business / Registered Office
525 Collins Street
Melbourne VIC 3000
GTP Legal
68 Aberdeen Street
Northbridge W A 6003
Bankers
National Australia Bank
1232 Hay Street
W est Perth W A 6005
Suite 901 / Lev el 9
109 Pitt Street
Sydney NSW 2000
Contact Details
Telephone: 02 8964 7401
www.actinogen.com.au
ABN 14 086 778 476
Share Register
Link Market Serv ices
Lev el 12
680 George Street
Sydney NSW 2000
Actinogen Medical Limited shares are listed on
the Australia Securities Exchange ('ASX').
ASX Code: ACW
1
ACTINOGEN MEDICAL LIMITED
C H A I R M A N ’ S A D D R E S S
Dear Shareholder,
It is with pleasure that I present to you this year’s Annual Report for the financial year ended 30 June 2019.
This year has been a momentous year for Actinogen Medical. The Phase II XanADu clinical trial of 10mg of
Xanamem in patients with mild dementia due to Alzheimer’s disease (AD) has been completed. The results are
encouraging, with XanADu establishing the safety and pharmacodynamic effects of Xanamem. While XanADu
showed that Xanamem at 10mg daily did not demonstrate adequate efficacy in improving cognition in mild
Alzheimer’s disease, further analysis is underway to comprehensively assess the XanADu data and identify any
specific cognitive domains in which trends may be evident.
As a result of the lack of efficacy seen in XanADu, the Company’s stock price fell significantly in May 2019 with
record share trading volumes. I can assure shareholders that the Board and management are working diligently
to develop the Company’s technology to its fullest potential to restore shareholder value.
During the financial year, several new fully funded studies were initiated to enhance the Xanamem dataset. This
comprehensive development program included: Phase 1 target occupancy and in vitro homogenate binding
studies to measure the effects of different Xanamem doses on inhibiting the 11β-HSD1 enzyme in the brain;
XanaHES which is assessing the safety and tolerability of higher Xanamem doses with an exploratory efficacy
assessment; and a suite of additional pre-clinical safety and toxicology studies to allow for longer treatment
periods, required by regulators for late stage clinical trials. This comprehensive dataset underpins the Company’s
ongoing plans for any future clinical development and commercialisation of Xanamem.
Raised cortisol has also been associated with several diseases, offering the possibility for Xanamem to be used
in the treatment of other medical conditions. Due to this wide reach, the Company completed an extensive
scientific, clinical and commercial review and is progressing the planning for new indications of cognitive
impairment in mood disorders and schizophrenia. Cognitive impairment in mood disorders and schizophrenia
represents a significant unmet medical need and a substantial market opportunity, with limited or no existing
therapeutic options currently available.
Independent research published during the year provided further endorsement of the cortisol hypothesis and
development of Xanamem. Research by Echouffo-Tcheugui et al. (2018) demonstrated an association between
higher serum (blood) cortisol, impaired cognitive performance and decreased brain volume. This study,
published in the highly regarded global peer-reviewed Neurology journal, builds on an increasing body of
evidence linking persistently raised cortisol levels with cognitive impairment, neurodegeneration and brain
atrophy. Additionally, an extensive literature review published in March 2019 by Ouanes and Popp concluded
that elevated cortisol levels may exert detrimental effects on cognition and contribute to AD pathology, and
that further studies are needed to investigate cortisol-reducing and glucocorticoid receptor modulating
interventions to prevent cognitive decline.
I realise that many shareholders are disappointed that we didn’t see any improvement in cognition at 10mg
Xanamem daily in the recent XanADu study. However, Actinogen Medical is positioned to continue building on
the Xanamem platform and we are committed to exploring all possible development strategies for the drug.
With the ongoing trials and the planning for the expansion of Xanamem to new indications underway, we
expect the next 12 months to be busy and fruitful.
I’d like to take this opportunity to thank all our shareholders for their continued support of the Company’s
endeavours, our staff and partners for their ongoing hard work and dedication and to my fellow Board members
for their commitment to Actinogen Medical.
Yours faithfully,
Dr Geoff Brooke
Chairman
Friday, 16 August 2019
2
ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
_____________________________________________________________
This Corporate Governance Statement (“Statement”) outlines the key aspects of Actinogen Medical
Limited’s (‘Actinogen Medical’ or ‘the Company’) governance framework and main governance
practices. The Company’s charters, policies, and procedures are regularly reviewed and updated to
comply with law and best practice. These charters and policies can be viewed on Actinogen
Medical’s website located at www.actinogen.com.au.
This Statement is structured with reference to the Australian Securities Exchange Corporate
Governance Council’s (“the Council’s”) “Corporate Governance Principles and Recommendations
3rd Edition” (“the Recommendations”).
The Board of Directors has adopted the Recommendations to the extent that is deemed appropriate
considering the current size and operations of the Company. Therefore, considering the size and
financial position of the Company, where the Board considers that the cost of implementing a
Recommendation outweighs any potential benefits, those Recommendations have not been
adopted.
This Statement was approved by the Board of Directors and is current as at 16 August 2019.
Principle 1: Lay solid foundations for management and oversight
Roles of the Board and Management
The Board is responsible for evaluating and setting the strategic direction for the Company, establishing
goals for management and monitoring the achievement of these goals. The Managing Director is
responsible to the Board for the day-to-day management of the Company.
•
•
The principal functions and responsibilities of the Board include, but are not limited to, the following:
•
Appointment, evaluation and, if necessary, removal of the Managing Director, any other
Executive Directors, the Company Secretary and the Chief Financial Officer (if applicable) and
approval of their remuneration;
Determining, in conjunction with management, corporate strategy, objectives, operations, plans
and approving and appropriately monitoring plans, new investments, major capital and
operating expenditures, capital management, acquisitions, divestitures and major funding
activities;
Establishing appropriate levels of delegation to the Managing Director to allow the business to be
managed efficiently;
Approval of remuneration methodologies and systems;
•
• Monitoring actual performance against planned performance expectations and reviewing
operating information at a requisite level to understand at all times the financial and operating
conditions of the Company;
• Monitoring the performance of senior management, including the implementation of strategy
•
and ensuring appropriate resources are available;
Identifying areas of significant business risk and ensuring that the Company is appropriately
positioned to manage those risks;
• Overseeing the management of safety, occupational health and environmental issues;
•
Satisfying itself that the financial statements of the Company fairly and accurately set out the
financial position and financial performance of the Company for the period under review;
Satisfying itself that there are appropriate reporting systems and controls in place to assure the
Board that proper operational, financial, compliance, risk management and internal control
processes are in place and functioning appropriately;
Ensuring that appropriate internal and external audit arrangements are in place and operating
effectively;
Authorising the issue of any shares, options, equity instruments or other securities within the
constraints of the Corporations Act and the ASX Listing Rules; and
Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the
Company has adopted, and that its practice is consistent with, a number of guidelines including:
− Code of Conduct;
− Continuous Disclosure Policy;
•
•
•
•
3
ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
_____________________________________________________________
− Diversity Policy;
− Performance Evaluation Policy;
− Procedures for Selection and Appointment of Directors;
− Remuneration Policy;
− Risk Management and Internal Compliance and Control Policy;
− Securities Trading Policy; and
− Shareholder Communications Policy.
Subject to the specific authorities reserved to the Board under the Board Charter, the Board has
delegated to the Managing Director responsibility for the management and operation of Actinogen
Medical. The Managing Director is responsible for the day-to-day operations, financial performance
and administration of Actinogen Medical within the powers authorised to him from time-to-time by the
Board. The Managing Director may make further delegation within the delegations specified by the
Board and is accountable to the Board for the exercise of those delegated powers.
Further details of Board responsibilities, objectives and structure are set out in the Board Charter on the
Actinogen Medical website.
Board Committees
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to
justify the formation of separate committees at this time, including Audit, Risk, Remuneration or
Nomination Committees, preferring at this stage, to manage the Company through the full Board of
Directors. The Board assumes the responsibilities normally delegated to the Audit, Risk, Remuneration
and Nomination Committees.
If the Company’s activities increase in size, scope and nature, the appointment of separate
Committees will be reviewed by the Board and implemented if appropriate.
Board Appointments
The Company undertakes comprehensive reference checks prior to appointing a Director, or putting
that person forward as a candidate, to ensure that person is competent, experienced, and would not
be impaired in any way from undertaking the duties of Director. The Company provides relevant
information to shareholders for their consideration about the attributes of candidates together with
whether the Board supports the appointment or re-election.
The terms of the appointment of a Non-Executive Director, Executive Directors and senior executives
are agreed upon and set out in writing at the time of appointment.
The Company Secretary
The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to
do with the proper functioning of the Board, including agendas, Board papers and minutes, advising
the Board and its Committees (as applicable) on governance matters, monitoring that the Board and
Committee policies and procedures are followed, communication with regulatory bodies and the ASX
and statutory and other filings.
Diversity
The Company has adopted a formal Diversity Policy. However, the Company is currently in an early
stage of its development and given that it has a limited number of employees, the application of
measurable objectives in relation to gender diversity, at various levels of the Company’s business, is not
considered to be appropriate nor practical. The Board will review this position on an annual basis and
will implement measurable objectives as and when they deem the Company to require them. The
Company’s Diversity Policy is available on its website.
The proportion of women in the Company as at 16 August 2019 is as follows:
Women on the Board: 0 of 4 (0%)
Women in senior executive positions: 1 of 2 (50%)
Women in the organisation: 5 of 10 (50%)
4
ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
_____________________________________________________________
Board and Management Performance Review
On an annual basis, the Board conducts a review of its structure, composition and performance.
The annual review includes consideration of the following measures:
comparing the performance of the Board against the requirements of its Charter;
assessing the performance of the Board over the previous 12 months having regard to the
corporate strategies, operating plans and the annual budget;
reviewing the Board’s interaction with management;
reviewing the type and timing of information provided to the Board by management;
reviewing management’s performance in assisting the Board to meet its objectives; and
identifying any necessary or desirable improvements to the Board Charter.
The method and scope of the performance evaluation will be set by the Board and may include a
Board self-assessment checklist to be completed by each Director. The Board may also use an
independent adviser to assist in the review.
The Chairman has primary responsibility for conducting performance appraisals of Non-Executive
Directors, in conjunction with them, having particular regard to:
contribution to Board discussion and function;
degree of independence including relevance of any conflicts of interest;
availability for and attendance at Board meetings and other relevant events;
contribution to Company strategy;
membership of and contribution to any Board Committees; and
suitability to Board structure and composition.
The Board conducts an annual performance assessment of the Managing Director against agreed key
performance indicators. Board and management performance reviews were conducted during the
year in accordance with the above processes.
Independent Advice
Directors have a right of access to all Company information and executives. Directors are entitled, in
fulfilling their duties and responsibilities, to obtain independent professional advice on any matter
connected with the discharge of their responsibilities, with prior notice to the Chairman, at Actinogen
Medical’s expense.
Principle 2: Structure the Board to add value
Board Composition
During the financial year and to the date of this report the Board comprised the following members:
Name
Position
Dr Geoffrey Brooke
Non-Executiv e Chairman
Appointed
Resigned
1/03/2017
Current
Dr Bill Ketelbey
Managing Director / Chief Executiv e Officer
18/12/2014
Current
Dr George Morstyn
Non-Executiv e Director
Mr Malcolm McComas Non-Executiv e Director
Dr Jason Lov eridge
Non-Executiv e Director
1/12/2017
4/04/2019
Current
Current
1/12/2014
28/11/2018
The Company currently has one executive Director, the Managing Director, and three Non-Executive
Directors. The Board is currently comprised of a majority of independent Directors, being Dr Geoffrey
Brooke (the Company’s Non-Executive Chairman), Dr George Morstyn and Mr Malcolm McComas.
Actinogen Medical has adopted a definition of 'independence' for Directors that is consistent with the
Recommendations.
5
ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
_____________________________________________________________
Board Selection Process
The Board considers that a diverse range of skills, backgrounds, knowledge and experience is required
in order to effectively govern Actinogen Medical. The Board believes that orderly succession and
renewal contributes to strong corporate governance and is achieved by careful planning and
continual review.
The Board is responsible for the nomination and selection of Directors. The Directors review the size and
composition of the Board regularly and at least once a year as part of the Board evaluation process.
The Board has a skills matrix covering the competencies and experience of each member. When the
need for a new Director is identified, the required experience and competencies of the new Director
are defined in the context of this matrix and any gaps that may exist.
Generally, a list of potential candidates is identified based on these skills required and other issues such
as geographic location and diversity criteria. Candidates are assessed against the required skills and
on their qualifications, backgrounds and personal qualities. In addition, candidates are sought who
have a proven track record in creating security holder value and the required time to commit to the
position.
Induction of New Directors and Ongoing Development
New Directors are issued with a formal Letter of Appointment that sets out the key terms and conditions
of their appointment, including Director's duties, rights and responsibilities, the time commitment
envisaged, and the Board's expectations regarding involvement with any Committee work.
An induction program is in place and new Directors are encouraged to engage in professional
development activities to develop and maintain the skills and knowledge needed to perform their role
as Directors effectively.
Principle 3: Act ethically and responsibly
The Company has implemented a Code of Conduct which provides guidelines aimed at maintaining
high ethical standards, corporate behaviour and accountability within the Company.
respect the law and act in accordance with it;
All employees and Directors are expected to:
maintain high levels of professional conduct;
respect confidentiality and not misuse Company information, assets or facilities;
avoid real or perceived conflicts of interest;
act in the best interests of shareholders;
by their actions contribute to the Company’s reputation as a good corporate citizen which seeks
the respect of the community and environment in which it operates;
perform their duties in ways that minimise environmental impacts and maximise workplace safety;
exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their
workplace and with customers, suppliers and the public generally; and
act with honesty, integrity, decency and responsibility at all times.
An employee that breaches the Code of Conduct may face disciplinary action including, in the case
of a serious breach, dismissal. If an employee suspects that a breach of the Code of Conduct has
occurred, or will occur, he or she must report that breach to the Company Secretary. No employee
will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All reports
will be acted upon and kept confidential.
Principle 4: Safeguard integrity in corporate reporting
The Board as a whole fulfills the functions normally delegated to the Audit Committee, as detailed in
the Audit Committee Charter.
6
ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
_____________________________________________________________
The Board is responsible for the initial appointment of the external auditor and the appointment of a
new external auditor when any vacancy arises. Candidates for the position of external auditor must
demonstrate complete independence from the Company through the engagement period. The
Board may otherwise select an external auditor based on criteria relevant to the Company’s business
and circumstances. The performance of the external auditor is reviewed on an annual basis by the
Board.
The Board receives regular reports from management and from external auditors. It also meets with
the external auditors as and when required.
The external auditors attend Actinogen Medical's Annual General Meeting (AGM) and are available
to answer questions from security holders relevant to the audit.
Prior approval of the Board must be gained for non-audit work to be performed by the external auditor.
There are qualitative limits on this non-audit work to ensure that the independence of the auditor is
maintained.
There is also a requirement that the audit partner responsible for the audit not perform in that role for
more than five years.
CEO and CFO Certifications
The Board has received certifications from the CEO and CFO Equivalent in connection with the
financial statements for Actinogen Medical for the year ended 30 June 2019. The certifications state
that the declaration provided in accordance with Section 295A of the Corporations Act as to the
integrity of the financial statements is founded on a sound system of risk management and internal
control which is operating effectively.
Principle 5: Make timely and balanced disclosure
The Company has a Continuous Disclosure Policy which outlines the disclosure obligations of the
Company as required under the ASX Listing Rules and the Corporations Act. The Policy is designed to
ensure that procedures are in place so that the market is properly informed of matters which may have
a material impact on the price at which Company securities are traded.
The Board considers whether there are any matters requiring disclosure in respect of each and every
item of business that it considers in its meetings. Individual Directors are required to make such a
consideration when they become aware of any information in the course of their duties as a Director
of the Company.
The Company is committed to ensuring all investors have equal and timely access to material
information concerning the Company.
The Board has designated the Company Secretary as the person responsible for communicating with
the ASX. The Chairman, Managing Director and the Company Secretary are responsible for ensuring
that:
a) Company announcements are made in a timely manner, that announcements are factual and
do not omit any material information required to be disclosed under the ASX Listing Rules and the
Corporations Act; and
b) Company announcements are expressed in a clear and objective manner that allows investors
to assess the impact of the information when making investment decisions.
Principle 6: Respect the rights of security holders
The Company recognises the value of providing current and relevant information to its shareholders.
7
ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
_____________________________________________________________
The Company respects the rights of its shareholders and to facilitate the effective exercise of those
rights the Company is committed to:
•
communicating effectively with shareholders through releases to the market via the ASX, the
Company’s website, information emailed or mailed to shareholders and the general meetings of
the Company;
giving shareholders ready access to clear and understandable information about the Company;
and
•
• making it easy for shareholders to participate in general meetings of the Company.
The Company also makes available a telephone number and email address for shareholders to make
enquiries of the Company. These contact details are available on the “Contact Us” page of the
Company’s website.
Shareholders may elect to, and are encouraged to, receive communications from Actinogen Medical
and Actinogen Medical's securities registry electronically.
The Company maintains information in relation to its Constitution, governance documents, Directors
and senior executives, Board and Committee charters, annual reports and ASX announcements on
the Company’s website.
Principle 7: Recognise and manage risk
The Board is committed to the identification, assessment and management of risk throughout
Actinogen Medical's business activities.
The Board is responsible for the oversight of the Company’s risk management and internal compliance
and control framework. Responsibility for control and risk management is delegated to the
appropriate level of management within the Company with the Managing Director having ultimate
responsibility to the Board for the risk management and internal compliance and control framework.
Actinogen Medical has established policies for the oversight and management of material business
risks.
Actinogen Medical's Risk Management and Internal Compliance and Control Policy recognises that
risk management is an essential element of good corporate governance and fundamental in
achieving its strategic and operational objectives. Risk management improves decision making,
defines opportunities and mitigates material events that may impact security holder value.
Actinogen Medical believes that explicit and effective risk management is a source of insight and
competitive advantage. To this end, Actinogen Medical is committed to the ongoing development
of a strategic and consistent enterprise-wide risk management program, underpinned by a risk
conscious culture.
Actinogen Medical accepts that risk is a part of doing business. Therefore, the Company’s Risk
Management and Internal Compliance and Control Policy is not designed to promote risk avoidance.
Rather Actinogen Medical's approach is to create a risk conscious culture that encourages the
systematic identification, management and control of risks whilst ensuring it does not enter into
unnecessary risks or enter into risks unknowingly.
Actinogen Medical assesses its risks on a residual basis; that is, it evaluates the level of risk remaining
after considering all the mitigation practices and controls. Depending on the materiality of the risks,
Actinogen Medical applies varying levels of management plans.
The Board has required management to design and implement a risk management and internal
compliance and control system to manage Actinogen Medical's material business risks. It receives
regular reports on specific business areas where there may exist significant business risk or exposure.
8
ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
_____________________________________________________________
The Company faces risks inherent to its business, including economic risks, which may materially impact
the Company’s ability to create or preserve value for security holders over the short, medium or long
term. The Company has in place policies and procedures, including a risk management framework
(as described in the Company’s Risk Management and Internal Compliance and Control Policy),
which is developed and updated to help manage these risks. The Board does not consider that the
Company currently has any material exposure to environmental or social sustainability risks.
The Company’s process of risk management and internal compliance and control includes:
identifying and measuring risks that might impact upon the achievement of the Company’s goals
and objectives; and monitoring the environment for emerging factors and trends that affect those
risks.
formulating risk management strategies to manage identified risks; and designing and
implementing appropriate risk management policies and internal controls.
monitoring the performance of, and improving the effectiveness of, risk management systems
and internal compliance and controls, including regular assessment of the effectiveness of risk
management and internal compliance and control.
The Board reviews the Company’s risk management framework at least annually to ensure that it
continues to effectively manage risk.
Management reports to the Board as to the effectiveness of Actinogen Medical's management of its
material business risks at each meeting.
Principle 8: Remunerate fairly and responsibly
Actinogen Medical’s Remuneration Policy was designed to recognise the competitive environment
within which Actinogen Medical operates and also emphasise the requirement to attract and retain
high calibre talent in order to achieve sustained improvement in Actinogen Medical’s performance.
The overriding objective of the Remuneration Policy is to ensure that an individual’s remuneration
package accurately reflects their experience, level of responsibility, individual performance and the
performance of Actinogen Medical.
The key principles are to:
link executive reward with strategic goals and sustainable performance of Actinogen Medical;
apply challenging corporate and individual key performance indicators that focus on both short-
term and long-term outcomes;
motivate and recognise superior performers with fair, consistent and competitive rewards;
remunerate fairly and competitively in order to attract and retain top talent;
recognise capabilities and promote opportunities for career and professional development; and
through employee ownership of Actinogen Medical shares, foster a partnership between
employees and other security holders.
The Board determines the Company’s remuneration policies and practices and assesses the necessary
and desirable competencies of Board members. The Board is responsible for evaluating Board
performance, reviewing Board and management succession plans and determines remuneration
packages for the CEO, Non-Executive Directors and senior management based on an annual review.
Actinogen Medical’s executive remuneration policies and structures and details of remuneration paid
to Directors and senior managers are set out in the Remuneration Report.
Non-Executive Directors receive fees (including statutory superannuation where applicable) for their
services, the reimbursement of reasonable expenses and, in certain circumstances, options. They do
not receive any termination or retirement benefits, other than statutory superannuation.
The maximum aggregate remuneration approved by shareholders for Non-Executive Directors is
$500,000 per annum. The Directors set the individual Non-Executive Directors fees within the limit
approved by shareholders.
9
ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
_____________________________________________________________
The total fees paid to Non-Executive Directors during the reporting period were $195,000.
Executive Directors and other senior executives are remunerated using combinations of fixed and
performance-based remuneration. Fees and salaries are set at levels reflecting market rates and
performance-based remuneration is linked directly to specific performance targets that are aligned to
both short and long term objectives.
In accordance with the Company’s Securities Trading Policy, participants in an equity based incentive
scheme are prohibited from entering into any transaction that would have the effect of hedging or
otherwise transferring the risk of any fluctuation in the value of any unvested entitlement in the
Company’s securities to any other person.
Further details in relation to the Company’s remuneration policies are contained in the Remuneration
Report, within the Directors’ Report.
10
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Your Directors present their report pertaining to Actinogen Medical Limited (‘Actinogen Medical’ or ‘the
Company’) for the year ended 30 June 2019.
INFORMATION ON DIRECTORS
BOARD OF DIRECTORS
1.
The names and details of the Company’s Directors in office during the financial year and until the date of this
report are as follows. Directors were in office for the entire period, unless otherwise stated.
Name
Position
Dr Geoffrey Brooke
Non-Executiv e Chairman
Appointed
Resigned
1/03/2017
Current
Dr Bill Ketelbey
Managing Director / Chief Executiv e Officer
18/12/2014
Current
Dr George Morstyn
Non-Executiv e Director
Mr Malcolm McComas Non-Executiv e Director
1/12/2017
4/04/2019
Current
Current
Dr Jason Lov eridge
Non-Executiv e Director
1/12/2014
28/11/2018
Dr Geoffrey Brooke (appointed 1 March 2017)
MBBS, MBA
Non-Executive Chairman
Dr Brooke is a healthcare industry and venture capital veteran with over 30 years’ international experience as
the founder, lead investor and/or Chairman/Director of numerous healthcare companies with a realised value
of more than $1.5 billion. Most notably, he was the Managing Director and Founder of leading life sciences
venture capital firm, GBS Ventures - one of Asia Pacific’s premier investors in the healthcare space. There, Dr
Brooke was responsible for GBS’s healthcare venture activity in the region and raised $450 million in venture and
private equity funds, focused on biopharmaceuticals, medical devices and services.
Dr Brooke was also responsible for numerous investments and exits via NASDAQ and ASX public listings and
trade sales, as well as being lead investor in numerous investments syndicated in multiple rounds with premier
US venture firms. Dr Brooke was also President and Founder of US-based seed healthcare venture capital firm,
Medvest Inc., with investors including the venture capital arm of leading global multinational medical devices,
pharmaceutical and consumer packaged goods manufacturer, Johnson & Johnson. Medvest was focused on
founding companies based upon health care-related technology, including pharmaceuticals, biotechnology,
therapeutic devices, medical services and information systems.
Dr Brooke now acts as a private investor in, and independent director for, a number of small to medium-sized
Australian and US private and public companies. He holds a Bachelor of Medicine and a Bachelor of Surgery
from Melbourne University and a Masters of Business Administration from IMEDE (Switzerland), now IMD.
During the past three years Dr Brooke has served as a Director of the following ASX-listed companies:
Non-Executive Director of Acrux Limited (ASX:ACR) – Current.
Non-Executive Director of Cynata Therapeutics Limited (ASX:CYP) – Current.
Dr Bill Ketelbey (appointed 18 December 2014)
MBBCh, FFPM, MBA, GAICD
Managing Director and Chief Executive Officer
Dr Ketelbey is a highly experienced and successful healthcare and pharmaceutical sector professional, with
more than 30 years’ experience in the industry, including senior medical and management roles with global
pharmaceutical giant, Pfizer. Dr Ketelbey has a medical degree from the University of the Witwatersrand (South
Africa), is a Fellow of the Faculty of Pharmaceutical Medicine with the Royal College of Physicians (UK), has an
MBA from Macquarie University (Australia), and is a Graduate of the Australia Institute of Company Directors.
11
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Prior to joining Actinogen Medical, Dr Ketelbey was the APAC Regional Vice President of Medical Affairs for
Pfizer’s Primary Care Business Unit and Country Medical Director for Pfizer, Australia and New Zealand. At Pfizer,
Dr Ketelbey was responsible for leading the development of numerous medicines across a broad range of
therapeutic areas, including Aricept, the market-leading therapy for Alzheimer’s disease.
Dr Ketelbey is a Non-Executive Director of the Westmead Institute of Medical Research (WIMR) and chairs
the IP and Commercialisation Committee of WIMR.
Dr Ketelbey has held no other ASX-listed directorships during the past three years.
Dr George Morstyn (appointed 1 December 2017)
MBBS FRACP PhD FTSE
Non-Executive Director
Dr Morstyn has more than 25 years’ experience in the biotechnology industry including as Senior Vice President
of Development and Chief Medical Officer at Amgen Inc. Dr Morstyn had overall responsibility globally for drug
development in all therapeutic areas including neuroscience at Amgen Inc. and was a member of the
Operating Committee. Many new products were approved and launched during Dr Morstyn’s tenure. Prior to
joining Amgen Inc. Dr Morstyn was the principal investigator on the earliest clinical studies of the haemopoietic
colony stimulating factors (‘CSFs’). The CSFs were subsequently approved and launched and were a major
medical breakthrough that have been used to reduce side effects of chemotherapy and enable
transplantation in more than 20 million patients worldwide. The CSFs have become multi-billion dollar drugs.
Since returning to Australia, Dr Morstyn has been a Non-Executive Director of various for-profit and not-for-profit
companies, including many biotechnology companies.
Dr Morstyn is a medical graduate of Monash University (Australia), and obtained a PhD at the Walter and Eliza
Hall Institute of Medical Research (Australia) and a FRACP in Medical Oncology following a Fellowship at the
National Cancer Institute in the USA. He is currently on the Board of the Cooperative Research Centre for
Cancer Therapeutics, Symbio (Tokyo) and Biomedical Research Victoria. He is a Member of the Australian
Institute of Company Directors and a Fellow of the Australian Academy of Technological Sciences and
Engineering.
Dr Morstyn has held no other ASX-listed directorships during the past three years.
Mr Malcolm McComas (appointed 4 April 2019)
BEc, LLB (Monash), SFFin, FAIDC
Non-Executive Director
Mr McComas brings over 25 years of experience in the financial services industry with extensive experience
in corporate finance, mergers and acquisitions, debt and equity funding transactions across multiple
industry sectors. He previously held senior leadership roles with Grant Samuel, County NatWest (now
Citigroup) and Morgan Grenfell (now Deutsche Bank) in Australia and the UK. Prior to this Mr McComas was
a lawyer at Herbert Geer specialising in tax.
Mr McComas is an experienced company director and currently services a number of listed entities, and
also has not-for-profit involvement as a director of the Australasian Leukemia and Lymphoma Group. He is
a Fellow of the Australian Institute of Company Directors and holds degrees in Law and Economics from
Monash University in Melbourne.
During the past three years Mr McComas has served as a Director of the following ASX-listed companies:
Chairman of Pharmaxis Limited (ASX:PXS) – Current;
Chairman of Fitzroy River Corporation Limited (ASX:FZR) – Current;
Non-Executive Director of Royalco Resources Limited (ASX:RCO) – Current; and
Non-Executive Director of Saunders International (ASX:SND) - Resigned May 2019.
12
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
The following Director resignations occurred during the year ended 30 June 2019:
Dr Jason Loveridge (appointed 1 December 2014; resigned 28 November 2018)
BSc PhD FRSM
Non-Executive Director
Dr Loveridge has worked in the biotech and medtech industries for over 28 years and brought extensive
experience in the commercialisation of medical research to the Board of Actinogen Medical. As a venture
investor with JAFCO Nomura, Dr Loveridge invested in over 28 companies in Europe, the US and Israel and
was directly involved in the management of a number of innovative companies in the medical arena.
During the past three years Dr Loveridge has served as a Director of the following ASX-listed companies:
Non-Executive Director of Resonance Health Limited (ASX: RHT) – Resigned June 2017.
Interests in the shares and options of the Company and related bodies corporate
As at the date of this report, the interests of the Directors in the shares and options of the Company were as
follows:
Fully paid
ordinary
shares
Total
LTI Rights
unlisted
(a)
options
Total
LTI Rights
and
options
Name
Dr Geoffrey Brooke
1,325,000
-
9,900,000
9,900,000
Dr Bill Ketelbey
Dr George Morstyn
Mr Malcolm McComas
953,803
200,000
500,000
12,000,000
11,700,000
23,700,000
-
-
3,000,000
3,000,000
3,000,000
3,000,000
Total
2,978,803
12,000,000
27,600,000
39,600,000
(a) Of Dr Ketelbey’s LTI Rights, 3,000,000 relate to Class I that have not yet vested due to the performance milestone
not being achieved. For further information on the key terms of the LTI Rights, refer to Section 3(C)(b) of the
Remuneration Report.
2. DIRECTORS’ MEETINGS
The following table sets out the number of meetings of the Company’s Directors held while each Director was
in office and the number of meetings attended by each Director.
Director
Number of meetings
Number of meetings
available to attend
attended
Dr Geoffrey Brooke
Dr Bill Ketelbey
Dr Jason Lov eridge
Dr George Morstyn
Mr Malcolm McComas
10
10
6
10
3
10
10
5
10
2
Due to size and scale of the Company, there are no Remuneration, Risk, Nomination or Audit Committees at
present. Matters typically dealt with by these Committees are, for the time being, reverted to the Board of
Directors. For details of the function of the Board please refer to the Corporate Governance Statement which
is included as part of this annual report.
13
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
3. COMPANY SECRETARY
Peter Webse (appointed 10 October 2013)
B.Bus, FGIA, FCPA, MAICD
Mr Webse has over 25 years’ company secretarial experience and is Managing Director of Platinum Corporate
Secretariat Pty Ltd, a company specialising in providing company secretarial, corporate governance and
corporate advisory services. Mr Webse holds a Bachelor of Business with a double major in Accounting and
Finance,
Fellow Certified
Institute of Australia, a
the Governance
Practicing Accountant and a Member of the Australian Institute of Company Directors.
Fellow of
is a
4. CORPORATE GOVERNANCE
The Board recognises the recommendations of the ASX Corporate Governance Council and has disclosed its
level of compliance with those guidelines within the Corporate Governance Statement which is included as
part of this Annual Report.
5.
SHARES UNDER OPTION
As at the date of this report, there were 41,942,631 unissued ordinary shares under option:
Quantity
Type
Issue
Date
Exercise
Price
Expiry
Date
Vesting
Conditions Comment
2,100,000
Unlisted Employee Options (A) (Tranche 1)
6/02/2017
$
0.100
5/02/2021 Fully v ested
5,000,000
Unlisted Director Options (G)
24/03/2017
$
0.100
24/03/2025
417,188
Unlisted Employee Options (B )(Tranche 2)
12/07/2017
$
0.100
5/02/2021
1,500,000
Unlisted Director Options (D)
1/12/2017
$
0.100
1/12/2022
417,110
Unlisted Employee Options (C) (Tranche 3)
3/04/2018
$
0.100
5/02/2021
Yes
No
Yes
No
625,000
Unlisted Employee Options (C) (Tranche 3)
3/04/2018
$
0.100
5/02/2021 Fully v ested
18,100,000
Unlisted Director Options (F)
13/12/2018
$
0.085
27/11/2023
5,783,333
Unlisted Employee Options (E) (Tranche 4)
13/12/2018
$
0.085
12/12/2023
5,000,000
Unlisted Consultant Options
1/02/2019
$
0.093
1/02/2024
3,000,000
Unlisted Director Options (H)
12/04/2019
$
0.100
4/04/2024
Yes
Yes
Yes
Yes
(a)
(b)
(c)
(d)
(e)
41,942,631
Total shares under option
(a) These options were issued to Dr Geoffrey Brooke as part of his appointment as Non-Executive Chairman of the
Company on 1 March 2017.
(b) These options were issued to Dr George Morstyn as part of his appointment as Non-Executive Director of the
Company on 1 December 2017.
(c) Of the 18,100,000 options issued, 4,900,000 options were issued to Dr Geoffrey Brooke, 11,700,000 options were
issued to Dr Bill Ketelbey and 1,500,000 options were issued to Dr George Morstyn.
(d) These options were issued to a Consultant: Bio-Link Australia.
(e) These options were issued to Mr Malcolm McComas as part of his appointment as Non-Executive Director of the
Company on 4 April 2019.
14
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
During the year and up to the date of this report the following options were exercised, expired, lapsed or
forfeited:
Quantity
Type
Exercised,
expired,
lapsed or
forfeited date
Exercised,
expired,
lapsed or
forfeited
Exercise
Price
Comment
4,000,000
Exercise of unlisted options
4/07/2018
Exercised
$
0.02
2,750,000 Exercise of unlisted options
18/09/2018
Exercised
$
0.02
1,112,500 Lapse of Employee Options (A) & (C)
31/10/2018
Lapsed
$
0.10
(i)
20,550,000 Exercise of unlisted options
14/11/2018
Exercised
$
0.02
7,200,000 Exercise of unlisted options
30/11/2018
Exercised
$
0.02
146,588,471 Expiry of listed options
31/03/2019
Expired
$
0.06
1,287,762 Exercise of unlisted options
4/04/2019
Exercised
$
0.06
916,667 Forfeiture of Employee Options (E)
12/04/2019
Forfeited
$
0.09
(ii)
184,405,400 Total shares under options that were exercised, expired, lapsed or forfeited
(i) By 31 October 2018, the vesting condition of achieving dosing of more than 30 patients at 20mg or higher on
Xanamen was not met and subsequently 1,112,500 unlisted employee options (comprising 800,000 and 312,500
Employee Options (A) and (C), respectively) lapsed.
(ii) On 15 April 2019, a total of 916,667 unvested employee options, expiring on 12/12/2023 and exercisable at $0.085
each, were forfeited due to Mr V. Ruffles ceasing employment with the Company on 12 April 2019.
No option holder has any right, by virtue of the option, to participate in any share issue of the Company.
15
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
OPERATIONS AND FINANCIAL REVIEW
6.
PRINCIPAL ACTIVITIES
The principal activity of the Company during the year focussed on the development of Xanamem, a novel
treatment for Alzheimer’s disease and the cognitive deficiency associated with other neurological and
metabolic diseases.
7.
REVIEW OF OPERATIONS
Highlights for the Financial Year (and subsequent to year end)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
XanADu Phase II Clinical Trial – completion of trial and preliminary data analysis
XanaHES Phase I Higher Dose Safety Study – 20mg cohort fully enrolled
Phase 1 Target Occupancy and Homogenate Binding studies – 10mg / 20mg cohorts completed
Pre-clinical Toxicology Studies – long term animal studies underway
Expansion opportunities into new indications – new target indications identified
Manufacturing of Xanamem – CDMO partner selected
(vii)
Raising Awareness – attendance at various conferences and partnering meetings
(viii)
Cortisol Hypothesis – new research published
(ix)
(x)
Board Changes – Appointment of Mr Malcolm McComas and retirement of Dr Jason Loveridge
Financial Position – Placement and Share Purchase Plan finalised in mid-2018 putting the Company
in a strong financial position.
(i)
XanADu Phase II Clinical Trial
The initial results from the XanADu Phase II clinical trial evaluating the safety and efficacy of Xanamem in
patients with mild dementia due to Alzheimer’s disease were announced in May 2019.
XanADu established that a 10mg daily dose of Xanamem is safe and inhibits cortisol, as demonstrated by
the expected increase in related hormones, including ACTH (adrenocorticotropic hormone). However,
Xanamem at 10mg daily did not demonstrate adequate efficacy in improving cognition in mild Alzheimer’s
disease. The primary and secondary endpoint measures did not demonstrate statistical differences
between Xanamem 10mg and placebo.
While it is clear that Xanamem is a pharmacologically active drug at 10mg daily, further analysis of the
XanADu dataset coupled with the output and analyses of other ongoing studies being conducted with
Xanamem (referenced below), will help inform the future strategic clinical development program for the
drug.
(ii)
XanaHES Phase I Higher Dose Safety Study
In February 2019, Actinogen Medical announced the initial dosing of the first participant in XanaHES, a
Phase I safety study of Xanamem in healthy elderly adults. The study is designed to expand the safety
dataset for Xanamem and explores the potential for higher doses of the drug to be used in future trials in
Alzheimer’s disease and other indications. The study also includes a cognition endpoint evaluation.
16
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
In May 2019, the Company announced the continuation of the XanaHES 20mg Phase I trial, with some
protocol enhancements, based on a pre-planned interim review of safety data. The XanaHES study has
randomised all 42 participants into the first cohort to receive either 20mg Xanamem or placebo daily, for 12
weeks. Following completion of this study later in 2019, a Dose Escalation Committee will review all data
from the 20mg cohort, and a second cohort of 42 participants may then be randomised to receive higher
doses of Xanamem or placebo, daily.
(iii)
Phase 1 Target Occupancy and Homogenate Binding Studies
The Xanamem target occupancy and homogenate binding studies aim to accurately demonstrate the
effect different doses of Xanamem have on inhibiting and blocking the activity of the 11β-HSD1 enzyme in
the brain. This will help optimise the dosing to be used in future Xanamem clinical studies.
The Phase I human study utilises a radio-labelled tracer compound, that will demonstrate the percentage
of the 11β-HSD1 enzyme binding sites in the brain occupied by Xanamem, using a PET scanner.
Following the successful manufacturing, radio-labelling and toxicology testing of the tracer compound that
began in April 2018, the clinical target occupancy Phase I PET study commenced in April 2019 at the Austin
Hospital in Melbourne, Australia. The study has progressed to plan, with both the 10mg and 20mg subject
cohorts completing the trial during the financial year. The study has generated encouraging initial results,
supporting Xanamem as a potent orally bioavailable and brain-penetrant 11β-HSD1 inhibitor, that
effectively binds to the 11β-HSD1 enzyme.
The homogenate binding studies are a suite of in-vitro studies using rat and human brain tissue being
conducted in Birmingham, UK, which are designed to further confirm and enhance the data and findings
of the target occupancy study. These studies commenced during the year and include autoradiography
involving competition, saturation and enzyme activity studies at varying concentrations of Xanamem.
(iv)
Pre-clinical Toxicology Studies
Long-term toxicology studies in two non-primate species are required by regulators prior to the
commencement of clinical studies where Xanamem might be given to patients for periods beyond 12
weeks. These toxicology studies commenced during the year and are progressing as planned; and will
continue over the remainder of calendar year 2019 and into calendar year 2020. Encouragingly, the
feedback to date indicates no unexpected toxicological or safety concerns with longer term exposure to
Xanamem. The Company should be able to commence longer-term clinical studies prior to the completion
of the full toxicology suite, if required.
(v)
Expansion Opportunities into New Indications
Xanamem is specifically designed to inhibit excess cortisol production in the brain, which is associated with
the development of cognitive impairment in a range of neurological diseases. In April 2019, the Company
announced the selection of cognitive impairment in mood disorders and schizophrenia as the next
indications for development and commercialisation of Xanamem, to be developed in parallel to the
ongoing primary indication of Alzheimer’s disease. The Company is progressing the drafting of a clinical
development plan for these new indications in consultation with an expert Advisory Board. Cognitive
impairment in mood disorders and schizophrenia represents a significant unmet medical need and a
substantial market opportunity, with limited or no existing therapeutic options available.
(vi)
Manufacturing of Xanamem
During the year, the Company completed a rigorous selection process to appoint a Contract Development
and Manufacturing Organisation (CDMO) with the expertise and capabilities to optimise the synthesis of
Xanamem and the scale up production required for clinical development and commercialisation. Corden
Pharma LLC (Switzerland), which has full commercial-scale capabilities, was selected as the CDMO partner,
in order to provide various services including the manufacturing of the active pharmaceutical ingredient
and the drug product, as well as regulatory and packaging services.
17
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(vii)
Raising Awareness of Actinogen Medical and Xanamem
Actinogen Medical continued to enhance its awareness activities of the Company and Xanamem among
the investor and scientific communities by attending and presenting at key scientific and industry
conferences during the year, and subsequent to year end, including:
September 2018: Finance News Network Investor Conference - Sydney
September 2018: Healthcare Investment Day - Singapore
October 2018: AC4R (Australasian Consortium of Centres for Clinical Cognitive Research) - Sydney
October 2018: Australian MicroCap Investment Conference - Melbourne
October 2018: AusBiotech Invest and Partnering Conference - Melbourne
October 2018: Clinical Trials on Alzheimer’s Disease (CTAD) - Barcelona
January 2019: 2nd Annual SACHS Neuroscience Innovation Forum – San Francisco
January 2019: JP Morgan Week – San Francisco
June 2019: BIO 2019 International Convention - Philadelphia
July 2019: Alzheimer’s Association International Conference (AAIC) poster presentation – Los Angeles
July 2019: BioShares Biotech Summit 2019 - Queenstown
Actinogen Medical also participated in multiple partnering and investor meetings during these
conferences, to update potential strategic pharmaceutical partners and major global investors interested
in neuroscience and the Company’s clinical development of Xanamem. The Company received
encouraging feedback from prospective partners with the request that they be kept updated on the
ongoing progress and development plans.
(viii)
Cortisol Hypothesis – New Research Published
New independent research was published during the year in further support of the cortisol hypothesis – the
hypothesis that underpins Xanamem’s development. The hypothesis holds, that by reducing cortisol
production in the brain, the cognitive decline associated with a number of neurological diseases could be
slowed, or even prevented.
In November 2018, the Company highlighted a recent study in Neurology, the most highly regarded global
peer-reviewed neurology journal, demonstrating an association between higher serum (blood) cortisol,
impaired cognitive performance, and decreased brain volume. Titled ‘Circulating cortisol and cognitive
and structural brain measures’ (Echouffo-Tcheugui et al., 2018), this study builds on an increasing body of
evidence linking persistently raised cortisol levels with cognitive impairment, neurodegeneration and
Alzheimer’s disease.
Additionally, an extensive literature review by Ouanes and Popp published in March 2019, titled ‘High
Cortisol and the Risk of Dementia and Alzheimer’s disease: A Review of the Literature’, concluded that
“Elevated cortisol levels may exert detrimental effects on cognition and contribute to AD pathology. Further
studies are needed to investigate cortisol-reducing and glucocorticoid receptor modulating interventions
to prevent cognitive decline”
(ix)
Board Changes
In November 2018, Actinogen Medical advised that Dr Jason Loveridge had retired as a Non-Executive
Director of the Company. Dr Loveridge had been a Non-Executive Director since the establishment of
Actinogen Medical in 2014 and was instrumental in initially identifying the Company’s technology and
compounds as a potential licensing opportunity from the University of Edinburgh, whilst also providing
valuable guidance in the subsequent clinical development of Xanamem.
In April 2019, Mr Malcolm McComas was appointed as a Non-Executive Director of the Company and his
appointment is seen as highly complementary to the Board’s existing mix of expertise and experience.
18
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(x)
Financial Position
During the
During the
financial year
financial year
Total
ended
ended
30 June 2018
30 June 2019
$
$
Capital
Raisings
$
Issue
Date
Private Placement Tranche 1 and 2
Priv ate Placement Tranche 1
28/05/2018
9,356,150
-
9,356,150
Priv ate Placement Tranche 2
12/07/2018
-
5,643,850
5,643,850
Total
9,356,150
5,643,850
15,000,000
Share Purchase Plan and Shortfall
Share Purchase Plan
Share Purchase Plan Shortfall
13/07/2018
24/07/2018
Total
-
-
-
952,500
560,000
952,500
560,000
1,512,500
1,512,500
Total Capital Raisings
9,356,150
7,156,350
16,512,500
In July 2018, Actinogen Medical completed Tranche 2 of a Private Placement, which was part of a capital
raising initially launched in May 2018 (Tranche 1) to raise a total of $15,000,000. Tranche 2 issued 112,877,006
fully paid ordinary shares raising $5,643,850. In addition, a Share Purchase Plan (‘SPP’) was launched offering
existing eligible shareholders the opportunity to purchase up to $15,000 of new fully paid ordinary shares.
The SPP closed on 12 July 2018, raising a total of $952,500 from the issue of 19,050,000 fully paid ordinary
shares on 13 July 2018. The Tranche 2 and SPP shares were issued at $0.05 per share. BVF and Australian
Ethical Investment elected to participate in the SPP Shortfall which raised a further $560,000 from the issue
of 11,200,000 fully paid ordinary shares. The total of the capital raisings carried out in the current financial
year ended 30 June 2019; and the prior year ended 30 June 2018, amounted to $16,512,500.
Completion of this capital raising ensured the Company had adequate capital to fund the nine additional
Xanamem studies initiated in mid-2019. Results from these studies will prove important to better
understanding the XanADu results and to inform on the future strategic clinical development of Xanamem.
8.
FINANCIAL PERFORMANCE
The financial performance of the Company during the year ended 30 June 2019 is as follows:
Rev enue and other income ($)(a)
Net loss after tax ($)
Loss per share (cents)
Div idend ($)
Full-year ended Full-year ended
30/06/2019
30/06/2018
5,067,301
3,343,180
(9,887,682)
(6,230,609)
(0.90)
(0.88)
- -
(a) Total Revenue and other income totaling $5,067,301 comprises $204,546 in revenue from ordinary
activities and $4,862,755 in other income (of which $4,603,261 relates to a research and development
rebate for the 2019 financial year that has been raised as a receivable at year end).
19
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
9.
FINANCIAL POSITION
The financial position of the Company as at 30 June 2019 is as follows:
Cash and cash equiv alents (a)
Net assets / Total equity
Contributed equity (b)
Accumulated losses
As at
As at
30/06/2019
30/06/2018
$
7,636,601
15,664,546
48,044,606
$
9,896,760
17,257,911
40,438,238
(39,196,317)
(29,308,635)
(a) Refer to Section 7(x) of the Directors’ Report for further information on cash received during the
financial year.
(b) For further information on movements in equity, refer to Note 13 of the financial statements.
10. SHARE PRICE PERFORMANCE
The table below sets out the performance of the Company and the consequences of performance on
shareholders’ wealth over the past five years:
2019
2018
2017
2016
2015
Quoted price of ordinary shares at year end (cents)
Quoted price of options at year end (cents)
Loss per share (cents)
Div idends paid
11. DIVIDENDS
1.00 4.80 6.00 7.20 7.20
-
0.60
-
-
0.54
-
-
0.90
-
-
0.88
-
-
0.88
-
No amounts have been paid or declared by way of dividend since the date of incorporation. The Directors
recommend that no final dividend be paid.
12. EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Other than what is stated below, there are no matters or circumstances that have arisen since the end of the
financial year which significantly affected, or may significantly affect, the operations of the Company, the
results of those operations, or the state of the Company in subsequent financial years.
13. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as disclosed in the financial statements, there were no significant changes in the state of affairs of
the Company during the financial year.
14. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Should any likely developments of the Company eventuate, this information will be made available to the
market in accordance with its continuous disclosure obligations under the ASX Listing Rules.
20
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
15. OUTLOOK & BUSINESS STRATEGY
(i)
Clinical Development Program
XanADu, the Phase II study of Xanamem 10mg daily in mild Alzheimer’s disease, was completed during the
year, with initial data announced in May 2019. A comprehensive analysis of the XanADu data was initiated
soon after with results expected in Q3 of calendar year 2019, around the same time as the initial read-out
from the nine additional Xanamem studies initiated in mid-2018.
These additional studies include the target occupancy, XanaHES, and pre-clinical toxicology studies. In late
Q3 of calendar year 2019, the Company will undertake a comprehensive strategic review of the available
data from all these studies and, as initially indicated, the totality of these data and results will inform the
Company’s future clinical development program for Xanamem.
XanaHES continues to progress smoothly, with final results on the 20mg cohort expected in Q4 of calendar
year 2019, including the safety profile of 20mg Xanamem and the results from the Cogstate cognition test
battery. A Dose Escalation Committee (DEC) will review all data from the 20mg cohort, and the DEC will
decide whether the study should continue with a second cohort of 42 participants receiving 30mg
Xanamem or placebo. Results from XanaHES will provide important data on the potential use of higher
doses of Xanamem in future studies, should this be necessary.
The Phase I Target Occupancy Study is also progressing well, with results on each dosing cohort being
evaluated in real-time; and culminating with the results being reviewed alongside all other studies data in
late Q3 of calendar year 2019.
The results observed to date with the target occupancy study are encouraging, with PET scans
demonstrating Xanamem 10mg and 20mg once daily achieves good occupancy of the target 11β-HSD1
enzyme. To complement the data being collected in the target occupancy study, in parallel the Company
is performing in-vitro homogenate binding studies. These studies look at rat and human brain slices in assay
solutions (homogenate) and perform investigations on the target occupancy, including enzyme activity
and saturation studies. When analysed collectively with the Phase I Target Occupancy study, the results
from these homogenate binding studies will allow Actinogen Medical to assess the full dose-response
occupancy profile of Xanamem, for the 11β-HSD1 enzyme.
The long-term toxicology studies continue, with further results expected to read out in calendar year 2020.
Based on current feedback, the studies indicate no unexpected toxicological or safety concerns
associated with longer term exposure to Xanamem. The completion of the toxicology studies will enable
the Company to carry out studies on the safety and efficacy of Xanamem for a dosing period beyond 12
weeks, however the Company will be able to commence longer-term clinical studies before the completion
of these toxicology studies, if required.
(ii)
Expansion of Clinical Development Program
Actinogen Medical continues to plan for the expansion of Xanamem into cognitive impairment in mood
disorders and schizophrenia. In consultation with an expert Advisory Board, the Company is finalising a
clinical development plan for these indications. Actinogen Medical looks forward to progressing the
Xanamem development program to target these new indications and will update the market as more data
becomes available from current ongoing analyses.
(iii) Continuing to Raise Awareness
Actinogen Medical remains focused on driving awareness of Xanamem’s clinical development to ensure
that the pharmaceutical and biotechnology industries recognise the significant progress made with the
development of Xanamem and its future potential in treating a variety of debilitating diseases, including
Alzheimer’s disease.
21
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
The Company’s executives and business development team will continue to participate in selected
international pharmaceutical and biotechnology industry partnering conventions and to take every
opportunity to showcase Xanamem’s significant potential, with the objective to continue engaging with
selected potential strategic partners.
In addition, the Company will continue to raise awareness within the research community through
presentation and publication of the Xanamem clinical data. Actinogen Medical is pleased to note that Dr
Sarah Gregory, PhD from the University of Edinburgh, presented a scientific poster entitled “11-β
Hydroxysteroid Dehydrogenase Type 1 Inhibitors: Preclinical and Clinical Systematic Reviews” at the
inaugural Alzheimer’s Association International Conference (AAIC), held in Los Angeles from 14 to 18 July
2019. Dr Gregory performed her literature review and presented her poster at the conference on behalf of
the Company. AAIC is the largest and most influential international meeting dedicated to advancing the
science of dementia.
22
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
REMUNERATION REPORT (AUDITED)
The information contained in the Remuneration Report has been audited, as required by Section 308(3C) of
the Corporations Act 2001. The Remuneration Report is set out under the following main headings:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Introduction
Remuneration governance
Executive remuneration arrangements
A. Remuneration principles and strategy
B. Approach to setting remuneration
C. Details of incentive plans
Executive remuneration outcomes including link to performance
Executive contracts
Non-Executive Director fee arrangements
Additional disclosures relating to options
Additional disclosures relating to shares
Loans to Key Management Personnel (‘KMP’) and their related parties
10.
Other transactions and balances with KMP and their related parties
1.
INTRODUCTION
The Remuneration Report details the remuneration arrangements for KMP who are defined as those having
authority and responsibility for planning, directing and controlling the major activities of the Company,
directly or indirectly, including any Director (whether executive or otherwise). The performance of the
Company depends upon the quality of its KMP. To prosper, the Company must attract, motivate and retain
appropriately skilled Directors and executives.
The Company’s broad remuneration policy is to ensure the remuneration package properly reflects the
person’s duties and responsibilities and that remuneration is competitive in attracting, retaining and
motivating people of the highest quality.
The people considered to be KMP during the financial year were:
Name
Position
Dr Geoffrey Brooke
Non-Executiv e Chairman
Appointed
Resigned
1/03/2017
Current
Dr Bill Ketelbey
Managing Director / Chief Executiv e Officer
18/12/2014
Current
Dr George Morstyn
Non-Executiv e Director
Mr Malcolm McComas Non-Executiv e Director
Dr Jason Lov eridge
Non-Executiv e Director
1/12/2017
4/04/2019
Current
Current
1/12/2014
28/11/2018
There were no other changes to KMP after the reporting date and before the date that the financial report
was authorised for issue.
23
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
2.
REMUNERATION GOVERNANCE
The Board has not established a separate Remuneration Committee at this point in the Company’s
development nor has the Board engaged the services of a remuneration consultant to provide
recommendations when setting the remuneration received by Directors. Therefore, remuneration of
Directors is currently set by the Board of Directors, which is put to shareholders at the Annual General
Meeting (‘AGM’). At the AGM held on 28 November 2018, Actinogen Medical received 93% of votes in
favour of its Remuneration Report for the 2018 financial year. The Company did not receive any specific
feedback at the AGM or throughout the year on its remuneration practices.
It is considered that the size of the Board, along with the level of activity of the Company, renders having a
Remuneration Committee impractical and the full Board considers in detail all of the matters for which the
Directors are responsible. All matters of remuneration are performed in accordance with the Corporations
Act 2001 requirements, especially in respect of related party transactions. Refer to the Corporate
Governance Statement for further information.
3.
EXECUTIVE REMUNERATION ARRANGEMENTS
(A) Remuneration principles and strategy
The Company aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibilities within the Company and aligned with market practice. Executive remuneration
must be:
aligned with the Company’s vision, values and overall business objectives; and
must be designed to motivate management to pursue the Company’s long-term growth and
success.
The nature and amount of remuneration of executives is assessed on a periodic basis by the Board (in the
absence of a Remuneration Committee) for their approval, with the overall objective of ensuring maximum
stakeholder benefit from the retention of high performing executives. The main objectives sought when
reviewing executive remuneration is that the Company has:
Executives who will create value for shareholders;
coherent remuneration policies and practices to attract and retain executives;
competitive remuneration offered benchmarked against the external market; and
fair and responsible rewards to executives having regard to the performance of the Company, the
performance of the executives and the general pay environment.
(B) Approach to setting remuneration
The Company aims to reward executives with a level and mix of remuneration appropriate to their position
and responsibilities, while being market competitive. The Company’s remuneration structure for executives
can include a mix of fixed remuneration, short term incentives (STI) and long-term incentives (LTI) as outlined
below.
Fixed remuneration component:
Fixed remuneration is represented by total employment cost and comprises base salary, statutory
superannuation contributions (where applicable) and other benefits. It is paid by the Company to
compensate fully for all requirements of the executive’s employment with reference to the market and the
individual’s role and experience. It is subject to annual review considering market data and the
performance of the Company and individual. The Company benchmarks the fixed component against
appropriate market comparisons with the comparator group criteria being market capitalisation.
STI component:
The STI component is in the form of a cash bonus to executives of the Company (bonuses are also
applicable to employees). Payment of the cash bonus is entirely discretionary and rewards the KMP for their
contribution to achievement of business goals. The business goals are determined annually by the Board
and are linked to the strategic and operational plans of the Company, including budgets agreed for each
financial year.
24
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
A specific STI component is also provided for within the Managing Director’s remuneration package.
Currently this includes a performance condition whereby at the annual review of the Managing Director’s
salary, one of the factors to be considered by the Board when granting an increase will be the Company’s
market capitalisation against appropriate ASX benchmarks with an aim for 50th percentile pay on ASX
market capitalisation. The Managing Director and the remainder of the Board will agree benchmarks for
each year of the term.
LTI component:
The LTI component is in the form of Employee Options, Director Options and LTI Rights. The Board is of the
opinion that the shares and options currently on issue provide a sufficient long-term incentive to align the
goals of the KMP with those of the shareholders to maximise shareholder wealth. The Board will continue to
monitor this policy to ensure that it is appropriate for the Company in future years.
(C) Details of incentive plans
During the financial year ended 30 June 2019, the Board of Directors had in place various Short-term
Incentives and Long-term Incentives which are outlined below.
(a) Short Term Incentives (‘STIs’)
STIs are set each calendar year, with any unmet milestones expiring at the end of each calendar year
ending 31 December. During the financial year ended 30 June 2019, the Board of Directors put in place
various STIs, and when achieved, a cash bonus was paid out to the following KMPs:
Dr Ketelbey – Managing Director and Chief Executive Officer
An STI was put in place for the achievement of a number of various short-term performance conditions
being met during the calendar year including first patient enrolment, all study sites initiated, various number
of subjects enrolled, dose-escalation, investor relations, capital raisings; and business development. Dr
Ketelbey achieved a number of these milestones and was paid an $80,000 bonus on 20 February 2019.
(b) Long Term Incentives (‘LTIs’)
The LTIs currently in place are in the form of Employee Options, Director Options and LTI Rights; and they are
summarised below:
Quantity
Type of LTI
Reference
2,100,000
Unlisted Employee Options (A) (Tranche 1)
417,188
Unlisted Employee Options (B) (Tranche 2)
1,042,110
Unlisted Employee Options (C) (Tranche 3)
5,783,333
Unlisted Employee Options (E) (Tranche 4)
1,500,000
Unlisted Director Options (D)
18,100,000
Unlisted Director Options (F)
5,000,000
Unlisted Director Options (G)
3,000,000
Unlisted Director Options (H)
12,000,000
LTI Rights
48,942,631
Total number of options issued as LTIs
(i)
(i)
(i)
(i)
(ii)
(ii)
(ii)
(ii)
(iii)
(i)
Employee Options
Directors are not eligible to receive Employee Options under the Employee Option Plan currently in place
with the Company. Furthermore, no employees of the Company were deemed to be KMP during the
financial years ended 30 June 2019 and 30 June 2018.
25
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(ii) Director Options
Director Options have been issued to all current Directors of the Company; the specific details are outlined
in the section below. However, in all instances the general terms of each option issue are as follows:
Entitlement: Each Option gives the holder (Option holder) the right to subscribe for one fully paid
ordinary share in the Company (Share) upon exercise of the Option.
Issue Price of Options: Options are issued for no consideration.
Valuation Methodology: Due to the vesting conditions attached to all Director Options issued, they
have been independently valued using a Black-Scholes methodology, whereby the total share-based
payment is being expensed over the vesting period. Refer to Note 20: Share-based Payments for further
information.
Other terms: The rights, restrictions and obligations which apply to Options, including in relation to
vesting, disposal and forfeiture, are pursuant to the terms of each Director’s engagement with the
Company; and the option offer letters accepted and signed by the Director at the time of the offer.
Dr Geoffrey Brooke – Non-Executive Chairman:
During the financial year, on 28 November 2018, an additional 4,900,000 Director Options (F) were granted
to Dr Brooke. In the prior year, on 24 March 2017, remuneration in the form of 5,000,000 Director Options (G)
were granted to Dr Brooke as part of his appointment as Non-Executive Chairman.
The key terms of these two offers are outlined below:
Director Options (F) Director Options (G)
Grant Date
Quantity
Exercise Price
Expiry Date
28/11/2018
4,900,000
$0.085
27/11/2023
24/03/2017
5,000,000
$0.10
24/03/2025
Vesting Conditions:
Director Options (F): 4,900,000 options to vest quarterly over a period of three years from the date of
grant.
Director Options (G): 2,000,000 options to vest one year after the date of grant; 1,500,000 options to vest
two years after the date of grant; and 1,500,000 options to vest three years after the date of grant.
In each case, these are subject to continuous service to the Company by Dr Brooke as Non-Executive
Chairman during the period from the date of grant up to and including the applicable vesting dates.
Dr Bill Ketelbey – Managing Director and Chief Executive Officer:
During the financial year, on 28 November 2018, an additional 11,700,000 Director Options (F) were granted
to Dr Ketelbey. The key terms of the offer are outlined below:
Director Options (F)
Grant Date
Quantity
Exercise Price
Expiry Date
28/11/2018
11,700,000
$0.085
27/11/2023
26
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Vesting Conditions:
Director Options (F): 11,700,000 options to vest quarterly over a period of three years from the date of
grant.
Dr George Morstyn – Non-Executive Director:
During the financial year, on 28 November 2018, an additional 1,500,000 Director Options (F) were granted
to Dr Morstyn.
In the prior year, on 18 January 2018, at a General Meeting of Shareholders, remuneration in the form of
1,500,000 Director Options (D) were approved and granted to Dr Morstyn as part of his appointment as Non-
Executive Director on 1 December 2017.
The key terms of these offers are outlined below:
Director Options (F) Director Options (D)
Grant Date
Quantity
Exercise Price
Expiry Date
28/11/2018
1,500,000
$0.085
27/11/2023
18/01/2018
1,500,000
$0.10
1/12/2022
Vesting Conditions:
Director Options (F): 1,500,000 options to vest quarterly over a period of three years from the date of
grant.
Director Options (D): 700,000 options to vest one year after the date of grant; 400,000 options to vest two
years after the date of grant; and 400,000 options to vest three years after the date of grant.
In each case, subject to continuous service to the Company by Dr Morstyn as Non-Executive Director. While
the terms of Dr Morstyn’s engagement state that the vesting periods commence from date of grant of the
Options, the intention when granting the options, was that the vesting period would commence from date
of appointment as a Non-Executive Director, which was 1 December 2017.
Mr Malcolm McComas – Non-Executive Director:
On 4 April 2019, remuneration in the form of 3,000,000 Director Options (H) were granted to Mr McComas as
part of his appointment as Non-Executive Director on 4 April 2019.
The key terms of the offer are outlined below:
Director Options (H)
Grant Date
Quantity
Exercise Price
Expiry Date
4/04/2019
3,000,000
$0.100
4/04/2024
Vesting Conditions:
Director Options (H): 3,000,000 options to vest quarterly over a period of three years from the date of
grant.
27
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(iii) LTI Rights
During a prior year, ended 30 June 2015, 45,000,000 Loan Shares (“LTI Rights”) were issued to various
personnel at the time by way of provision of a limited recourse, interest free loan (subject to approval at an
Annual General Meeting of shareholders on 19 November 2014). Of the 45,000,000 Loan Shares originally
issued, 5,000,000 Class F LTI Rights were forfeited, and later cancelled in the prior year ended 30 June 2018
(refer to the table below). Subsequently, 40,000,000 LTI Rights remain on issue as at 30 June 2019. The loans
are not recognised in the financial statements on the basis that the LTI Rights are accounted for as “in-
substance options” under Australian Accounting Standards.
During the year, Messrs Rogers, Loveridge and Ruffles repaid their loans: $400,000, $120,000 and $40,000,
respectively, to the Company to exercise the rights attached to their LTI Rights issued to them when they
were employed by the Company. As at 30 June 2019, the total value of the loans outstanding is $480,000
which relates to Dr Ketelbey’s Class H, I and J LTI Rights. Refer to Note 20: Share-based Payments for further
information.
These LTI Rights were issued with performance conditions attached, consisting of a number of Key
Performance Indicators (KPI’s) covering both financial and non-financial measures of performance.
Typically included are measures such as contribution to research and development success, share price
appreciation and tenure. There is no expiry date on these vesting rights but there must be continuity of
employment to receive the vesting benefits.
The key terms of the LTI Rights and of each limited recourse loan provided are as follows:
(i) the loan may only be applied towards the subscription price for the LTI Rights;
(ii) the loan will be interest free, provided that if the loan is not repaid by the repayment date set by the Board,
the loan will incur interest at 9% per annum after that date (which will accrue on a daily basis and
compound annually on the then outstanding loan balance);
(iii) by signing and returning a limited recourse loan application, the participants of the Plan (each a
Participant) acknowledges and agrees that the Loan Shares will not be transferred, encumbered,
otherwise disposed of, or have a security interest granted over it, by or on behalf of the Participant until the
loan is repaid in full to the Company;
(iv) the Company has security over the Loan Shares as security for repayment of the loan;
(v) the loan becomes repayable on the earliest of:
a) five years from the date on which the loan is advanced to the Participant;
b) one month after the Participant resigns or ceases to be employed by the Company other than:
(i) where the Participant is removed from office by shareholders of the Company, or
(ii) where the Company does not renew the Participant's executive employment agreement or
(iii) where the Company dismisses the Participant other than for cause; and
c) (by the legal personal representative of the Participant) six months after the Participant ceases to be
an employee of the Company due to their death.
Repayment Date:
(vi)
(vii)
notwithstanding paragraph (v) above, the Participant may repay all or part of the loan at any time
before the Repayment Date; and
the loan will be limited recourse such that on the Repayment Date the repayment obligation under the
limited recourse loan will be limited to the lesser of (i) the outstanding balance of the limited recourse
loan and (ii) the market value of the shares on that date. In addition, where the Participant has elected
for the Loan Shares to be provided to the Company in full satisfaction of the loan, the Company must
accept the Loan Shares as full settlement of the repayment obligation under the limited recourse loan.
Vesting conditions:
The Directors may issue the LTI Rights subject to vesting conditions (including performance milestones and
time-based retention hurdles), such that the holder is only entitled to the benefit of the LTI Rights once the
vesting conditions are met. If the vesting conditions are not met, the holder will lose their entitlement to the
LTI Rights and the Company may buy back or arrange for the sale of those LTI Rights. This enables the Board
28
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
to attract, incentivise and retain key personnel and to align the interests of those personnel and shareholders
through equity participation.
Due to the vesting conditions attached to the LTI Rights, they have been independently valued using a
Black-Scholes methodology, whereby the total share-based payment is being expensed over the vesting
period. Refer to Note 20: Share-based Payments for further information.
Refer to the table below setting out the vesting conditions attached to the LTI Rights.
Class of
Quantity of
Vested,
unv ested
Recipient
LTI Rights
LTI Rights
Vesting Date / Condition
or lapsed
Ref.
Jason Lov eridge Class A 3,000,000
Upon successful completion of the phase 1b multiple
ascending dose study.
Vested
Jason Lov eridge Class B
3,000,000 Upon funding of the phase 2a proof of concept study.
Vested
Martin Rogers
Class C
7,500,000
Martin Rogers
Class D
7,500,000
Martin Rogers
Class E
5,000,000
Martin Rogers
Class F
-
Upon Shares trading on the ASX abov e $0.04 for ten
consecutiv e trading days.
Upon Shares trading on the ASX abov e $0.06 for ten
consecutiv e trading days.
Upon recruitment of the phase 1b multiple ascending
dose study.
Upon recruitment of the phase 2a proof of concept
study.
Vincent Ruffles
Class G
2,000,000
Three years from commencement of employment.
Bill Ketelbey
Class H
6,000,000
Three years from commencement of employment.
Upon Share trading on the ASX at 150% of the share
Bill Ketelbey
Class I
3,000,000
price on the date of commencement of employment
Unv ested
Bill Ketelbey
Class J
3,000,000
Upon recruitment of Phase II Xanamen Study.
Vested
for 10 consecutiv e trading days.
40,000,000
Vested
v ii
Vested
Vested
Lapsed
Vested
Vested
v i
v
iii
iv
x
v iii
ix
ii
i
(i) During the year ended 30 June 2019 the vesting condition on 3,000,000 Class J Rights issued to Dr Ketelbey was met
on 31 October 2018.
(ii) As at 30 June 2019, Class I Rights remain unvested as the vesting condition has not yet been met despite the share-
based payment expense against these Rights being fully expensed based on the expected vesting date at that time.
In prior years, the following LTI Rights vested or lapsed:
(iii) On 16 December 2014, the vesting condition on 7,500,000 Class C Rights issued to Mr Rogers was met.
(iv) On 24 February 2015, the vesting condition on 7,500,000 Class D Rights issued to Mr Rogers was met.
(v) On 21 May 2015, the vesting condition on 3,000,000 Class B Rights issued to Dr Loveridge was met.
(vi) On 12 August 2015, the vesting condition on 3,000,000 Class A Rights issued to Dr Loveridge was met.
(vii) On 11 August 2015, the vesting condition on 5,000,000 Class E Rights issued to Mr Rogers was met.
(viii) On 27 October 2017, the vesting condition on 2,000,000 Class G Rights issued to Mr Ruffles was met.
(ix) On 18 December 2017, the vesting condition on 6,000,000 Class H Rights issued to Dr Ketelbey was met.
(x) On 14 December 2017, the shares attached to the 5,000,000 Class F Rights were cancelled by the Company during
the year due to the vesting condition not being met. However, the share-based payment expense attached to these
Rights, was reversed in the prior year ending 30 June 2017 when the 5,000,000 Class F Rights were forfeited which was
when the former director, Mr Rogers, resigned from the Company, this being 30 November 2016.
29
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
4.
EXCUTIVE REMUNERATION OUTCOMES INCLUDING LINK TO PERFORMANCE
During the financial years ended 30 June 2019 and 30 June 2018 the KMP’s received either or all of the
following benefits:
Short-term benefits: cash salary, cash fees and cash bonuses;
Post-employment benefits;
Other long-term benefits; and
Share-based payments.
All remuneration paid to Directors and the other KMP is valued at the cost to the Company and expensed.
Table 1 - Remuneration of KMP for the year ended 30 June 2019:
Year ended
30/6/2019
Short-term
benefits
Post-
Other long-
Share-based
employment
term benefits
payments
Cash,
salary
and fees
Cash
Super-
bonus
annuation
Accrued
leave
benefits
LTI Rights /
Options
Shares
Total
Value of
SBP as a
% of total
remuneration
Directors (a)
$
$
$
$
$ (c)
$
$
%
Geoffrey Brooke
91,324
- 8,676
- 60,016
- 160,016
Bill Ketelbey
318,081
80,000 20,531 11,388 27,690
- 457,690
38%
6%
Jason Lov eridge (b)
20,000
- - -
- - 20,000
-
George Morstyn
60,000
- - - 11,658
- 71,658
Malcolm McComas (b)
15,000
- - - 3,533
- 18,533
16%
19%
Total Directors
504,405
80,000 29,207 11,388 102,897
- 727,897
(a) The total Non-Executive Director Fees including superannuation (excluding Dr Ketelbey) during the year totalled $195,000.
(b) During the year the following appointments and resignations occurred:
Dr Loveridge resigned as Non-Executive Director on 28 November 2018; and
-
- Mr McComas was appointed as Non-Executive Director on 4 April 2019.
(c) Refer to Note 20: Share-based Payments for further information.
Table 2 - Remuneration of KMP for the year ended 30 June 2018:
Year ended
Short-term
Post-
Other Long-
Share-based
30/6/2018
benefits
employment
term benefits
payments
Cash,
salary
and fees
Cash
Super-
bonus
annuation
Accrued
leav e
benefits (c)
LTI Rights /
Options
Shares
Total
Value of
SBP as a
% of total
remuneration
Directors (a)
$
$
$
$
$
$
$
%
Geoffrey Brooke
83,714
- 7,953
- 130,068
- 221,735
Bill Ketelbey
289,195
48,450 20,049 3,796 33,256
- 394,746
59%
8%
Jason Lov eridge
60,000
- - -
- - 60,000
-
George Morstyn (b)
30,000
- - - 7,705
- 37,705
20%
Anton Uv arov (b)
6,552
- 622
-
- - 7,174
-
Total Directors
469,461
48,450 28,624 3,796 171,029
- 721,360
(a) The total Non-Executive Director fees including superannuation (excluding Dr Ketelbey) during the year totalled $188,841.
(b) During the year the following appointments and resignations occurred:
-
-
Dr Uvarov resigned as Non-Executive Director on 14 August 2017; and
Dr Morstyn was appointed as Non-Executive Director on 1 December 2017.
(c) Accrued leave benefits were included in 2018 KMP remuneration for the first time in 2019.
30
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
5.
EXECUTIVE CONTRACTS
During the financial year the following executive was remunerated for his role and was subject to the
following contractual arrangement:
Dr Bill Ketelbey – Managing Director and Chief Executive Officer
- Commencement of employment: 18 December 2014.
-
Received salary totaling $329,469 (plus a bonus payment of $80,000 during the year) plus
superannuation of $20,531;
-
-
-
-
Remuneration package is $350,000 per annum (including statutory superannuation up to the ATO
threshold) with effect from 1 January 2018.
Included within the remuneration package is an STI scheme which is put in place by the Board of
Directors for the achievement of a number of various short-term performance conditions being met.
For further information on the STI’s refer to Section 3(C) of the Remuneration Report.
Term: The appointment of the employee will continue on an ongoing basis unless terminated earlier
in accordance with termination provisions.
Termination: The Company or the individual may terminate the contract by giving three months’
written notice. In the event of breach or criminal activity, termination is effective immediately
without payment other than the fee accrued to the date of termination.
6.
NON-EXECUTIVE DIRECTOR FEE ARRANGEMENTS
Non-Executive Directors are remunerated by way of fees, in the form of cash, non-cash benefits and
superannuation contributions and do not normally participate in schemes designed for the remuneration
of executives. As noted above, fees for Non-Executive Directors are generally not directly linked to the
performance of the Company, however, to align Directors’ interests with shareholder interests, the Directors
are encouraged to hold shares in the Company.
The maximum aggregate remuneration approved by shareholders for Non-Executive Directors, at an
Annual General Meeting held on 12 November 2015, is $500,000 per annum. The Directors set the individual
Non-Executive Directors fees within the limit approved by shareholders. Total fees, including superannuation,
paid to Non-Executive Directors during the year were $195,000.
During the financial year the following Non-Executive Directors were remunerated for their respective roles
and were subject to the following contractual arrangements:
Dr Geoffrey Brooke – Non-Executive Chairman
- Date of Appointment: 1 March 2017.
-
-
-
-
Received Director’s fees totaling $91,324 (plus GST) plus statutory superannuation totaling $8,676
during the year ended 30 June 2019.
Remuneration package is set at $100,000 per annum (plus GST and statutory superannuation).
Subject to annual review.
Term: Dr Brooke’s appointment is subject to retirement by rotation under the Company’s
Constitution.
Termination: The other members of the Board may request that the officer resign with immediate
effect in the event that the Board deems the individual’s performance is unsatisfactory, or the
Company’s shareholders may resolve to seek the officer’s removal by members’ resolution.
Alternatively, the individual may resign from the Board.
31
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Dr George Morstyn – Non-Executive Director
-
-
-
-
- Date of Appointment: 1 December 2017.
- Director’s fees received totaled $60,000 during the year ended 30 June 2019.
-
Remuneration package is set at $60,000 per annum (exclusive of GST and superannuation). Subject
to annual review.
Term: Dr Morstyn’s appointment is subject to retirement by rotation under the Company’s
Constitution.
Termination: The other members of the Board may request that the officer resign with immediate
effect in the event that the Board deems the individual’s performance is unsatisfactory, or the
Company’s shareholders may resolve to seek the officer’s removal by members’ resolution.
Alternatively, the individual may resign from the Board.
Mr. Malcolm McComas – Non-Executive Director
- Date of Appointment: 4 April 2019.
- Director’s fees received totaled $15,000 during the year ended 30 June 2019.
-
Remuneration package is set at $60,000 per annum (plus GST and exclusive of superannuation),
with effect from 4 April 2019. Subject to annual review.
Term: Dr McComas’ appointment is subject to retirement by rotation under the Company’s
Constitution.
Termination: The other members of the Board may request that the officer resign with immediate
effect in the event that the Board deems the individual’s performance is unsatisfactory, or the
Company’s shareholders may resolve to seek the officer’s removal by members’ resolution.
Alternatively, the individual may resign from the Board.
Dr Jason Loveridge – former Non-Executive Director
- Date of Appointment: 1 December 2014.
- Director’s fees received totaled $20,000 during the year ended 30 June 2019.
-
Remuneration package is set at $60,000 per annum (exclusive of GST and superannuation) with
effect from 1 February 2016. Subject to annual review.
Term: Dr Loveridge was elected as a Director at the Company‘s 2014 Annual General Meeting, with
effect from 1 December 2014 following the acquisition of Corticrine Limited; and thereafter was
subject to retirement by rotation under the Company’s Constitution.
-
- Dr. Loveridge resigned on 28 November 2018.
7.
(i)
ADDITIONAL DISCLOSURES RELATING TO OPTIONS
Option holding of KMP
At the date of this report, the unissued ordinary shares of Actinogen Medical under option carry no dividend
or voting rights. When exercisable, each option is convertible into one fully paid ordinary share of the
Company.
32
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Option holdings of KMP as at 30 June 2019:
Balance at
Net
Balance at
Director /
beginning of
Granted as
change
end of year
Vested at
Not vested
Class of Options
year 1/7/2018
remuneration
other
30/6/2019
30/6/2019
at 30/6/2019
Geoffrey Brooke
Director Options (G)
5,000,000
-
Director Options (F)
-
4,900,000
Bill Ketelbey (a)
Class H LTI Rights
Class I LTI Rights
Class J LTI Rights
5,000,000
4,900,000
6,000,000
3,000,000
3,000,000
-
-
-
Director Options (F)
-
11,700,000
12,000,000
11,700,000
George Morstyn
Director Options (D)
1,500,000
-
Director Options (F)
-
1,500,000
1,500,000
1,500,000
5,000,000
3,500,000
1,500,000
4,900,000
816,667
4,083,333
9,900,000
4,316,667
5,583,333
6,000,000
6,000,000
-
3,000,000
-
3,000,000
3,000,000
3,000,000
-
11,700,000
1,950,000
9,750,000
23,700,000
10,950,000
12,750,000
1,500,000
700,000
800,000
1,500,000
250,000
1,250,000
3,000,000
950,000
2,050,000
-
-
-
-
-
-
-
-
-
-
-
-
-
Malcolm McComas (b)
Director Options (H)
Jason Loveridge (c)
Class A LTI Rights
Class B LTI Rights
-
-
3,000,000
3,000,000
3,000,000
3,000,000
3,000,000
3,000,000
6,000,000
-
-
-
(3,000,000)
(3,000,000)
(6,000,000)
-
-
-
-
-
-
-
-
3,000,000
3,000,000
-
-
-
Total Directors
24,500,000
21,100,000
(6,000,000)
39,600,000
16,216,667
23,383,333
(a) As at 30 June 2019, Class I LTI Rights remain unvested as the vesting condition has not yet been met despite the
share-based payment expense against these LTI Rights being fully expensed in prior years based on the expected
vesting date at that time.
(b) Mr McComas was appointed as Non-Executive Director on 4 April 2019; and he was issued 3,000,000 Director
Options as part of his appointment. For accounting purposes, the share-based payment expense has been
prorated and recognised during the financial year end, however, the vesting conditions attached to these options
are that they vest quarterly from grant date. The options were granted on 4 April 2019, therefore, the first quarter
vesting date occurred subsequent to year end, on 4 July 2019, whereby 250,000 of the 3,000,000 options vested.
(c) Dr Loveridge resigned as Non-Executive Director on 28 November 2018.
For further information pertaining to options on issue to Directors and the vesting conditions attached to these options,
refer to Section 3(C)(b) within the Remuneration Report for further information.
33
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Option holdings of KMP as at 30 June 2018:
Balance at
Net
Balance at
Director /
beginning of
Granted as
change
end of year
Vested at
Not v ested
Class of Options
year 1/7/2017
remuneration
other
30/6/2018
30/6/2018
at 30/6/2018
Geoffrey Brooke
Director Options
Bill Ketelbey (a)
Class H LTI Rights
Class I LTI Rights
Class J LTI Rights
Jason Lov eridge
Class A LTI Rights
Class B LTI Rights
George Morstyn (b)
Director Options
5,000,000
5,000,000
6,000,000
3,000,000
3,000,000
12,000,000
3,000,000
3,000,000
6,000,000
-
-
-
-
-
-
-
-
-
-
-
1,500,000
1,500,000
Total Directors
23,000,000
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
2,000,000
3,000,000
5,000,000
2,000,000
3,000,000
6,000,000
6,000,000
-
3,000,000
3,000,000
-
-
3,000,000
3,000,000
12,000,000
6,000,000
6,000,000
3,000,000
3,000,000
3,000,000
3,000,000
6,000,000
6,000,000
-
-
-
1,500,000
1,500,000
-
-
1,500,000
1,500,000
24,500,000
14,000,000
10,500,000
(a) As at 30 June 2018, Class I and Class J LTI Rights remain unvested as the vesting condition has not yet been met
despite the share-based payment expense against these LTI Rights being fully expensed in prior years based on the
expected vesting date at that time.
(b) George Morstyn commenced as Non-Executive Director on 1 December 2017. He was issued Director Options as
part of his appointment. Refer to Section 3(C)(b)(ii) within the Remuneration Report for further information.
For further information pertaining to options on issue to Directors and the vesting conditions attached to these options,
refer to Section 3(C)(b) within the Remuneration Report for further information.
34
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(ii)
Value of options awarded, vested and lapsed during the financial year
The value of the options awarded, vested and lapsed during the year are outlined in the Table below.
Total share-
Total share-
Value
Value
Total share-based
Value to be
Remuneration
based
Value vested
based payments
recognised
lapsed
payments
recognised
consisting of
Directors /
payment
during the
expensed as at
during the
during the
expensed as at
in future
option for the
Class of option issued
valuation
year
1 July 2018
year
year
30 June 2019
years
year (%)
G. Brooke
Director Options (G)
$
98,114
$
-
$
98,114
$
-
$
-
$
98,114
$
-
Director Options (G)
$
73,586
$
-
$
46,672
$
26,914
$
-
$
73,586
$
-
Director Options (G)
$
73,586
$
-
$
27,278
$
21,505
$
-
$
48,783
$
24,803
Director Options (F)
$
69,580
$
11,597
$
-
$
11,597
$
-
$
11,597
$
57,983
B. Ketelbey
Class H LTI Rights
$
218,886
$
-
$
218,886
$
-
$
-
$
218,886
$
-
Class I LTI Rights
$
109,443
$
109,443
$
-
$
-
$
109,443
$
-
Class J LTI Rights
$
109,443
$
109,443
$
109,443
$
-
$
-
$
109,443
$
-
Director Options (F)
$
166,140
$
27,690
$
-
$
27,690
$
-
$
27,690
$
138,450
G. Morstyn
Director Options (D)
$
9,030
$
-
$
5,220
$
3,810
$
-
$
9,030
$
-
Director Options (D)
$
5,160
$
-
$
1,491
$
2,580
$
-
$
4,071
$
1,089
Director Options (D)
$
5,160
$
-
$
993
$
1,718
$
-
$
2,712
$
2,448
Director Options (F)
$
21,300
$
3,550
$
-
$
3,550
$
-
$
3,550
$
17,750
M. McComas
0%
17%
13%
7%
0%
0%
0%
6%
5%
4%
2%
5%
Director Options (H)
$
42,396
$
3,533
$
-
$
3,533
$
-
$
3,533
$
38,863
19%
J. Loveridge
Class A LTI Rights
$
112,848
$
-
$
112,848
$
-
$
(112,848)
$
-
$
-
Class B LTI Rights
$
112,848
$
-
$
112,848
$
-
$
(112,848)
$
-
$
-
0%
0%
Total Directors
$
1,227,519
$
155,813
$
843,237
$
102,896
$
(225,696)
$
720,437
$
281,386
Refer to Section 3(C)(b)(ii) within the Remuneration Report for detailed information relating to options issued to Directors.
35
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(iii)
Number of options awarded, vested and lapsed during the financial year
Directors /
Class of option
issued
G. Brooke
Fair value
per option
Quantity
Quantity
Quantity
lapsed
Quantity
vested
at grant
Finacial
Vesting
Exercise
Expiry
as at
during the
as at
during the
Grant Date
date
Year
date
price
date
1 July 2018
year
30 June 2019
year
Director Options (G)
24/03/2017
$
0.049
2017
24/03/2018
$
0.10
24/03/2025
2,000,000
Director Options (G)
24/03/2017
$
0.049
2017
24/03/2019
$
0.10
24/03/2025
1,500,000
Director Options (G)
24/03/2017
$
0.049
2017
24/08/2020
$
0.10
24/03/2025
1,500,000
Director Options (F)
28/11/2018
$
0.014
2019
See Note 1
$
0.09
27/11/2023
4,900,000
B. Ketelbey
Class H LTI Rights
15/12/2014
$
0.036
2015
18/12/2017
$
0.04
15/12/2019
6,000,000
Class I LTI Rights
15/12/2014
$
0.036
2015
30/06/2015
$
0.04
15/12/2019
3,000,000
Class J LTI Rights
15/12/2014
$
0.036
2015
30/06/2017
$
0.04
15/12/2019
3,000,000
Director Options (F)
28/11/2018
$
0.014
2019
See Note 1
$
0.09
27/11/2023
11,700,000
G. Morstyn
Director Options (D)
18/01/2018
$
0.013
Director Options (D)
18/01/2018
$
0.013
Director Options (D)
18/01/2018
$
0.013
2018
2018
2018
1/12/2018
$
0.10
1/12/2022
1/12/2019
$
0.10
1/12/2022
1/12/2020
$
0.10
1/12/2022
700,000
400,000
400,000
Director Options (F)
28/11/2018
$
0.014
2019
See Note 1
$
0.09
27/11/2023
1,500,000
M. McComas
Director Options (H)
4/04/2019
$
0.014
2019
See Note 1
$
0.10
4/04/2024
3,000,000
J. Loveridge
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
1,500,000
1,500,000
1,500,000
-
4,900,000
816,667
6,000,000
3,000,000
-
-
3,000,000
3,000,000
11,700,000
1,950,000
700,000
400,000
400,000
700,000
-
-
1,500,000
250,000
3,000,000
-
-
-
Class A LTI Rights
19/11/2014
$
0.038
Class B LTI Rights
19/11/2014
$
0.038
2015
2015
30/09/2015
$
0.02
30/11/2019
3,000,000
(3,000,000)
31/12/2015
$
0.02
30/11/2019
3,000,000
(3,000,000)
-
-
Total Directors
45,600,000
(6,000,000)
39,600,000
8,216,667
Note 1: Director Options (F) and (H) both vest quarterly over a period of three years from the date of grant.
Refer to Section 3(C)(b)(ii) within the Remuneration Report for detailed information relating to options issued to Directors.
36
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
8.
ADDITIONAL DISCLOSURES RELATING TO SHARES
There were no shares issued as compensation to KMP during the financial year ended 30 June 2019. LTI
Rights held by KMP, despite being ordinary fully paid shares, represent an option arrangement and
have not been included in the table below.
Shareholding of KMP as at 30 June 2019:
Balance at
Balance at
Directors
year 1/7/2018
remuneration
options
other (a)
30/6/2019
beginning of
Granted as
On exercise of
Net change
end of year
Geoffrey Brooke
Bill Ketelbey (b)
Jason Lov eridge
George Morstyn
Malcolm McComas
1,025,000
353,803
21,875,078
200,000
-
Total Directors
23,453,881
-
-
-
-
-
-
-
-
-
-
-
-
300,000
1,325,000
600,000
953,803
(21,875,078)
-
-
500,000
200,000
500,000
(20,475,078)
2,978,803
(a) Movement relates to shares purchased by Dr Brooke and Dr Ketelbey pursuant to the Share Purchase Plan issued
13/7/2018; shares purchased by Mr McComas on-market prior to his appointment as a director; and Dr
Loveridge’s resignation on 28 November 2019.
(b) Dr Ketelbey also holds 12,000,000 LTI Rights that despite being accounted for as “in-substance options”, they are
issued ordinary shares that carry voting and divided rights, however, with a restriction on being able to trade
them. Refer to Section 3(C)(b)(iii) within the Remuneration Report for information on LTI Rights.
Shareholding of KMP as at 30 June 2018:
Balance at
Balance at
Directors
year 1/7/2017
remuneration
options
other (a)
30/6/2018
beginning of
Granted as
On exercise of
Net change
end of year
Geoffrey Brooke
Bill Ketelbey
Jason Lov eridge
George Morstyn
Anton Uv arov
Total Directors
400,000
353,803
21,875,078
-
4,187,244
26,816,125
-
-
-
-
-
-
-
-
-
-
-
-
625,000
1,025,000
-
-
353,803
21,875,078
200,000
200,000
(4,187,244)
-
(3,362,244)
23,453,881
(a) Movement relates to shares purchased on-market during the year; other than Anton Uvarov’s movement
which represents his resignation on 14 August 2017
9.
LOANS MADE TO KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES
No loans were made to any KMP or any of their related entities during the reporting period. In a prior
year, limited recourse interest free loans were provided to KMP in the form of LTI Rights. As at 30 June
2019, the total value of the loans outstanding is $480,000 which relates to Dr Ketelbey’s Class H, I and J
LTI Rights. The loans are not recognised as the LTI Rights are accounted for as “in-substance options”.
Refer to Section 3(C)(b)(iii) within the Remuneration Report for information on LTI Rights.
10.
OTHER TRANSACTIONS WITH KEY MANAGEMNET PRESONNEL AND THEIR RELATED PARTIES
There were no other transactions with any Director of KMP or any of their related entities during the year.
End of Audited Remuneration Report
37
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
16.
INDEMNIFICATION OF AUDITORS
To the extent permitted by Law, the Company has agreed to indemnify its auditors, Ernst & Young, as
part of the terms of its audit engagement agreement against claims by third parties arising from the audit
(for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the
financial year.
17.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, Actinogen Medical paid a base premium of $36,438 to insure the Directors and
officers of the Company. The liabilities insured are legal costs that may be incurred in defending civil or
criminal proceedings that may be brought against the officers in their capacity as officers in the
Company, and any other payments arising from liabilities incurred by the officers in connection with such
proceedings.
This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers
or the improper use by the officers of their position or of information to gain advantage for themselves or
someone else or to cause detriment to the Company. It is not possible to apportion the premium between
amounts relating to the insurance against legal costs and those relating to other liabilities.
18. PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court, under section 237 of the Corporations Act 2001, to bring
proceedings on behalf of the Company or intervene in any proceedings to which the Company is party
for the purpose of taking responsibility on behalf of the Company for all or part of these proceedings. The
Company was not a party to any such proceedings during the year.
19. ENVIRONMENTAL REGULATIONS
The Company's operations are not subject to significant environmental regulation under the Australian
Commonwealth or State law.
20. NON-AUDIT SERVICES
No fees were paid for non-audit services to the external auditors and their associated entities during the
years ended 30 June 2019 and 30 June 2018.
21. AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001
for the year ended 30 June 2019 forms a part of the Directors’ Report and can be found on page 39.
Signed in accordance with a resolution of the Board of Directors.
Dr Bill Ketelbey
Managing Director
Sydney, New South Wales
Friday, 16 August 2019
38
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Actinogen
Medical Limited
As lead auditor for the audit of the financial report of Actinogen Medical Limited for the financial year
ended 30 June 2019, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
Ernst & Young
Pierre Dreyer
Partner
16 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TD:KG:ACTINOGEN:008
ACTINOGEN MEDICAL LIMITED
S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E
F o r t h e y e a r e n d e d 3 0 J u n e 2 0 1 9
__________________________________________________________________
Rev enue from continuing operations
Other income
Total revenue & other incom e
Business dev elopment
Corporate administration expenses
Research & dev elopment expenses
Finance costs
Share-based payment expenses
Amortisation expense
Impairment loss
Depreciation expense
Total expenses
Loss before income tax
Income tax expense
Loss for the Year
Full year ended
Full year ended
30/06/2019
30/06/2018
Note
$
$
204,546 91,897
4,862,755
3,251,283
5,067,301
3,343,180
(776,052) (528,418)
(658,886) (696,654)
(12,553,709) (7,741,706)
(7,987) (11,457)
(127,949) (239,514)
(353,500) (353,500)
(476,900)
-
- (2,540)
(14,954,983) (9,573,789)
6
6
11
11
10
(9,887,682) (6,230,609)
7
-
-
(9,887,682)
(6,230,609)
Other comprehensiv e income
Item s that m ay be reclassified subsequently to profit and loss:
Transfer of av ailable-for-sale reserv e to profit and
loss upon disposal of av ailable-for-sale
inv estments
Total comprehensive loss for the Year
- (76,607)
(9,887,682)
(6,307,216)
Loss per share for attributable to the ordinary equity
holders of the Company
Basic loss per share (cents)
Diluted loss per share (cents)
15
15
(0.90)
(0.90)
(0.88)
(0.88)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
40
ACTINOGEN MEDICAL LIMITED
S T A T E M E N T O F F I N A N C I A L P O S I T I O N
A s a t 3 0 J u n e 2 0 1 9
_________________________________________________________________
CURRENT ASSETS
Cash and cash equiv alents
Trade and other receiv ables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Other receiv able - restricted cash
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Prov isions
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserv e shares
Reserv es
Accumulated losses
TOTAL EQUITY
As at
As at
30/06/2019
30/06/2018
Note
$
$
8
9
10
11
12
13
13
14
7,636,601
4,890,521
9,896,760
3,532,414
12,527,122
13,429,174
-
-
3,659,553
4,489,953
35,266 107,037
3,694,819
16,221,941
4,596,990
18,026,164
433,575
649,225
123,820 119,028
557,395
768,253
15,664,546
17,257,911
48,044,606
40,438,238
(480,000) (1,040,000)
7,296,257 7,168,308
(39,196,317)
(29,308,635)
15,664,546
17,257,911
The above Statement of Financial Position should be read in conjunction with the accompanying Notes.
41
ACTINOGEN MEDICAL LIMITED
S T A T E M E N T O F C A S H F L O W S
F o r t h e y e a r e n d e d 3 0 J u n e 2 0 1 9
_________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Div idends receiv ed
Interest receiv ed
Interest paid
Payments to suppliers and employees
Payments for research and dev elopment
Full year ended
Full year ended
30/06/2019
30/06/2018
Note
$
$
- 53,182
204,546
38,715
(7,987) (11,457)
(1,300,665) (1,170,799)
(12,633,011) (8,086,285)
Gov ernment grants and rebate receiv ed
3,238,819
1,265,592
Net cash (outflow) from operating activities
8
(10,498,298)
(7,911,052)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
10
- (274)
NAB bank guarantee (restricted cash) for Sydney
office premise.
71,771 (107,037)
Proceeds on sale of av ailable-for-sale listed
- 2,060,671
Net cash inflow from investing activities
71,771
1,953,360
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
7,923,616 14,756,150
Transaction costs associated with issue of shares
(317,248) (796,303)
Repayment of loan attached to LTI Rights
560,000
-
Net cash inflow from financing activities
8,166,368 13,959,847
Net (decrease)/increase in cash and cash equivalents
(2,260,159)
8,002,155
Cash and cash equiv alents at beginning of the year
9,896,760
1,894,605
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
8
7,636,601
9,896,760
The above Statement of Cash Flows should be read in conjunction with the accompanying Notes.
42
ACTINOGEN MEDICAL LIMITED
S T A T E M E N T O F C H A N G E S I N E Q U I T Y
F o r t h e y e a r e n d e d 3 0 J u n e 2 0 1 9
_________________________________________________________________
Fair Value Reserve
of Financial Assets
Contributed
Accumulated
at Fair Value
Option
Reserve
Equity
Losses
through Other
Reserve
Shares
Total
Comprehensive
Income
Full year ended 30/6/2019
$
$
$
$
$
$
Balance as at 1/7/2018
40,438,238
(29,308,635)
- 7,168,308 (1,040,000) 17,257,911
Loss for the year
-
(9,887,682)
- -
- (9,887,682)
Other comprehensiv e income
-
-
- -
- -
Total comprehensiv e loss for the
- (9,887,682)
- -
- (9,887,682)
year
Transactions with equity holders
in their capacity as equity
holders:
S hares issued during the year
7,923,616
-
- -
- 7,923,616
Capital raising costs
(317,248)
(317,248)
Repayment of LTI Rights upon
cessation of employment
-
-
- - 560,000 560,000
S hare-based payments
-
-
- 127,949
Balance as at 30/6/2019
48,044,606
(39,196,317)
- 7,296,257
- 127,949
(480,000) 15,664,546
Contributed
Accumulated
Equity
Losses
Full year ended 30/6/2018
$
$
Fair Value
Reserv e of
Financial Assets
at Fair Value
through Other
Comprehensiv e
Income
$
Option
Reserv e
Reserv e
Shares
Total
$
$
$
Balance as at 1/7/2017
26,578,391
(23,078,026) 76,607
6,928,794 (1,140,000)
9,365,766
Loss for the year
-
(6,230,609)
- -
- (6,230,609)
Other comprehensiv e income
-
- (76,607)
-
- (76,607)
Total comprehensiv e loss for the
-
(6,230,609) (76,607)
-
- (6,307,216)
year
Transactions with equity holders
in their capacity as equity
holders:
S hares issued during the year
14,756,150
-
- -
- 14,756,150
Capital raising costs
(796,303)
-
- -
- (796,303)
Cancellation on unv ested
loan shares
(100,000)
-
- - 100,000
-
S hare-based payments
-
-
- 239,514
- 239,514
Balance as at 30/6/2018
40,438,238
(29,308,635)
- 7,168,308 (1,040,000) 17,257,911
The above Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
43
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
1.
CORPORATE INFORMATION
The financial statements of Actinogen Medical Limited (‘Actinogen Medical’ or ‘the Company’) for the
year ended 30 June 2019 were authorised in accordance with a resolution of Directors on 15 August
2019.
Actinogen Medical is a for profit company limited by shares incorporated and domiciled in Australia
whose shares are publicly traded on the Australian Securities Exchange (‘ASX’). The nature of
operations and principal activities of the Company are described in the Directors’ Report.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated
below. The financial statements of the Company are for the financial year ended 30 June 2019.
(a)
Basis of preparation
These general-purpose financial statements have been prepared in accordance with Australian
Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards
Board, and the Corporations Act 2001. The financial statements have been prepared on a going
concern basis. The financial statements are presented in Australian dollars.
(b) Going concern basis
This financial report has been prepared on the going concern basis which contemplates the continuity
of normal business activity and the realisation of assets and settlement of liabilities in the normal course
of business.
The Company has incurred a loss after tax for the year ended 30 June 2019 of $9,887,682 (30 June 2018:
$6,230,609) and experienced net cash outflows from operating activities of $10,498,298 (30 June 2018:
$7,911,052).
In arriving at this position, the Directors have had regard for the fact that based on the matters noted
below the Company has, or in the Directors’ opinion will have access to, sufficient cash to fund
administrative and other committed expenditure for a period of not less than 12 months from the date
of this report. In forming this view the Directors have taken into consideration the following:
The Company has $7,636,601 in cash and cash equivalents as at 30 June 2019. The Company is
listed on the ASX and therefore has access to the Australian equity capital markets. Accordingly,
the Directors consider that the Company maintains a reasonable expectation of being able to
raise funding from the market as and when required, although it cannot determine in advance
the terms upon which it may raise such funding.
The Company is achieving key milestones with respect to its XanADu trial, an international multi-
site Phase II efficacy and safety trial of Xanamem, Actinogen Medical’s drug candidate that has
been specifically designed to block the production of cortisol in the brain. This provides the
Directors with confidence as regards the Company’s prospects of generating positive cash flow
from operations in the future.
The Company will be submitting a claim for the Research and Development Tax Incentive in
respect of the 2019 tax year. The Company is satisfied that it meets the criteria to qualify for a cash
refund and is confident the expenditure to be claimed will satisfy the tests of eligibility. The amount
of eligible expenditure in the 2019 financial year is estimated to be $10,582,210, and if approved,
would lead to a cash refund of $4,603,261 which has been recognised in the current year financial
statements. Refer to Note 9: Trade and other receivables.
(c) Compliance with IFRS
The financial statements of the Company also comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
44
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
(d)
Historical cost convention
These financial statements have been prepared under the historical cost convention, except for certain
financial assets which have been measured at fair value.
(e) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Company’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements are disclosed in Note 4.
(f)
Plant & equipment
Each asset of plant and equipment is stated at cost, net of accumulated depreciation and impairment
losses, if any. Assets are depreciated from the date the asset is ready for use.
Items of plant and equipment are depreciated using the diminishing value method over their estimated
useful lives to the Company. The depreciation rates used for each class of asset for the current period
are as follows:
Computer Equipment
General Pool Assets >$1,000
25% to 66.67%
37%
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount. The recoverable amount is assessed on the
basis of expected net cash flows that will be received from the assets continual use or subsequent
disposal. The expected cash flows have been discounted to their present value in determining the
recoverable amount.
An asset is de-recognised upon disposal or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in the Statement of
Comprehensive Income when the asset is de-recognised.
The assets’ residual values, useful lives and methods of depreciation are reviewed, and adjusted if
appropriate, at each balance date.
(g)
Impairment of non-financial assets
At each reporting date, the Company reviews the carrying values of its assets to determine whether
there is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair value less costs of disposal and value in use, is
compared to the assets carrying value. Any excess of the assets carrying value over its recoverable
amount is expensed to the Statement of Comprehensive Income. Where it is not possible to estimate
the recoverable amount of an individual asset, the Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken
into account. If no such transactions can be identified, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value measures.
(h)
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their fair value at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses. Internally generated intangibles, excluding capitalised development costs, are not
capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure
is incurred.
45
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite
lives are amortised over the useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting
period. Changes in the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset are considered to modify the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates and adjusted on a prospective basis.
The amortisation expense on intangible assets with finite lives is recognised in the Statement of
Comprehensive Income.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, or
when indicators of impairment exist, individually or at the cash-generating unit level. The assessment of
indefinite life is reviewed annually, or when indicators of impairment exist, to determine whether the
indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made
on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured
as the difference between the net disposal proceeds and the carrying amount of the asset and are
recognised in the Statement of Comprehensive Income when the asset is derecognised.
(i) Research and development costs
Development expenditures on an individual project is recognised as an intangible asset when the
Company can demonstrate:
The technical feasibility of completing the intangible asset so that the asset will be available for
use or sale
Its intention to complete and its ability to use or sell the asset
How the asset will generate future economic benefits
The availability of resources to complete the asset
The ability to measure reliably the expenditure during development
The ability to use the intangible asset generated
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less
any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins
when development is complete, and the asset is available for use. It is amortised over the period of
expected future benefit. During the period of development, the asset is tested for impairment annually.
The Company assessed whether the above criteria had been met for the financial year ended 30 June
2019. The Company did not meet this criterion and as a consequence all research and development
costs were expensed to profit and loss for the current year.
(ii)
Intellectual property
The Company’s intangible assets relate to intellectual property for upfront payments to purchase
patents and licenses. The patents and licenses have been granted for a period of 20 years by the
relevant government agency with the option of renewal at the end of this period. As a result, those
patents and licenses are amortised on a straight-line basis over the period of the patent patents and
license. The remaining life of the patents and licenses is 12 years. Refer to Note 11: Intangible Assets.
(i)
Government grants
Research and development tax rebates are treated as a government grant. Government grants are
recognised where there is reasonable assurance that the grant will be received, and all attached
conditions will be complied with. When the grant relates to an expense item, it is recognised as income
on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed.
(j)
Income tax
The charge for current income tax expense is based on the result for the year adjusted for any non-
assessable or disallowed items. It is calculated using the tax rates that have been enacted or are
substantially enacted by the end of the reporting period.
Deferred income tax is accounted for using the liability method on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
46
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
However, the deferred income tax from the initial recognition of an asset or liability, in a transaction
other than a business combination is not accounted for if it arises that at the time of the transaction;
and affects neither accounting or taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are expected to apply when the asset is realised, or
liability is settled. Deferred tax is credited in the Statement of Comprehensive Income except where it
relates to items that may be credited directly to equity, in which case the deferred tax is adjusted
directly against equity. Deferred tax assets are recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current
and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
(k)
Employee benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits that are expected to be settled within one year have
been measured at the amounts expected to be paid when the liability is settled, plus related on-costs.
Employee benefits payable later than one year have been measured at the present value of the
estimated future cash outflows to be made for those benefits discounted using the interest rate on high
quality corporate bonds with terms to maturity approximating the terms of the liability.
(l)
Share-based payments
The Company provides benefits to employees (including Directors) and consultants of the Company in
the form of share-based payment transactions, whereby employees and consultants render services in
exchange for shares or rights over shares (‘equity-settled transactions’). The cost of these equity-settled
transactions with employees is measured by reference to the fair value at the date at which they are
granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing
model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that,
in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the
best available information at balance date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in the determination of
fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only
conditional upon a market condition. Where an equity-settled award is cancelled, it is treated as if it
had vested on the date of cancellation, and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for the cancelled award; and
designated as a replacement award on the date that it is granted, the cancelled and new award are
treated as if they were a modification of the original award.
(m) Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, bank overdrafts and other short term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
47
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
(n)
Revenue from contracts with customers
Revenue is recognised when control of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Company is entitled. The following specific
recognition criteria must also be met before revenue is recognised:
Interest revenue is recorded using the effective interest rate method (EIR). EIR is the rate that exactly
discounts the estimated future cash payments or receipts over the expected life of the financial
instrument, or a shorter period, where appropriate, to the net carrying amount of the financial asset or
liability. Interest income is included in finance income in the Statement of Comprehensive Income.
Investment income is recognised when the Company’s right to receive payment is established.
(o) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the ATO. In these circumstances the GST is recognised as part of
the cost of acquisition of the asset or as part of the expense. Receivables and payables in the Statement
of Financial Position are shown inclusive of GST. Cash flows are presented in the Statement of Cash
Flows on a gross basis, except for the GST component of investing and financing activities, which are
disclosed as operating cash flows.
(p) Contributed equity
Ordinary issued share capital is recognised at the fair value of the consideration received by the
Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity
as a reduction in share proceeds received.
(q)
Trade and other payables
Liabilities for trade creditors and other amounts are subsequently carried at amortised cost after initial
recognition at fair value. Interest, when charged by the lender, is recognised as an expense on an
accrual basis.
(r)
Provisions
Provisions for legal claims and make good obligations are recognised when the Company has a
present legal or constructive obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the reporting date. The discount rate used to determine the
present value reflects current market assessments of the time value of money and the risks specific to
the liability. The increase in the provision due to the passage of time is recognised as interest expense.
(s)
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the result attributable to owners of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
issued during the year.
48
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted average number of additional ordinary shares that
would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
(t)
Trade receivables
Trade receivables are recognised initially at the transaction price as determined under AASB 15 and
subsequently measured at amortised cost using the effect interest method, less allowance for
impairment. Trade receivables are generally due for settlement within 30 days. Refer to impairment of
trade receivables in section (u) below.
(u)
Financial instruments – initial recognition and subsequent measurement
(i)
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair
value through profit or loss or fair value through other comprehensive income (“OCI”).
The classification of financial assets at initial recognition depends on the financial assets’ contractual
cash flow characteristics and the Company’s business model for managing them. With the exception
of trade receivables that do not contain a significant financing component or for which the Company
has applied the practical expedient, the Company initially measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing component or for which the Company has
applied the practical expedient for contracts that have a maturity of one year or less, are measured
at the transaction price determined under AASB 15.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI,
it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the
principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an
instrument level.
The Company’s business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the financial assets, or both.
Subsequent measurement up to 30 June 2018
Loans and receivables
This category which was used up to 30 June 2018 was the most relevant to the Company. Loans and
receivables were non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial measurement, such financial assets were subsequently
measured at amortised cost using the EIR method, less impairment.
Amortised cost was calculated by taking into account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR.
The EIR amortisation is included in finance income in the Statement of Comprehensive Income. The
losses arising from impairment are recognised in the Statement of Comprehensive Income in finance
costs for loans and in cost of sales or other operating expenses for receivables. This category generally
applies to trade and other receivables. For more information on receivables, refer to Note 9.
Subsequent measurement from 1 July 2018
For purposes of subsequent measurement from 1 July 2018, financial assets are classified in four
categories:
49
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
Financial assets at amortised cost (debt instruments)
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and
losses upon derecognition (equity instruments)
Financial assets at fair value through profit or loss
The Company only held financial assets at amortised cost from 1 July 2018.
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Company. The Company measures financial assets at
amortised cost if both of the following conditions are met:
The financial asset is held within a business model with the objective to hold financial assets in order
to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using EIR method and are subject to
impairment. Interest received is recognised as part of finance income in the statement of profit or loss
and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is
derecognised, modified or impaired.
The Company’s financial assets at amortised cost includes trade and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e. removed from the Company’s Statement of Financial Position)
when:
The rights to receive cash flows from the asset have expired; or
the Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all
the risks and rewards of the asset but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to
the extent of its continuing involvement. In that case, the Company also recognises an associated
liability. The transferred asset and the associated liability are measured on a basis that reflects the rights
and obligations that the Company has retained. Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the lower of the original carrying amount of the
asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets up to 30 June 2018
The Company assessed, at each reporting date, whether there was objective evidence that a financial
asset or a group of financial assets was impaired. An impairment existed if one or more events that had
occurred since the initial recognition of the asset (an incurred ‘loss event’), had an impact on the
estimated future cash flows of the financial asset or the group of financial assets that could be reliably
estimated.
Evidence of impairment may have included indications that the debtor or a group of debtors was
experiencing significant financial difficulty, default or delinquency in interest or principal payments, the
probability that they would enter bankruptcy or other financial reorganisation and observable data
indicating that there is a measurable decrease in the estimated future cash flows, such as changes in
arrears or economic conditions that correlate with defaults.
50
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Company first assessed whether impairment existed
individually for financial assets that were individually significant, or collectively for financial assets that
were not individually significant. If the Company determined that no objective evidence of impairment
existed for an individually assessed financial asset, whether significant or not, it includes the asset in a
group of financial assets with similar credit risk characteristics and collectively assessed them for
impairment. Assets that were individually assessed for impairment and for which an impairment loss is,
or continues to be, recognised are not included in a collective assessment of impairment.
The amount of any impairment loss identified was measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future expected
credit losses that had not yet been incurred). The present value of the estimated future cash flows was
discounted at the financial asset’s original EIR.
The carrying amount of the asset was reduced through the use of an allowance account and the loss
was recognised in the Statement of Comprehensive Income. Interest income (recorded as finance
income in the Statement of Comprehensive Income) continued to be accrued on the reduced
carrying amount using the rate of interest used to discount the future cash flows for the purpose of
measuring the impairment loss.
Loans, together with the associated allowance were written off when there is no realistic prospect of
future recovery and all collateral had been realised or had been transferred to the Company. If, in a
subsequent year, the amount of the estimated impairment loss increased or decreased because of an
event occurring after the impairment was recognised, the previously recognised impairment loss was
increased or reduced by adjusting the allowance account. If a write-off was later recovered, the
recovery was credited to finance costs in the Statement of Comprehensive Income.
Impairment of financial assets from 1 July 2018
The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not
held at fair value through profit or loss. ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows that the Company expects to receive,
discounted at an approximation of the original effective interest rate. For those credit exposures for
which there has been a significant increase in credit risk since initial recognition, a loss allowance is
required for credit losses expected over the remaining life of the exposure, irrespective of the timing of
the default (a lifetime ECL).
For trade receivables, the Company applies the simplified approach in calculating ECLs. Therefore, the
Company does not track changes in credit risk, but instead recognises a loss allowance based on the
financial asset’s lifetime ECL at each reporting date. The group has established a provision
methodology that is based on its historical credit loss experience, adjusted for forward-looking factors
specific to the debtors and the economic environment.
The amount of the impairment loss is recognised in the Statement of Comprehensive Income within
impairment losses – financial assets. When a trade receivable for which an expected credit loss
provision has been recognised becomes uncollectible in a subsequent period, it is written off against
the allowance account. Subsequent recoveries of amounts previously written off are credited against
impairment losses – financial assets in the Statement of Comprehensive Income.
(ii)
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an
effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable transaction costs. The
Company’s financial liabilities include trade and other payables.
The only financial liabilities the Company has are trade payables which we subsequently measured at
amortised cost using the EIR method. Refer to Note 12 for more detail.
51
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the Statement of Comprehensive
Income.
(v)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board of
Directors.
(w)
New accounting standards and interpretations adopted
Since 1 July 2018, Actinogen Medical has adopted all Accounting Standards and Interpretation,
mandatory for annual periods beginning on or before 1 July 2018.
It has been determined that there is no material impact as a result of the newly adopted standards
and interpretations. These standards are discussed below.
AASB 15 Revenue from Contracts with Customers (“AASB 15“)
AASB 15 supersedes AASB 118 Revenue, AASB 111 Construction Contracts and related Interpretations
and it applies to all revenue arising from the contracts with customers, unless those contracts are in
scope with other standards. The new standard establishes a five-step model to account for revenue
arising from contracts with customers. Under AASB 15, revenue is recognised as an amount that reflects
the consideration to which an entity expects to be entitled in exchange for transferring goods or
services to a customer.
At 1 July 2018, it was determined that the adoption of AASB 15 had no impact on the Company, other
than interest receivable, as it is not revenue generating.
AASB 9 Financial Instruments (“AASB 9“)
In accordance with the transitional provisions in AASB 9, comparative figures have not been restated
and continue to be reported under AASB 139. AASB 9 replaces AASB 139 Financial Instruments:
Recognition and Measurement (“AASB 139”), bringing together all three aspects of the accounting for
financial instruments: classification and measurements; impairment and hedge accounting.
Classification and Measurement:
Under AASB 9, debt instruments are subsequently measured at fair value through profit and loss (FVPL),
amortise cost, or fair value through other comprehensive income (FVOCI). The classification is based
on two criteria: the Company’s business model for managing the assets; and whether the instruments’
contractual cash flows represent “solely payment of principal and interest’ on the principal amount
outstanding (the “SPPI test”). The SPPI test is applied to the entire financial asset, even if it contains an
embedded derivative.
As the date of initial application, existing financial assets and liabilities of the Company were assessed
in terms of the requirements of AASB 9. The assessment was conducted on instruments that had not
been derecognised as at 1 July 2018.
In this regard, the Company has determined that the adoption of AASB 9 has impacted the
classification of financial instruments at 1 July 2018 as follows:
52
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
Class of financial instrument
Original measurement
New measurment category
presented in the
Statement of Financial Position
category unde AASB 139
(prior to 1 Juy 2018)
Cash and cash equiv alents
Loans and receiv ables
Trade and other receiv ables
Loans and receiv ables
under AASB 9
(from 1 July 2018)
Financial assets at
amortised cost
Financial assets at
amortised cost
Trade and other payables
Financial Liability at
Financial liabilities at
amortised cost
amortised cost
The change in classification of financial instruments has not resulted in any re-measurement
adjustment at 1 July 2018.
(x)
New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30
June 2019 reporting periods and have not been early adopted by the Company. These new standards and
interpretations, and the status of the Company’s assessment of impact on the Company, are set out below.
Application
date of
standard*
Application
date for
Company*
1 January 2019 1 July 2019
1 January 2020 1 July 2020
Reference
Title
Summary
AASB 16
Leases
AASB 3
Definition of
a Business -
Amendment
s to AASB 3
AASB 16 requires lessees to account for all leases under a single on-balance
sheet model in a similar way to finance leases under AASB 117 Leases. The
standard includes two recognition exemptions for lessees – leases of ’low-
value’ assets (e.g., personal computers) and short-term leases (i.e., leases
with a lease term of 12 months or less). At the commencement date of a
lease, a lessee will recognise a liability to make lease payments (i.e., the
lease liability) and an asset representing the right to use the underlying asset
during the lease term (i.e., the right-of-use asset).
Lessees will be required to separately recognise the interest expense on the
lease liability and the depreciation expense on the right-of-use asset.
Lessees will be required to remeasure the lease liability upon the occurrence
of certain events (e.g., a change in the lease term, a change in future lease
payments resulting from a change in an index or rate used to determine
those payments). The lessee will generally recognise the amount of the
remeasurement of the lease liability as an adjustment to the right-of-use
asset.
Lessor accounting is substantially unchanged from today’s accounting under
AASB 117.
Transition
A lessee can choose to apply the standard using either a full retrospective or
a modified retrospective approach. The standard’s transition provisions
permit the Company to apply certain transitional application relief.
Impact
The Company is still determining the impact of adopting this standard.
Key requirements
The AASB issued amendments to the definition of a business in AASB 3
Business Combinations to help entities determine whether an acquired set of
activities and assets is a business or not. They clarify the minimum
requirements for a business, remove the assessment of whether market
participants are capable of replacing any missing elements, add guidance
to help entities assess whether an acquired process is substantive, narrow the
definitions of a business and of outputs, and introduce an optional fair value
concentration test.
Impact
The Company is not expecting any impact from the adoption of this Standard.
53
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
Reference
Title
Summary
AASB 101 and
AASB 108
Definition of
Material -
Amendment
s to AASB
101 and
AASB 108
Key requirements
In October 2018, the AASB issued amendments to AASB 101 Presentation of
Financial Statements and AASB 108 to align the definition of ‘material’ across
the standards and to clarify certain aspects of the definition. The new
definition states that, ’Information is material if omitting, misstating or
obscuring it could reasonably be expected to influence decisions that the
primary users of general-purpose financial statements make on the basis of
those financial statements, which provide financial information about a
specific reporting entity.’
The amendments must be applied prospectively. Early application is
permitted and must be disclosed.
Impact
The amendments to the definition of material are not expected to have a
significant impact on a Company’s financial statements.
Application
date of
standard*
Application
date for
Company*
1 January 2020 1 July 2020
3.
FINANCIAL RISK MANAGEMENT
The Company’s activities expose it to a variety of financial risks: market risk, (including interest rate risk and
price risk), credit risk and liquidity risk. The Company’s overall risk in these areas is not significant enough to
warrant a formalised specific risk management program. Risk management is carried out by the Board of
Directors in their day-to-day function as the overseers of the business.
Set out below is an overview of the financial instruments held by the Company as at 30 June 2019:
As at 30/6/2019
Financial assets:
Cash and cash equiv alents
Trade and other receiv ables
Total current assets
Total assets
Financial liabilities:
Trade and other payables
Total current liabilities
Total liabilities
Net exposure
Cash and cash
Financial assets / liabilities
equivalents
at amortised cost
$
$
7,636,601
-
7,636,601
7,636,601
-
-
-
-
4,890,521
4,890,521
4,890,521
433,575
433,575
433,575
7,636,601
4,456,946
54
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
Set out below is an overview of the financial instruments held by the Company as at 30 June 2018:
As at 30/6/2018
Financial assets:
Cash and cash equiv alents
Trade and other receiv ables
Total current assets
Total assets
Financial liabilities:
Trade and other payables
Total current liabilities
Total liabilities
Cash and cash
Financial assets / liabilities
equiv alents
at amortised cost
$
$
9,896,760
-
9,896,760
9,896,760
-
-
-
-
3,532,414
3,532,414
3,532,414
649,225
649,225
649,225
Net exposure
9,896,760
2,883,189
(a) Market Risk
(i) Price risk
Equity price risk represents the risk that the value of a financial instrument will fluctuate as a result of changes
in equity prices, whether those changes are caused by factors specific to the individual instrument or its issuer
or factors affecting all instruments in the market.
(ii) Interest rate risk
The Company’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate
as a result of changes in market interest rates and the interest rates on classes of financial assets and financial
liabilities is as follows:
Sensitivity analysis:
30 June 2019
Financial Assets
Interest rate risk
-1%
+1%
Carrying amount
Profit/Equity
Profit/Equity
$
$
$
Cash and cash equiv alents
7,636,601
(76,366)
76,366
30 June 2018
Financial Assets
Cash and cash equiv alents
9,896,760
(98,968)
98,968
Variable rate instruments:
2019
2018
$
%
$
%
Cash and cash equiv alents
7,636,601
2.03
9,896,760
1.0
55
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
(b) Credit risk
Credit risk is the risk of financial loss to the Company if a counter party to a financial instrument fails to meet its
contractual obligations. The Company’s main credit risk exposure relates to the financial assets of the
Company, which comprise cash and cash equivalents and trade and other receivables. The Company’s
exposure to credit risk arises from potential default of the counter party, with the maximum exposure equal to
the carrying amount of these instruments.
The carrying amount of financial assets included in the Statement of Financial Position represents the
Company’s maximum exposure to credit risk in relation to those assets. The Company does not hold any credit
derivatives to offset its credit exposure.
The Company trades only with recognised, credit worthy third parties and as such collateral is not requested
nor is it the Company’s policy to securitise its trade and other receivables. Receivable balances are monitored
on an ongoing basis with the result that the Company does not have a significant exposure to bad debts. The
Company has the following concentrations of credit risk:
(i) Cash
The Directors believe that there is negligible credit risk with the Company’s cash and cash equivalents, as
funds are held at call with National Australia Bank, a reputable Australian Banking institution.
(ii) Trade and other receivables
While the Company has policies in place to ensure that transactions with third parties have an appropriate
credit history, the management of current and potential credit risk exposures is limited as far as is considered
commercially appropriate. Up to the date of this report, the Board has placed no requirement for collateral
on existing debtors. This is because the current Research and Development Rebate Receivable is with the
ATO, a reputable Australian government agency.
(c)
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial liabilities as and when they fall
due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the
availability of funding through an adequate amount of committed credit facilities and the ability to close out
market positions.
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows. Surplus funds
are generally only invested at call or in bank bills that are highly liquid and with maturities of less than six months.
(i) Financing arrangements:
The Company does not have any financing arrangements.
(ii) Maturities of financial liabilities:
The Company’s only debt relates to trade payables, where payments are generally due within 30 days.
(d)
Fair Value Measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement
or for disclosure purposes.
Accounting standards require disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(level 3).
The carrying value of financial assets and financial liabilities approximates their fair value as at 30 June 2019
and 30 June 2018 given the short-term nature of financial assets and liabilities.
56
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Key estimates: Impairment of Intangible Assets
The Company assesses impairment for intangible assets at each reporting date or when an impairment
indicator exists, by evaluating conditions specific to the Company and to the particular asset that may lead
to impairment. These include product, technology, economic and political environments and future
expectations. If an impairment indicator exists, the recoverable amount of the asset is determined. For further
information on intangible assets refer to Note 2(h).
Key estimates: Share-based payments
The Company initially measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. Estimating fair value for share-based
payment transactions requires determination of the most appropriate valuation model, which is dependent
on the terms and conditions of the grant.
This estimate also requires determination of the most appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend yield and making assumptions about them. The
assumptions and models used for estimating fair value for share-based payment transactions are disclosed in
Note 20.
Key Estimates: Research & development tax rebate
In line with accounting policy 2(i) research & development tax rebates are treated as government grants and
are recognised where there is reasonable assurance that the grant will be received, and all attached
conditions will be complied with. The Company applies judgment in assessing that all attached conditions will
be complied with based on the nature of the expenditure incurred and the activities of the Company
undertaken during the year.
5.
SEGMENT INFORMATION
The Company’s sole operations are within the biotechnology industry within Australia. Given the nature of the
Company, its size and current operations, the Company’s management does not treat any part of the
Company as a separate operating segment. Internal financial information used by the Company’s decision
makers is presented on a “whole of entity” manner without dissemination to any separately identifiable
segments.
Accordingly, the financial information reported elsewhere in this financial report is representative of the nature
and financial effects of the business activities in which it engages and the economic environments in which it
operates. All non-current assets are held in Australia and all revenue is derived in Australia.
57
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
6.
REVENUE, OTHER INCOME AND EXPENSES
Full year ended
Full year ended
30/06/2019
30/06/2018
$
$
Revenue from contracts with customers
Div idends receiv ed on listed inv estments
- 53,182
Interest rev enue
Other income
204,546 38,715
204,546 91,897
Export market dev elopment grant
80,819 50,838
Research and dev elopment tax rebate
4,781,936
3,158,000
Realised gain on sale of listed inv estments
- 42,445
Total other incom e
Total revenue and income
4,862,755 3,251,283
5,067,301 3,343,180
Expenses
Research and developm ent ('R&D') expenses:
Research consultants
Administrativ e
Laboratory expenses
Full year ended
Full year ended
30/06/2019
30/06/2018
$
$
228,427 188,459
304,805 72,842
10,321,144
5,955,423
Trav el and accommodation costs
223,204 265,057
R&D employee expenses
Non-R&D employee expenses
1,476,129
1,259,925
12,553,709 7,741,706
170,916 195,493
170,916 195,493
58
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
7.
INCOME TAX
Numerical reconciliation of operating loss to prima facie
income tax expense
Operating loss before income tax
Tax benefit at the Australian tax rate of 27.5% (2018: 27.5%)
Tax effect of amounts that are not deductible / taxable in
calculating taxable income:
Entertainment expense
Share-based payments
Gain on asset disposal
Prior year over-provision
Research and dev elopment
Deferred tax asset not brought to account
Full-year ended
Full-year ended
30/06/2019
30/06/2018
$
$
(9,887,682)
(6,230,609)
(2,719,113)
(1,713,418)
1,274 806
35,186 65,866
- 2,671
(8,827)
-
1,595,075
1,096,405
1,127,987
516,088
Income tax expense
- -
Tax Losses
Unused tax losses for which no deferred tax asset has been
recognised.
Potential tax benefit @ 27.5% (2018: 27.5%)
Unrecognised temporary differences
Temporary differences for which deferred tax assets hav e
not been recognised.
- Prov isions and accruals
- Intangible Assets
- Capital raising costs
- Patent application fees
Full-year ended
Full-year ended
30/06/2019
30/06/2018
$
$
3,780,689
2,693,159
3,780,689
2,693,159
149,797
127,312
476,900
-
757,053
850,152
- 72,842
1,383,750
1,050,306
Unrecognised deferred tax asset relating to the abov e
temporary differences @ 27.5% (2018: 27.5%)
264,310
288,834
The tax benefit of tax losses and other temporary differences will only arise in the future where the Company
derives sufficient net taxable income and is able to satisfy the carried forward tax loss recoupment rules. The
Directors believe that the likelihood of the Company achieving sufficient taxable income in the future is not
probable and the tax benefit of these tax losses and other temporary differences has not been recognised.
59
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
8.
CASH AND CASH EQUIVALENTS
As at
As at
30/06/2019
30/06/2018
$
$
Cash at bank and on hand
Short term deposits
Total cash and cash equivalents
1,571,600
6,065,001
7,636,601
9,829,796
66,964
9,896,760
During the year ended 30 June 2019, the Company raised cash via a number of capital raisings and the
exercise of options. Refer the Directors’ Report: Review of Operations: Section 7(x) and Note 13: Contributed
Equity for further information on the capital raisings and exercise of options that occurred during the year.
Furthermore, the Company is expecting to receive an estimated $4,603,261 which relates to the research and
development rebate receivable recognised at year end. Refer to Note 9(c) below.
Reconciliation of net cash flows from operating activities
Loss for the year
Non cash items:
Realised loss from av ailable-for-sale listed
inv estments
Depreciation
Amortisation expense
Impairment loss
Full year ended
Full year ended
30/06/2019
30/06/2018
$
$
(9,887,682) (6,230,609)
- (42,445)
- 2,540
353,500 353,500
476,900 -
Share-based payment expense
127,949 239,514
Change in assets and liabilities:
(Increase)/decrease in receiv ables
(1,358,107) (2,157,546)
Increase/(decrease) in trade creditors and other
payables
(215,650) (114,457)
Increase/(decrease) in prov isions
4,792 38,451
(10,498,298) (7,911,052)
Non-cash financing and investing activities: No non-cash financing and investing activities occurred during the
year ended 30 June 2019. During the prior year ended 30 June 2018, 5,000,000 unvested Class F LTI Rights, totalling
$100,000, were cancelled on 14 December 2017 due to forfeiture following the resignation of former director, Mr
Martin Rogers, on 30 November 2017.
Financing facilities available: As at 30 June 2019, the Company had no financing facilities available (2018: None).
For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks and investments in
money market instruments, net of outstanding bank overdrafts.
Interest rate risk exposure: The Company’s exposure to interest rate risk is discussed in Note 3.
Credit risk exposure: The maximum exposure to credit risk at the end of the reporting period is the carrying
amount of each class of cash and cash equivalents mentioned above.
60
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
9.
TRADE AND OTHER RECEIVABLES
As at
As at
30/06/2019
30/06/2018
$
$
Prepayments (a)
Goods and serv ices tax receiv able (b)
Research and dev elopment tax rebate
receiv able (c)
Other receiv able
57,115
230,145
47,375
312,904
4,603,261
3,158,000
- 14,135
Total trade and other receivables
4,890,521
3,532,414
(a) Prepayments: This amount relates to prepaid insurances.
(b) Goods and services tax receivable: This amount relates to net good and services tax (GST) paid during
the quarter ended 30 June 2019 which is refundable.
(c) Research and development tax rebate receivable: This amount relates to the Research and
Development Tax Rebate that the Company is entitled to claim on research and development costs
incurred during the financial year.
None of the current receivables are impaired, or past due but not impaired. Due to their short-term nature,
carrying amounts approximate their fair value.
10.
PROPERTY, PLANT AND EQUIPMENT
As at
As at
30/06/2019
30/06/2018
$
$
At cost
- 24,222
Accumulated depreciation
-
(24,222)
Total property, plant and equipment
- -
Movements during the year:
Plant and
Office
Computer
General
Equipment
Equipment
Equipment
$
$
$
Pool
$
Total
$
Balance at 1 July 2018
- - - - -
Acquisitions
Depreciation
- - - - -
- - - - -
Balance at 30 June 2019
- - - - -
Balance at 1 July 2017
- - - 2,266 2,266
Acquisitions
Depreciation
- - - 274
274
- - - (2,540) (2,540)
Balance at 30 June 2018
- - - - -
61
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
11.
INTANGIBLE ASSETS
As at
As at
30/06/2019
30/06/2018
$
$
5,756,743
5,756,743
(1,620,290)
(1,266,790)
(476,900)
-
3,659,553 4,489,953
Intellectual
Property
$
4,489,953
(353,500)
(476,900)
3,659,553
4,843,453
(353,500)
4,489,953
At cost
Accumulated amortisation
Accumulated impairment loss (b)
Total intangible assets (a)
Movements during the year:
Balance at 1/7/2018
Amortisation expense
Impairment loss
Balance at 30/6/2019
Balance at 1/7/2017
Amortisation expense
Balance at 30/6/2018
(a)
Intellectual property
On 8 December 2014, Actinogen Medical entered into an Assignment of Licence Agreement with Corticrine
Limited for the assignment of all of Corticrine’s interest in, to and under the Licence Agreement to Actinogen
Medical and the assumption by the Company of all of Corticrine's obligations in respect of such Assignment.
When the Company acquired the intellectual property from Corticrine, this comprised patents and licences,
as well as the value of research performed to date; and the progression of testing to human trials. The
intellectual property is supported by seven patent families, the most recent of which will expire in 2031. The
patent useful life has been aligned to the patent term and as a result, those patents are amortised on a
straight-line basis over the period of the patent.
As at 30 June 2019, the intellectual property is valued at $3,659,553
(b)
Impairment testing:
As at 30 June 2019, the Company conducted an assessment to determine whether there were any indicators
of impairment in relation to the carrying value of its capitalised intangible assets. On review, the Board were
of the view that indicators of impairment existed in relation to its capitalised intangible assets, based on the
fact that the market capitalisation of the Company was below the book value of its net assets as at 30 June
2019. As a result, the Board made a formal estimate of recoverable amount using fair value less costs of
disposal (“FVLCD”).
In estimating the recoverable amount of its intangible assets, the Company considered a valuation
methodology which sought to estimate an enterprise value for the Company and the resultant FVLCD of the
62
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
intangible assets using relevant historical transaction multiples. This methodology took into consideration
historical information for completed comparable transactions in Australia over a 15-year period, based on
which a mean is determined to use for the estimate of an enterprise value for the Company.
Since this method of determining recoverable amount was performed using a significant non-observable
input, the FVLCD determined was classified as a Level 3 measurement under the fair value hierarchy in AASB
13.
The Board has, following this process, estimated the recoverable amount of the Company’s capitalised
intangible assets, and has recognised an impairment loss of $476,900 for the year ended 30 June 2019 (2018:
Nil).
12.
TRADE AND OTHER PAYABLES
Trade payables
Accruals and other payables
Goods and serv ices tax payable
NAB credit cards
Prov ision for payroll tax
PAYG payable
Total trade and other payables
As at
As at
30/06/2019
30/06/2018
$
$
282,822
58,939
507,399
25,500
522 108
33,542 54,574
32,000 27,445
25,750 34,199
433,575
649,225
Trade and other payables are non-interest bearing liabilities stated at amortised cost and settled within 30
days.
13.
CONTRIBUTED EQUITY
Fully paid ordinary shares (1,119,231,320)
Capital raising costs
Total contributed equity
(a) Share Capital
As at
As at
30/06/2019
30/06/2018
$
$
51,438,157
43,514,541
(3,393,551)
(3,076,303)
48,044,606
40,438,238
Ordinary shares: These shares entitle the holder to participate in dividends and the winding up of the Company
in proportion to the number and amount paid on the share held.
63
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
(b) Movement of fully paid ordinary shares during the period were as follows:
Date
Quantity
Unit Price $
Total $
Opening balance 1 July 2017
620,193,558
26,578,391
Capital Raising Tranche 1
8/12/2017 91,500,000 0.04
3,660,000
Capital raising costs
- - -
(219,600)
Less cancellation of loan shares
14/12/2017
(5,000,000) 0.02
(100,000)
Capital Raising Tranche 2
22/01/2018
40,500,000 0.04
Capital raising costs
- - -
Exercise of unlisted options
12/04/2018
3,000,000 0.02
Exercise of unlisted options
14/05/2018
3,000,000 0.02
Priv ate Placement Tranche 1
28/05/2018
187,122,994 0.05
Capital raising costs
Balance at 30 June 2018
- - -
940,316,552
Exercise of Unlisted Options
4/07/2018
4,000,000 0.02
Priv ate Placement T2 (BVF)
12/07/2018
112,877,006 0.05
Capital raising costs - Bell Potter
12/07/2018
Share purchase plan
13/07/2018
19,050,000 0.05
Share purchase plan (shortfall)
24/07/2018
11,200,000 0.05
Capital raising costs - Bell Potter
17/07/2018
Exercise of Unlisted Options
18/09/2018
2,750,000 0.02
Exercise of Unlisted Options
14/11/2018
20,550,000 0.02
Exercise of Unlisted Options
30/11/2018
7,200,000 0.02
Exercise of Unlisted Options
4/04/2019
1,287,762 0.06
1,620,000
(97,200)
60,000
60,000
9,356,150
(479,503)
40,438,238
80,000
5,643,850
(282,192)
952,500
560,000
(35,056)
55,000
411,000
144,000
77,266
Balance at 30 June 2019
1,119,231,320
48,044,606
Refer to the Directors’ Report: Review of Operations: Section 7(x) for further information on the capital raisings
completed during the year.
(c) Reserve Shares
During a prior year (year ended 30 June 2015), the Company issued 45,000,000 shares, which are considered
to be “in substance options’ or rights (‘LTI Rights’) under Australian Accounting Standards, to various KMP by
way of provision of a limited recourse, interest free loan (subject to approval at an Annual General Meeting
of shareholders on 19 November 2014).
Of the 45,000,000 shares issued, 33,000,000 were issued at $0.02 each on 3 December 2014; and 12,000,000
were issued at $0.04 each on 12 December 2014.
During the year, the vesting condition on 3,000,000 Class J Rights issued to Dr Ketelbey were met on 31 October
2018.
As at 30 June 2019, all LTI Rights have vested, except for 3,000,000 Class I LTI Rights due to the performance
milestones not being met as yet despite the share-based payment expense against these Rights being fully
expensed based on the expected vesting date at that time.
During the year, Messrs Rogers, Loveridge and Ruffles repaid their loans: $400,000, $120,000 and $40,000,
respectively, to the Company to exercise the rights attached to their LTI Rights issued to them when they were
previously employed by the Company. As at 30 June 2019, the total value of the loans outstanding is $480,000
which relates to Dr Ketelbey’s Class H, I and J LTI Rights.
64
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
Reserve shares
Opening balance 1 July 2017
Date
Quantity
Unit Price $
Total $
(45,000,000)
(1,140,000)
Cancellation of unv ested loan shares
14/12/2017
5,000,000
0.02
100,000
Balance at 30 June 2018
(40,000,000)
(1,040,000)
Repayment of loan shares by Mr Rogers
30/11/2018
20,000,000
Repayment of loan shares by Dr Lov eridge
6/12/2018
6,000,000
Repayment of loan shares by Mr Ruffles
15/03/2019
2,000,000
Balance at 30 June 2019
(12,000,000)
0.02
0.02
0.02
400,000
120,000
40,000
(480,000)
(d) Share Options
As at 30 June 2019, there were 41,942,631 unissued ordinary shares under option:
Quantity
Type
Issue
Date
Exercise
Price
Expiry Date
Vesting
Conditions
2,100,000
Unlisted Employee Options A (Tranche 1)
6/02/2017
$
0.100
5/02/2021
5,000,000
Unlisted Director Options G
24/03/2017
$
0.100
24/03/2022
417,188
Unlisted Employee Options B (Tranche 2)
12/07/2017
$
0.100
5/02/2021
1,500,000
Unlisted Director Options D
1/12/2017
$
0.100
1/12/2022
417,110
Unlisted Employee Options C (Tranche 3)
3/04/2018
$
0.100
5/02/2021
625,000
18,100,000
Unlisted Employee Options C (Tranche 3)
Unlisted Director Options F
3/04/2018
27/11/2018
$
$
0.100
0.085
5/02/2021
27/11/2023
5,783,333
Unlisted Employee Options E (Tranche 4)
13/12/2018
$
0.085
12/12/2023
5,000,000
3,000,000
Unlisted Consultant Options (Bio-Link)
Unlisted Director Options H
1/02/2019
12/04/2019
$
$
0.093
0.100
1/02/2024
4/04/2024
Yes
Yes
No
Yes
No
Yes
Yes
Yes
Yes
Yes
41,942,631
Total shares under option
During the year the following options were exercised, expired, lapsed or forfeited:
Exercised,
Exercised,
expired,
lapsed or
expired,
lapsed or
Exercise
Quantity
Type
forfeited date
forfeited
Price
Comment
4,000,000 Exercise of unlisted options
4/07/2018
Exercised
$
0.02
2,750,000 Exercise of unlisted options
18/09/2018
Exercised
$
0.02
1,112,500 Lapse of Employee Options (A) & (C)
31/10/2018
Lapsed
$
0.10
(i)
20,550,000 Exercise of unlisted options
14/11/2018
Exercised
$
0.02
7,200,000 Exercise of unlisted options
30/11/2018
Exercised
$
0.02
146,588,471 Expiry of listed options
1,287,762 Exercise of unlisted options
31/03/2019
4/04/2019
Expired
Exercised
$
$
0.06
0.06
916,667 Forfeiture of Employee Options (E)
12/04/2019
Forfeited
$
0.09
(ii)
184,405,400 Total shares under options that were exercised, expired, lapsed or forfeited
(i) By 31 October 2018, the vesting condition of achieving dosing of more than 30 patients at 20mg or higher
on Xanamen was not met and subsequently 1,112,500 unlisted employee options (comprising 800,000 and
312,500 Employee Options (A) and (C), respectively) lapsed.
(ii) On 15 April 2019, a total of 916,667 unvested employee options, expiring on 12/12/2023 and exercisable
at $0.085 each, lapsed. These options related to Mr V. Ruffles ceasing employment with the Company.
65
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
No option holder has any right, by virtue of the option, to participate in any share issue of the Company or any
related body corporate.
(e) Terms and Conditions of Issued Capital
At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has a vote on a show of hands. Ordinary shares have no par value.
(f) Capital risk management
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern,
so it can provide returns to shareholders and benefits to other stakeholders. The Company considers capital
to consist of cash reserves on hand.
Consistent with the Company’s objective, it manages working capital by issuing new shares, investing in and
selling assets, submitting applications for research and development rebates to the Australian Tax Office or
modifying its planned research and development program as required.
Given the stage of the Company’s development there are no formal targets set for return on capital. The
Company is not subject to externally imposed capital requirements. The net equity of the Company is
equivalent to capital. Net capital is obtained through capital raisings on the ASX and receipt of Research
and Development rebates from the Australian Tax Office.
14.
RESERVES
Reserves is made up of the option reserve. The option reserve records items recognised as share-based payment
(‘SBP’) expenses on valuation of employee and Director options. Details of the movement in reserves is shown
below.
As at
As at
30/06/2019
30/06/2018
$
$
Option Reserv e
7,296,257
7,168,308
Av ailable-for-sale Inv estments Reserv e
-
-
Total reserves
7,296,257
7,168,308
Movements in Option Reserve during the year:
As at
As at
30/06/2019
30/06/2018
$
$
Option Reserve
Balance at the beginning of the year
7,168,308
Share-based payment expense on LTI Rights
-
6,928,794
41,428
Share-based payment expense on Director options
102,896
137,773
Share-based payment expense on employee options
36,571 97,391
Lapse of employee options
(22,834) (37,078)
Share-based payment expense on consultant options 11,316
Balance at end of year
7,296,257
7,168,308
Refer to Note 13(d) on unissued ordinary shares under option; and Note 20: Share-based payments.
66
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
Movements in Available-for-sale Investments Reserve during the year:
As at
As at
30/06/2019
30/06/2018
$
$
Available-for-sale Investments Reserve
Balance at the beginning of the year
- 76,607
Transfer of av ailable-for-sale reserv e upon disposal of
av ailable-for-sale-listed inv estments
- (76,607)
Balance at end of year
- -
15.
LOSSES PER SHARE
Full-year ended Full-year ended
30/06/2019
30/06/2018
$
$
Basic EPS from continuing operations attributable to the ordinary
shareholders of the Company (cents)
(0.90)
(0.88)
W eighted number of ordinary shares used as the denominator
1,102,236,780
705,094,056
Net loss used in calculating EPS
(9,887,682)
(6,230,609)
Diluted EPS from continuing operations attributable to the
ordinary shareholders of the Company (cents)
(0.90)
(0.88)
W eighted number of ordinary shares used as the denominator
1,102,236,780
705,094,056
Net loss used in calculating diluted EPS
(9,887,682)
(6,230,609)
As at 30 June 2019, there were 41,942,631 (2018: 193,548,031) unissued ordinary shares under option excluded
from the calculation of diluted earnings per share that could potentially dilute basic earnings per share in the
future because they are anti-dilutive for the current period presented.
There have been no other transactions involving ordinary shares or potential ordinary shares between the
reporting date and the date of authorisation of these financial statements.
16.
COMMITMENTS
Other than what is mentioned below, the Company has no other future commitments existing as at 30 June 2019
(2018: Nil).
Rental Agreement
During the prior year the Company entered into a property rental lease agreement for a term of three years
which commenced from 1 June 2018 with an option to renew for a period of three years from 1 June 2021 to 31
May 2024 included in the agreement.
There are no restrictions placed upon the Company by entering into this lease. The lease includes a clause to
enable upward revision of the rental charge on an annual basis according to prevailing market conditions.
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2019 are as follows:
67
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
_________________________________________________________________
W ithin one year
After one year but not more than fiv e years
17.
CONTINGENCIES
As at
As at
30/06/2019
30/06/2018
$
96,180
$
96,180
88,165
184,345
184,345
280,525
The Directors are not aware of any contingent liabilities or assets as at 30 June 2019 (2018: Nil).
Research and development claims recognised are subject to review within the time period stipulated by the
Australian Tax Office (‘ATO’).
18.
KEY MANAGEMENT PERSONNEL DISCLOSURES
Key Management Personnel (“KMP”) of Actinogen Medical are listed below:
Name
Position
Dr Geoffrey Brooke
Non-Executiv e Chairman
Appointed
1/03/2017
Resigned
Current
Dr Bill Ketelbey
Managing Director / Chief Executiv e Officer
18/12/2014
Current
Dr George Morstyn
Non-Executiv e Director
Mr Malcolm McComas Non-Executiv e Director
Dr Jason Lov eridge
Non-Executiv e Director
1/12/2017
4/04/2019
Current
Current
1/12/2014
28/11/2018
(a) Key Management Personnel Compensation:
Full-year ended
Full-year ended
30/06/2019
30/06/2018
$
$
Short-term employee benefits
584,405 517,911
Post employment benefits
Long-term benefits
Share-based payments
29,207 28,624
11,388 3,796
102,897 171,029
727,897 721,360
There were no other long-term benefits or termination benefits paid out during the years ended 30 June 2019 and
30 June 2018. The detailed remuneration disclosures and relevant interest of each KMP in fully paid ordinary shares
and options of the Company are provided in the audited Remuneration Report on pages 23 to 37.
19.
RELATED PARTY TRANSACTIONS
(a) Transactions with Key Management Personnel
Details of transactions with KMP are set out in Note 18. There were no other related party transactions that
occurred during the year.
68
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
20.
SHARE – BASED PAYMENTS
The table below summarises the options on issue (including the LTI Rights that are in substance options) that had share-based payments applied as at 30 June 2019:
Quantity
Type
Grant
Date
Exercise
Price
Expiry Date
Remaning
life (years)
Vesting
Conditions
Reference
below
12,000,000
LTI Rights Class H to J
15/12/2014
$
0.04
15/12/2019
0.5
Yes
2,100,000
Unlisted Employee Options (A) (Tranche 1)
23/01/2017
$
0.10
5/02/2021
417,188
Unlisted Employee Options (B) (Tranche 2)
12/07/2017
$
0.10
5/02/2021
417,110
Unlisted Employee Options (C) (Tranche 3)
20/03/2018
$
0.10
5/02/2021
625,000
Unlisted Employee Options (C) (Tranche 3)
20/03/2018
$
0.10
5/02/2021
5,783,333
Unlisted Employee Options (E) (Tranche 4)
12/12/2018
$
0.085
12/12/2023
1,500,000
Unlisted Director Options (D)
18/01/2018
$
0.10
1/12/2022
18,100,000
Unlisted Director Options (F)
28/11/2018
$
0.085
27/11/2023
5,000,000
Unlisted Director Options (G)
24/03/2017
$
0.10
24/03/2025
3,000,000
Unlisted Director Options (H)
4/04/2019
$
0.100
4/04/2024
5,000,000
Unlisted Consultant Options
1/02/2019
$
0.093
1/02/2024
2
2
2
2
4
4
4
6
5
5
53,942,631
Total Share-based payments
Fully v ested.
No. Upfront v esting.
No. Upfront v esting.
Fully v ested.
Yes
Yes
Yes
Yes
Yes
Yes
(a)
(b)
(b)
(b)
(b)
(b)
(c)
(c)
(c)
(c)
(d)
(a) LTI Rights
During a prior year ended 30 June 2015, 45,000,000 shares, which are considered to be “in substance options’ or rights (‘LTI Rights’) under Australian Accounting Standards,
were issued to various KMP at the time by way of provision of a limited recourse loan. They were independently valued using the Black-Scholes option pricing model taking
into account the terms and conditions upon which the LTI Rights were granted. Due to the vesting conditions attached to these LTI Rights, they are expensed over the vesting
period. Refer to Section 3(C)(b) within the Remuneration Report for further information on vesting conditions.
The approximate interest rate over a five-year term was used. The assumed dividend payable in the next five years was deemed to be nil.
A volatility of the share price fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of
its competitors to predict the distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date
of grant. The contractual term of the share options is five years and there are no cash settlement alternatives for the employees. The Company does not have a past practice
of cash settlement for these awards.
69
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
Of the 45,000,000 shares originally issued, 5,000,000 Class F LTI Rights were cancelled by the Company during the prior year ended 30 June 2018 due to the vesting condition
not being met. Furthermore, the share-based payment expense associated with the Class F LTI Rights was reversed in the prior year ending 30 June 2017 according to when
they were forfeited which was when the former director, Mr Rogers, resigned from the Company on 30 November 2016. At an Annual General Meeting held on 30 November
2016, Shareholders approved an extension of time for Mr Rogers to repay the loan to the Company, this being a period of two years from the date of resignation.
During the year ended 30 June 2019, Messrs Rogers and Loveridge and Ruffles repaid their loans: $400,000, $120,000 and $40,000, respectively, to the Company to exercise
the rights attached to their respective LTI Rights. Furthermore, the share-based payment expense associated with their Class of LTI Rights was also reversed due to forfeiture
that comes with cessation of employment (see table below).
As at 30 June 2019, there are 12,000,000 Class H, I and J LTI Rights remaining and they are held by Dr Ketelbey. These rights have been fully expensed in prior periods despite
the fact that the Class I remains unvested.
The fair value of options granted during a prior year ended 30 June 2015 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Weighted average share price ($) 0.04
Expected volatility (%) 100
Risk-free interest rate (%) 5.0%
Expected life (years) 5.0
Quantity of
LTI Rights
Quantity of
converted
Quantity of
LTI rights
during the
LTI Rights
Opening
Value
Value of
Closing value
Value to be
value of SBP
recognised
converted
of SBP
recognised
as at
year
as at
Fair value per
Total SBP
expensed as
during the
rights during
expensed as at
in future
Recipient
Grant Date
Class
1 July 2018
(Note 1)
30 June 2019
LTI Right
valuation
at 1 July 2018
year
the year
30 June 2019
years
J. Lov eridge
19/11/2014
Class A
3,000,000
(3,000,000)
J. Lov eridge
19/11/2014
Class B
3,000,000
(3,000,000)
M. Rogers
19/11/2014
Class C
7,500,000
(7,500,000)
M. Rogers
19/11/2014
Class D
7,500,000
(7,500,000)
M. Rogers
19/11/2014
Class E
5,000,000
(5,000,000)
V. Ruffles
19/11/2014
Class G
2,000,000
(2,000,000)
B. Ketelbey
15/12/2014
Class H
B. Ketelbey
15/12/2014
Class I
B. Ketelbey
15/12/2014
Class J
6,000,000
3,000,000
3,000,000
-
-
-
-
-
-
-
-
-
$ 0.0376
$
112,848
$
112,848
$
-
$
(112,848)
$
-
$
-
$ 0.0376
$
112,848
$
112,848
$
-
$
(112,848)
$
-
$
-
$ 0.0376
$
282,120
$
282,120
$
-
$
(282,120)
$
-
$
-
$ 0.0376
$
282,128
$
282,128
$
-
$
(282,128)
$
-
$
-
$ 0.0376
$
188,085
$
188,085
$
-
$
(188,085)
$
-
$
-
$ 0.0376
$
75,234
$
75,234
$
-
$
(75,234)
$
-
$
-
6,000,000
$ 0.0365
$
218,886
$
218,886
$
-
$
-
$
218,886
$
-
3,000,000
$
0.0365
$
109,443
$
109,443
$
-
$
-
$
109,443
$
-
3,000,000
$
0.0365
$
109,443
$
109,443
$
-
$
-
$
109,443
$
-
Total Rights
40,000,000
(28,000,000)
12,000,000
$
1,491,035
$
1,491,035
$
-
$
(1,053,263)
$
437,772
$
-
70
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
(b) Employee Options A, B, C and E
Under the Employee Option Plan (approved by shareholders on 12 November 2015), awards are made to employees of the Company. The Plan awards are delivered in the
form of options over shares. The fair value of share options granted have been valued using a Black-Scholes option pricing model, taking into account the terms and conditions
upon which the share options were granted. Where vesting conditions are applicable, they are expensed over the vesting period. During the year and in previous years,
various issues of options to employees were made and are outlined below:
(i)
4,950,000 Employee Options (A) (Tranche 1)
The approximate interest rate over a five-year term was used. The assumed dividend payable during the term of the Options is deemed to be nil. A volatility of the share price
fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of its competitors to predict the
distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date of grant. The contractual
term of the share options is five years and there are no cash settlement alternatives for the employees. The Company does not have a past practice of cash settlement for
these awards. The fair value of options granted during a prior year ended 30 June 2017 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Expected volatility (%) 100%
Risk-free interest rate (%) 2.17%
Expected life (years) 5.0
Quantity
lapsed
Opening
Value
Value
Closing value
Quantity
during the
Quantity
value of SBP
recognised
lapsed
of SBP
Value to be
as at
year
as at
Fair value
Total SBP
expensed as
during the
during the
expensed as at
recognised in
Recipient
Grant Date
1 July 2018
(Note 1)
30 June 2019
per option
valuation
at 1 July 2018
year
year
30 June 2019
future years
23/01/2017
625,000
(625,000)
-
$
0.0352
$
22,000
$
17,839
$
-
$
(17,839)
$
-
$
-
V. Ruffles
V. Ruffles
23/01/2017
1,250,000
T. Woolley
23/01/2017
P. Webse
23/01/2017
T. Russell
T. Russell
23/01/2017
23/01/2017
B. Rooney
23/01/2017
B. Rooney
23/01/2017
200,000
300,000
50,000
100,000
125,000
250,000
-
-
-
1,250,000
$
0.0352
$
44,000
$
35,677
$
8,323
$
-
$
44,000
$
-
200,000
$
0.0352
$
7,040
$
4,949
$
2,091
$
-
$
7,040
$
-
300,000
$
0.0352
$
10,560
$
7,423
$
3,137
$
-
$
10,560
$
-
(50,000)
-
$
0.0352
$
1,760
$
1,427
$
-
$
(1,427)
$
-
$
-
-
100,000
$
0.0352
$
3,520
$
2,854
$
666
$
-
$
3,520
$
-
(125,000)
-
$
0.0352
$
4,400
$
3,568
$
-
$
(3,568)
$
-
$
-
-
250,000
$
0.0352
$
8,800
$
7,135
$
1,665
$
-
$
8,800
$
-
Total
2,900,000
(800,000)
2,100,000
$
102,080
$
80,872
$
15,882
$
(22,834)
$
73,920
$
-
Note 1: By 31 October 2018, the vesting condition of achieving dosing of more than 30 patients at 20mg or higher on Xanamen was not met and subsequently 800,000
Employee Options (A) lapsed.
71
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
(ii)
417,188 Employee Options (B) (Tranche 2)
The approximate interest rate over a four-year term was used. The assumed dividend payable during the term of the Options is deemed to be nil. A volatility of the share price
fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of its competitors to predict the
distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date of grant. The contractual
term of the share options is four years and there are no cash settlement alternatives for the employees. The Company does not have a past practice of cash settlement for
these awards. There were no vesting conditions attached to these options; therefore, the share-payment of $417,188 was fully expensed as at grant date.
The fair value of options granted during the prior year ended 30 June 2018 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Expected volatility (%) 75%
Risk-free interest rate (%) 2.29%
Expected life (years) 4.0
Quantity
Opening
Value
Value
Closing value
Quantity
lapsed
Quantity
value of SBP
recognised
lapsed
of SBP
Value to be
as at
during the
as at
Fair value
Total SBP
expensed as
during the
during the
expensed as at
recognised in
Recipient
Grant Date
1 July 2018
year
30 June 2019
per option
valuation
at 1 July 2018
year
year
30 June 2019
future years
V. Ruffles
T. Russell
K. Boyd
12/07/2017
234,375
12/07/2017
18,750
12/07/2017
117,188
B. Rooney
12/07/2017
46,875
Total
417,188
-
-
-
-
-
234,375
$
0.0244
$
5,723
$
5,723
$
-
18,750
$
0.0244
$
458
$
458
$
-
117,188
$
0.0244
$
2,862
$
2,862
$
-
46,875
$
0.0244
$
1,145
$
1,145
$
-
-
-
-
-
$
5,723
$
458
$
2,862
$
1,145
-
-
-
-
417,188
$
10,188
$
10,188
$
-
$
-
$
10,188
$
-
72
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
(iii)
1,354,610 Employee Options (C) (Tranche 3)
The approximate interest rate over a three-year term was used. The assumed dividend payable during the term of the Options is deemed to be nil. A volatility of the share
price fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of its competitors to
predict the distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date of grant. The
contractual term of the share options is three years and there are no cash settlement alternatives for the employees. The Company does not have a past practice of cash
settlement for these awards.
The fair value of options granted during the prior year ended 30 June 2018 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Expected volatility (%) 65%
Risk-free interest rate (%) 2.101%
Expected life (years) 3.0
Quantity
Opening
Value
Value
Closing value
Quantity
lapsed
Quantity
value of SBP
recognised
lapsed
of SBP
Value to be
as at
during the
as at
Fair value
Total SBP
expensed as
during the
during the
expensed as at
recognised in
Recipient
Grant Date
1 July 2018
year (Note 1)
30 June 2019
per option
valuation
at 1 July 2018
year
year
30 June 2019
future years
V. Ruffles
T. Russell
T. Miller
T. Miller
T. Miller
20/03/2018
296,875
20/03/2018
20/03/2018
20/03/2018
20/03/2018
23,750
37,110
312,500
625,000
59,375
-
-
-
296,875
$
0.0128
$
3,804
$
3,804
$
-
$
-
$
3,804
$
-
23,750
$
0.0128
$
304
$
304
$
-
$
-
$
304
$
-
37,110
$
0.0128
$
476
$
476
$
-
$
-
$
476
$
-
(312,500)
-
$
0.0128
$
4,004
$
1,823
$
-
$
(1,823)
$
-
$
-
-
-
625,000
$
0.0128
$
8,009
$
3,647
$
4,362
$
-
$
8,009
$
-
59,375
$
0.0128
$
761
$
761
$
-
$
-
$
761
$
-
1,354,610
(312,500)
1,042,110
$
17,358
$
10,815
$
4,362
$
(1,823)
$
13,354
$
-
B. Rooney
20/03/2018
Total
Note 1: By 31 October 2018, the vesting condition of achieving dosing of more than 30 patients at 20mg or higher on Xanamen was not met and subsequently 312,500
Employee Options (C) lapsed.
73
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
(iv)
6,700,000 Employee Options (E) (Tranche 4)
The approximate interest rate over a five-year term was used. The assumed dividend payable during the term of the Options is deemed to be nil. A volatility of the share price
fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of its competitors to predict the
distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date of grant. The contractual
term of the share options is five years and there are no cash settlement alternatives for the employees. The Company does not have a past practice of cash settlement for
these awards.
The fair value of options granted during the year ended 30 June 2019 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Expected volatility (%) 54%
Risk-free interest rate (%) 2.15%
Expected life (years) 5.0
Quantity
Quantity
issued
Quantity
forfeited
Quantity
Opening
Value
value of SBP
recognised
Closing value
Value to be
of SBP
recognised
as at
during the
during the
as at
Fair value per
Total SBP
expensed as
during the
Value lapsed
expensed as at
in future
Recipient
Grant Date
1 July 2018
year
year (Note 1)
30 June 2019
option
valuation
at 1 July 2018
year
during the year
30 June 2019
years
V. Ruffles
T. Miller
M. Roes ner
T. Russell
12/12/2018
12/12/2018
12/12/2018
12/12/2018
T. Woolley
12/12/2018
P. Webse
12/12/2018
Total
-
-
-
-
-
-
-
1,000,000
4,000,000
1,000,000
200,000
200,000
300,000
(916,667)
83,333
$
0.0158
$
15,800
$
-
$
1,317
$
-
$
1,317
$
-
0
0
0
0
0
4,000,000
$
0.0158
$
63,200
$
-
$
10,533
$
-
$
10,533
$
52,667
1,000,000
$
0.0158
$
15,800
$
-
$
2,633
$
-
$
2,633
$
13,167
200,000
$
0.0158
$
3,160
$
-
$
527
$
-
$
527
$
2,633
200,000
$
0.0158
$
3,160
$
-
$
527
$
-
$
527
$
2,633
300,000
$
0.0158
$
4,740
$
-
$
790
$
-
$
790
$
3,950
6,700,000
(916,667)
5,783,333
$
105,860
$
-
$
16,327
$
-
$
16,327
$
75,050
Note 1: Of the 1,000,000 options issued to employee, Vincent Ruffles, 83,333 had vested during the year while the remaining 916,667 unvested portion were forfeited due to
him ceasing employment on 12 April 2019. Although Mr Ruffles is no longer an employee of the Company, the 83,333 unlisted options that vested during his employment with
the Company remain on issue.
74
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
(c) Director Options
(i)
1,500,000 Director Options (D) - Issued to Dr George Morstyn
1,500,000 Director options were granted to Dr George Morstyn as part of his appointment to the Board as Non-Executive Director. These options over shares will vest over a
period of three years subject to meeting various vesting conditions. Refer to Section 3(C)(b) within the Remuneration Report for further information on vesting conditions.
The fair value of options granted have been valued using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the share options
were granted. The approximate interest rate over a five-year term was used. The assumed dividend payable during the term of the Options is deemed to be nil.
A volatility of the share price fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of
its competitors to predict the distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date
of grant. The contractual term of the share options is five years and there are no cash settlement alternatives for the employees. The Company does not have a past practice
of cash settlement for these awards.
The fair value of options granted during the prior year ended 30 June 2018 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Expected volatility (%) 60%
Risk-free interest rate (%) 2.44%
Expected life (years) 5.0
Quantity
Opening
Value
Value
Closing value
Quantity
lapsed
Quantity
value of SBP
recognised
lapsed
of SBP
Value to be
as at
during the
as at
Fair value
Total SBP
expensed as
during the
during the
expensed as at
recognised in
Recipient
Grant Date
1 July 2018
year
30 June 2019
per option
valuation
at 1 July 2018
year
year
30 June 2019
future years
G. Morstyn
18/01/2018
G. Morstyn
18/01/2018
G. Morstyn
18/01/2018
Total
700,000
400,000
400,000
1,500,000
-
-
-
-
700,000
$
0.0129
$
9,030
$
5,220
$
3,810
$
-
$
9,030
$
-
400,000
$
0.0129
$
5,160
$
1,491
$
2,580
$
-
$
4,071
$
1,089
400,000
$
0.0129
$
5,160
$
993
$
1,718
$
-
$
2,712
$
2,448
1,500,000
$
19,350
$
7,705
$
8,108
$
-
$
15,813
$
3,537
75
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
(ii)
18,100,000 Director Options (F) – issued to various Directors
18,100,000 Director options were granted to various Directors who held office at the time of the date of grant. These options over shares will vest quarterly over a period of
three years subject to continuous service as a director from grant date up to and including each of the quarterly vesting dates. Refer to Section 3(C)(b) within the Remuneration
Report for additional information.
The fair value of options granted have been valued using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the share options
were granted. The approximate interest rate over a five-year term was used. The assumed dividend payable during the term of the Options is deemed to be nil.
A volatility of the share price fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of
its competitors to predict the distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date
of grant. The contractual term of the share options is five years and there are no cash settlement alternatives for the employees. The Company does not have a past practice
of cash settlement for these awards.
The fair value of options granted during the year ended 30 June 2019 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Expected volatility (%) 54%
Risk-free interest rate (%) 2.29%
Expected life (years) 5.0
Quantity
Quantity
Quantity
issued
lapsed
Quantity
Opening
Value
value of SBP
recognised
Closing value
Value to be
of SBP
recognised
as at
during the
during the
as at
Fair value per
Total SBP
expensed as
during the
Value lapsed
expensed as at
in future
Recipient
Grant Date
1 July 2018
year
year
30 June 2019
option
valuation
at 1 July 2018
year
during the year
30 June 2019
years
G. Brooke
28/11/2018
B. Ketelbey
28/11/2018
G. Morstyn
28/11/2018
Total
-
-
-
-
4,900,000
11,700,000
1,500,000
18,100,000
-
-
-
-
4,900,000
$
0.0142
$
69,580
$
-
$
11,597
$
-
$
11,597
$
57,983
11,700,000
$
0.0142
$
166,140
$
-
$
27,690
$
-
$
27,690
$
138,450
1,500,000
$
0.0142
$
21,300
$
-
$
3,550
$
-
$
3,550
$
17,750
18,100,000
257,020
-
42,837
-
42,837
214,183
76
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
(iii)
5,000,000 Director Options (G) - Issued to Dr Geoffrey Brooke
5,000,000 Director options were granted to Dr Geoffrey Brooke as part of his appointment to the Board as Non-Executive Chairman. These options over shares will vest over a
period of three years subject to meeting various vesting conditions. Refer to Section 3(C)(b) within the Remuneration Report for further information on vesting conditions.
The fair value of options granted have been valued using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the share options
were granted. The approximate interest rate over a five-year term was used. The assumed dividend payable during the term of the Options is deemed to be nil.
A volatility of the share price fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of
its competitors to predict the distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date
of grant. The contractual term of the share options is eight years and there are no cash settlement alternatives for the employees. The Company does not have a past practice
of cash settlement for these awards.
The fair value of options granted during a prior year ended 30 June 2017 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Expected volatility (%) 100
Risk-free interest rate (%) 2.61%
Expected life (years) 8.0
Quantity
Opening
Value
Value
Closing value
Quantity
lapsed
Quantity
value of SBP
recognised
lapsed
of SBP
Value to be
as at
during the
as at
Fair value
Total SBP
expensed as
during the
during the
expensed as at
recognised in
Recipient
Grant Date
1 July 2018
year
30 June 2019
per option
valuation
at 1 July 2018
year
year
30 June 2019
future years
G. Brooke
G. Brooke
G. Brooke
Total
24/03/2017
2,000,000
24/03/2017
1,500,000
24/03/2017
1,500,000
5,000,000
-
-
-
-
2,000,000
$
0.0491
$
98,114
$
98,114
$
-
$
-
$
98,114
$
-
1,500,000
$
0.0491
$
73,586
$
46,672
$
26,914
$
-
$
73,586
$
-
1,500,000
$
0.0491
$
73,586
$
27,278
$
21,505
$
-
$
48,783
$
24,803
5,000,000
$
245,285
$
172,064
$
48,419
$
-
$
220,483
$
24,803
77
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
(iv)
3,000,000 Director Options (H) - Issued to Mr Malcolm McComas
3,000,000 Director options were granted to Mr McComas as part of his appointment to the Board as Non-Executive Director. These options over shares will vest quarterly over
a period of three years subject to continuous service as a director from grant date up to and including each of the quarterly vesting dates. Refer to Section 3(C)(b) within the
Remuneration Report for additional information.
The fair value of options granted have been valued using a Black-Scholes optiong pricing model, taking into account the terms and conditions upon which the share options
were granted. The approximate interest rate over a five-year term was used. The assumed dividend payable during the term of the Options is deemed to be nil.
A volatility of the share price fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of
its competitors to predict the distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date
of grant. The contractual term of the share options is five years and there are no cash settlement alternatives for the employees. The Company does not have a past practice
of cash settlement for these awards.
The fair value of options granted during the year ended 30 June 2019 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Expected volatility (%) 48.5
Risk-free interest rate (%) 1.5%
Expected life (years) 5.0
Quantity
Quantity
Quantity
issued
lapsed
Quantity
Opening
Value
value of SBP
recognised
Closing value
Value to be
of SBP
recognised
as at
during the
during the
as at
Fair value per
Total SBP
expensed as
during the
Value lapsed
expensed as at
in future
Recipient
Grant Date
1 July 2018
year
year
30 June 2019
option
valuation
at 1 July 2018
year
during the year
30 June 2019
years
M. McComas
4/04/2019
Total
-
-
3,000,000
3,000,000
-
-
3,000,000
$
0.0141
$
42,396
$
-
$
3,533
$
-
$
3,533
$
38,863
3,000,000
42,396
-
3,533
-
3,533
38,863
78
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
(d) Consultant Options
(i)
Issued to Bio-Link Australia
5,000,000 options were granted to Bio-Link Australia to reward them for their existing contributions to the Company; and to incentivise future achievements that will benefit
shareholders. These options over shares will vest over a period of four years subject to meeting various vesting conditions.
The fair value of options granted have been valued using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the share options
were granted. The approximate interest rate over a five-year term was used. The assumed dividend payable during the term of the Options is deemed to be nil.
A volatility of the share price fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of
its competitors to predict the distribution of relative share performance. The exercise price of the share options is equal to the market price of the underlying shares on the date
of grant. The contractual term of the share options is five years and there are no cash settlement alternatives for the employees. The Company does not have a past practice
of cash settlement for these awards.
The fair value of options granted during the year ended 30 June 2019 was estimated on the date of grant using the following assumptions:
Dividend yield (%) nil
Expected volatility (%) 53.75%
Risk-free interest rate (%) 1.83%
Expected life (years) 5.0
Quantity
Quantity
Quantity
issued
lapsed
Quantity
Opening
Value
value of SBP
recognised
Closing value
Value to be
of SBP
recognised
as at
during the
during the
as at
Fair value per
Total SBP
expensed as
during the
Value lapsed
expensed as at
in future
Recipient
Grant Date
1 July 2018
year
year
30 June 2019
option
valuation
at 1 July 2018
year
during the year
30 June 2019
years
Bio-Link
Total
1/02/2019
-
-
5,000,000
5,000,000
-
-
5,000,000
$
0.0185
$
92,500
$
-
$
11,316
$
-
$
11,316
$
81,184
5,000,000
92,500
-
11,316
-
11,316
81,184
79
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 9
21.
REMUNERATION OF AUDITOR
Amounts paid or payable to Ernst &
Young for:
- An audit or rev iew of the financial
statements of the entity
- Other assurance serv ices
Full-year ended
Full-year ended
30/06/2019
30/06/2018
$
$
41,903 40,502
2,500
-
44,403 40,502
22.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
There are no matters or circumstances that have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Company, the results of those operations, or the state
of the Company in subsequent financial years.
80
ACTINOGEN MEDICAL LIMITED
DIRECTORS’ DECLARATION
In the Directors’ opinion:
1.
The Financial Statements and Notes set out on pages 40 to 80, are in accordance with the
Corporations Act 2001 including:
(a) complying with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements;
(b) giving a true and fair view of the Company’s financial position as at 30 June 2019 and of
its performance for the year ended on that date;
2.
3.
4.
The remuneration disclosure included in the audited Remuneration Report in the Directors’
Report complies with Section 300A of the Corporations Act 2001.
The Directors have been given the declaration by the Managing Director and Chief Financial
Officer (or equivalent) as required by section 295A of the Corporations Act 2001.
The Company has included in the Notes to the Financial Statements an explicit and unreserved
statement of compliance with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
5.
There are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
This declaration is made in accordance with a resolution of the Directors.
Dr Bill Ketelbey
Managing Director
Sydney, New South Wales
16 August 2019
81
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Actinogen Medical
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Actinogen Medical Limited (the Company), which comprises the
statement of financial position as at 30 June 2019, the statement of comprehensive income, statement
of changes in equity and statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors' declaration of the
Company.
In our opinion, the accompanying financial report of the Company 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 2019 and of its
financial performance for the year ended on that date; 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 the 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 (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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context. We have determined the matters described below to be the key audit matters
to be communicated in our report.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
report section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial report. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PD:KG:ACTINOGEN:007
1. Research and development rebate
Why significant
How our audit addressed the key audit matter
The Company has lodged a claim with the Australian Taxation
Office (ATO) for a rebate of eligible Research & Development
(R&D) expenditure (R&D rebate) relating to its ongoing
research activities for the development of Xanamem.
Included in trade and other receivables on the statement of
financial position is an amount for $4.61 million related to the
R&D rebate calculated for the year ended 30 June 2019.
Due to judgment involved in determining whether expenditure
incurred in R&D activities meets the eligibility criteria to qualify
for inclusion in the R&D rebate calculation and the significance
of this source of cash inflow for the Company, we considered
this to be a key audit matter. Refer to Note 9 to the financial
report.
2. Impairment of intangible assets
We involved our R&D taxation specialists to assess the
appropriateness of the R&D rebate calculated by the
Company’s third party expert.
We evaluated the qualifications, competency and objectivity of
the Company’s third party expert.
We assessed the Company’s accounting treatment of the R&D
rebate under Australian Accounting Standard - AASB 120
Accounting for Government Grants and Disclosure of
Government Assistance.
Why significant
How our audit addressed the key audit matter
Included in the statement of financial position as at 30 June
2019 is an amount for $3.66 million relating to intangible
assets which consist of patents and licenses. This amount
represents 23% of the Company’s total assets.
We challenged the Company’s assessment regarding whether
there were impairment indicators present that required
intangibles assets to be tested for impairment as at 30 June
2019.
In doing so, we examined the patent and license agreement
and considered potential internal and external impairment
factors in relation to the patents and licences held pursuant to
the requirements of Australian Accounting Standards.
As impairment indicators were identified for the intangible
assets, we assessed the key assumptions used in determining
recoverable amount. Our valuation specialists assisted us in
this assessment.
We assessed the adequacy of the disclosures in Note 11 to the
financial report.
The carrying value of intangible assets must be assessed for
impairment when facts and circumstances indicate that the
carrying value exceeds its recoverable amount.
The determination whether there are any indicators of
impairment involves a high degree of judgment. Following an
assessment of a number of internal and external factors, the
directors determined that there were impairment indicators
present at 30 June 2019.
As detailed in Note 11, the directors estimated that the
carrying value of the Company’s intangible assets exceeded its
recoverable amount by $0.48 million and hence this amount
was recorded as an impairment loss in the statement of
comprehensive income for the year ended 30 June 2019.
Due to the significance to the Company’s financial report and
level of judgment involved in determining whether indicators of
impairment are present and, if they were, in estimating the
recoverable amount of the Company’s intangible assets, we
consider this to be a key audit matter. Refer to Note 11 to the
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
3. Share based payments
Why significant
How our audit addressed the key audit matter
We assessed the assumptions used in the Company’s
calculation of the share based payment expense, including the
share price of the underlying equity, interest rate, volatility,
time to maturity (expected life), grant date and grant criteria.
We involved our valuation specialists in assessing these
assumptions and calculations.
We assessed the adequacy of the share based payment
disclosure in the financial report.
During the year ended 30 June 2019, the Company issued the
following options:
• 6,700,000 to employees of the Company
• 21,100,000 to two non-executive directors of the
Company
• 5,000,000 to a consultant.
Under Australian Accounting Standards, equity settled awards
are measured at fair value on grant date taking into
consideration the probability of the vesting conditions
attached. This amount is recognised as an expense over the
relevant vesting period.
Due to the complex and judgmental estimates used in
determining the valuation of the share based payments, we
consider the Company’s calculation of the share based
payment expense to be a key audit matter. Refer to Note 20 to
the financial report for details.
Information other than the financial report and auditor’s report
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2019 Annual Report, 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, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information 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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
In preparing the financial report, the directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Company or to cease
operations, or have 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment 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 resulting from error, as fraud may involve
collusion, forgery, intentional omissions, 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 Company’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 Company’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 Company 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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year 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 audit of the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 23 to 38 of the directors' report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of the Company for the year ended 30 June 2019, 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.
Ernst & Young
Pierre Dreyer
Partner
Perth
16 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
ACTINOGEN LIMITED
S H A R E H O L D E R I N F O R M A T I O N
___________________________________________________________
Substantial shareholders
The following substantial shareholders have lodged notices with the company as at 8 October 2019:
Holders
BVF Partners L.P. on its own behalf and on behalf of BVF Inc.,
Mark N Lampert, Biotechnology Value Fund, L.P.; and
Biotechnology Value Fund II, L.P.
Distribution of ordinary shareholders as at 8 October 2019
Shares
Percentage of
Issued Capital
217,200,000
17.16%
Range of Holding
1-1,000
1,001-5,000
5,001-10,000
10,001 - 100,000
100,001 – over
Shareholders with less than a
marketable parcel.
Shares
5,791
275,025
2,388,923
66,438,773
1,050,122,808
1,119,231,320
Holders
48
88
268
1,473
932
2,809
490
Voting Rights
Each fully paid ordinary share carries voting rights of one vote per share.
Twenty Largest holders of quoted ordinary shares as at 8 October 2019
HSBC Custody Nominees (Australia) Limited
Edinburgh Technology Fund Limited
Tisia Nominees Pty Ltd
Mrs Sarah Cameron
Mr Ross Edward Gustafson
Jinark Pty Ltd
Bannaby Investments Pty Limited
Sunset Capital Management Pty Ltd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd DRP
Comsec Nominees Pty Limited
Dr John William Ketelbey
Brazil Farming Pty Ltd
Mr Steven Veronese
Tets Pty Ltd
Oaktone Nominees Pty Ltd
Citicorp Nominees Pty Limited
Griffin & Grace Investments Pty Ltd
Romfal Sifat Pty Ltd
Mr Alan Giles Sauran
BNP Parabis Nominees Pty Ltd
TOTAL
Number of
Shares
226,324,149
48,147,864
29,867,184
25,174,137
22,877,572
20,360,843
17,976,761
15,392,421
14,302,319
12,891,130
12,157,894
11,000,000
10,008,001
10,000,000
10,000,000
8,869,221
8,500,000
8,000,000
7,600,000
7,560,729
527,010,225
Percentage
of Issued
Capital
20.22%
4.30%
2.67%
2.25%
2.04%
1.82%
1.61%
1.38%
1.28%
1.15%
1.09%
0.98%
0.89%
0.89%
0.89%
0.79%
0.76%
0.71%
0.68%
0.68%
47.08%
87
ACTINOGEN LIMITED
S H A R E H O L D E R I N F O R M A T I O N
___________________________________________________________
Unquoted Securities as at 8 October 2019
There were 3,559,298 unlisted employee share option plan options exercisable at $0.10 each and
expiring on 5 February 2021 held by seven holders, on issue.
There were 1,500,000 unlisted options exercisable at $0.10 each and expiring on 1 December
2022 held by one holder, on issue. Details of the holders holding more than 20% of the above:
George Morstyn
Number of Options
Percentage
1,500,000
100.00%
There were 18,100,000 unlisted options exercisable at $0.085 each and expiring on 27 November
2023 held by three holders, on issue. Details of the holders holding more than 20% of the above:
John William Ketelbey
Geoffrey Edward Duncan Brooke
Number of Options
Percentage
11,700,000
4,900,000
64.64%
27.07%
There were 5,783,333 unlisted employee share option plan options exercisable at $0.085 each
and expiring on 12 December 2023 held by six holders, on issue.
There were 5,000,000 unlisted options exercisable at $0.093 each and expiring on 1 February 2024
held by one holder, on issue. Details of the holders holding more than 20% of the above:
Bio-Link Australia Pty Ltd
Number of Options
Percentage
5,000,000
100.00%
There were 3,000,000 unlisted options exercisable at $0.10 each and expiring on 4 April 2024 held
by one holder, on issue.Details of the holders holding more than 20% of the above:
Malcolm John McComas
Number of Options
3,000,000
Percentage
100.00%
There were 5,000,000 unlisted options exercisable at $0.10 each and expiring on 24 March 2025
held by one holder, on issue.Details of the holders holding more than 20% of the above:
Geoffrey Edward Duncan Brooke
Number of Options
5,000,000
Percentage
100.00%
1.
2.
3.
4.
5.
6.
7.
Restricted Securities
The Company has no securities on issue that are subject to either ASX or voluntary escrow.
On-Market Buy-Back
There is no current on-market buy back in place.
88