Contents
CHAIRMAN AND THE CEO’S LETTER
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CORPORATE GOVERNANCE STATEMENT
FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDIT REPORT
SHAREHOLDER INFORMATION
CORPORATE DIRECTORY
1
2
15
16
19
42
43
46
INSIDE BACK COVER
Cover Image (left to right):
Dr Michael Graham, Benitec’s Chief Scientist and discoverer of ddRNAi and
Dr David Suhy, Benitec’s Senior Vice President of Research & Development and creator of TT-034.
Chairman’s and CEO’s letter
Dear Shareholder,
We are pleased to present Benitec Biopharma’s Annual Report for 2014.
Once in a generation a technology is developed that has the potential to radically change the current approach to disease treatment. Before penicillin
there was fresh air and mercury baths. Think of what medicine was like before X-rays, MRI, organ transplants, IVF, or monoclonal antibodies. Now
we are on the verge of turning the knowledge from the human genome project into targeted gene therapy drugs for a number of currently untreatable
or incurable diseases. Benitec Biopharma’s gene silencing technology represents such a transformational technology for medicine.
During the last year Benitec has made very significant progress toward delivering on this potential. This can be seen by comparing Benitec today
with the company’s key performance indicators 12 months ago. In September 2013 the company had a market capitalisation of AUD$24.8 million, a
share price of AUD$0.29, AUD$1.58 million in the bank, few institutional investors and no programs in the clinic.
The Board and management team are very proud to report that one year later Benitec has a market capitalisation of around AUD$110 million, over
AUD$30 million in the bank, 10 institutional healthcare investors and our lead compound, TT034 a “single shot cure” for Hepatitis C is in the clinic.
These achievements have been made against the backdrop of a significant rise in the acceptance of RNAi as a treatment modality. siRNA-based
companies such as Alnylam, Dicerna and Arrowhead also saw large increases in their valuation over the past 12 months. Your Board believes that
Benitec is well positioned to continue to leverage the success of RNAi through the commercialisation of ddRNAi.
Benitec became a clinical stage biotechnology company when, in January 2014, the US Food and Drug Administration (FDA) provided the company
with clearance to began a phase I/II(a) clinical trial for TT-034. The fact that this clearance to proceed was provided within 30 days of the
Investigational New Drug (IND) Application being submitted was a major validation of the work that our team put into this program. Even more
important when considering that this was the first time the FDA had provided clearance for the commencement of a clinical trial for a systemically
delivered ddRNAi therapeutic. The progress and challenges of the trial and our measures in response have been reported on in Company
announcements and we remain confident and committed to this program.
In February 2014 with the assistance of Lodge Partners (Melbourne) and Maxim Investment Bank (New York) Benitec was able to raise over AUD$30
million in a private placement, predominantly from US-based healthcare institutional investors. This raising was important for a number of reasons;
first it validated ddRNAi’s position in the RNAi therapeutic space, specialist healthcare institutions who had invested in US-based RNAi companies
such as Alnylam, Dicerna and Arrowhead were acknowledging the opportunity that Benitec represented. Secondly these funds will enable Benitec
to advance TT-034 to the conclusion of a Phase II(b) trial at which point we believe the drug, if successful, should deliver optimal partnering value.
Thirdly, as a result of securing these funds, Benitec was able to open the Company’s own laboratory in Northern California providing the Company
with the capability of advancing the other programs in our pipeline such as Hepatitis B, AMD, Lung Cancer and OPMD. Being able to advance these
programs through the pre-clinical pathway highlights the depth and strength of Benitec’s approach to commercialising ddRNAi.
During May 2014 Benitec’s Senior Vice President of Research and Development, Dr David Suhy was present at Duke Medical Research Unit when
the first patient in our groundbreaking trial was given a sub-therapeutic dose of TT-034. It was particularly gratifying for Dr Suhy to be present
at this significant event; Dr Suhy first drew his proposed structure for TT-034 on a white board in California eight years earlier. In June 2014, the
independent Data Safety Monitoring Board (DSMB) for the TT-034 trial gave the all clear to dose the second patient, indicating that they saw no
treatment-related adverse events with the first patient. Importantly laboratory results from the first patient demonstrated that TT-034 had been able
to transduce liver cells and produce small but detectable amounts of shRNA, a very encouraging result considering this dose was sub-therapeutic.
In a further significant development for Benitec’s ddRNAi technology, our licensee Calimmune, was given approval by the FDA to begin treating their
second cohort of patients in the company’s groundbreaking Phase I/II trial of Cal-1, a stem cell based therapeutic candidate for HIV/AIDS therapeutic.
This approval was further evidence of the safety of ddRNAi technology.
Benitec has continued an aggressive strategy to raise the company’s profile and increase awareness of our achievements, and during 2013 – 2014
we have presented at or attended the following events:
• Ausbiotech 2013 – Brisbane
• Over 30 investor and partnering meetings around the 2014 JP
Morgan Healthcare Conference – San Francisco
• ASX Spotlight - New York & London
• BioPharma Europe - Barcelona
• Bio 2014 - San Diego
• Three Tickers – Brisbane and Melbourne
• Broker Meets Biotech – Perth & Brisbane
It is becoming clear from these meetings that both investors and pharmaceutical industry representatives are now much more aware and interested
in the potential that Benitec and ddRNAi offers as a value proposition than they were twelve months ago.
The last 12 months has in many ways been transformational for your Company. Whilst many challenges remain in bringing a first-in-man therapy
through to clinical validation, Benitec now has the resources to achieve its goals. We thank you for your ongoing support and look forward to an
exciting next twelve months.
Peter Francis
Chairman
Peter French
CEO and Managing Director
Benitec Biopharma Ltd Annual Report 2014 Page 1
Directors’ Report
Back (from left to right): Dr David Suhy, Mr Carl Stubbings, Mr Iain Ross, Dr John Chiplin, Dr Michael Graham. Front (from left to right): Dr Peter French, Mr Peter Francis, Mr Greg West
The Directors of Benitec Biopharma Limited (‘the Company’ or
‘Benitec’) and its controlled entities (‘the Group’) present their report
for the financial year ended 30 June 2014.
Mr Kevin Buchi BA, MBA, CPA
Non-Executive Director
Appointed 14 April 2013
NON-EXECUTIVE DIRECTORS
The following persons were Directors of Benitec Biopharma Limited
during or since the end of the financial year.
Names, qualifications experience and special
responsibilities
Mr Peter Francis LLB, GRAD DIP (INTELLECTUAL PROPERTY)
Non-Executive Chairman
Appointed 23 February 2006
Mr Peter Francis is a partner at Francis Abourizk Lightowlers (FAL), a
firm of commercial and technology lawyers with offices in Melbourne,
Australia. He is a legal specialist in the areas of intellectual property
and licensing and provides legal advice to a large number of
corporations and research bodies.
Other Current Directorships of Listed Companies: None
Former Directorships of Listed Companies in last three years
Xceed Capital Limited.
Page 2 Benitec Biopharma Ltd Annual Report 2014
Mr. Buchi served as Chief Executive Officer of Cephalon, Inc. through
its $6.8 billion acquisition by Teva Pharmaceutical Industries in
October 2011. After the acquisition Mr. Buchi served as Corporate
Vice President, Global Branded Products of Teva Pharmaceuticals. Mr.
Buchi joined Cephalon in 1991 and held various positions, including
Chief Operating Officer, Chief Financial Officer and Head of Business
Development prior to being appointed CEO.
Mr. Buchi currently serves as President and CEO and a member of the
Board of Directors of TetraLogic Pharmaceuticals. Mr Buchi is also on
the Board of Directors of Stemline Therapeutics, Inc., Forward Pharma
A/S, Alexza Pharmaceuticals, Inc. and Epirus Biopharmaceuticals.
Mr Buchi originally trained as a synthetic organic chemist for the
Eastman Kodak Company graduating from Cornell University with
a Bachelor of Arts degree in chemistry. He holds Master’s degree
in management from Kellogg Graduate School of Management at
Northwestern University and is a Certified Public Accountant.
Other Current Directorships of Listed Companies
Stemline Therapeutics, Inc. and Alexza Pharmaceuticals, Inc.
Former Directorships of Listed Companies in last three years
Mesoblast Limited (Australia).
Directors’ Report
Dr Mel Bridges BAPPSC, FAICD
Non-Executive Director
Appointed 12 October 2007
Resigned 18 June 2014
Dr Mel Bridges has more than 30 years’ experience as a CEO and
public company director in the global biotechnology and healthcare
industry. During this period, he founded and managed successful
diagnostics, biotechnology and medical device businesses. He has
successfully raised in excess of $300 million investment capital in the
healthcare/biotech sector and been directly involved in over $1 billion
in M&A and related transactions.
The businesses that Dr Bridges has founded have won numerous
awards including the Queensland Export Award, Australian Small
Business of the Year, Queensland Top 400, BRW’s Top 100 Fastest
Growing Companies for seven consecutive years and The Australian
Quality Award.
Dr Bridges has an Honorary Doctorate from Queensland University of
Technology
Other Current Directorships of Listed Companies
ALS Ltd, Tissue Therapies Ltd.
Former Directorships of Listed Companies in last three years
Alchemia Limited (October 2003 to July 2013), Genetic Technologies
Limited (December 2011 to November 2012), Leaf Energy Limited
(August 2010 to September 2012), and Genera Biosystems Limited
(December 2008 to November 2010).
Dr Bridges retired from the Board in June 2014.
Dr John Chiplin PH.D.
Non-Executive Director
Appointed 1 February 2010
Dr. Chiplin is CEO of Polynoma LLC, an immuno-oncology company
currently running one of the world’s largest (Phase III) melanoma trials.
Prior to Polynoma, he was the founding CEO of Arana Therapeutics,
a world leading antibody developer, and a director of Domantis, Inc.,
prior to their acquisition by Cephalon & GSK respectively.
Dr Chiplin’s investment vehicle, Newstar Ventures Ltd., has funded
more than a dozen early stage companies in the past ten years. Dr.
Chiplin’s Pharmacy and Doctoral degrees are from the University of
Nottingham. In addition to Benitec Biopharma, he currently serves on
the board of ScienceMedia, Inc. and Adalta Pty.Ltd
Other Current Directorships of Listed Companies: None
Former Directorships of Listed Companies in the last three years
Arana Therapeutics Ltd., Calzada Ltd., Healthlinx, Ltd., Progen
Pharmaceuticals Ltd., and Medistem, Inc.
Mr Iain Ross BSc, CH.D.
Non-Executive Director
Appointed 1 June 2010
Mr Ross brings over 30 years’ experience in the international life
sciences sector to the Board of Benitec. Following a career with
Sandoz, Fisons, Hoffman La Roche and Celltech, he has undertaken
and had input to a number of company turnarounds and start-ups as
a board member on behalf of banks and private equity groups. He has
led and participated in 4 IPOs, has direct experience of life science
mergers and acquisitions both in the UK and USA and has raised more
than £250m in the biotech sector.
He is a Qualified Chartered Director and currently he is Chairman of
Ark Therapeutics Group plc (LSE); Biomer Technology Limited and
Pharminox Limited; and a non-executive director of Tissue Therapies
Limited (ASX), Novogen Limited (ASX) and Anatata Lifesciences
Limited. He is also Vice Chairman of the Council of Royal Holloway,
University of London.
Other Current Directorships of Listed Companies
Ark Therapeutics Group plc, Tissue Therapies Limited,
Novogen Limited
Former Directorships of Listed Companies in last three years: Coms plc
CHIEF EXECUTIVE OFFICER & MANAGING DIRECTOR
Dr Peter French MBA, PH.D.
Chief Executive Officer and Managing Director
Appointed 26 August 2013
Peter French is a cell and molecular biologist who has been
extensively involved in both basic and clinical medical research
and commercialisation of biological intellectual property. He has
an MBA in Technology Management and a PhD in cell biology. Dr
French is a Past President of the Australia and New Zealand Society
for Cell and Developmental Biology, and represented Australia’s
biological scientists on the Board of FASTS, Australia’s peak
government lobbying organization for science and technology. Dr
French has conducted cell and molecular research in a broad range
of areas relevant to Benitec’s DNA-directed RNAi based therapeutic
technology, including cancer, HIV/AIDS, neurobiology, immunology and
inflammatory disease.
He obtained his PhD in 1987 for work performed at CSIRO on the
characterisation of the keratin composition of the developing wool
fibre. He carried out postdoctoral research at the Children’s Medical
Research Foundation, Sydney, on the role of glycoprotein expression in
neuronal development. In 1989 he became Principal Scientific Officer
and Manager of the Centre for Immunology, St Vincent’s Hospital,
Sydney. Over the past 15 years Dr French has been extensively
involved in Australia’s biotechnology industry, initially founding the
stem cell company Cryosite (ASX:CTE), and then taking up leadership
roles at other biotechnology companies prior to joining Benitec in 2009
as its Chief Scientific Officer. Peter was appointed Chief Executive
Officer of Benitec in June 2010 and Managing Director in August 2013.
Other Current Directorships of Listed Companies: None
Former Directorships of Listed Companies in last three years: None
COMPANY SECRETARY
Mr Greg West CA
Appointed 26 May 2011
Mr West is a Chartered Accountant with experience in the Biotech
sector. He is a Director and Audit Committee Chairman of UOWE
Limited (a business arm of Wollongong University), and a Director and
Audit Committee Chairman of IDP Education Pty Ltd and Education
Australia Limited. He worked at PWC and has held senior finance
executive roles in financial services and investment banking with
Bankers Trust, Deutsche Bank, NZI, and with other financial institutions.
Benitec Biopharma Ltd Annual Report 2014 Page 3
Directors’ Report
Interests in the shares and options of the company and
related bodies corporate
Employees
The Group had 13 employees as at 30 June 2014 (2013: 7 employees).
At the date of this report, the interest of the Directors in the shares
and options of Benitec Biopharma Limited were:
Dividends
Director
Number of
Ordinary Shares
(*after the July 2014
securities consolidation)
Number of Options over
Ordinary Shares
(*after the July 2014
securities consolidation)
Mr Peter Francis
327,250
Dr Peter French
342,554
Mr Kevin Buchi
615,385
Dr John Chiplin
263,020
Mr Iain Ross
66,364
1,716,924
2,849,231
646,154
410,563
407,500
* A resolution to consolidate the Company’s securities (shares,
options and warrants) was approved at the General Meeting on 17
July 2013. The securities consolidation was on a 25:1 basis meaning
that shareholders have 1 consolidated security for every 25 securities
held before Friday 19 July 2013. Capital raisings and securities
consolidation are referred to on page 12.
Unless otherwise stated, all numbers of securities in this document
are after the 19 July 2013 consolidation.
CORPORATE INFORMATION
Corporate Structure
Benitec Biopharma Limited (‘the Company’ or ‘Benitec’) is a company
limited by shares and is incorporated and domiciled in Australia. The
Company has prepared a consolidated financial report incorporating
the entities that it controlled during the financial year (‘the Group’),
which are described in note 11 of the financial statements.
–
Principal Activities
Benitec Biopharma Limited is an ASX-listed biotechnology company
(ASX: BLT, OTC: BTEBY) based in Sydney, Australia. The company
has a pipeline of in-house and partnered therapeutic programs
based on its patented gene-silencing technology, ddRNAi. Benitec
is developing treatments for chronic and life-threatening human
conditions such as Hepatitis C, Hepatitis B, wet age-related macular
degeneration, cancer-associated pain, drug resistant lung cancer
and oculopharyngeal muscular dystrophy based on this technology.
In addition, Benitec has licensed ddRNAi technology to other
biopharmaceutical companies who are progressing their programs
towards the clinic for applications including HIV/AIDS, retinitis
pigmentosa and Huntington’s disease. Benitec generates revenue from
licensing its technology and research and development grants.
The principal activities of the Group during the year were progressing
programs through the clinic, the commercialisation of Benitec’s unique
Intellectual Property, development of the Company’s therapeutic
pipeline and pre-clinical programs, funding, and protection and
building the IP estate.
Page 4 Benitec Biopharma Ltd Annual Report 2014
No dividends in respect of the current or previous financial year have
been paid, declared or recommended for payment.
OPERATING AND FINANCIAL REVIEW
Operating review
Benitec’s ddRNAi approach is significantly different to other gene
silencing methodologies: it induces the target cell to continuously
manufacture specific silencing molecules resulting in long term
silencing of the disease-associated gene after just a single treatment.
While there are other technologies for inhibiting gene activity, in
most cases these treatments must be regularly re-administered. It is
believed that only ddRNAi is able to achieve long-term gene silencing
from a single treatment administration.
The key elements of Benitec’s strategy to generate a competitive and
appropriate return for stakeholders are to:
• Validate that ddRNAi will be safe and effective in a clinical
setting. The Company has made substantial progress towards this
goal, namely:
–
In late May 2014, the Duke Medical Research Unit,
commenced dosing in the Company’s “first-in-man” clinical
trial of its hepatitis C virus (HCV) treatment, TT-034.
Demonstrating its safety and efficacy should be a significant
value inflection point in addition to “validating” ddRNAi as a
transformational platform for targeting multiple diseases. This
would be expected to enhance interest from pharmaceutical
companies in collaborating with Benitec on developing
ddRNAi therapies in areas of mutual interest.
In December Benitec’s collaborator, University of NSW
Children’s Cancer Institute, was able to confirm increased
survival in a preclinical in-vivo lung cancer model. The
Company filed a pre-pre IND submission with the US Food and
Drug Administration (FDA) to discuss options for preclinical
toxicology testing.
• Optimise the Company’s share register by consolidating the
number of shares issued and expanding the number of institutional
investors.
–
In July 2013 Benitec announced a 25:1 consolidation of the
Company’s stock. The post consolidation share price of $0.27.5
has been significantly improved on the company trading above
$1.00 for the majority of 2014.
In February 2014 Benitec announced that the company had
completed a $31.5M private placement which included US
and international institutional investors including: RA Capital
Management, Perceptive Advisors, Special Situation Funds
and Sabby Management.
In June 2014 Benitec advised it had established a sponsored
Level 1 American Depositary Receipt (ADR) program facility
trading in the Over-The-Counter (OTC) market in the United
States. The Benitec ticker for the ADR is: BTEBY. The primary
benefit of the ADR program is to widen the secondary capital
market for the Company allowing Benitec shares to be traded
more easily for U.S. investors.
–
–
Directors’ Report
• Secure funding to accelerate the clinical development of Benitec’s
programs. The $31.5 million capital raise finalised in April is
enabling the Company to:
– Fund TT-034 into Phase I/II(b) and to advance other programs
in the Company’s pipeline with particular emphasis on lung
cancer, AMD and HBV.
– Expand the Company’s in-house capability with the opening of
its own laboratory in northern California.
– Appoint key personnel: Benitec has recruited a number
of experienced and highly qualified scientific, program
management and Intellectual Property resources to support the
accelerated clinical development of the Company’s programs.
Successful execution of these elements is enhancing Benitec’s
opportunities to engage with the pharmaceutical industry and achieve
successful commercial outcomes for the Company’s programs.
Strategic Advantage
Benitec’s ddRNAi technology is a form of RNA interference (RNAi) that
can ‘silence’ or shut down disease-causing genes. Recently there has
been an increasing awareness of the value of gene silencing and RNAi
as a therapeutic modality; Companies operating in this segment – such
as Alnylam, Arrowhead, Dicerna, Tekmira, Bluebird Bio and Isis – have
seen significant increases in their valuation. In particular, Alnylam has
grown its company’s market capitalisation from around $1 Billion to
over $4 Billion over the last two years. Benitec’s ddRNAi technology
has a number of differential advantages over RNAi: the most important
is its ability to silence a disease-causing gene for long periods with a
single administration, whereas conventional RNAi requires continuous
administration.
Big pharma is demonstrating a renewed interest in RNAi and gene
therapy. Benitec’s ddRNAi technology offers an optimised combination of
these approaches, and the TT-034 clinical trial, if successful, will provide
validation of the technology for treating a wide range of diseases.
In-house Programs
Focus
Indication Partners/Collaborators Discovery
Pre-clinical
Clinical
Hepatitis C
Infectious
Disease
Hepatitis B
Biomics
Biotechnology (JV)
Non Small
Cell* Lung
Cancer
Cancer
Associated
Pain
University of New
South Wales (RC)
Stanford University
(RC)
Cancer
Ocular
Disease
AMD**
Stanford University
(RC)
Genetic
Disease
OPMD***
Royal Holloway
London University (RC)
RC = research collaboration
JV = joint venture
*and other chemotherapy-resistant cancers
**Age-Related Macular Degeneration
***Oculopharyngeal Muscular Dystrophy, and orphan disease
Benitec has six in-house development programs underway. Following
the acquisition of Tacere in November 2012, the Company decided to
put most of these programs on hold whilst focusing on advancing the
hepatitis C therapeutic, TT-034, towards the clinic. With the securing of
the major fund raising in April 2014, the Company is re-activating the
other pipeline programs. Highlights over the previous 12 months include:
• Hepatitis C – “TT-034”. In 2014 TT-034 became Benitec’s first
clinical stage treatment achieving the following key milestones:
– Allowance by the FDA to proceed with a clinical trial for TT-
034 was received in mid-January. Of particular note, the New
Drug Application (NDA) was accepted by the Agency within 30
days of receipt with no significant changes.
– Commencement of screening and patient recruitment at Duke
Medical Research Unit.
– The first patient was dosed in late May.
– The first patient experienced no treatment-related adverse
events and, importantly, there was evidence of liver
transduction and production of short hairpin RNAs (shRNA).
– Approval by the Data Safety Monitoring Board (DSMB) to
proceed with the clinical trial with no modification following
review of the safety parameters of the first patient after 6
weeks following the single administration.
– A paper describing TT-034 was accepted for publication in
the prestigious scientific journal Nature Molecular Therapy
Nucleic Acids.
– University of California San Diego (UCSD) has joined the
Duke Clinical Research Unit to concurrently screen and enrol
patients, boosting patient recruitment.
• Chemotherapy-resistant lung cancer – “Tribetarna™”.
Benitec’s lung cancer program targeting the gene responsible for
chemotherapy resistance, beta III tubulin, has made encouraging
progress toward the clinic. Significant milestones in the last 12
months include:
– Significantly increased survival observed in a preclinical in vivo
model of lung cancer following intravenous administration of
the ddRNAi-based therapeutic, Tribetarna™ in combination
with cisplatin, confirming previously reported results.
– Dr Craig Lewis appointed Chief Medical Adviser. Dr Lewis is
a medical oncologist at Sydney’s Prince of Wales Hospital; he
has a major interest in clinical trial research in lung cancer,
breast cancer and sarcoma.
– Professor Maria Kavallaris (Benitec’s collaborator on
Tribetarna™) was acknowledged by the prestigious National
Health and Medical Research Council (NHMRC)’s List of High
Achievers in Health and Medical Research Award.
– Pre-pre IND submission filed with the US FDA and a
teleconference held to discuss guidance on appropriate
toxicology studies to be conducted for this first-in-man
therapeutic approach.
• Wet age-related macular degeneration (AMD). A focus of
Benitec’s US laboratory has been the testing and optimisation
of suitable vectors to deliver ddRNAi constructs to the retina. In
parallel the Company has identified suitable animal models to
complete the validation of this therapy. The single-administration
approach permits the possibility of use as a prophylactic,
preventing any development of retinal damage before AMD
develops thus offering both a treatment and a preventative
solution to this important healthcare problem.
Benitec Biopharma Ltd Annual Report 2014 Page 5
Directors’ Report
• Hepatitis B – ‘Hepbarna™’ Hepatitis B virus (HBV) infection is
currently incurable and represents a significantly larger public
health problem than HCV. Hepbarna™ is similar in design to TT-
034, utilizing the same delivery vector, enabling it to leverage
much of the toxicity and biodistribution data obtained in the
Company’s HCV clinical development program. In conjunction with
the Company’s collaborator, Biomics Biotechnologies, Benitec is
optimising the design of DNA constructs, and the Company’s US
laboratory is preparing to undertake a range of in vitro validation
experiments.
• Neuropathic pain. The research collaboration with Professor
David Yeomans at Stanford University will focus in the first
instance on re-validating the previously developed constructs
in vivo.
• Genetic disease – ‘Pabparna™’. Benitec’s treatment for
oculopharyngeal muscular dystrophy (OPMD) – which is being
developed in collaboration with the Royal Holloway, University of
London – continues to progress.
• Huntington’s disease – Benitec’s non-exclusive license allows
uniQure to develop a treatment for Huntington’s disease using
the company’s ddRNAi gene silencing technology. uniQure listed
on the NASDAQ in early 2014, raising around $90M so is wel
resourced to be able to advance this program towards the clinic.
• Retinitis pigmentosa – Benitec’s licensee Genable Technologies
Ltd is developing GT308 for retinitis pigmentosa using ddRNAi
to silence the disease-causing mutant gene. Genable was been
granted orphan drug designation from the FDA; this status means
Genable will gain seven years of market exclusivity in the US once
the product is approved.
• Breast cancer – Benitec has granted a license to Regen
Biopharma for the development of a ddRNAi-based therapy called
dCellVax. Regen recently announced the successful silencing of
the IDO gene in dendritic cells, an approach that in animal models
has demonstrated the ability to induce regression of breast cancer.
Licensed Programs
Intellectual Property
In addition to the Company’s in-house development programs, Benitec
has licensed its ddRNAi technology to four biotech companies. As
each of these companies advances their clinical development their
success further validates ddRNAi. Each program is outlined below:
Focus
Indication Partners/Collaborators Discovery
Pre-clinical
Clinical
Infectious
Disease
HIV/AIDS
Licensed to
Calimmune
Cancer
Cancer Vac-
cines
Licensed to
Regen BioPharma
Ocular
Disease
Retina
Pigmentosa
Licensed to
Genable
Genetic
Disease
Huntington’s
Disease
Licensed to
uniCure
• HIV/AIDS – Benitec’s US-based licensee Calimmune Inc. has
recently received approval to commence dosing patients in the
second cohort of their Phase I/II stem cell-based clinical trial in
people living with HIV/AIDS. Approval to move into the second
group of patients confirms that there were no safety issues or
treatment-related adverse events observed during the dosing of
the first cohort. The Cal-1 therapy utilises ddRNAi-based gene
silencing technology along with additional proprietary technology
to reduce the ability of HIV to enter immune cells. The trial is
entitled “Safety Study of a Dual Anti-HIV Gene Transfer Construct
to Treat HIV-1 Infection”.
Page 6 Benitec Biopharma Ltd Annual Report 2014
Benitec’s patent estate includes a combination of technology patents
and program-specific patents. Technology patents are based on
research in the 1990’s conducted by Dr Michael Graham (now Chief
Scientist at Benitec) and colleagues at CSIRO. These patents form
the basis for a dominant position in DNA-directed gene silencing
for therapeutic use in humans. The program patents are aimed at
establishing strategic patent protection for Benitec’s programs in
development in key jurisdictions including the US, Europe, Australia,
China, Japan and Canada
Key developments:
•
International patent application filed for the AMD program. This
patent filing is aimed at the use of ddRNAi in the treatment of
wet age-related macular degeneration including identifying target
sequences for RNAi activity.
• European opposition hearing was conducted for the Graham
European patent EP1555317 in the presence of patent opponents,
BASF SE and Galapagos NV. Despite a favourable preliminary
ruling, the formal hearing reversed its initial findings and upheld
the opposition, revoking this Graham patent. Benitec, along with
CSIRO, has the opportunity to appeal this decision. The Graham
patent family also includes two pending applications in Europe,
EP070008204 and EP10183258.
• Benitec has licensed third party IP to strengthen its position in
Europe. The company has executed a license agreement with
Galapagos NV in Europe, which grants Benitec the rights to use
RNAi in human therapeutics and diagnostics under the Galapagos
patent EP1444346. The rights include the right to sub-license.
• The European Waterhouse patent EP1068311 has been scheduled
for an opposition hearing at The Hague in January 2015. The
opponents to this patent are BASF SE, Strawman Limited,
Carnegie Institution of Washington/University of Washington and
Syngenta International AG. The preliminary review from the EPO is
favourable.
Directors’ Report
Technology patents
Title
Patent number
Filing date
Status
Genetic constructs for delaying or
repressing the expression of a target
gene (Graham patent family)1
Control of gene expression (Graham
family patent)
Methods and means for obtaining
modified phenotypes (Waterhouse
patent family)2
US 6,573,099
19 June 1998
Graham patent family member; granted 3 June 2003; Re-
examination Certificate (US90/008096) issued 8 March 2011
WO199904929
19 March 1999
Granted
US (8067383, 8168774, 7754697, 8048670, 8053419), Australia,
Canada, Europe (under opposition), UK, Hong Kong, India, Japan,
Korea, Mexico, New Zealand, Singapore, South Africa
Pending
US, Brazil, China, Europe, Japan, Mexico
WO1999053050
7 April 1999
Granted
US, Australia, China, Europe (under opposition), New Zealand
Genetic Silencing
WO2001070949
16 March 2001
Pending
US, Canada, Europe, Japan
Granted
Singapore, South Africa, UK
Pending
Brazil
Double-stranded nucleic acid
WO2004106517
3 June 2004
Granted
Australia, New Zealand, Singapore, South Africa
1 Benitec has an exclusive, irrevocable worldwide license from CSIRO for human therapeutics
2 Benitec has an exclusive, irrevocable worldwide license from CSIRO for human therapeutics
Program specific patents
Title
Patent number
Filing date
Status
Multiple promoter expression
cassettes for simultaneous delivery
of RNAi agents (Hepatitis C)
WO2005087926
4 March 2005
Granted
US (7727970, 8283461, 8691967), Australia, Canada, China,
Europe, Israel, Japan, Korea
Pending
China, Europe
RNAi expression constructs
(Hepatitis C)
WO2006084209
3 February 2006
Granted
US (7803611, 8076471), Australia, China, New Zealand
RNAi expression constructs with
liver-specific enhancer/promoter
(Hepatitis virus)
Minigene expression cassette
(Hepatitis)
US 8,008,468
16 February 2006
Granted on 30 August 2011
Pending
US, Europe, Canada, Hong Kong,
US 8,129,510
30 March 2007
Granted on 6 March 2012
HBV treatment (Hepatitis B)
WO2012055362
27 October 2011
Pending
Australia, Brazil, Canada, China, Hong Kong, Europe, India,
Korea, Russia, US
Pain treatment
WO2013126963
28 February 2013
PCT filed
Age related macular degeneration
treatment (AMD)
WO2014107763
8 January 2014
PCT filed
Benitec Biopharma Ltd Annual Report 2014 Page 7
Directors’ Report
Commercialisation
Cash Flows
Business development has remained a major focus for Benitec in
2013 – 2014. Executing an appropriate partnering agreement with a
suitable commercial pharmaceutical company is a key goal for the
Company. The review and subsequent allowance to proceed with
the TT-034 clinical trial by the FDA combined with agreement by the
DSMB to dose the second patient in this “first-in-man” clinical trial
has created a significant increase in interest from the pharmaceutical
industry. These successes provide early stage validation of ddRNAi in
the Company’s other programs, any one of which could be a “company
maker” in their own right.
The $31.5 million injection of capital will enable Benitec to negotiate
with potential partners from a strong financial position.
Raising Benitec’s profile
Benitec’s commercial profile continues to grow. Two more firms
initiated coverage of Benitec during 2013 – 2014: Shaw Stockbrokers
recommended a “buy” rating with target price of $3.00 and New York-
based Maxim Group also recommended a “buy” rating with a target
price of $4.00. Lodge Partners, who had initiated coverage in 2012
– 2103, updated their target price to $3.20 maintaining their “buy”
recommendation.
Benitec continued to raise its profile as an innovator and leader in
gene silencing with Dr Peter French appearing on ABC TV’s “The
Business” and “The 7:30 Report”. Dr Peter French also recorded an
in-depth interview on Brisbane Radio 4BC.
The Company cash flows consist of income from licensing the
Company’s technology, proceeds from issue of shares, interest income,
Research and Development grant receipts, payments to employees and
suppliers to exploit the Company’s intellectual property portfolio and
the maintenance of the required regulatory corporate structures.
Capital raisings - June & July 2013
Benitec announced a capital management update on 6 June 2013,
including details of a Private Placement and share purchase plan (SPP).
The private placement raised $7,900,000 and was subscribed to by
several new institutional investors, along with Benitec management
and directors and existing sophisticated investors at $0.275 per share
(after consolidation). The June & July 2013 placement was made in
two stages:
• $412,000 was raised under the Company’s 15% placement
capacity, in accordance with ASX Listing Rule 7.1, and settled on
14 June 2013; and
• $7,488,000 was raised following shareholder approval, settled on
24 July 2013.
A General Meeting was held on 17 July 2013 where shareholders
approved the second stage of the private placement, together with
a 25-for-1 consolidation of the Company’s issued securities. The
securities consolidation means that shareholders have 1 consolidated
security for every 25 securities held before Friday 19 July 2013. All
numbers of securities in this report are after the consolidation on 19
July 2013.
Benitec has entered into agreements to raise AUD 31,496,514 from international
institutional investors comprising leading US healthcare and biotechnology funds.
In the print media, Benitec featured in The Australian Way, QANTAS’
in-flight magazine, Business Review Weekly, and Hospital & Aged
Care, as well as being featured in stories in The Australian, Brisbane
Times and The Geelong Independent.
Benitec completed production of a video summarising ddRNAi’s mode
of action highlighting its advantages compared with conventional
RNAi; the video can be viewed on the Company’s website
http://www.benitec.com/videos.php
Financial Overview
Benitec’s net loss for the year to 30 June 2014 was $7,039,109
compared to a net loss of $3,847,960 for the previous corresponding
period. Operating revenue of $1,373,773 (2013: $1,464,182) included
Research and Development Grants received totalling $775,833 (2013:
$824,333). Expenses totalled $8,867,247 (June 2013: $4,952,142)
Benitec’s current assets at 30 June 2014 were $34,447,525 (June
2013: $1,722,590), with current liabilities of $954,680 (June 2013:
$1,110,370).
The SPP raised $2,820,000 and closed on 29 July 2013. The SPP was
conducted on the same terms as the private placement, with shares
allotted to participants in the SPP on 6 August 2013.
Capital raisings – February and April 2014
On 24 February 2014 Benitec announced it has entered into agreements
for a Private Placement to raise AUD $31,496,514 from international
institutional investors who include US based RA Capital Management,
Perceptive Advisors, Special Situations Funds and Sabby Management,
as well as existing Australian investors. The international institutional
investors comprised leading US healthcare and biotechnology
funds and their participation represents significant support for and
recognition of Benitec’s ddRNAi development programs.
The Placement involved the purchase of 29,435,994 ordinary shares at a
price of AUD $1.07 per ordinary share. In addition, the investors received
free attaching options expiring in five-years to purchase 13,246,204
ordinary shares at an exercise price of AUD $1.26 per ordinary share.
The February and April 2014 Placement was made in two stages:
Page 8 Benitec Biopharma Ltd Annual Report 2014
Directors’ Report
• $15,748,255 representing 14,717,995 ordinary shares, with
There were no ESOP options which lapsed during the financial year.
6,623,099 options. The placement was made without shareholder
approval on 28 February 2014; and was ratified by shareholders’ at
a general meeting on 10 April 2014; and
• $15,748,259 representing 14,717,999 ordinary shares, with
6,623,105 options. The placement was made after receiving
shareholder approval at a general meeting on 10 April 2014.
Ordinary Shares
67,867,428 ordinary shares were issued during the year through
private placements at prices ranging from $0.275 to $1.07 per share.
In addition, 955,002 ordinary shares were released from escrow to the
Tacere vendors during the year at $0.375 per share.
Options
At the date of this Directors’ Report, the Company has a total of
23,320,173 options to acquire ordinary shares in the Company.
Unless otherwise noted, all options are unlisted, restricted and are
categorised as follows:
Non-Executive Director Options on issue were:
Grant Date
Expiry Date
Exercise Price Number
13 July 2010
19 August 2014
$0.5700
26 September 2011 26 September 2016 $1.2500
120,000
1,600,000
26 September 2011 26 September 2016 $1.2500
1,200,000
10 November 2013 18 May 2018
$0.6250
400,000
Total
3,320,000
Summary of Shares, Options and Warrants on Issue –
30 June 2014
The Company had 114,898,992 listed ordinary shares and no listed
options on issue at reporting date. There are 14,467,095 unlisted
options and 245,078 warrants on issue, details of which are included
in note 16 (b) to the financial statements.
Employee Share Option Plan
Directors’ Options
Warrants
Unlisted Options
Total
5,288,000
3,320,000
245,078
14,467,095
23,320,173
Unissued Shares
As at the date of this report, there were 23,320,173 options over
unissued ordinary shares, details of which are included in note 16 (b)
to the financial statements. Option holders do not have the right, by
virtue of the option, to participate in any share issue of the Company
or any related body corporate or in the interest issue of any other
registered scheme related to the Company.
Further details of the unissued shares under option are provided in
Note 16(b)
Employees Share Option Plan (ESOP)
Options issued to employees are made through the Employee Share
Option Plan (ESOP). The expiry dates for options granted under the
ESOP are set out below. The expiry date for options held by any
employee who has resigned will be determined by the Board or will
expire within twelve months of resignation. The Board has the power
to adjust, amend and cancel the ESOP. Non-Executive Directors are
excluded from the ESOP.
Options on issue under the Employees Share Option Plan are:
Grant Date
Expiry Date
Exercise Price Number
13 July 2010
19 August 2014
$0.510
260,000
17 November 2011 17 November 2016 $1.250
1,800,000
7 February 2012
7 February 2017
$1.250
168,000
Shares issued as a result of the exercise of Options
During the year 547,088 shares were issued on the exercise of options
issued by the Company (2013: nil).
Significant changes in the state of affairs
During the year the Company commenced a US based Phase I/IIa clinical
trial in Hepatitis C and arranged net equity funding of $39.6 million.
These and other important events in the year are considered in the
‘Operation of Operations’ section of this Directors Report. Other than
this, there were no significant changes in the Company’s state of affairs.
Significant events after the reporting date
No other matters or circumstances have arisen since 30 June 2014
which have significantly affected or may significantly affect the
operations of the Group, the results of those operations or the state of
affairs of the Group, in subsequent financial years.
18 July 2012
18 July 2017
$1.250
400,000
Likely developments and expected results
16 November 2012 16 November 2017 $1.250
400,000
22 August 2013
22 August 2018
15 May 14
15 May 19
$1.250
$1.500
Total
2,080,000
180,000
5,288,000
Benitec will continue to progress programs through the clinic, seek
commercialisation opportunities with big Pharma and others for
the Company’s unique Intellectual Property; develop its therapeutic
pipeline and pre-clinical programs, protect and build the Company’s IP
estate and secure adequate funding.
Benitec Biopharma Limited is listed on the Australian Securities
Exchange (ASX) and is subject to the continuous disclosure
requirements of the ASX Listing Rules which require timely disclosure
of information which may affect security values or influence
investment decisions, and information in which security holders,
investors and ASX have a legitimate interest.
Benitec Biopharma Ltd Annual Report 2014 Page 9
The performance of executives is measured against criteria agreed
annually with each executive and is based predominantly on the overall
success of the Company in achieving its broader corporate goals.
Bonuses and incentives are linked to predetermined performance
criteria. The Board may, however, exercise its discretion in relation
to approving incentives, bonuses, and options, and can recommend
changes to the CEO’s recommendations. The policy is designed
to attract the highest calibre of executives and reward them for
performance that results in long-term growth in shareholder wealth.
Executives may be invited to participate in the Employee Share
Option Plan.
Australian executives or directors receive a superannuation guarantee
contribution required by the government and do not receive any other
retirement benefits.
All remuneration paid to directors and executives is valued at the cost
to the Company and expensed. Options are valued using the Black-
Scholes methodology.
The Board policy is to remunerate non-executive directors at
market rates for comparable companies for time, commitment, and
responsibilities. The Board as a whole determines payments to the
non-executive directors and reviews their remuneration annually,
based on market practice, duties, and accountability. The maximum
aggregate amount of fees that can be paid to non-executive directors
is subject to approval by shareholders at the Annual General Meeting.
Fees for non-executive directors are not linked to the performance
of the consolidated entity. However, to align directors’ interests with
shareholder interests, the directors are encouraged to hold shares in
the Company.
Performance Based Remuneration
Each executive’s remuneration package has a performance-based
component. The intention of this approach is to facilitate goal
congruence between executives with the business and shareholders.
Generally, the executive’s performance based remuneration is tied
to the Company’s successful achievement of certain key milestones
relating to its operating activities, as well as the Company’s overall
financial position.
Company Performance, Shareholder Wealth, and Directors’ and
Executives’ Remuneration
The remuneration policy has been tailored to increase goal congruence
between shareholders, directors, and executives. Two methods are
applied in achieving this aim, the first being a performance based bonus
based on achievement of key corporate milestones, and the second
being the issue of options to the majority of directors and executives to
encourage the alignment of personal and shareholder interests.
Directors’ Report
Environmental regulation
The Group’s operations are not subject to any significant environmental
regulations under either Commonwealth or State legislation.
Meetings of Directors
The number of meetings of the Directors held during the year and the
number of meetings attended by each director was as follows:
Board of Directors Risk & Audit Committee
Attended
Attended
Held
Held
Peter Francis
Peter French
John Chiplin
Kevin Buchi
Iain Ross
Mel Bridges
13
11
13
11
11
11
13
11
13
13
13
13
2
-
2
-
-
2
2
-
2
-
-
2
Committee membership
Due to the small number of Directors, it was determined that the
Board would undertake all of the duties of a properly constituted
Remuneration and Nomination Committee, with Dr John Chiplin acting
as Chairman.
The Audit and Risk Committee was chaired by Dr Bridges and met
twice during the financial year. Mr Iain Ross now chairs the Audit and
Risk Committee.
Remuneration report (audited)
This report details the nature and amount of remuneration for each
director of the Company, and for all key management personnel.
The information provided in the Remuneration Report has been audited
as required by s308 (3c) of the Corporations Act 2001.
Remuneration Philosophy
The remuneration policy of the Company is to align director and
executive objectives with shareholder and business objectives by
providing a fixed remuneration component and offering long-term
incentives based on key performance areas. The Board believes the
remuneration policy to be appropriate and effective in its ability to
attract and retain the best executives and directors to run and manage
the consolidated entity, as well as create goal congruence between
directors, executives, and shareholders.
The Board is responsible for determining the appropriate remuneration
package for the CEO, and the CEO is in turn responsible for determining
the appropriate remuneration packages for senior management.
Executives typically receive a base salary (which is based on factors
such as experience and comparable industry information), options, and
performance incentives. The Board reviews the CEO’s remuneration
package, and the CEO reviews the other senior executives’
remuneration packages, annually by reference to the consolidated
entity’s performance, executive performance, and comparable
information within the industry.
Page 10 Benitec Biopharma Ltd Annual Report 2014
Directors’ Report
Details of Remuneration for Year Ended 30 June 2014
Table 1. Non-Executive Director Remuneration for the year ended 30 June 2014
Short Term
Post Employment
Equity
Total
Salary & Fees
Cash
Bonus
Non
Monetary
Benefits
Super-
annuation
Termination
Benefits
Options
% of
remuneration
consisting of
options
Peter Francis
John Chiplin
Iain Ross
Kevin Buchi
Mel Bridges
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
$
113,328
113,328
53,000
50,000
58,000
50,000
53,000
10,972
58,000
55,000
$
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
$
$
27,556
137,728
6,890
34,444
6,890
34,444
103,098
-
6,890
34,444
140,884
251,056
59,890
84,444
64,890
84,444
156,098
10,972
64,890
89,444
19.6%
54.9%
11.5%
40.8%
10.6%
40.8%
66.0%
0.0%
10.6%
38.5%
There was no performance related remuneration payable to non-executive directors during the year.
Table 2. Remuneration of key management personnel for the year ended 30 June 2014
Short Term
Post Employment
Equity
Total
% of re
muneration
Salary &
Fees
Cash
Bonus
$
$
Non
Monetary
Benefits
$
300,000
249,800
252,000
240,000
195,000
185,000
217,902
135,662
217,391
162,333
150,000
-
50,000
-
30,000
-
87,160
-
50,000
-
-
-
-
-
-
-
-
-
-
-
Peter French
Carl Stubbings
2014
2013
2014
2013
Michael Graham 2014
2013
2014
2013
2014
2013
David Suhy
Greg West
Peter French
Carl Stubbings
Michael Graham
David Suhy
Greg West
Fixed
remuneration
At risk -
STI
53.5%
79.6%
84.0%
65.9%
78.2%
25.3%
14.7%
11.9%
26.4%
16.7%
Super-
annuation
Termination
Benefits
Options
consisting
of options
Perfor-
mance
based
$
17,775
15,775
17,775
15,775
17,775
15,775
-
-
17,775
14,610
At risk -
Options
21.2%
5.7%
4.1%
7.7%
5.1%
$
-
-
-
-
-
-
-
-
-
-
$
$
126,061
104,167
19,391
54,166
10,417
52,083
25,360
38,710
15,461
2,790
539,836
369,742
339,166
309,941
253,192
252,858
330,422
174,372
300,627
179,733
21.2%
28.2%
5.7%
17.5%
4.1%
20.6%
7.7%
22.2%
5.1%
1.6%
46.5%
28.2%
20.4%
17.5%
16.0%
20.6%
34.1%
22.2%
21.8%
1.6%
Benitec Biopharma Ltd Annual Report 2014 Page 11
Directors’ Report
Options Issued as part of remuneration for the year ended 30 June 2014
Options can be issued to executives as part of their remuneration. Options are issued to executives to increase goal congruence with Company
objectives. During the year ended 30 June 2014, 2,080,000 options (2013: 800,000) were granted to executives and the 2013 Annual General
Meeting approved the grant of 400,000 options to Director Kevin Buchi. There were no other options issued to directors as part of their
remuneration.
Balance
1 July 13
Granted as
Remuneration
Options
Acquired
Options
Exercised
Balance at
30 June 14
Total Vested Exercisable
at 30 June 14 at 30 June 14
Total
Directors
Peter Francis
Mel Bridges
John Chiplin
Iain Ross
Kevin Buchi
1,660,000
460,000
410,563
407,500
246,154
3,184,217
-
-
-
-
400,000
400,000
36,924
61,539
61,539
-
-
-
-
61,539
-
-
1,696,924
1,696,924
1,696,924
521,539
410,563
407,500
646,154
521,539
410,563
407,500
512,820
521,539
410,563
407,500
512,820
160,002
61,539
3,682,680
3,549,346
3,549,346
Specified Executives
Peter French
Carl Stubbings
Mick Graham
David Suhy
Greg West
1,449,231
1,400,000
412,308
600,000
400,000
120,000
200,000
-
200,000
280,000
2,981,539
2,080,000
-
-
-
-
-
-
-
-
-
-
-
-
2,849,231
1,449,231
1,449,231
612,308
600,000
600,000
400,000
145,641
600,000
133,333
80,000
145,641
600,000
133,333
80,000
5,061,539
2,408,205
2,408,205
* Refers to securities purchased during the financial year not as part of remuneration.
Options Issued to Directors and Specified Executives in the year ended 30 June 2014
Percentage
remuneration
that are
options
Number
granted in
the year
to 30 June
2014
Grant
date
Value per
option at
grant date
($)
Number
vested
Number
lapsed
Exercise
price ($)
Vesting and
first exercise
date
Last
exercise
date
Non-Executive Directors
Kevin Buchi
Specified Executives
Peter French
Carl Stubbings
David Suhy
Greg West
66.0%
400,000
10-Nov-13
$ 0.42
266,666
21.2% 1,400,000
200,000
5.7%
200,000
7.7%
280,000
5.1%
22-Aug-13
22-Aug-13
22-Aug-13
22-Aug-13
$ 0.18
$ 0.18
$ 0.18
$ 0.18
-
-
-
-
-
-
-
-
-
$ 0.63
10-Nov-13
18-May-18
$ 1.25
$ 1.25
$ 1.25
$ 1.25
22-Aug-14
22-Aug-14
22-Aug-14
22-Aug-14
22-Aug-18
22-Aug-18
22-Aug-18
22-Aug-18
The options were provided at no cost to the recipients. All options expire on the earlier of their expiry date or termination of the individual’s
employment or an expiry date which may be determined by the Board. The Board has the power to adjust, amend and cancel the ESOP. Non-
Executive Directors are excluded from the ESOP.
There were no options issued to staff or directors in the period since the end of the financial year and the issuing of this report.
Page 12 Benitec Biopharma Ltd Annual Report 2014
Directors’ Report
Number of Shares held by Key Management Personnel
No shares were granted as remuneration to staff or directors
Balance
1 July 2013
Received as
Remuneration
Upon Options
Exercised
Securities
Purchased
Balance
30 June 14
Non-Executive Directors
Peter Francis
Mel Bridges
John Chiplin
Iain Ross
Kevin Buchi
Specified Executives
Peter French
Carl Stubbings
Michael Graham
David Suhy
Greg West
89,487
165,200
47,634
30,000
615,385
947,706
332,615
37,009
47,448
-
-
417,072
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61,539
-
-
61,539
-
-
-
-
-
-
237,763
226,544
153,847
36,364
-
654,518
9,939
87,470
-
-
-
327,250
391,744
263,020
66,364
615,385
1,663,763
342,554
124,479
47,448
-
-
97,409
514,481
Consequences of performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following indices in respect of the
current financial year and the previous five financial years:
Loss per share (cents per share)
Dividends (cents per share)
Net loss ($ 000’s)
Share price ($’s)
2014
(7.62)
-
(6,889)
1.15
2013
(8.25)
-
(3,488)
0.38
2012
(10.75)
-
(4,113)
0.43
2011
(17.00)
-
(3,535)
0.70
2010
(5.25)
-
(4,641)
0.65
2009
(20.00)
-
-2,471
0.58
Payments to Related Parties of Directors
Legal services at normal commercial rates totalling $119,804 (2013: $103,492) were provided by Francis Abourizk Lightowlers, a law firm in which
Mr Peter Francis is a partner and has a beneficial interest.
Consultancy fees were paid for executive duties totalling $40,000 (2013: $40,000) provided by NewStar Ventures Ltd, a corporation in which Dr
John Chiplin is a director and has a beneficial interest.
Employment Contracts
The employment conditions of Dr Peter French, the Chief Executive Officer and Managing Director, are formalised in a contract of employment
prepared on his appointment as Chief Executive Officer and dated 4 June 2010. Dr French’s appointment with the Company may be terminated
with the Company giving six months’ notice or by Dr French giving six months’ notice. The Company may elect to pay Dr French an equal amount to
that proportion of his salary equivalent to six months’ pay in lieu of notice, together with any outstanding entitlements due to him. The Company
may, at any time, by notice in writing terminate Dr French’s contract immediately in the event of serious misconduct.
The employment conditions of Carl Stubbings, the Chief Business Officer, are formalised in a contract of employment dated 28 May 2012. Mr
Stubbing’s appointment with the Company may be terminated with the Company giving three months’ notice or by Mr Stubbings giving three
months’ notice. The Company may elect to pay Mr Stubbings an equal amount to that proportion of his salary equivalent to three month’s pay in
lieu of notice, together with any outstanding entitlements due to him. The Company may, at any time, by notice in writing terminate the contract
immediately in the event of serious misconduct.
Benitec Biopharma Ltd Annual Report 2014 Page 13
AUDITOR INDEPENDENCE
The Directors received the declaration included on page 15 of this
annual report from the auditor of Benitec Biopharma Limited.
The directors are satisfied that the provision of non-audit services
during the year is compatible with the general standard of
independence for auditors imposed by the Corporations Act. The
Directors and management assess the provision of non-audit services
before engagement to be satisfied that the auditor did not compromise
the auditor independence requirements of the Corporations Act.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on
behalf of the Company or intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of
the Company for all or any part of those proceedings.
NON-AUDIT SERVICES
Non-audit services provided by Grant Thornton, the Company’s
auditors, during the year ended 30 June 2014 relate to taxation advice
and corporate advisory services for which fees of $24,000 (2013:
$43,230) were paid.
This report has been made in accordance with a resolution of the
Directors.
Peter Francis
Chairman
Sydney
22 August 2014
Directors’ Report
The employment conditions of Dr Michael Graham, the Chief
Scientific Officer, are formalised in a contract of employment dated
1 January 2012. Dr Graham’s appointment with the Company may be
terminated with the Company giving three months’ notice or by Dr
Graham giving three months’ notice. The Company may elect to pay
Dr Graham an equal amount to that proportion of his salary equivalent
to three month’s pay in lieu of notice, together with any outstanding
entitlements due to him. The Company may, at any time, by notice
in writing terminate the contract immediately in the event of serious
misconduct.
The employment conditions of Dr David Suhy, Senior Vice President,
Research and Development, are formalised in a contract of
employment dated 28 August 2012. Dr Suhy’s appointment with the
Company may be terminated with the Company effectively giving
three months’ notice. The Company may elect to pay Dr Suhy an equal
amount to that proportion of his salary equivalent to three month’s pay
in lieu of notice, together with any outstanding entitlements due to
him. The Company may, at any time, by notice in writing terminate the
contract immediately in the event of serious misconduct.
The employment conditions of Mr Greg West, the Company Secretary,
are formalised in a contract of employment dated 23 August 2011.
Mr West’s appointment with the Company may be terminated with the
Company giving two months’ notice or by Mr West giving two months’
notice. The Company may elect to pay Mr West an equal amount to
that proportion of his salary equivalent to two month’s pay in lieu of
notice, together with any outstanding entitlements due to him. The
Company may, at any time, by notice in writing terminate the contract
immediately in the event of serious misconduct.
This concludes the Remuneration Report which has been audited.
Indemnification and insurance of Directors and Officers
The Company has entered into Deeds of Indemnity with the Directors,
the Chief Executive Officer and the Company Secretary, indemnifying
them against certain liabilities and costs to the extent permitted by law.
The Company has also agreed to pay a premium in respect of a contract
insuring the Directors and Officers of the Company. Full details of the
cover and premium are not disclosed as the insurance policy prohibits
the disclosure.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate
behaviour and accountability, the Directors of Benitec Biopharma
Limited observe the ASX principles of corporate governance. The
Company’s corporate governance statement is included on page 16 of
this annual report.
Page 14 Benitec Biopharma Ltd Annual Report 2014
Auditor’s Independence Declaration
Benitec Biopharma Ltd Annual Report 2014 Page 15
Corporate Governance Statement
The Board of Directors is responsible for establishing the corporate
governance framework of the Group. The Board guides and monitors
the business and affairs of Benitec on behalf of its shareholders by
whom they are elected and to whom they are accountable.
The Company’s corporate governance reflects the ASX Corporate
Governance Council’s principles and recommendations. The following
commentary summarises the Company’s compliance with the ASX
Corporate Governance Council’s recommendations.
• Dr Bridges, Dr Chiplin, Mr Ross and Mr Buchi do not have any
previous association with the Company or any other relationships
that are relevant to their independence.
The Board continually assesses its membership and makes
appointments to complement and enhance the existing skill base
of the Board. The Board has established a Remuneration and
Nominations Committee comprising of all non-executive directors.
Formal letters of appointment are used for all new NEDs.
PRINCIPLE 1
Lay solid foundations for management and oversight
The Board has adopted a formal charter that sets out their
responsibilities. This charter is posted on the Company’s website
www.benitec.com. The Board sets objectives, goals and strategic
direction along with a policy framework which management then
works within to manage day-to-day business. The Board monitors
this on a regular basis. There is clear segregation between the Board
and management. Any functions not reserved for the Board and not
expressly reserved for members by the Corporations Act and ASX
Listing Rules are reserved for senior executives.
Senior executives are subject to a formal performance review process
on an annual basis. The focus of the performance review is to set
specific objectives, and monitor performance against them for each
executive, that are aligned with the Company’s business objectives.
An annual review of the performance of each senior executive was
conducted in accordance with this process during the year.
PRINCIPLE 2
Structure the Board to add value
Details on the Board members and their qualifications are included in
the Directors’ Report. The Board has a policy of maintaining a majority
of independent directors. The current Board composition is four
independent Non-Executive Directors (NEDs). The Board has resolved
that a majority of the members of each Board committee should be
NEDs. The Board has approved that, where necessary, NEDs should
meet during the year in absence of management at such times as they
determine necessary.
Directors are considered to be independent when they are
independent of management and free from any business or other
relationship that could materially interfere with the exercise of their
independent judgement. The Board assesses director independence
on an annual basis, or more often if it feels it is warranted, depending
on disclosures made by individual Directors. In the context of director
independence, to be considered independent a NED may not have a
direct or indirect material relationship with the Company. The Board
has determined that a material relationship is one which has, or has
the potential to, impair or inhibit a Director’s exercise of judgement on
behalf of the Company and its shareholders.
The Board has concluded that all NEDs are independent. In reaching
this conclusion, the Board considered that:
• Mr Francis, the Non-Executive Chairman, is a principal of Francis
Abourizk Lightowlers, a material professional adviser to the
Company. Notwithstanding this association, the Board is satisfied
that it will not interfere with the independent exercise of his
judgment.
Page 16 Benitec Biopharma Ltd Annual Report 2014
The Company’s Constitution provides that:
•
the maximum number of Directors shall be ten unless amended by
a resolution at a General Meeting of Shareholders;
• one third of the Directors (excluding the Managing Director and
rounded down) must retire from office at the Annual General
Meeting (AGM) each year; such retiring Directors are eligible for
re-election;
• Directors appointed to fill casual vacancies must submit to
•
election at the next general meeting; and
the number of Directors necessary to constitute a quorum is not
less than two Directors currently in office.
The duties of a nomination committee have been assumed by the
Board due to the size and scale of the Company.
The Board carries out a Board performance assessment on an annual
basis. In the last review, the Board undertook a detailed review of its
performance and that of its committees and individual Directors. This
involved a self-assessment process which required the completion
and evaluation of questionnaires on Board and management matters.
The results of this review were collated and analysed by the Board.
Following recent changes to the Board, the next review is expected to
take place during the year ended 30 June 2015.
PRINCIPLE 3
Promote ethical and responsible decision-making
The Board and management ensure that the business processes of
Benitec are conducted according to sound ethical principles. The Board
has established a formal Code of Conduct in this regard. This code is
posted on the Company’s website.
All Directors and employees of the Company are expected to act with
the utmost integrity and objectivity, striving at all times to enhance the
reputation and performance of the Company.
All Directors and employees of the Company are made aware of their
obligations under the Corporations Act 2001 with regard to trading in
the securities of the Company. In addition, the Company has adopted a
Share Trading Policy, which is reviewed and updated on a regular basis
as required. This policy is posted on the Company’s website.
Board members who have or may have a conflict of interest in any
activity of the Company or with regard to any decision before the
Board, notify the Board of such and a decision is made as to whether
the Board member concerned is to be excluded from making decisions
that relates to the particular matter. The Company’s constitution allows
a Director to enter into any contract with the Company other than that
of auditor for the Company, subject to the law.
The Board has determined that Directors are able to seek independent
professional advice for Company related matters at the Company’s
expense, subject to the instruction and estimated cost being approved
by the Chairman in advance as being necessary and reasonable.
Corporate Governance Statement
Diversity Policy
Diversity includes, but is not limited to, gender, age, ethnicity and
cultural background. The company is committed to diversity and
recognises the benefits arising from employee and board diversity and
the importance of benefiting from all available talent. A copy of the
company’s diversity policy is available on the Benitec website.
The diversity policy outlines the requirements for the Board to develop
measurable objectives for achieving diversity, and annually assess
both the objectives and the progress in achieving those objectives.
Accordingly, the Board has developed the following objectives
regarding gender diversity and aims to achieve these objectives over
the next few years as director and senior executive positions become
vacant and appropriately qualified candidates become available:
2014
2015
2016
Women on the Board
Women in senior management roles
Women employees in the company
-
3
5
-
4
6
-
5
6
PRINCIPLE 4
Safeguard integrity in financial reporting
The Board has established an Audit and Risk Committee which meets
at least twice through the year. Mr Iain Ross has been appointed to
chair the Committee and Mr Peter Francis is the other independent
director on the Committee. Dr Mel Bridges chaired the Audit and Risk
Committee until his retirement on 18 June 2014.
The members of the Committee have significant financial, business
and legal backgrounds, expertise and qualifications, full particulars of
which are contained in this annual report, as are details of meetings of
this Committee.
The Committee is responsible for the appointment of the Company’s
auditors and has a formal charter, which is posted on the Company’s
website. The charter is reviewed annually to ensure that it is in line
with emerging market practices which are in the best interests of
shareholders.
The main objective of the Committee is to assist the Board in
reviewing any matters of significance affecting financial reporting and
compliance of the consolidated entity including:
• exercising oversight of the accuracy and completeness of the
financial statements;
• making informed decisions regarding accounting and compliance
•
policies, practices, and disclosures;
reviewing the scope and results of operational risk reviews,
compliance reviews, and external audits; and
• assessing the adequacy of the consolidated entity’s internal
control framework including accounting, compliance, and
operational risk management controls based on information
provided or obtained.
“Compliance” refers to compliance with laws and regulations, internal
compliance guidelines, policies and procedures, and other prescribed
internal standards of behaviour.
All other directors, the auditors and the Chief Financial Officer are
invited to attend Committee meetings. The Committee meets with the
auditors without management in attendance so that there can be open
and frank communication between the Committee and the auditor.
The Committee has the power to conduct or authorise investigations
into, or consult independent experts on, any matters within the
Committee’s scope of responsibility.
The Committee also considers the independence of the auditor. The
Company requires that the audit partner be rotated every five years
and, on an annual basis, the auditor provides a certificate to the
Committee confirming their independence.
The Chief Executive Officer and Chief Financial Officer have certified
to the committee that the Group’s financial reports present a true and
fair view, in all material respects, of the Group’s financial condition
and operational results and are in accordance with relevant accounting
standards.
PRINCIPLE 5
Make timely and balanced disclosure
The Board is committed to inform its shareholders and the market
of any major events that influence the Company in a timely and
conscientious manner. The Board is responsible for ensuring that
the Company complies with the continuous disclosure requirements
as set out in ASX Listing Rule 3.1 and the Corporations Act 2001.
The Company’s Communication Protocols have been posted on the
Company’s website.
Any market sensitive information is discussed by the Board before it
is approved to be released to the market. The Company’s procedure
is to lodge the information with the ASX and make it available on the
Company’s website shortly thereafter. All executives of the Company
have been made aware of the Company’s obligations with regard to
the continuous disclosure regime.
PRINCIPLE 6
Respect the rights of shareholders
The Board ensures that its shareholders are fully informed of matters
likely to be of interest to them. The Company provides all obligatory
information such as annual reports, half yearly reports and other ASX
required reports in accordance with the law and regulations.
Notices of shareholders meetings, annual and extraordinary, are
distributed in a timely manner and are accompanied by all information
that the Company has obtained.
The Company is always available to be contacted by shareholders
for any query that the shareholders may have. The queries can be
submitted by telephone, email or fax to the Company’s office.
The chairman encourages questions and comments at the AGM
ensuring that shareholders have a chance to obtain direct response
from the CEO and other appropriate Board members. The Company
requests that the auditors attend the AGM and are available to answer
any questions with regard to the conduct of the audit and their report.
Benitec Biopharma Ltd Annual Report 2014 Page 17
Corporate Governance Statement
PRINCIPLE 7
Recognise and manage risk
The Directors continually monitor areas of significant business
risk, recognising that there are inherent risks associated with the
management, funding and commercialisation of biotechnology projects.
The Board has delegated the responsibility for the establishment and
maintenance of a framework for risk oversight and the management of
risk for the Group to the Risk and Audit Committee.
The Committee’s role is to provide a direct link between the Board and
the external function of the Company. This includes:
• Monitoring corporate risk assessment and the internal controls
instituted;
• Monitoring the establishment of an appropriate internal control
framework, including information systems, and considering
enhancements;
• Reviewing reports on any defalcations, frauds and thefts from the
Company and action taken by managements;
• Reviewing policies to avoided conflicts of interest between the
Company and members of management; and
• Considering the security of computer systems and applications,
and the contingency plans for processing financial information in
the event of a systems breakdown.
The Chief Executive Officer and Chief Financial Officer have made
representations to the Committee on the system of risk management
and internal compliance and control which implements the policies
adopted by the Board. The Chief Executive Officer and Chief Financial
Officer have also represented that, to the best of their knowledge,
the Company’s risk management and internal compliance and control
system is operating efficiently and effectively in all material respects.
PRINCIPLE 8
Remunerate fairly and responsibly
After considering the size and nature of the Company business the
Board have accepted the responsibilities of the Remuneration and
Nomination Committee rather than establishing separate committee.
The Board, acting as the Remuneration and Nomination Committee,
ensures that the Company’s remuneration levels are appropriate in the
markets in which it operates and are applied, and seen to be applied,
fairly.
The Company’s remuneration policy is described in the Remuneration
Report contained within the Directors’ Report.
The business of the Committee has been dealt with as part of the
regular Board meetings as needed. The Board has access to senior
management of the Company and may consult independent experts
where the Board considers it appropriate to carry out the duties of the
Committee.
Currently the Company pays directors’ fees to the NEDs. As stated
in the Directors’ Report, businesses associated with directors may
receive fees for professional services provided to the Company in
addition to their duties as a NED.
Page 18 Benitec Biopharma Ltd Annual Report 2014
Financial Statement and Notes to the Financial Statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the Year Ended 30 June 2014
Continuing Operations
Revenue
Other income
Royalties & licence fees
Research and development
Employment related
Share based expense
Impairment costs
Travel related costs
Consultants costs
Occupancy costs
Corporate expenses
Foreign exchange translation
Loss before income tax
Income tax benefit
Note
2
2
4
2014
$
597,940
775,833
1,373,773
(192,753)
(3,757,869)
(2,444,015)
(355,116)
-
(585,359)
(652,839)
(121,582)
(646,315)
(111,399)
(8,867,247)
(7,493,474)
454,365
2013
$
639,849
824,333
1,464,182
(30,000)
(1,280,012)
(1,832,065)
(518,749)
(1,503,296)
(345,826)
(336,570)
(100,153)
(531,686)
1,526,215
(4,952,142)
(3,487,960)
-
Loss for the year attributable to members of the parent entity
(7,039,109)
(3,487,960)
Other Comprehensive Income
Items that may be reclassified subsequently to profit and loss
Other Comprehensive Income for the year, Foreign exchange translation, net of tax
Total Comprehensive Income for the year
Total Comprehensive Income attributable to members of the parent entity
7,747
(7,031,362)
(7,031,362)
(1,313,792)
(4,801,752)
(4,801,752)
Earnings per share (cents per share)
Basic and diluted for loss for the year attributable
to ordinary equity holders of the parent entity
Cents per share, with the comparative adjusted
for the share consolidation at 25:1 in July 2013
6
(7.81)
(8.25)
This statement should be read in conjunction with the notes to the financial statements.
Benitec Biopharma Ltd Annual Report 2014 Page 19
Financial Statement and Notes to the Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2014
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Note
8
9
10
12
13
15
16
17
2014
$
31,359,199
121,587
2,966,739
2013
$
1,587,299
105,073
30,218
34,447,525
1,722,590
47,677
47,677
28,120
28,120
34,495,202
1,750,710
788,169
166,511
954,680
954,680
1,011,733
98,637
1,110,370
1,110,370
33,540,522
640,340
129,185,676
640,773
(96,285,927)
89,609,248
277,910
(89,246,818)
33,540,522
640,340
This statement should be read in conjunction with the notes to the financial statements.
Page 20 Benitec Biopharma Ltd Annual Report 2014
Financial Statement and Notes to the Financial Statements
Note
8
26
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended 30 June 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Research and development grants
Interest received
Income tax benefit
Payments to suppliers and employees
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Business acquisition
Purchase of property, plant and equipment
Net cash provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issue of shares
Net cash provided by financing activities
Net decrease in cash held
Exchange differences on cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
8
This statement should be read in conjunction with the notes to the financial statements.
2014
$
260,310
775,833
321,116
454,365
(11,081,963)
(9,270,339)
-
(32,365)
(32,365)
39,075,618
39,075,618
29,772,914
(1,014)
1,587,299
31,359,199
2013
$
566,754
824,333
133,011
(4,256,694)
(2,732,596)
143,603
(9,889)
133,714
1,086,844
1,086,844
(1,512,038)
23,457
3,075,880
1,587,299
Benitec Biopharma Ltd Annual Report 2014 Page 21
Financial Statement and Notes to the Financial Statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Year Ended 30 June 2014
Contributed
Equity
$
Share-based
Payments
Reserve
$
Foreign
exchange
translation Accumulated
Reserve
$
Losses
$
Total
$
Balance at 1 July 2012
87,348,819
1,394,142
-
(86,080,047)
2,662,914
Loss for the year
Other comprehensive income for year
Total comprehensive income for year
Share issue to Tacere on business acquisition
Transfer to Accumulated Losses the Share Based
Payments Reserve no longer required
Share Based Payments
Share issues, net of transaction costs
Transactions with owners
-
-
-
1,173,585
-
-
1,086,844
2,260,429
-
-
-
-
(321,189)
518,749
-
197,560
-
(1,313,792)
(1,313,792)
(3,487,960)
-
(3,487,960)
(3,487,960)
(1,313,792)
(4,801,752)
-
-
-
-
-
-
1,173,585
(321,189)
-
-
321,189
-
518,749
1,086,844
2,779,178
Balance 30 June 2013
89,609,248
1,591,702
(1,313,792)
(89,246,818)
640,340
Loss for the year
Other comprehensive income for year
Total comprehensive income for year
Share Based Payments
Share issues, net of transaction costs
Transactions with owners
-
-
-
-
39,576,428
39,576,428
-
-
-
355,116
-
355,116
-
7,747
7,747
-
-
-
(7,039,109)
-
(7,039,109)
-
-
-
(7,039,109)
7,747
(7,031,362)
355,116
39,576,428
39,781,544
Balance 30 June 2014
129,185,676
1,946,818
(1,306,045)
(96,285,927)
33,540,522
This statement should be read in conjunction with the notes to the financial statements.
Page 22 Benitec Biopharma Ltd Annual Report 2014
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(a) Basis of Preparation
The financial report covers Benitec Biopharma Limited and its controlled
entities as a consolidated entity (“Group”). Benitec Biopharma Limited is
a listed public company, incorporated and domiciled in Australia.
The consolidated general purpose financial statements of the Group
have been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards
Board. Compliance with Australian Accounting Standards results in full
compliance with the International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB). Benitec
Biopharma Limited is a for-profit entity for the purpose of preparing
financial statements. The consolidated financial statements for the
year ended 30 June 2014 (including comparatives) were approved and
authorised for issue by the board of directors on 22 August 2014.
The consolidated financial statements have been prepared using the
measurement bases specified by Australian Accounting Standards for
each type of asset, liability, income and expense. The measurement
bases are more fully described in the accounting policies below.
(b) Principles of Consolidation
A controlled entity is any entity controlled by Benitec Biopharma Limited
whereby Benitec Biopharma Limited has the power to control the
financial and operating policies of an entity so as to obtain benefits from
its activities.
All inter-company balances and transactions between entities in the
consolidated entity, including any unrealised profits or losses, have been
eliminated on consolidation. Accounting policies of controlled entities
have been changed where necessary to ensure consistencies with those
policies applied by the parent entity.
Where controlled entities have entered or left the consolidated entity
during the year, their operating results have been included/excluded from
the date control was obtained or until the date control ceased.
A list of controlled entities is contained in note 11 to the financial
statements. All controlled entities have a June financial year-end except
for Benitec Ltd (UK) which has a December year-end.
(c) Accounting Standards
New and revised standards that are effective for these financial
statements
A number of new and revised standards are effective for annual periods
beginning on or after 1 July 2013. Information on these new standards is
presented below.
AASB 10 Consolidated Financial Statements
AASB 10 supersedes AASB 127 Consolidated and Separate Financial
Statements (AASB 127) and AASB Interpretation 112 Consolidation
- Special Purpose Entities. AASB 10 revises the definition of control
and provides extensive new guidance on its application. These new
requirements have the potential to affect which of the Group’s investees
are considered to be subsidiaries and therefore to change the scope of
consolidation. The requirements on consolidation procedures, accounting
for changes in non-controlling interests and accounting for loss of control
of a subsidiary are unchanged.
Management has reviewed its control assessments in accordance with
AASB 10 and has concluded that there is no effect on the classification
(as subsidiaries or otherwise) of any of the Group’s investees held during
the period or comparative periods covered by these financial statements.
AASB 11 Joint Arrangements
AASB 11 supersedes AASB 131 Interests in Joint Ventures (AAS 131)
and AASB Interpretation 113 Jointly Controlled Entities- Non-Monetary-
Contributions by Venturers. AASB 11 revises the categories of joint
arrangement, and the criteria for classification into the categories, with
the objective of more closely aligning the accounting with the investor’s
rights and obligations relating to the arrangement. In addition, AASB
131’s option of using proportionate consolidation for arrangements
classified as jointly controlled entities under that Standard has been
eliminated. AASB 11 now requires the use of the equity method
for arrangements classified as joint ventures (as for investments in
associates).
AASB 13 Fair Value Measurement
AASB 13 clarifies the definition of fair value and provides related
guidance and enhanced disclosures about fair value measurements. It
does not affect which items are required to be fair-valued. The scope
of AASB 13 is broad and it applies for both financial and non-financial
items for which other Australian Accounting Standards require or permit
fair value measurements or disclosures about fair value measurements,
except in certain circumstances.
AASB 13 applies prospectively for annual periods beginning on or after
1 January 2013. Its disclosure requirements need not be applied to
comparative information in the first year of application. The Group has
however included as comparative information the AASB 13 disclosures
that were required previously by AASB 7 Financial Instruments:
Disclosures.
Amendments to AASB 119 Employee Benefits
The 2011 amendments to AASB 119 made a number of changes to the
accounting for employee benefits. The amendments which impact the
Group related to the following:
- Under the amendments, employee benefits ‘expected to be settled
wholly’ (as opposed to ‘due to be settled’ under the superseded
version of AASB 119) within 12 months after the end of the reporting
period are short-term benefits, and are therefore not discounted
when calculating leave liabilities. As the Group does not expect all
annual leave for all employees to be used wholly within 12 months
of the end of reporting period, annual leave is included in ‘other long-
term benefit’ and discounted when calculating the leave liability.
This change has had no impact on the presentation of annual leave
as a current liability in accordance with AASB 101 Presentation of
Financial Statements.
Management have assessed the impact of this change and noted that it
is not material to the Group for the year ended 30 June 2013 and
30 June 2014.
Accounting Standards issued but not yet effective and not been
adopted early by the Group
At the date of authorisation of these financial statements, certain new
standards, amendments and interpretations to existing standards have
been published but are not yet effective, and have not been adopted
early by the Group. Management anticipates that all of the relevant
pronouncements will be adopted in the Group’s accounting policies for
the first period beginning after the effective date of the pronouncement.
Benitec Biopharma Ltd Annual Report 2014 Page 23
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
Information on new standards, amendments and interpretations that are
expected to be relevant to the Group’s financial statements is provided
below. Certain other new standards and interpretations have been issued
but are not expected to have a material impact on the Group’s financial
statements.
AASB 2014-1 Amendments to Australian Accounting Standards
Part A of AASB 2014-1 makes amendments to various Australian
Accounting Standards arising from the issuance by the International
Accounting Standards Board (IASB) of International Financial
Reporting Standards Annual Improvements to IFRSs 2010-2012 Cycle
and Annual Improvements to IFRSs 2011-2013 Cycle. Among other
improvements, the amendments arising from Annual Improvements to
IFRSs 2010-2012 Cycle:
(a) clarify that the definition of a ‘related party’ includes a management
entity that provides key management personnel services to the reporting
entity (either directly or through a group entity); and
(b) amend AASB 8 Operating Segments to explicitly require the disclosure
of judgements made by management in applying the aggregation criteria.
Part E of AASB 2014-1 makes amendments to Australian Accounting
Standards to reflect the AASB’s decision to defer the mandatory
application date of AASB 9 Financial Instruments to annual reporting
periods beginning on or after 1 January 2018. Part E also makes
amendments to numerous Australian Accounting Standards as a
consequence of the introduction of Chapter 6 Hedge Accounting into
AASB 9 and to amend reduced disclosure requirements for AASB
7 Financial Instruments: Disclosures and AASB 101 Presentation of
Financial Statements.
Accounting for Acquisitions of Interests in Joint Operations
The amendments to IFRS 11 state that an acquirer of an interest in a
joint operation in which the activity of the joint operation constitutes a
‘business’, as defined in IFRS 3 Business Combinations, should:
-
-
apply all of the principles on business combinations accounting
in IFRS 3 and other IFRSs except principles that conflict with the
guidance of IFRS 11. This requirement also applies to the acquisition
of additional interests in an existing joint operation that results in the
acquirer retaining joint control of the joint operation (note that this
requirement applies to the additional interest only, i.e. the existing
interest is not remeasured) and to the formation of a joint operation
when an existing business is contributed to the joint operation by
one of the parties that participate in the joint operation; and
provide disclosures for business combinations as required by IFRS 3
and other IFRSs.
The Australian Accounting Standards Board (AASB) is expected to issue
the equivalent Australian amendment shortly.
AASB 9 Financial Instruments
AASB 9 introduces new requirements for the classification and
measurement of financial assets and liabilities. These requirements
improve and simplify the approach for classification and measurement of
financial assets compared with the requirements of AASB 139. The main
changes are:
(a) Financial assets that are debt instruments will be classified based on
(1) the objective of the entity’s business model for managing the financial
assets; and (2) the characteristics of the contractual cash flows.
(b) Allows an irrevocable election on initial recognition to present gains
and losses on investments in equity instruments that are not held for
Page 24 Benitec Biopharma Ltd Annual Report 2014
trading in other comprehensive income (instead of in profit or loss).
Dividends in respect of these investments that are a return on investment
can be recognised in profit or loss and there is no impairment or recycling
on disposal of the instrument.
(c) Financial assets can be designated and measured at fair value through
profit or loss at initial recognition if doing so eliminates or significantly
reduces a measurement or recognition inconsistency that would arise
from measuring assets or liabilities, or recognising the gains and losses
on them, on different bases.
(d) Where the fair value option is used for financial liabilities the change
in fair value is to be accounted for as follows:
-
-
The change attributable to changes in credit risk are presented in
other comprehensive income (OCI); and
The remaining change is presented in profit or loss.
If this approach creates or enlarges an accounting mismatch in the profit
or loss, the effect of the changes in credit risk are also presented in profit
or loss.
(d) Revenue
Revenue from the granting of licenses is recognised in accordance
with the terms of the relevant agreements and is usually recognised
on an accruals basis, unless the substance of the agreement provides
evidence that it is more appropriate to recognise revenue on some
other systematic rational basis. Interest revenue is recognised on a
proportional basis taking into account the interest rates applicable to the
financial assets. Revenue from the rendering of a service is recognised
upon the delivery of the service to the customers. All revenue is stated
net of the amount of goods and services tax (GST).
Government grants are recognised at fair value where there is
reasonable assurance that the grant will be received and all grant
conditions will be met. Grants relating to expense items are recognised
as income over the periods necessary to match the grant costs they are
compensating. Grants relating to assets are credited to deferred income
at fair value and are credited to income over the expected useful life of
the asset on a straight line basis.
Research and Development Grant revenue is recognised as income when
it is received.
(e) Income Tax
The charge for current income tax expense is based on the loss for the
year adjusted for any non-assessable or disallowed items. It is calculated
using tax rates that have been enacted or are substantially enacted by
reporting date.
Deferred tax is accounted for using the liability method in respect of
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. No
deferred income tax will be recognised from the initial recognition of an
asset or liability, excluding a business combination, where there is no
effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to
the period 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 income tax
assets are recognised to the extent that it is probable that future tax
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
profits will be available against which deductible temporary differences
can be utilised.
The amount of benefits brought to account or which may be realised in
the future is based on the assumption that no adverse change will occur
in income taxation legislation and the anticipation that the consolidated
entity will derive sufficient future assessable income to enable the
benefit to be realised and comply with the conditions of deductibility
imposed by the law.
Benitec Biopharma Limited and its wholly-owned Australian
subsidiary has formed an income tax consolidated group under the Tax
Consolidation Regime. Benitec Biopharma Limited is responsible for
recognising the current and deferred tax assets and liabilities for the
tax consolidated group. The Group notified the ATO on 12 February 2004
that it had formed an income tax consolidated group to apply from 1 July
2002. No tax sharing agreement has been entered between entities in
the tax consolidated group.
(f) Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgments incorporated into the
financial report based on historical knowledge and best available current
information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both
externally and within the Group.
Key estimates – share-based payments transactions
The Group 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. The fair value is determined using a
Black-Scholes model, using the assumptions detailed in note 21.
Key judgements – tax losses
Given the company’s and each individual entities’ history of recent
losses, the Group has not recognised a deferred tax asset with regard
to unused tax losses and other temporary differences, as it has not
been determined whether the company or its subsidiaries will generate
sufficient taxable income against which the unused tax losses and other
temporary differences can be utilised.
Key judgements – compound financial instruments
The Group measures the fair value of the liability component using the
prevailing market interest rate for similar convertible instruments.
(g) Impairment of Non-Financial Assets
The Group assesses at each reporting date whether there is an indication
that an asset may be impaired. If any such indication exists, or when
annual impairment testing for an asset is required (i.e. Goodwill,
intangible assets with indefinite useful lives and intangible assets
not yet available for use), the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount is the higher of its
fair value less costs to sell and its value in use and is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets
and the asset’s value in use cannot be estimated to be close to its fair
value. In such cases the asset is tested for impairment as part of the cash
generating unit to which it belongs. When the carrying amount of an
asset or cash-generating unit exceeds its recoverable amount, the asset
or cash-generating unit is considered impaired and is written down to its
recoverable amount.
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. Impairment losses relating to continuing operations are
recognised in those expense categories consistent with the function of
the impaired asset unless the asset is carried at revalued amount (in
which case the impairment loss is treated as a revaluation decrease).
(h) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call
with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts
are shown within short term borrowings in current liabilities on the
statement of financial position.
(i) Trade and Other Receivables
Trade receivables, which generally have 30 day terms, are recognised
and carried at original invoice amount less an allowance for any
uncollectible amounts. An estimate for doubtful debts is made when
collection of the full amount is no longer probable. Bad debts are written
off when identified.
(j) Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value
less, where applicable, any accumulated depreciation and impairment
losses.
Plant and equipment
Plant and equipment are measured on the cost basis less depreciation
and impairment losses. The carrying amount of plant and equipment
is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is
assessed on the basis of the expected net cash flows that will be
received from the assets employment and subsequent disposal. The
expected net cash flows have been discounted to their present values in
determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the
group and the cost of the item can be measured reliably. All other repairs
and maintenance are charged to the statement of comprehensive income
during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including capitalised lease
assets is depreciated on a diminishing value basis over their useful lives
to the consolidated entity commencing from the time the asset is held
ready for use. Leasehold improvements are depreciated over the shorter
of either the unexpired period of the lease or the estimated useful lives
of the improvements.
The depreciation rates used for plant and equipment were 20-33 %. The
assets’ residual values and useful lives are reviewed, and adjusted if
appropriate, at each reporting date. 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.
Gains and losses on disposals are determined by comparing proceeds
with the carrying amount. These gains and losses are included in the
statement of comprehensive income. When assets which have been
Benitec Biopharma Ltd Annual Report 2014 Page 25
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
revalued are sold, amounts included in the revaluation reserve relating to
that asset are transferred to retained earnings.
(k) Leases
Leases of fixed assets are classified as finance leases where the Group
has substantially all the risks and benefits incidental to the ownership of
the asset, but not the legal ownership.
Finance leases are capitalised by recording an asset and a liability at the
lower of the amounts equal to the fair value of the leased property or the
present value of the minimum lease payments, including any guaranteed
residual values. Lease payments are allocated between the reduction of
the lease liability and the lease interest expense for the period. Leased
assets are depreciated on a straight-line basis over their estimated useful
lives where it is likely that the consolidated entity will obtain ownership
of the asset or over the term of the lease. Lease payments for operating
leases, where substantially all the risks and benefits remain with the
lessor, are charged as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and
amortised on a straight-line basis over the life of the lease term.
(l) Financial Instruments
Recognition
Financial instruments are initially measured at cost on trade date,
which includes transaction costs, when the related contractual rights or
obligations exist. Subsequent to initial recognition these instruments are
measured as set out below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market and are
stated at amortised cost using the effective interest rate method.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost,
comprising original debt less principal payments and amortisation.
Compound instruments
The component parts of compound instruments (convertible notes)
issued by the Group are classified separately as financial liabilities and
equity in accordance with the substance of the contractual arrangement.
The liability component is recorded on an amortised cost basis using
the effective interest method until extinguished upon conversion or at
the instrument’s maturity date. The equity component is determined by
deducting the amount of the liability component from the fair value of
the compound instrument as a whole. This is recognised and included in
equity, net of income tax effects, and is not subsequently remeasured.
Fair value
Fair value is determined based on current bid prices for all quoted
investments. Valuation techniques are applied to determine the fair value
for all unlisted securities, including recent arm’s length transactions,
reference to similar instruments and option pricing models.
Impairment
At each reporting date, the group assess whether there is objective
evidence that a financial instrument has been impaired. In the case
of available-for-sale financial instruments, a prolonged or significant
decline in the value of the instrument is considered to determine
whether impairment has arisen. Impairment losses are recognised in the
statement of comprehensive income.
Page 26 Benitec Biopharma Ltd Annual Report 2014
(m) Intangibles
Research and development
Expenditure during the research phase of a project is recognised as an
expense when incurred. Development costs are capitalised only when
technical feasibility studies identify that the project will deliver future
economic benefits and these benefits can be measured reliably.
Development costs have a finite life and are amortised on a systematic
basis matched to the future economic benefits over the useful life of the
project.
Goodwill
Goodwill, representing the excess of the cost of acquisition over the
fair value of the identifiable assets, liabilities and contingent liabilities
acquired, is recognised as an asset and not amortised, but tested at least
annually for impairment and whenever there is an indication that the
goodwill may be impaired. Any impairment is recognised immediately in
profit or loss and is not subsequently reversed
Refer to Note 1 (g) for a description of impairment testing procedures.
(n) Trade and Other Payables
Trade payables and other payables are carried at amortised costs and
represent liabilities for goods and services provided to the group prior to
the end of the financial year that are unpaid and arise when the group
becomes obliged to make future payments in respect of the purchase of
these goods and services.
(o) Employee Benefits
Provision is made for the Group’s liability for employee benefits arising
from services rendered by employees to reporting 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.
(p) Provisions
Provisions are recognised when the Group has a legal or constructive
obligation, as a result of past events, for which it is probable that an
outflow of economic benefits will results and that outflow can be reliably
measured.
(q) Contributed Equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as
a deduction, net of tax, from the proceeds.
(r) Share-based Payment Transactions
Benefits are provided to employees of the Group in the form of share-
based payment transactions, whereby employees render services in
exchange for shares or rights over shares (‘equity-settled transactions’).
The plan currently in place to provide these benefits is the Employee
Share Option Plan (ESOP), which provides benefits to senior executives.
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 using a Black-Scholes model.
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
In valuing equity-settled transactions, no account is taken of any
performance conditions, other than conditions linked to the price of the
shares of Benitec Biopharma Limited (‘market conditions’).
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 group, will ultimately vest. This
opinion is formed based on the best available information at reporting
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 conditional upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum
an expense is recognised as if the terms had not been modified. In
addition, an expense is recognised for any increase in the value of the
transaction as a result of the modification, as measured at the date of
modification. 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, as
described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional
share dilution in the computation of earnings per share.
(s) Earnings per Share
Basic earnings per share is calculated as net profit attributable to
members of the parent, adjusted to exclude any costs of servicing equity
(other than dividends) and preference share dividends, divided by the
weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share is calculated as net profit attributable to
members of the parent, adjusted for:
• costs of servicing equity (other than dividends) and preference
•
share dividends;
the after tax effect of dividends and interest associated with dilutive
potential ordinary shares that have been recognised as expenses;
and
• other non-discretionary changes in revenues or expenses
during the period that would result from the dilution of potential
ordinary shares;
divided by the weighted average number of ordinary shares and dilutive
potential ordinary shares, adjusted for any bonus element.
(t) Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured
using the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are presented in
Australian dollars which is the parent entity’s functional and presentation
currency.
Transaction and balances
Foreign currency transactions are translated into functional currency
using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end exchange
rate. Non-monetary items measured at historical cost continue to be
carried at the exchange rate at the date of the transaction. Non-monetary
items measured at fair value are reported at the exchange rate at the
date when fair values were determined.
Exchange differences arising on the translation of monetary items are
recognised in the statement of comprehensive income, except where
deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items
are recognised directly in equity to the extent that the gain or loss is
directly recognised in equity, otherwise the exchange difference is
recognised in the statement of comprehensive income.
Group companies
The financial results and position of foreign operations whose functional
currency is different from the Group’s presentation currency are
translated as follows:
• Assets and liabilities are translated at year-end exchange rates
•
prevailing at that reporting date.
Income and expenses are translated at average exchange rates for
the period.
• Retained profits are translated at the exchange rates prevailing at
the date of the transaction.
(u) 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 Australian Tax Office. In these circumstances the GST is recognised
as part of the cost of acquisition of the asset or as part of an item of 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.
(v) Comparative Figures
When required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial year.
(w) Going Concern
The directors have prepared the financial statements on a going
concern basis after taking into consideration the net loss for the year of
$7,039,109 and the cash and cash equivalents balance of $31,359,199,
The directors have recognised the capital raisings in 2013 and 2014,
performed a review of the cash flow forecasts, considered the cash
flow needs of the Group, and believe that the strategies in place are
appropriate to generate funding which will be sufficient to maintain the
going concern status of the Group. If these strategies are unsuccessful
then the Group may need to realise its assets and extinguish liabilities
other than in the ordinary course of business and at amounts different to
those disclosed in the financial report.
Benitec Biopharma Ltd Annual Report 2014 Page 27
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 2: REVENUE FROM CONTINUING OPERATIONS
Revenue
Licensing revenue and royalties
Finance income - interest received
Other income
Federal Government Research and Development Grants
Total revenue and other income
NOTE 3: LOSS FOR THE YEAR
(a) Expenses incurred by continuing operations
Items included in Statement of Comprehensive Income
Depreciation
Included in Occupancy expenses
Depreciation of plant and equipment
Employee benefits expense
Included in Employment related expenses
Wages and salaries
Superannuation costs
(b) Expenses
Research and development costs consist of:
Project expenses
Other IP related expenses
2014
$
2013
$
276,824
321,116
597,940
775,833
1,373,773
521,140
118,709
639,849
824,333
1,464,182
12,808
29,794
2,109,860
89,090
3,310,014
447,855
3,757,869
1,759,745
72,320
1,075,844
204,168
1,280,012
NOTE 4: INCOME TAX EXPENSE
(a) The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax as follows:
Prima facie tax payable on loss from ordinary activities before income tax at 30% (2013: 30%)
Add Tax effect of:
Non-deductible share-based payment expense
Non-assessable foreign currency translation provision
Non-deductible legal fees
Capital items deductible
Other non-deductible items
Deductible items not included in operating result
Deferred tax asset not brought to account
Income tax benefit
Income tax benefit reported in the income statement
(2,248,042)
(1,046,388)
106,535
(2,324)
15,906
(231,942)
19,500
4,800
2,335,567
-
454,365
155,625
457,865
9,326
(58,863)
46,843
(48,354)
483,947
-
-
The income tax benefit was a cash refund of income tax in the US in Tacere Therapeutics Inc. (a wholly owned subsidiary).
Page 28 Benitec Biopharma Ltd Annual Report 2014
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
(b) The parent entity, acting as the Head Entity, notified the Australian Taxation Office on 12 February 2004 that it had formed a Tax Consolidated
Group applicable as from 1 July 2002. No tax sharing agreement has been entered between entities in the tax consolidated group.
(c) As at 30 June 2014, the Tax Consolidated Group has estimated carry-forward tax losses of $13,103,412 (2013: $11,751,713) calculated at 30%
of the accumulated annual Australian tax losses. The tax losses have not been recognised in the financial statements and the capacity of the
Tax Consolidated Group to use the tax losses will be subject to conforming with regulatory tests. The deferred tax asset relating to temporary
differences (calculated at 30%) was $49,953 (2013: $29,591).
The Tax Consolidated Group also has Australian capital tax losses for which no deferred tax asset is recognised in the financial statements
of $381,588 (2013: $381,588). The capacity of the Tax Consolidated Group to use the capital tax losses will be subject to conforming with
regulatory tests.
The recoupment of available tax losses as at 30 June 2014 is contingent upon the following:
(i)
the Consolidated Group deriving future assessable income of a nature and of an amount sufficient to enable the benefit from the losses to
be realised;
(ii) the conditions for deductibility imposed by tax legislation continuing to be complied with; and
(iii) there being no changes in tax legislation which would adversely affect the Tax Consolidated Group from realising the benefit from the losses.
NOTE 5: AUDITOR’S REMUNERATION
Audit Services
Remuneration of Grant Thornton Audit Pty Ltd for:
- auditing or reviewing the financial report
Other Services
Remuneration of Grant Thornton Australia Limited for:
- taxation compliance and corporate advisory services
2014
$
2013
$
73,238
54,000
24,000
43,230
NOTE 6: EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net loss for the year attributable to ordinary shareholders by the weighted average number
of ordinary shares on issue during the year.
Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary shareholders by the weighted average number
of ordinary shares on issue during the year (adjusted for the effects of dilutive options) and the weighted average number of ordinary shares that
would be issued on conversion of all dilutive potential ordinary shares.
2014
$
2013
$
Loss after income tax used in the calculation of basic EPS and dilutive EPS
(7,039,109)
(3,487,960)
Weighted average number of ordinary shares for basic and diluted earnings per share
Weighted average number of converted, lapsed or cancelled potential ordinary shares
included in diluted earnings per share
Outstanding options to acquire ordinary shares are not considered dilutive for the years ended 30 June 2014 and 30 June 2013.
Classification of securities
No securities or convertible debt instruments could be classified as potential ordinary shares under AASB 133 and therefore have not been
included in determination of dilutive EPS.
-
Number
90,432,177
Number
41,688,975
-
Benitec Biopharma Ltd Annual Report 2014 Page 29
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 7: KEY MANAGEMENT PERSONNEL
(a) Details of Key Management Personnel
(i) Non-Executive Directors
Mr Peter Francis
Dr John Chiplin
Mr Iain Ross
Mr Kevin Buchi
Dr Mel Bridges
Chairman - Non-Executive
Director - Non-Executive
Director - Non-Executive
Director - Non-Executive
Director - Non-Executive
(ii) Specified Executives
Dr Peter French
Chief Executive Officer
and Managing Director
Appointed on 23 February 2006
Appointed on 1 February 2010
Appointed on 1 June 2010
Appointed on 11 April 2014
Appointed on 12 October 2007
Resigned 18 June 2014
Dr Michael Graham
Mr Greg West
Mr Carl Stubbings
Dr David Suhy
Chief Scientific Officer
Company Secretary
Chief Business Officer
Senior VP Research and Development Appointed on 1 October 2012
Appointed as Managing Director on 26 August 2014
Appointed Chief Executive Officer on 4 June 2010
Appointed Chief Scientific Officer on 4 August 2009
Appointed on 1 January 2012
Appointed on 26 May 2011
Appointed on 2 July 2012
(b) Key management personnel remuneration includes the following expenses:
Short term employee benefits
Salaries including bonuses
Post-employment benefits
Superannuation
Share-based payments
Total Remuneration
2014
$
1,859,719
71,100
348,013
2,278,832
2013
$
1,252,095
61,935
492,976
1,807,006
During the year no key management personnel exercised options which were granted either under ESOP or by a General Meeting of Members to
Non-Executive Directors
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank
Deposits at call
Reconciliation of Cash Flow from Operations with Loss after Income Tax
Loss after Income Tax
Non-cash flows included in operating loss:
Impairment
Foreign exchange on intercompany balances
Depreciation
Share-based payments
Foreign currency translation unrealised
Changes in assets and liabilities:
(Increase)/decrease in other assets
Decrease in receivables
Decrease/(increase) in payables
Increase/(decrease) in employee provisions
Net cash flows from operations
Page 30 Benitec Biopharma Ltd Annual Report 2014
288,945
31,070,254
31,359,199
614,746
972,553
1,587,299
(7,039,109)
(3,487,960)
-
-
12,808
355,116
8,761
(2,936,521)
(16,514)
277,246
67,874
(9,270,339)
1,503,296
(1,526,215)
29,794
518,749
(23,457)
(13,163)
22,393
200,452
43,515
(2,732,596)
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 9: TRADE AND OTHER RECEIVABLES
CURRENT
Sundry Debtors
NOTE 10: OTHER ASSETS
CURRENT
Prepayments
Prepaid clinical trials *
Other current assets
2014
$
2013
$
121,587
105,073
26,679
2,700,000
240,060
2,966,739
14,190
-
16,028
30,218
* Prepaid clinical trials - The Company announced on 3 June 2013 that it had committed to moving its non-small cell lung cancer therapeutic, into
clinical development. The Company is using European-based clinical research organisation Clinical Trials Group (CTGCRO) to manage both the
initial clinical development and trials. The Company made prepayments in the September quarter 2013 in order to secure favourable commercial
terms with CTGCRO for the conduct of the trials.
NOTE 11: CONTROLLED ENTITIES
(a) Controlled entities:
Parent Entity:
Benitec Biopharma Limited
Controlled entities of Benitec Biopharma Limited:
Benitec Australia Limited
Benitec Biopharma Limited
Benitec, Inc.
Benitec LLC
RNAi Therapeutics, Inc.
Tacere Therapeutics, Inc.
(b) Controlled entities acquired or disposed:
Country of Incorporation
Percentage Owned
2014
2013
Australia
Australia
United Kingdom
USA
USA
USA
USA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
No controlled entities were acquired or disposed during the financial year.
Benitec Biopharma Ltd Annual Report 2014 Page 31
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
At cost
Accumulated depreciation
Total Property, Plant and Equipment
2014
$
127,795
(80,118)
47,677
2013
$
95,431
(67,311)
28,120
Movements in Carrying Amounts
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year.
Total
$
30,803
27,111
-
(29,794)
28,120
32,365
-
(12,808)
47,677
Leasehold
Improvement
$
Plant and
Equipment
$
19,043
27,111
-
(28,244)
17,910
32,365
-
(11,258)
39,016
Balance at 30 June 2012
Additions
Less Disposals
Depreciation expense
Balance at 30 June 2013
Additions
Less Disposals
Depreciation expense
Balance at 30 June 2014
NOTE 13: GOODWILL
The net carrying amount of goodwill can be analysed as follows:
Gross carrying amount
Balance at 30 June 2012
Acquired through business combination
Balance at 30 June 2013
Acquired through business combination
Balance at 30 June 2014
Accumulated impairment
Balance at 30 June 2012
Impairment loss recognised in the year
Balance at 30 June 2013
Impairment loss recognised in the year
Balance at 30 June 2014
Net book value
At 30 June 2013
As at 30 June 2014
Goodwill Impairment
11,760
-
-
(1,550)
10,210
-
-
(1,550)
8,660
$
-
1,503,296
1,503,296
-
1,503,296
-
(1,503,296)
(1,503,296)
-
(1,503,296)
-
-
A review of the carrying value of the goodwill which arose on the acquisition of Tacere Therapeutics Inc. was undertaken in the 2013 financial
year. The recoverable amounts of the cash generating units to which the goodwill was allocated were determined based on value-in-use
calculations. This review identified that the full value of the goodwill should be impaired and as such a non-cash impairment charge of $1,503,296
was booked in the 2013 financial year.
Page 32 Benitec Biopharma Ltd Annual Report 2014
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 14: TRADE AND OTHER PAYABLES
CURRENT
Unsecured liabilities
Trade creditors
Sundry creditors and accrued expenses
Deferred consideration - Tacere vendors
NOTE 15: PROVISIONS
CURRENT
Provision for employee benefits
2014
$
572,557
215,612
-
788,169
2013
$
279,994
374,560
357,179
1,011,733
166,511
98,637
NOTE 16: CONTRIBUTED EQUITY
The share capital of the Company consists only of fully paid ordinary shares; the shares do not have a par value. All shares are equally eligible
to receive dividends and the repayment of capital and represent one vote at the shareholders’ meeting of the Company. The Board monitors
capital funding requirements in its competitive landscape and continues to actively manage its cash requirements as part of a broader capital
management program to ensure adequate capital is in place to fund the company’s operations.
(a) Ordinary Shares, reported in post consolidation share numbers for 2014 and 2013
114,898,992 (2013: 46,076,562) issued and fully paid ordinary shares
Contributed Equity at the beginning of the reporting period, (after applying the 25:1 consolidation)
Placements in March to June 2013
Placement in July 2013
Share Purchase Plan August 2013
Issued to Tacere shareholders on purchase of Tacere
Tacere escrow shares released October 2013
Options exercised during the year
Placements in February and April 2014
Transaction costs relating to share issues during the year
Contributed Equity at the close of the reporting period
At the beginning of reporting period
Shares issued during the year
89,609,248
-
7,618,326
2,820,000
-
357,190
185,503
31,496,504
(2,901,095)
129,185,676
Number
46,076,562
68,822,430
114,898,992
87,348,819
1,262,000
-
-
1,173,585
-
-
-
(175,156)
89,609,248
Number
38,825,141
7,251,421
46,076,562
(b) Share options
At the end of the financial year, there were 23,320,173 unissued ordinary shares (2013: 17,594,313) over which options were outstanding.
Details
Exercise Price
Expiry Date
Number
Strategic Advisor warrants
ESOP Options
NED Options
Unlisted Options - placement
Unlisted other options
4 August 2014
19 August 2014
19 August 2014
18 February 2015
10 April 2015
22.500
0.510
0.570
0.325
2.500
245,078
260,000
120,000
662,767
480,000
Benitec Biopharma Ltd Annual Report 2014 Page 33
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 15: CONTRIBUTED EQUITY (continued)
Unlisted other options
NED Options
ESOP Options
NED Options
ESOP Options
ESOP Options
ESOP Options
NED Options
ESOP Options
Unlisted options - placement
ESOP Options
23 October 2015
26 September 2016
17 November 2016
26 September 2016
7 February 2017
18 July 2017
16 November 2017
18 May 2018
22 August 2018
28 February 2019
15 May 2019
4.250
1.250
1.250
1.250
1.250
1.250
1.250
0.625
1.250
1.260
1.500
78,125
1,600,000
1,800,000
1,200,000
168,000
400,000
400,000
400,000
2,080,000
13,246,203
180,000
23,320,173
Since 30 June 2013, the following options were issued under the ESOP:
Expiry date
Exercise price
Issue date
Number
Weighted average
share price
Volatility
Risk free rate
22 August 2018
15 May 2019
1.250
1.500
22 August 2013
2,080,000
15 May 2014
180,000
$0.29
$0.30
112%
100%
3.55%
2.60%
2,260,000
Rights over shares are provided to employees under the Employee Share Option Plan (ESOP). 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 using a Black-Scholes
model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the
shares of Benitec Biopharma Limited (‘market conditions’).
The following information was factored in to the Black-Scholes model for the options issued under ESOP this year:
i. weighted average share price as shown above
ii. exercise prices were as shown above
iii. expected volatility was as shown above and was determined by reference to Bloomberg for the Benitec share price based on historical
volatility
iv. option life is 5 years
v. The risk-free interest rate used was as shown above
There were no options issued to staff or directors in the period from 30 June 2014 to the date this report was issued.
Page 34 Benitec Biopharma Ltd Annual Report 2014
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 17: RESERVES
Share-based payments reserve
At the beginning of the reporting period
Share based payments
Transferred to Accumulated Losses Reserve no longer required
Foreign currency translation reserve
At the beginning of the reporting period
Foreign currency translation
Total Reserves
2014
$
2013
$
1,591,702
355,116
-
1,946,818
(1,313,792)
7,747
(1,306,045)
640,773
1,394,142
518,749
(321,189)
1,591,702
-
(1,313,792)
(1,313,792)
277,910
Nature and purpose of Reserves
Share Based Payments Reserve
The Share-based Payments Reserve represents the expense attributed to options based on a Black Scholes valuation method for vested options.
Foreign currency translation reserve
The Foreign currency translation reserve represents the currency translation movements of subsidiary company balances denominated in foreign
currencies at year end.
NOTE 18: OPERATING SEGMENTS
Business Segments
The Group had only one business segment during the financial year, being the global commercialisation by licensing and partnering of patents and
licences in biotechnology, more specifically in functional genomics, with applications in biomedical research and human therapeutics.
Geographical Segments
Business operations are principally conducted in Australia, with laboratory and other activities in the USA.
Geographical location
Segment Revenues
Segment Results
2014
$
2013
$
2014
$
2013
$
Carrying Amount of
Segment Assets
2014
$
2013
$
Australia
External customers
Interest revenue
Other income
United States of America
External customers
Interest revenue
Other income
274,413
321,116
775,833
521,140
118,709
823,354
1,371,362
1,463,203
2,411
-
-
2,411
-
-
979
979
(7,495,377)
(3,220,240)
34,433,803
1,507,350
1,903
(267,720)
61,399
243,360
1,373,773
1,464,182
(7,493,474)
(3,487,960)
34,495,202
1,750,710
Accounting Policies
Segment revenues and expenses are directly attributable to the identified segments and include joint venture revenue and expenses where a
reasonable allocation basis exists. Segment assets include all assets used by a segment and consist mainly of cash, receivables, inventories,
intangibles and property, plant and equipment, net of any allowances, accumulated depreciation and amortisation. Where joint assets correspond
to two or more segments, allocation of the net carrying amount has been made on a reasonable basis to a particular segment. Segment liabilities
include mainly accounts payable, employee entitlements, accrued expenses, provisions and borrowings. Deferred income tax provisions are not
included in segment assets and liabilities.
Benitec Biopharma Ltd Annual Report 2014 Page 35
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 19: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise receivables, payables, cash and short-term deposits. The Group manages its exposure to key
financial risks, including interest rate and currency risk in accordance with the Company financial risk management policy. The objective of the
policy is to protect the assets and provide a solid return.
The main risks arising from the financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board reviews
and agrees policies for managing each of these risks and they are summarised below.
Risk Exposures and Responses
Interest rate risk
The Group generates income from interest on surplus funds. At reporting date, the Group had the following mix of financial assets and liabilities
exposed to Australian variable interest rate risk that are not designated in cash flow hedges:
Financial Assets
Cash and cash equivalents
Financial Liabilities
Net Exposure
2014
$
31,359,199
-
31,359,199
2013
$
1,587,299
-
1,587,299
The policy is to analyse the Company’s interest rate exposure across the Groups financial assets and liabilities. Consideration is given to the return
on funds invested, alternative financing, the mix of fixed and variable interest rates and hedging positions. The Group currently has short term
deposits at variable interest rates. The average interest rate applying to cash deposits in the year was 3.67% (2013 4.00%).
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date:
At 30 June 2014, if interest rates had moved, as illustrated in the table below, with all other variables held constant, the judgment of reasonably
possible movements in post-tax profit and equity would have been as follows:
+1% (100 basis points)
-0.5% (50 basis points)
Post Tax Result
Higher/ (Lower)
Equity
Higher/ (Lower)
2014
$
143,625
(71,812)
2013
$
12,797
(6,399)
2014
$
143,625
(71,812)
2013
$
12,797
(6,399)
Liquidity risk
The Group’s objective is to obtain revenue from commercialisation and to continue to access funding markets. The Group has a pipeline of
programs to take its research and development to the clinic and potentially originate licensing transactions with pharmaceutical companies.
Trade payables and other financial liabilities originate from the financing of the ongoing research and development programs in addition to the
operations of the business generally.
The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest resulting from recognised financial
assets and liabilities as at 30 June 2014. ash flows for financial assets and liabilities with fixed amount or timing are presented with their
respective discounted cash flows for the respective upcoming fiscal years.
The remaining contractual maturities of the Group’s financial liabilities are:
6 months or less
6-12 months
1-5 years
Over 5 years
2014
$
788,169
-
-
-
788,169
2013
$
1,011,733
-
-
-
1,011,733
Maturity analysis of financial assets and liabilities based on management’s expectation
The table below reflects management’s expectation of the maturity of financial assets and liabilities.
These assets are considered in the context of the Group’s overall liquidity risk. The Group has established a risk reporting process overseen by the
board which monitors existing financial assets and liabilities and provides information to enable effective risk management. The Board regularly
evaluates managements rolling forecasts of liquidity which includes assessments of cash income and outgoings.
Page 36 Benitec Biopharma Ltd Annual Report 2014
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
≤6 months
$
6-12 months
$
1-5 years
$
>5 years
$
Financial assets
Cash and cash equivalents 23,359,199
Trade and other receivables 121,587
Financial Liabilities
Trade and other payables
Net Maturity
(788,169)
22,692,617
8,000,000
-
-
8,000,000
-
-
-
-
-
-
-
-
Total
$
31,359,199
121,587
(788,169)
30,692,617
Foreign currency risk
The Group has transactional currency exposures. Such exposure arises from licensing fees and royalties as well as expenditure by the Group in
currencies other than the unit’s measurement currency. With the exception of unrealised movements on intercompany loans, foreign currency
income and expenditure accounts for less than 15% of the Groups transactions and therefore management have assessed that movements in
foreign exchange would not materially impact the financial statements.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, and trade and other receivables. The Group’s
exposure to credit risk arises from potential counter party payment default, with a maximum exposure equal to the carrying amount. Exposures at
each reporting date are assessed and disclosed in the financial statements.
The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties and
as such collateral is not requested. The Group does not securitise its trade and other receivables.
Customers who wish to trade on credit terms are subject to credit assessment procedures which may include an assessment of their independent
credit rating, financial position, past experience and industry reputation. Receivable balances are regularly monitored. There are no significant
concentrations of credit risk within the Group.
NOTE 20: FINANCIAL INSTRUMENTS
Fair values
Fair values of financial assets and liabilities are equivalent to carrying values due their short term to maturity.
NOTE 21: SHARE BASED PAYMENTS
Benitec Biopharma Limited Employees Share Option Plan (ESOP):
Description of plan
The Group may from time to time issue employees options to acquire shares in the parent at a fixed price. Each option when exercised entitles the
option holder to one share in the Company. Options are exercisable on or before an expiry date, do not carry any voting or dividend rights and are
not transferable except on death of the option holder.
Share Options granted during the year
The following options were issued to executives by Benitec Biopharma Limited under its ESOP and are unlisted.
Executive
Exercise Price
Grant Date
Number
Peter French
22 August 2013
1,400,000
David Suhy
Greg West
22 August 2013
22 August 2013
Carl Stubbings
22 August 2013
Tin Mao
Shin-chu Kao
15 May 2014
15 May 2014
200,000
280,000
200,000
90,000
90,000
2,260,000
$1.250
$1.250
$1.250
$1.250
$1.500
$1.500
Expiry Date
22 August 2018
22 August 2018
22 August 2018
22 August 2018
15 May 2019
15 May 2019
Benitec Biopharma Ltd Annual Report 2014 Page 37
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 21: SHARE BASED PAYMENTS (continued)
There were no options issued to directors in the year to 30 June 2014. The closing market price of an ordinary share of Benitec Biopharma Limited
(ASX Code: BLT) on the Australian Securities Exchange at 30 June 2014 was $1.15 (30 June 2013: $0.375, after adjusting for the securities
consolidation in July 2013)
The following table shows the number and weighted average exercise price (WAEP) of share options issued under the ESOP:
2014
Number
2013
Number
2014
WAEP
2013
WAEP
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Lapsed or forfeited during the year
Outstanding at the end of the year
Options exercisable at the end of the year
3,028,000
2,260,000
-
-
5,288,000
2,178,667
Details of ESOP share options outstanding as at end of year:
Grant Date
13 July 2010
Expiry Date
19 August 2014
17 November 2011
17 November 2016
7 February 2012
18 July 2012
7 February 2017
18 July 2017
16 November 2012
16 November 2017
22 August 2013
28 May 2014
22 August 2018
18 May 2019
1.200
1.270
-
-
1.229
Exercise Price
$0.510
$1.250
$1.250
$1.250
$1.250
$1.250
$1.500
2,440,000
800,000
-
-212,000
3,028,000
1,456,000
2014
Number
260,000
1,800,000
168,000
400,000
400,000
2,080,000
180,000
5,288,000
1.147
1.250
-
0.792
1.200
2013
Number
260,000
1,800,000
168,000
400,000
400,000
-
-
3,028,000
The weighted average remaining life of the options issued under the ESOP at 30 June 2014 was 3 years and 3 months.
(2013: 3 years and 4 months)
NOTE 22: EVENTS SUBSEQUENT TO REPORTING DATE
No matters or circumstances have arisen since 30 June 2014 which have significantly affected or may significantly affect the operations of the
Group, the results of those operations or the state of affairs of the Group, in subsequent financial years.
NOTE 23: CONTINGENT LIABILITIES
In January 2010, the Company reached a settlement with the CSIRO to replace the existing Licence Agreement and Commercial Agreement with a
new exclusive Licence Agreement for the use of intellectual property and the Capital Growth Agreement with the issue of ordinary shares. As part
of the settlement, a Transition Agreement was put in place in order to facilitate the change from the old agreements to the new agreement and to
deal with a number of other matters.
Under the terms of the Transition Agreement, the Company agreed to pay CSIRO an amount of $297,293 for past patent costs only in the event of
a trigger event, being either a corporate transaction or an insolvency event.
Scientific work on the therapeutic programs
On 18 December 2012 Benitec announced the appointment of Synteract Inc. as the Company’s Clinical Research Organisation responsible for the
progression of TT-034 into Phase I/II (a) Clinical Trials in the USA. Benitec has negotiated a contract with favourable commercial terms, in some
instances requiring prepayment, for Synteract to continue to manage the Clinical Trials throughout 2014 and 2015.
Benitec announced plans on 3 June 2014 to progress its non-small cell lung cancer (NSCLC) therapeutic Tribetarna™ into Phase II clinical trials
in late 2014 calendar year. The Company had reached agreement to use European-based clinical research organisation Clinical Trials Group
(CTGCRO) to manage the trial, and subsequently negotiated favourable commercial terms which included prepayments covering the clinical trial
Page 38 Benitec Biopharma Ltd Annual Report 2014
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
and consulting services.
The Company has contracted for scientific work on the therapeutic programs, as described above, and payments due within the next twelve
months total approximately $2,092,500 (2013: $4,178,261)
NOTE 24: CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Group’s capital management objectives are to ensure the Group has the ability to fund its activities, to continue as a going concern; and to
provide value to shareholders.
The Group’s capital management plan targets appropriate cash levels to service expected future cash flow needs based on the forecasts for
current and future programs and business running costs. Management assesses the Group’s capital requirements in order to maintain an efficient
overall financing structure. The Group manages the capital structure and makes adjustments to it in the light of changes in access to funding,
business conditions and the risk characteristics of the business. In order to maintain appropriate funding the Group may issue new shares. The
amounts managed as capital by the Group for the reporting periods under review are as shown in the statement of financial position.
NOTE 25: RELATED PARTY TRANSACTIONS
Transactions with Directors and Director-related Entities:
Legal services paid / payable to Francis Abourizk Lightowlers,
a law firm in which Mr Peter Francis is a partner and has a beneficial interest.
Consultancy fees for executive duties paid/payable to NewStar Ventures Ltd,
a corporation in which Dr John Chiplin is a director and has a beneficial interest.
2014
$
108,913
40,000
2013
$
103,492
40,000
Transactions between related parties are on normal commercial terms and the conditions no more favourable than
those available to other non-related parties. There are no outstanding balances as at 30 June 2014 (2013: nil).
NOTE 26: BUSINESS COMBINATION – TACERE THERAPEUTICS INC. ACQUISITION IN OCTOBER 2012
Benitec announced an agreement to acquire the US-based RNA interference (RNAi) therapeutics company Tacere Therapeutics Inc. (‘Tacere’) on
11 October 2012. The acquisition was completed on 30 October 2012 when Benitec acquired 100% of the issued share capital and voting rights of
Tacere, a company based in the United States. Tacere was a privately held drug development company with a Phase I/II ready program in hepatitis
C (HCV) that uses Benitec’s novel gene silencing technology.
Benitec acquired Tacere’s extensive HCV program data and materials, as well as an advanced preclinical program for the eye disease macular
degeneration, The Tacere acquisition provided Benitec with the opportunity to commence Phase I/II clinical trials in 2014.
The consideration for the acquisition was an issue of shares in Benitec Biopharma Limited for USD $1,530,765 plus a potential cash royalty on
future licensing revenue. The shares issued as consideration represented 9.5% of the issued capital at the time of the acquisition.
Further, the agreements with the Tacere vendors provided for AUD $357,179 Benitec Biopharma Limited shares (included in the acquisition
consideration) be treated as reserve shares and not issued to the Tacere vendors for a period of 12 months from acquisition. The reserve shares
are accounted for as a creditor in 2013 (refer to note 6). The reserve shares were established by an agreement with the Tacere vendors for the
purposes of satisfying indemnities to Benitec, if required. The Tacere Vendors also provided a cash escrow of USD $360,000 to provide Benitec
with additional security should certain pre-acquisition liabilities emerge.
Impairment costs, relating to the goodwill on the acquisition of Tacere of $1,503,296 were recognised in the 2013 financial year. The Tacere
acquisition goodwill is the excess of the consideration over the fair value of the identifiable assets acquired less liabilities assumed. The
immediate write off of the goodwill, following the impairment review, was considered to be the most appropriate accounting treatment as the
intellectual property is a preclinical trial and hence the future economic benefit is uncertain.
Benitec Biopharma Ltd Annual Report 2014 Page 39
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 26: BUSINESS COMBINATION – TACERE THERAPEUTICS INC. ACQUISITION IN OCTOBER 2012 (continued)
Financial details of the business combination made in the previous financial year (year ended 30 June 2013) were:
Fair value of consideration transferred
Consideration for the acquisition in October 2012 was the issue of 102,321,345 (pre-consolidation)
shares in Benitec Biopharma Limited, plus a potential cash royalty on future licensing revenue
Recognised amounts of identifiable net assets
Property, plant and equipment
Cash and cash equivalents
Amount owing to Benitec Biopharma Limited
Other liabilities
Identifiable net assets
Goodwill on acquisition impaired in the June 2013 financial statements
Net cash inflow on acquisition
Acquisition related costs recognised as an expense in the Group corporate expenses
Post-acquisition loss of Tacere in the period to 30 June 2013
Post-acquisition loss of Tacere in the period to 30 June 2014
$
1,530,765
17,567
138,760
(126,882)
(1,976)
27,469
1,503,296
143,603
77,104
267,720
1,903
Page 40 Benitec Biopharma Ltd Annual Report 2014
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2014
NOTE 27: BENITEC BIOPHARMA LIMITED PARENT COMPANY INFORMATION
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Share based payments reserve
Accumulated losses
TOTAL EQUITY
FINANCIAL PERFORMANCE
Loss for the year
Other comprehensive income
2014
$
34,386,167
181,547
Parent Entity
2013
$
1,478,422
48,999
34,567,714
1,527,421
1,311,608
-
1,165,652
-
1,311,608
1,165,652
33,256,106
361,769
129,185,675
2,096,818
(98,026,387)
89,609,248
1,591,702
(90,839,181)
33,256,106
361,769
(7,037,206)
-
(4,885,852)
-
TOTAL COMPREHENSIVE INCOME
(7,037,206)
(4,885,852)
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2014 (2013: nil), other than the contingent liabilities described in note 22.
Capital commitments
The parent entity has no capital commitments as at 30 June 2014 (2013: nil).
Significant accounting policies
The accounting policies of the parent are consistent with those of the consolidated entity (Note 1)
Benitec Biopharma Ltd Annual Report 2014 Page 41
Directors’ Declaration
1.
In the opinion of the Directors:
(a) the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position and performance of the Company and consolidated entity; and
(ii) complying with Australian Accounting Standards, including the Interpretations, and the Corporations Regulations 2001.
(b) the financial statements and notes thereto also comply with International Financial Reporting Standards, as disclosed in Note 1; and
(c) as indicated in note 1(w), there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
(d) The remuneration disclosures contained in the Remuneration Report comply with s300A of the Corporations Act 2001
2. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the
Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Peter Francis
Director
Sydney
22 August 2014
Page 42 Benitec Biopharma Ltd Annual Report 2014
Independent Audit Report
Benitec Biopharma Ltd Annual Report 2014 Page 43
Independent Audit Report
Page 44 Benitec Biopharma Ltd Annual Report 2014
Independent Audit Report
Benitec Biopharma Ltd Annual Report 2014 Page 45
Shareholder Information
1. SHARE AND OPTION HOLDING INFORMATION
a) Distribution of Equity Security Holders
The number of holders and amount of holdings by a range of holding sizes of the ordinary shares and options as at 23 September 2014
are detailed below.
Range
Fully Paid Ordinary Shares (ASX:BLT)
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
b) Marketable parcels
Number of
holders
944
1,547
563
822
117
3,993
Number of
shares held
537,815
4,378,010
4,471,682
25,281,581
80,549,905
115,218,993
The number of holdings of ordinary shares less than a marketable parcel of $500 as at 23 September 2014 is 409.
c) Substantial Shareholders
The names of substantial shareholders listed in the Company’s register as at 23 September 2014 were:
Holder
RA Capital Management LLC
Dr Christopher Bremner
Dalit Pty Ltd
d) Voting rights
Number Of Ordinary
Shares Held
% Of Issued
Capital
14,018,691
8,013,201
5,780,497
12.2
7.0
5.0
The voting rights attached to each class of equity security are as follows:
Each ordinary share holder is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on
a show of hands.
Option holders do not have any voting rights until the option is converted into an ordinary share.
Page 46 Benitec Biopharma Ltd Annual Report 2014
Shareholder Information
e) 20 Largest Ordinary Shareholders as at 23 September 2014
Holder
Citicorp Nominees Pty Limited
National Nominees Limited
Dalit Pty Ltd
MJGD Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Irwin Biotech Nominees P/L
National Nominees Limited
CSIRO
HSBC Custody Nominees (Australia) Limited - A/C 2
Dr Russell Kay Hancock
Tigcorp Nominees Pty Ltd
Mr Paul Leonard Grimshaw + Mr Dayne Paul Grimshaw
Hokkaido Venture Capital Co Ltd
HSBC Custody Nominees (Australia) Limited
Montclair Pty Ltd
Promega Corporation
Merrill Lynch (Australia) Nominees Pty Limited
Wilson Engineering Wa Pty Ltd
Sara Renison
Mr Jason Scott Ellenport + Mrs Vicky Ellenport
Totals: Top 20 holders of fully paid ordinary shares
Total remaining holders balance
Number Of Ordinary
Shares Held
% Of Issued
Capital
18,439,997
12,461,673
5,339,848
4,323,463
4,073,729
3,510,088
2,407,418
1,924,658
1,855,773
1,050,000
872,892
751,594
653,416
611,644
593,134
519,854
487,504
450,000
447,098
440,681
61,214,464
54,004,529
16.00
10.82
4.63
3.75
3.54
3.05
2.09
1.67
1.61
0.91
0.76
0.65
0.57
0.53
0.51
0.45
0.42
0.39
0.39
0.38
53.13
46.87
Benitec Biopharma Ltd Annual Report 2014 Page 47
Shareholder Information
f) Restricted securities
There are no securities on issue subject to restriction agreements.
i) Unquoted securities
As at the date of this report, the Company has unquoted securities as follows:
Details
Strategic Advisor warrants
ESOP Options
NED Options
Unlisted Options - placement
Unlisted other options
Unlisted other options
NED Options
ESOP Options
NED Options
ESOP Options
ESOP Options
ESOP Options
NED Options
ESOP Options
Unlisted options - placement
ESOP Options
2. On-Market Buy Back
There is currently no on-market buy back.
3. Listing on Exchanges
Expiry Date
Exercise Price
4 August 2014
19 August 2014
19 August 2014
18 February 2015
10 April 2015
23 October 2015
26 September 2016
17 November 2016
26 September 2016
7 February 2017
18 July 2017
16 November 2017
18 May 2018
22 August 2018
28 February 2019
15 May 2019
22.500
0.510
0.570
0.325
2.500
4.250
1.250
1.250
1.250
1.250
1.250
1.250
0.625
1.250
1.260
1.500
Number
245,078
260,000
120,000
662,767
480,000
78,125
1,600,000
1,800,000
1,200,000
168,000
400,000
400,000
400,000
2,080,000
13,246,203
180,000
23,320,173
Trading of the Company’s securities is available on the Australian Securities Exchange Limited (ASX : BLT) and through a
Level 1 American Depositary Receipt (ADR) program in the Over-The-Counter (OTC : BTEBY) market in the United States.
Page 48 Benitec Biopharma Ltd Annual Report 2014
Corporate Directory
BENITEC BIOPHARMA LIMITED
ABN 64 068 943 662
Directors
Mr Peter Francis Non-Executive Chairman
Dr Peter French
Dr John Chiplin
Mr Iain Ross
Mr Kevin Buchi
Chief Executive Officer and Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer and Managing Director
Dr Peter French
Company Secretary
Mr Greg West
Registered Office
Level 16
356 Collins Street
Melbourne Vic 3000
Australia
Principal Place of Business
F6A/1-15 Barr Street
Balmain NSW 2041
Australia
Auditors
Grant Thornton Audit Pty Ltd
Level 17, 383 Kent Street
Sydney NSW 2000
Bankers
Westpac Banking Corporation
274 Darling Street
Balmain NSW 2041
Share Registry
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Melbourne VIC 3067
Stock Exchange Listing
The Company is listed on the Australian Securities Exchange Limited
ASX Code: BLT
Benitec Biopharma Ltd
ABN 64 068 943 662
F6A / 1-15 Barr Street
Balmain NSW 2041 Australia
Tel: +61 (0) 2 9555 6986
Email: info@benitec.com
www.benitec.com