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AlectorAnnual Report
2018
Silencing
genes for life®
General Information
The financial statements cover Benitec Biopharma Limited as a Group consisting of Benitec Biopharma Limited and the entities it controlled at the end of, or during, the year.
The financial statements are presented in Australian dollars, which is Benitec Biopharma Limited’s functional and presentation currency. Benitec Biopharma Limited is a listed
public Company limited by shares, incorporated and domiciled in Australia. Benitec Biopharma Limited shares are listed on the Australian Securities Exchange in Australia
(ASX: BLT). It is also listed on the NASDAQ Global Select Market in United States (NASDAQ: BNTC; NASDAQ: BNTCW).
Its registered office and principal place of business is:
Suite 1201, 99 Mount Street, North Sydney NSW 2060
A description of the nature of the Group’s operations and its principal activities are included in the Directors’ report, which is not part of the financial statements. The financial
statements were authorised for issue, in accordance with a resolution of directors, on August 29, 2018. The directors have the power to amend and reissue the financial statements.
The information in this report should be read in conjunction with the most recent annual financial report and any public announcements made by Benitec Biopharma Limited.
Table of
Contents
DIRECTORS’
REPORT
For the year ended June 30, 2018
FINANCIAL
STATEMENTS
For the year ended June 30, 2018
07 Review of Operations
48 Auditor’s Independence Declaration
12 Four Key Pipeline Programs
50 Consolidated Financial Statements
23 Licensed Programs
55 Notes to the Consolidated Financial Statements
26 Other Key Information
80 Directors’ Declaration
29 Information on Directors
34 Remuneration Report (Audited)
43 Shares Under Option
82 Independent Auditor’s Report to the
Members of Benitec Biopharma Limited
86 Shareholder Information
89 Corporate Directory
Executive Chairman’s
and CEO Letter
Dear Shareholder
The past year has been one of great change for Benitec.
Through the unfailing dedication of the Board and the core
members of the Scientific, Clinical, and Financial teams at
the Company, Benitec has successfully navigated a series
of unprecedented structural, operational, and financial
challenges.
The fundamental strengths of our organisation have been
bolstered in ways that will provide the Company with an
exceedingly rare set of opportunities to soundly demonstrate
the exceptional breadth of the scientific, clinical, and
commercial applications of our ddRNAi platform.
While many of the key corporate improvements occurred
following the formal close of the fiscal year, we believe them
to be profoundly transformative for our Company and worth
highlighting for our current and future investors.
One of the most significant areas of progress for the
Company was represented by the recently executed global
research partnership and license agreement for BB-301
(now designated as AXO-AAV-OPMD) with Axovant
Sciences announced on July 9, 2018. This transformative
partnership meaningfully enhances our opportunity to
develop novel genetic medicines that facilitate broad-
based, clinically meaningful patient benefit across several
indications for which profound unmet medical need still
exists.Additionally, this partnership significantly augments
the financial, intellectual, and clinical development
resources available to our team as we endeavor to build
Benitec into a diversified biopharmaceutical Company.
With greater financial stability and six fully-funded
research opportunities, all of which possess the capacity to
unambiguously de-risk the silence-and-replace platform
across a series of extraordinarily high-value targets from
the perspectives of both unmet medical need and global
commercial opportunity, we believe that the Company is
positioned for long-term success.
The fundamental strengths of our
organisation have been bolstered
in ways that will provide the
Company with an exceedingly rare
set of opportunities to soundly
demonstrate the exceptional
breadth of the scientific, clinical,
and commercial applications of our
ddRNAi platform.
We also remain firmly focused on the execution of our
proprietary research and development programs. The Phase
2 study for BB-401 in advanced Squamous Cell Carcinoma
of the Head and Neck is ongoing, and we look forward
to providing additional details over the next six months
regarding our future areas of focus for our proprietary
research and development efforts.
I have rarely had the opportunity to work with such an
exceptional team, and we will continue to build on our
culture of innovation and collaborative creativity with the
goal delivering cures for ailing patients and driving value
for our current and future shareholders.
Thank you,
Jerel A. Banks, M.D., Ph.D.
Executive Chairman and CEO
DIRECTORS’
REPORT
For the year ended June 30, 2018
07 Review of Operations
12 Four Key Pipeline Programs
23 Licensed Programs
26 Other Key Information
29 Information on Directors
34 Remuneration Report (Audited)
43 Shares Under Option
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
6
The Company’s directors present their report on the consolidated entity
(referred to hereafter as the ‘Group’) consisting of Benitec Biopharma Limited
(referred to hereafter as the ‘Company’ or ‘parent entity’) and the entities it
controlled at the end of, or during, the year ended June 30, 2018.
Directors
Results
The following persons were directors of the Company during
the whole of the period and up to the date of this report,
unless otherwise noted:
The loss for the Group after providing for income tax
amounted to $11.640m (June 30, 2017: $5.690m).
The $5.950m increase in loss is explained by:
Dr Jerel A Banks
Chairman, appointed as Chairman on October 12, 2017
and Executive Chairman on June 15, 2018
and CEO on June 26, 2018.
Mr Peter Francis
Resigned as Chairman on October 12, 2017
and continues as Non-Executive Director.
Mr Kevin Buchi
Non-Executive Director.
Ms Megan Boston
Appointed as Non-Executive Director on August 16, 2017
and Executive Director and Head of Operations Australia
on June 15, 2018
Dr John Chiplin
Resigned on October 23, 2017.
Non-Executive Director.
Principal Activities
During the financial year the principal continuing activities
of the Group consisted of development of the Group’s
therapeutic pipeline and pre-clinical programs, funding,
and protecting and building the IP estate.
The Group has a pipeline of in-house and partnered
therapeutic programs based on its patented gene-silencing
technology, ddRNAi. It is developing treatments for several
chronic and life-threatening human diseases, such as head
and neck squamous cell carcinoma, oculopharyngeal
muscular dystrophy, wet age-related macular degeneration
and hepatitis B based on this technology.
Dividends
There were no dividends paid, recommended or declared
during the current or previous financial year.
• Reduction in Research and Development grant income
of $6.508m: Grant income is lower in the current period
due to the inclusion of an estimation of the grant income
for the twelve months ended June 30, 2018 of $3.999m,
whilst in the previous corresponding period we included
grant income of $6.275m for the financial year 2016 and an
estimation for twelve months to June 30, 2017 of $4.232m.
In 2017 a new reporting system was implemented to allow
a reliable estimate to be made of the grant income. As a
result, an estimation of grant income for each quarter is
now taken to account on a quarterly basis. Previously the
grant income was only taken up on the lodgement of the
previous year’s tax return, which was the time at which it
was considered a reliable estimate could be made. It is
noted that grant income recognised in the current period,
will be received subsequent to the claim being made, on
lodgement, of the June 2018 income tax return.
• Reduction in Research and development costs of
$0.035m: Research and development costs were
reduced only slightly by $0.035m due to reduced
expenditure on programs related to HBV, HCV and
AMD. These costs reductions were offset by increased
expenditure on OPMD and HNSCC.
• Net reduction in all other costs of $0.401m:
Principally due to a reduction in corporate costs
of $0.180m and Consultants cost $0.193m.
Cash Flows
As at June 30, 2018, the Company had cash on hand of
$16.085m. This was a decrease of $1.290m from June 30,
2017. This represents operating cash outflow of $14.498m
offset by grant income of $4.112m, other revenue and other
income of $0.592m, purchase of plant and equipment of
$0.081m, a foreign exchange gain of $0.143m, net proceeds
from issue of shares of $8.508m and other items of $0.066m.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
7
Review of
Operations
Benitec Biopharma is a clinical-stage biotechnology Company focused
on the development of novel genetic medicines. The proprietary
platform, called DNA-directed RNA interference, or ddRNAi, combines
RNA interference, or RNAi, with gene therapy to create medicines that
facilitate sustained silencing of disease-causing genes following a single
administration.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
8
The ddRNAi-based genetic medicines under
development by Benitec represent a pipeline of
proprietary and partnered product candidates that
can, potentially, be used to meaningfully improve
upon the existing standards of care for chronic and
life-threatening human diseases.
The primary research and development efforts of the
Company have been directed towards disorders that
include head and neck squamous cell carcinoma, or
HNSCC, oculopharyngeal muscular dystrophy, or OPMD,
wet age-related macular degeneration, or AMD, hepatitis
B, and, recently, C9orf72 gene-related amyotrophic lateral
sclerosis (ALS) and frontotemporal dementia (FTD).
Through the combination of the targeted gene silencing
effect of RNAi together with the durable gene expression
associated with the use of modified viral vectors, ddRNAi
has the potential to produce durable silencing of disease-
causing genes following a single administration of the
proprietary genetic medicine. This novel attribute of the
investigational agents emerging from the platform could
facilitate the achievement of robust clinical activity while
greatly reducing the dosing frequencies traditionally
expected for medicines employed for the management of
chronic diseases.
Additionally, the establishment of chronic gene silencing via
ddRNAi-based genetic medicines could significantly reduce
the risk of patient non-compliance during the course of
medical management of potentially fatal disorders.
Benitec endeavours to
become the leader in
discovering, developing,
and commercialising
ddRNAi-based
therapeutics for a range
of human diseases with
high unmet clinical need.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
11
The following strategy has
been put in place to drive the
Company towards these goals:
Selectively develop proprietary and partnered
pipeline programs
Benitec will continue to enroll patients onto the BB-401
Phase 2 clinical study. BB-401, the EGFR-targeted antisense
RNA product, is undergoing clinical evaluation in a Phase 2
study for the treatment of patients with advanced HNSCC.
BB-401 is a plasmid-derived antisense agent and, as such,
is fundamentally aligned with the internal research and
development expertise of the Benitec team which has
historically focused on the discovery and development of
gene therapy and gene silencing agents. BB-401 functions
via post transcriptional gene silencing and could, potentially,
provide compelling proof-of-concept data to support
the development of a ddRNAi-based second generation
therapeutic to treat patients with HNSCC and other
advanced solid tumors.
Benitec will work in concert with Axovant Sciences to
complete the preclinical development work and the core
development work underlying the achievement of FDA-
compliant chemistry, manufacturing, and controls-related
processes and Good Manufacturing Practices for AXO-
AAV-OPMD (formerly designated as BB-301).
Preclinical research efforts supporting the development of
proprietary ddRNAi-based therapeutics targeted towards the
treatment of HBV and AMD have continued, and research and
development activities geared towards the development of
ddRNAi-based therapeutics for the five programs partnered
with Axovant Sciences, C9orf72 gene-related ALS and FTD,
are slated to begin over the coming months.
Identify new clinical indications for which our
proprietary ddRNAi-based genetic medicines
have a high probability of biological, clinical,
and commercial success
Following the recent restructuring of the management
team, and the execution of the transformative research,
development, and commercial partnership with Axovant
Sciences, the senior leadership team of Benitec will work to
redefine the core proprietary programs on which our efforts
will focus.
Benitec will provide additional details on the strategic
direction of the research and development efforts of the
Company over the next six months.
Continue to explore and secure research
and development partnerships with global
biopharmaceutical companies supported by the
differentiated nature of our scientific platform
and intellectual property portfolio
The recently announced partnership with Axovant Sciences
provides Benitec with an extraordinarily rare opportunity to
unambiguously demonstrate the exceptional breadth of the
scientific, clinical, and commercial applications of the ddRNAi
platform. This transformative partnership significantly
enhances the financial, intellectual, and clinical development
resources available to the Company as we work to build
Benitec into a diversified biopharmaceutical Company.
The senior leadership team will continue to explore
partnership opportunities with global pharmaceutical
companies, as we expect the unique attributes of the
proprietary ddRNAi approach and the breadth of
potential clinical applications to support the formation
of collaborations over a broad range of disorders with
significant unmet medical need.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
12
Four Key Pipeline
Programs
As of June 30, 2018, the Company had four key pipeline
programs in development:
01. Head and neck squamous cell carcinoma (HNSCC)
02. Wet age-related macular degeneration (AMD)
03. Hepatitis B (HBV*)
04. Oculopharyngeal Muscular Dystrophy (OPMD)
* Continued development dependant on partnership or funding
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
13
Development status
01. Head and neck squamous cell carcinoma (HNSCC) Oncology
In-house programs
Discovery
Preclinical
IND-Enabling
Early stage clinical
(IND - Ph 2)
Late stage clinical
(Ph 2 - Ph 3)
HNSCC (BB-401)
Plasmid Intratumoral
Global Commercial Rights
HNSCC (BB-501)
ddRNAi Intratumoral
Global Commercial Rights
02. Wet age-related macular degeneration (AMD) Retinal disease
In-house program
Discovery
Preclinical
IND-Enabling
Early stage clinical
(IND - Ph 2)
Late stage clinical
(Ph 2 - Ph 3)
AMD (BB-201)
Novel AAV Intravitreal
Global Commercial Rights
03. Hepatitis B (HBV*) Infectious disease
In-house program
Discovery
Preclinical
IND-Enabling
Early stage clinical
(IND - Ph 2)
Late stage clinical
(Ph 2 - Ph 3)
HBV (BB-103)
AAV Intravenous
Global Commercial Rights
* Continued development dependant on partnership or funding
04. Oculopharyngeal muscular dystrophy (OPMD) Orphan disease
Partnered program
Discovery
Preclinical
IND-Enabling
Early stage clinical
(IND - Ph 2)
Late stage clinical
(Ph 2 - Ph 3)
OPMD (BB-301)
AAV Intramuscular
Partnered
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
14
Head and neck squamous
cell carcinoma (HNSCC)
BB-401 is a DNA plasmid that expresses an antisense RNA
molecule targeting the EGFR mRNA, thus, preventing its
translation into its cognate protein via post-transcriptional
gene silencing. Benitec acquired the rights to BB-401 from
Nant Capital in 2016, and BB-401 is currently undergoing
clinical evaluation in a Phase 2 study in patients with
advanced HNSCC. EGFR is the cell-surface receptor for
members of the epidermal growth factor family, or EGF
family, of extracellular protein ligands. EGFR is a well-
validated oncology target and has been shown to be a key
driver of the growth of HNSCC lesions with more than 80%
of HNSCC lesions exhibiting significantly elevated levels of
EGFR versus concentrations found in non-malignant tissues.
01 BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
15
Statistics
Head and neck cancers often begin
in the moist mucosal surfaces inside
the head and neck, such as inside
the mouth and the throat. The global
incidence of HNSCC is expected to
increase from approximately 119,000
cases in 2016 to over 136,000 cases
in 2026.
119,000
cases in 2016
136,000
cases in 2026
Squamous cell carcinoma of
the head and neck accounts for
more than 90% of all head and
neck cancers
More than 50% of HNSCC
patients present with Stage
III or higher disease (locally
advanced or metastatic),
which has higher potential for
progression and recurrence.
For patients with recurrent of
metastatic HNSCC the median
overall survival is 7.8 months
and the five-year survival rate
is 3.6%.
Total drug sales
Total drug sales in the HNSCC
markets in the seven major markets
(United States, France, Germany, Italy,
Spain, United Kingdom and Japan)
are expected to increase from
$579.4 million in 2016 to just over
$4.1 billion in 2026.
CAGR (Compound
Annual Growth Rate)
21.6%
Reference: GlobalData Report (March 2018):
Head and Neck Squamous Cell Carcinoma –
Opportunity Analysis and Forecast to 2026.
5b
4b
3b
2b
1b
0
$4.1 billion
in 2026
$579.4 million
in 2016
2016
2026
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
16
Phase 1 study
BB-401 drives the expression of a 39-base pair
oligonucleotide that is an antisense molecule to EGFR
mRNA, and this investigational agent is currently being
developed for the treatment of recurrent or metastatic
HNSCC in patients who have failed all available standard
therapies.
Treatment comprises antisense DNA molecules that
correspond to a 39-base pair sequence of DNA derived from
human EGFR contained within a plasmid construct. BB-401
plasmids containing the EGFR-targeted antisense DNA will
be injected into malignant tumors of patients with advanced
HNSCC. BB-401 will be administered weekly as a direct
intratumoral injection.
First Phase 1 study
Second Phase 1 study
A second Phase 1 study of 6 patients evaluated the potential
for BB-401 to improve the efficacy of an existing multi-agent
anti-cancer treatment regimen comprised of cetuximab
along with intensity-modulated radiotherapy, which
has been approved for treatment of locally or regionally
advanced HNSCC. The combination of cetuximab with
radiation therapy has a demonstrated Objective Response
Rate of 74%. In five of six patients treated with BB-401 in
combination with radiation therapy and cetuximab the
Objective Response rate was 83%.
The first Phase 1 study involved 20 patients with lesions that
were unresponsive to standard anti-cancer therapies. In this
study, BB-401 (referred to as EGFR-AS) was administered
to target malignant lesions once per week for four weeks.
Seventeen patients completed the planned, four-week,
course of dosing and were evaluable for response to therapy.
Key observations of this study included:
• Disease responses described below as defined by
reductions in the sizes of the injected malignant lesions.
a. Five of the patients experienced an Objective Response
which provides for an Objective Response Rate of
29.4%. Two patients experienced a 100% reduction in
the size of the injected lesions by Response Evaluation
Criteria in Solid Tumors, or RECIST, leading to a
Complete Response Rate of 11.8%, and three patients
experienced Partial Responses which is defined by a
reduction in the size of the injected lesion of 30% or
greater by RECIST, and these data supported a Partial
Response Rate of 17.6%.
b. Additionally, two patients had reductions in the sizes
of the injected lesions of between 19%-to-29% of the
original size, defined as a Stable Disease Rate of 11.8%.
c. These data demonstrated that seven patients, or 41.2%
of the evaluable clinical trial participants, achieved a
definable Clinical Benefit.
• The mean duration of anti-tumor response was 6.5 months.
• No grade 3 or grade 4 dose-limiting toxicities were noted
in the Phase I study.
Key milestones achieved and next steps
Investigation of single agent activity
Discovery stage program
The Company is investigating the single agent activity of BB-
401 in a Phase 2 clinical study which is designed as an open
label study to explore the safety, tolerability and efficacy
of BB-401 following intratumoral injections. The Phase 2
study patients are refractory to all standard therapies such
as surgery, chemotherapy and immunotherapy. The study is
being conducted at 5-to-8 sites in Australia and Russia. As
of June 30, 2018, regulatory and ethics committee approval
have been received in Australia and screening has started
at the first clinical site. Regulatory approval was received in
May from the Ministry of Health, and the first two study sites
in Russia now have ethics committee approval.
Selection and optimization of shRNAs
As of June 30, 2018, selection and optimization of shRNAs
was completed and in vivo testing in mouse xenograft
models continues.
In parallel to returning BB-401 to the clinic, the Company
has initiated a discovery stage program using its proprietary
ddRNAi platform, to develop follow-on anti-EGFR
strategies. The clinical data obtained from the BB-401
program will be used to inform the development pathway
of BB-501, a ddRNAi therapeutic designed to silence the
expression of EGFR. It is thought that the efficiency of
target knockdown will be significantly greater with RNA
interference as opposed to the post transcriptional gene
silencing mechanism of BB-401.
Explore other potential clinical indications
As EGFR is a key oncoprotein in many epithelial
malignancies, Benitec intends to explore other potential
clinical indications, including rare cancers.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
18
Age-related macular
degeneration (AMD)
The Company is exploring the development of a
ddRNAi-based therapy for the treatment of wet AMD,
which is designated BB-201. The delivery vector for BB-
201 is comprised of a novel AAV capsid that has been
developed in collaboration with 4DMT and is designed
to deliver ddRNAi constructs to the retina using a
direct intravitreal injection. The aim of this program
is to develop a therapeutic that provides long-term
treatment of AMD from a single intravitreal injection.
We believe this could replace the need for regular
intravitreal injections of protein based therapeutics into
the eye, which is the current standard of care.
02 Key milestones achieved
and next steps
Completion of the molecular analyses
The Company completed the molecular analyses of the
retinal tissues from an in vivo proof of concept study in a
non-human primate. These data indicated that additional
optimization work on the BB-201 AMD program was
required to progress the program forward. The Company
continues to review these plans internally.
AMD is a chronic condition that leads to the deterioration
of the macula. The macula is a small area in the retina that
is responsible for central vision. AMD is the leading cause
of blindness and visual impairment in older adults, often
involving blood vessel overgrowth and damage to the retina
resulting in the loss of vision in the central visual field. The
vascular endothelial growth factor, or VEGF-a, is responsible
for stimulating the new blood vessel growth. The disease
occurs in two forms, wet and dry. Dry AMD is the most
common type of macular degeneration and affects 85%
to 90% of the people with AMD. Dry AMD often develops
into wet AMD. Although the wet form of the disease
affects only 10% to 15% of those who have AMD, wet AMD
accounts for 90% of the severe vision loss caused by macular
degeneration.
Wet AMD is the more advanced type of AMD. According
to a study published in JAMA Ophthalmology, AMD is the
leading cause of irreversible vision loss in the United States,
affecting an estimated 1.75 million people. It is estimated
that 196 million people will be affected by AMD worldwide
by 2020 according to a study published in The Lancet
Global Health.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
20
Hepatitis B (HBV)
The Company is developing BB-103 for the treatment
of HBV. Results of in vivo and in vitro studies, from
December 2016, March 2016 and December 2015,
demonstrated the potential utility of an approach that
combines RNAi with gene therapy to treat HBV. In April
2017, the Company completed a pre-IND submission
with the FDA in which the feedback provided by the
agency included details regarding steps required
to initiate a clinical trial for BB-103. The Company is
seeking partnerships to support the progression of
BB-103 into the clinic.
03 BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
21
Oculopharyngeal muscular
dystrophy (OPMD)
OPMD is an insidious, autosomal-dominant, late-onset
degenerative muscle disorder that typically presents in
patients at 40-to-50 years of age.
The disease is characterized by progressive swallowing difficulties (dysphagia) and
eyelid drooping (ptosis). OPMD is caused by a specific mutation in the poly(A)-binding
protein nuclear 1, or PABPN1, gene. OPMD is a rare disease and has been reported
in at least 33 countries. Patients suffering with OPMD are well identified and are
geographically clustered, which we believe should simplify clinical development and global
commercialisation efforts.
BB-301 is a monotherapy delivered using an innovative AAV single vector system with
the capability to both ‘silence and replace’ disease causing genes. In addition to using
RNA interference to ‘silence’ the mutant PABPN1 gene expression that causes the OPMD,
BB-301 simultaneously introduces a normal copy of the same gene thus providing the
potential to restore normal function to the treated tissues and in the process, improve
treatment outcomes. This single gene therapy product, versus an equivalent system with
two or more vectors, vastly simplifies the manufacturing and regulatory processes and
reduces the complexity of the clinical strategy for BB-301.
04 Key milestones achieved and next steps
Licensed exclusive global rights for BB-301
(now named AXO-AAV-OPMD)
On 9 July 2018 Benitec announced that it had licensed to
Axovant Sciences the exclusive global rights for BB-301
(now named AXO-AAV-OPMD) intended for the treatment
of OPMD, and has also entered into a fully funded research
collaboration for the development of five additional gene
therapy products in neurological disorders.
Upfront cash payments
Under the terms of the agreement, Benitec received
an upfront cash payment of US$10m (AUD$13.5m) and
will receive additional cash payments totaling US$17.5m
(AUD$23.6m) upon completion of four specific near-term
manufacturing, regulatory and clinical milestones.
Granted worldwide rights to AXO-AAV-OPMD
Axovant has been granted worldwide rights to AXO-AAV-
OPMD and will assume all future development costs. The
total potential value of all of the development, regulatory
and commercial milestones achievable by Benitec, of which
there are eight milestones including the four near-term
milestones, is US$187.5m (AUD$253.3m). Benitec, working
in partnership with Axovant over the next few years, hopes
to achieve all eight milestones and thus realize the maximum
amount of US$187.5m (AUD$253.3m). There can be no
assurance as to the total amount of payments that the
Company will actually receive or when they will be received.
Retain 30% profits
Importantly, upon commercialisation, Benitec will
retain 30% of the net profits on worldwide sales of
AXO-AAV-OPMD.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
23
Licensed Programs
In addition to its in-house development programs, the Company
has licensed its ddRNAi technology to companies who are developing
therapeutic programs in other disease areas:
• HIV / AIDS
• Cancer Immunotherapy
• Intractable Neuropathic Pain
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
24
HIV/AIDS
Cancer
Immunotherapy
In March 2012, Benitec granted a non-exclusive, royalty-
bearing, worldwide license to a U.S. based biotechnology
Company, Calimmune, Inc. Under the agreement,
Calimmune could develop, use and commercialise ddRNAi
to silence up to three targets for the treatment or prevention
of HIV/AIDS.
Calimmune’s approach was developed with core technology
from the laboratory of Dr. David Baltimore, a Nobel Laureate
in the area of HIV/AIDS, and involves silencing the gene that
codes for a receptor protein known as CCR5. Calimmune’s
HIV/AIDS treatment is known as CAL-1. In August 2017, the
CSL Behring subsidiary of CSL Ltd. announced that it will
acquire Calimmune Inc. gaining two ex vivo autologous
gene therapy candidates and two stem cell therapy
technologies.
As part of this deal, CSL Behring also acquired CAL-1, the
autologous T cell and blood stem cell therapy in Phase I/II
testing to treat HIV infection. The announcement indicated
that CSL Behring is evaluating options for developing this
candidate, including licensing or partnering as the Company
is “unlikely” to develop the candidate on its own.
In August 2013, an exclusive, royalty-bearing, worldwide
license was granted to a U.S.-based biotechnology
Company, Regen Biopharma Inc. to use ddRNAi for
silencing expression of indoleamine 2,3—dioxygenase,
or IDO, in dendritic cells. Regen is developing a cancer
immunotherapy using the licensed technology. IDO is
associated with immune-suppression and is overexpressed
in some cancers. Regen has reported preclinical evidence
that modification of these cells using ddRNAi targeting the
silencing of IDO may significantly enhance their efficacy in
cancer immunotherapy. Regen’s first treatment, which is for
breast cancer, is called dCellVax.
Intractable
Neuropathic Pain
In November 2014, an exclusive, royalty-bearing, worldwide
license was granted to a U.S.-based biotechnology
Company, Circuit Therapeutics, Inc. to use ddRNAi for the
development of treatments for and the prevention of pain.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
26
Other Key
Information
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
27
Intellectual property
The Company manages a substantial portfolio of patents
relating to the ddRNAi platform technology, improvements
to this technology and its pipeline programs. The
Company continues to hold a dominant position in the
field of expressed RNAi and it defends its position in this
space. With the limited patent term remaining on the
platform patents licensed from CSIRO, Benitec’s focus has
increasingly been on establishing patent protection for
its pipeline and products in development with the aim of
securing competitive and commercially relevant intellectual
property positions for each of its programs.
Commercialisation
Business development activities based on proactive
engagement with biotechnology and pharmaceutical
companies remains a major focus for the Company, primarily
in the following areas:
• Partnering pipeline programs by co-development or
licensing to other biotechnology and pharmaceutical
companies;
• Collaborating with biotechnology and pharmaceutical
companies on nominated targets using Benitec’s ddRNAi
technology; and
• Licensing ddRNAi to commercial users of the technology.
• The Company continues to generate strong interest from
a number of potential partners.
Significant changes in the
state of affairs
During the year the Company had the following significant
changes in the state of affairs:
Change in Board and Management composition
• On October 12, 2017, Dr Jerel A Banks was appointed
Chairman replacing Mr Peter Francis who continues
as non-executive director.
• On October 23, 2017 Dr John Chiplin resigned
as a director.
• On January 7, 2018 Dr Cliff Holloway resigned as
Chief Business and Operations Officer.
• On June 15, 2018 Mr Greg West resigned as CEO
and Company Secretary.
• On June 15, 2018 Dr Jerel Banks was appointed
to the role of Executive Chairman.
• On June 15, 2018 Ms Megan Boston was appointed to the
role of Executive Director as Head of Operations Australia.
• On June 22, 2018 Dr David Suhy resigned from the role
of Chief Scientific Officer.
• On June 26, 2018 Dr Jerel Banks was appointed to
the role of CEO of the Company.
• On June 29, 2018 Mr Oliver Kidd was appointed
Company Secretary.
Placement of Shares
On May 4, 2018 the Company placed 15,444,020 shares,
representing 772,201 American Depositary Shares (ADS)
at 17 cents per share, raising $2,625,483.
Entitlement offer:
On June 4, 2018, the Company completed a 1 for 2
entitlement offer by issuing 36,442,672 shares, raising
$6,195,254.
There were no other significant changes in the state of affairs
of the Group during the financial year.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
28
Matters subsequent to the end
of the financial year
Likely developments and expected
results of operations
On July 9, 2018, it was announced that a license was entered
into with Axovant Sciences (“Axovant”) granting the
exclusive global rights for BB-301 (now named AXO-AAV-
OPMD) intended for the treatment of oculopharyngeal
muscular dystrophy (OPMD), as well as entering into a fully
funded research collaboration for the development of five
additional gene therapy products in neurological disorders.
The Group will continue to progress programs through
the clinic, seek commercialisation opportunities with big
Pharma and others for its unique IP, develop its therapeutic
pipeline and pre-clinical programs, protect and build the
Group’s IP estate and secure adequate funding. Refer
to Operating and Financial Review (OFR) for further
commentary.
Environmental regulation
The Group is not subject to any significant environmental
regulation under Australian Commonwealth or State law.
Under the terms of the agreement, Benitec will receive an
upfront cash payment of US$10 million (AUD$13.5m) and
additional cash payments totalling US$17.5 m (AUD$23.6m)
upon completion of four specific near-term manufacturing,
regulatory and clinical milestones. Axovant has been
granted worldwide rights to AXO-AAV-OPMD and will
assume all future development costs. The total potential
value of all of the development, regulatory and commercial
milestones achievable by Benitec, of which there are eight
milestones including the four near-term milestones, is
US$187.5m (AUD$253.3m). Benitec, working in partnership
with Axovant over the next few years, hopes to achieve all
eight milestones and thus realize the maximum amount of
US$187.5m (AUD$253.3m). There can be no assurance as to
the total amount of payments that the Company will actually
receive or when they will be received. Importantly, upon
commercialisation, Benitec will retain 30% of the net profits
on worldwide sales of AXO-AAV-OPMD.
No other matter or circumstance has arisen since June 30,
2018 that has significantly affected, or may significantly affect
the Group’s operations, the results of those operations, or the
Group’s state of affairs in future financial years.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
29
Information
on Directors
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
30
Dr Jerel
Banks
Executive Chairman
(appointed on June 15, 2018)
Mr Peter
Francis
Non-Executive Director
Qualifications
Dr. Banks earned an M.D. from the Brown
University School of Medicine and a Ph.D.
in Organic Chemistry from Brown University,
and he holds an A.B. in Chemistry from
Princeton University.
Experience and expertise
Dr. Banks was formerly the Chief Investment
Officer of Nant Capital, LLC. Prior to joining Nant
Capital, LLC, Dr. Banks served as vice president,
portfolio manager and research analyst for the
Franklin Biotechnology Discovery. Fund at
Franklin Templeton Investments from 2012 to 2015.
Previously, Dr. Banks worked as a senior equity
research analyst covering the biotechnology
sector at Sectoral Asset Management Inc. and
Apothecary Capital. Dr. Banks began his career
in the asset management industry as an equity
research associate on the healthcare investment
team at Capital Research and Management.
Other current directorships
Nil
Former directorships (last 3 years)
GlobeImmune, Inc (resigned April 15, 2018)
Special responsibilities
Member of the Remuneration and Nomination
Committee (resigned June 15, 2018)
Interests in shares
Nil
Interests in options
Nil
Qualifications
LLB, Grad Dip (Intellectual Property)
Experience and expertise
Peter is a partner at Francis Abourizk Lightowlers
(‘FAL’), a firm of commercial and technology
lawyers with offices in Melbourne. 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
Nil
Former directorships (last 3 years)
Optiscan Imaging Limited (resigned April 23, 2018),
Rision Ltd (resigned April 12, 2018) and
Neuroscope Ltd
(public non listed resigned August 2017)
Special responsibilities
Chair of the Remuneration and Nomination
Committee (resigned June 15, 2018)
Chair of Audit & Risk Committee
(commencing June 16, 2018)
Interests in shares
636,261 ordinary shares
Interests in options
1,400,000 options over ordinary shares
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
31
Ms Megan
Boston
Executive Director
Head of Operations Australia
(appointed on June 15, 2018)
Mr Kevin
Buchi
Non-Executive Director
Qualifications
B.Comm, CA, GAICD, Grad Diploma Share Trading
Qualifications
BA (Chemistry), MBA, CPA
Experience and expertise
Ms Megan Boston has previously been CEO
and Managing Director of ASX listed entities.
Megan holds a Bachelor of Commerce and
is a Chartered Accountant with over 13 years’
experience as a non-executive Director across
a range of industries. She has chaired Company
boards as well as board sub-committees
particularly in the area of finance and risk
management. Megan has completed the Company
Directors Course Diploma run by the Australian
Institute of Company Directors. Previously, Megan
held senior executive roles at various banking
institutions in the area of risk and compliance,
as well as working for PricewaterhouseCoopers.
Other current directorships
Nil
Former directorships (last 3 years)
Omni Market Tide Limited, ASX
(resigned June 2016), and
Neuroscope Ltd, public non listed
(resigned August 2017)
Special responsibilities
Chair of the Audit and Risk Committee
(resigned on June 15, 2018)
Interests in shares
100,000 ordinary shares
Interests in options
Nil
Experience and expertise
Kevin most recently served as the CEO of
TetraLogic Pharmaceuticals Corporation, a public
U.S. Biotechnology Company. Prior to that,
Kevin served as Chief Executive Officer (‘CEO’) of
Cephalon, Inc. through its $6.8 billion acquisition
by Teva Pharmaceutical Industries (‘Teva’) in
October 2011. After the acquisition, he served
as Corporate Vice President, Global Branded
Products of Teva. Kevin joined Cephalon, Inc. in
1991 and held various positions, including Chief
Operating Officer, Chief Financial Officer and
Head of Business Development prior to being
appointed CEO.
Other current directorships
Impax Labs,
Amneal Pharmaceuticals,
Dicerna Pharmaceuticals
Former directorships (last 3 years)
Stemline Therapeutics, Inc. (May 2016),
Forward Pharma A/S, (May 2016)
Alexza Pharmaceuticals, Inc. (June 2016) and
Epirus Biopharmaceuticals, Inc.(July 2016)
Special responsibilities
Chair of the Remuneration and Nomination
Committee (commenced June 16, 2018)
Interests in shares
1,448,210 ordinary shares
Interests in options
840,000 options over ordinary shares
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
32
Dr John
Chiplin
Non-Executive Director
(resigned October 23, 2017)
Notes
Other current directorships quoted above are
current directorships for listed entities only and
excludes directorships of all other types of entities,
unless otherwise stated.
Former directorships (last 3 years) quoted above
are directorships held in the last 3 years for listed
entities only and excludes directorships of all other
types of entities, unless otherwise stated.
Qualifications
BPharm, MRPharmsS, Ph.D (Pharmacy)
from the University of Nottingham, Nottingham,
United Kingdom.
Experience and expertise
John is a founder of and has served as a Managing
Director of investment Company, Newstar Ventures
Ltd., since 1998. More recently, he has served as a
director of Medistem, Inc. through its acquisition
by Intrexon Corporation in 2014, as founding Chief
Executive Officer of Arana Therapeutics Limited
from 2006 through its acquisition by Cephalon,
Inc. in 2009, as director of Domantis Ltd through
its acquisition by GlaxoSmithKline plc in 2006, and
as Managing Director of ITI Life Sciences Fund
from 2003 to 2005. He currently serves on the
board of directors of Adalta Pty Ltd(1AD.AX), Batu
Biologics Inc., Cynata Therapeutics Limited (CYP.
AX), Prophecy Inc., ScienceMedia Inc., Scancell
Holdings plc (SCLP.L, Executive Chairman), Sienna
Cancer Diagnostics (SDX.ASX) and The Coma
Research Institute.
Other current directorships
As above
Former directorships (last 3 years)
Medistem, Inc. (MEDS.US)
Special responsibilities
Until date of resignation John was Chair of the
Remuneration and Nomination Committee
Interests in shares
200,000 ordinary shares at the date of resignation.
Interests in options
Nil options over ordinary shares
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
33
Company Secretary
Mr Oliver Kidd was appointed Company secretary on June 29, 2018. Mr Greg West resigned as Company Secretary on June 15, 2018.
Meetings of directors
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the year
ended June 30, 2018, and the number of meetings attended by each director were:
FULL BOARD
AUDIT AND RISK
COMMITTEE
REMUNERATION AND
NOMINATIONS COMMITTEE
Attended
Held
Attended
Held
Attended
Held
Jerel Banks
Peter Francis
Megan Boston
Kevin Buchi
John Chiplin
14
13
12
14
3
14
14
14
14
3
n/a
n/a
4
4
n/a
n/a
4
4
n/a
n/a
n/a
1
n/a
1
n/a
n/a
1
n/a
1
n/a
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
34
Remuneration
Report (Audited)
The remuneration report details the key management personnel
remuneration arrangements for the Group, in accordance with the
requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the activities of
the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
• Principles used to determine the nature and amount of remuneration
• Details of remuneration
• Service agreements
• Share-based compensation
• Consequences of performance on shareholder wealth
• Additional disclosures relating to key management personnel
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
35
Principles used to determine the nature and amount of remuneration
The objective of the Group’s executive reward framework
is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework
aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders and
conforms to the market best practice for the delivery of
reward. The Board of Directors (‘the Board’) ensures that
executive reward satisfies the following key criteria for good
reward governance practices:
• competitiveness and reasonableness;
• acceptability to shareholders;
• performance linkage / alignment of executive
compensation; and
• transparency.
The Nomination and Remuneration Committee is
responsible for determining and reviewing remuneration
arrangements for its directors and executives. The
performance of the Group depends on the quality of its
directors and executives. The remuneration philosophy is
to attract, motivate and retain high performance and high
quality personnel.
This committee is currently chaired by Mr Kevin Buchi.
The Nomination and Remuneration Committee has
structured an executive remuneration framework that is
market competitive and complementary to the reward
strategy of the Group.
Alignment to shareholders’ interests:
•
has economic profit as a core component of plan design;
•
focuses on sustained growth in shareholder wealth,
consisting of dividends and growth in share price, and
delivering constant or increasing return on assets as well
as focusing the executive on key non-financial drivers of
value; and
•
attracts and retains high calibre executives.
Alignment to program participants’ interests:
• rewards capability and experience;
• reflects competitive reward for contribution to growth
in shareholder wealth; and
• provides a clear structure for earning rewards.
In accordance with best practice corporate governance,
the structure of non-executive directors and executive
remunerations are separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the
demands and responsibilities of their role. Non-executive
directors’ fees and payments are reviewed annually by
the Nomination and Remuneration Committee. The
Nomination and Remuneration Committee may, from time
to time, receive advice from independent remuneration
consultants to ensure non-executive directors’ fees and
payments are appropriate and in line with the market. The
chairman’s fees are determined independently to the fees
of other non-executive directors based on comparative
roles in the external market. The chairman is not present
at any discussions relating to the determination of his own
remuneration. Non-executive directors may receive share
options or other incentives.
ASX listing rules require the aggregate non-executive
directors remuneration be determined periodically by a
general meeting. The most recent determination was at
the Annual General Meeting held on November 13, 2014,
where the shareholders approved a maximum aggregate
remuneration of $500,000.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
36
Executive remuneration
The Group aims to reward executives with a level and mix
of remuneration based on their position and responsibility,
which has both fixed and variable components.
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 Group’s
performance, executive performance, and comparable
information within the industry.
Executives may receive their fixed remuneration in the form
of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the
Group and provides additional value to the executive.
The short-term incentives (‘STI’) program is designed to
align the targets of the business units with the targets of
those executives responsible for meeting those targets.
STI payments are granted to executives based on specific
annual targets and key performance indicators (‘KPI’s’)
being achieved. KPI’s include profit contribution, leadership
contribution and product management.
The performance of executives is measured against
criteria agreed annually with each executive and is based
predominantly on the overall success of the Group 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.
The long-term incentives (‘LTI’) include long service leave
and share-based payments. Executives may be invited to
participate in the Employee Share Option Plan (‘ESOP’).
Shares are awarded to executives over a period of three
years based on long-term incentive measures. These
include increase in shareholders’ value relative to the entire
market and the increase compared to the Group’s direct
competitors. Australian executives or directors receive a
superannuation guarantee contribution required by the
Government and do not receive any other retirement
benefits.
The executive remuneration and reward framework has
four components:
• base pay and non-monetary benefits;
• short-term performance incentives;
• share-based payments; and
• other remuneration such as superannuation and long
service leave.
The combination of these comprises the executive’s total
remuneration.
Fixed remuneration, consisting of base salary and non-
monetary benefits, are reviewed annually by the Nomination
and Remuneration Committee, based on individual and
business unit performance, the overall performance of the
Group and comparable market remunerations.
Group performance and link to remuneration
Executive bonus and incentive payments are based on
performance and are at the discretion of the Nomination
and Remuneration Committee.
Use of remuneration consultants
During the financial year ended June 30, 2018, the
Group did not engage any remuneration consultants to
review its existing remuneration policies and provide any
recommendations on how to improve both the STI and
LTI programs.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
37
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel (KMP) of the Group are set out in the following tables. The key
management personnel of the Group consisted of the directors of Benitec Biopharma Limited and the following persons:
•
Ms Georgina Kilfoil – Chief Development Officer.
•
Mr Greg West – Chief Executive Officer and Company secretary. Resigned June 15, 2018.
•
Dr David Suhy – Chief Scientific Officer. Resigned June 22, 2018.
•
Dr Cliff Holloway – Chief Business Officer Resigned January 7, 2018.
SHORT-TERM
BENEFITS
POST
EMPLOYMENT
BENEFITS
Cash Salary
And Fees
$
Cash
Bonus
$
Non-
Monetary
$
Super-
annuation
$
Employee
Leave
$
2018 DIRECTORS
Jerel Banks (1)
Peter Francis (2)
Megan Boston (3)
Kevin Buchi
John Chiplin (4)
OTHER KEY
MANAGEMENT
PERSONNEL
Georgina Kilfoil (5)
Greg West (6)
David Suhy (7)
116,273
83,195
77,500
76,650
28,288
275,000
620,974
-
-
-
-
-
-
-
396,362
10,749
Cliff Holloway (8)
158,872
-
-
-
-
-
-
(529)
-
-
-
1,833,114
10,749
(529)
-
8,233
7,362
-
-
20,049
20,049
23,220
10,867
89,780
-
-
-
-
-
-
-
-
-
-
LONG-TERM
BENEFITS
Share-
Based
Payments
Options
$
6,717
19,902
-
11,941
-
Total
$
122,990
111,330
84,862
88,591
28,288
42,370
336,890
96,627
79,444
-
737,650
509,775
169,739
257,001
2,190,115
(1) Jerel Banks held the position of Non Executive director from July 1 2017 to October 12, 2017. He was then appointed Non Executive Chairman,
a role he held to June 15, 2018. On the June 15, 2018 he was appointed executive Chairman and CEO, on June 26, 2018.
(2) Peter Francis held the position of Chairman from July 1, 2017 to October 12, 2017. At this date he assumed the role of non-executive director.
(3) Megan Boston held the position of non-executive director from July 1, 2017 to June 15, 2018.
At this date she was appointed executive director and Head of Operations Australia.
(4) John Chiplin resigned as a director on October 23, 2017.
(5) Georgina Kilfoil appointed as Chief Development Officer on February 9, 2018.
(6) Greg West resigned as CEO and Company Secretary June 15, 2018.
(7) David Suhy resigned as CSO on June 22, 2018.
(8) Cliff Holloway resigned as Chief Business and Operations Officer on January 7, 2018.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
38
SHORT-TERM
BENEFITS
POST
EMPLOYMENT
BENEFITS
Cash Salary
And Fees
$
Cash
Bonus
$
Non-
Monetary
$
Super-
annuation
$
Employee
Leave
$
LONG-TERM
BENEFITS
Share-Based
Payments
Options
$
Total
$
113,328
52,130
68,160
76,650
84,863
51,873
400,000
352,789
283,077
1,482,870
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9,231)
(12,019)
(3,846)
11,400
-
6,475
-
-
-
19,616
19,516
19,616
-
-
-
-
-
-
92,265
219,993
-
-
57,159
57,159
40,101
52,130
74,635
133,809
142,022
91,974
19,328
142,527
572,240
-
-
26,775
387,061
-
298,847
(25,096)
76,623
19,328
418,986
1,972,711
2017 DIRECTORS
Peter Francis
Jerel Banks
Megan Boston
Kevin Buchi
John Chiplin
Iain Ross*
OTHER KEY
MANAGEMENT
PERSONNEL
Greg West
David Suhy
Cliff Holloway
*Iain Ross resigned as a director on September 30, 2016
The proportion of remuneration at risk and the fixed proportion are as follows:
FIXED REMUNERATION
AT RISK - STI (BONUS)
AT RISK - LTI (OPTIONS)
2018
2017
2018
2017
2018
2017
100%
83%
100%
87%
100%
-%
87%
87%
84%
100%
-%
57%
100%
57%
60%
56%
-%
72%
93%
100%
-%
-%
-
-%
-%
-%
-%
%
-%
-%
-%
-%
-
-%
-%
-%
-%
-%
-%
-%
-%
17%
-
13%
-%
-%
13%
13%
16%
-%
-%
43%
-
43%
40%
44%
-%
28%
7%
-%
DIRECTORS
Jerel Banks
Peter Francis
Megan Boston
Kevin Buchi
John Chiplin
Iain Ross
OTHER KEY
MANAGEMENT
PERSONNEL
Georgina Kilfoil
Greg West
David Suhy
Cliff Holloway
Bonus
In 2018 a cash bonus was paid to David Suhy. No cash bonus was paid in 2017.
EMPLOYEE
INCLUDED IN
REMUNERATION ($)
PERCENTAGE VESTED
DURING THE YEAR
PERCENTAGE FORFEITED
DURING THE YEAR
David Suhy
10,749
100%
-
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
39
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name
Dr Jerel Banks
Title
Executive Chairman and CEO
Agreement commenced
June 15, 2018
Name
Ms Megan Boston
Title
Executive Director Head of Australian Operations
Agreement commenced
June 15, 2018
Name
Ms Georgina Kilfoil
Title
Chief Development Officer
Agreement commenced
September 29, 2014
Detail
Dr Banks was appointed Executive Chairman on June
15, 2018 and CEO on June 26, 2018 with a base salary
of US$400,000 plus superannuation. Dr Banks will be
granted 10 million unlisted share options under the Benitec
Directors’ and Officers’ Option Plan 2018 subject to
shareholder approval. Each year Dr Banks can receive up to
a 50% bonus on his base salary, to be reviewed annually by
the Nomination and Remuneration Committee. Dr Banks
appointment as CEO may be terminated with the Company
giving six months’ notice or by Dr Banks giving six months
notice. The Company may elect to pay Dr Banks 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.
Detail
Ms Boston was appointed Executive Director – Head of
Australian Operations (June 15, 2018) with a base salary of
$180,000 plus superannuation. Ms Boston’s appointment
may be terminated with the Company giving six months’
notice or by Ms Boston giving six months’ notice. The
Company may elect to pay Ms Boston an equal amount to
that proportion of her salary equivalent to six months pay in
lieu of notice, together with any outstanding entitlements
due to her.
Detail
Ms Kilfoil joined Benitec on September 29, 2014 and was
appointed as Chief Development officer on February 9, 2018
with the base salary of $275,000 plus superannuation.
Ms Kilfoil’s appointment may be terminated with the
Company giving three months’ notice or by Ms Kilfoil giving
three months’ notice. The Company may elect to pay
Ms Kilfoil an equal amount to that proportion of her salary
equivalent to three month’s pay in lieu of notice, together
with any outstanding entitlements due to her.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
40
Name
Mr Greg West (resigned June 15, 2018)
Title
CEO and Company Secretary
Agreement commenced
August 10, 2016
(previously CFO and Company Secretary
from August 23, 2011)
Name
Dr David Suhy (resigned June 22, 2018)
Title
Chief Scientific Officer
Agreement commenced
August 28, 2012
Name
Dr Cliff Holloway (resigned January 7, 2018)
Title
Chief Business and Operating Officer
Agreement commenced
August 24, 2016
Detail
CEO role – Mr West was appointed CEO on August 10,
2016 with a base salary of $400,000 plus superannuation.
Each year Mr West can receive up to a 50% bonus on his
base salary, to be reviewed annually by the Nomination and
Remuneration Committee. Greg’s appointment with the
Company may be terminated with the Company giving six
months’ notice or by Greg giving six months’ notice. The
Company may elect to pay Greg 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. Mr West was appointed interim CEO in October 2015
as well as maintaining his role as Company Secretary which
he had held since August 23, 2011.
Detail
Base salary for the year ended June 30, 2017 of $US307,260
plus superannuation, to be reviewed annually by the
Nomination and Remuneration Committee. David’s
appointment with the Company may be terminated
without notice.
Detail
Base salary for the year ended June 30, 2018 of $300,000
plus superannuation, to be reviewed annually by the
Nomination and Remuneration Committee. Cliff’s
appointment with the Company may be terminated with
six months’ notice.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
41
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year ended
June 30, 2018.
Options
Details of options over ordinary shares granted, vested and lapsed for directors and other key management personnel as part
of compensation during the year ended June 30, 2018 are set out below:
Name
Number
of options
granted
Grant
date
Value per
options at
grant date
Value of
options at
grant date
Number
vested/
(forfeited)
Exercise
price
Vested and
first exercise
date
Last
exercise
date
Georgina Kilfoil
800,000 17/07/2017
$0.0909
$72,720
David Suhy
1,500,000 17/07/2017
$0.0909
$136,350
-
-
$0.1960
17/07/2018 16/07/2022
$0.1960
17/07/2018 30/06/2019
Greg West
2,000,000 17/07/2017
$0.0909
$181,800 (1,333,334)
$0.1960
17/07/2018 15/09/2018
Jerel Banks
10,000,000 26/06/2018
$0.1003
$1,003,000
-
$0.2278
26/06/2019 26/06/2021
Options granted carry no dividend or voting rights. Options vest over three years with vesting based on remaining in service.
None of the options were exercised in FY2018. There are no other performance criteria.
Consequences of performance on shareholder wealth
The earnings of the Group for the five years to June 30, 2018 are summarised below:
Loss after income tax
(7,039)
(11,509)
(24,778)
(5,690)
(11,640)
2014
$’000
2015
$’000
2016
$’000
2017
$’000
2018
$’000
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
2014
0.38
(7.78)
2015
1.15
(9.96)
2016
0.69
(17.41)
2017
0.097
(3.24)
2018
0.135
(5.53)
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
42
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key management
personnel of the Group, including their personally related parties, is set out below:
Balance
at July
1, 2017
Received
as part of
remuneration
Exercise of
options
Purchased
Disposals/
other
-
424,174
-
861,539
200,000
1,485,713
-
-
-
-
-
-
-
-
-
-
-
-
-
212,087
100,000
586,671
-
898,758
-
-
-
-
-
-
Balance
at June
30, 2018
-
636,261
100,000
1,448,210
200,000
2,384,471
Ordinary Shares
Jerel Banks
Peter Francis
Megan Boston
Kevin Buchi
John Chiplin
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other members
of key management personnel of the Group, including their personally related parties, is set out below:
Balance
at July
1, 2017
Granted
Exercised
Expired/
forfeited/
other
Balance
at June
30, 2018
Vested and
exercisable
Vested
and not
exercisable
Options over
ordinary shares
Jerel Banks
Peter Francis
Kevin Buchi
John Chiplin (1)
-
10,000,000
1,400,000
1,240,000
840,000
-
-
-
Georgina Kilfoil
600,000
800,000
Greg West (2)
David Suhy (3)
3,080,000
2,000,000
1,200,000
1,500,000
8,360,000 14,300,000
(1) John Chiplin resigned as a director on October 23, 2017.
-
-
-
-
-
-
-
-
-
-
10,000,000
-
1,400,000
1,400,000
(400,000)
840,000
840,000
(840,000)
-
-
-
1,400,000
600,000
(2,066,668)
3,013,332
1,613,333
(400,000)
2,300,000
800,000
(3,706,668)
18,953,332
5,253,333
-
-
-
-
-
-
-
-
(2) Greg West resigned as CEO and Company Secretary on June 15, 2018. Mr West has 3 months to exercise options that had vested, including options,
which will vest within the 3 months period post his resignation.
(3) David Suhy resigned as Chief Scientific fic Officer on June 22, 2018. His options terms were varied, and the options continue until their normal expiry date.
Other transactions with key management personnel and their related parties
Legal services at normal commercial rates totalling $8,212 at the end of the period (twelve months ended June 30, 2017: $191,050)
were provided by Francis Abourizk Lightowlers, a law firm in which Peter Francis is a partner and has a beneficial interest.
Consulting fees of Nil in current period (2017:$32,133) were paid to Newstar Ventures Ltd, a corporation in which John Chiplin
is a Director and has a beneficial interest.
Annabel West, the wife of Greg West, our former Chief Executive Officer, was employed as a part-time clerical and
administrative assistant. Annabel West was paid wages and superannuation totalling $42,278 for this period (twelve months
ended June 30, 2017:$36,248)
This concludes the remuneration report, which has been audited.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
43
Shares Under Option
Unissued ordinary shares of the Company under option at the
date of this report are as follows. The numbers in this table are
as at the date of this report, August 29, 2018.
GRANT DATE
EXPIRY DATE
EXERCISE PRICE NUMBER UNDER OPTION
February 28, 2014 ***
February 28, 2019
May 15, 2014 **
May 15, 2019
December 17, 2014 **
December 17, 2019
May 6, 2015 **
May 6, 2020
$1.260
$1.500
$1.250
$1.250
August 20, 2015 ****
August 21, 2020
$USD 0.275
November 12, 2015*
November 12, 2020
August 9, 2016**
August 9, 2021
July 17, 2017**
July 17, 2022
April 11, 2018**
April 11, 2023
June 26, 2018**
June 26, 2023
* Non-Executive Directors options
** ESOP options
*** Unlisted options
$0.77
$0.1665
$0.196
$0.298
$0.23
13,246,203
90,000
2,334,000
650,000
11,498,000
2,240,000
1,466,666
5,716,666
650,000
10,000,000
47,891,535
**** Warrants. These options represent 574,900 unlisted warrants. Each warrant is convertible into 20 shares.
The exercise price of each warrant is convertible on the payment of $USD5.50 ($USD 0.275 per share).
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
44
Shares issued on the exercise of options
Non-audit services
No options were exercised and converted during the year.
Indemnity and insurance of officers
The Company has indemnified the directors and executives
of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally
liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in
respect of a contract to insure the directors and executives
of the Company against a liability to the extent permitted
by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the
amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the
financial year, indemnified or agreed to indemnify the
auditor of the Company or any related entity against
a liability incurred by the auditor.
During the financial year, the Company has not paid a
premium in respect of a contract to insure the auditor of
the Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the
Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to 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 part of
those proceedings.
Details of the amounts paid or payable to the auditor for
non-audit services provided during the financial year by the
auditor are outlined in note 20 to the financial statements.
The directors are satisfied that the provision of non-audit
services during the financial year, by the auditor (or by
another person or firm on the auditor’s behalf), is compatible
with the general standard of independence for auditors
imposed by the Corporations Act 2001.
The directors are of the opinion that the services as
disclosed in note 20 to the financial statements do
not compromise the external auditor’s independence
requirements of the Corporations Act 2001 for the
following reasons:
•
•
all non-audit services have been reviewed and approved
to ensure that they do not impact the integrity and
objectivity of the auditor;
none of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by
the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own work,
acting in a management or decision-making capacity for
the Company, acting as advocate for the Company or
jointly sharing economic risks and rewards; and
• all services have been pre-approved by the audit
committee.
Officers of the Company who are former
partners of Grant Thornton Audit Pty Ltd
There are no officers of the Company who are former
partners of Grant Thornton Audit Pty Ltd.
Rounding of amounts
The Parent entity has applied the relief available to it under
ASIC Corporations (Rounding in Financial/Directors’
Reports)instrument 2016/191 and accordingly amounts in
the financial statements and Directors’ Report have been
rounded off to the nearest $1,000, or in certain cases, to the
nearest dollars.
BENITEC BIOPHARMA LIMITED
DIRECTORS’ REPORT FOR THE YEAR ENDED JUNE 30, 2018
45
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 49.
Auditor
Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Jerel Banks
Executive Chairman
August 29, 2018
Signed in accordance with a resolution of the directors:
FINANCIAL
STATEMENTS
For the year ended June 30, 2018
48 Auditor’s Independence Declaration
50 Consolidated Financial Statements
55 Notes to the Consolidated Financial Statements
80 Directors’ Declaration
82 Independent Auditor’s Report to the
Members of Benitec Biopharma Limited
86 Shareholder Information
89 Corporate Directory
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
48
Auditor’s
Independence
Declaration
For the year ended June 30, 2018
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
49
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Benitec Biopharma Limited
I In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Benitec
Biopharma Limited for the year ended 30 June 2018, I declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
L M Worsley
Partner – Audit & Assurance
Sydney, 29 August 2018
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
50
Consolidated
Financial
Statements
For the year ended June 30, 2018
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
51
Consolidated statement of profit or loss and other comprehensive income
For the year ended June 30, 2018
Twelve months ended
NOTES
JUNE 2018
$’000
JUNE 2017
$’000
REVENUE
Revenue
Other income
Total Income
EXPENSES
Royalties and licence fees
Research and development
Employee benefits expense
Share-based expense
Travel related costs
Consultants costs
Occupancy costs
Depreciation
Corporate expenses
Foreign exchange realized loss
Foreign exchange unrealized loss
Change in market value of listed investment
Loss on disposal of fixed assets
Total Expenses
LOSS BEFORE INCOME TAX
Loss before income tax
Income tax
Loss after income tax for the period attributable
to the owners of Benitec Biopharma Limited
OTHER COMPREHENSIVE INCOME
Foreign currency translation loss
Total comprehensive loss for the period attributable
to the owners of Benitec Biopharma Limited
Basic loss for the twelve months, cents per share
Diluted loss for the twelve months, cents per share
4a
4b
5
5
5
6
17
28
28
620
4,087
4,707
(451)
(6,890)
(5,094)
(434)
(468)
(783)
(587)
(194)
(1,360)
(39)
(5)
(41)
(1)
586
10,507
11,093
(272)
(6,925)
(5,015)
(386)
(629)
(976)
(550)
(217)
(1,540)
(98)
(168)
-
(7)
(16,347)
(16,783)
(11,640)
-
(11,640)
(63)
(11,703)
(5.53)
(5.53)
(5,690)
-
(5,690)
34
(5,656)
(3.24)
(3.24)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
52
Consolidated statement of financial position
For the year ended June 30, 2018
NOTES
JUNE 2018
$’000
JUNE 2017
$’000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Other financial assets
Trade and other receivables
Other assets
Total Current Assets
NON-CURRENT ASSETS
Deposits
Plant and equipment
Total Non-Current Assets
Total Assets
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
Total Current Liabilities
NON-CURRENT LIABILITIES
Provisions
Total Non-Current Liabilities
Total Liabilities
NET ASSETS
Total Net Assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total Equity
7
8
9
10
11
12
13
14
15
16
17
16,085
130
4,255
425
20,895
125
319
444
17,375
100
4,406
281
22,162
59
445
504
21,339
22,666
2,376
171
2,547
48
48
2,595
919
206
1,125
35
35
1,160
18,744
21,506
164,087
1,492
(146,835)
18,744
155,580
1,674
(135,748)
21,506
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
53
Consolidated statement of changes in equity
For the year ended June 30, 2018
ISSUED
CAPITAL
$’000
RESERVES
ACCUMULATED
LOSSES
$’000
$’000
TOTAL
EQUITY
$’000
BALANCE AT JUNE 30, 2016
147,641
Loss for the period
OTHER COMPREHENSIVE INCOME
Foreign exchange translation reserve
Total comprehensive income
-
-
-
Contributions of equity, net of transaction costs
7,939
Share based payments
Transfer of expired share based payments
At June 30, 2017
-
-
155,580
BALANCE AT JUNE 30, 2017
155,580
Loss for the period
OTHER COMPREHENSIVE INCOME
Foreign exchange translation reserve
Total comprehensive income
-
-
-
Contributions of equity, net of transaction costs
8,507
Share based payments
Transfer of expired share based payments
At June 30, 2018
-
-
164,087
2,565
-
34
34
-
386
(1,311)
1,674
1,674
-
(63)
(63)
-
434
(553)
1,492
(131,369)
(5,690)
-
(5,690)
-
-
1,311
18,837
(5,690)
34
(5,656)
7,939
386
-
(135,748)
21,506
(135,748)
(11,640)
-
(11,640)
-
-
553
(146,835)
21,506
(11,640)
(63)
(11,703)
8,507
434
-
18,744
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
54
Consolidated statement of cash flows
For the year ended June 30, 2018
NOTES
JUNE 2018
$’000
JUNE 2017
$’000
27
12
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Interest received
Government grants
Receipts of CRO prepayment
Payments to suppliers and employees
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
Proceeds from disposal of plant and equipment
Security deposits
Clinical trial deposit
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
IPO and share issue transaction cost
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of the period
237
246
4,112
109
(14,498)
(9,794)
(83)
2
-
(66)
(147)
8,820
(313)
8,507
(1,434)
17,375
144
16,085
333
242
6,274
791
(15,944)
(8,304)
(171)
-
(131)
-
(302)
8,072
(133)
7,939
(667)
18,230
(188)
17,375
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
55
Notes to the
Consolidated
Financial
Statements
For the year ended June 30, 2018
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
56
1. Significant
accounting policies
The principal accounting policies adopted in the
preparation of the financial statements are set out
below. These policies have been consistently applied
to all the years presented, unless otherwise stated.
a. Basis of preparation
These general purpose financial statements have
been prepared in accordance with Australian
Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board (‘AASB’)
and the Corporations Act 2001, as appropriate for
for-profit oriented entities. These financial statements
also comply with International Financial Reporting
Standards as issued by the International Accounting
Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under
the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires
the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the
process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates
are significant to the financial statements, are
disclosed in note 2.
b. New, revised or amending Accounting
Standards and Interpretations adopted
In the current year the Group has adopted all of the
new, revised or amended Accounting Standards and
interpretation issued by the Australian Accounting
Standards Board (AASB) that were mandatory for
current financial year.
c. New Accounting Standards and
Interpretations not yet mandatory
or early adopted
Certain new accounting standards and interpretations
AASB 9 Financial Instruments
Addresses the classification, measurement and
derecognition of financial assets and financial liabilities
and introduces new rules for hedge accounting. In
December 2014, the AASB made further changes
to the classification and measurement rules and
also introduced a new impairment model. These
latest amendments now complete the new financial
instruments standard.
• Impact - Based on the entity’s preliminary assessment,
the Standard will not have an impact on the
transactions and balances recognised in the financial
statements when it is first adopted for the year ending
June 30, 2019 based on the financial assets and
liabilities held by the group at the date of this report.
• Mandatory application date / Date of adoption
by group - Must be applied for financial years
commencing on or after January 1, 2018.
Expected date of adoption by the group: July 1, 2018.
AASB 15 Revenue from Contracts with Customers
The AASB has issued a new standard for the
recognition of revenue. This will replace AASB 118
which covers contracts for goods and services. The
new standard is based on the principle that revenue is
recognised when control of a good or service transfers
to a customer; so the notion of control replaces the
existing notion of risks and rewards.
• Impact - Based on the entity’s preliminary assessment,
in relation to our existing contracts at June 30, 2018,
the Standard will not have a material impact on the
transactions and balances recognised in the financial
statements when it is first adopted for the year ending
June 30, 2019 because the Company does not yet
have material revenue.
Subsequent to year end, as announced to the market
via the ASX on July 9, 2018, the Company entered into
an agreement with Axovant Sciences. In accordance
with the agreement, US$10m (AUD$13.5m) was
received on July 19, 2018 and further funds will follow
over the coming years. Benitec will undertake a
detailed review of this contract to determine the
exact impact of applying the new revenue recognition
standard to this contract.
The standard permits a modified retrospective
approach for the adoption. Under this approach,
entities will recognise transitional adjustments in
have been published that are not mandatory for June
retained earnings on the date of initial application
30, 2018 reporting periods and have not been early
(eg. July 1, 2017), ie without restating the comparative
adopted by the group. The group’s assessment of the
period. They will only need to apply the new rules to
impact of these new standards and interpretations is
contracts that are not completed as of the date of
set out below.
initial application.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
57
• Mandatory application date / Date of adoption by
group - commencing on or after January 1, 2018.
Expected date of adoption by the group: July 1, 2018.
AASB 16 Leases
The AASB has issued a new standard for the
recognition of leases. This will replace AASB 117:
Leases. The new standard introduces a single lessee
accounting model that no longer requires leases to be
classified as operating or financing.
Other major changes include, the recognition of a
right-to-use asset and liability, depreciation of right-
to-use assets in line with AASB 116: Property Plant and
Equipment, variable lease payments that depend on
an index or rate are included in the initial measurement
of lease liability, option for lessee to not separate non-
lease components and account for all components as
a lease, and additional disclosure requirements.
• Impact - The entity has undertaken a detailed review
and has concluded that there will be no material
impact on its financial position on the transactions and
balances recognised in the financial statements when
it is first adopted for the year ending June 30, 2020
due to the immaterial size of leases entered into by the
Company. The Company’s only lease is the lease on its
head office and research and development facilities.
Commitments are set out in note 21.
• Mandatory application date / Date of adoption
by group - Must be applied for financial years
commencing on or after January 1, 2019.
Expected date of adoption by the group: July 1, 2019.
There are no other standards that are not yet effective
and that would be expected to have a material impact
on the entity in the current or future reporting periods
and on foreseeable future transactions.
d. 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 $11,640m
(2017: $5.690m) and the cash and cash equivalents
balance of $16.085m (2017: $17.375m). The directors
have recognised the capital raisings in the last 3
years, performed a review of the cash flow forecasts,
considered the cash flow needs of the Group, and
believe that there will be sufficient cash to maintain
the going concern status of the Group.
We anticipate that we will continue to incur losses
for at least the next several years. We expect that
our research and development and general and
administrative expenses will continue at a similar rate.
The financial report does not contain any adjustments
to the amounts or classifications of recorded assets or
liabilities that might be necessary if the Group does
not continue as a going concern.
The financial statements take no account of the
consequences, if any, of the effects of unsuccessful
product development or commercialisation, nor of the
inability of the Group to obtain adequate funding in
the future.
e. Parent entity information
In accordance with the Corporations Act 2001, these
financial statements present the results of the Group
only. Supplementary information about the parent
entity is disclosed in note 24.
f.
Principles of consolidation
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of Benitec
Biopharma Limited (‘Company’ or ‘parent entity’) as at
June 30, 2018 and the results of all subsidiaries for the
year then ended. Benitec Biopharma Limited and its
subsidiaries together are referred to in these financial
statements as the ‘Group’.
Subsidiaries are all those entities over which the Group
has control. The Group controls an entity when it is
exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect
those returns through its power to direct the activities
of the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They
are de-consolidated from the date that control ceases.
The Company’s 100% owned subsidiary, Tacere
Therapeutics, Inc. has a 31 December year end. The
Company is reviewing the appropriate time to align
the subsidiary year end to the parent’s year end. For
consolidation purposes Tacere prepares financial
statements for the 12 month period ended 30 June
that are used to consolidate into the group accounts.
Intercompany transactions, balances and unrealised
gains on transactions between entities in the Group
are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of the
impairment of the asset transferred. Accounting
policies of subsidiaries have been changed where
necessary to ensure consistency with the policies
adopted by the Group.
The acquisition of subsidiaries is accounted for using
the acquisition method of accounting. A change
in ownership interest, without the loss of control, is
accounted for as an equity transaction, where the
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
58
difference between the consideration transferred and
i.
Revenue recognition
the book value of the share of the non-controlling
interest acquired is recognised directly in equity
attributable to the parent.
Revenue is recognised when it is probable that
the economic benefit will flow to the Group and
the revenue can be reliably measured. Revenue
Where the Group loses control over a subsidiary, it
is measured at the fair value of the consideration
derecognises the assets including goodwill, liabilities
received or receivable.
and non-controlling interest in the subsidiary together
with any cumulative translation differences recognised
in equity. The Group recognises the fair value of
the consideration received and the fair value of any
investment retained together with any gain or loss in
profit or loss.
g. Operating segments
Operating segments are presented using the
‘management approach’, where the information
presented is on the same basis as the internal reports
provided to the Chief Operating Decision Makers
(‘CODM’). The CODM is responsible for the allocation
of resources to operating segments and assessing
their performance.
h. Foreign currency translation
The financial statements are presented in Australian
Licensing revenue and royalties
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
Interest revenue is recognised as interest accrues
using the effective interest method. This is a method
of calculating the amortised cost of a financial asset
and allocating the interest income over the relevant
period using the effective interest rate, which is the
rate that exactly discounts estimated future cash
receipts through the expected life of the financial
asset to the net carrying amount of the financial asset.
dollars, which is Benitec Biopharma Limited’s
j. Government research
functional and presentation currency.
and development grants
Foreign currency transactions
Foreign currency transactions are translated into
Australian dollars using the exchange rates prevailing
at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such
transactions and from the translation at financial year-
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
end exchange rates of monetary assets and liabilities
are credited to deferred income at fair value and are
denominated in foreign currencies are recognised in
credited to income over the expected useful life of the
profit or loss.
Foreign operations
The assets and liabilities of foreign operations
are translated into Australian dollars using the
exchange rates at the reporting date. The revenues
and expenses of foreign operations are translated
into Australian dollars using the average exchange
rates, which approximate the rates at the dates of
the transactions, for the period. All resulting foreign
exchange differences are recognised in other
asset on a straight-line basis.
Grant income is generated through the Australian
federal government’s Research and Development
Tax Incentive program, under which the government
provides a cash refund for the 43.5% (2017 43.5%)
of eligible research and development expenditures.
Grants are recorded when a reliable estimate can be
made. In the twelve months ended June 30, 2018 the
Company estimated the grant income that will be
receivable following the lodgement of the 2018 tax
comprehensive income through the foreign currency
return. Previously the grant income was only taken
reserve in equity. The foreign currency reserve is
up on the lodgement of the previous year’s tax return,
recognised in profit or loss when the foreign operation
which was the time at which it was considered a
or net investment is disposed of.
reliable estimate could be made.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
59
k.
Income tax
The income tax expense or benefit for the period is the
tax payable on that period’s taxable income based on
the applicable income tax rate for each jurisdiction,
adjusted by the changes in deferred tax assets and
liabilities attributable to temporary differences,
unused tax losses and the adjustment recognised for
prior periods, where applicable.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to be
applied when the assets are recovered, or liabilities are
settled, based on those tax rates that are enacted or
substantively enacted, except for:
•
•
When the deferred income tax asset or liability
arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business
combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated
with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be
controlled, and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised
deferred tax assets are reviewed at each reporting
date. Deferred tax assets recognised are reduced to
the extent that it is no longer probable that future
taxable profits will be available for the carrying amount
to be recovered. Previously unrecognised deferred tax
assets are recognised to the extent that it is probable
that there are future taxable profits available to recover
the asset.
Deferred tax assets and liabilities are offset only where
there is a legally enforceable right to offset current tax
assets against current tax liabilities and deferred tax
assets against deferred tax liabilities; and they relate to
the same taxable authority on either the same taxable
entity or different taxable entities which intend to
settle simultaneously.
Benitec Biopharma Limited (the ‘head entity’) and its
wholly-owned Australian subsidiaries have formed
an income tax consolidated group under the tax
consolidation regime. The head entity and each
subsidiary in the tax consolidated group continue
to account for their own current and deferred tax
amounts. The tax consolidated group has applied
the ‘separate taxpayer within group’ approach in
determining the appropriate amount of taxes to
allocate to members of the tax consolidated group.
No tax sharing agreement has been entered between
entities in the tax consolidated group.
In addition to its own current and deferred tax
amounts, the head entity also recognises the current
tax liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax credits
assumed from each subsidiary in the tax consolidated
group.
l.
Current and non-current classification
Assets and liabilities are presented in the statement of
financial position based on current and non-current
classification.
An asset is classified as current when: it is either
expected to be realised or intended to be sold
or consumed in normal operating cycle; it is held
primarily for the purpose of trading; it is expected to be
realised within 12 months after the reporting period; or
the asset is cash or cash equivalent unless restricted
from being exchanged or used to settle a liability for
at least 12 months after the reporting period. All other
assets are classified as non-current.
A liability is classified as current when: it is either
expected to be settled in normal operating cycle; it is
held primarily for the purpose of trading; it is due to be
settled within 12 months after the reporting period; or
there is no unconditional right to defer the settlement
of the liability for at least 12 months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified
as non-current.
m. Cash and cash equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short-term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
n.
Trade and other receivables
Other receivables are recognised at amortised cost,
less any provision for impairment.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
60
o.
Investments and other financial assets
Investments and other financial assets are initially
measured at fair value. Transaction costs are included
as part of the initial measurement, except for financial
assets at fair value through profit or loss. They are
subsequently measured at either amortised cost or fair
value depending on their classification. Classification
is determined based on the purpose of the acquisition
and subsequent reclassification to other categories is
restricted.
Financial assets are derecognised when the rights
to receive cash flows from the financial assets have
expired or have been transferred and the Group has
transferred substantially all the risks and rewards of
ownership.
Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that
are not quoted in an active market. They are carried
at amortised cost using the effective interest rate
method. Gains and losses are recognised in profit or
loss when the asset is derecognised or impaired.
Impairment of financial assets
The Group assesses at the end of each reporting
period whether there is any objective evidence that a
financial asset or group of financial assets is impaired.
Objective evidence includes significant financial
difficulty of the issuer or obligor; a breach of contract
such as default or delinquency in payments; the lender
granting to a borrower concessions due to economic
or legal reasons that the lender would not otherwise
do; it becomes probable that the borrower will enter
bankruptcy or other financial reorganisation; the
disappearance of an active market for the financial
asset; or observable data indicating that there is a
measurable decrease in estimated future cash flows.
The amount of the impairment allowance for loans and
receivables carried at amortised cost is the difference
between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the
original effective interest rate. If there is a reversal of
impairment, the reversal cannot exceed the amortised
cost that would have been recognised had the impairment
not been made and is reversed to profit or loss.
p. Plant and equipment
Plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable
to the acquisition of the items.
Depreciation is calculated on a straight-line basis to
write off the net cost of each item of property, plant
and equipment (excluding land) over their expected
useful lives as follows:
Leasehold improvements
Plant and equipment
period of the lease term
3-7 years
The residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate, at
each reporting date.
An item of plant and equipment is derecognised upon
disposal or when there is no future economic benefit
to the Group. Gains and losses between the carrying
amount and the disposal proceeds are taken to profit
or loss.
q.
Leases
The determination of whether an arrangement is
or contains a lease is based on the substance of the
arrangement and requires an assessment of whether
the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement
conveys a right to use the asset.
r.
Impairment of non-financial assets
Other intangible assets that have an indefinite useful
life are not subject to amortisation and are tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that they might
be impaired. Other non-financial assets are reviewed
for impairment whenever events or changes in
circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair
value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated
future cash flows relating to the asset using a pre-tax
discount rate specific to the asset or cash-generating
unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to
form a cash-generating unit.
s.
Trade and other payables
These amounts represent liabilities for goods and
services provided to the Group prior to the end of the
financial year and which are unpaid. Due to their short-
term nature, they are measured at amortised cost and
are not discounted. The amounts are unsecured and
are usually paid within 30 days of recognition.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
61
t.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries and other employee
benefits expected to be settled within 12 months
of the reporting date are measured at the amounts
expected to be paid when the liabilities are settled.
Other long-term employee benefits
Employee benefits not expected to be settled within
12 months of the reporting date are measured as the
present value of expected future payments to be
made in respect of services provided by employees
up to the reporting date using the projected unit
credit method. Consideration is given to expected
future wage and salary levels, experience of employee
departures and periods of service. Expected future
payments are discounted using market yields at the
reporting date on high quality corporate bonds with
terms to maturity and currency that match, as closely
as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation
plans are expensed in the period in which they are
incurred.
Share-based payments
Equity-settled share-based compensation benefits
are provided to directors and senior executives. The
plan currently in place to provide these benefits is the
Employee Share Option Plan (‘ESOP’).
Equity-settled transactions are awards of shares, or
options over shares that are provided to employees in
exchange for the rendering of services.
The cost of equity-settled transactions are measured
at fair value on grant date. Fair value is independently
determined using Black-Scholes option pricing
model that takes into account the exercise price, the
term of the option, the impact of dilution, the share
price at grant date and expected price volatility of the
underlying share, the expected dividend yield and
the risk free interest rate for the term of the option,
together with non-vesting conditions that do not
determine whether the Group receives the services
that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised
as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to
profit or loss is calculated based on the grant date fair
value of the award, the best estimate of the number of
awards that are likely to vest and the expired portion
of the vesting period. The amount recognised in
profit or loss for the period is the cumulative amount
calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in
determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective
of whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum
an expense is recognised as if the modification has not
been made. An additional expense is recognised, over
the remaining vesting period, for any modification
that increases the total fair value of the share-based
compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the
Group or employee, the failure to satisfy the condition
is treated as a cancellation. If the condition is not
within the control of the Group or employee and is
not satisfied during the vesting period, any remaining
expense for the award is recognised over the
remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as
if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new
replacement award is substituted for the cancelled
award, the cancelled and new award is treated as if
they were a modification. The dilutive effect, if any, of
outstanding options is reflected as additional share
dilution in the computation of earnings per share.
u. Fair value measurement
When an asset or liability, financial or non-financial,
is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that
would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market
participants at the measurement date; and assumes
that the transaction will take place either: in the
principal market; or in the absence of a principal
market, in the most advantageous market.
Fair value is measured using the assumptions that
market participants would use when pricing the
asset or liability, assuming they act in their economic
best interests. For non-financial assets, the fair value
measurement is based on its highest and best use.
Valuation techniques that are appropriate in the
circumstances and for which sufficient data is available
to measure fair value, are used, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
62
v.
Issued capital
x. Goods and Services Tax (‘GST’) and other
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.
Costs related to an initial offering are expensed in the
statement of profit or loss and other comprehensive
income.
w. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to the owners of Benitec Biopharma
Limited, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial
year, adjusted for bonus elements in ordinary shares
issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest and
other financing costs associated with dilutive potential
ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
similar taxes
Revenues, expenses and assets are recognised net
of the amount of associated GST, unless the GST
incurred is not recoverable from the tax authority.
In this case it is recognised as part of the cost of the
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of
the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the
tax authority is included in other receivables or other
payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing
or financing activities which are recoverable from,
or payable to the tax authority, are presented as
operating cash flows.
Commitments and contingencies are disclosed net
of the amount of GST recoverable from, or payable to,
the tax authority.
y. Rounding of amounts
The Parent entity has applied the relief available to
it under ASIC Corporations (Rounding in Financial/
Directors’ Reports) instrument 2016/191 and
accordingly amounts in the financial statements and
Directors Report have been rounded off to the nearest
$1,000, or in certain cases, to the nearest dollars.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
63
2. Critical accounting
judgements, estimates
and assumptions
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the reported amounts in
the financial statements. Management continually
evaluates its judgements and estimates in relation
to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements,
estimates and assumptions on historical experience
and on other various factors, including expectations of
future events, management believes to be reasonable
under the circumstances. The resulting accounting
judgements and estimates will seldom equal the
related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets
and liabilities (refer to the respective notes) within the
next financial year are discussed below.
Research and development expenses
Management does not consider the development
programs to be sufficiently advanced to reliably
determine the economic benefits and technical
feasibility to justify capitalisation of development
costs. These costs have been recognised as an
expense when incurred. Research and development
expenses relate primarily to the cost of conducting
clinical and pre-clinical trials. Clinical development
costs are a significant component of research and
development expenses. Estimates have been used
in determining the expense liability under certain
clinical trial contracts where services have been
performed but not yet invoiced. Generally, the costs,
and therefore estimates, associated with clinical trial
contracts are based on the number of patients, drug
administration cycles, the type of treatment and
the outcome being the length of time before actual
amounts can be determined will vary depending on
length of the patient cycles and the timing of the
invoices by the clinical trial partners.
Research and development
refundable tax offsets
The Group accounts for the federal government
research and development grant tax incentive when
a reliable estimate of the amounts receivable can
be made. In the year ended June 30, 2017 reporting
period detailed reporting systems were implemented
to allow for the first time a reliable estimate to be made
of the grant income that is expected to be received
for the current period. In determining the estimate
management reviews historical claims, Government
overseas findings enabling the claim of overseas
expenditure and the allocation of staff and overheads
costs within approved projects. Judgement is also
applied in determining the eligibility of the activities
undertaken in Australia and overseas. Grant Income
for the year ended June 30, 2018 includes an estimate
of Research and Development grant receivable for
June 30, 2018 of $3,999k. (refer Note 4b).
Share-based payment 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 by using
either the Black-Scholes model taking into account
the terms and conditions upon which the instruments
were granted. The accounting estimates and
assumptions relating to equity-settled share-based
payments would have no impact on the carrying
amounts of assets and liabilities within the next annual
reporting period but may impact profit or loss and
equity.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible
temporary differences only if the Group considers it is
probable that future taxable amounts will be available
to utilise those temporary differences and 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.
Costs of capital raising
Costs directly attributable to an equity transaction
are held in the statement of financial position until
the completion of the transaction. On completion,
the costs will be applied against issued capital. Costs
associated with abandoned or sub-optimal equity
transactions are expensed to profit or loss in the year
the transaction is determined to no longer be viable
under existing conditions.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
64
3. Operating segments
The Group had only one business segment during the period, being the global commercialisation by licensing and
partnering of and licences in biotechnology, with applications in biomedical research and human therapeutics. Business
operations are conducted in Australia. However, there are controlled entities based in the USA and United Kingdom.
The United Kingdom entity has no segment revenues, results or assets.
JUNE 2018
$’000
JUNE 2017
$’000
SEGMENT REVENUES FROM EXTERNAL CUSTOMERS
Australia
United States of America
Total
SEGMENT RESULTS
Australia
United States of America
Total
CARRYING AMOUNT OF SEGMENT ASSETS
Australia
United States of America
Total
Accounting policies
378
-
378
(11,733)
93
(11,640)
19,639
1,700
21,339
333
-
333
(5,835)
145
(5,690)
21,580
1,086
22,666
Segment revenues and expenses are directly attributable to the identified segments. 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. 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 LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
65
4. Revenue and other income
(a) REVENUE
Licensing revenue and royalties
Interest
Total
(b) OTHER INCOME
Australian Government R&D grants
Foreign exchange unrealized gain
Other
Total
2018
$’000
378
242
620
3,999
87
1
4,087
2017
$’000
333
253
586
10,507
-
-
10,507
There is no discernible seasonality in the operations of the consolidated entity.
5. Expenses
Loss before income tax includes the following specific expenses:
2018
$’000
2017
$’000
DEPRECIATION
Leasehold improvements
Plant and equipment
Total depreciation
RESEARCH AND DEVELOPMENT
Project expenses
Other IP related expenses
Total research and development
EMPLOYEE BENEFITS EXPENSE
Defined contribution superannuation expense
Employee benefits expense excluding superannuation
Total
RENTAL EXPENSE RELATING TO OPERATING LEASES
25
169
194
6,219
671
6,890
241
4,853
5,094
53
164
217
6,456
469
6,925
240
4,775
5,015
Minimum lease payments
384
376
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
66
6. Income tax benefit
INCOME TAX BENEFIT
Current tax
Aggregate tax benefit
NUMERICAL RECONCILIATION OF INCOME TAX BENEFIT
AND TAX AT THE STATUTORY RATE
Loss before income tax benefit
Tax at the statutory tax rate of 27.5% (27.5%)
TAX EFFECT AMOUNTS WHICH ARE NOT DEDUCTIBLE/
(TAXABLE) IN CALCULATING TAXABLE INCOME
R&D expenses
R&D incentive income
Legal expenses
Share-based payments
Timing differences utilised not previously recognised
Write off prepayment
Impact of foreign exchange rate differences
Tax losses not brought to account
Income tax benefit
2018
$’000
-
-
(11,640)
(3,201)
2,605
(1,124)
70
119
(196)
-
(1,727)
1,727
-
2017
$’000
-
-
(5,690)
(1,565)
2,676
(2,889)
154
106
(506)
-
2
(2,022)
2,022
-
The above potential tax benefit has not been recognised in the statement of financial position. These tax losses are
recognised only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise
those temporary differences and losses.
TAX LOSSES FOR WHICH NO DEFERRED TAX ASSET
HAS BEEN RECOGNISED - AUSTRALIA
Tax losses not recognised
Capital losses not recognised
Other deferred tax assets not recognised
Potential tax benefit of tax assets not recognised at 27.5% (27.5%)
TAX LOSSES FOR WHICH NO DEFERRED TAX ASSET
HAS BEEN RECOGNISED - US (TACERE)
Tax losses not recognised
Potential tax benefit of tax assets not recognised at 34% - US
2018
$’000
61,471
1,272
627
63,370
17,427
846
233
2017
$’000
60,382
1,272
2,776
64,430
17,718
955
324
The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised
in the statement of financial position as the recovery of this benefit is uncertain.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
67
7. Cash and cash equivalents
Cash at bank
Cash on deposit
8. Other financial assets
Market value of listed shares
Security Deposit
9. Trade and other receivables
Settlement Receivable
R&D Grant Receivable
Other
10. Current assets - other
Prepayments
11. Deposits non-current
Other
2018
$’000
9,575
6,510
16,085
2018
$’000
30
100
130
2018
$’000
-
4,121
134
4,255
2018
$’000
425
425
2018
$’000
125
125
2017
$’000
4,349
13,026
17,375
2017
$’000
-
100
100
2017
$’000
109
4,233
64
4,406
2017
$’000
281
281
2017
$’000
59
59
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
68
12. Property, plant and equipment
LEASEHOLD IMPROVEMENTS
At cost
Less: Accumulated depreciation
PLANT AND EQUIPMENT
At cost
Less: Accumulated depreciation
Reconciliations
2018
$’000
2017
$’000
79
(44)
35
975
(691)
284
319
79
(19)
60
889
(504)
385
445
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
LEASEHOLD
IMPROVEMENT
$’000
PLANT AND
EQUIPMENT
$’000
44
74
(53)
(5)
60
-
-
(25)
-
35
BALANCE AT JUNE 30, 2016
Additions
Depreciation expense
FX loss
BALANCE AT JUNE 30, 2017
Additions
Disposals
Depreciation expense
FX loss
BALANCE AT JUNE 30, 2018
13. Trade and other payables
Trade creditors
Sundry creditors and accrued expenses
Total
14. Provisions
Employee Benefits
Provision for make good
Total
462
97
(164)
(10)
385
86
(27)
(169)
9
284
2018
$’000
580
1,796
2,376
2018
$’000
146
25
171
TOTAL
$’000
506
171
(217)
(15)
445
86
(27)
(194)
9
319
2017
$’000
174
745
919
2017
$’000
179
27
206
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
69
15. Issued capital
ISSUED CAPITAL
2018
SHARES
2017
SHARES
2018
$’000
2017
$’000
Ordinary shares - fully paid
257,029,426
205,142,734
164,087
155,580
MOVEMENTS IN ORDINARY
SHARE CAPITAL
Balance
Issue of shares Highbridge
Issue of shares Nant Capital
DATE
SHARES
ISSUE
PRICE
$'000
June 30, 2017
205,142,734
155,580
May 8, 2018
15,444,020
May 31, 2018
29,305,819
0.17
0.17
0.17
2,625
4,982
1,213
(313)
Issue of shares Entitlement offer
June 4, 2018
7,136,853
Share issue transaction costs
Balance
June 30, 2018
257,029,426
164,087
The weighted average number of shares on issue
during the twelve months to June 30, 2018 was
210,454,829
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and
the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote. Benitec shares are listed on the Australian Securities Exchange and trade under the code BLT.
Benitec shares trade on Nasdaq as American Depository Receipts (ADR) under the code BNTC. Each ADR represents
20 ordinary shares.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders. Operating
globally, the Group develops speciality pharmaceutical products. The overall strategy of the Group is to continue its drug
development programs, which depends on selling assets and raising additional equity to fund the activities.
The capital risk management policy remains unchanged from the prior year.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
70
16. Reserves
Foreign currency reserve
Share-based payments reserve
Total
Foreign currency reserve
2018
$’000
(1,348)
2,840
1,492
2017
$’000
(1,285)
2,959
1,674
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
FOREIGN
CURRENCY
$’000
SHARE-BASED
PAYMENTS
$’000
BALANCE AT JUNE 30, 2016
Foreign currency translation
Share-based payments
BALANCE AT JUNE 30, 2017
Foreign currency translation
Share-based payments
BALANCE AT JUNE 30, 2018
17. Accumulated losses
(1,319)
34
-
(1,285)
(63)
(1,348)
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Transfer from share-based payment reserve for expired options
Accumulated losses at the end of the financial year
3,884
-
(925)
2,959
-
(119)
2,840
2018
$’000
(135,748)
(11,640)
553
(146,835)
TOTAL
$’000
2,565
34
(925)
1,674
(63)
(119)
1,492
2017
$’000
(131,369)
(5,690)
1,311
(135,748)
18. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
71
19. Financial instruments
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk)
and liquidity risk. 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.
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
FINANCIAL LIABILITIES
Trade and other payables
Total Financial Liabilities
Market risk
2018
$’000
16,085
4,255
20,340
2,376
2,376
2017
$’000
17,375
4,406
21,781
919
919
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
At the June 30, 2018 the Company held USD cash or cash equivalents of AUD$7.536m and trade payables and accruals of
AUD$1.630m. Net USD exposure in AUD of $5.907m. Each 1 cent movement in the AUD/USD exchange rate has a +/- effect
of AUD $82k on profit and net assets of the Company. Exposure to foreign exchange rates vary during the year depending
on the volume of overseas transactions. Nonetheless the analysis above is considered to be appropriate of the Group’s
exposure to currency risk.
Interest rate risk
The Group generates income from interest on surplus funds. At reporting date, the Group had the following assets
exposed to Australian variable interest rate risk that are not designated in cash flow hedges.
As at the reporting date, the Group had the following variable rate cash and cash equivalents outstanding:
Cash and cash equivalents
Net exposure to cash flow
interest rate risk
WEIGHTED
AVERAGE
INTEREST RATE
2%
BALANCE
2018
$’000
WEIGHTED
AVERAGE
INTEREST RATE
16,085
16,085
1%
BALANCE
2017
$’000
17,375
17,375
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
72
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount,
net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements. The Group does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and
liabilities
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables
have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
financial liabilities are required to be paid.
WEIGHTED
AVERAGE
INTEREST
RATE %
1 YR
OR LESS
$’000
BETWEEN
1-2 YRS
$’000
BETWEEN
2-5 YRS
$’000
REMAINING
CONTRACTUAL
MATURITIES
$’000
OVER
5 YRS
$’000
2018
NON-DERIVATIVES
Non-interest bearing
Trade payables
Other payables
Total non-derivatives
2017
NON-DERIVATIVES
Non-interest bearing
Trade payables
Other payables
Total non-derivatives
-%
-%
-%
-%
580
1,796
2,376
174
745
919
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
580
1,796
2,376
174
745
919
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
73
20. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Grant Thornton Audit Pty Ltd,
the auditor of the Company:
2018
$
2017
$
AUDIT SERVICES - GRANT THORNTON AUDIT PTY LTD
Audit or review of the financial statements
240,806
241,933
OTHER AUDIT SERVICES
F1 consent
F3 consent
OTHER SERVICES - GRANT THORNTON AUDIT PTY LTD
Tax compliance services
21. Commitments
LEASE COMMITMENTS - OPERATING
Committed at the reporting date but not recognised
as liabilities, payable:
Within one year
One to five years
17,990
6,660
42,617
308,073
20,800
9,561
23,150
295,444
2018
$’000
2017
$’000
219
293
512
169
89
258
Operating lease commitments includes contracted amounts for offices under non-cancellable operating leases expiring
within 3 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of
the leases are renegotiated.
Parent entity
Benitec Biopharma Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 25.
Key management personnel
Disclosures relating to key management personnel are
set out in note 23 and the remuneration report in the
directors’ report.
22. Contingent liabilities
Under the terms of the sub-license agreement with NantWorks, the Company will be required to make a milestone
payment to NantWorks of US$300k (AUD$405k) upon dosing of the last patient in the first Phase 2 clinical study using
BB-401, the EGFR antisense product. The Company would be required to pay consideration to NantWorks, upon
successful completion of subsequent regulatory and commercial milestones.
Under the terms of a commercial license agreement with Oxford Expression Technologies (OET), the Company will be
required to make a milestone payment to OET of GBP30,000 (AUD$53,543) upon entry into the clinic with BB-301.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
74
23. Related party transactions
Parent entity
Benitec Biopharma Limited is the parent entity.
Key management personnel
Disclosures relating to key management personnel are set out in June 30, 2018 Annual Report in the remuneration
report.
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set
out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
The following transactions occurred with related parties:
PAYMENT FOR OTHER EXPENSES:
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.
Annabel West, the wife of Greg West, our former Chief Executive
Officer, was employed as a part-time clerical and administrative
assistant
2018
$
1,843,334
89,780
-
257,001
2,190,115
2018
$
2017
$
1,539,777
76,623
32,537
418,986
2,067,923
2017
$
8,212
191,050
-
32,133
42,278
36,248
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
75
24. Parent entity information
Set out below is the supplementary information about the parent entity.
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Loss after income tax
Total Financial Assets
STATEMENT OF FINANCIAL POSITION
Total current assets
Total assets
Total current liabilities
Total liabilities
EQUITY
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
2018
$’000
2017
$’000
(13,566)
(13,566)
19,461
19,639
2,351
2,399
164,087
2,840
(149,687)
17,240
(5,835)
(5,835)
21,421
22,868
969
1,004
155,580
2,959
(136,675)
21,864
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at June 30, 2018 and June 30, 2017.
Contingent liabilities
The parent entity had no contingent liabilities as at June 30, 2018 (2017: nil), other than the contingent liabilities described
as belonging to the parent entity in note 22.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at June 30, 2018 and June 30, 2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 1, except for
the following:
• Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
• Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
76
25. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1:
PRINCIPAL PLACE OF
BUSINESS / COUNTRY
OF INCORPORATION
2018
%
2017
%
NAME
Benitec Limited
United Kingdom
Benitec Australia Limited (subsidiary of Benitec Limited)
Australia
Benitec, Inc.
Benitec LLC (subsidiary of Benitec Inc)
RNAi Therapeutics, Inc.
Tacere Therapeutics, Inc.*
USA
USA
USA
USA
All companies in the Group adopt the same accounting policies.
* Note Tacere year end is 31 December which was the year end date when the Company was acquired.
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
26. Events after the reporting period
On July 9, 2018, it was announced that a license was entered into with Axovant Sciences (“Axovant”) granting the
exclusive global rights for BB-301 (now named AXO-AAV-OPMD) intended for the treatment of oculopharyngeal
muscular dystrophy (OPMD), as well as entering into a fully funded research collaboration for the development of five
additional gene therapy products in neurological disorders.
Under the terms of the agreement, Benitec will receive an upfront cash payment of US$10m (AUD $13.5m) and additional
cash payments totalling US$17.5m (AUD $23.6m) upon completion of four specific near-term manufacturing, regulatory
and clinical milestones. Axovant has been granted worldwide rights to AXO-AAV-OPMD and will assume all future
development costs. The total potential value of all of the development, regulatory and commercial milestones achievable
by Benitec, of which there are eight milestones including the four near-term milestones, is US$187.5m (AUD $253.3m).
Benitec, working in partnership with Axorant over the next few years, hopes to achieves all eight milestones and thus
realise the maximum amount of US$187.5m (AUD$253.3m). There can be no assurance as to the total amount of
payments that the Company will actually receive or when they will be received. Importantly, upon commercialisation,
Benetic will retain 30% of the net profits on worldwide sales of AXO-AAV-OPMD.
No other matter or circumstance has arisen since June 30, 2018 that has significantly affected, or may significantly affect
the Group’s operations, the results of those operations, of the Group’s state of affairs in the future financial years.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
77
27. Reconciliation of loss after income tax to
net cash used in operating activities
LOSS AFTER INCOME TAX BENEFIT FOR THE YEAR
ADJUSTMENTS FOR:
Loss on disposal of fixed assets
Depreciation and amortisation
Share-based payments
Net unrealised Foreign exchange
CHANGE IN OPERATING ASSETS AND LIABILITIES:
Increase in trade and other receivables
(Decrease) in other current assets
Increase in trade and other payables
(Decrease) in R&D grant receivable
(Decrease) in employee benefits
Increase in provision
Net cash used in operating activities
28. Earnings per share
Loss after income tax attributable to the owners
of Benitec Biopharma Limited
Weighted average number of ordinary shares used
in calculating basic earnings per share
Weighted average number of ordinary shares used
in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
2018
$’000
(11,640)
1
194
434
(82)
72
(121)
1,259
112
(23)
-
2017
$’000
(5,690)
6
217
386
242
814
(182)
106
(4,233)
(3)
25
(9,794)
(8,304)
2018
$’000
(11,640)
2017
$’000
(5,690)
NUMBER
NUMBER
210,454,829
175,433,909
210,454,829
175,433,909
CENTS
(5.53)
(5.53)
CENTS
(3.24)
(3.24)
Outstanding options (see Note 29) to acquire ordinary shares are not considered dilutive for the years ended
June 30, 2018 and June 30, 2017.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
78
29. Share-based payments
Benitec Biopharma Limited Employees Share Option Plan (ESOP):
Description of plan
The Group may from time to time issue employee’s options to acquire shares in the parent at a fixed price. Each option
when exercised entitles the option holder to one share in the Parent 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.
The following table shows the number and weighted average exercise price (WAEP) of share options issued under
the ESOP:
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
2018
NUMBER
9,724,000
2018
WAEP
2017
NUMBER
0.832
12,220,000
19,950,000
0.218
2,200,000
-
(5,196,668)
24,477,332
6,527,333
-
0.426
0.416
-
(4,696,000)
9,724,000
6,497,333
2017
WAEP
1.234
0.166
-
1.164
0.832
Details of ESOP share options outstanding as at end of year:
GRANT
DATE
EXPIRY
DATE
EXERCISE
PRICE
2018 NUMBER
UNDER OPTION
2017 NUMBER
UNDER OPTION
November 17, 2012 **
November 17, 2017
November 10, 2013 *
May 18, 2018
August 22, 2013 **
August 22, 2018
May 15, 2014 **
May 15, 2019
December 17, 2014 **
December 17, 2019
May 6, 2015 **
May 6, 2020
November 12, 2015*
November 12, 2020
August 9, 2016**
August 9, 2021
July 17, 2017
April 11, 2018
July 17, 2022
April 11, 2023
June 26, 2018
June 26, 2023
$1.25
$0.62
$1.25
$1.50
$1.25
$1.25
$0.77
$0.1665
$0.1960
$0.2980
$0.2278
-
-
480,000
90,000
2,334,000
650,000
2,240,000
1,466,666
6,566,666
650,000
10,000,000
24,477,332
400,000
400,000
480,000
180,000
2,334,000
650,000
3,080,000
2,200,000
-
-
-
9,724,000
The weighted average remaining life of the options issued under the ESOP at June 30, 2018 was 3 years and 10 months
(2017: 2 years and 10 months).
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
79
For the options granted during the year, the valuation model inputs used to determine the fair value at the grant date are
as follows:
GRANT
DATE
EXPIRY
DATE
SHARE PRICE
AT GRANT
DATE
EXERCISE
PRICE
EXPECTED
VOLATILITY*
DIVIDEND
YIELD
11/07/2017
17/07/2022
$0.130
11/04/2018
11/04/2023
$0.200
26/06/2018 26/06/2023 $0.145
$0.196
$0.298
$0.228
100.01%
101.43%
100.31%
-%
-%
-%
RISK-FREE
INTEREST
RATE
FAIR VALUE
AT GRANT
DATE
2.370%
$0.0909
2.373%
$0.1407
2.303%
$0.1003
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense were $0.434m (2017: $0.386m).
* Expected volatility was determined with reference to the Benitec share price based on historical volatility.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
80
Directors’
Declaration
For the year ended June 30, 2018
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
81
In the opinion of the directors of Benitec Biopharma Limited:
• the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
• the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 1 to the financial statements;
• the attached financial statements and notes give a true and fair view of the Group’s financial position as at June 30, 2018
and of its performance for the financial year ended on that date; and
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Jerel Banks
Chairman
August 29, 2018
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
82
Independent
Auditor’s Report
to the Members of
Benitec Biopharma
Limited
For the year ended June 30, 2018
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
83
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Benitec Biopharma Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Benitec Biopharma Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss
and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
84
84
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Recognition of R&D Tax Incentive (Note 4b)
Under the research and development (R&D) tax incentive
scheme, the Group receives a 43.5% refundable tax offset
(2017: 43.5%) of eligible expenditure if its turnover is less than
$20 million per annum. A Registration of R&D Activities
Application is filed with AusIndustry in the following financial
year and, based on this filing, the Group receives the incentive
in cash. Management performed a detailed review of the
Group’s total R&D expenditure to estimate the refundable tax
offset receivable under the R&D tax incentive legislation.
This area is a key audit matter due to the size of the
receivable and because there is a degree of judgement and
interpretation of the R&D tax legislation required by
management to assess the eligibility of the R&D expenditure
under the scheme.
Our procedures included, amongst others:
obtaining, through discussions with management, an
understanding of the process to estimate the claim;
utilising an internal R&D tax specialist to:
o
review the expenditure methodology employed by
management for consistency with the R&D tax offset
rules; and
o consider the nature of the expenses against the
eligibility criteria of the R&D tax incentive scheme to
form a view about whether the expenses included in
the estimate were likely to meet the eligibility criteria;
comparing the nature of the R&D expenditure included in
the current year estimate to the prior year claim;
considering the entity's history of successful claims;
comparing the eligible expenditure used in the receivable
calculation to the expenditure recorded in the general
ledger;
inspecting copies of relevant correspondence with
AusIndustry and the ATO related to the claims; and
assessing the adequacy of the relevant disclosures in the
financial statements.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
85
85
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 34 to 42 of the Directors’ report for the year ended 30 June
2018.
In our opinion, the Remuneration Report of Benitec Biopharma Limited, for the year ended 30 June 2018 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
L M Worsley
Partner – Audit & Assurance
Sydney, 29 August 2018
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
86
Shareholder
Information
BENITEC BIOPHARMA LIMITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018
87
The shareholder information set out below was applicable as at July 30, 2018.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total Shareholders
Holding less than a marketable parcel
NUMBER OF HOLDERS OF ORDINARY SHARES
776
1,885
838
1,302
172
4,973
1,532
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
ORDINARY
SHARES HELD
% OF TOTAL
SHARES ISSUED
NANT CAPITAL LLC
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
DALIT PTY LTD
CITICORP NOMINEES PTY LIMITED
CS FOURTH NOMINEES PTY LIMITED
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