Cynata Therapeutics Limited
ACN 104 037 372
and its controlled entities
Annual report for the financial year ended
30 June 2018
Corporate directory
Cynata Therapeutics Limited
Board of Directors
Dr Paul Wotton
Dr Ross Macdonald
Dr Stewart Washer
Dr John Chiplin
Mr Peter Webse
Company Secretary
Mr Peter Webse
Non-Executive Chairman
Managing Director/Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Registered and Principal Office
Level 3, 62 Lygon Street
Carlton, Victoria 3053
Tel:
Fax:
Email: admin@cynata.com
+61 3 9824 5254
+61 3 9822 7735
Postal Address
PO Box 7165
Hawthorn North, Victoria 3122
Website
Website: www.cynata.com
Auditors
Stantons International
Level 2, 1 Walker Avenue
West Perth, Western Australia 6005
Share Registry
Automic Registry Services
Level 2, 267 St Georges Terrace
Perth, Western Australia 6000
Tel:
Fax:
+61 8 9324 2099
+61 8 9321 2337
Stock Exchange
Australian Securities Exchange
Level 40, Central Park
152-158 St Georges Terrace
Perth, Western Australia 6000
ASX Code
CYP
Cynata Therapeutics Limited
Annual report for the financial year ended
30 June 2018
Contents
Chairman’s letter….………………………………………………………………………………………………… 1
CEO letter……………………………………………………………….……………….……………………………… 3
Directors’ report……………………………………………………………………………………………………… 5
Operating and financial review………………………………………………….……………………………. 10
Remuneration report………………………………………………………………………………………………. 16
Auditor’s independence declaration………………………………………….……………………………. 23
Independent auditor’s report…………………………………………………………………………………. 24
Directors’ declaration………………………………………………………………..……………………………. 28
Consolidated statement of profit or loss and other comprehensive income…………… 29
Consolidated statement of financial position………………………………………………….…….… 30
Consolidated statement of changes in equity……………………………………………………….… 31
Consolidated statement of cash flows…………………………………………………………….…….… 32
Notes to the consolidated financial statements.…………………………………………….….…… 33
Corporate governance statement………………………………………………………………………..…. 59
Additional securities exchange information……………………………………………………………. 66
Cynata Therapeutics Limited
Dear Shareholder,
Chairman’s Letter
Welcome to this year’s Annual Report for the financial year ending 30 June 2018. This has been a
momentous year for the business, with so many milestones and achievements including the very positive
results so far from our first phase I clinical trial. These results provided us with a spring board to target
further clinical trials in additional indications and to further advance the development of our CYP-001 drug
for the treatment of graft-versus-host-disease (GvHD). It is also notable to acknowledge Cynata’s leadership
in the field as the first company in the world to conduct a clinical trial with an iPSC-derived allogeneic cell
therapy product.
The results to date from our clinical trial are very promising: no treatment-related adverse safety events
have been identified, and there are clear efficacy signals. Pleasingly, we saw an Overall Response1 in 100%
of patients at day 100 in the first cohort of patients (Cohort A) and 86% at day 28 in the second cohort
(Cohort B). Even more exciting was that a Complete Response2 was demonstrated in 50% of patients in
Cohort A at 100 days and 57% in Cohort B at 28 days.
Looking ahead
The 100-day readout for Cohort B will be reached by early September and will mark the completion of the
trial. Assuming the results continue the favourable pattern seen so far, we will look to Fujifilm to exercise
the license option to CYP-001 for the treatment of GvHD. Should Fujifilm do so, Cynata will receive an
upfront fee of US$3m, along with future milestones and royalties, and all future development and
commercialisation costs will be borne by Fujifilm.
Following the positive data from the phase I clinical trial in GvHD, particularly the positive safety profile that
emerged, we have considered the next steps in the development of the Cymerus™ technology. Perhaps
most importantly, the positive safety data collected from this trial enables us to progress the technology
platform directly to phase II trials in other indications. Following a thorough review, we have selected
critical limb ischemia (CLI) as the next indication that we will advance to a clinical trial. In preclinical studies
in CLI, Cymerus™ MSCs demonstrated improved blood flow and faster blood flow recovery compared to a
saline placebo. Planning for a Phase II clinical program has now commenced.
Regenerative medicine market
The world’s population is ageing. There were 962m people over 60 in 2017 and this is expected to reach
2.1bn by 2050 and 3.1bn by 2100. This has inevitably increased the demand for regenerative therapies,
particularly for chronic diseases of the aged. Regenerative therapies will not only help treat older patients
but are expected to relieve the burden on healthcare systems by keeping older patients healthier for longer.
There are over 2,500 regenerative medicine trials in progress and over 850 trials using MSCs and it is
estimated that over USD500bn has been invested into the sector3. This has inevitably created a significant
opportunity for regenerative medicine companies to capitalise on with new therapies that can restore and
even cure life-threatening diseases.
No other company has the technology that we have that enables the creation of an unlimited amount of
uniform MSCs from a single donor, in a single blood donation. Our proprietary Cymerus platform makes this
possible, using as starting material induced pluripotent stem cells (iPSCs) that can be developed into
virtually any cell in the human body. Our product is truly scalable, meaning our technology is consistent with
1 An improvement in the severity of GvHD by at least one grade compared to baseline
2 GvHD signs/symptoms completely resolved
3 Source: Frost and Sullivan
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Cynata Therapeutics Limited
the requirements for industrialisation of drug product manufacture. Our ability to overcome the inherent
challenges in the manufacture of MSC-based cell therapies has the ability to rapidly advance the therapies
available.
Strong set of data – paving the way for future clinical trials
We have strong preclinical data in a diverse range of diseases that provides us with a robust base from
which to expand our product portfolio. This year we made advancements in pre-clinical studies using
Cymerus™ MSCs in heart attack, asthma and diabetic ulcers. The studies are demonstrating positive results
and highlighting the effectiveness of our MSCs. Our MSCs have demonstrated the potential to restore
cardiac function after a heart attack. In asthma, a second study confirmed Cymerus MSCs produced a
significantly greater reduction of airway hyperresponsiveness compared to corticosteroid treatment and
combination therapy involving Cymerus MSCs and corticosteroids resulted in a pronounced synergistic
effect, producing marked anti-inflammatory effects in addition to the benefits seen with Cymerus™ MSC
treatment alone.
We also added new indications to the target portfolio, including coronary artery disease (CAD), sepsis,
diabetic wounds, and for Cymerus™ MSCs to be used as part of the cancer treatment, CAR-T therapy, to
ameliorate the effects of cytokine release syndrome (CRS) and other related adverse reactions to CAR-T.
Well positioned to drive product development
Whilst we are focusing our efforts on advancing two key priority targets (GvHD and CLI) we will continue to
build on the body of preclinical data we have to further strengthen our proposition and appeal to potential
development and licencing partners.
We have a supportive and key partner in Fujifilm and look forward to collaborating with them further in the
ongoing development of CYP-001 for the treatment of the devastating disease, GvHD. We have been
fortunate to work alongside Fujifilm and value their expertise, support and commitment to the regenerative
medicine sector and to developing game-changing therapies that could change the way we use stem cells as
a treatment.
The completion of our phase I trial marks a crucial moment in our Company’s history and I would like to take
this opportunity to thank our shareholders and partners for their support this year. I look forward to
sharing in another year of milestones and achievements.
Yours sincerely
Dr Paul Wotton
Chairman
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Cynata Therapeutics Limited
Dear Shareholders,
CEO Letter
It is with great pleasure that I welcome you to Cynata Therapeutics’ Annual Report for the financial year
2018. This year saw Cynata successfully achieve a number of key milestones, including completion of our
first clinical trial in GvHD, which has yielded very positive results so far, as well as the addition of new target
disease indications to our growing portfolio.
We also welcomed institutional shareholder, Fidelity International, to the register. Fidelity invested $5.2m
through a placement in May, which in addition to their on-market purchases, took their holding to 10% and
saw them become the largest shareholder of the Company. We also have significant strategic support from
Fujifilm, following their $4m investment in 2017. Our licence option agreement with Fujifilm is also set to
deliver USD$3m in an upfront payment together with a further AUD60m in milestone and royalty payments,
if exercised.
Clinical trial successes
This year, we completed patient enrolment in our world first clinical trial using induced pluripotent stem
cells (iPSCs) derived from a single blood donation and then manufactured into mesenchymal stem cells
(MSCs) using our proprietary Cymerus™ platform.
The trial was split into two patient groups; Cohort A and Cohort B. Cohort A received two infusions of CYP-
001 and Cohort B received two infusions at twice the dose of Cohort A. We have now received the six-
month follow up data from Cohort A. This data was extremely positive, with an overall survival rate of
87.5% (7 of the 8 patients) and no treatment related serious adverse events or safety concerns. The
Complete Response rate was 50%, while the Overall Response was 100%.
Patients in Cohort B have reached the 28-day analysis point, with the positive efficacy and safety data seen
in Cohort A continuing to be evident. Six of the seven patients showed an Overall Response and the
symptoms were completely resolved in four of the seven patients. It was also evident that Cohort B elicited
a faster response compared to Cohort A, which potentially is a result of the higher dose.
Completion of the trial will occur when the final patient reaches the 100-day analysis point. This will be
around early September and we will then work with the trial sites and investigators to deliver a full
comprehensive report.
Well positioned to continue to advance development of stem cell therapies
We are well positioned to continue to develop and advance stem cell therapies in new target indications.
We are working with a number of key partners including Monash University, Critical Care Research Group,
University of Sydney, Department of Neurosurgery at Brigham and Women's Hospital - Harvard Medical
School, the CRC for Cell Therapy Manufacturing, University of New South Wales and the Royal College of
Surgeons Ireland developing and advancing preclinical studies to deliver additional data to support further
clinical trials.
So far, we have received positive data in studies in critical limb ischemia (CLI), asthma, heart attack, brain
cancer and diabetic wounds and continue to advance studies in ARDS and coronary artery disease. CLI will
be our next target indication that we will advance to clinical trials. According to an analysis conducted by
Clearview Healthcare Partners, CLI represents an estimated USD1.4bn global market opportunity and we
have a strong pre-clinical data set that supports our efforts in this area.
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Cynata Therapeutics Limited
Furthermore, this year we also strengthened our intellectual property portfolio with a number of new
patents and applications. The protection of our technology is of the upmost importance to us as it is our
unique technology that provides us with the ability to manufacture MSC products at scale without recourse
to multiple donors, which is a capability that does not exist elsewhere.
FY19 Outlook
This financial year will see us complete the phase I clinical trial as the final cohort of patients reach the 100-
day analysis point.
This year we anticipate being able to commence new clinical trials. Due to the positive safety and efficacy
data achieved in the phase I clinical trial, we will be able to look to advance directly to phase II clinical trials
which we have begun planning for our next priority target indication (CLI), along with GvHD, which we
would look to advance to phase II clinical trials in partnership with Fujifilm.
We will continue to build and deliver shareholder value by focusing on advancing the product pipeline and
commercialisation opportunities and we will add further target indications where there is an opportunity.
The partnership with Fujifilm is a major advancement towards commercialisation of the platform. However,
this is for one indication only. We therefore continue to seek further commercial opportunities in our other
targeted indications. We truly have a unique platform that has the potential to bring a scalable stem cell
therapy to the market that can be productised in a similar fashion to a mass manufactured medication.
I’d once again like to thank shareholders for their continued support. I look forward to FY19 and to sharing
further progress reports on the development and commercialisation of our Cymerus™ MSC products.
Yours Sincerely,
Dr Ross Macdonald
Chief Executive Officer
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Cynata Therapeutics Limited
Directors’ report
The directors of Cynata Therapeutics Limited (“Cynata” or “the Company”) and its controlled entities
(“the Group”) submit herewith the annual report of the Group for the financial year ended 30 June
2018. In order to comply with the provisions of the Corporations Act 2001, the directors report as
follows:
Information about the directors
The names and particulars of the directors of the Group during or since the end of the financial year
are:
Name
Dr Paul Wotton
MBA, PhD
Dr Ross Macdonald
PhD (Biochemistry),
Grad Dip in Bus Admin
Dr John Chiplin
BPharm, PhD,
MRPharmS
Particulars
Chairman, joined the Board in June 2016. Dr Wotton is the Founding
President and CEO of Sigilon Inc. and Board Member. He was previously
President and CEO of Ocata Therapeutics Inc. (NASDAQ: OCAT) taking the
company through a take-over by Astellas Pharma Inc., in a US$379 million all
cash transaction. Prior to Ocata, Dr Wotton had served as President and CEO
of Anteres Pharma Inc. (NASDAQ: ATRS) since October 2008. Prior to joining
Antares, Dr Wotton was the CEO of Topigen Pharmaceuticals and prior to
Topigen, he was the Global Head of Business Development of SkyePharma
PLC. Dr Wotton has held senior level positions at Eurand International BV,
Penwest Pharmaceuticals, Abbott Laboratories and Merck, Sharp and
Dohme. Dr Wotton is a member of the board of and Governance Committee
of Vericel Corporation, a US company developing autologous cellular
therapies, a member of the board at Veloxis Pharmaceuticals A/S where he
is Chairman of the Compensation Committee and also past Chairman of the
Emerging Companies Advisory Board of BIOTEC Canada. Dr Wotton received
his PhD in pharmaceutical sciences from the University of Nottingham and
an MBA from Kingston Business School. In 2014, he was named New Jersey
EY Entrepreneur of the Year in Life Sciences.
Chief Executive Officer, joined the Board in August 2013. Dr Macdonald has
over 31 years’ experience and a track record of success in pharmaceutical
and biotechnology businesses. His career history includes positions as Vice
President of Business Development for Sinclair Pharmaceuticals Ltd (now
Sinclair IS Pharma plc), a UK-based specialty pharmaceuticals company and
Vice President, Corporate Development for Stiefel Laboratories Inc, the
largest independent dermatology company in the world and acquired by
GlaxoSmithKline in 2009 for £2.25b. Dr Macdonald has also served as CEO of
Living Cell Technologies Ltd, Vice President of Business Development of
Connetics Corporation and Vice President of Research and Development of F
H Faulding & Co Ltd. Dr Macdonald currently serves as a member of the
Investment Committee of UniSeed Management Pty Ltd.
Non-Executive Director, joined the Board in November 2014. Dr. Chiplin is
Managing Director, Newstar Ventures Ltd and has significant international
experience in the life science and technology industries. Recent transactions
that Dr. Chiplin has been instrumental in include US stemcell company
Medistem (acquired by
Intrexon), Arana Therapeutics (acquired by
Cephalon) and Domantis (acquired by GSK).
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Cynata Therapeutics Limited
Dr Chiplin is also a director of Adalta Limited (ASX: 1AD), Batu Biologics Inc.,
ScienceMedia Inc and Scancell Holdings plc (LON: SCLP, Chairman) and
Sienna Cancer Diagnostics (ASX: SDX). Dr Chiplin’s Pharmacy and Doctoral
degrees are from the University of Nottingham, UK.
Non-Executive Director, joined the Board in August 2013 and was Executive
Chairman until 28 February 2017. Dr Washer has over 25 years of CEO and
board experience in medical technology and biotech companies. He is
currently the Chairman of Emerald Clinics Ltd and Orthocell Ltd (ASX: OCC)
and Director with Zelda Therapeutics Limited (ASX: ZLD). Dr Washer was
previously a Director of AusBiotech and a Senator with Murdoch University.
Non-Executive Director, joined the Board in May 2012. Mr Webse has over
26 years’ company secretarial experience and is the managing director of
Platinum Corporate Secretariat Pty Ltd, a company specialising in providing
company secretarial, corporate governance and corporate advisory services.
Mr Webse is currently a non-executive director of Omni Market Tide Limited
(ASX: OMT).
Dr Stewart Washer
BSc (Hons), PhD
Mr Peter Webse
B.Bus, FGIA, FCIS,
FCPA, MAICD
The above-named directors held office during the whole of the financial year and since the end of the
financial year.
Directorships of other listed companies
Directorships of other listed companies held by directors in the 3 years immediately before the end of
the financial year are as follows:
Name
Paul Wotton
Stewart Washer
John Chiplin
Peter Webse
Company
Ocata Therapeutics Inc.
Vericel Corporation
Veloxis Pharmaceuticals A/S
Orthocell Limited
Zelda Therapeutics Limited
Benitec Biopharma Limited
Adalta Limited
Sienna Cancer Diagnostics Limited
Omni Market Tide Limited
Dimerix Limited
4DS Memory Limited
Period of directorship
2014-2016
Since 2015
Since 2016
Since 2014
Since 2016
Since 2010
Since May 2014
Since Jan 2016
Since Nov 2017
2012-2015
May to Dec 2015
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Directors’ shareholdings
The following table sets out each director’s relevant interest in shares, rights or options in shares or
debentures of the Company or a related body corporate as at the date of this report:
Cynata Therapeutics Limited
Directors
Paul Wotton
Ross Macdonald
Stewart Washer
John Chiplin
Peter Webse
Fully paid ordinary shares
Number
55,000
28,500
224,856
50,000
220,000
Share options
Number
2,200,000
2,700,000
2,500,000
200,000
200,000
Remuneration of key management personnel
Information about the remuneration of key management personnel is set out in the remuneration
report section of this directors’ report. The term ‘key management personnel’ refers to those persons
having authority and responsibility for planning, directing and controlling the activities of the Group,
directly or indirectly, including any director (whether executive or otherwise) of the Group.
Share options granted to directors and senior management
During and since the end of the financial year, an aggregate 2,000,000 share options were granted to
the following key management personnel:
Key management
personnel
Paul Wotton
Number of
options granted
2,000,000
Issuing entity
Cynata Therapeutics Ltd
Number of ordinary shares
held under option
2,000,000
Company Secretary
Peter Webse B.Bus, FGIA, FCIS, FCPA, MAICD
Mr Webse held the position of company secretary of Cynata Therapeutics Limited at the end of the
financial year. He joined Cynata in April 2012. Mr Webse is the Managing Director of Platinum Corporate
Secretariat Pty Ltd, a company specialising in providing company secretarial, corporate governance and
corporate advisory services. Peter acts as Company Secretary for a number of ASX listed biotech and
technology companies.
Dividends
No dividends have been paid or declared since the start of the financial year and the directors have not
recommended the payment of a dividend in respect of the financial year.
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Cynata Therapeutics Limited
Shares under option or issued on exercise of options
Details of unissued shares or interests under option as at the date of this report are:
Issuing entity
Grant date
Number of
shares under
option
Class of
shares
Exercise
price of
option
Expiry date
of options
Cynata Therapeutics Limited1
Cynata Therapeutics Limited2
Cynata Therapeutics Limited3
Cynata Therapeutics Limited4
Cynata Therapeutics Limited5
Cynata Therapeutics Limited6
Cynata Therapeutics Limited7
27 Sept 2013
5,000,000
Ordinary
$0.40
27 Sept 2018
17 July 2015
2,798,653
Ordinary
17 July 2015
118,333
Ordinary
22 Feb 2016
300,000
Ordinary
$1.00
$1.00
$0.53
17 Jul 2020
17 Jul 2020
22 Feb 2019
16 Nov 2016
800,000
Ordinary
$1.022
17 Nov 2019
7 Aug 2017
100,000
Ordinary
17 Nov 2017
2,000,000
Ordinary
$0.88
$1.50
4 Aug 2020
17 Nov 2019
1 100,000,000 unlisted options (on a pre-consolidation basis) issued to Dr Macdonald and Dr Washer following
shareholders’ approval on 27 September 2013 and were subsequently consolidated on a 1 for 20 basis.
2 Unlisted options (3,333,336) issued to institutional investors pursuant to a private placement on 17 July 2015. A
total of 534,683 options were exercised during the months of March and April 2018.
3 Unlisted options (333,333) issued to placement agent pursuant to the mandate for the private placement on 17
July 2015. A total of 100,000 options were exercised in May 2018 and 115,000 in July 2018.
4 Unlisted options (600,000) issued to external advisers on 22 February 2016 pursuant to an advisory services
agreement. 300,000 options were exercised on 28 February 2018.
5 Unlisted options issued to Dr Macdonald, Dr Wotton, Dr Chiplin and Mr Webse (200,000 each) pursuant to an
Employee Option Acquisition Plan approved at the Company’s Annual General Meeting on 16 November 2016.
6 Unlisted options (300,000) issued to a third party on 7 August 2017 for the provision of corporate advisory
services. 200,000 options lapsed on 23 January 2018.
7 Unlisted incentive options issued to Dr Wotton on 17 November 2017 pursuant to the terms of his appointment
as non-executive chairman and as approved at the 2017 Annual General Meeting.
The holders of these options do not have the right, by virtue of the option, to participate in any share
issue or interest issue of the Company or of any other body corporate or registered scheme.
There have been no options granted over unissued shares or interests of any controlled entity within
the Group during or since the end of the reporting period.
Details of shares or interests issued during or since the end of the financial year as a result of exercise of
an option are (2017: nil):
Issuing entity
Cynata Therapeutics Limited
Cynata Therapeutics Limited
Cynata Therapeutics Limited
Number of
shares issued Class of shares
Ordinary
Ordinary
Ordinary
300,000
749,683i
477,373ii
Amount paid
for shares
$0.53
$1.00
-
Amount unpaid
on shares
$nil
$nil
-
i 534,683 options were exercised by overseas institutional investors during the months of Mar and Apr 2018,
100,000 options were exercised by the USA placement agent in May 2018 and 115,000 options were exercised
by the USA placement agent in July 2018.
ii cashless exercise of 750,000 unlisted 16 Dec 2018 options by Dr Kelly in accordance with the terms and
conditions using the cashless exercise mechanism.
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Indemnification of officers and auditors
During the financial year, the Company paid a premium in respect of a contract insuring the directors of
the Company (as named above), the company secretary, and all executive officers of the Company and
of any related body corporate against a liability incurred as such a director, secretary or executive
officer 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.
Cynata Therapeutics Limited
The Company has not otherwise, during or since the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any
related body corporate against a liability incurred as such an officer or auditor.
Directors’ meetings
The following table sets out the number of directors’ meetings (including meetings of committees of
directors) held during the financial year and the number of meetings attended by each director (while
they were a director or committee member). During the financial year, 13 board meetings were held.
Directors
Paul Wotton
Ross Macdonald
Stewart Washer
Peter Webse
John Chiplin
Board of Directors
Held
13
13
13
13
13
Attended
13
13
13
13
13
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in
any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of
the Company for all or any part of those proceedings.
Non-audit services
The auditor did not perform any non-audit services during the financial year.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 23 of this annual report.
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Cynata Therapeutics Limited
Operating and financial review
Principal activities
The Group’s principal activities in the course of the financial year were the development and
commercialisation of a proprietary mesenchymal stem cell (MSC) technology for potential human
therapeutic use, which the Company has branded Cymerus™. Cynata’s Cymerus™ technology represents
an important breakthrough in the development of therapeutic stem cell products that facilitates large-
scale manufacture of MSCs from a single donor and a single donation, comparing favourably to most
other MSC technologies that require multiple donors and multiple donations. This has the potential to
revolutionise commercial manufacture of MSC based therapeutic products.
Operating results
The consolidated loss of the Group for the financial year, after accounting for an R&D refund of
$1,328,685 (2017: $1,748,874) and providing for
income tax, amounted to $4,566,134 (2017:
$4,553,536). Further discussion on the Group’s operations is provided below:
Review of operations
Key Highlights
• Outstanding safety and efficacy results were reported from the Company’s first clinical trial in
patients with graft-versus-host disease (GvHD). Patient recruitment and treatment concluded in May
2018 and analysis of the final data is ongoing.
• Following the clinical study in GvHD, the Company has developed a clear path to the next clinical
indication beyond GvHD with a focus on cardiovascular diseases and specifically on critical limb
ischaemia (CLI). Plans are being developed to commence a clinical program in this disease.
• Global asset manager Fidelity International became the Company’s largest shareholder with the
acquisition of AUD$5.19m in Cynata’s shares through a placement at a premium to the prevailing
share price. Fidelity invests A$414.5 billion across the world so it was very encouraging to see their
confidence in Cynata. With the placement and on-market purchases, Fidelity now owns around 10%
of Cynata’s shares.
• Following the Company’s successful pre-IND meeting with the US FDA in July 2017, an application to
the FDA for Orphan Drug Designation for CYP-001 for the treatment of GvHD was successful, meaning
CYP-001 is eligible for important commercial incentives.
• A pre-clinical study of Cynata’s Cymerus™ MSCs in a rodent model of diabetic wounds was very
successful and the findings are being considered as a basis for undertaking a clinical trial in patients
with diabetic foot ulcers.
• Patent portfolio strengthened with two US Patents granted to cover key aspects of the Cymerus™
stem cell technology and with the filing of further patent applications describing unique aspects of
the Company’s technology, including potential use in association with CAR-T treatment in cancer.
Key Milestones Achieved in World’s First Clinical Trial
This year, Cynata completed patient enrolment and dosing in its phase I clinical trial for the treatment of
acute steroid resistant GvHD, following the commencement of the trial in May 2017. The Phase 1 trial
was designed to include two patient groups, Cohort A and Cohort B.
Cohort A – successful interim analysis and positive data from analysis points
Eight patients with steroid-resistant acute GvHD were enrolled into Cohort A and received two infusions
of CYP-001 administered one week apart. Each dose consisted of 1 million cells per kilogram of body
weight (cells/kg), up to a maximum dose of 100 million cells. Upon completion of patient dosing of this
Cohort A in January, data from the 28-day point was reviewed by the independent Data Safety and
Monitoring Board (DSMB). That review concluded that there were no treatment-related serious adverse
events or safety concerns, enabling progress to the second cohort of patients (Cohort B) with no
modifications to the trial required.
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Cynata Therapeutics Limited
The overall survival rate in Cohort A at day 100 was 87.5 percent, while the Overall Response (an
improvement in the severity of GvHD by at least one grade compared to baseline) and Complete
Response (GvHD signs/symptoms completely resolved) rates by day 100 were 100 percent and 50
percent, respectively. One patient in Cohort A died after developing pneumonia, which is common in
recipients of bone marrow transplants and similar procedures and this death was not considered to be
treatment related.
Data from the 6-month follow up assessment of Cohort A also showed positive safety and sustained
overall survival rates. The 6-month assessment found that the overall survival in Cohort A remained at
seven out of eight patients (87.5%).
Cohort B - improved results from increased dose
The second cohort of patients (Cohort B) completed enrolment during the year and data from the 28-day
analysis showed similarly positive safety and efficacy data to Cohort A. At day 28 the Overall Response
rate was 86% (six out of seven patients) and the Complete Response rate was 57% (four out of seven
patients).
Eight patients with steroid-resistant acute GvHD were enrolled into Cohort B, as originally planned.
Seven out of the eight patients were dosed with two infusions of CYP-001 administered one week apart.
Each dose was two million cells per kilogram of body weight (cells/kg), up to a maximum dose of 200
million cells, which was twice the dose level received by patients in Cohort A. It was evident that the
higher dose of CYP-001 administered in Cohort B elicited a faster response than the lower dose in Cohort
A, as by Day 28, Cohort B had a Complete Response rate of 57%, compared to 12.5% in Cohort A.
The clinical investigator determined that one patient in Cohort B was no longer a suitable candidate for
treatment, due to a medical complication that occurred shortly after enrolment but prior to treatment
with CYP-001. This decision was consistent with pre-specified criteria outlined in the trial protocol and
the patient will be excluded from safety and efficacy analyses, as they did not receive CYP-001
treatment.
A summary of the trial data to date is provided in the table below.
The advancements in the clinical trial are significant progress towards commercialisation milestones. The
strategic partnership and licence option agreement with FUJIFILM is worth over $60 million in milestone
payments and, should the option be exercised, Cynata will receive an upfront payment of US$3 million.
The option may be exercised at any time during or up until 90 days after study report of the trial has
been completed; the report will be compiled following the 100-day analysis point of Cohort B.
Regulatory Advances
Written advice received from the United States Food and Drug Administration (FDA) confirmed that the
scope and substance of Cynata’s “Chemistry, Manufacturing and Controls” (CMC) dossier
is
commensurate with its expectations, which indicates that Cymerus™ MSC products are expected to be of
suitable quality for clinical trial use in the US. Cynata received clarification on the design of preclinical
studies required to support a US IND (Investigational New Drug) application.
11
Cynata Therapeutics Limited
The FDA also provided advice regarding the protocol for a planned GvHD clinical trial in the US.
Additionally, the FDA clarified that Cynata may submit a request for “Regenerative Medicine Advanced
Therapy” (RMAT) designation for its CYP-001 product to treat GvHD once preliminary results of the world
first clinical trial are available, assuming those results support such a request. RMAT designation is an
initiative that arose from the 21st Century Cures Act, which recently came into law in the US. The
initiative allows companies with RMAT designated products to avail of additional and earlier interactions
with the FDA and to seek priority review and accelerated approval.
The FDA has also granted Orphan Drug Designation to Cynata’s Lead Cymerus™ MSC Product, CYP-001
for the treatment of acute graft versus host disease (GvHD). Orphan Drug Designation means CYP-001 is
eligible for important incentives, including an extended period of marketing exclusivity, tax credits and
FDA fee waivers. An Orphan Drug is a therapeutic agent used for the prevention, diagnosis or treatment
of a rare disease, which is defined as a disease or condition that affects fewer than 200,000 people in the
USA.
Furthermore, a successful meeting between Cynata and Health Canada to discuss development of
Cymerus™ MSCs as a therapeutic product took place. Health Canada agreed in principle that the unique
Cymerus™ process, including donor screening and testing, the induced pluripotent stem cell (iPSC)
derivation process and the manufacture and testing of the final product, meets its expectations for a
product entering clinical trials. Cynata also received clarification from Health Canada on the design of
preclinical studies required to support a Clinical Trial Application in Canada.
Phase 2 Ready Asset: Next Steps
Following the excellent progress and highly promising results from the GvHD trial, the Company has
considered the focus of further clinical trials. Assuming Fujifilm exercises its license option for GvHD,
future clinical trials for GvHD will be led by Fujifilm at their cost, so this and the fact that MSCs are being
investigated in a wide range of clinical indications, led the Company to explore the most suitable next
steps. The Company engaged the services of Boston-based healthcare consultancy, ClearView
Healthcare Partners, to analyse the many potential clinical opportunities for MSCs and to advise the
Company on the most suitable clinical targets having regard to (i) the scientific rationale, (ii) the clinical
development path, and (iii) the potential commercial opportunity. The results of ClearView Healthcare
Partners’ analysis led Cynata to select cardiovascular disease as its highest priority indication area, with
critical limb ischaemia (CLI) being the initial focus. Cardiovascular disease is the leading cause of
premature death worldwide. CLI is a manifestation of cardiovascular disease, where patients are at
substantial risk of severe disease consequences, including limb amputation and higher mortality rates. As
such, the global commercial opportunity for MSC therapies in CLI, as estimated by ClearView Healthcare
Partners, has the potential to reach US$1.4 billion per year. Plans are being developed to commence a
Phase 2 clinical program in this disease.
Progress of Other Indications in the Product Pipeline
Cynata continues to make excellent advances in pre-clinical studies, with positive results showing the
effectiveness of Cynata’s MSCs in asthma, heart attack and CLI. The Company also expanded its product
pipeline with additional new indications, including the investigation of Cymerus™ MSCs in pre-clinical
models of a range of diseases including coronary artery disease (CAD), acute respiratory distress
syndrome (ARDS) and diabetic wounds.
A collaboration with an Australian research consortium, the Cooperative Research Centre for Cell
Therapy Manufacturing (CRC-CTM) has produced positive data demonstrating the efficacy of Cymerus™
MSCs in a preclinical model of diabetic wounds (also known as diabetic ulcers). Specifically, Cymerus™
MSCs resulted in significantly faster wound healing than bone marrow-derived MSCs. Diabetic wounds
are prevalent among the 400m+ diabetics globally and a significant opportunity exists to improve existing
treatments and meet a growing unmet medical need. Discussions between Cynata and CTM CRC are
underway regarding progressing Cymerus™ MSCs and CTM CRC’s wound-dressing technology into a
clinical trial in human patients with diabetic foot ulcers.
12
Cynata Therapeutics Limited
Very exciting results were reported during the year in the area of CAR-T therapy, a very promising new
approach to treating certain types of cancer. Here Cynata’s MSCs were shown in a pre-clinical model to
reduce the often-fatal adverse effects of CAR-T therapy and therefore potentially make it a more widely
available treatment for cancer patients.
Partnerships and Licensing Agreements
The Company has a strategic partnership with the Japanese industry titan, Fujifilm, one of the most
active companies in the regenerative medicine space. Fujifilm owns around 8.5% of Cynata and has a
license option to CYP-001 for GvHD in a deal potentially worth in excess of $60m, plus royalty payments.
Cynata signed a memorandum of understanding (MoU) with leading US biotechnology company,
Celularity Inc., for the evaluation of and identification of commercial opportunities for the Cymerus™
platform and Celularity’s cell therapy assets. Discussions with Celularity are ongoing. The Company’s
collaboration with the German company apceth GmbH & Co. KG pursuant to a license option agreement
executed in May 2016 has been discontinued. A major change in strategic focus at apceth away from
oncology resulted in apceth deciding to focus its endeavours elsewhere.
Patents
During the year, Cynata significantly strengthened its intellectual property with a number of new patents
granted and applied for covering aspects of Cynata’s proprietary Cymerus™ MSC technology.
The patents include:
• Two patents were granted by the U.S. Patent and Trademark Office (USPTO) entitled “A method
of making primate cells expressing apelin receptor that have mesangioblast potential” and
“Methods and materials for hematoendothelial differentiation of human pluripotent stem cells
under defined conditions”, covering certain proprietary methods relating to the platform’s ability
to efficiently manufacture MSCs at scale for therapeutic use.
• Notice of Allowance from European Patent Office was received for a patent application entitled
“Generation of clonal mesenchymal progenitors and mesenchymal stem cell lines”.
• A patent application was filed describing the therapeutic use of the Cymerus™ technology in the
treatment of adverse reactions associated with chimeric antigen receptor T-cell (CAR-T)
immunotherapy.
Funding Position Strengthened
In May of 2018, Cynata received a $5.2m investment by way of a placement of shares at a premium to
the prevailing share price to Fidelity International, a global investment powerhouse investing around
A$414 billion across the world. The investment from Fidelity International took its holding in Cynata to
10%, making them the largest shareholder on the register. The funds raised have strengthened Cynata’s
balance sheet and are being deployed to support the Company’s continuing product development
activities.
Outlook
Cynata has determined that it will progress a phase II clinical trial in CLI that leverages initial positive pre-
clinical results and the positive safety and efficacy data from the Phase I clinical trial in GvHD. The
development timeline is expected to be relatively rapid, with trials to last from one to two years and
likely requiring 50 – 100 revascularisation-ineligible patients (those not eligible for the existing surgery
required to treat CLI by restoring blood flow). Planning for the phase II program will commence in the
second half of calendar year 2018.
13
Cynata Therapeutics Limited
The 100-day analysis point for the second cohort of patients in the phase I GvHD clinical trial is expected
to occur in September. This will mark the completion of the phase I clinical trial and a full report and
analysis will be compiled. The report will be provided to FUJIFILM and will trigger a 90-day deadline on
exercising the license option. The Company is therefore looking forward to the outcome of FUJIFILM’s
decision. If FUJIFILM do not exercise their option, Cynata intends to progress the drug’s development to
phase II in the treatment of GvHD and will either seek an alternative development partner or progress
independently. Should FUJIFILM opt to exercise their licence option, both parties are expected to
progress towards a phase II clinical trial and the exercise of the option will see Cynata receive an initial
USD3m in licence fees from FUJIFILM.
Cynata’s platform has broad therapeutic application across a range of diseases and the Company will
continue to drive its investigative studies in existing and potential new target indications. It has a robust
portfolio of potential disease target indications and will continue to investigate ways to leverage these
strong assets through a vigorous program of potential partner engagement.
The Company received a A$1.33m Tax Incentive Refund for the 2017/2018 financial year and closed the
half year period with $12.2m cash and has an operating runway into late 2019, based on current
projections.
Financial position
The net assets of the Group have increased by $1,522,266 to $15,386,862 in 2018 (2017: $13,864,596).
This increase is mainly due to an increase in cash and cash equivalents resulting from a capital raising of
$5,194,758 (before costs) and numerous exercises of options totalling $793,683.
Changes in state of affairs
There was no significant change in the state of affairs of the Group during the financial year.
Subsequent events
On 2 July 2018, the Company announced that it had commenced a development partnership with Royal
College of Surgeons in Ireland (RCSI) to focus on demonstrating the therapeutic potential of Cynata’s
Cymerus™ mesenchymal stem cells to treat sepsis.
On 6 July and 16 July 2018, the Company issued 60,000 and 55,000 fully paid ordinary shares respectively
following the exercise of unlisted 17 July 2020 options.
On 11 July 2018, the Company issued 477,373 fully paid ordinary shares following a cashless exercise of
750,000 unlisted 16 December 2018 options at a calculated value of $643,499.
On 31 July 2018, Cynata announced positive efficacy data from a study of its Cymerus™ MSCs in a
preclinical heart attack model. Cymerus™ MSC treatment improved recovery of cardiac function post
heart attack compared to either placebo or bone marrow-derived MSCs (BM-MSCs). Cymerus™ MSC
treatment also reduced left ventricular end-systollic diameter (LVESD) compared to either placebo or
BM-MSCs. LVESD reduction is associated with lower risk of further cardiac events.
Other than the above, there has not been any matter or circumstance occurring subsequent to the end of
the financial year that has significantly affected, or may significantly affect, the operations of the Group,
the results of those operations, or state of affairs of the Group in future financial years.
14
Cynata Therapeutics Limited
Future developments, prospects and business strategies
Cynata is well positioned in the regenerative medicine space, with its proprietary therapeutic stem cell
platform technology Cymerus™ and is well diversified across a number of key target disease areas.
Strong progress has been delivered for the Company’s lead therapeutic product candidate, CYP-001,
which has recently completed patient recruitment and dosing in a Phase 1 clinical trial for GvHD. Initial
data shows that CYP-001 was well tolerated and had a clear beneficial effect in this devastating disease.
Cynata continues to work closely with its strategic partner FUJIFILM and other leading investigative
institutions for the ongoing development and research of its Cymerus™ technology. The quality of its
partners has provided strong support and validation of its ability and potential in the regenerative
medicine sector and the Company is well positioned as it advances its preclinical trials across other
indications. The Company intends to continue its business development activities and has active
engagement with entities that have a commercial interest in accessing Cynata’s technologies.
Environmental regulations
The Group’s operations are not subject to significant environmental regulation under the Australian
Commonwealth or State law.
15
Cynata Therapeutics Limited
Remuneration report (audited)
This remuneration report, which forms part of the directors’ report, sets out information about the
remuneration of Cynata Therapeutics Limited’s key management personnel for the financial year ended
30 June 2018. The term ‘key management personnel’ refers to those persons having authority and
responsibility for planning, directing and controlling the activities of the Group, directly or indirectly,
including any director (whether executive or otherwise) of the Group. The prescribed details for each
person covered by this report are detailed below under the following headings:
• key management personnel
•
•
•
• key terms of employment contracts.
remuneration policy
relationship between the remuneration policy and Company performance
remuneration of key management personnel
Key management personnel
The directors and other key management personnel of the Group during or since the end of the
financial year were:
Non-executive directors
Dr Paul Wotton
Dr Stewart Washer
Mr Peter Webse
Dr John Chiplin
Executive director
Dr Ross Macdonald
Position
Non-executive chairman
Non-executive director
Non-executive director
Non-executive director
Position
Managing Director, Chief Executive Officer
Other key management personnel
Dr Kilian Kelly
Position
Vice President, Product Development
Except as noted, the named persons held their current position for the whole of the financial year and
since the end of the financial year.
Remuneration policy
Cynata’s remuneration policy, which is set out below, is designed to promote superior performance and
long-term commitment to the Company.
As at the date of this report, the Company has one executive – the Chief Executive Officer, four non-
executive directors and one Vice President, Product Development. As set out below, total remuneration
costs for the 2018 financial year were $1,314,684 down from $1,534,156 for the previous financial year.
Non-executive director remuneration
Non-executive directors are remunerated by way of fees, in the form of cash, non-cash benefits,
superannuation contributions or salary sacrifice into equity and do not normally participate in schemes
designed for the remuneration of executives.
Shareholder approval must be obtained in relation to the overall limit set for the non-executive
directors’ fees. The maximum aggregate remuneration approved by shareholders for non-executive
directors is $300,000 per annum. The directors set the individual non-executive director fees within the
limit approved by shareholders.
16
Cynata Therapeutics Limited
Executive director remuneration
Executive directors receive a base remuneration which is market related, and may be entitled to
performance-based remuneration, which is determined on an annual basis.
Overall remuneration policies are subject to the discretion of the board and can be changed to reflect
competitive and business conditions where it is in the interests of the Company and shareholders to do
so. Executive remuneration and other terms of employment are reviewed annually by the board having
regard to the performance, relevant comparative information and expert advice.
The board’s remuneration policy reflects
its obligation to align executive remuneration with
shareholder interests and to retain appropriately qualified executive talent for the benefit of the
Company. The main principles are:
(a) remuneration reflects the competitive market in which the Company operates;
(b) individual remuneration should be linked to performance criteria if appropriate; and
(c) executives should be rewarded for both financial and non-financial performance.
The total remuneration of executives consists of the following:
(a) salary – executives receive a fixed sum payable monthly in cash;
(b) cash at risk component – executives may participate in share and option schemes generally made in
accordance with thresholds set in plans approved by shareholders if deemed appropriate. However,
the board considers it appropriate to issue shares and options to executives outside of approved
schemes in exceptional circumstances; and
(c) other benefits – executives may, if deemed appropriate by the board, be provided with a fully
expensed mobile phone and other forms of remuneration.
The board has not formally engaged the services of a remuneration consultant to provide
recommendations when setting the remuneration received by directors or other key management
personnel during the financial year.
Equity-settled compensation
The fair value of the equity which executives and employees are granted is measured at grant date and
recognised as an expense over the vesting period, with a corresponding increase to an equity account.
The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained
using a Black–Scholes pricing model which incorporates all market vesting conditions. The number of
shares and options expected to vest is reviewed and adjusted at each reporting date such that the
amount recognised for services received as consideration for the equity instruments granted shall be
based on the number of equity instruments that eventually vest.
Relationship between the remuneration policy and company performance
The board considers that at this time, evaluation of the Group’s financial performance using generally
accepted measures such as profitability, total shareholder return or per company comparison are not
relevant as the Group is at an early stage in the implementation of a corporate strategy that includes
the development of a novel life sciences (i.e. therapeutic stem cell) manufacturing technology and the
identification and execution of business opportunities as outlined in the directors’ report.
17
The table below sets out summary information about the Group’s earnings and movements in
shareholder wealth for the five (5) years to 30 June 2018:
Cynata Therapeutics Limited
Revenue
Net loss before tax
Net loss after tax
Share price at start of year
Share price at end of year
Basic/diluted loss per share (cents)
30 June
2018
$
1,518,060
4,566,134
4,566,134
0.61
1.365
5.04
30 June
2017
$
1,843,105
4,553,536
4,553,536
0.31
0.61
5.69
30 June
30 June
2015
2016
$
$
1,247,397
374,889
4,939,471 3,712,077
4,939,471 3,712,077
0.40
0.93
6.12
0.93
0.31
6.82
30 June
2014
$
107,755
3,039,663
3,039,663
0.20
0.40
6.76
Remuneration of key management personnel
Short-term employee benefits
Salary &
fees
$
Cash
bonus
$
Other
$
Post-
employment
benefits
Superannua-
tion
$
Share-
based
payment
Options
Total
$
$
Value of
options as
proportion of
remunerat-
ion
100,000
355,061
45,662
50,000
50,000
-
84,375
-
-
-
-
2,118
-
-
48,000
-
25,000
4,338
-
-
105,682
29,186
-
29,186
29,186
205,682
495,740
50,000
79,186
127,186
258,676
859,399
45,320
129,695
14,780
64,898
24,574
53,912
13,540
206,780
356,890
1,314,684
51.38%
5.89%
-
36.86%
22.95%
3.79%
15.73%
2018
Directors
P. Wotton
R. Macdonald1
S. Washer
J. Chiplin
P. Webse2
Other KMP
K. Kelly1
Total
1 The amount of $2,118 in ‘Other’ represent accrued annual leave in accordance with AASB 119 Employee Benefits. The amount
of $84,375 in ‘Cash bonus’ represents bonus determined and accrued for the financial year 2018 for Dr Macdonald and $45,320
represents bonus determined and accrued for the financial year 2018 for Dr Kelly.
2 The amount of $48,000 in ‘Other’ represents company secretarial fees of $4,000 per month paid to Mr Webse pursuant to a
consultancy agreement with Platinum Corporate Secretariat Pty Ltd (Platinum). Mr Webse is the sole director of Platinum.
During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company, the
company secretary and all executive officers of the Company. The contract of insurance prohibits disclosure of the nature of the
liability and the amount of the premium.
18
Cynata Therapeutics Limited
Remuneration of key management personnel (cont’d)
Short-term employee benefits
Salary &
fees
$
Cash
bonus
$
Other
$
Post-
employment
benefits
Superannua-
tion
$
Share-
based
payment
Options
Total
$
$
Value of
options as
proportion of
remunerat-
ion
124,810
319,635
50,000
50,000
66,667
30,000
167,100
-
-
-
71,594
(18,958)
-
49,500
-
18,658
25,304
-
-
-
-
48,010
48,010
48,009
48,009
245,062
541,091
98,010
147,509
114,676
245,434
856,546
56,906
254,006
5,443
107,579
23,316
67,278
56,709
248,747
387,808
1,534,156
-
8.87%
48.98%
32.55%
41.86%
14.62%
16.21%
2017
Directors
S. Washer1
R. Macdonald2
J. Chiplin
P. Webse3
P. Wotton4
Other KMP
K. Kelly2
Total
1 The amount of $71,594 in ‘Other’ comprises of $41,096 as termination pay and $30,498 as annual leave payout. Dr Washer
reverted to a non-executive director as from 28 February 2017.
2 Amounts in ‘Other’ represent accrued annual leave in accordance with AASB 119 Employee Benefits. Amounts in ‘Cash Bonus’
represent $60,000 for the financial year 2016 determined and paid in financial year 2017 and $107,100 determined and accrued
for the financial year 2017 ($20,000 was paid in the financial year 2017) for Dr Macdonald. It also represents $18,750 for the
financial year 2016 for Dr Kelly determined and paid in financial year 2017 and $38,156 determined and accrued for the financial
year 2017.
3 The amount of $49,500 in ‘Other’ represents company secretarial fees of $4,000 per month and an amount of $1,500 for
additional company secretary work outside the scope of the consultancy agreement with Platinum Corporate Secretariat Pty Ltd
(Platinum). Mr Webse is the sole director of Platinum.
4 Appointed non-executive Chairman on 28 February 2017.
During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company, the
company secretary and all executive officers of the Company. The contract of insurance prohibits disclosure of the nature of the
liability and the amount of the premium.
Bonuses and share-based payments granted as compensation for the current financial year
Bonuses
Cash bonuses of $87,100 to Dr Macdonald and $38,156 to Dr Kelly were paid during the financial year.
These amounts were accrued in the 2017 accounts.
A performance bonus entitlement of $84,375 for Dr Macdonald and $45,320 for Dr Kelly were accrued in
the 2018 accounts. These amounts are payable subsequent to 30 June 2018. No other cash bonuses
were granted during 2018.
19
Incentive share-based payments arrangements
During the financial year, the following share-based payment arrangements were in existence:
Cynata Therapeutics Limited
Option series
1*
2**
3***
4****
Number
Expiry date
Grant date
5,000,000 27 Sept 2013 27 Sept 2018
16 Dec 2018
17 Nov 2019
17 Nov 2019
16 Dec 2015
16 Nov 2016
17 Nov 2017
750,000
800,000
2,000,000
Exercise
price
$0.400
$0.490
$1.022
$1.500
Grant date
fair value
$0.2900
$0.2370
$0.3859
$0.7391
Vesting date
Vested
Vested
Vested
Various
* Unlisted options issued to Drs Stewart Washer and Ross Macdonald. In accordance with the terms of the share-
based arrangement, 100% of the options have vested following achievements of vesting conditions.
** Unlisted options issued to Dr Kilian Kelly. In accordance with the share-based arrangement, 100% of the options
have vested following achievement of vesting conditions. Subsequent to the financial year end, Dr Kelly exercised
all of the options in accordance with the terms and conditions using the cashless exercise mechanism.
*** Unlisted options issued to Dr Macdonald, Dr Chiplin, Dr Wotton and Mr Webse (200,000 each) pursuant to an
Employee Option Acquisition Plan approved at the Company’s Annual General Meeting held on 16 Nov 2016.
**** Unlisted options issued to Dr Wotton pursuant to the terms of his appointment as non-executive chairman
and approved at the Company’s Annual General Meeting held on 17 Nov 2017. 1,000,000 options vest 12 months
from date of grant and the remaining 1,000,000 options vest 18 months from date of grant.
There are no further services or performance criteria that need to be met in relation to options granted
under series (1), (2) and (3) above, and as a consequence the beneficial interest has vested to the
recipients. There has been no alteration of the terms and conditions of the above share-based payment
arrangements since the grant date.
Details of share-based payments granted to key management personnel during the current financial
year:
Name
P. Wotton
Option series
Series 4
No. granted
2,000,000
During the financial year
% of grant
vested
No. vested
% of grant
forfeited
-
-
n/a
No share options were exercised by key management personnel during the year (2017: nil).
Each option converts into one ordinary share of Cynata Therapeutics Limited.
Key terms of employment contract
The key terms and conditions of the varied letter of appointment of Dr Paul Wotton are as follows:
• A fee of $100,000 per annum inclusive of statutory superannuation.
• The appointment letter and the varied appointment letter may be terminated immediately by
the Company if Dr Wotton becomes disqualified or is prohibited by law from being or acting as
director or from being involved in the management of a company.
The key terms and conditions of the renewed executive services agreement of Dr Ross Macdonald are as
follows:
• Term of renewed agreement – ongoing until terminated by agreement with both parties (by
giving 6 months’ written notice) or terminated by the Company with reasons.
• Effective 1 July 2018, a salary of $386,250 per annum including superannuation. During the
financial year 2018, Dr Macdonald was paid a salary of $375,000 per annum inclusive of
statutory superannuation.
• The Company may (but it is not bound) pay additional performance-based remuneration.
20
Cynata Therapeutics Limited
The key terms and conditions of the appointment of Dr Stewart Washer as non-executive director are
formalised in an appointment letter and are as follows:
• A fee of $50,000 per annum inclusive of statutory superannuation.
• The appointment may be terminated if Dr Washer gives notice of resignation and the
appointment may be terminated immediately if Dr Washer becomes disqualified or prohibited
by law from being or acting as a director or from being involved in the management of a
company.
The key terms and conditions of appointment of Dr John Chiplin are formalised in an appointment letter
and are as follows:
• A fee of $50,000 per annum (not subject to GST).
• The appointment letter may be terminated immediately by the Company if Dr Chiplin becomes
disqualified or is prohibited by law from being or acting as a director or from being involved in
the management of a company.
The key terms and conditions of appointment of Dr Kilian Kelly are formalised in an employment
agreement and are as follows:
• Effective 1 July 2018, a salary of $300,000 per annum inclusive of statutory superannuation.
During the financial year 2018, Dr Kelly was paid a salary of $283,250 per annum inclusive of
statutory superannuation.
• The right to participate in the Company’s equity-based incentive scheme and an incentive
payment of up to 10% of the annual salary and based on attainment of agreed performance
indicators.
• The Company may (but is not bound to) pay additional performance-based remuneration.
• The contract may be terminated by either party providing 3 months’ notice.
Mr Peter Webse’s services as non-executive director and Company Secretary are provided through
Platinum Corporate Secretariat Pty Ltd (“Platinum”). Platinum is paid a fee of $50,000 (exc. GST) per
annum for the provision of Mr Webse’s services as a non-executive director. A consultancy agreement
was entered into with Platinum, commencing 3 April 2012, for the provision of company secretarial
services at a fee of $4,000 (exc. GST) per month plus additional services charged at a rate of $250 per
hour as agreed from time to time. The agreement is subject to 2 months’ notice of termination.
Key management personnel equity holdings
Fully paid ordinary shares of Cynata Therapeutics Limited
2018
P Wotton
R Macdonald
S Washer
J Chiplin
P Webse
K Kelly
2017
Balance at
1 July 2017
No.
55,000
28,500
224,856
50,000
220,000
16,640
Granted as
compensation
No.
Received on
exercise of options
No.
Net other change
Balance at
No.
30 June 2018
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55,000
28,500
224,856
50,000
220,000
16,640
Balance at
1 July 2016
No.
Granted as
compensation
No.
Received on
exercise of options
No.
Net other change1
Balance at
No.
30 June 2017
No.
P Wotton
-
R Macdonald
8,500
S Washer
174,856
J Chiplin
10,000
P Webse
210,000
K Kelly
16,640
1 Amounts in ‘Net other change’ represent on market acquisitions.
-
-
-
-
-
-
-
-
-
-
-
-
55,000
20,000
50,000
40,000
10,000
-
55,000
28,500
224,856
50,000
220,000
16,640
21
Key management personnel equity holdings (cont’d)
Share options of Cynata Therapeutics Limited
Cynata Therapeutics Limited
2018
Balance at
1 July 2017
Granted as
compens-
ation
Exerci-
sed
Net other
change
P Wotton1
R Macdonald
S Washer
J Chiplin
P Webse
K Kelly
No.
200,000
2,700,000
2,500,000
200,000
200,000
750,000
No.
No.
-
-
-
-
-
-
No.
2,000,000
-
-
-
-
-
-
-
-
-
-
-
Balance at
30 June
2018
No.
2,200,000
2,700,000
2,500,000
200,000
200,000
750,000
Balance
vested at
30 June
2018
No.
200,000
2,700,000
2,500,000
200,000
200,000
750,000
Vested and
exercisable
No.
200,000
2,700,000
2,500,000
200,000
200,000
750,000
Options
vested
during
year
No.
200,000
200,000
-
200,000
200,000
250,000
1 Amounts in ‘Net other change’ represents unlisted options issued on 17 November 2017 pursuant to the terms of
appointment as non-executive chairman.
2017
Balance at
1 July 2016
Granted as
compens-
ation
Exerci-
sed
Net other
change
(1)
Balance at
30 June
2017
P Wotton
R Macdonald
S Washer
J Chiplin
P Webse
K Kelly
No.
-
2,500,000
2,500,000
-
-
750,000
No.
No.
-
-
-
-
-
-
No.
200,000
200,000
-
200,000
200,000
-
No.
200,000
2,700,000
2,500,000
200,000
200,000
750,000
-
-
-
-
-
-
Balance
vested at
30 June
2017
No.
-
2,500,000
2,500,000
-
-
500,000
Vested and
exercisable
No.
-
2,500,000
2,500,000
-
-
500,000
Options
vested
during
year
No.
-
-
-
-
-
250,000
All share options issued to key management personnel were made in accordance with the provisions of
the employee share option plan.
No share options were exercised by key management personnel during the financial year (2017: nil).
Further details of the employee share option plan and share options are contained in note 17 to the
financial statements.
This is the end of the audited remuneration report
This directors’ report is signed in accordance with a resolution of directors made pursuant to s.298(2) of
the Corporations Act 2001.
On behalf of the directors.
Dr Ross Macdonald
Managing Director/Chief Executive Officer
Melbourne, 22 August 2018.
22
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
22 August 2018
Board of Directors
Cynata Therapeutics Limited
Level 3, 62 Lygon Street
CARLTON, VICTORIA 3053
Dear Directors
RE:
CYNATA THERAPEUTICS LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Cynata Therapeutics Limited.
As the Audit Director for the audit of the financial statements of Cynata Therapeutics Limited for the year
ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no contraventions
of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
any applicable code of professional conduct in relation to the audit.
Yours sincerely
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(Authorised Audit Company)
Martin Michalik
Director
Liability limited by a scheme approved
under Professional Standards Legislation
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
CYNATA THERAPEUTICS LIMITED
Report on the Audit of the Financial Report
Our Opinion
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
We have audited the financial report of Cynata Therapeutics 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, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
In our opinion:
(a)
the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group's financial position as at 30 June 2018 and of its
financial performance for the period then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in note
3.1
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.
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 year. 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.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the financial statements and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Liability limited by a scheme approved
under Professional Standards Legislation
Key Audit Matters
How the matter was addressed in the audit
Carrying value of intangible assets, amortisation
and impairment reviews
At 30 June 2018, the Group has intangibles with a
carrying value of $3,533,192. The intangible assets
are considered a Key Audit Matter as they represent
over 22% of the net assets of the Group.
Cynata Therapeutics acquired
intangible assets
(patents) through the acquisition of a subsidiary.
Under Australian Accounting Standards, the Group is
required to assess whether there are any indicators of
impairment, and if so, perform an impairment review
of the intangible assets at least annually.
The testing for impairment is complex due to the
assessment process and judgments and assumptions
involved, which are affected by expected future
market and economic developments.
Our audit procedures included, inter alia, the
following:
i. A review of the ASX announcements to
obtain an understanding of the significant
activities undertaken by the Group during
the year;
ii. An audit of the Group’s patent register to
obtain reasonable assurance any patents
that have expired are written off;
iii. Appraising management’s assessment of
the patents and
the carrying value of
assessing
and
relevance of information provided to justify
the carrying value of the patents;
appropriateness
the
iv. Checking the amortisation charge to ensure
that the patents are being amortised over
the 20-year patents’ life; and
v. Assessing the adequacy of the disclosures
(Note 11) to the financial statements.
Other Information
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 accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this financial
report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial
report.
We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in Internal control that we identify during our
audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 22 of the directors’ report for the year ended
30 June 2018. 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.
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of Cynata Therapeutics Limited for the year ended 30 June 2018
complies with section 300A of the Corporations Act 2001.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
West Perth, Western Australia
22 August 2018
Cynata Therapeutics Limited
Directors’ declaration
The directors declare that:
(a)
in the directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay
its debts as and when they become due and payable;
(b) in the directors’ opinion, the attached financial statements are in compliance with International
Financial Reporting Standards, as stated in note 3 to the financial statements;
(c)
in the directors’ opinion, the attached financial statements and notes thereto are in accordance
with the Corporations Act 2001, including compliance with accounting standards and giving a true
and fair view of the financial position and performance of the Group; and
(d) the directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations
Act 2001.
On behalf of the directors
Dr Ross Macdonald
Managing Director/Chief Executive Officer
Melbourne, 22 August 2018
28
Cynata Therapeutics Limited
Consolidated statement of profit or loss and other
comprehensive income for the year ended
30 June 2018
Continuing operations
Other income
Product development costs
Employee benefits expenses
Amortisation expenses
Share based payment expenses
Other expenses
Loss before income tax
Income tax expense
Loss for the year
Consolidated
Year ended
30 June 2018
$
30 June 2017
$
Note
6
7
11
7
7
8
1,518,060
(3,220,523)
(859,904)
(279,965)
(274,415)
(1,449,387)
(4,566,134)
1,843,105
(3,472,806)
(1,032,993)
(279,965)
(248,747)
(1,362,130)
(4,553,536)
-
(4,566,134)
-
(4,553,536)
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Other comprehensive income for the year, net of income tax
Total comprehensive loss for the year
Loss for the year attributable to:
Owners of Cynata Therapeutics Limited
Total comprehensive loss for the year attributable:
Owners of Cynata Therapeutics Limited
-
-
-
-
(4,566,134)
248
248
(4,553,288)
(4,566,134)
(4,553,536)
(4,566,134)
(4,553,288)
Loss per share:
Basic and diluted (cents per share)
9
(5.04)
(5.69)
Notes to the consolidated financial statements are included on pages 33 to 58.
29
Consolidated statement of financial position
as at 30 June 2018
Cynata Therapeutics Limited
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Intangibles
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Option reserves
Foreign currency translation reserve
Accumulated losses
Total equity
Consolidated
Note
30 June 2018
$
30 June 2017
$
20
10
11
12
13
14
15
15
12,206,040
393,776
12,599,816
10,349,764
91,272
10,441,036
3,533,192
3,533,192
16,133,008
3,813,157
3,813,157
14,254,193
725,395
20,751
746,146
746,146
385,744
3,853
389,597
389,597
15,386,862
13,864,596
44,191,746
4,240,602
4,724
(33,050,210)
15,386,862
38,377,761
3,966,187
4,724
(28,484,076)
13,864,596
Notes to the consolidated financial statements are included on pages 33 to 58.
30
Consolidated statement of changes in equity
for the year ended 30 June 2018
Cynata Therapeutics Limited
Balance at 1 July 2016
Loss for the year
Other comprehensive income for the year, net of tax
Total comprehensive income/(loss) for the year
Issue of ordinary shares (refer to note 14)
Share issue costs
Share based payments
Balance at 30 June 2017
Balance at 1 July 2017
Loss for the year
Other comprehensive income for the year, net of tax
Total comprehensive income/(loss) for the year
Issue of ordinary shares (refer to note 14)
Share issue costs
Share based payments
Balance at 30 June 2018
Issued
Capital
$
28,791,762
-
-
-
9,972,458
(386,459)
-
38,377,761
38,377,761
-
-
-
5,988,441
(174,456)
-
44,191,746
Option
Reserve
$
3,717,440
-
-
-
-
-
248,747
3,966,187
3,966,187
-
-
-
-
-
274,415
4,240,602
Foreign
currency
translation
reserve
$
4,476
-
248
248
-
-
-
4,724
4,724
-
-
-
-
-
4,724
Accumulated
losses
$
(23,930,540)
(4,553,536)
-
(4,553,536)
-
-
-
(28,484,076)
(28,484,076)
(4,566,134)
-
(4,566,134)
-
-
-
(33,050,210)
Total
$
8,583,138
(4,553,536)
248
(4,553,288)
9,972,458
(386,459)
248,747
13,864,596
13,864,596
(4,566,134)
-
(4,566,134)
5,988,441
(174,456)
274,415
15,386,862
Notes to the consolidated financial statements are included on pages 33 to 58.
31
Consolidated statement of cash flows for the year ended 30
June 2018
Cynata Therapeutics Limited
Cash flows from operating activities
Grants and other income received
Payments to suppliers and employees
Interest received
Research and development tax refund received
Development costs paid
Net cash (used in) operating activities
Cash flows from investing activities
Net cash used in investing activities
Consolidated
Year ended
Note
30 June 2018
$
30 June 2017
$
46,450
(2,583,941)
161,343
1,328,685
(3,014,453)
(4,061,916)
-
(2,507,972)
67,765
1,748,874
(3,356,857)
(4,048,190)
20.1
-
-
Cash flows from financing activities
Proceeds from issue of equity instruments of the Company
Payment for share issue costs
Net cash provided by financing activities
14
5,988,441
(130,028)
5,858,413
9,972,458
(386,459)
9,585,999
Net increase in cash and cash equivalents
1,796,497
5,537,809
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balance of cash held in
foreign currencies
Cash and cash equivalents at the end of the year
10,349,764
4,879,173
59,779
12,206,040
(67,218)
10,349,764
20
Notes to the consolidated financial statements are included on pages 33 to 58.
32
Cynata Therapeutics Limited
Notes to the consolidated financial statements for the year
ended 30 June 2018
1.
General information
Cynata Therapeutics Limited (“the Company”) is a listed public company incorporated in
Australia. The addresses of its registered office and principal place of business are disclosed in
the corporate directory to the annual report.
The principal activities of the Company and its controlled subsidiaries (“the Group”) are
described in the directors’ report.
2.
2.1
Application of new and revised Accounting Standards
Amendments to Accounting Standards and the new Interpretation that are mandatorily
effective for the current year
The Group has adopted all of the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board (the AASB) that are relevant to their operations and
effective for an accounting period that begins on or after 1 July 2017.
New and revised Standards and amendments thereof and Interpretations effective for the
current year that are relevant to the Group include:
• AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of
Deferred Tax Assets for Unrealised Losses.
• AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative:
Amendments to AASB 107.
The application of these amendments does not have any material impact on the disclosures or
the amounts recognised in the Group’s consolidated financial statements.
2.2
Standards and Interpretations in issue but not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations that
were issued but not effective are listed below:
• AASB 9 Financial Instruments and associated Amending Standards (applicable for annual
reporting commencing 1 January 2018).
The Standard includes revised requirements for the classification and measurement of
financial instruments, revised recognition and derecognition requirements for financial
instruments and simplified requirements for hedge accounting.
The directors anticipate that the adoption of AASB 9 will not have a material effect on the
Group’s financial statements.
• AASB 2016-5 Amendments to Australian Accounting Standards – Classification and
Measurement of Share-based Payment Transactions (applicable for annual reporting
commencing on or after 1 January 2018).
The AASB issued amendments to AASB 2 Share-based Payment that address three main
areas:
-
the effect of vesting conditions on the measurement of a cash-settled share-
based payment transaction;
the classification of a share-based payment transaction with net settlement
features for withholding tax obligations; and
accounting where a modification to the terms and conditions of a share-based
payment transaction changes its classification from cash settled to equity settled.
The directors anticipate that the adoption of this amendment will not have a material impact
on the Group’s financial statements.
-
-
33
2.2
Standards and Interpretations in issue but not yet adopted (cont’d)
Cynata Therapeutics Limited
• AASB 2016-6 Amendments to Australian Accounting Standards – Applying AASB 9
Financial Instruments with AASB 4 Insurance Contracts (applicable for annual reporting
commencing 1 January 2018).
The amendments address concerns arising from implementing the new financial
instruments standard, AASB 9, before implementing AASB 17 Insurance Contracts, which
replaces AASB 4. The amendments introduce two options for entities issuing insurance
contracts: a temporary exemption from applying AASB 9 and an overlay approach. The
temporary exemption is first applied for reporting periods beginning on or after 1 January
2018. An entity may elect the overlay approach when it first applies AASB 9 and apply
that approach retrospectively to financial assets designated on transition to AASB 9. The
entity restates comparative information when reflecting the overlay approach if, and only
if, the entity restates comparative information when applying AASB 9. These amendments
are not applicable to the Group.
• AASB 15 Revenue from Contracts with Customers (applicable to annual reporting periods
commencing on or after 1 January 2018).
When effective, this Standard will replace the current accounting requirements applicable
to revenue with a single, principles-based model. Apart from a limited number of
exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts
with customers as well as non-monetary exchanges for goods and services. To achieve
this objective, AASB 15 provides the following five-step process:
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
-
-
- determine the transaction price;
- allocate the transaction price to the performance obligations in the contract(s); and
- recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this standard permit an entity to either restate the contracts
that existed in prior period presented per AASB 108 Accounting Policies, Changes in
Accounting Estimates and Errors, or recognise the cumulative effect of retrospective
application to incomplete contracts on the date of initial application. There are also
enhanced disclosure requirements.
The directors anticipate that the adoption of this amendment will not have a material
impact on the Group’s financial statements.
3.
3.1
Significant accounting policies
Statement of compliance
These financial statements are general purpose financial statements which have been
in accordance with the Corporations Act 2001, Accounting Standards and
prepared
Interpretations and comply with other requirements of the law.
The financial statements comprise the consolidated financial statements of the Group. For the
purposes of preparing the consolidated financial statements, the Company is a for-profit
entity.
Accounting Standards include Australian Accounting Standards. Compliance with Australian
Accounting Standards ensures that the financial statements and notes of the Company and the
Group comply with International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the directors on 22 August 2018.
34
3.2
Basis of preparation
Cynata Therapeutics Limited
The consolidated financial statements have been prepared on the basis of historical cost,
except for certain financial instruments that are measured at revalued amounts or fair values
at the end of each reporting period, as explained in the accounting policies below. Historical
cost is generally based on the fair values of the consideration given in exchange for goods and
services. All amounts are presented in Australian dollars, unless otherwise noted.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date, regardless of
whether that price is directly observable or estimated using another valuation technique. In
estimating the fair value of an asset or liability, the Group takes into account the
characteristics of the asset or liability at the measurement date. Fair value for measurement
and/or disclosure purposes in these consolidated financial statements is determined on such a
basis, except for share-based payment transactions that are within the scope of AASB 2 Share-
based Payment, leasing transactions that are within the scope of AASB 117 Leases, and
measurements that have some similarities to fair value but are not fair value, such as net
realisable value in AASB 102 Inventories or value in use in AASB 136 Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into
Level 1, 2 or 3 based on the degree to which inputs to the fair value measurements are
observable and the significance of the inputs to the fair value measurement in its entirety,
which are described as follows:
•
•
•
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included in Level 1, that are
observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
3.3
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company
and entities controlled by the Company and its subsidiaries. Control is achieved when the
Company:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns
The Company reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power
over the investee when the voting rights are sufficient to give it the practical ability to direct
the relevant activities of the investee unilaterally. The Company considers all relevant facts
and circumstances in assessing whether or not the Company’s voting rights in an investee are
sufficient to give it power, including:
•
•
•
•
the size of the Company’s holdings of voting rights relative to the size and dispersion of
holdings of the other vote holders;
potential voting rights held by the Company, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not
have, the current ability to direct the relevant activities at the time that decisions need to
be made, including voting patterns at previous shareholders’ meetings.
35
Cynata Therapeutics Limited
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary
and ceases when the Company loses control of the subsidiary. Specifically, income and
expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated statement of profit or loss and other comprehensive income from the date the
Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the
owners of the Company and to the non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the Company and to the non-controlling interests
even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with the Group’s accounting policies. All intragroup assets
and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
3.4 Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value which is calculated as the sum
of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the
Group to the former owners of the acquiree and the equity instruments issued by the Group in
exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss
as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are
recognised at their fair value, except that:
• deferred tax assets or liabilities and assets or liabilities related to employee benefit
arrangements are recognised and measured in accordance with AASB 112 Income Taxes
and AASB 119 Employee Benefits respectively;
•
liabilities or equity instruments related to share-based payment arrangements of the
acquiree or share-based payment arrangements of the Group entered into to replace
share-based payment arrangements of the acquiree are measured in accordance with
AASB 2 Share-based Payment at the acquisition date; and
• assets (or disposal groups) that are classified as held for sale in accordance with AASB 5
Non-current Assets Held for Sale and Discontinued Operations are measured in accordance
with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of
any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously
held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the
acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds
the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any),
the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a
proportionate share of the entity's net assets in the event of liquidation may be initially
measured either at fair value or at the non-controlling interests' proportionate share of the
recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis
is made on a transaction-by-transaction basis. Other types of non-controlling interests are
measured at fair value or, when applicable, on the basis specified in another Standard.
36
Cynata Therapeutics Limited
Where the consideration transferred by the Group in a business combination includes assets
liabilities resulting from a contingent consideration arrangement, the contingent
or
consideration is measured at its acquisition-date fair value. Changes in the fair value of the
contingent consideration that qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against goodwill. Measurement period
adjustments are adjustments that arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year from the acquisition date) about facts
and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of contingent consideration that do
not qualify as measurement period adjustments depends on how the contingent consideration
is classified. Contingent consideration that is classified as equity is not remeasured at
subsequent reporting dates and its subsequent settlement is accounted for within equity.
Contingent consideration that is classified as an asset or liability is remeasured at subsequent
reporting dates in accordance with AASB 139 Financial Instruments: Recognition and
Measurement, or AASB 137 Provisions, Contingent Liabilities and Contingent Assets as
appropriate, with the corresponding gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the Group’s previously held equity
interest in the acquiree is remeasured to its acquisition date fair value and the resulting gain or
loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior
to the acquisition date that have previously been recognised in other comprehensive income
are reclassified to profit or loss where such treatment would be appropriate if that interest
were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting
period in which the combination occurs, the Group reports provisional amounts for the items
for which the accounting is incomplete. Those provisional amounts are adjusted during the
measurement period (see above), or additional assets or liabilities are recognised, to reflect
new information obtained about facts and circumstances that existed as of the acquisition
date that, if known, would have affected the amounts recognised as of that date.
3.5
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of
the acquisition of the business (see 3.4 above) less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Groups’ cash-
generating units (or groups of cash-generating units) that is expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually,
or more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to
the unit and then to the other assets of the unit pro rata based on the carrying amount of each
asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An
impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of
the relevant cash-generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
37
Cynata Therapeutics Limited
3.6
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is
reduced for estimated customer returns, rebates and other similar allowances.
3.6.1
Interest income
Interest income from a financial asset is recognised when it is probable that the economic
benefits will flow to the Group and the amount of revenue can be measured reliably. Interest
income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts
though the expected life of the financial asset to that asset’s net carrying amount on initial
recognition.
3.7
Foreign currencies
The individual financial statements of each group entity are presented in the currency of the
primary economic environment in which the entity operates (its functional currency). For the
purpose of the consolidated financial statements, the results and financial position of each
group entity are expressed in Australian dollars (‘$’), which is the functional currency of the
Company and the presentation currency for the consolidated financial statements.
In preparing the financial statements of each individual group entity, transactions in
currencies other than the entity’s functional currency (foreign currencies) are recognised at
the rates of exchange prevailing at the dates of the transactions. At the end of each reporting
period, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
For the purpose of presenting these consolidated financial statements, the assets and
liabilities of the Group’s foreign operations are translated into Australian dollars using the
exchange rates prevailing at the end of the reporting period. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates fluctuated
significantly during that period, in which case the exchange rates at the dates of the
transactions are used. Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity (and attributed to non-controlling
interests as appropriate).
Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed
through acquisition of a foreign operation are treated as assets and liabilities of the foreign
operation and translated at the rate of exchange prevailing at the end of each reporting
period. Exchange differences arising are recognised in other comprehensive income.
3.8
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will
comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in
which the Group recognises as expenses the related costs for which the grants are intended
to compensate. Specifically, government grants whose primary condition is that the Group
should purchase, construct or otherwise acquire non-current assets are recognised as
deferred revenue in the consolidated statement of financial position and transferred to profit
or loss on a systematic and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already
incurred or for the purpose of giving immediate financial support to the Group with no future
related costs are recognised in profit or loss in the period in which they become receivable.
38
Cynata Therapeutics Limited
3.9
Employee benefits
Short-term and long-term employee benefits
A liability is recognised for benefits accrued to employees in respect of wages and salaries
and annual leave when it is probable that settlement will be required and they are capable of
being measured reliably.
Liabilities recognised in respect of short-term employee benefits are measured at their
nominal values using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long term employee benefits are measured as the present
value of the estimated future cash outflows to be made by the Group in respect of services
provided by employees up to reporting date.
3.10
Share-based payments arrangements
Equity-settled share-based payments to employees and others providing similar services are
measured at the fair value of the equity instruments at the grant date. Details regarding the
determination of the fair value of equity-settled share-based transactions are set out in note
17.
The fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of
equity instruments that will eventually vest, with a corresponding increase in equity. At the
end of each reporting period, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are
measured at the fair value of the goods or services received, except where that fair value
cannot be estimated reliably, in which case they are measured at the fair value of the equity
instruments granted, measured at the date the entity obtains the goods or the counterparty
renders the service.
For cash-settled share-based payments, liability is recognised for the goods or services
acquired, measured initially at the fair value of the liability. At the end of each reporting
period until the liability is settled, and at the date of settlement, the fair value of the liability
is remeasured, with any changes in fair value recognised in profit or loss for the year.
3.11
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
3.11.1 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from
profit before tax as reported in the consolidated statement of profit or loss and other
comprehensive income because of items of income or expense that are taxable or deductible
in other years and items that are never taxable or deductible. The Group’s current tax is
calculated using the tax rates that have been enacted or substantively enacted by the end of
the reporting period.
R&D rebates are accounted for on a cash basis and included under other income.
39
3.11.2 Deferred tax
Cynata Therapeutics Limited
Deferred tax is recognised on temporary differences between the carrying amounts of assets
and liabilities in the consolidated financial statements and the corresponding tax bases used in
the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable
temporary differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference arises from the initial recognition
(other than in a business combination) of assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not
recognised if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiaries and associates, and interests in joint ventures, except where the
Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary differences and they are expected to reverse in
the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realised, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the reporting period. The
measurement of deferred tax liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and liabilities.
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when they relate to income taxes levied by
the same authority and the Group intends to settle its current tax assets and liabilities on a net
basis.
3.11.3
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that
are recognised in other comprehensive income or directly in equity, in which case the current
and deferred tax are also recognised in other comprehensive income or directly in equity,
respectively. Where current tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business combination.
40
Cynata Therapeutics Limited
3.12
Intangible assets
3.12.1
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill
are initially recognised at their fair value at the acquisition date (which is regarded as their
cost).
Intangibles have been identified as all granted patents and patent applications. They have a
finite useful life and are carried at cost less accumulated amortisation. Amortisation is
calculated using the straight-line method over the expected life of the assets, as follows:
• Patents 20 years
3.12.2
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are
expected from use or disposal. Gains or losses arising from derecognition of an intangible
asset, measured as the difference between the net disposal proceeds and the carrying amount
of the asset are recognised in profit or loss when the asset is derecognised.
3.13
Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss (if any). When it is not
possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated to the smallest
group of cash-generating units for which a reasonable and consistent allocation basis can be
identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are
tested for impairment at least annually, and whenever there is an indication that the asset
may be impaired.
Recoverable amount is the higher of fair values less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the
relevant asset is carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-
generating unit) is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (or cash-generating unit) in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless
the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
41
Cynata Therapeutics Limited
3.14
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that the Group will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the end of the reporting period, taking into account the risks
and uncertainties surrounding the obligation. When a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the present value of
those cash flows (where the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, a receivable is recognised as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable can be measured reliably.
3.15
Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes a party to
the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs
that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at fair value through profit or loss)
are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value through profit or loss are recognised
immediately in profit or loss.
3.15.1
Financial assets
Financial assets are classified into the following specified categories: financial assets ‘at fair
value through profit or loss’ (FVTPL), ‘held-to maturity’ investments, ‘available-for-sale’ (AFS)
financial assets and ‘loans and receivables’. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition. All regular
way purchases or sales of financial assets are recognised and derecognised on a trade date
basis. Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the time frame established by regulation or convention in the
marketplace.
3.15.1.1 Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it
is designated as at FVTPL.
A financial asset is classified as held for trading if:
it has been acquired principally for the purpose of selling it in the near term; or
•
• on initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
•
42
Cynata Therapeutics Limited
A financial asset other than a financial asset held for trading may be designated as at FVTPL
upon initial recognition if:
•
•
•
such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or
the financial asset forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance
with the Group’s documented risk management or investment strategy and information
about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and AASB 139
Financial Instruments: Recognition and Measurement permits the entire combined
contract to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss
incorporates any dividend or interest earned on the financial asset and is included in the ‘other
gains and losses’ line item.
3.15.1.2 Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that
are not quoted in an active market are classified as ‘loans and receivables’. Loans and
receivables are measured at amortised cost using the effective interest method, less any
impairment. Interest income is recognised by applying the effective interest rate, except for
short-term receivables when the effect of discounting is immaterial.
3.15.1.3
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the
end of each reporting period. Financial assets are considered to be impaired when there is
objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the investment have been
affected.
For financial assets that are carried at amortised cost, the amount of the impairment loss
recognised is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the financial asset’s original effective interest rate.
For financial asset that are carried at cost, the amount of the impairment loss is measured as
the difference between the asset’s carrying amount and the present value of the estimated
future cash flows discounted at the current market rate of return for a similar financial asset.
Such impairment loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is considered uncollectible,
it is written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously
recognised in other comprehensive income are reclassified to profit or loss in the period.
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, the previously recognised impairment loss is reversed
through profit or loss to the extent that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortised cost would have been had the
impairment not been recognised.
43
In respect of AFS securities, impairment losses previously recognised in profit or loss are not
reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is
recognised
income and accumulated under the heading of
investments revaluation reserve.
in other comprehensive
3.15.1.4 Derecognition of financial assets
Cynata Therapeutics Limited
The Group derecognises a financial asset when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. If the Group neither transfers nor retains
substantially all the risks and rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and an associated liability for
amounts it may have to pay. If the Group retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Group continues to recognise the financial asset
and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or
loss that had been recognised in other comprehensive income and accumulated in equity is
recognised in profit or loss.
On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an
option to repurchase part of a transferred asset), the Group allocates the previous carrying
amount of the financial asset between the part it continues to recognise under continuing
involvement, and the part it no longer recognises on the basis of the relative fair values of
those parts on the date of the transfer. The difference between the carrying amount allocated
to the part that is no longer recognised and the sum of the consideration received for the part
no longer recognised and any cumulative gain or loss allocated to it that had been recognised
in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that
had been recognised in other comprehensive income is allocated between the part that
continues to be recognised and the part that is no longer recognised on the basis of the
relative fair values of those parts.
3.15.2
Financial liabilities and equity instruments
3.15.2.1 Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement.
3.15.2.2 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by a group of entity are
recognised at the proceeds received, net of direct issue costs.
3.15.2.3 Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial
liabilities’.
3.15.2.4 Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for
trading or it is designated as at FVTPL.
44
Cynata Therapeutics Limited
A financial liability is classified as held for trading if:
•
it has been incurred principally for the purpose of repurchasing it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
•
A financial liability other than a financial liability held for trading may be designated as at
FVTPL upon initial recognition if:
•
•
•
such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance
with the Group’s documented risk management or investment strategy, and information
about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and AASB 139
Financial Instruments: Recognition and Measurement permits the entire combined
contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss
incorporates any interest paid on the financial liability and is included in the ‘other gains and
losses’ line item.
3.15.2.5 Other financial liabilities
Other financial liabilities, including borrowings and trade and other payables, are initially
measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective
interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash payments through the expected life of
the financial liability, or (where appropriate) a shorter period, to the net carrying amount on
initial recognition.
3.15.2.6 Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or they expire. The difference between the carrying amount of the
financial liability derecognised and the consideration paid and payable is recognised in profit
or loss.
3.16
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax
(GST), except:
i. where the amount of GST incurred is not recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an asset or as part of an item of expense;
or
for receivables and payables which are recognised inclusive of GST.
ii.
The net amount of GST recoverable from, or payable to, the taxation authority is included as
part of receivables or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of
cash flows arising from investing and financing activities which is recoverable from, or payable
to, the taxation authority is classified within operating cash flows.
45
Cynata Therapeutics Limited
3.17 Comparative amounts
When current period balances have been classified differently within current period
disclosures when compared to prior periods, comparative disclosures have been restated to
ensure consistency of presentation between periods.
4.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in note 3, the
directors of the Company are required to make judgements, estimates and assumptions about
the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period on which the estimate is revised if the
revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
4.1
Key sources of estimation uncertainty
4.1.1 Recoverability of intangible assets acquired in a business combination
During the year, the directors reconsidered the recoverability of the Group’s intangible assets
arising from the acquisition of Cynata Incorporated, which is included in the consolidated
statement of financial position at 30 June 2018 with a carrying value of $3,533,192 (2017:
$3,813,157) after accounting for amortisation.
The directors have allocated the carrying value of the patents (before amortisation) to the
different categories of the research based on their estimates. The resulting allocation has
given rise to an amortisation expense of $279,965 for the year ended 30 June 2018 (2017:
$279,965).
The directors performed an impairment testing and concluded that no further impairment of
the intangible assets is required for the year (2017: nil).
5.
Segment information
The Group operates in one business segment, namely the development and commercialisation
of therapeutic products. AASB 8 Operating Segments states that similar operating segments
can be aggregated to form one reportable segment. However, none of the operating segments
currently meet any of the prescribed quantitative thresholds, and as such do not have to be
reported separately. The Group has therefore decided to aggregate all its reporting segments
into one reportable operating segment.
The revenue and results of this segment are those of the Group as a whole and are set out in
the consolidated statement of profit or loss and other comprehensive income. The segment
assets and liabilities are those of the Group and set out in the consolidated statement of
financial position.
6.
Other income
Continuing operations
Interest revenue
Other income and grants
Research and development rebate
2018
$
142,925
46,450
1,328,685
1,518,060
2017
$
94,231
-
1,748,874
1,843,105
46
7.
Loss for the year
Loss for the year has been arrived at after charging the following
items of expenses:
Employee benefits expenses
Wages and salaries
Superannuation expenses
Leave entitlements
Total employee benefits expenses i
Share-based payment expenses
Other expenses
Share register fees
Director fees
Legal costs
Other administrative expenses
Effect of foreign exchange
Total other expenses
i excludes amounts charged to product development costs.
8.
8.1
Income taxes relating to continuing operations
Income tax recognised in profit or loss
Current tax
Deferred tax
Cynata Therapeutics Limited
2018
$
789,094
53,912
16,898
859,904
274,415
13,386
200,000
162,923
1,119,905
(46,827)
1,449,387
2017
$
984,980
67,279
(19,266)
1,032,993
248,747
11,221
166,667
103,676
1,016,484
64,082
1,362,130
2018
$
2017
$
-
-
-
-
-
-
The income tax expense for the year can be reconciled to the accounting loss as follows:
Loss before tax from continuing operations
Income tax expense calculated at 27.5% (2017: 27.5%)
Tax effect of R&D rebate received
Effect of expenses that are not deductible in determining taxable
income
Effect of unused tax losses not recognised as deferred tax assets
2018
$
(4,566,134)
2017
$
(4,553,536)
(1,255,687)
(365,388)
(1,252,222)
(480,940)
1,166,940
454,135
-
1,025,518
707,644
-
The tax rate used for the 2018 reconciliations above is the corporate tax rate of 27.5% (2017: 27.5%)
payable by Australian corporate entities on taxable profits under Australian tax law.
8.2
Income tax recognised directly in equity
Current tax
Share issue costs
Deferred tax
Arising on transactions with owners:
Share issue costs deductible over 5 years
2018
$
2017
$
-
-
-
-
-
-
47
8.
8.3
Income taxes relating to continuing operations (cont’d)
Unrecognised deferred tax assets in relation to:
Unused tax losses (revenue) for which no deferred tax assets have
been recognised
Other
8.4
Unrecognised deferred tax (liabilities) in relation to:
Intangibles
Other
Net deferred tax assets
Cynata Therapeutics Limited
2018
$
2017
$
4,975,545
122,943
5,098,488
4,521,410
81,048
4,602,458
2018
$
(1,059,958)
(5,043)
(1,065,001)
2017
$
(1,143,947)
(10,108)
(1,154,055)
4,033,487
3,448,403
All unused tax losses were incurred by Australian entities.
This benefit for tax losses will only be obtained if the specific entity carrying forward the tax losses
derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the losses to be realised, and the Company complies with the conditions for deductibility
imposed by tax legislation.
9.
Loss per share
Basic and diluted loss per share (cents per share)
9.1
Basic and diluted loss per share
2018
cents per
share
2017
cents per
share
(5.04)
(5.69)
The loss and weighted average number of ordinary shares used in the calculation of basic earnings per
share are as follows:
Loss for the year attributable to owners of the Company
2018
$
(4,566,134)
2017
$
(4,553,536)
2018
No.
2017
No.
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share
90,608,951
80,061,243
10.
Trade and other receivables
Deposits made
Prepayments
Other receivables
At the reporting date, none of the receivables were past due/impaired.
2018
$
3,568
337,520
52,688
393,776
2017
$
3,568
54,506
33,198
91,272
48
11.
Intangibles
Carrying value at beginning of year (i)
Amortisation (ii)
Net book value of research and development at end of year
Cynata Therapeutics Limited
2018
$
3,813,157
(279,965)
3,533,192
2017
$
4,093,122
(279,965)
3,813,157
(i) The carrying value at beginning of year represents the fair value attributable to interests in research
and development of stem cells is due to, and in recognition of, the successful development activities and
data generated by Cynata Incorporated as at the acquisition date (1 December 2013), representing
less accumulated
progress toward the eventual commercialisation of the relevant technology
amortisation.
(ii) An amortisation expense of $279,965 has been recognised in profit or loss (2017: $279,965). Refer to
note 3.13 for more information on the Group’s accounting policy on intangibles and amortisation.
Cost
Balance at 1 July
Additions
Disposals
Balance at 30 June
Accumulated amortisation
Balance at 1 July
Amortisation expense
Balance at 30 June
12.
Trade and other payables
Trade payables
Accrued expenses
13.
Provisions
Provisions for employee entitlements
2018
$
4,821,799
-
-
4,821,799
2018
$
1,008,642
279,965
1,288,607
2018
$
299,080
426,315
725,395
2017
$
4,821,799
-
-
4,821,799
2017
$
728,677
279,965
1,008,642
2017
$
94,877
290,867
385,744
2018
$
20,751
2017
$
3,853
49
14.
Issued capital
95,066,251 fully paid ordinary shares (30 June 2017:
90,057,248)
Cynata Therapeutics Limited
2018
$
44,191,746
2017
$
38,377,761
Fully paid ordinary shares
Balance at beginning of year
Exercise of share options (i)
Exercise of share options (ii)
Exercise of share options (iii)
Exercise of share options (iv)
Exercise of share options (v)
Exercise of share options (vi)
Exercise of share options (vii)
Issue of shares (viii)
Issue of shares (ix)
Share Placement (x)
Share issue costs
30 June 2018
30 June 2017
No.
90,057,248
300,000
159,683
150,000
150,000
75,000
50,000
50,000
4,074,320
-
-
-
95,066,251
$
38,377,761
159,000
159,683
150,000
150,000
75,000
50,000
50,000
5,194,758
-
-
(174,456)
44,191,746
No.
72,738,075
-
-
-
-
-
-
-
-
8,088,403
9,230,770
-
90,057,248
$
28,791,762
-
-
-
-
-
-
-
-
3,972,457
6,000,001
(386,459)
38,377,761
(i) Exercise of unlisted options at $0.53 each on 28 February 2018.
(ii) Exercise of unlisted options at $1.00 each on 13 March 2018.
(iii) Exercise of unlisted options at $1.00 each on 28 March 2018.
(iv) Exercise of unlisted options at $1.00 each on 4 April 2018.
(v) Exercise of unlisted options at $1.00 each on 24 April 2018.
(vi) Exercise of unlisted options at $1.00 each on 15 May 2018.
(vii) Exercise of unlisted options at $1.00 each on 22 May 2018.
(viii) Issue of fully paid ordinary shares at $1.275 each on 4 June 2018 to Fidelity International.
(ix) Issue of fully paid ordinary shares at $0.49113 each on 25 January 2017 to FUJIFILM Corporation of Japan.
(x) Issue of fully paid ordinary shares at $0.65 each on 30 January 2017 pursuant to a placement.
15.
Reserves
15.1
Share-based payments
Balance at beginning of year
Recognition of share-based payments (i)
Balance at end of year
2018
$
3,966,187
274,415
4,240,602
2017
$
3,717,440
248,747
3,966,187
(i) Total expenses arising from share-based payment transactions recognised during the year ended 30
June 2018 was $274,415 (2017: $248,747).
Further information about share-based payments is set out in note 17.
15.2
Foreign currency translation reserve
Balance at beginning of year
Exchange differences arising on translating the foreign operations
Balance at end of year
2018
$
4,724
-
4,724
2017
$
4,476
248
4,724
Exchange differences relating to the translation of results and net assets of the Group’s foreign
operations from their functional currencies to the Group’s presentation currency (i.e. Australian dollars)
are recognised directly in other comprehensive income and accumulated in the foreign currency
translation reserve.
50
Cynata Therapeutics Limited
16.
Financial instruments
16.1 Capital management
The Group’s objective when managing capital is to safeguard its ability to continue as a going concern so
that it can continue to provide returns for shareholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the
capital structure, the Group may adjust the amount of dividends paid, return capital to shareholders,
issue new shares or sell assets to reduce debt.
Given the nature of the business, the Group monitors capital on the basis of current business operations
and cash flow requirements. There were no changes in the Group’s approach to capital management
during the year.
16.2 Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net financial assets
2018
$
12,206,040
56,256
12,262,296
2017
$
10,349,764
36,766
10,386,530
725,395
725,395
385,744
385,744
11,536,901
10,000,786
The fair value of the above financial instruments approximates their carrying values.
16.3 Financial risk management objectives
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group’s objectives, policies and processes for managing those risks
and the methods used to measure them. Further quantitative information in respect of those risks is
presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the methods used to measure them from
previous periods unless otherwise stated in this note.
The board has overall responsibility for the determination of the Group’s risk management objectives
and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for
designing and operating processes that ensure the effective implementation of the objectives and
policies to the Group’s finance function. The Group’s risk management policies and objectives are
therefore designed to minimise the potential impacts of these risks on the Group where such impacts
may be material. The board receives monthly financial reports through which it reviews the
effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the board is to set policies that seek to reduce risk as far as possible without
unduly affecting the Group’s competitiveness and flexibility.
16.4 Market risk
Market risk for the Group arises from the use of interest bearing financial instruments. It is the risk that the
fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rate
(see 16.5 below).
51
Cynata Therapeutics Limited
16.
Financial instruments (cont’d)
16.5
Interest rate risk management
Interest rate risk arises on cash and cash equivalents and receivables from related parties. The Group
does not enter into any derivative instruments to mitigate this risk. As this is not considered a significant
risk for the Group, no policies are in place to formally mitigate this risk.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both
derivatives and non-derivative instruments at the end on the reporting period.
If interest rates had been 100 basis points higher/lower and all other variables were held constant, the
Group’s loss for the year ended 30 June 2018 would decrease/increase by $122,060 (2017: $103,498)
16.6 Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently, exposures to
exchange rate fluctuations arise. At 30 June 2018, the Company has cash denominated in US dollars
(US$1,299,552 (2017: US$1,600,459)). The AUD equivalent at 30 June 2018 is $1,755,434 (2017:
$2,088,279). A 5% movement in foreign exchange rates would increase or decrease the Group’s loss
before tax by approximately $87,772 (2017: $104,414).
16.7 Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. The Group has adopted a policy of dealing with creditworthy counterparties and
obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from
defaults. The Group only transacts with entities that are rated the equivalent of investment grade and
above. This information is supplied by independent rating agencies where available and, if not available, the
Group uses other publicly available financial information and its own trading records to rate its major
customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored
and the aggregate value of transactions concluded is spread amongst approved counterparties.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings
assigned by international credit-rating agencies.
16.8 Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, which has
established an appropriate liquidity risk management framework for the management of the Group’s short-
, medium- and long-term funding and liquidity management requirements. The Group manages liquidity by
maintaining adequate banking facilities, by continuously monitoring forecast and actual cash flows, and by
matching the maturity profiles of financial assets and liabilities.
Contractual cash flows
Carrying
Amount
Less than 1
month
1-3
months
3-12
months
1 year to
5 years
Total contractual
cash flows
2018
Trade and other payables
2017
Trade and other payables
$
$
725,395
725,395
385,744
385,744
$
-
-
$
-
-
$
-
-
$
725,395
385,744
52
Cynata Therapeutics Limited
17.
Share-based payments
17.1 Employee share option plan
Options may be issued to external consultants or non-related parties without shareholders’ approval,
where the annual 15% capacity pursuant to ASX Listing Rule 7.1 has not been exceeded. Options cannot
be offered to a director or an associate except where approval is given by shareholders at a general
meeting.
Each option converts into one ordinary share of Cynata Therapeutics Limited on exercise. The options
carry neither right to dividends nor voting rights. Options may be exercised at any time from the date of
vesting to the date of their expiry.
The following options arrangements were in existence at the reporting date:
Option
series
Number
Grant date
Grant date
fair value
$
Exercise
price
$
Expiry date
Vesting date
1
2
3
4
5
6
7
5,000,000i
27 Sept 2013
750,000
233,333
300,000
800,000ii
100,000iii
2,000,000iv
16 Dec 2015
17 July 2015
22 Feb 2016
16 Nov 2016
7 Aug 2017
17 Nov 2017
0.290
0.237
0.610
0.222
0.386
0.233
0.074
0.400
27 Sept 2018
0.490
1.000
0.530
1.022
0.880
1.500
16 Dec 2018
17 July 2020
22 Feb 2019
17 Nov 2019
4 Aug 2020
17 Nov 2019
Vested
Vested
Vested
Vested
Vested
Vested
Various
i This represents 100,000,000 unlisted options after a 1:20 consolidation issued to Drs Washer and Macdonald.
ii This represents unlisted options issued to Dr Macdonald, Dr Wotton, Dr Chiplin and Mr Webse (200,000 each)
pursuant to an Employee Option Acquisition Plan.
iii This represents unlisted options issued to a third party for the provision of corporate advisory services. 300,000
unlisted options were issued on 7 Aug 2017 and 200,000 lapsed on 23 Jan 2018.
iv This represents unlisted incentive options issued to Dr Wotton pursuant to the terms of his appointment as non-
executive chairman. 1,000,000 options vest in 12 months and the remainder in 18 months from date of grant.
There has been no alteration to the terms and conditions of the above options arrangements.
17.2 Fair value of share options granted in the year
Option were priced using the Black-Scholes pricing model. Expected volatility is based on the historical
share price volatility over the past 12 months.
The weighted average exercise price of options granted during the year is $1.42 (2017: $1.02).
Where relevant, the fair value of the options has been adjusted based on management’s best estimate
for the effects of non-transferability of the options.
Input
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Risk-free interest rate
Series 6
$0.590
$0.880
75%
3 years
n/a
1.92%
Series 7
$0.605
$1.500
65%
2 years
n/a
1.79%
53
17.
Share-based payments (cont’d)
17.3 Movements in share options during the year
The following reconciles the share options outstanding at the beginning and end of the year:
Cynata Therapeutics Limited
2018
2017
Number of
options
No.
7,483,333
2,300,000
-
(400,000)
(200,000)
9,183,333
7,183,333
Weighted
average
exercise price
$
0.513
1.419
-
0.648
0.880
0.726
0.510
Number of
options
No.
7,183,333
800,000
-
-
(500,000)
7,483,333
6,433,333
Weighted
average
exercise price
$
0.448
1.022
-
-
0.400
0.513
0.450
Balance at beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Balance at end of year
Exercisable at end of year
17.4 Share options exercised during the year
The following share options were exercised during the year (2017: nil):
Option series
(2) Granted 17 Jul 2015
(2) Granted 17 Jul 2015
(3) Granted 22 Feb 2016
Number
exercised
50,000
50,000
300,000
Exercise date
15 May 2018
22 May 2018
28 Feb 2018
Share price at
exercise date
$1.390
$1.270
$1.155
17.5 Share options outstanding at the end of the year
The share options outstanding at the end of the year had a weighted average exercise price of $0.723
(2017: $0.513) and a weighted average remaining contractual life of 251 days (2017: 548 days).
18.
Key management personnel
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
Share-based payments
2018
$
1,053,992
53,912
206,780
1,314,684
2017
$
1,218,131
67,278
248,747
1,534,156
Short-term employee benefits
These amounts include fees paid to non-executive directors, accrued bonuses, salary and paid leave
benefits awarded to executive directors and fees paid to entities controlled by the directors.
Post-employment benefits
These amounts are superannuation contributions made during the year.
54
Share-based payments
These amounts represent the expense related to the participation of key management personnel in
equity -settled benefit schemes as measured by the fair value of the options granted on grant date.
Further information in relation to key management personnel remuneration can be found in the
remuneration report contained in the directors’ report.
Cynata Therapeutics Limited
19.
Related party transactions
19.1
Entities under the control of the Group
The Group consists of the parent entity, Cynata Therapeutics Limited and its wholly-owned US-based
subsidiary Cynata Incorporated, which in turns controls 100% of Cynata Australia Pty Ltd, the non-
operating entity of Cynata Incorporated.
Balances and transactions between the parent entity and its subsidiaries, which are related parties of the
entity, have been eliminated on consolidation and are not disclosed in this note.
19.2 Key management personnel
Any person(s) having authority and responsibility for planning, directing and controlling the activities of
the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity,
are considered key management personnel.
For details of disclosures relating to key management personnel, refer to the remuneration report
contained in the directors’ report and note 18.
19.3 Other related party transactions
Mr Webse’s services are provided by Platinum Corporate Secretariat Pty Ltd (“Platinum Corporate”). Mr
Webse is the sole director of Platinum Corporate. Company secretarial fees paid to Platinum Corporate
are disclosed in the remuneration report.
Transactions with related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
20.
Cash and cash equivalents
For the purposes of the consolidated statement of cash flows, cash and cash equivalents include cash on
hand and in banks. Cash and cash equivalents at the end of the reporting period as shown in the
consolidated statement of cash flows can be reconciled to the related items in the consolidated
statement of financial position as follows:
Cash and bank balances
2018
$
2017
$
12,206,040
10,349,764
55
20.
Cash and cash equivalents (cont’d)
20.1 Reconciliation of loss for the year to net cash flows from operating activities
Cynata Therapeutics Limited
Cash flow from operating activities
Loss for the year
Adjustments for:
Share-based payments
Amortisation expenses
Effects of exchange rate changes on the balance of cash held in
foreign currencies
Movements in working capital
(Increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions – annual leave
Net cash outflows from operating activities
2018
$
2017
$
(4,566,134)
(4,553,536)
274,415
279,965
(59,781)
248,747
279,965
67,218
(302,502)
295,223
16,898
(4,061,916)
(32,804)
(8,018)
(49,762)
(4,048,190)
21. Contingent liabilities and contingent assets
The directors are not aware of any significant contingencies at balance date other than a requirement for
the payment of royalties pursuant to certain licence agreements should future revenues exceed
predetermined thresholds.
22. Commitments for expenditure
The Group has entered into a number of agreements related to research and development activities. As
at 30 June 2018, under these agreements, the Company is committed to making payments over future
periods, as follows:
- During the period 1 July 2018 – 30 June 2019
- During the period 1 July 2019 – 30 June 2020
- During the period 1 July 2021 – 30 June 2022
A$
1,895,529
659,979
303,832
Where commitments are denominated in foreign currencies, the amounts have been converted to
Australian dollars based on exchange rates prevailing as at 30 June 2018.
23.
Remuneration of auditors
Auditor of the Group
Audit and review of the financial statements
2018
$
36,388
2017
$
36,880
The auditor of the Group is Stantons International Audit and Consulting Pty Ltd.
56
24. Parent entity information
The accounting policies of the parent entity, which have been applied in determining the financial
information shown below, are the same as those applied in the consolidated financial statements. Refer
to note 3 for a summary of significant accounting policies relating to the Group.
Cynata Therapeutics Limited
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Provisions
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Commitments and contingencies
2018
$
2017
$
12,599,817
4,890,653
17,490,470
10,441,036
4,890,653
15,331,689
725,395
20,751
746,146
16,744,324
385,744
3,853
389,597
14,942,092
44,191,746
4,240,602
(31,688,024)
16,744,324
38,377,761
3,966,186
(27,401,855)
14,942,092
(4,286,169)
(4,273,323)
There were no material commitments or contingencies at the reporting date for the parent
company except for those mentioned in note 21 and note 22 above.
25.
Subsidiaries
Details of the Company’s subsidiaries at the end of the reporting period are as follows:
Name of subsidiary
Principal activity
Cynata Incorporated
Cynata Australia Pty Ltd (i)
Holds licences with WARF
for core IPs
Non-operating subsidiary
from date of reconstruction
Place of
incorporation
USA
Proportion of ownership
interest and voting
power held by the Group
2018
100%
2017
100%
Australia
100%
100%
(i) Cynata Australia Pty Ltd is a wholly owned subsidiary of Cynata Incorporated.
57
Cynata Therapeutics Limited
26.
Events after the reporting period
On 2 July 2018, the Company announced it had commenced a development partnership with Royal
College of Surgeons in Ireland (RCSI) to focus on demonstrating the therapeutic potential of Cynata’s
Cymerus™ mesenchymal stem cells to treat sepsis.
On 6 July and 16 July 2018, the Company issued 60,000 and 55,000 fully paid ordinary shares respectively
following the exercise of unlisted 17 July 2020 options.
On 11 July 2018, the Company issued 477,373 fully paid ordinary shares following a cashless exercise of
750,000 unlisted 16 December 2018 options at a calculated value of $643,499.
On 31 July 2018, Cynata announced positive efficacy data from a study of its Cymerus™ MSCs in a
preclinical heart attack model. Cymerus™ MSC treatment improved recovery of cardiac function post
heart attack compared to either placebo or bone marrow-derived MSCs (BM-MSCs). Cymerus™ MSC
treatment also reduced left ventricular end-systollic diameter (LVESD) compared to either placebo or
BM-MSCs. LVESD reduction is associated with lower risk of further cardiac events.
Other than the above, there has not been any matter or circumstance that has arisen since the end of
the year that has significantly affected, or may significantly affect, the operations of the Group, the
results of those operations, or the state of affairs of the Group in future financial years.
27. Approval of financial statements
The financial statements were approved by the board of directors and authorised for issue on 22 August
2018.
58
Cynata Therapeutics Limited
Corporate Governance Statement
This Corporate Governance Statement (“Statement”) outlines the key aspects of Cynata Therapeutics Limited
(‘Cynata’ or ‘the Company’) governance framework and main governance practices. The Company’s charters,
policies, and procedures are regularly reviewed and updated to comply with law and best practice. These charters
and policies can be viewed on Cynata's website located at www.cynata.com.
This Statement is structured with reference to the Australian Securities Exchange Corporate Governance Council’s
(“the Council’s”) “Corporate Governance Principles and Recommendations 3rd Edition” (“the Recommendations”).
The Board of Directors has adopted the Recommendations to the extent that is deemed appropriate considering
current the size and operations of the Company. Therefore, considering the size and financial position of the
Company, where the Board considers that the cost of implementing a recommendation outweighs any potential
benefits, those recommendations have not been adopted.
This Statement was approved by the Board of Directors and is current as at 21 August 2018.
Principle 1: Lay solid foundations for management and oversight
Roles of the Board & Management
The Board is responsible for evaluating and setting the strategic direction for the Company, establishing goals for
management and monitoring the achievement of these goals. The Managing Director is responsible to the Board
for the day-to-day management of the Company.
•
•
The principal functions and responsibilities of the Board include, but are not limited to, the following:
•
Appointment, evaluation and, if necessary, removal of the Managing Director, any other executive directors,
the Company Secretary and the Chief Financial Officer (if applicable) and approval of their remuneration;
Determining, in conjunction with management, corporate strategy, objectives, operations, plans and
approving and appropriately monitoring plans, new investments, major capital and operating expenditures,
capital management, acquisitions, divestitures and major funding activities;
Establishing appropriate levels of delegation to the Managing Director to allow the business to be managed
efficiently;
Approval of remuneration methodologies and systems;
•
• Monitoring actual performance against planned performance expectations and reviewing operating
information at a requisite level to understand at all times the financial and operating conditions of the
Company;
• Monitoring the performance of senior management, including the implementation of strategy and ensuring
•
•
•
•
•
•
•
appropriate resources are available;
Identifying areas of significant business risk and ensure that the Company is appropriately positioned to
manage those risks;
Overseeing the management of safety, occupational health and environmental issues;
Satisfying itself that the financial statements of the Company fairly and accurately set out the financial
position and financial performance of the Company for the period under review;
Satisfying itself that there are appropriate reporting systems and controls in place to assure the Board that
proper operational, financial, compliance, risk management and internal control processes are in place and
functioning appropriately;
Ensuring that appropriate internal and external audit arrangements are in place and operating effectively;
Authorising the issue of any shares, options, equity instruments or other securities within the constraints of
the Corporations Act and the ASX Listing Rules; and
Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the Company
has adopted, and that its practice is consistent with, a number of guidelines including:
− Code of Conduct;
− Continuous Disclosure Policy;
− Diversity Policy;
− Performance Evaluation Policy;
− Procedures for Selection and Appointment of Directors;
− Remuneration Policy;
− Risk Management and Internal Compliance and Control Policy;
− Securities Trading Policy; and
− Shareholder Communications Policy.
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Cynata Therapeutics Limited
Subject to the specific authorities reserved to the Board under the Board Charter, the Board has delegated to the
Managing Director responsibility for the management and operation of Cynata. The Managing Director is
responsible for the day-to-day operations, financial performance and administration of Cynata within the powers
authorised to him from time-to-time by the Board. The Managing Director may make further delegation within the
delegations specified by the Board and is accountable to the Board for the exercise of those delegated powers.
Further details of Board responsibilities, objectives and structure are set out in the Board Charter on the Cynata
Website.
Board Committees
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the
formation of separate committees at this time including audit, risk, remuneration or nomination committees,
preferring at this stage to manage the Company through the full Board of Directors. The Board assumes the
responsibilities normally delegated to the audit, risk, remuneration and nomination Committees.
If the Company’s activities increase, in size, scope and nature, the appointment of separate committees will be
reviewed by the Board and implemented if appropriate.
Board Appointments
The Company undertakes comprehensive reference checks prior to appointing a director or putting that person
forward as a candidate to ensure that person is competent, experienced, and would not be impaired in any way
from undertaking the duties of director. The Company provides relevant information to shareholders for their
consideration about the attributes of candidates together with whether the Board supports the appointment or re-
election.
The terms of the appointment of a non-executive director, executive directors and senior executives are agreed
upon and set out in writing at the time of appointment.
The Company Secretary
The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with the
proper functioning of the Board, including agendas, Board papers and minutes, advising the Board and its
Committees (as applicable) on governance matters, monitoring that the Board and Committee policies and
procedures are followed, communication with regulatory bodies and the ASX and statutory and other filings.
Diversity
The Board has adopted a Diversity Policy which provides a framework for the Company to establish and achieve
measurable diversity objectives, including in respect to gender, age, ethnicity and cultural diversity. The Diversity
Policy allows the Board to set measurable gender diversity objectives (if considered appropriate) and to assess
annually both the objectives (if any have been set) and the Company’s progress towards achieving them.
The Board considers that, due to the size, nature and stage of development of the Company, setting measurable
objectives for the Diversity Policy at this time is not appropriate. The Board will consider setting measurable
objectives as the Company increases in size and complexity.
The participation of women in the Company at the date of this report is as follows:
•
•
•
Women employees in the Company
Women in senior management positions
Women on the Board
0%
0%
0%
The Company’s Diversity Policy is available on its website.
Board & Management Performance Review
On an annual basis, the Board conducts a review of its structure, composition and performance.
The annual review includes consideration of the following measures:
60
Cynata Therapeutics Limited
• comparing the performance of the Board against the requirements of its Charter;
• assessing the performance of the Board over the previous 12 months having regard to the corporate strategies,
operating plans and the annual budget;
• reviewing the Board’s interaction with management;
• reviewing the type and timing of information provided to the Board by management;
• reviewing management’s performance in assisting the Board to meet its objectives; and
•
identifying any necessary or desirable improvements to the Board Charter.
The method and scope of the performance evaluation will be set by the Board and may include a Board self-
assessment checklist to be completed by each Director. The Board may also use an independent adviser to assist in
the review.
The Executive Chairman has primary responsibility for conducting performance appraisals of Non-Executive
Directors, in conjunction with them, having particular regard to:
• contribution to Board discussion and function;
• degree of independence including relevance of any conflicts of interest;
• availability for and attendance at Board meetings and other relevant events;
• contribution to Company strategy;
• membership of and contribution to any Board committees; and
• suitability to Board structure and composition.
The Board conducts an annual performance assessment of the Managing Director against agreed key performance
indicators.
Board and management performance reviews were conducted during the financial year in accordance with the
above processes.
Independent Advice
Directors have a right of access to all Company information and executives. Directors are entitled, in fulfilling their
duties and responsibilities, to obtain independent professional advice on any matter connected with the discharge
of their responsibilities, with prior notice to the Chairman, at Cynata’s expense.
Principle 2: Structure the board to add value
Board Composition
During the financial year and to the date of this report the Board was comprised of the following members:
Dr Paul Wotton
Dr Ross Macdonald
Dr Stewart Washer
Mr Peter Webse
Dr John Chiplin
Non-Executive Chairman (appointed 8 June 2016);
Managing Director (appointed 1 August 2013);
Non-Executive Director (appointed 1 August 2013);
Non-Executive Director (appointed 18 May 2012);
Non-Executive Director (appointed 18 November 2014).
The Board currently consists of one Executive Director, being the Managing Director, and four Non-Executive
Directors, one of whom is also the Company Secretary.
Cynata has adopted a definition of 'independence' for Directors that is consistent with the Recommendations.
The Board does not consist of a majority of independent directors. Dr John Chiplin and Dr Paul Wotton are the only
current directors considered to be independent. Dr Stewart Washer is not considered to be an independent
director by virtue of the fact that he was a former executive of the Company. Mr Peter Webse is not considered to
be an independent director by virtue of the fact the he has a contractual arrangement to provide company
secretarial services to the Company.
Given the size of the Board and the nature and scale of the Company’s current operations the Board believes the
presence of two independent directors on the Board is sufficient.
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Cynata Therapeutics Limited
Board Selection Process
The Board considers that a diverse range of skills, backgrounds, knowledge and experience is required in order to
effectively govern Cynata. The Board believes that orderly succession and renewal contributes to strong corporate
governance and is achieved by careful planning and continual review.
The Board is responsible for the nomination and selection of directors. The Board reviews the size and composition
of the Board regularly and at least once a year as part of the Board evaluation process. The Board has a skills
matrix covering the competencies and experience of each member. When the need for a new director is identified,
the required experience and competencies of the new director are defined in the context of this matrix and any
gaps that may exist.
Generally, a list of potential candidates is identified based on these skills required and other issues such as
geographic location and diversity criteria. Candidates are assessed against the required skills and on their
qualifications, backgrounds and personal qualities. In addition, candidates are sought who have a proven track
record in creating security holder value and the required time to commit to the position.
Induction of New Directors and Ongoing Development
New Directors are issued with a formal Letter of Appointment that sets out the key terms and conditions of their
appointment, including Director's duties, rights and responsibilities, the time commitment envisaged, and the
Board's expectations regarding involvement with any Committee work.
An induction program is in place and new Directors are encouraged to engage in professional development
activities to develop and maintain the skills and knowledge needed to perform their role as Directors effectively.
Principle 3: Act ethically and responsibly
The Company has implemented a Code of Conduct, which provides guidelines aimed at maintaining high ethical
standards, corporate behaviour and accountability within the Company.
All employees and Directors are expected to:
•
respect the law and act in accordance with it;
• maintain high levels of professional conduct;
•
•
•
•
respect confidentiality and not misuse Company information, assets or facilities;
avoid real or perceived conflicts of interest;
act in the best interests of shareholders;
by their actions contribute to the Company’s reputation as a good corporate citizen which seeks the respect of
the community and environment in which it operates;
perform their duties in ways that minimise environmental impacts and maximise workplace safety;
exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their workplace and
with customers, suppliers and the public generally; and
act with honesty, integrity, decency and responsibility at all times.
•
•
•
An employee that breaches the Code of Conduct may face disciplinary action including, in the cases of serious
breaches, dismissal. If an employee suspects that a breach of the Code of Conduct has occurred or will occur, he or
she must report that breach to the Company Secretary. No employee will be disadvantaged or prejudiced if he or
she reports in good faith a suspected breach. All reports will be acted upon and kept confidential.
Principle 4: Safeguard integrity in corporate reporting
The Board as a whole fulfills the functions normally delegated to the Audit Committee as detailed in the Audit
Committee Charter.
The Board is responsible for the initial appointment of the external auditor and the appointment of a new external
auditor when any vacancy arises. Candidates for the position of external auditor must demonstrate complete
independence from the Company through the engagement period. The Board may otherwise select an external
auditor based on criteria relevant to the Company’s business and circumstances. The performance of the external
auditor is reviewed on an annual basis by the Board.
The Board receives regular reports from management and from external auditors. It also meets with the external
auditors as and when required.
62
Cynata Therapeutics Limited
The external auditors attend Cynata's AGM and are available to answer questions from security holders relevant to
the audit.
Prior approval of the Board must be gained for non-audit work to be performed by the external auditor. There are
qualitative limits on this non-audit work to ensure that the independence of the auditor is maintained.
There is also a requirement that the audit partner responsible for the audit not perform in that role for more than
five years.
CEO and CFO (Equivalent) Certifications
The Board has received certifications from the CEO and CFO (Equivalent) in connection with the financial
statements for Cynata for the Reporting Period. The certifications state that the declaration provided in
accordance with Section 295A of the Corporations Act as to the integrity of the financial statements is founded on a
sound system of risk management and internal control which is operating effectively.
Principle 5: Make timely and balanced disclosure
The Company has a Continuous Disclosure Policy which outlines the disclosure obligations of the Company as
required under the ASX Listing Rules and Corporations Act. The policy is designed to ensure that procedures are in
place so that the market is properly informed of matters which may have a material impact on the price at which
Company securities are traded.
The Board considers whether there are any matters requiring disclosure in respect of each and every item of
business that it considers in its meetings. Individual Directors are required to make such a consideration when they
become aware of any information in the course of their duties as a Director of the Company.
The Company is committed to ensuring all investors have equal and timely access to material information
concerning the Company.
The Board has designated the Company Secretary as the person responsible for communicating with the ASX. The
Chairman, Managing Director and the Company Secretary are responsible for ensuring that:
a)
Company announcements are made in a timely manner, that announcements are factual and do not omit any
material information required to be disclosed under the ASX Listing Rules and Corporations Act; and
b) Company announcements are expressed in a clear and objective manner that allows investors to assess the
impact of the information when making investment decisions.
Principle 6: Respect the rights of security holders
The Company recognises the value of providing current and relevant information to its shareholders.
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights the
Company is committed to:
•
communicating effectively with shareholders through releases to the market via ASX, the company website,
information mailed to shareholders and the general meetings of the Company;
giving shareholders ready access to clear and understandable information about the Company; and
•
• making it easy for shareholders to participate in general meetings of the Company.
The Company also makes available a telephone number and email address for shareholders to make enquiries of
the Company. These contact details are available on the “contact us” page of the Company’s website.
Shareholders may elect to, and are encouraged to, receive communications from Cynata and Cynata's securities
registry electronically.
The Company maintains information in relation to its Constitution, governance documents, Directors and senior
executives, Board and committee charters, annual reports and ASX announcements on the Company’s website.
Principle 7: Recognise and manage risk
The Board is committed to the identification, assessment and management of risk throughout Cynata's business
activities.
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Cynata Therapeutics Limited
The Board is responsible for the oversight of the Company’s risk management and internal compliance and control
framework. The Company does not have an internal audit function. Responsibility for control and risk management
is delegated to the appropriate level of management within the Company with the Managing Director having
ultimate responsibility to the Board for the risk management and internal compliance and control framework.
Cynata has established policies for the oversight and management of material business risks.
Cynata's Risk Management and Internal Compliance and Control Policy recognises that risk management is an
essential element of good corporate governance and fundamental in achieving its strategic and operational
objectives. Risk management improves decision making, defines opportunities and mitigates material events that
may impact security holder value.
Cynata believes that explicit and effective risk management is a source of insight and competitive advantage. To
this end, Cynata is committed to the ongoing development of a strategic and consistent enterprise wide risk
management program, underpinned by a risk conscious culture.
Cynata accepts that risk is a part of doing business. Therefore, the Company’s Risk Management and Internal
Compliance and Control Policy is not designed to promote risk avoidance. Rather Cynata's approach is to create a
risk conscious culture that encourages the systematic identification, management and control of risks whilst
ensuring we do not enter into unnecessary risks or enter into risks unknowingly.
Cynata assesses its risks on a residual basis; that is, it evaluates the level of risk remaining and considering all the
mitigation practices and controls. Depending on the materiality of the risks, Cynata applies varying levels of
management plans.
The Board has required management to design and implement a risk management and internal compliance and
control system to manage Cynata's material business risks. It receives regular reports on specific business areas
where there may exist significant business risk or exposure. The Company faces risks inherent to its business,
including economic risks, which may materially impact the Company’s ability to create or preserve value for
security holders over the short, medium or long term. The Company has in place policies and procedures, including
a risk management framework (as described in the Company’s Risk Management and Internal Compliance and
Control Policy), which is developed and updated to help manage these risks. The Board does not consider that the
Company currently has any material exposure to environmental or social sustainability risks.
The Company’s process of risk management and internal compliance and control includes:
•
identifying and measuring risks that might impact upon the achievement of the Company’s goals and
objectives, and monitoring the environment for emerging factors and trends that affect those risks;
formulating risk management strategies to manage identified risks, and designing and implementing
appropriate risk management policies and internal controls; and
•
• monitoring the performance of, and improving the effectiveness of, risk management systems and internal
compliance and controls, including regular assessment of the effectiveness of risk management and internal
compliance and control.
The Board reviews the Company’s risk management framework at least annually to ensure that it continues to
effectively manage risk.
Management reports to the Board as to the effectiveness of Cynata's management of its material business risks on
at each Board meeting.
Principle 8: Remunerate fairly and responsibly
The Board as a whole fulfills the functions normally delegated to the Remuneration Committee as detailed in the
Remuneration Committee Charter.
Cynata has implemented a Remuneration Policy which was designed to recognise the competitive environment
within which Cynata operates and also emphasise the requirement to attract and retain high caliber talent in order
to achieve sustained improvement in Cynata’s performance. The overriding objective of the Remuneration Policy is
to ensure that an individual’s remuneration package accurately reflects their experience, level of responsibility,
individual performance and the performance of Cynata.
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Cynata Therapeutics Limited
The key principles are to:
•
•
link executive reward with strategic goals and sustainable performance of Cynata;
apply challenging corporate and individual key performance indicators that focus on both short-term and
long-term outcomes;
• motivate and recognise superior performers with fair, consistent and competitive rewards;
•
•
•
remunerate fairly and competitively in order to attract and retain top talent;
recognise capabilities and promote opportunities for career and professional development; and
through employee ownership of Cynata shares, foster a partnership between employees and other security
holders.
The Board determines the Company’s remuneration policies and practices and assesses the necessary and desirable
competencies of Board members. The Board is responsible for evaluating Board performance, reviewing Board and
management succession plans and determines remuneration packages for the CEO, Non-Executive Directors and
senior management based on an annual review.
Cynata’s executive remuneration policies and structures and details of remuneration paid to directors and senior
managers are set out in the Remuneration Report.
Non-Executive Directors receive fees (including statutory superannuation where applicable) for their services, the
reimbursement of reasonable expenses and, in certain circumstances options. They do not receive any termination
or retirement benefits, other than statutory superannuation.
The maximum aggregate remuneration approved by shareholders for Non-Executive Directors is $300,000 per
annum. The Directors set the individual Non-Executive Directors fees within the limit approved by shareholders.
The total fees paid to Non-Executive Directors during the reporting period were $250,000.
Executive directors and other senior executives are remunerated using combinations of fixed and performance-
based remuneration. Fees and salaries are set at levels reflecting market rates and performance-based
remuneration is linked directly to specific performance targets that are aligned to both short and long-term
objectives.
In accordance with the Company’s Securities Trading Policy, participants in an equity-based incentive scheme are
prohibited from entering into any transaction that would have the effect of hedging or otherwise transferring the
risk of any fluctuation in the value of any unvested entitlement in the Company’s securities to any other person.
Further details in relation to the company’s remuneration policies are contained in the Remuneration Report,
within the Directors’ report.
65
ASX Additional Information as at 2 October 2018
Substantial Shareholders
The names of the substantial shareholders disclosed to the Company as substantial shareholders as at
2 October 2018 are:
Cynata Therapeutics Limited
Name
FIL Investment Management (Hong Kong) Limited
Fujifilm Corporation
Distribution of Ordinary Shares
Number of
Shares Held
9,506,625
8,088,403
% of Issued
Capital
10.00%
8.98%
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Voting Rights
Number of
Holders
Ordinary
Shares
% of Issued
Capital
554
846
418
751
132
2,701
316,345
2,399,303
3,393,419
25,321,651
69,327,906
95,658,624
0.31
2.38
3.37
25.13
68.81
100.00
(a)
(b)
(c)
at meetings of members each member entitled to vote may vote in person or by proxy or attorney;
on a show of hands each person present who is a member has one vote, and on a poll each person
present in person or by proxy or by attorney has one vote for each ordinary share held; and
no voting rights attach to unlisted options.
Number of Holders of Unlisted Options
700,000 unlisted $1.022 Options expiring 17/11/2019 held by 4 holders (1);
300,000 unlisted $0.53 Options expiring 22/02/2019 held by 1 holder (2);
2,916,986 unlisted $1.00 Options expiring 17/07/2020 held by 6 holders (3);
100,000 unlisted $0.88 Options expiring 4/8/2020 held by 1 holder (4); and
2,000,000 unlisted $1.50 Options expiring 17/11/2019 held by 1 holder (5).
Unlisted Option Holders holding 20% or more:
(1) 200,000 Options held in the name of Dr John Chiplin (28.57%), 200,000 Options held in the name of Mrs
Sharon Anne Macdonald (28.57%) and 200,000 Options held in the name of Mrs Kay Joan Webse (28.57%).
(2) 300,000 Options held in the name of Pegari Pty Ltd (100%).
(3) 1,666,668 Options held in the name of Merrill Lynch (Australia) Nominees Pty Limited (57.14%) and
1,111,112 Options held in the name of Citicorp Nominees Pty Limited (38.09%).
(4) 100,000 Options held in the name of Pegari Pty Ltd (100%).
(5) 2,000,000 Options held in the name of Dr Paul Wotton (100%).
Restricted Securities
There are no ASX restricted securities on issue.
On-Market Buy-Back
There is no current on-market buy back.
66
Unmarketable Parcels
The number of shareholders holding less than a marketable parcel is 148.
20 Largest Shareholders
Name
HSBC Custody Nominees (Australia) Limited
Fujifilm Corporation
Pershing Australia Nominees Pty Ltd
Dr Ross Alexander Macdonald
Mal Washer Nominees Pty Ltd
John W King Nominees Pty Ltd
Professor Igor Slukvin
J P Morgan Nominees Australia Limited
Helium Management Pty Ltd
BNP Paribas Nominees Pty Ltd
Citicorp Nominees Pty Limited
Dr Maksym Vodyanyk
Tenbagga Resources Fund Pty Ltd
Celtic Capital Pte Ltd
Mr Jon Nicolai Herringstad Bjarnason
Tisia Nominees Pty Ltd
Neweconomy Com AU Nominees Pty Limited <900 Account>
C M Cook Superannuation Pty Ltd
BNP Paribas Noms Pty Ltd
Mr George McDougall & Ms Geraldine Frances Elmes
Cynata Therapeutics Limited
Number of
Shares Held
9,840,885
8,088,403
2,705,000
2,500,000
2,500,000
2,463,596
2,380,317
2,105,107
1,394,366
1,356,158
1,244,315
1,191,658
1,155,447
1,140,000
750,000
747,430
726,972
700,000
674,387
600,000
44,264,041
% of Issued
Capital
9.77
8.03
2.68
2.48
2.48
2.45
2.36
2.09
1.38
1.35
1.23
1.18
1.15
1.13
0.74
0.74
0.72
0.69
0.67
0.63
43.95
67