24th October 2013
Dear Shareholder,
Hexima Limited
ABN 64 079 319 314
Level 1, 379 Collins Street
Melbourne Vic 3000
Telephone 61 3 8610 0555
Over the past year the Company has accelerated development work on its existing programs and has expanded its
research and development pipeline. This has been achieved without an increase in costs. Our primary focus is still the
disease program with DuPont Pioneer, which is now in its sixth year. DuPont Pioneer’s five year exclusivity period
expired in August. We are continuing negotiations to extend the contract, including achieving the key technical
milestone. The first field trials of our disease resistant corn plants are expected to commence in the US in early 2014
and this is expected to provide valuable feedback on the commerciality of Hexima’s disease program.
Work has commenced on a significant new program that will utilise our existing expertise and we expect to be able to
announce details of the program relatively soon. This program strengthens our commercial pipeline and will be
externally funded. We are negotiating a commercial agreement for intellectual property generated under the program,
which is assessed as having a lower technical risk profile than the Company’s disease program.
Hexima’s human health initiatives have reached proof of concept phase. Hexima recently entered two collaboration
agreements with Acrux Limited to undertake proof of concept work on a therapeutic for non-melanoma skin cancer (the
‘NMSC project’) and a therapeutic with antifungal properties (the ‘Antifungal project’). The Company has received a
grant through the Federal Government’s Commercialisation Australia program for the NMSC project. The collaboration
agreements involve leading public facilities for pre-clinical testing of both therapeutics, and preliminary results have
been promising.
The Board and Management have diversified the Company’s commercial initiatives to reduce the risk associated with
our major development activity having long lead times and a relatively high risk profile. Although the disease program
has been successful to date and has entered a stage where the prospects of successful development have increased
significantly, there is still a lengthy period to product registration and there are still material technical risks.
The Company expanded its contract service business and glasshouse management services during the year, with further
growth forecast for 2014 and beyond. These projects use existing competencies within the Company and provide
valuable cash flow that assists in stabilising the Company’s capital base. The Company has evolved from having a dual
commercial focus (insect and disease resistance) when the IPO was conducted to having five commercial initiatives,
including disease resistance with GM crops, a second area of activity with GM crops with insect resistance, human
antifungals, cancer therapeutics and contract field trial management.
The diversification of commercial initiatives has occurred while the Company has continued its efforts to reduce
operating costs. Cost containment is essential to ensure the Company has an adequate capital base to continue
operations while its major projects are taken through to commercialisation. The cash burn rate when the Company
listed was ~$6m p.a. and our projected burn rate for the 2015 year is approximately $200,000.
The Company’s Management are excited about the new potential for growth. The Board has recommended an
employee share ownership program to ensure the retention of and continued commitment from key personnel.
Yours sincerely,
Ross Dobinson
Executive Chairman
FINANCIAL REVIEW
STATEMENT OF COMPREHENSIVE INCOME
Revenue
3,252,087
2,960,602
2013
2012
Research & development expenses
(4,453,019)
(4,416,242)
Patent and legal expenses
(312,866)
(290,766)
Management, administration and
compliance expenses
Marketing & business development
expenses
Depreciation expense
(1,253,156)
(1,664,820)
(238,741)
(238,296)
(265,534)
(241,169)
(6,496,078)
(6,878,531)
Results from operating activities
(3,243,991)
(3,917,929)
Financial income
394,093
712,358
Net financing income/(expenses)
394,093
712,358
Loss before income tax
(2,849,898)
(3,205,571)
Income tax expense
Loss for the period
-
-
(2,849,898)
(3,205,571)
The Group recorded a loss after tax of $2.85million for the year ended 30 June 2013. A loss after tax of
$3.2million was recorded for the previous financial year.
Net finance income for the Group for the financial year ended 30 June 2013 was $0.394million
(2012:$0.712million), reflecting lower cash balances as cash was utilised in the current reporting period, and
lower interest rates.
No dividends were paid for the year ended 30 June 2013.
STATEMENT OF CASH FLOWS
Cash flows from operating activities
Cash receipts from government grants &
collaboration agreements
2013
2012
3,243,513
628,914
Cash paid to suppliers and employees
(6,103,115)
(6,820,371)
Net cash (used in) operating activities
(2,859,602)
(6,191,457)
Cash flows from investing activities
Interest received
Payments for plant and equipment
398,224
(13,858)
844,952
(178,689)
Net cash ( used in ) investing activities
384,366
666,263
Cash flows from financing activities
Proceeds from exercise of share options
Net cash from financing activities
-
-
-
-
Net (decrease)/ increase in cash and cash
equivalents
(2,475,236)
(5,525,194)
Cash and cash equivalents at 1 July
9,789,777
15,314,971
Cash and cash equivalents at 30 June
7,314,541
9,789,777
The Group had net cash outflows from operating activities of $2.9million for the year ended 30 June 2013,
compared with $6.2million for the prior year. The $3.3million variance resulted from the receipt of the
government tax incentive of $2.3million, higher fee for service income, and lower staffing costs.
At 30 June 2013, Hexima had $7.3 million in cash. The R&D tax credit program and new commercial initiatives
provide a solid base for the Company’s development activities.
A copy of the Company’s full Annual Financial Report for the year ended 30 June 2013 is available at
www.hexima.com.au.
Hexima Limited Corporate Directory
ABN 64 079 319 314
Directors
Mr Ross Dobinson
Executive Chairman
Mr Steven M Skala AO
Non-Executive Director
Mr Hugh M Morgan AC
Non-Executive Director
Professor Jonathan West
Non-Executive Director
Professor Marilyn A Anderson
Executive Director, Chief Science Officer
Company Secretary
Ms Elisha L Larkin
Registered Office
Level 1, 379 Collins Street
Melbourne VIC 3000
Telephone: +61 3 8610 0555
Facsimile: +61 3 8610 0599
Share Registry
Link Market Services Limited
Level 1, 333 Collins Street
Melbourne VIC 3000
Telephone: +61 3 8280 7111
Facsimile: +61 2 9287 0303
www.linkmarketservices.com.au
www.hexima.com.au
Auditor
KPMG
147 Collins Street
Melbourne VIC 3000
Legal Advisors
Arnold Bloch Leibler
Level 21, 333 Collins Street
Melbourne VIC 3000
Bankers
National Australia Bank
Westpac Banking Corporation
For information regarding trading of Hexima shares please contact the Company Secretary at the Registered
Office on +61 3 8610 0555.