Hexima Limited
Annual
Report
For the year ended 30 June 2021
About Hexima
Hexima (ASX:HXL) is a clinical
stage, anti-infectives focused
biotechnology company engaged
in the research and development of
defensin peptides for applications
as human therapeutics. Our lead
product candidate, pezadeftide
(formerly HXP124) applied in a
topical formulation, is a potential
new prescription treatment for
toenail fungal infections (or
onychomycosis). Hexima is currently
conducting an Australian phase IIb
clinical trial testing pezadeftide for
the treatment of onychomycosis.
Hexima holds granted, long-life
patents protecting pezadeftide in
major markets globally.
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Table of Contents
Operational Highlights
Message from the Chair and Chief Executive Officer
Company Overview
– About Onychomycosis
– Pezadeftide as a Potential Treatment for Onychomycosis
– Phase IIb Clinical Trial (HXP124-ONY-002)
Financial Report
Company Directory
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Hexima Limited | Annual Report | For the year ended 30 June 2021 Operational
Highlights
Message from the Chairman and
Chief Executive Officer
Equity capital raising and ASX-listing
Key patents granted
Dear Shareholder,
During FY2021, Hexima raised a total of $8.5 million before
costs in a private placement ($5.5 million) and public
offering ($3.0 million). On 1 December 2020 Hexima’s
shares commenced trading on ASX under the ticker code
“HXL”. Hexima finished the financial year well-capitalized
with $7.4 million in cash and short-term receivables.
Hexima continued to strengthen its intellectual property
position during FY2021. As at August 2021, Hexima has
obtained granted patents covering the use of pezadeftide
to treat onychomycosis in all major markets including the
United States, Japan, Europe, China, Singapore, Mexico
and Australia.
Completion of enrolment into phase IIb study
INN designation
Hexima’s phase IIb clinical trial of pezadeftide (formerly
HXP124 )for onychomycosis progressed according to plan
in 2021 and in July 2021 Hexima was pleased to report the
completion of patient enrolment into the study. This is
an important achievement in pezadeftide’s development
program. All patients are in treatment and follow-up and
Hexima expects to report the results of the study in Q2 2022.
Completion of manufacturing scale-up
Hexima completed multiple large-scale manufacturing
batches with its European contract manufacturer to
produce pezadeftide for toxicology studies. In this scale-
up process, Hexima has resolved important challenges
in manufacturing pezadeftide at scale and can now
point confidently to both commercial-scale and low-cost
manufacturing of pezadeftide.
The International Nonproprietary Names (INN) Programme
and Classification of Medical Products of the World Health
Organization (WHO) has selected “pezadeftide” as the
non-proprietary name for Hexima’s HXP124. The suffix”-
deftide”, representing defensin-derived anti-microbial
peptides, establishes pezadeftide as the first in a new class
of anti-fungal molecules. The designation of pezadeftide as
the first in a new class of anti-microbial peptides highlights
the important role that Hexima is playing in developing
novel, powerful and broad-spectrum fungicidal molecules
as potentially valuable tools in the ever-escalating battle
with constantly evolving fungal pathogens.
Formation of Scientific Advisory Board
Hexima has recruited a group of expert clinical opinion
leaders to a Scientific Advisory Board (SAB) which held
its first meeting in February 2021. The SAB members are
internationally recognised Dermatologists and Podiatrists
based in US, Australia and Japan. They include the lead
clinicians from advanced clinical trials conducted for
multiple successful therapeutic products developed
to treat onychomycosis in international markets. In its
inaugural meeting, the SAB discussed the scientific
and early clinical data supporting the unique activity of
pezadeftide.
Hexima achieved
several major milestones
in FY2021 and was
pleased to report the
completion of patient
enrolment into its phase
IIb clinical trial in
July 2021.
On behalf of the Board of Directors we are pleased to
present Hexima’s annual report for the 2021 financial year.
With our capital raising and listing on ASX almost a
year behind us, we are very pleased to share with you
the extraordinary progress achieved over the last year,
anchoring the Company’s plans for future development.
As stated upon our listing, Hexima is developing
pezadeftide (which we previously referred to as HXP124)
as a new topical prescription therapy for the treatment of
onychomycosis (or fungal nail infection).
Onychomycosis is both a very common disease and has
a significant unmet medical need. While common in the
general population, in settings such as elderly care facilities
the prevalence of this difficult to treat infection can be
50% or higher. Fungal nail infection is typically progressive,
gradually invading the nail bed and resulting in discolored
and disfigured nails, which are often painful and result in
discomfort and emotional distress.
Currently the market for treatment options for
onychomycosis remains poorly served, and available
treatments have some significant shortcomings. Patients
are often reluctant to use oral therapies because of the
risk of serious side effects and the topical alternatives
prescribe a long course of daily treatment for ~12 months.
Only a small minority of treated patients actually clear
their infected nails.
In our conversations with doctors, and particularly
podiatrists, we are constantly struck with the repeated
refrain: “…we see this infectious disease all the time, and we
have no attractive treatment options”.
In spite of the weakness of existing therapies, the market
for treatments is large, estimated to be more than US$3.7
billion per year, as sufferers search for solutions.
Hexima’s goal continues to be the development of
pezadeftide as a safe and effective topical therapy with
a patient-friendly, and convenient course of therapy. Our
completed phase I/IIa trial delivered early but powerful
evidence of this. Pezadeftide appears to deliver on
each of the key characteristics that our market research
indicates is critical for a new and successful treatment for
onychomycosis: safety, efficacy and patient convenience.
In this large and underserved market, Hexima expects
pezadeftide to represent the preferred treatment option
for clinicians and patients alike.
It is a hugely valuable and increasingly tangible goal.
Despite the challenges of the current environment, we are
very pleased with the progress made in our clinical and
product development activities over the course of the
period.
Clinical and regulatory progress
FY21 saw the Company continue to make significant
progress in our clinical, manufacturing and intellectual
property development activities.
Funding from our capital raising and listing on ASX in
late 2020 provided the necessary resources to conduct
our phase IIb clinical trial. This large multi-centre trial
is designed to answer an important question: identify
the course of therapy which maximises the efficacy of
pezadeftide while retaining the important features of a
convenient, short-course treatment in a topical format
which is so important in this consumer driven market. As
of writing, the clinical trial is fully enrolled and patients are
in the treatment and follow-up phase. We are on track to
announce the results of this trial in Q2 2022.
Hexima also continues to progress towards commercial
scale for its sophisticated biotechnology manufacturing
system used to make pezadeftide. The scale up of this
system and delivery of pezadeftide according to rigorous
quality standards was an important, challenging and
successfully met milestone that lays the foundation for our
phase III clinical trial program.
The Company’s intellectual property portfolio is a corner
stone of securing the value created in the pezadeftide
product development program. Throughout FY21 Hexima
was pleased to add Europe and Mexico patent protection
to our already granted US and Japanese patents. A patent
was also granted in China shortly after year end.
It should be noted that because the pezadeftide molecule
is a biologic, we expect to enjoy regulated market
exclusivity over and above formal patent protection for
12 years post product approval in the US (our largest
potential market). Leading into FY22 Hexima will look
to pursue other patents protecting pezadeftide in major
markets.
FY21 activities undertaken by the Company also saw
the formation of our international Scientific Advisory
Board (SAB) to assist the Company’s understanding
of our market opportunity and moulding our product
development efforts to ensure we address most effectively
the market need. Our SAB comprises opinion leading
dermatologists and podiatrists from the US, Australia and
Japan. We have plans to augment this with European
expertise over time.
Additionally, Hexima continues to prioritse engagement
with clinicians on the front line of treating onychomycosis
to further inform our clinical development and increase
sector awareness of pezadeftide. To support this
function, FY21 saw the beginnings of our engagement
with the broader US podiatric community. We presented
pezadeftide at the American Podiatric Medical Association
annual scientific conference in Denver, Colorado.
Our informal interactions with podiatrists at the APMA
conference was a refreshing affirmation that our goals in
developing pezadeftide neatly align with the needs of this
critical specialist group and their patients.
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Hexima Limited | Annual Report | For the year ended 30 June 2021
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Hexima Limited | Annual Report | For the year ended 30 June 2021 Message from the Chairman and
Chief Executive Officer (continued)
Company Overview
About Onychomycosis
Outlook for FY22
Looking ahead Hexima’s primary strategic goal is to
continue the development of pezadeftide as a new and
valuable prescription topical therapy for onychomycosis
in major markets globally. Important elements of that
strategy include:
• Retain US product rights and develop a prescription
product optimised to address the unmet medical need
of patients and clinicians in the US market.
• Deliver results from the ongoing phase IIb clinical trial
and define the optimal dosing strategy for pezadeftide.
• Establish a license and development collaboration
with a leading Japanese pharmaceutical company for
development of pezadeftide in the Japan market. Japan
is both a large market for therapies for onychomycosis
and also requires a degree of independent, Japan-
market specific development.
And while we have made important and valuable progress
on each of these strategic initiatives during the course of
this year, we expect further developments in these areas
concurrent to the completion of pezadeftide’s phase II
clinical trial program.
Looking further out, we are making plans to move this
valuable asset forward into its final phase III program in the
US, and ensuring that we have all of the key aspects of the
product presentation ready to test in that trial program;
our final step before seeking approval to launch and
market pezadeftide.
As we continue on this journey on behalf of the Board and
management I wish to thank our shareholders for their
continued support of Hexima’s aspiration to improving the
lives of patients suffering from onychomycosis.
The Company looks forward to updating shareholders as
we continue to progress forward throughout FY22.
• Secure financing on attractive terms to support the
With thanks
initiation of our phase III clinical trial program in the US.
The upfront and milestone payments of a Japan market
licence and development collaboration may represent a
significant component of our financing plans.
• Explore the potential of pezadeftide and its related anti-
fungal defensin molecules for which we have patent
protection to represent a valuable follow-on product for
other localised fungal infections where there exists an
unmet medical need;
Jonathan West
Non-executive Chairman
Michael Aldridge
Managing Director and Chief Executive Officer
Hexima’s primary
strategic goal is to
continue the development
of pezadeftide as a new
and valuable prescription
topical therapy for
onychomycosis in major
markets globally.
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Hexima Limited | Annual Report | For the year ended 30 June 2021
Onychomycosis (fungal nail infection) is a common
fungal infection of the nail plate and nail bed. Prevalence
of onychomycosis has been estimated at between 10%
(Japan) and 13.8% (USA).i Onychomycosis is an infectious
disease and is difficult to treat. It has a significant
healthcare burden, causing pain in approximately 50% of
patients and in the US onychomycosis results in close to
four doctor’s visits annually for treatment.ii Onychomycosis
impacts a patient’s quality of life with 51% unable to
wear the shoes they would prefer and 66% distressed
by the appearance of their nail.iii It is important to treat
onychomycosis as it is an infectious disease; the fungi in
the nail can be a source of secondary infection in other
areas of the body or infect family members and spread to
the environment.
10-14%
of population
affected
Onychomycosis is estimated to
affect 10-14% of the population and
is the most common nail disorder.
$3.7b
Onychomycosis is estimated to
affect 10-14% of the population and
is the most common nail disorder.
10-14%
of population
affected
The global market for
treatments for onychomycosis
was approximately US$3.7
billion in 2018.
$3.7b
Onychomycosis is responsible
for an average of 4 doctors visits
annually by patients seeking
treatment.
4 p.a.
The global market for
treatments for onychomycosis
was approximately US$3.7
billion in 2018.
50%
EXPERIENCE PAIN
Onychomycosis is responsible
ARE IMPACTED WEARING SHOES
for an average of 4 doctors visits
annually by patients seeking
treatment.
51%
4 p.a.
66%
DISTRESSED BY APPEARANCE OF THEIR NAILS
EXPERIENCE PAIN
10-14%
of population
Onychomycosis is the most common nail disorder
affected
accounting for 50% of all nail diseases. It is particularly
prevalent in older, diabetic and immune compromised
populations.v The global market for treatments for
onychomycosis was approximately US$3.7 billion in 2018.iv
Onychomycosis is estimated to
affect 10-14% of the population and
is the most common nail disorder.
ARE IMPACTED WEARING SHOES
50%
51%
66%
DISTRESSED BY APPEARANCE OF THEIR NAILS
$3.7b
The global market for
treatments for onychomycosis
was approximately US$3.7
billion in 2018.
Treatment of Onychomycosis
Approved prescription therapies for onychomycosis
comprise either oral or topical medications. Oral
medications are associated with adverse effects such as
nausea, taste disturbance, and flatulence. They can also
severely impact liver function and so often require liver
function monitoring. The clinical and commercial success
of topical medications has been constrained by an inability
of anti-fungal agents to effectively penetrate the human
nail and the lack of sufficient anti-fungal activity when in
contact with the target pathogen.v
Hexima’s Approach
Hexima embraces the significant challenge of new product
development for onychomycosis. Hexima has taken a
very different approach, building on its many years of
ground-breaking research into the evolutionary tools that
plants use naturally to fight fungal infections. The result is
pezadeftide, a new topical treatment for onychomycosis,
with a novel and powerful fungicidal mode of action.
Historically, therapies for onychomycosis have generally
focused on new forms of primarily the azole class of
antifungal agents or improving the topical delivery of
systemic antifungal agents. Hexima’s technology is a
completely novel approach with fundamental differences
that address the well-documented limitations of these
traditional technologies.
Pezadeftide penetrates the nail more effectively than
existing topical treatments and so can more readily target
the fungal cells which proliferate in the nail bed. It is also
more effective at rapidly killing fungal cells on contact.
Together, these properties mean that pezadeftide has
the potential to resolve the fungal infection more quickly,
leading to faster and more complete clearing of the
infected nail area. Consequently, pezadeftide offers the
promise to capture significant value in a large and poorly
served market.
Onychomycosis is responsible
i Tatchibana et al., Journal of Fungi, 2017
for an average of 4 doctors visits
ii Joseph et al, Supplement to Podiatry Today, 2013
annually by patients seeking
iii Milobratovic et al., Mycoses, 2013
iv Persistence Market Research 2018
treatment.
v Wang et al., Onychomycosis: Diagnosis and Effective Management, 2018
4 p.a.
EXPERIENCE PAIN
ARE IMPACTED WEARING SHOES
DISTRESSED BY APPEARANCE OF THEIR NAILS
50%
51%
66%
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Hexima Limited | Annual Report | For the year ended 30 June 2021 Company Overview
Pezadeftide as a Potential Treatment for Onychomycosis
Company Overview
Phase IIb Clinical Trial (HXP124-ONY-002)
Hexima believes pezadeftide addresses the important
short comings of available treatments for onychomycosis.
It is a broad spectrum and powerful antifungal agent which
penetrates nails very rapidly when applied topically. It is
safe and well tolerated and in a 6-week phase I/IIa clinical
trial demonstrated:
• Short course of therapy, pezadeftide appears active
following just 6-weeks of daily therapy
• Better efficacy, clearing fungus from the nail two-times
more effectively than current best-in-class (more than
oral and topical) products at the same time point
• Fast acting, dramatically improving the appearance of
the infected nail in less than 12 weeks
• Safe and well tolerated, with no treatment area
irritation or treatment-related adverse events
• Locally acting, pezadeftide effectively penetrates nails
but is not detected in the blood stream and has not
presented any systemic toxicity
This is a consumer driven market and based on our market
research, there is a well-defined and under-served demand
from consumers (clinicians and their patients) who are
looking for such features in their treatment.
Hexima is conducting a phase IIb clinical trial at 15
sites in Australia and New Zealand. The trial has
enrolled 117 patients with onychomycosis and seeks to
identify the optimal course of therapy for pezadeftide.
This study is comparing 12 weeks versus 31 weeks
of daily therapy as well as 12 weeks of daily therapy
followed by once weekly therapy out to 36 weeks.
Patients are randomly assigned to one of the three
treatment arms. The patients receiving treatment with
pezadeftide (active) are being compared to patients
being treated with a formulation not containing
pezadeftide (vehicle) at a ratio of 3:1. The identity of
active versus vehicle treatments is blinded to both
patient and clinician.
1. Internal Hexima research; 2. Kaken Pharma and Dow Pharma, Sugiura et al., 2014; 3. UCSF Medical Center, Hui et al., 2006;
4. HXP124 PI/IIa clinical trial, HXP124-ONY-001 (ACTRN12618000131257);
Before treatment
2 weeks later - Noticeable
improvement in just 2 weeks
6 weeks later
(end of treatment)
12 weeks later (end of study)
Almost clear nail in just 12 weeks
The results of this clinical trial are intended to
identify the optimum dosing regimen to take
into Hexima’s US phase III clinical trial program.
Hexima expects this phase IIb clinical trial
(HXP124-ONY-002; ANZCTR registration number
ACTRN12620000697987) to represent its last large,
multi-centre clinical trial ahead of initiating its phase
III program.
Our goal is to
demonstrate the
potential of pezadeftide
to be a safe and
effective treatment in a
convenient, consumer
friendly, topical format for
this very common and
difficult to treat infectious
disease.
Before treatment
2 weeks later - Noticeable
improvement in just 2 weeks
6 weeks later
(end of treatment)
12 weeks later (end of study)
Almost clear nail in just 12 weeks
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Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021HXP124 EfinaconazoleCiclopirox 8% 6% 4% 2% 0% HXP124 EfinaconazoleCiclopirox 100% 75% 50% 25% 0% 75% 50% 25% 0% PezadeftidePezadeftideMycological Cure* measured at 12 weeks a(cid:10)ter 6-week treatment Drug penetrating thenail within 72 hFungal cells killedwithin 30 minsRAPID NAIL PENETRATIONPOWERFUL ANTIFUNGALACTIVITYRAPID (cid:11)YCOLOGICAL CURE* &EARLY CLEAR NAIL GROWT(cid:8)4[1,2,3][1]69%29%PezadeftideVehicle[4]DAILY DOSINGNOTE: DAILY DOSINGPERIODS INCLUDE 1-WEEK WASHOUTS EVERY 6 WEEKS31WEEK DAILY DOSING12 WEEK DAILY DOSING FOLLOWED BY ONCE WEEKLY DOSINGONCE-WEEKLY DOSINGFOLLOW-UP VISITSWEEK13WEEK24WEEK36WEEK40NON-DOSINGFOLLOW-UPPERIOD12 WEEK DAILY DOSING Hexima Limited
FINANCIAL REPORT
For the year ended 30 June 2021
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Table of Contents
Corporate Governance Statement
Directors’ Report
ASX Additional Information
Consolidated Statement of Profit or Loss and other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Lead Auditor’s Independence Declaration
Corporate Directory
Corporate Governance Statement
The Corporate Governance Statement is current at 30 June 2021 and can be
found on the Company’s website:
https://hexima.com.au/wp-content/uploads/2021/08/Corporate-Governance-
Statement_v2.pdf
The Corporate Governance statement was approved by the Board of Directors
26 August 2021.
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Hexima Limited | Annual Report | For the year ended 30 June 2021 Directors’ Report
The Directors present their report together with the financial report of Hexima
Limited (“the Company” or “Hexima”) and of the Group, being the Company and its
subsidiaries for the financial year ended 30 June 2021 and the auditor’s report thereon.
DIRECTORS
The Directors of Hexima at any time during or since the end of the financial year are:
Professor Jonathan West
BA (University of Sydney), PhD (Harvard University)
Non-Executive Chairman
Professor Jonathan West was the founding Director of the
Australian Innovation Research Centre. Prior to assuming
that appointment, he taught for 18 years at the Harvard
University Graduate School of Business Administration,
where he was Associate Professor, founding Director of
the Harvard University Life Sciences Initiative, and from
1998-1999 the Novartis Faculty Research Fellow. He has
been Visiting Professor at Hitotsubashi University and
the Nomura School of Advanced Management in Tokyo,
Japan and Visiting Professor at the University de Paris IX-
Dauphine, Sorbonne.
Professor West was Chairman of the Asia Advisory Council
of Bunge Ltd, one of the world’s largest agribusiness
processing and trading companies, and has served
as an advisor to other major corporations and several
Governments around the world, including in the life
sciences field, DuPont, Roche, Novartis, Syngenta and
the J.R. Simplot Company, along with the Governments
of Singapore, Japan, Hong Kong and France. He was a
member of the Scientific Advisory Board of the Novartis
Agricultural Discovery Institute in La Jolla, California.
In Australia, he has served on the Prime Minister’s
Science, Engineering, Innovation Council’s Working
Group on Science and Technology in China and India
and in 2006 was ‘Eminent Thinker in Residence’ with
the Premier of NSW. Professor West is Non-Executive
Chairman of Gowing Bros Limited and Non-Executive
Director of Boundary Bend Limited and the Hydration
Pharmaceuticals Trust.
Professor West has been a Director of the Company since
7 November 2005 and was appointed Non-Executive
Chairman on 18 November 2014. He is a member of the
Remuneration and Nomination Committee and Chairman
of the Audit and Risk Management Committee.
Michael Aldridge
BSc (Hons) (University of Canterbury), M.A. Applied
Finance (Macquarie University)
Managing Director and Chief Executive Officer
Mr Aldridge most recently served as Senior Vice President,
Corporate & Strategic Development, Codexis from October
2016 until August 2018. Prior to that, from January 2012
to September 2014, Mr. Aldridge served as Senior Vice
President, Corporate Strategic Development Questcor
Pharmaceuticals, Inc., a publicly-traded biopharmaceutical
company acquired by Mallinckrodt Pharmaceuticals in
2014. From May 2010 to September 2012, Mr. Aldridge
served as Chief Executive Officer and a member of the
board of directors Xenome Limited, a privately-held
biopharmaceutical company headquartered in Australia.
Between 2003 and 2009, Mr. Aldridge served as Chief
Executive Officer and a member of the board of directors
and a strategic consultant at Peplin, Inc., a publicly-traded
drug development company acquired by LEO Pharma
A/S in 2009. Prior to that, Mr. Aldridge held investment
banking positions at various financial firms, including
Wilson HTM Investment Group, Bear, Stearns & Co., Volpe,
Brown, Whelan & Company and S.G. Warburg Group. Mr.
Aldridge received a B.S. with honours in Chemistry from
the University of Canterbury in Christchurch, New Zealand
and an M.A. in Applied Finance from Macquarie University
in Sydney, Australia.
Mr Aldridge was Chief Business Officer between May 2019
and September 2020 and was appointed Chief Executive
Officer in September 2020. Mr Aldridge has been a
Director of the Company since 21 May 2019.
Dr. Nicole van der Weerden
BSc, PhD (La Trobe University)
Executive Director, Chief Operating Officer
Dr. Nicole van der Weerden completed her PhD in
Biochemistry at La Trobe University in 2007. Her PhD
research on the antifungal properties and mechanism of
action of plant defensins led to the award of a prestigious
Victoria Fellowship in 2006. Since completing her PhD, Dr.
van der Weerden has worked for Hexima and has led the
gene discovery program for the Pioneer partnership on
control of fungal diseases in corn. She led the Hexima team
that identified the clinical opportunities for plant antifungal
molecules and discovered and developed pezadeftide
(formerly HXP124) for treatment of onychomycosis. Dr. van
der Weerden is an inventor on nine patent applications.
Dr. van der Weerden completed a Master of Business
Administration in 2013 at Melbourne Business School
and is a graduate of the Australian Institute of Company
Directors. She was Hexima’s Chief Executive Officer from
December 2015 until September 2020, taking on the Chief
Operating Officer role from September 2020.
Dr. van der Weerden has been a Director of the Company
since 16 December 2014.
Professor Marilyn Anderson AO
BSc (Hons) (The University of Melbourne),
PhD (LaTrobe University)
Executive Director, Chief Science Officer
Professor Marilyn Anderson AO is a founding scientist of
Hexima. She has over 40 years’ experience in scientific
research in the area of biochemistry and genetics. After
completing a BSc Honours at The University of Melbourne
and a PhD in Biochemistry at La Trobe University,
Professor Anderson spent seven years in the United States
working on diabetes at the University of Miami Florida,
and molecular biology at Cold Spring Harbor Laboratory
NY. She is an expert on antifungal and insecticidal
molecules produced by plants. She is a fellow of the
Australian Academy of Science, the Australian Academy of
Technology and Engineering and the Australian Institute of
Company Directors.
She is a Professor of Biochemistry at La Trobe University,
and a member of the Australian Academy of Science
Council. She was appointed an Officer of the Order of
Australia in 2016 for distinguished service to science and
higher education. She was a member of the La Trobe
Council until 2017. Professor Anderson was appointed
Hexima’s Chief Science Officer in July 2009.
She has been a Director of the Company since
23 November 2010.
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Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 Directors’ Report (continued)
Justin Yap
BCom (University of New South Wales)
Non-Executive Director
Mr Yap is a Non-Executive Director of CathRx Limited,
an Australian medical device company commercialising
cardiac electrophysiology catheters for the treatment of
heart rhythm disorders. He is a Non-Executive Director
of Wilhelm Integrated Solutions Pty Ltd, a leading
supplier of integrated OR solutions to hospitals around
Australia. Prior to this, he began his career in investment
banking for Mosaic Risk Management Pty Ltd, a wholly
owned subsidiary of Wilson HTM Limited specialising in
derivatives risk management.
Mr Yap has been a Director since 17th July 2018, and is a
member of the Remuneration and Nomination Committee
and the Audit and Risk Management Committee.
Scott Robertson
BSBA (University of Southern California),
MBA (University of California)
Non-Executive Director
Mr. Robertson is currently Chief Financial Officer at DiCE
Molecules. Prior to DiCE Molecules, Mr. Robertson served
at DuPont where he was Business Development Director
for DuPont Pioneer with responsibility for the business
unit’s crop genetics and precision agriculture M&A
activity. He also held the position of portfolio manager
with DuPont Ventures where he focused on strategic
investment opportunities in production agriculture and
the intersection of agriculture and downstream renewable
technologies. Prior to joining DuPont, Mr. Robertson was
an investment professional at MPM Capital, a life sciences-
dedicated venture capital fund, and previous to that a
member of the Healthcare Investment Banking groups
at Merrill Lynch & Co. and Thomas Weisel Partners. He
received a Bachelor of Science in Business Administration
from the University of Southern California and an M.B.A.
from the Haas School of Business at the University of
California, Berkeley.
Mr Robertson has been a Director since 21 November
2018, and is a member of the Audit and Risk Management
Committee and Chairman of the Remuneration and
Nomination Committee.
Steven M Skala AO
BA, LL.B (Hons) (University of Qld),
BCL (University of Oxford)
Non-Executive Alternate Director
Steven Skala is Vice Chairman, Australia of Deutsche Bank
AG, a position he has held since 2004 and is Chairman of
the Commonwealth Government’s Clean Energy Finance
Corporation. Among public companies, he is a former
Chairman of Wilson Group Limited, the Island Food
Company Limited and is a former Director of the Channel
TEN Group of companies and Max Capital Group Limited.
Between 1982 and 2004, he was a Partner of Australian
law firms, Morris Fletcher & Cross (now Minter Ellison) and
Arnold Bloch Leibler.
Active beyond banking and commerce, Mr Skala is
Chairman of the Heide Museum of Modern Art, Deputy
Chairman of the General Sir John Monash Foundation,
a Director of the Centre for Independent Studies and
a Member of the International Council of the Museum
of Modern Art (MoMA) in New York. He was previously
Chairman of Film Australia Limited, Chairman of the
Australian Centre for Contemporary Art, Vice President
(Deputy Chairman) of The Walter & Eliza Hall Institute
of Medical Research, a Director of the Australian
Broadcasting Corporation and a Director of the Australian
Ballet. He was appointed an Officer of the Order of
Australia in January 2010 for service to the arts, education,
business and commerce.
Mr Skala was appointed Alternate Director for Mr Scott
Robertson on 10 March 2020. He had been a Director of
the Company previously from 17 May 2002 until
31 December 2015, and had been Chairman of the
Company for 7 years during this time.
G. F. Dan O’Brien
BSC, BVMS (Murdoch University),
MBA (Harvard University)
Non-Executive Director
Mr O’Brien is the founder and Chairman of The Hydration
Pharmaceuticals Trust (HPT) which established the
Hydralyte range of OTC pharmaceutical products. HPT
sold the Hydralyte business in Australia and New Zealand
to NYSE listed Prestige Brands Inc during 2014. HPT
retains ownership of Hydralyte outside Australia and New
Zealand.
Mr O’Brien has extensive experience including executive
and non-executive roles with King Island Dairy Limited,
Tasman Agriculture Limited, Colly Farms Cotton Limited,
SPC Ardmona Limited, Coates Hire Limited, Mattel Asia
Pacific and BIL Limited.
Mr O’Brien was a Director of Hexima between 17 May 2002
and 2 October 2009 and was reappointed to the Board on
18 November 2015.
Mr O’Brien resigned as a Director on 22 September 2020.
Dr John Bedbrook
BSc, PhD (Auckland University)
Non-Executive Director
Dr. John Bedbrook received his PhD in Molecular biology
at Auckland University in 1974, was a Fulbright Fellow
to Harvard Medical School, a Cabot Fellow to Harvard
University and an EMBO fellow to The Plant Breeding
Institute Cambridge England. Between 1979 and 2000,
Dr. Bedbrook founded and or ran several agricultural
biotechnology companies including Advanced Genetic
Sciences, DNA Plant Technologies, Verdia Inc and was
President of Maxygen Agriculture. He was CEO of Plant
Science Ventures a venture firm investing in Biotechnology
startups. After the acquisition of Verdia Inc. by DuPont in
2004 Dr. Bedbrook became Vice President of Research
and Development for DuPont Agriculture and Nutrition,
and subsequently Vice President of DuPont Agricultural
Biotechnology. He retired from full time employment in
2013 and retained a part time role as Director Strategic
Growth. Dr Bedbrook recently secured a highly valuable
partnership for Dice Molecules Inc., where he is Executive
Chairman, with global pharma company Sanofi targeting
potential new small molecule therapeutics across a range
of diseases.
Dr. Bedbrook has authored over 100 scientific papers
and multiple patents. Dr. Bedbrook is Director of Plant
Biosciences LTD., Executive Chairman of DiCE Molecules
Inc. and a Member of the Advisory Board of the College of
Natural Resources at University of California Berkeley.
Dr. Bedbrook has been a Director of the Company since
3 June 2014.
Dr John Bedbrook resigned as a Director on
22 September 2020.
14
15
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 Directors’ Report (continued)
Key Management
Ms Helen Molloy
Company Secretary
Helen Molloy holds a Bachelor of Business from Federation
University and is a member of the Australian Society of
Certified Practising Accountants. Helen has previously
worked as a financial accountant within the treasury
department of the Mayne Group, as well as with Orica
Chemicals and Incitec Pivot Limited. Helen has been
the Financial Controller for Hexima for 11 years and was
appointed sole company secretary for the Group in
November 2019.
Dr Peter Welburn
Chief Development Officer
Dr Welburn is the Managing Director of Eiger Health
Consulting Group, which he established In July 2014. From
2011 to 2014 Dr Welburn served as the General Manager
of LEO Pharma Australia & New Zealand following the
acquisition of Peplin Inc. by LEO Pharma AS, a global
dermatology company. Prior to that, from 2001 to 2011 Dr
Welburn held a number of positions at Peplin Inc where
he led the R&D team that conducted the development of
Picato, a novel topical therapy, globally approved for the
treatment of pre-cancerous skin lesions. Dr Welburn has
also held both R&D and Strategic Marketing positions at a
number of global pharmaceutical companies, SmithKline
Beecham International (1991 – 2001), Janssen-Cilag (1984 –
1990) and Ethnor Pty Ltd (a division of J & J) from
1979 – 1984.
Dr Welburn was educated in the UK and received a BSc
(Hons) degree in Pharmacology from the University of
Edinburgh, a master’s degree in Pharmacology from the
University of Sydney and a PhD from the University of
Cardiff. Dr Welburn is an author on numerous scientific
publications and most recently was invited to contribute
a chapter on Picato for the book “To Heal the Skin”. Dr
Welburn is also an invited lecturer for the Bioscience
Enterprise programme at the University of Auckland.
Dr Welburn has been a consultant for the company since
30 April 2019 and was appointed Chief Development
Officer on 1 October 2020.
Directors’ Meetings
The number of Directors’ meetings (including meetings
of committees of Directors) and the number of meetings
attended by each of the Directors of the Company during
the financial year are:
BOARD
MEETINGS
AUDIT AND RISK
MANAGEMENT COMMITTEE
REMUNERATION AND
NOMINATION
COMMITTEE
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
Jonathan West
Marilyn Anderson (2)
John Bedbrook
Nicole van der Weerden (2)
Dan O’Brien (2)
Scott Robertson
Justin Yap
Michael Aldridge (2)
Steven Skala (1)
12
12
5
12
5
12
12
12
12
12
12
4
12
5
10
12
11
11
2
2
1
2
1
2
2
2
2
(1) Attended as Alternate Director but did not vote. Attends to remain informed.
(2) Attended by invitation
2
1
-
2
1
2
2
1
1
1
1
-
1
-
1
1
1
1
1
-
-
1
-
1
1
1
-
16
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Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 Directors’ Report (continued)
Directors’ Report (continued)
PRINCIPAL ACTIVITIES
The principal activity of the Group during the financial year was the research and development of plant-derived proteins and
peptides for applications as human therapeutics. Hexima’s lead drug candidate is the plant defensin, pezadeftide (formerly
HXP124), which is being developed for treatment of fungal nail infections (onychomycosis). Hexima’s principal activities in
FY2021 included the conduct of Hexima’s phase IIb clinical trial at sites in Australia and New Zealand and the transfer of our
manufacturing to a commercial-scale Contract Manufacturing Organisation (CMO) in Europe.
There were no significant changes in the nature of the activities of the Group during the year.
Nail fungus (onychomycosis) is a very common nail infection, affecting approximately 14% of people in the USA and more
than 500 million globally. Independent market researchers have estimated the global onychomycosis market at US$3.7
billion in 2018. However, available treatments all have significant limitations including modest efficacy rates, long treatment
durations or the potential for toxic side effects, some of which may be severe.
Pezadeftide is an easy to apply topical solution that penetrates the nail more effectively than existing topical treatments and
so can more readily target the fungal cells which proliferate in the nail bed. It is also more effective at rapidly killing fungal
cells on contact. Together, these properties mean that pezadeftide has the potential to resolve the fungal nail infection more
quickly, leading to faster and more complete clearing of the infected nail area. Consequently, pezadeftide offers the promise
to capture significant value in a large and poorly served market.
OPERATING AND FINANCIAL REVIEW OF THE GROUP
Financial performance
Revenue and other income
Results from operating activities
Net financing (expense)/income
Income tax expense
Net loss after tax attributable to members
Dividends
Review of operations
2021
$
2020
$
4,163,529
2,568,341
(6,825,639)
(3,534,291)
(48,007)
-
(91,471)
-
(6,873,646)
(3,625,762)
NIL
NIL
During the period under review, Hexima substantially progressed development of its lead program, pezadeftide, as a topical
treatment for nail fungus (onychomycosis).
Phase IIb clinical trial
Hexima continued a phase IIb clinical trial across 15 sites in Australia and New Zealand to assess the safety and efficacy of
pezadeftide in patients with mild to moderate onychomycosis. This study is seeking to identify the optimal course of therapy
for pezadeftide and is comparing three treatment arms: 12 weeks versus 31 weeks of daily therapy, as well as 12 weeks of
daily therapy followed by once a week therapy out to 36 weeks. The patients receiving treatment with pezadeftide are being
compared to patients treated with a formulation not containing pezadeftide at a ratio of 3:1. Details of the trial can be found
on the Australia and New Zealand Clinical Trial Register (ACTRN12620000697987).
We announced the completion of patient enrolment in July 2021. Hexima expects the results of this trial to be available in Q2
2022. The results of this clinical trial are intended to identify the optimum dosing regimen to take into Hexima’s US phase III
clinical trial program. Hexima expects this phase IIb clinical trial to represent its last large, multi-centre clinical trial ahead of
initiating its phase III program.
Manufacture scale-up
During the period under review, Hexima commenced transfer of its pezadeftide manufacturing to a world-class, commercial-
scale CMO in Europe. Hexima completed multiple large-scale manufacturing batches to produce pezadeftide for toxicology
studies. In this scale-up process Hexima has resolved important challenges in manufacturing pezadeftide at scale and can
now point confidently to both commercial-scale and low-cost manufacturing of pezadeftide.
Key patents granted
Hexima continued to strengthen its intellectual property position during FY 2021 with key patents covering the use of
pezadeftide to treat onychomycosis granted in Europe and Mexico. Hexima’s global patent portfolio also includes similar
granted patents in the United States, Japan, Singapore and Australia.
INN designation
During the period under review, the International Nonproprietary Names (INN) Programme and Classification of Medical
Products of the World Health Organization (WHO) selected “pezadeftide” as the non-proprietary name for Hexima’s HXP124.
The suffix”-deftide”, representing defensin-derived anti-microbial peptides, establishes pezadeftide as the first in a new class
of anti-fungal molecules. The designation of pezadeftide as the first in a new class of anti-microbial peptides highlights the
important role that Hexima is playing in developing novel, powerful and broad-spectrum fungicidal molecules as potentially
valuable tools in the ever-escalating battle with constantly evolving fungal pathogens.
Formation of Scientific Advisory Board
During FY2021, Hexima held the first meeting of its Scientific Advisory Board (SAB), a group of internationally recognised
Dermatologists and Podiatrists based in US, Australia and Japan who are expert clinical opinion leaders in onychomycosis.
They include the lead clinicians from advanced clinical trials conducted for multiple successful therapeutic products
developed to treat onychomycosis in international markets. In its inaugural meeting, the SAB discussed the scientific and
early clinical data supporting the unique activity of pezadeftide.
Management changes
In September 2020, Michael Aldridge accepted the role as Hexima’s new CEO. Michael is based in the San Francisco Bay
Area and has a 20-plus year career in the leadership of emerging growth pharmaceutical product development companies.
Previously Michael led Peplin, which developed Picato, a topical treatment for actinic keratosis or sunspots. Peplin was
acquired by LEO Pharma in 2009.
Nicole van der Weerden, our previous CEO, has assumed the role of COO and remains firmly at the helm of the challenging
and critical technical operations at Hexima.
Peter Welburn has joined our team as Chief Development Officer. Peter has a long career in drug development and steered
the development program at Peplin from its earliest pre-clinical stage through global phase III trials and onto the market.
Impact of COVID-19
Like many businesses in Australia, Hexima has seen an impact from COVID-19. In particular, the pace of enrolment of patients
into its phase IIb trial was modestly impacted by State travel restrictions, business closures and mandated lock downs due
to COVID-19. These events have not affected in any way the integrity of the phase IIb trial and Hexima responded by adding
additional clinical investigator sites and adopting other measures to accelerate patient recruitment and enrolment. The
measures were effective and the trial was fully-enrolled in July 2021.
Review of financial condition
The Group had net cash outflows from operating activities of $5,517,424 for the year ended 30 June 2021, compared with
$2,099,064 for the prior year. The variance in the most part has resulted from the increased expenses of the phase IIb clinical
trial and manufacturing development of pezadeftide. Revenue has increased as a result of the increased expenses, as the
Research and Development tax rebate correlates directly with increased qualifying research and development expenditure.
The Group recorded a loss after tax of $6,873,646 for the year ended 30 June 2021. A loss after tax of $3,625,762 was
recorded for the previous financial year. Net finance expense for the Group for the financial year ended 30 June 2021 was
$48,007 (2020: expense of $91,471). The prior financial year net finance expense was greater due to the accrual of interest on
convertible notes for the full year, this accrual ceased on their conversion to ordinary shares in September 2020.
Financial position
Hexima has cash and short term receivables of $7,445,019 at 30 June 2021 (2020: $3,649,727).
Change in capital structure
In September 2020, Hexima closed a placement of 28,500,000 shares at $0.20 (post-consolidation) to raise $5.7 million (the
“Placement”). This was followed in November 2020 by a public offer (the “Public Offer”) of 15,000,000 shares (also at $0.20)
to raise $3,000,000 (before costs of the Public Offer) with an associated listing on ASX on 30 November 2020.
In October 2020, Hexima completed a one for two consolidation of its share capital. The consolidation was approved by
shareholders at an Extraordinary General Meeting of the Company held on 5 October 2020.
18
19
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
Directors’ Report (continued)
Directors’ Report (continued)
Significant changes in the state of affairs
Convertible notes of $3,246,791, including accrued interest of $242,891, were converted to ordinary shares upon completion
of the $5,700,000 Placement in September 2020. On 20 November 2020, the Group completed a Public Offer of shares to
raise $3,000,000. On 30 November 2020, Hexima was admitted to the official list of ASX. There were no other significant
changes in the state of affairs of the Group that occurred during the financial year ended 30 June 2021.
SHARE OPTIONS
Unissued shares under option
At the date of this report, unissued ordinary shares of the Company under option are:
DIVIDENDS
The Company has not paid or declared any dividends during or since the end of the financial year ended 30 June 2021.
EVENTS SUBSEQUENT TO REPORTING DATE
In July 2021, the Group commenced negotiations to sell the glasshouse asset and surrender the lease for the land on which
the glasshouse is constructed with the intention to utilize the proceeds to settle payables.
In July 2021, the Board resolved to issue 1,792,000 options to KMP and other personnel. 1,643,000 of these options were
issued to Directors and are subject to shareholder approval.
Other than the matters noted above, there have been no events subsequent to balance date which would have a material
effect on the Group’s financial statements as at 30 June 2021.
LIKELY DEVELOPMENTS
Further disclosure of information regarding likely developments in the operations of the Group and the expected results
of those operations in future financial years has not been included in this report because, in the opinion of the Directors,
disclosure of the information may prejudice the interests of the Group.
ENVIRONMENTAL REGULATION
The Group’s operations are not subject to any significant environmental regulations under either Commonwealth or
State legislation. However, the Board believes that the Group has adequate systems in place for the management of its
environmental requirements and is not aware of any breach of those environmental requirements as they apply to the Group.
DIRECTOR’S INTERESTS
Set out below are details of the interests of the Directors at the date of this report in the shares of the Company, rights or
options over such instruments. Interests include those held directly and indirectly.
Director
Jonathan West
Marilyn Anderson
Nicole van der Weerden
Justin Yap
Scott Robertson
Michael Aldridge
Steven Skala
Total
A related party of Justin Yap holds 14,715,790 shares in the Company.
Total shares
3,000,000
2,280,548
144,700
-
-
-
5,480,029
10,905,277
Options over shares
1,393,000
286,000
1,894,000
536,500
536,500
3,272,000
125,000
8,043,000
Expiry Date
Exercise Price
12 February 2022
12 February 2022
31 December 2022
1 January 2023
15 December 2023
15 December 2023
15 December 2023
1 January 2024
15 November 2024
28 January 2025
14 October 2030
27 July 2031
$0.40
$0.16
$0.40
$0.40
$0.30
$0.40
$0.60
$1.00
$1.00
$1.00
$0.20
$0.205
Number
375,000
662,500
50,000
500,500
1,000,000
1,000,000
1,000,000
250,000
143,000
250,000
7,117,500
1,792,000
14,140,500
Shares issued on exercise of options
The Group’s policies prohibit those that are granted share-based payments as part of their remuneration from entering into
other arrangements that limit their exposure to losses that would result from share price decreases. The Group requires all
Executives and Directors to sign annual declarations of compliance with this policy throughout the period.
INDEMNIFICATION AND INSURANCE OF OFFICERS AND DIRECTORS
The Company has entered into deeds of access, insurance and indemnity with each Director, alternate director and the
Company Secretary of Hexima.
Under the Constitution, the Company is required to indemnify all Directors and officers, past and present, against certain liabilities. The
indemnity provided for under the deed of access, insurance and indemnity, operates from the date of appointment as a Director or officer
of the Company until the seventh anniversary of that Director or officer’s retirement date. To the extent permitted by law and subject to
the scope of and limitations on indemnities found in the deed of access, insurance and indemnity and the prohibitions in section 199A of
the Corporations Act, the Company indemnifies the Director against any and all liabilities incurred by the Director as an officer of a Group
Member, including any and all legal costs incurred by the Director in connection with a claim. If the Director becomes liable to pay any
amount for which the Director is or is entitled to be indemnified under the deed of access, insurance and indemnity, the Company must
pay that amount to the person to whom the amount is due within 10 Business Days after the date on which the Director provides evidence
satisfactory to the Company that the Director is liable to pay that amount and is entitled to be indemnified under this deed.
Under the Constitution, the Company must arrange and maintain Directors’ and officers’ insurance for its Directors and
officers to the extent permitted by law. Under the deed of access, insurance and indemnity, the Company must, for each
Director or officer, maintain or procure the maintenance of insurance for the Director or officer’s period of office and for a
period of seven years after the Director or officer ceases to hold office.
The deed of access, insurance and indemnity allows for the Company in certain cases to make advance payments to an
indemnified party for an amount owing in respect of a loss covered by the deed.
No indemnities were given or insurance premiums paid during the financial year for any person who was an auditor of the Company.
During the financial year ended 30 June 2021, the Company paid insurance premiums totalling $288,850 in respect of
Directors’ and Officers’ liability and legal expenses insurance contracts (2020: $34,320). This covered both current and
former Directors and Officers of the Company. The insurance premiums relate to:
• costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever their
outcome; and
• other liabilities that may arise from their position, with the exception of conduct involving a willful breach of duty or
improper use of information or position to gain personal advantage.
20
21
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
Directors’ Report (continued)
Directors’ Report (continued)
AUDITED REMUNERATION REPORT
Principles of Remuneration
The remuneration report details the Key management personnel (KMP) remuneration practices of the Group. Key
management personnel are those persons 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. For
the financial year ended 30 June 2021, key management personnel comprised all Directors, Executives and the Company
Secretary
Key Management Personnel
Directors
Professor Jonathan West
Mr Scott Robertson
Mr Justin Yap
Mr Michael Aldridge
Dr Nicole van der Weerden
Professor Marilyn Anderson AO
Mr Steven Skala AO
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Managing Director and Chief Executive Officer
Executive Director and Chief Operating Officer
Executive Director
Alternate Non-Executive Director (for Mr Scott Robertson)
Dr John Bedbrook (resigned 22 September 2020)
Non-Executive Director
Mr GF (Dan) O’Brien (resigned 22 September 2020)
Non-Executive Director
Other Management Personnel
Dr Peter Welburn
Ms Helen Molloy
Chief Development Officer
Financial Controller and Company Secretary
Remuneration levels for key management personnel are set to attract and retain appropriately qualified and experienced
Directors and Executives. The Remuneration and Nomination Committee obtains independent advice on remuneration
packages and reviews remuneration at least on an annual basis.
Remuneration structures take into account the capability and experience of key management personnel. Remuneration
includes a mix of fixed and variable remuneration as well as short and long term incentives.
Fixed Remuneration
Fixed remuneration consists of base salary, which is calculated on a total cost basis and includes any FBT charges related to
employee benefits, as well as employer contributions to superannuation funds.
Performance Linked Remuneration
Performance linked remuneration may include short and long term incentives.
Short Term Incentives (STI): The objective of STI is to link the achievement of the Company’s operational targets with the
remuneration received by the executives responsible for meeting those targets. The total potential STI available is set at a
level that provides appropriate incentive to the executive to achieve the operational targets at a cost to the Company that
is reasonable in the circumstances. Actual STI payments in the form of cash bonuses to key management personnel depend
on the extent to which specific corporate goals set at the beginning of the financial year (or shortly thereafter) are met.
These corporate goals are linked to the Company’s development plans. On an annual basis, after consideration of actual
performance against KPIs, the Remuneration and Nomination Committee determines the amount, if any, of the STI to be
paid to KMP. Payments of the STI are made in the following reporting period. The Remuneration and Nomination Committee
considered the STI payment for the 2021 financial year in July 2021. Based on the achievement of operational objectives in
the financial year, the Remuneration and Nomination Committee has determined there will be $319,457 STI paid to KMP for
the 2021 financial year. This payment will be made during FY2022.
Long term incentives may be provided as options over the Company’s ordinary shares and other securities. Details are
provided on pages 26 to 27 of the Directors’ Report.
AUDITED REMUNERATION REPORT (continued)
Consequences of Performance on Shareholder Wealth
Hexima is a development stage company and the performance linked remuneration of key management personnel is
not determined by the level of revenue, profit or dividends. Instead, consideration is given to the progress of product
development programs, the achievement of the Company’s strategic goals, the development of the Company’s intellectual
property and asset base and long-term share price performance.
Service Contracts
The Group has entered into service contracts with key management personnel, which outline the components of
remuneration paid to key management personnel, but do not prescribe how remuneration levels are modified from year to
year. Base salary levels are reviewed each year to take into account cost-of-living changes, any change in scope of the role
performed by the senior Executive, and any changes required to meet the principles of the remuneration policy.
All employment contracts have no fixed term and may be terminated immediately for cause or for material underperformance.
Mr Michael Aldridge
Mr Aldridge is an employee of the Group and was appointed Chief Business Officer on 1 June 2019. Mr Aldridge accepted the role
of Chief Executive Officer in September 2020. The Group or Mr Aldridge can terminate the employment contract at any time.
If Mr Aldridge’s position was terminated other than for cause, death or disability or resignation for good reason within the
change in control period (the period beginning on the date that is 3 months prior to the date of a closing change in control,
and ending on the 1 year anniversary of such change in control as defined in the Corporations Act , he would receive a lump
sum of 12 months base salary. If termination was outside the change in control period continuing payments of salary for 6
months from the date of termination would be made.
Dr. Nicole van der Weerden
Executive Director Dr. van der Weerden has been a member of the Executive since 2012 and was Chief Executive Officer
from December 2015 to September 2020. Dr. van der Weerden is an employee of La Trobe University and Hexima contracts
her services through a Research Agreement with the University. In addition to her employment by the University, Dr. van
der Weerden also has an employment contract with the Group. The Group or Dr van der Weerden can terminate this
employment contract at any time provided that either party gives 3 months written notice, other than for summary dismissal.
Professor Marilyn A Anderson AO
Executive Director Professor Anderson was appointed Chief Science Officer from 1 July 2009. She was formerly Senior
Vice President Research and Discovery. Professor Anderson is an employee of La Trobe University and Hexima contracts
her services through a Research Agreement with the University. In addition to her employment by the University, Professor
Anderson also has an employment contract with the Group. The Group or Professor Anderson can terminate this
employment contract at any time provided that either party gives 3 months written notice, other than for summary dismissal.
Ms Helen Molloy
Ms Molloy has an employment contract with the Group having dual roles of Company Secretary and Financial Controller. The
Group or Ms Molloy can terminate this employment contract at any time provided that either party gives 1 months written
notice, other than for summary dismissal.
Dr Peter Welburn
Dr Welburn has an employment contract with the Group having been appointed Clinical Development Officer in October
2020. The Group or Dr Welburn can terminate this employment contract at any time provided that either party gives 3
months written notice, other than for summary dismissal.
Non-Executive Directors
The Constitution provides that Non-Executive Directors may be paid or provided fees or other remuneration for their services
as a Director of Hexima (including as a member of any Directors’ committee). The total amount or value of this remuneration
must not exceed $500,000 (including mandatory superannuation) per annum or such other maximum amount determined
by the Company in a general meeting.
A Non-Executive Director may be paid remuneration for services outside the scope of ordinary duties of the Director. Non-
Executive Directors may also be paid expenses properly incurred in attending meetings or otherwise in connection with the
Company’s business. Additional “per diem” fees may be paid where services rendered are above normal requirements.
Other than is noted below, Non-Executive directors have not received any cash payments since 1 January 2015, and have
instead received equity compensation;
• During October 2020 both Steven Skala and Jonathan West received $100,000 as they performed duties over and above
that expected from a non-executive director in the lead up to the $5.7million placement that occurred in September 2020.
22
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Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
Directors’ Report (continued)
Directors’ Report (continued)
AUDITED REMUNERATION REPORT (continued)
Directors’ and Executive Officers’ Remuneration (continued)
Notes in relation to the table of Directors’ and Executive officers’ remuneration
1.
2.
The fair value of options is calculated at grant date using the Black-Scholes Pricing model, and expensed over the
period from grant date to vesting date. The value disclosed is the portion of the fair value of the options recognised
in this reporting period.
Professor Anderson is employed by both the Company and La Trobe University. The Company engages her
services through a Research Agreement with the University and through a separate direct employment agreement.
Professor Anderson’s total remuneration from the Company and La Trobe University (in relation to services
performed for Hexima) was $108,136 (2020: $136,259), comprising $66,408 (2020: $94,531) paid and payable
directly by the Company and $41,728 (2020: $41,728) paid by La Trobe University (for services performed for
Hexima). In the current year the La Trobe payment has been included in the Remuneration table above and the
comparative numbers have been adjusted for consistency.
Professor Anderson is the Chief Science Officer for Hexima Limited as well as an Executive Director of the Company.
3. Ms Elisha Larkin resigned as Company Secretary effective 19 November 2019. Ms Larkin was employed on a part-
time basis.
4. Dr. Nicole van der Weerden is employed by both the Company and La Trobe University. The Company engages
Dr. van der Weerden’s services through a Research Agreement with the University, and through a separate direct
employment agreement. Dr van der Weerden’s total remuneration from the Company and La Trobe University (in
relation to services performed for Hexima) was $543,140 (2020: $256,816), comprising $393,969 (2020: $116,870)
paid and payable directly by the Company, and $149,171 (2020: $139,946) paid by La Trobe University (for the
services performed for Hexima). In the current year the La Trobe payment has been included in the Remuneration
table above and the comparative numbers have been adjusted for consistency.
Dr van der Weerden is the Chief Operating Officer for Hexima Limited as well as an Executive Director of the
Company.
5. Ms Molloy was appointed sole Company Secretary on 21 November 2019. Ms Molloy is an employee of the Group
and is also Financial Controller.
AUDITED REMUNERATION REPORT (continued)
Directors’ and Executive Officers’ Remuneration
Details of the nature and amount of each major element of remuneration of each Director of the Company and each key
management personnel are:
Short Term
Share based
payments
Post
employment
Fixed
Remuneration
(Salary & Fees)
Leave
Benefits
Health
Cover
Bonus
Share
Options
Issued (1)
Super-
annuation
Total
Remuneration
Value of
Bonus as
proportion of
remuneration
Value of
options as
proportion of
remuneration
Non-executive
Directors
Jonathan West
2021
100,000
2020
John Bedbrook
2021
2020
GF Dan O’Brien
2021
2020
Scott Robertson
2021
Justin Yap
2020
2021
2020
-
-
-
-
-
-
-
-
-
Steven Skala AO
2021
100,000
2020
-
-
-
-
-
-
-
-
-
-
-
-
-
Executive
Directors
Marilyn Anderson
AO (2)
Nicole van der
Weerden (4)
2021
2020
2021
2020
82,788
117,132
317,076
230,925
1,377
8,421
50,582
10,163
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
86,813
15,280
4,992
14,701
4,992
7,641
11,980
12,514
27,646
9,017
15,806
-
12,867
-
7,203
3,543
86,800
72,731
-
7,085
Michael Aldridge
2021
525,166
16,560
63,121
186,000
85,425
2020
386,529
Executives
Elisha Larkin (3)
2021
-
Helen Molloy (5)
Peter Welburn
2020
2021
2020
2021
2020
38,799
153,689
143,891
102,740
-
-
-
49,380
14,025
22,939
5,192
-
29,942
-
-
-
-
-
-
-
-
-
10,540
-
94,717
-
2,370
12,614
2,207
23,250
32,632
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,901
7,163
15,951
8,643
-
-
-
3,686
14,600
13,670
9,760
-
186,813
15,280
4,992
14,701
4,992
7,641
11,980
12,514
27,646
9,017
115,806
-
108,136
136,259
543,140
256,816
876,272
511,188
-
94,235
205,468
182,707
173,574
-
Total
2021
1,381,459
87,736
63,121
319,457
362,834
44,212
2,258,819
2020
917,276
90,903
29,942
-
169,075
33,162
1,240,358
-
-
-
-
-
-
-
-
-
-
-
-
12%
-
16%
-
21%
-
-
-
5%
-
13%
-
14%
-
46%
100%
100%
100%
100%
100%
100%
100%
100%
100%
14%
-
7%
3%
13%
3%
10%
19%
-
3%
6%
1%
20%
-
16%
14%
24
25
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
Directors’ Report (continued)
Directors’ Report (continued)
AUDITED REMUNERATION REPORT (continued)
30 June 2020:
No. of
Options
Granted
500,000
250,000
250,000
250,000
250,000
50,000
60,000
Exercise
Price
$0.50
$0.50
$0.50
$0.50
$0.50
$0.50
$0.50
Grant Date
28/1/2020
28/1/2020
28/1/2020
28/1/2020
28/1/2020
Vesting
Period
1 year
1 year
1 year
1 year
1 year
15/11/2019
Grant date
15/11/2019
Grant date
Jonathan West
John Bedbrook
GF Dan O’Brien
Justin Yap
Scott Robertson
Elisha Larkin
Helen Molloy
Total
1,610,000
The options in the June 2020 table are pre consolidation
End of Audited Remuneration Report
Fair value
per option
at grant
date
$0.037
$0.037
$0.037
$0.037
$0.037
$0.037
$0.037
Expiry Date
27/1/2025
27/1/2025
27/1/2025
27/1/2025
27/1/2025
15/11/2024
15/11/2024
No. of options
vested during
2020
-
-
-
-
-
50,000
60,000
110,000
Equity instruments
All options refer to options over ordinary shares of Hexima Limited, which are exercisable on a one-for-one basis.
Options over equity instruments granted as compensation
Details on options over ordinary shares in the Company granted to key management personnel and Executives during the
reporting period. Options were issued as an incentive to KMP to align with business objectives and have a service criteria
only. The number of options granted during the year are based on term of service and are consistent with equity-based
compensation for similar stage life science companies. The number of options granted to Michael Aldridge also considered
his acceptance of the Chief Executive Officer role..
30 June 2021:
Cancelled Options
Granted and Vested Options
Number
Expiry Date
500,000
11/12/2020
250,000
12/02/2022
250,000
01/01/2023
250,000
01/01/2024
250,000
28/01/2025
Exercise
Price
FV at
Cancellation
Date
Number
Exercise
Price
Grant Date
Vesting
period
FV per
option
at grant
date
Options
vested
2021
Expiry Date
$1.00
$0.40
$0.40
$1.00
$1.00
$1
1,000,000
$0.20
14/10/2020
1 year
$0.1782
14/10/2030
-
$12,714
$19,386
$16,134
$21,695
2,500,000 18/06/2029
$1.00
$361,164
2,750,000
$0.20
14/10/2020 4 years
$0.1782
14/10/2030
250,000
11/12/2020
$1.00
-
-
-
-
-
-
-
-
-
1,150,000
$0.20
14/10/2020 4 years
$0.1782
14/10/2030
125,000
$0.20
14/10/2020 4 years
$0.1782
14/10/2030
-
-
$1.00
28/01/2020
$0.0734 28/01/2025 125,000
$1.00
28/01/2020
$0.0734 28/01/2025 125,000
Jonathan
West
Michael
Aldridge
Nicole van
der Weerden
Marilyn
Anderson
John
Bedbrook
GF Dan
O’Brien
Justin Yap
62,500
01/01/2023
$0.40
Scott
Robertson
125,000
01/01/2024
125,000
28/01/2025
$1.00
$1.00
50,000
31/12/2022
$0.40
500,000
22/02/2024
125,000
28/01/2025
$1.00
$1.00
Steven Skala
125,000
11/12/2020
$1.00
Peter
Welburn
-
-
-
312,500
$0.20
14/10/2020
1 year
$0.1782
14/10/2030
312,500
$0.20
14/10/2020
1 year
$0.1782
14/10/2030
125,000
$0.20
14/10/2020
1 year
$0.1782
14/10/2030
650,000
$0.20
14/10/2020 4 years
$0.1782
14/10/2030
Helen Molloy
30,000
15/07/2024
$1.00
$2,284
217,500
$0.20
14/10/2020 4 years
$0.1782
14/10/2030
-
-
-
-
$4,847
$8,067
$10,848
$3,874
$33,856
$10,848
-
-
-
-
-
-
-
-
-
-
Total
5,392,500
6,642,500
250,000
The options in the June 2021 table are post consolidation
26
27
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
Directors’ Report (continued)
ASX ADDITIONAL INFORMATION
CURRENT AS AT 18 AUGUST 2021
NON-AUDIT SERVICES
During the year KPMG, the Group’s auditor, has performed certain other services in addition to the audit and review of the
financial statements.
The Board has considered the non-audit services provided during the year by the auditor and in accordance with advice
provided by the Audit and Risk Management Committee, is satisfied that the provision of those non-audit services during the
year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations
Act 2001 for the following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Group and have been
reviewed by the Audit and Risk Management Committee to ensure they do not impact the integrity and objectivity of the
auditor; and
• The non-audit services provided do not undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own
work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly
sharing risks and rewards.
Details of the amounts paid to the auditor of the Group, KPMG, for audit and non-audit services are set out below:
Substantial shareholders
Shareholder
Woobinda Nominees Pty Ltd and its associates2
Dato Lim Sen Yap1
Gowing Bros Ltd3
Total
Shares
14,939,353
14,715,790
7,923,307
37,578,450
Relevant interest
11.4%
11.2%
6.1%
28.7%
Note 1: Related party of Justin Yap, a Director of Hexima.
Note 2: Associated entities of G.F.O’Brien, a previous Director of Hexima.
Note 3: Jonathan West, a Director of Hexima, is chairman of Gowing Bros Ltd.
Voting rights
Ordinary shares
Holders of ordinary shares are entitled to one vote per share at general meetings of the Company
2020
There are no voting rights attached to options
Options
Services other than audit and review of financial statements:
Other assurance services
Investigating Accountant for public offer of shares
Audit and review of the financial statements
2021
$
108,675
85,679
194,354
$
-
48,228
48,228
LEAD AUDITORS’ INDEPENDENCE DECLARATION UNDER SECTION
370C OF THE CORPORATIONS ACT 2001
The Lead Auditor’s Independence Declaration is set out on page 68 and forms part of the Directors’ Report for the year
ended 30 June 2021.
This report is made pursuant to a resolution of the Directors.
Professor Jonathan West
Non-Executive Chairman
Dated this 26th day of August 2021
Mr Michael Aldridge
Managing Director and Chief Executive Officer
Distribution of equity security holders
Number of equity security holder
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Ordinary
Shares
Options
Rights
Convertible
Preference
Redeemable
Preference
Redeemable
Convertible
Notes
82
239
133
343
116
913
-
2
2
12
15
31
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Securities exchange
The Company is listed on the ASX. The home exchange is Sydney.
28
29
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
ASX ADDITIONAL INFORMATION (continued)
CURRENT AS AT 18 AUGUST 2021
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Twenty largest shareholders
Name
Dato Lim Sen Yap
Caroline House Superannuation Fund Pty Ltd
Woobinda Nominees Pty Ltd
Beta Gamma Pty Ltd
HSBC Custody Nominees (Australia) Ltd
Gowing Bros Limited
Paul Orlin
Gowing Bros Ltd
Balmoral Financial Investments Pty Ltd
Adrienne Clarke
Hugh Morgan
Dongrisha Pty Ltd
Dalit Pty Ltd
Huysmans Pty Ltd
Marilyn Anderson
Clianth Investments Pty Ltd
Pioneer Hi-Bred International Inc
Mr Leon Francis Lachal & Mrs Susan Lachal
Cranley Nominees
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
UBS Nominees Pty Ltd
Restricted securities
Number of Ordinary Shares Held
Percentage of Capital Held
14,715,790
8,487,131
6,452,222
5,736,586
4,871,833
4,256,176
3,750,000
3,667,131
3,051,090
3,028,938
2,977,252
2,500,000
2,500,000
2,346,011
2,280,548
2,106,755
2,000,000
1,779,249
1,762,145
1,606,367
79,875,224
11.2
6.5
4.9
4.4
3.7
3.5
2.9
2.8
2.3
2.3
2.3
1.9
1.9
1.8
1.7
1.6
1.5
1.4
1.3
1.2
61.0
Shares/Options subject to escrow
Date from which securities may be sold
10,400,000
3,559,437
13,959,437
Use of funds since listing
1 December 2022
25 September 2021
Hexima’s use of funds during FY 2021 was consistent with achieving the business objectives as outlined in the prospectus
dated 15 October 2020 and filed with ASIC. This included expenditure on the Company’s ongoing phase IIb clinical trial, scale
up of pezadeftide manufacturing, formulation, stability and toxicology studies.
Revenue
Collaboration and service fees
Lease income
Government grants
Expense
Contracted research
Other research and development
Patent and legal
Marketing and business development
Employee benefits
Depreciation
Other
Results from operating activities
Finance income
Finance expense
Net financing (expense) / income
Loss before income tax
Income tax expense
Loss for the period
Notes
4(a)
4(b)
4(c)
5
6
7
7
Consolidated
2021
$
-
392,948
3,770,581
4,163,529
(1,885,007)
(5,794,736)
(208,582)
(109,339)
(2,293,087)
(147,979)
(550,438)
(10,989,168)
(6,825,639)
99,423
(147,430)
(48,007)
2020
$
88,184
409,172
2,070,985
2,568,341
(2,180,959)
(1,839,169)
(264,998)
(126,749)
(1,103,154)
(162,359)
(425,244)
(6,102,632)
(3,534,291)
89,308
(180,779)
(91,471)
(6,873,646)
(3,625,762)
8(a)
-
-
(6,873,646)
(3,625,762)
Other comprehensive income for the period, net of income tax
-
-
Total comprehensive loss for the period
(6,873,646)
(3,625,762)
Loss attributable to:
Owners of the Company
Loss for the period
Total comprehensive loss attributable to:
Owners of the Company
Total comprehensive loss for the period
Basic EPS (cents per share)
Diluted EPS (cents per share)
The accompanying notes form part of these financial statements
(6,873,646)
(6,873,646)
(6,873,646)
(6,873,646)
(6.14)
(6.14)
(3,625,762)
(3,625,762)
(3,625,762)
(3,625,762)
(5.57)
(5.57)
16
16
30
31
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2021
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 JUNE 2021
CURRENT ASSETS
Cash and cash equivalents
Receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Investment Property
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Employee benefits
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS/(DEFICIENCY IN NET ASSETS)
EQUITY
Share capital
Reserves
Accumulated losses
Notes
10
11
12(a)
12(b)
13
14
15
13
16
16
TOTAL EQUITY / (DEFICIENCY IN EQUITY)
The accompanying notes form part of these financial statements
Consolidated
2021
$
3,421,881
4,023,138
7,445,019
131,998
998,032
1,130,030
8,575,049
3,293,844
31,996
586,871
3,912,711
1,616,758
1,616,758
5,529,469
3,045,580
71,905,180
2,281,224
(71,140,824)
3,045,580
2020
$
1,357,647
2,292,080
3,649,727
1,275,586
-
1,275,586
4,925,313
3,353,137
3,022,372
170,079
6,545,588
-
-
6,545,588
(1,620,275)
61,006,378
1,640,525
(64,267,178)
(1,620,275)
Note
Ordinary
Shares
Consolidated
Equity
Option
reserve
Equity
compensation
reserve
Accumulated
Losses
Total equity
2021
$
$
$
$
$
Opening balance at 1 July 2020
61,006,378
200,000
1,440,525
(64,267,178)
(1,620,275)
Total comprehensive loss for the period
Net (loss) for the period
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners recorded directly in
equity
Issue Ordinary shares
Issue Convertible Notes
Capital Raising Costs
Share based payment expenses
Amount received on issue of options
Issue of shares on exercise of options
-
-
-
8,700,000
3,246,791
(1,047,989)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,216
390,483
-
-
-
-
Total contributions by and distributions to owners
10,898,802
250,216
390,483
(6,873,646)
(6,873,646)
-
-
(6,873,646)
(6,873,646)
-
-
-
-
-
-
-
8,700,000
3,246,791
(1,047,989)
640,699
-
-
11,539,501
Closing balance at 30 June 2021
71,905,180
450,216
1,831,008
(71,140,824)
3,045,580
2020
$
$
$
$
$
Opening balance at 1 July 2019
61,006,378
200,000
1,253,399
(60,641,416)
1,818,361
Note
Ordinary
Shares
Equity
Option
reserve
Equity
compensation
reserve
Accumulated
Losses
Total equity
Total comprehensive loss for the period
Net (loss) for the period
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners recorded directly in
equity
Contributions by and distributions to owners
Share based payment expenses
Amount received on issue of options
Issue of shares on exercise of options
Total contributions by and distributions to owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,625,762)
(3,625,762)
-
-
(3,625,762)
(3,625,762)
187,026
100
-
187,126
-
-
-
-
187,026
100
-
187,126
Closing balance at 30 June 2020
61,006,378
200,000
1,440,525
(64,267,178)
(1,620,275)
The accompanying notes form part of these financial statements
32
33
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021
CASH FLOWS USED IN OPERATING ACTIVITIES
Cash receipts from government grants & collaboration
agreements
Cash receipts from lease agreement
Cash paid to suppliers and employees
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Payments for plant and equipment
Net cash from investing activities
Notes
17(b)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments received on issue of options
Receipt of Paycheck Protection Program from the US Government
Proceeds from the issue of ordinary shares
Payments to raise capital
Proceeds from Convertible note issue
Net cash from financing activities
Net increase / (decrease) in cash and cash equivalents
Effect on movements in exchange rates on foreign currency
denominated cash at bank
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
17(a)
Consolidated
2021
$
2020
$
2,017,046
538,820
(8,349,628)
(5,793,762)
1,520
(2,423)
(903)
-
-
8,700,000
(797,347)
-
7,902,653
2,107,988
(43,754)
1,357,647
3,421,881
2,347,385
342,324
(4,788,773)
(2,099,064)
2,551
(1,738)
813
100
63,991
-
-
1,400,000
1,464,091
(634,160)
41,238
1,950,569
1,357,647
1.
REPORTING ENTITY
Hexima Limited (the “Company”) is a Company domiciled in Australia and is a for-profit entity. The address of the Company’s
registered office is Level 4, LIMS 2, La Trobe University, Victoria, 3086. The consolidated financial statements of the
Company as at and for the year ended 30 June 2021 comprises the Company and its subsidiaries (together referred to as
the “Group” and individually as “Group entities”). The Group is actively engaged in the research and development of plant-
derived proteins for applications as human therapeutics. Hexima’s lead product candidate, pezadeftide (previously referred
to as HXP124) applied in a topical formulation, is a potential new prescription treatment for toenail fungal infections (or
onychomycosis). Hexima is currently conducting an Australian phase IIb clinical trial testing pezadeftide for the treatment of
onychomycosis.
2. BASIS OF PREPARATION
(a) Basis of accounting
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.
The consolidated financial report of the Group complies with International Financial Reporting Standards (IFRSs) and
interpretations adopted by the International Accounting Standards Board (IASB).
The financial statements were approved by the Board of Directors on 26 August 2021.
Details of the Group’s accounting policies are included in Note 26. Changes to significant accounting policies are described in
Note 2(e).
(b) Basis of measurement
The financial report has been prepared on the basis of historical cost, except for share options and the embedded derivative
in respect of convertible debt which has been measured at fair value.
(c) Functional and presentation currency
The financial statements are presented in Australian dollars, which is the Group’s functional currency.
(d) Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect
the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities
that are not readily apparent from other sources. 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 in
which the estimate is revised and in any future periods affected.
The accompanying notes form part of these financial statements
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value for both financial and
non-financial assets and liabilities. The Group engages a third party to perform fair value calculations for share options issues
which is reviewed by the finance team. Significant valuation issues are reported to the Group Audit Committee.
Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where
applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to
that asset or liability.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the
lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change has occurred.
The Group measure the following assets/liabilities at fair value: Share-based payment transactions and convertible notes.
34
35
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
2. BASIS OF PREPARATION (continued)
d) Use of estimates and judgements (continued)
Convertible notes
The fair value of the embedded derivative within the convertible note at time of conversion of the note was measured using
the Monte Carlo Model. Measurement inputs were based on the terms and conditions of the convertible note.
Share-based payment transactions
The fair value of employee share options at grant date is measured using the Binomial Approximation Option Pricing method.
Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on
weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average
expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends,
and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to
the transactions are not taken into account in determining fair value.
Further information about the assumptions made in measuring fair values is included in the following notes:
• Note 14 – convertible notes.
• Note 9 – measurement of share-based payments
(e) Going concern basis of accounting
The financial report is prepared on a going concern basis, which contemplates continuity of normal operations and the
realisation of assets and settlement of liabilities in the ordinary course of operations. In making this assessment, the directors
have considered future events and conditions for a period of at least 12 months following the approval of these financial
statements.
The Group has a history of losses and incurred a loss after tax for the year ended 30 June 2021 of $6,873,646 (2020: loss
after tax of $3,625,762) and as at 30 June 2021 has a surplus in net current assets of $3,532,308 (2020: deficit of net current
assets of $2,895,861) and an overall net asset surplus of $3,045,580 (2020: net asset deficit of $1,620,275).
Notwithstanding the history of operating losses, the Directors consider that it is appropriate to prepare the financial
statements on a going concern basis based on the following mitigating factors:
4. REVENUE, LEASING INCOME AND GOVERNMENT GRANTS
(a) Revenue
Collaboration and service fees
(b) Lease income
Income from rental of glasshouse
(c) Government grants
R&D tax incentive
Covid-19
Other
Total government grants
5. OTHER RESEARCH AND DEVELOPMENT EXPENDITURE
Other research and development expenditure
• The majority of the Group’s research expenditure is expected to continue to be eligible for the Australian Government’s
research and development tax incentive rebate;
6. OTHER EXPENSES
• The Group has not entered into any long term contractual commitments and its major expenditure (R&D) can be curtailed
in line with the cash resources available;
• The Group has demonstrated it has the ability to negotiate creditor settlement terms with its major research service
provider to align with cash resources available to it, and has a commitment to allow the Group to defer $1,616,758 of
amounts payable and recorded as a non-current liability at 30 June 2021 and instead repay this amount on 31 December
2022. In addition:
- the provider has committed in principle that should the Company be unable to pay this amount as it becomes due, it
will accept conversion of the liability into equity of the Company; and
Administration and compliance costs
Other expenses
• post year end the Company has entered into negotiations to sell its glasshouse to the provider and that the proceeds on
sale will be used to retire this deferred liability with the provider.
7.
FINANCE INCOME AND EXPENSE
• The Directors have prepared a cash flow forecast for the period from 1 July 2021 until 31 December 2022. This forecast
indicates the Group will require additional financing to fund its research and development expenditures, which may be in
the form of a capital raising and/or licensing fees from a corporate partnership.
• Hexima is listed on ASX and the Directors are confident of the ability of the Company to raise sufficient capital to fund its
future operations;
The Group’s ability to continue to operate as a going concern is dependent upon the successful sale of the glasshouse and/or
the ability to secure additional funding or curtail its future expenditure (as outlined above), which is yet to be secured and is
consequently uncertain at the date of approval of these annual financial statements. This gives rise to a material uncertainty
as to whether the Group will be able to continue as a going concern. Should the Group be unable to continue as a going
concern it may be required to realise assets at an amount different to that recorded in the statement of financial position,
settle liabilities other than in the ordinary course of business and make provisions for other costs which may arise.
3.
SEGMENT REPORTING
The Group primarily operates in one sector being the biotechnology industry developing and/or commercialising
biotechnology research and therefore the Group’s financial information is the same as the operating segment information.
The majority of operations are in Australia. The Group employs a US-based CEO and approximately 10% of the Groups
expenses are incurred in the USA.
Interest income on term deposit and cash at bank
Interest expense on convertible note issue
Interest on discounted long term debt
Foreign exchange gain/(loss)
Derivative instrument gain
Finance (expense)/income
Consolidated
2021
$
-
2020
$
88,184
392,948
409,172
3,657,085
1,905,621
81,500
31,996
77,000
88,364
3,770,581
2,070,985
4,163,529
2,568,341
Consolidated
2021
$
5,794,736
5,794,736
2020
$
1,839,169
1,839,169
Consolidated
2021
$
427,733
122,705
550,438
2020
$
365,468
59,776
425,244
Consolidated
2021
$
1,453
2020
$
2,551
(44,935)
(180,779)
97,970
(56,887)
(45,608)
(48,007)
-
41,238
45,519
(91,471)
36
37
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
8.
INCOME TAX
(a) Income tax expense
Loss before tax
Income tax benefit using the domestic corporation tax rate of
26% (2019: 27.5%)
Increase/(decrease) in income tax expense due to:
R & D adjustment
Non-assessable R&D tax incentive
Non-deductible share based payment
Other
Temporary differences and tax losses not brought to account
Adjustment to deferred tax asset due to change in tax rate
Adjustment to prior year tax
Income tax expense/(benefit) on pre-tax net profit
Consolidated
2021
$
2020
$
(6,873,646)
(3,625,762)
(1,787,148)
(997,085)
2,188,245
(951,887)
101,526
(351)
135,964
47,919
265,732
-
1,208,864
(524,055)
51,432
14,076
246,768
-
-
-
Income tax expense can arise due to the add-back of R&D expenses which is claimed under the R&D Tax Incentive Scheme.
Tax losses are not fully available to offset against all taxable income arising as a result of the available fraction rules.
(b) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items
Temporary differences
Tax losses
Total
1,142,374
8,805,345
9,947,719
612,789
9,207,399
9,820,188
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not
been recognized in respect of these items because it is not yet probable that future taxable profit will be available against
which the group could utilize the benefits subject to passing the continuity of ownership and/or same business test.
9. SHARE-BASED PAYMENTS
At 30 June 2021, the Group had the following share-based payment arrangements. All options are to be settled by physical
delivery of shares. The terms and conditions of the share options granted as at 30 June 2021 are as follows;
Grant date / parties entitled
Options granted 12 February
2017 to key management
Options granted 12 February
2017 to key management
Options granted 1 January
2018 to key management
Options granted 1 January
2018 to other personnel
Options granted 1 January
2018 to other personal
Options granted 1 January
2018 to other personnel
Options granted 1 January
2019 to key management
Options granted 15
November 2019 to other
personnel
Options granted 28 January
2020 to key management
Options granted 14 October
2020 to key management
Options granted 14 October
2020 to key management
Options granted 14 October
2020 to other personnel
Options granted 15
December 2020 to other
party
Number of
instruments
375,000
662,500
Vesting conditions
Vesting upon continuous service until 31 December
2017
Vesting on earlier of 25% at completion of each year
post grant, or on completion of deal with minimum
total and minimum upfront payment
312,500
Vesting upon continuous service until 31 December
2018
148,000
Vesting immediately
52,500
50,000
250,000
Vested upon completion of various performance
related milestones – all vested
Vested upon delivery of certain licensing and
technology advice – all vested
Vesting upon continuous service until 31 December
2019
155,500
Vesting immediately
Contractual life
of options
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
250,000
Vesting upon retirement 22 September 2020
5 years
1,750,000
4,892,500
475,000
Vesting upon continuous service until 14 October
2021
Tranche 1 25% vesting 14 October 2021, and monthly
thereafter until 14 October 2024
Tranche 1 25% vesting 14 October 2021, and monthly
thereafter until 14 October 2024
3,000,000
Vesting immediately
10 years
10 years
10 years
3 years
Total share options
12,373,500
38
39
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
9. SHARE-BASED PAYMENTS (continued)
10. CASH AND CASH EQUIVALENTS
The number and weighted average exercise prices of share options are as follows:
Cash on hand
Cash at bank
11. RECEIVABLES
Current
Trade receivables
R&D Tax Incentive Receivable – ATO
Prepayments and other receivables
Consolidated
2021
$
952
3,420,929
3,421,881
Consolidated
2021
$
110,135
3,661,103
251,900
2020
$
952
1,356,695
1,357,647
2020
$
215,528
1,907,568
168,984
4,023,138
2,292,080
The Group’s exposure to credit and currency risks and impairment losses related to trade receivables is disclosed in Note 19.
Outstanding at 1 July
Exercised during the period
Cancelled during the period
Lapsed during period
Granted during the period
Outstanding at 30 June
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
2021
$0.78
-
$0.94
$0.59
$0.27
$0.31
2021
8,802,500
-
(5,452,500)
(1,094,000)
1 0 ,1 1 7, 5 0 0
12,373,500
2020
$0.78
-
-
$0.98
$1.00
$0.78
Number of
options
2020
8,703,500
-
-
(936,500)
1,035,500
8,802,500
The comparative detail has been restated for the 1:2 share consolidation which occurred during the 2021 financial year.
The options outstanding at 30 June 2021 have various exercise prices ($0.16, $0.20, $0.30, $0.40, $0.60 and $1.00) and a
weighted average remaining contractual life of 6.2 years.
Measurement of fair values
The fair value of services received in return for share options granted is based on the fair value of share options granted,
measured using the Black Scholes Model. This model is generally used to calculate a theoretical price of an option on a stock
that does not pay dividends using the five key variables of an option’s price being the current spot price, future exercise
price, volatility, time to expiration, and the risk-free interest rate.
The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payment plans issued
to directors, key management personnel and other in FY21 were:
• Non-executive Directors; 1,750,000 options with Risk-free rate 0.84%, exercise price of $0.20, fair value at grant date
$0.1782, expected volatility (annualised) 100.00%, expected life of 10 years, and an annualised dividend rate of 0%.
• Executive Directors; 4,025,000 options with Risk-free rate 0.84%, exercise price of $0.20, fair value at grant date $0.1782,
expected volatility (annualised) 100.00%, expected life of 10 years, and an annualised dividend rate of 0%.
• Management Personnel; 1,342,500 options with Risk-free rate 0.84%, exercise price of $0.20, fair value at grant date
$0.1782, expected volatility (annualised) 100.00%, expected life of 10 years, and an annualised dividend rate of 0%.
Other; 3,000,000 options allocated into three 1,000,000 parcels with Risk-free rate 0.11%, exercise prices of $0.30, $0.40
and $0.60, fair value at grant date $0.0957, $0.0848 and $0.0696 respectively with expected volatility (annualised) 100.00%,
expected life of 3 years, and an annualised dividend rate of 0%.
Employee expenses
Current
Share options expense
Total expense recognised as employee costs
Consolidated
2021
$
390,483
390,483
2020
$
187,026
187,026
40
41
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
12.(a) PLANT AND EQUIPMENT
Consolidated
Cost
Balance at 1 July 2020
Additions
Transfer to investment property
Balance at 30 June 2021
Balance at 1 July 2019
Additions
Disposals
Balance at 30 June 2020
Accumulated depreciation
Balance at 1 July 2020
Depreciation for the year
Transfer to investment property
Balance at 30 June 2021
Balance at 1 July 2019
Depreciation for the year
Disposals
Balance at 30 June 2020
Carrying amounts
At 30 June 2020
At 30 June 2021
Plant and Equipment Office Equipment
$
3,424,934
-
(2,365,709)
1,059,225
3,424,934
-
-
3,424,934
2,152,057
145,590
(1,367,677)
929,970
1,992,286
159,771
-
2,152,057
159,519
129,255
$
19,670
2,423
-
22,093
19,737
1,738
(1,805)
19,670
16,961
2,389
-
19,350
15,863
2,588
(1,490)
16,961
2,674
2,743
Total
$
3,444,604
2,423
(2,365,709)
1,081,318
3,444,671
1,738
(1,805)
3,444,604
2,169,018
147,979
(1,367,677)
949,356
2,008,149
162,359
(1,490)
2,169,018
162,227
131,962
The glasshouse has been reclassified in FY2021 as Hexima no longer intends to use the glasshouse in the future (Refer to
Note 12(b). Post year end Hexima has commenced negotiations to sell the glasshouse.
12.(b) INVESTMENT PROPERTY
The Group holds one investment property, a glasshouse facility measured at cost. Hexima considers the fair value of the
glasshouse to be $2.8m based on the current rental return. The glasshouse has been wholly leased to a third party. Refer to
Note 22.
Cost
Balance at 1 July 2020
Transfer from property, plant and equipment
Disposals
Balance at 30 June 2021
Balance at 1 July 2019
Additions
Disposals
Balance at 30 June 2020
Accumulated depreciation
Balance at 1 July 2020
Transfer from property, plant and equipment
Disposals
Balance at 30 June 2021
Balance at 1 July 2019
Depreciation for the year
Disposals
Balance at 30 June 2020
Carrying amounts
At 30 June 2020
At 30 June 2021
13. TRADE AND OTHER PAYABLES
Current
Trade payables and other
Other payables & accrued expenses
Rental income received in advance
Glasshouse
$
-
2,365,709
-
2,365,709
-
-
-
-
-
1,367,677
-
1,367,677
-
-
-
-
-
998,032
Consolidated
2021
$
2020
$
2,678,680
2,567,376
516,119
99,045
687,794
97,967
3,293,844
3,353,137
42
43
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
13. TRADE AND OTHER PAYABLES (continued)
Non-Current
Trade payable
Consolidated
2021
$
1,616,758
1,616,758
2020
$
-
-
Exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 19.
14. LOANS AND BORROWINGS
Non-Current
Convertible Note
US Government Loan - Paycheck Protection Program
Consolidated
2021
$
-
31,996
31,996
2020
$
2,958,381
63,991
3,022,372
Terms and Repayment Schedule
Type
Currency
Interest
rate
Year of
Maturity
Face Value
Carrying
Amount
Face Value
Carrying
Amount
Convertible Notes
AUD
6%
2021
-
-
3,003,900
2,958,382
30 June 2021
30 June 2020
Convertible Notes
Opening balance of financial liability
Proceeds from issue
Capitalisation of accrued interest
Conversion of Convertible Notes to 22,238,396 (post consolidation)
ordinary shares
Less: gain on the fair value movement of derivative liability
Carrying amount of financial liability
Opening balance of embedded derivative
Movement in fair value
Conversion to equity
Carrying amount of embedded derivative
Total Carrying value
Consolidated
2021
$
2,952,174
-
288,410
(3,240,584)
-
-
6,208
(6,208)
2020
$
1,534,997
1,400,000
17,177
-
-
2,952,174
51,726
(45,518)
-
-
6,208
2,958,382
14. LOANS AND BORROWINGS (continued)
Convertible Notes (continued)
Conversion terms:
The convertible note carried a fixed coupon rate of 6%. The convertible note, including accrued interest, mandatorily
converted in September 2020 as a result of a qualified financing occurring. The qualified financing in this case was the
company raising proceeds of not less than $5,000,000. The conversion took place at a discount of 27% to the 10 cent share
price (pre-consolidation) at the time.
The carrying amount of the host contract (financial liability) on initial recognition is the difference between the carrying
amount of the hybrid instrument and the fair value of the embedded derivative. The embedded derivative is measured at
fair value through profit or loss. Subsequent to initial recognition the derivative is measured at fair value through profit or
loss. The valuation methodology used for the derivative component was the Black Scholes Model. The assumptions used in
the valuation are 1) Risk Free Rate is equal to 0.203% 2) The volatility is unchanged at 100% 3) The principal of the note is
$3,000,000 and 4) Conversion date equals 31 December 2020.
15. EMPLOYEE BENEFITS
Current
Accrued salary and wages
Accrued bonus
Superannuation
Liability for annual leave
Liability for long service leave
Consolidated
2021
$
-
338,730
12,876
82,787
152,478
586,871
2020
$
15,000
-
7,551
30,610
116,918
170,079
16. CAPITAL AND RESERVES
Reconciliation of movement in capital and reserves
Consolidated and the Parent Entity
Ordinary Shares
Number of Shares
Amount
$
2021
2020
2021
2020
130,238,789
130,238,789
61,006,378
61,006,378
On Issue at 1 July
Issued via Placement
57,000,000
Issued via convertible note conversion
44,476,598
Total ordinary shares pre share
consolidation
Total ordinary shares post 1:2
consolidation
Issued via Public Offer
Capital raising costs
231,715,387
115,857,724
15,000,000
-
-
-
-
-
-
-
5,700,000
3,246,791
69,953,169
69,953,169
3,000,000
(1,047,989)
-
-
-
-
-
-
On issue at 30 June – fully paid
130,857,724
130,238,789
71,905,180
61,006,378
1.
Shares in the Company were consolidated on a one for two basis in October 2020.
2. The total shares post consolidation is not exactly half of the pre consolidation total due to rounding of uneven share
holdings.
The Company does not have authorised capital or par value in respect of its issued shares. The holders of ordinary shares are entitled
to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company.
44
45
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
16. CAPITAL AND RESERVES (continued)
Equity Option Reserve
The equity option reserve comprises the accumulated amount of share options issued to other parties not under
compensation schemes.
On issue at 1 July
Issued to lead manager of Public Offer
On issue at 31 December
Equity compensation Reserve
Number of options
Amount
2021
2020
-
3,000,000
3,000,000
-
-
-
2021
$
2020
$
200,000
200,000
250,216
450,216
-
200,000
16. CAPITAL AND RESERVES (continued)
Earnings per Share
The Group’s basic and diluted EPS are shown below:
Net loss
Weighted average number of ordinary shares
Basic EPS (cents per share)
Diluted EPS (cents per share)
2021
2020
($6,873,646)
($3,625,762)
1 1 1 ,92 3,137
65 ,119,395
(6.14)
(6.14)
(5.57)
(5.57)
Dilutive earnings per share is the same as Basic earnings per share as potential ordinary shares shall be treated as dilutive
when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share from
continuing operations.
The equity compensation reserve represents the accumulated amount of share options vested and to be vested to director’s,
key management personnel and other personnel under compensation schemes.
The comparative weighted average number of ordinary shares has been restated for the 1:2 share consolidation which
occurred during the 2021 financial year.
On issue at period beginning
17,605,000
17,407,000
1,440,525
1,253,399
Note
Consolidated
Number of options
Amount
2021
2020
2021
$
2020
$
17. NOTES TO THE STATEMENT OF CASHFLOW
17a. RECONCILIATION OF CASH
Options on issue post consolidation
8,802,500
N/A
1,440,525
Issued as compensation
Exercise of share options
Cancelled options
Lapsed options
On issue at period end
Total Reserve at period end
7,1 1 7, 5 0 0
2,071,0001
390,483
-
(5,452,500)
-
-
(1,094,000)
(1,873,000)1
-
-
-
9,373,500
17,605,0001
1,831,008
1,440,525
12,373,500
17,605,0001
2,281,224
1,640,525
1.
Full year 2020 values have not been adjusted for consolidation
Shares in the Company were consolidated on a one for two basis in October 2020, options were consolidated on an
equivalent basis.
Options issued during the period
In October 2020, each of the Chairman and each current Non-Executive Director (including Mr Steven Skala AO as alternate
Director) as well as members of the management team requested that the Company cancel options previously granted
to them. Replacement options were granted 14 October 2020. The Company accounted for these replacements as
modifications to equity-settled share-based payment. The incremental fair value of the difference between the fair value of
the modified share-based payment and that of the original share-based payment, both measured at the date of modification,
is recognised as an expense over the remaining vesting period.
The lead manager of the public offer was issued 3,000,000 options in December 2020 upon listing of the company.
No options were exercised for the year ended 30 June 2021. The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per share at meetings of the Company.
N/A
187,126
-
-
-
Reconciliation of cash at the end of the period (as shown in the
statement of cash flows) to the related items in the accounts is as
follows:
2021
$
2020
$
Cash on hand and at bank
11
3,421,881
1,357,647
17b. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the period
Adjustments for:
Interest received and foreign exchange differences – classified as
investing activity and movement in cash
Derivative instrument gain/(loss)
Depreciation
Equity settled share based payment expense
Operating loss before changes to working capital
Decrease/(Increase) in trade and other receivables and prepayments
Increase in payables and employee benefits
Net cash used in operating activities
Consolidated
2021
$
2020
$
(6,873,646)
(3,625,762)
2,399
45,608
147,979
640,699
(43,789)
(45,519)
162,359
187,126
(6,036,961)
(3,365,585)
(1,731,058)
1,974,257
71,632
1,194,889
(5,793,762)
(2,099,064)
46
47
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
18. AUDITOR’S REMUNERATION
a. Audit Services
Auditors of the Company
KPMG Australia
- Audit of the annual financial report
- Review of half year financial statements
b. Non-Audit Services
KPMG Australia
- Investigating Accountant for public offer of shares
Consolidated
2021
$
53,583
32,096
85,679
2021
$
108,675
108,675
2020
$
28,866
19,362
48,228
2020
$
-
-
19. FINANCIAL INSTRUMENTS
Credit Risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure.
The Group’s maximum exposure to credit risk at 30 June was:
Trade and other receivables
R&D Tax Incentive – ATO
Cash on hand and at bank
Note
11
11
10
Consolidated
2021
$
110,135
3,661,103
3,421,881
7,193,119
2020
$
215,528
1,907,568
1,357,647
3,480,743
Cash on hand and at bank include deposits with the National Australia Bank and the Bank of America.
Impairment Losses
The Group has receivables past due of $NIL (2020: $NIL) and no impairment losses have been recognised (2020: $NIL).
The Group is in the development phase of its research and development program. The Group’s income is currently limited to
interest on cash and term deposits, Australian government grants and rental income where income is received in advance.
Accordingly, risk of impairment losses is minimal.
Liquidity Risk
The Group has trade and other payables and employee provisions with a carrying value of $3,880,715 (2020: $3,523,216)
(notes 13 and 15), which are payable in cash and have a maturity of less than 6 months. Long Service leave current liability
(also included in Note 15) totals $152,478 (2020: $116,918).
The Group have a non-current liability owing to La Trobe University of $1,616,758 that is payable in December 2022. The
Group also has a US Government, Small Business Administration Payroll Protection Program loan as part of the US
government Covid 19 program. The loan originally totalled AUD $63,911 part of which has been forgiven. The balance
remaining is AUD $31,996 to be repaid within 2 years.
There are currently NIL term deposits.
19. FINANCIAL INSTRUMENTS (continued)
Currency risk
At 30 June 2021, there were no receivables of another currency, and payables of EUR 119,713 (2020: EUR 117,925), USD
$28,959 (2020: USD $472), GBP 82,597 (2020: GBP NIL) and NZD $151,803 (2020: NZD NIL). Of the cash on hand at 30
June 2021, the Group held a combined USD $383,763 within a NAB and Bank of America USD denominated account (AUD
$505,816) (2020: USD $25,645; AUD equivalent of $36,761), GBP 465,491 (AUD $849,684) and EUR 335,630 (AUD $526,075).
The GBP and EUR denominated accounts were opened in November 2020.
Interest Risk
Exposure to interest rate risks arises in the normal course of the Group’s business in respect of interest income on cash at
bank (note 11). The weighted average interest rate in respect of interest income in 2021 was 0.05% (2020: 0.85%).
Fixed rate instruments
There were no term deposits during the year ended June 2021, or the year prior.
Variable rate instruments
In respect of cash at bank a 100 basis points increase in interest rates would have decreased the loss by $31,841 (2020:
$15,918). A 100 basis points decrease in interest rates would have increased the loss by $31,841 (2020: $15,918).
Estimation of fair values
The fair value of a financial asset or a financial liability is the amount at which the asset could be exchanged, or liability
settled in a current transaction between willing parties after allowing for transaction costs. The carrying value of financial
assets and liabilities approximates their fair value at 30 June 2021.
Fair value hierarchy
No financial instruments are carried at fair value at 30 June 2021, however, as noted above the carrying amounts approximate
fair value in respect of financial assets and liabilities.
20. CONTINGENCIES
The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future
sacrifice of economic benefits will be required or the amount is not capable of reliable measure.
Guarantee and Indemnification
The Company has an Institutional Biosafety Committee (IBC) to advise on certain aspects of the Group’s field trial
applications. The Group has agreed to indemnify, release and forever discharge the members of the IBC from and against any
claim or liability, incurred by the members, arising in connection with the conduct of field trials and related applications being
undertaken by the Group. The financial exposure from this arrangement is expected to be nil.
21. RELATED PARTIES
Directors
The following were key management personnel of the Group and the Company at any time during the reporting period and
unless otherwise indicated were Directors for the entire period:
Non-Executive Chairman
Professor Jonathan West
Executive Directors
Mr Michael Aldridge, Chief Executive Officer
Dr. Nicole van der Weerden, Chief Operating Officer
Professor Marilyn Anderson, Chief Science Officer
Non-Executive Directors
Dr. John Bedbrook (retired 22 September 2020)
Mr GF Dan O’Brien (retired 22 September 2020)
Mr Justin Yap
Mr Scott Robertson
Mr Steven Skala AO (alternate director appointed 10th March 2020)
Executives
Ms Helen Molloy, Company Secretary
Dr Peter Welburn (appointed as Chief Development Officer 1 October 2020)
48
49
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
21. RELATED PARTIES (continued)
21. RELATED PARTIES (continued)
The key management personnel compensation included in ‘employee benefits expense’ is as follows:
Options and rights over equity instruments (continued)
Short term employee benefits
Post employment benefits
Share based payments
Consolidated
2021
2020 (Restated)
$
1,851,773
44,212
362,834
$
1,038,121
33,162
169,075
2,258,819
1,240,538
For consistency of information, comparative numbers have been changed to include La Trobe payments.
Individual Directors and Executive compensation disclosures
Steven Skala and Jonathan West each received $100,000 as they performed duties over and above that expected from a
non-executive director in the lead up to the $5million placement that occurred in September 2020.
Apart from the details disclosed in this note, no Director has entered into a material contract with the Group and the
Company since the end of the previous financial year and there were no material contracts involving Directors’ interests
existing at year end.
Options and rights over equity instruments
The movement during the reporting period in the number of options over ordinary shares in the Company held directly,
indirectly or beneficially, by each key management person including their related parties, is as follows:
Held at
1 July 2020
Options
post share
consolidation
Cancelled
Granted as
compensation
Expired/
Lapsed
Held at
30 June
2021
Vested
during the
period
Vested and
exercisable
at
30 June
2021
2021
Directors
Jonathan West
3,000,000
1,500,000
(1,500,000)
1,000,000
1,500,000
750,000
(250,000)
1,150,000
Nicole van der
Weerden
Marilyn
Anderson AO
John Bedbrook
(4)
G F Dan O’Brien
(4)
250,000
125,000
2,500,000
1,250,000
1,250,000
625,000
-
-
-
Justin Yap (1)
625,000
312,500
(312,500)
Scott Robertson
1,350,000
675,000
(675,000)
Michael
Aldridge
Steven Skala
AO (2)
Key Management
Peter Welburn
(3)
5,000,000
2,500,000
(2,500,000)
2,750,000
250,000
125,000
(125,000)
125,000
-
-
-
650,000
Helen Molloy
75,000
37,500
(30,000)
217,500
125,000
-
-
312,500
312,500
(125,000)
500,000
125,000
500,000
-
-
-
-
-
-
312,500
312,500
2,750,000
125,000
650,000
225,000
-
-
-
-
-
-
-
-
-
-
-
7,500
15,800,000
7,900,000
(5,392,500)
6,642,500
(875,000)
8,275,000
437,500
1,632,500
1. A related party of Justin Yap holds 14,715,790 shares.
2. Steven Skala is an alternate director for Scott Robertson, appointed 10 March 2020
3. Peter Welburn was appointed Chief Development Officer 1 October 2020
4. John Bedbrook and G F Dan O’Brien retired as directors on 22 September 2020
Held at
1 July 2019
Exercised
Lapsed
Granted as
compensation
Net movement
other
Held at 30 June
2020
Vested and
exercisable at
reporting date
2020
Directors
J West
M Anderson
2,500,000
750,000
N van der Weerden
2,000,000
E Larkin (2)
J Bedbrook
GF O’Brien
J Yap
S Robertson (1)
140,000
2,450,000
1,000,000
375,000
1,100,000
M Aldridge (1)
5,000,000
S Skala (3)
Key Management
H Molloy (1)
-
-
15,315,000
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
(500,000)
(500,000)
-
-
-
-
-
3,000,000
2,500,000
250,000
125,000
1,500,000
1,250,000
(65,000)
50,000
(125,000)
-
-
(200,000)
-
-
-
-
-
250,000
250,000
250,000
250,000
-
-
-
-
-
-
-
2,500,000
1,250,000
1,250,000
1,000,000
625,000
1,350,000
375,000
350,000
5,000,000
1,250,000
250,000
250,000
250,000
(16,000)
60,000
31,000
75,000
75,000
(1,281,000)
1,610,000
156,000
15,800,000
8,425,000
1.
Scott Robertson was appointed a Director on 21 November 2018, and Michael Aldridge appointed on 21 May 2019. Helen
Molloy was appointed sole Company Secretary on 21 November 2020.
2. Elisha Larkin departed the Company on 21 November 2019.
3. Steven Skala was appointed as Alternate Director on 10 March 2020.
Movement in shares
The movement during the reporting period in the number of ordinary shares in the Company held directly, indirectly, or
beneficially by each key management personnel, including their related parties, is as follows:
Nicole van der Weerden
214,400
John Bedbrook (3)
500,000
500,000
75,000
-
-
-
-
-
3,000,000
2,280,548
144,700
250,000
-
-
-
-
3,000,000
2,280,548
144,700
250,000
G F Dan O’Brien (3)
15,035,894
15,282,811
(1,000,000)
14,659,353
280,000
14,939,353
Justin Yap (1)
Scott Robertson
Michael Aldridge
-
-
-
-
-
-
Steven Skala AO (2)
6,667,947
4,292,109
Key Management
Peter Welburn (4)
Helen Molloy
-
32,000
-
125,000
-
-
-
-
-
-
-
-
-
5,480,029
-
78,500
-
-
-
-
-
-
-
-
-
5,480,029
-
78,500
30,511,337
22,274,920
(1,000,000)
25,893,130
280,000
26,173,130
1. A related party of Justin Yap holds 14,715,790 shares.
2. Steven Skala is the Alternate Director for Scott Robertson, appointed 10 March 2020.
3. G F Dan O’Brien and John Bedbrook retired from the Board on 22 September 2020.
4. Peter Welburn was appointed Chief Development Officer 1 October 2020.
-
-
-
1,000,000
-
-
1,650,000
125,000
500,000
250,000
62,500
125,000
2021
Directors
Held at
1 July 2020
Pre consolidation CN
conversion, Placement
and Purchases
Pre
consolidation
Transfer
Shares
held post
Consolidation
Post
Consolidation
Purchases
Held at
30 June 2021
Jonathan West
4,000,000
2,000,000
(750,000)
500,000
125,000
500,000
Marilyn Anderson AO
4,061,096
50
51
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
21. RELATED PARTIES (continued)
Movement in shares (continued)
2020
Key Management Personnel
Held at
1 July 2019
Net
movement
other
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2020
Jonathan West
Nicole van der Weerden
4,000,000
214,400
-
-
Elisha Larkin**
Marilyn Anderson
GF Dan O’Brien
John Bedbrook
Justin Yap
Scott Robertson*
Michael Aldridge*
Steven Skala***
Helen Molloy*
1 1 5 ,1 4 2
( 1 1 5 ,1 4 2 )
4,061,096
15,035,894
500,000
-
-
-
-
-
-
-
-
-
-
-
6,667,947
32,000
23,926,532
6,584,805
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000,000
214,400
-
4,061,096
15,035,894
500,000
-
-
-
6,667,947
32,000
30,511,337
*Scott Robertson was appointed a Director on 21 November 2018, and Michael Aldridge appointed on 21 May 2019. Helen
Molloy was appointed Company Secretary on 21 November 2020.
**Elisha Larkin departed the Company on 21 November 2019.
***Steven Skala was appointed as Alternate Director on 10 March 2020.
Key management personnel and directors’ transactions
Professor Anderson and Dr van der Weerden are employees of La Trobe University. During the course of the financial year
ended 30 June 2021, amounts (including GST) totalling $4,227,350 (2020: $3,825,043) were paid or payable by Hexima to
La Trobe University for research work carried out on behalf of the Group. These transactions were conducted on normal
commercial terms. Trade accounts and/or accruals payable to La Trobe University at 30 June 2021 were $3,621,075 (exclusive
of GST) (2020: $2,419,228).
22. OPERATING LEASES
Leases as lessor
Lease rentals are receivable as follows:
Less than one year
Between one and five years
2021
$
396,180
297,135
693,315
2020
$
391,868
685,832
1,077,700
23. GROUP ENTITIES
Parent Entity
Hexima Limited
Significant subsidiaries
Hexima Holdings Limited
Pharmagra Pty Ltd
Hexima Operations USA, Inc
Country of
incorporation
Australia
Australia
Australia
USA
Ownership Interest
2021
2020
100%
100%
100%
100%
100%
100%
Pharmagra Pty Ltd is incorporated in Australia and is a 100% owned subsidiary of the Company. Pharmagra Pty Ltd has total
assets and net assets of $2.00 at 30 June 2021.
Hexima Holdings Pty Ltd is incorporated in Australia and is a 100% owned subsidiary of the Company. Hexima Holdings Pty Ltd
has net assets totalling $998,032 at 30 June 2021, which comprises the Hexima glasshouse located at La Trobe University.
Hexima Operation USA, Inc was incorporated in the USA on 23 May 2019 and has net assets totalling $84,027 as at 30 June 2021.
24. PARENT ENTITY DISCLOSURES
Result of the Parent Entity
Loss for the period
Other Comprehensive income
Total Comprehensive loss for the period
Financial Position of the Parent entity at year end
Current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total equity of the Parent entity comprising of:
Share capital
Reserves
(Accumulated losses)
Total Equity / (Deficiency in equity)
Company
2021
$
2020
$
(6,895,787)
(3,817,835)
-
-
(6,895,787)
(3,817,835)
7,331,676
8,461,705
3,883,380
1,616,758
5,500,138
3,595,983
4,871,569
6,553,716
-
6,553,716
71,905,180
2,281,224
61,006,378
1,640,525
(71,224,837)
(64,329,050)
2,961,567
(1,682,147)
52
53
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
25. SUBSEQUENT EVENTS
In July 2021, the Group entered into negotiations to sell the glasshouse asset, surrender the lease for the land on which the
glasshouse is constructed with the intention to utilize the proceeds to settle payables.
In July 2021, the Board resolved to issue 1,792,000 options to KMP and other personnel. 1,643,000 of these options were
issued to Directors and are subject to shareholder approval.
Other than the matters noted above, there have been no events subsequent to balance date which would have a material
effect on the Group’s financial statements as at 30 June 2021.
26. SIGNIFICANT ACCOUNTING POLICIES
26. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Financial Instruments (continued)
(ii) Classification and subsequent measurement (continued)
Financial assets (continued)
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign
exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI.
On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. There were no debt investment at
FVOCI during or at year end.
The accounting policies set out below have been applied consistently to all periods by Group entities.
Financial Liabilities
Certain comparative amounts have been reclassified to conform to the current year’s presentation.
(a) Basis of Consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of subsidiaries are included in the consolidated financial statements from the date on which control
commences until the date on which control ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
(b) Financial Instruments
(i) Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and
financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially
measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue.
A trade receivable without a significant financing component is initially measured at the transaction price.
(ii) Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt investment; FVOCI – equity
investment; or FVTPL.
The group issued convertible notes denominated in AUD which are contingently convertible to ordinary shares in the event
of a qualifying financing occurring. As the notes are repayable in cash on the event of a qualifying sale taking place, or on
an insolvency event, and also contain a contingent conversion feature they represent a hybrid instrument. The notes were
categorised as a financial liability and are recognised on initial recognition as the difference between the carrying amount
of the hybrid instrument and the fair value of the embedded derivative and subsequently the financial liability component is
measured at amortised cost. The conversion feature represents an embedded derivative which is not closely related to the
host notes and therefore are separated on initial recognition at their fair value and are subsequently recognised at fair value
through profit or loss. The value and number of shares to be issued is dependent on the event triggering the conversion.
The carrying amount of the host contract (financial liability) on initial recognition is the difference between the carrying
amount of the hybrid instrument and the fair value of the embedded derivative. The embedded derivative is measured at
fair value through profit or loss. Subsequent to initial recognition the derivative is measured at fair value through profit or
loss. The valuation methodology used for the derivative component was the Black Scholes Model. The assumptions used in
the valuation are 1) Risk Free Rate is equal to 0.203% 2) The volatility is unchanged at 100% 3) The principal of the note is
$3,000,000 and 4) Conversion date equals 31 December 2020.
The conversion occurred on a qualified financing occurring in the current financial year.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL
are measured at fair value and net gains and losses, including any Interest expense, are recognised in profit or loss. Other
financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and
foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in
profit or loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the
dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI
and are never reclassified to profit or loss. There were no equity investment at FVOCI during or at year end.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for
managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting
period following the change in the business model.
(iii) Derecognition
Financial assets
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
•
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
•
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
•
•
it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present
subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This
includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise.
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it
transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain control of the financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains
either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not
derecognised.
54
55
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
26. SIGNIFICANT ACCOUNTING POLICIES (continued)
26. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Financial Instruments (continued)
(iii) Derecognition (continued)
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. The Group
also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially
different, in which case a new financial liability based on the modified terms is recognised at fair value.
Convertible notes are derecognised and converted to equity when a triggering event occurs as detailed in Note 15.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid
(including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
(iv) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them
on a net basis or to realise the asset and settle the liability simultaneously.
(v) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity, net of any related income tax benefit.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
(c) Plant and equipment
(i) Recognition and measurement
(e) Impairment
(i) Non-derivative financial assets
Financial instruments and contract assets
The Group recognises loss allowances for ECLs on:
• financial assets measured at amortised cost;
• debt investments measured at FVOCI. The Group did not have any debt investment of FVOCI during and as at 30 June
2021; and
• contract assets.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at
12-month ECLs:
• debt securities that are determined to have low credit risk at the reporting date; and
• other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the
financial instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when
estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue
cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical
experience and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days past due.
The Group considers a financial asset to be in default when:
• the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as
Items of plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of plant and equipment have different useful lives, they are accounted for as separate items of plant
and equipment. Cost includes expenditures that are directly attributable to the acquisition of the asset.
realising security (if any is held); or
• the financial asset is more than 180 days past due.
(ii) Subsequent costs
The Company recognises in the carrying amount of an item of plant and equipment the cost of replacing part of such an item
when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group
and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as
incurred. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant
and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset. Depreciation is recognised in profit or
loss on a straight-line or diminishing value basis over the estimated useful lives of each part of an item of property, plant and
equipment. The estimated useful lives for the current and comparative periods are as follows:
Plant and equipment
Office equipment
Plant and equipment - Building
2021
2020
15% - 37.5%
15% - 37.5%
33% - 66.7%
33% - 66.7%
5%
5%
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
(d) Foreign Currency
Transactions in foreign currencies are translated to the functional currency of Group entities at exchange rates at the dates of
the transactions.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the
reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed
to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that
the Group expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI
are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
• significant financial difficulty of the borrower or issuer;
• a breach of contract such as a default or being more than 90 days past due;
• the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;
•
it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
• the disappearance of an active market for a security because of financial difficulties.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.
56
57
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
26. SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Impairment (continued)
(i) Non-derivative financial assets (continued)
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering
a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross
carrying amount when the financial asset is 180 days past due based on historical experience of recoveries of similar assets.
For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off
based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount
written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply
with the Group’s procedures for recovery of amounts due.
(f) Revenue, income and government grants
Revenue
Performance obligations and revenue recognition polices:
Type of product/service
Research and collaboration
fees – recognised over time
Nature and timing of satisfaction of
performance obligations, including significant
payment terms
Customer obtains control as the underlying
research services are performed. This usually
occurs when the underlying activities are
undertaken by the Group over time.
Where an agreement contains a right to access
the Group’s IP this is also recognised over time.
Revenue recognition under AASB 15
Revenue is recognised when the
underlying expenses underpinning the
delivery of services are incurred.
Lease income
Refer accounting policy note 26(n)
Government grants
The Group recognises an unconditional government grant as other income when the grant becomes receivable.
Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic
basis in the periods in which the expense are recognised, unless conditions for receiving the grant are met after the related
expenses have been recognised. In this case, the grant is recognised when it becomes receivable.
(g) Research and development expenditure
Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and
understanding is recognised in the income statement as an expense as incurred. Patent costs relating to research activities
are expensed as incurred. Plant and equipment acquired to perform research activities are capitalised where the plant and
equipment are not specific in nature to the Group’s research activities and can be sold or leased to third parties. Plant and
equipment specific to the research activities of the Group are expensed on acquisition.
Development expenditure is capitalised only if development costs can be measured reliably, the product or process is
technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient
resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials,
direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. No costs were
capitalised during the period. Other development expenditure is recognized in the profit and loss as incurred.
(h) Finance income and expenses
Finance income comprises interest income on term deposits. Interest income is recognised as it accrues in profit or loss,
using the effective interest method.
26. SIGNIFICANT ACCOUNTING POLICIES (continued)
(i)
Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit or loss except to the
extent that it relates to items recognised directly in equity, in which case it is recognised directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted
at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for temporary
differences where the initial recognition of assets and liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit. Deferred tax is measured at the tax rates that are expected to be applied to
the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the
reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.
The Company and its Australian subsidiaries are part of a Tax Consolidated Group and subject to tax as a single entity. The
US subsidiary is tax a single entity in the US.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
The Group receives refundable R&D tax incentives administered through the taxation system. These incentives, as
refundable, have been accounted for as a government grant within the scope of AASB 120 – refer to the accounting policy
disclosed in note 26(f).
(j) Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount
of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable
to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the
statements of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities
which are recoverable from, or payable to, the ATO are classified as operating cash flows.
(k) Segment Reporting
The Group determines and presents operating segments based on the information that internally is provided to the Group’s
chief operating decision maker. An operating segment is a component of the Group that engages in business activities from
which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Group’s other components.
The Group primarily operates in one sector, being the biotechnology industry, developing and/or commercialising
biotechnology research. The majority of operations are in Australia. All assets are located in Australia. The Group employs a
US-based CEO and approximately 10% of the Groups expenses are incurred in the USA
(l) Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit under which the entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined
contribution plans are recognised as a personnel expense in profit or loss when they are due. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Short term benefits
Short-term employee benefit obligations are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group
has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
Long term employee benefits
The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees
have earned in return for their service in the current and prior periods plus related on costs; that benefit is discounted to
determine its present value, and the fair value of any related assets is deducted.
58
59
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
26. SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Share based payment transactions
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-
market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on
the number of awards that do not meet the related service and non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured
to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
(n) Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To
assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease
in AASB 16.
(i) As a lessor
At inception or on modification of a contract that contains a lease component, the Group allocates the consideration in the
contract to each lease component on the basis of their relative standalone prices.
27. FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from their use of financial instruments:
• credit risk
•
liquidity risk
• market risk
• operational risk.
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes
for measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout
this financial report.
The Board of Directors has overall responsibility for the oversight of risks. The Group maintains a control environment in
which all employees understand their roles and obligations.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from the Government and University in respect of
research grants and accrued interest receivable from banks.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
Liquidity risk
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an
operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major
part of the economic life of the asset.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It
assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with
reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described
above, then it classifies the sub-lease as an operating lease.
The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term
as part of ‘rental income’.
The Group owns a glasshouse located at La Trobe university which it leases to a third party.
(o)
Investment Property
Investment property is initially and subsequently measured at cost. Any gain or loss on disposal of an investment property
(calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in
profit and loss. Rental income earned from investment property is recognised in profit and loss. Subsequent expenditure is
capitalised if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of
the item can be measured reliably.
(p) New standards and interpretations not yet adopted
• Other Standards
The following new and amended standards are not expected to have a significant impact on the Group’s consolidated
financial statements.
• COVID 19 Related rent concessions (Amendment to IFRS 16)
• Property, Plant and Equipment: Proceeds before intended use (Amendments to IAS 16)
• Reference to conceptual framework (Amendments to IFRS 3)
• Classification of liabilities as current or non-current (Amendments to IAS 1)
•
IFRS 17 Insurance contracts and amendments to IFRS 17 Insurance contracts
• Onerous contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
•
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The Group determines that there is no impact of adopting the above standards.
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s
reputation.
The Group prepares and monitors budgets to manage its liquidity for the short and long term.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect
the Group’s income or the value of its holdings of financial instruments. The Board of Directors oversee market risk exposures
to optimise returns.
Currency risk
The Group’s currency risk is limited to trade and other receivables, payables and cash and cash equivalents that are
denominated in a currency other than the functional currency of the Group entities, primarily US dollar, Euro and GBP. The
Group has bank accounts in all 3 currencies with the National Australia Bank and a US dollar bank account with the Bank of
America. At 30 June 2021, there were receivables of $NIL and payables of $521,591 denominated in foreign currencies (2020
receivable: $NIL, payable: $270,125). At 30 June 21 the Group had US $383,763 in the two group US dollar denominated bank
accounts, GBP 465,491 and EUR 335,630.
Interest rate risk
Interest income is earned on term deposits and cash at bank, which are based on prevailing market rates.
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s
processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks
such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour.
Operational risks arise from all of the Group’s operations.
The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the
Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
60
61
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 JUNE 2021 (continued)
Directors’ Declaration
27. FINANCIAL RISK MANAGEMENT (continued)
Operational risk (continued)
The primary responsibility for the development and implementation of controls to address operational risk is assigned to
senior management of the Group. This responsibility is supported by the development of overall Group standards for the
management of operational risk in the following areas:
• requirements for appropriate segregation of duties, including the independent authorisation of transactions
• requirements for the reconciliation and monitoring of transactions
• compliance with regulatory and other legal requirements
• documentation of controls and procedures
• requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to
address the risks identified
• requirements for the reporting of operational losses and proposed remedial action
• development of contingency plans
• training and professional development
• ethical and business standards
• risk mitigation, including insurance where this is effective.
Capital management
The Board’s policy is to maintain a strong capital base to maintain investor, creditor and market confidence and to sustain
future development of the business. As the Group is a development stage business, the Board of Directors monitors the
Group’s performance with particular regard to the progress of scientific programs, the commercialisation of those programs,
the development of the Group’s intellectual property and asset base and long-term share price performance. There were no
changes in the Group’s approach to capital management during the year. The Group is not subject to externally imposed
capital requirements.
1)
In the opinion of the Directors of Hexima Limited (“the Company”):
a) The consolidated financial statements and notes that are set out on pages 31 to 62, are 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 2021 and of its performance for the
financial year ended on that date;
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b) There are reasonable grounds to believe that the Company will be able pay its debts as and when they become due
and payable.
2) The Directors draw attention to Note 2(a) to the financial statements, which includes a statement of compliance with
International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Dated at Melbourne this 26th day of August 2021
Professor Jonathan West
Non-Executive Chairman
Mr Michael Aldridge
Managing Director and Chief Executive Officer
62
63
Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021
Independent Auditors Report
Independent Auditors Report
(continued)
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64
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Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 Independent Auditors Report
(continued)
Independent Auditors Report
(continued)
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Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021 Lead Auditor’s
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Corporate Directory
Directors
Prof Jonathan West
Mr Michael Aldridge
Non-Executive Chairman
Chief Executive Officer and Managing Director
Dr Nicole van der Weerden
Chief Operating Officer and Executive Director
Prof Marilyn Anderson
Chief Science Officer and Executive Director
Non-Executive Director
Non-Executive Director
Alternate Non-Executive Director
Mr Justin Yap
Mr Scott Robertson
Mr Steven Skala AO
Company Secretary
Ms Helen Molloy
Registered Office
Hexima Limited
La Trobe Institute for Molecular Science
Level 4, LIMS2, La Trobe University
Melbourne Victoria 3086, Australia
Share Registry
Link Market Services
Tower 4, Collins Square
727 Collins Street
Melbourne Victoria 3008, Australia
Auditor
KPMG
Tower Two, Collins Square
727 Collins Street
Melbourne Victoria 3008, Australia
Stock Exchange
Australian Securities Exchange Ltd
ASX code
HXL
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Hexima Limited | Annual Report | For the year ended 30 June 2021Hexima Limited | Annual Report | For the year ended 30 June 2021