Date: 26 September 2019
Sydney, Australia
ASX Limited
20 Bridge Street
SYDNEY NSW 2000
NOXOPHARM ANNUAL REPORT CAPTURES POSITIVE PROGRESS
● Noxopharm Annual Report released today
● Positive indications for clinical benefits of proprietary drug candidate Veyonda® continue
● Key commercialisation milestones met
Sydney, 26 Sept 2019:
Noxopharm (ASX: NOX) is pleased to release its 2019 Annual Report.
This has been an important year for Noxopharm with new trial data continuing to indicate
positive clinical benefits of its front-line drug candidate, Veyonda®, in late-stage prostate
cancer, pointing to its potential to become an important new drug in both that and other
cancers.
The Report summarises this critically important progress, the key milestones being met on the
path to commercialisation and the broader efforts driving the Company’s evolution into a
global biotechnology company.
About Noxopharm
Noxopharm is a clinical-stage Australian drug development company with offices in Sydney and New York. The
Company has a primary focus on the development of Veyonda® and is the major shareholder in Nyrada Inc, a spin-
off company developing a pipeline of non-oncology drugs.
www.noxopharm.com
Investor & Corporate Enquiries:
Prue Kelly
M: 0459 022 445
E: info@noxopharm.com
Company Secretary:
David Franks
T: +61 2 9299 9690
E: David.Franks@automicgroup.com.au
Media Contact USA:
Frank de Maria
Purposeful Communications
T: +1 347 647 0284
E: frank.demaria@purposefulcommunications.com
Media Contact Australia
Marianne Gould
Noxopharm Ltd
T: +61 429 216 194
E: Marianne.gould@noxopharm.com
Forward Looking Statements
This announcement may contain forward-looking statements. You can identify these statements by the fact they
use words such as “aim”, “anticipate”, “assume”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”,
“may”, “plan”, “predict”, “project”, “plan”, “should”, “target”, “will” or “would” or the negative of such terms or
other similar expressions. Forward-looking statements are based on estimates, projections and assumptions made
by Noxopharm about circumstances and events that have not yet taken place. Although Noxopharm believes the
forward-looking statements to be reasonable, they are not certain. Forward-looking statements involve known and
unknown risks, uncertainties and other factors that are in some cases beyond the Company’s control that could
cause the actual results, performance or achievements to differ materially from those expressed or implied by the
forward-looking statement. No representation, warranty or assurance (express or implied) is given or made by
Noxopharm that the forward-looking statements contained in this announcement are accurate and undue reliance
should not be placed upon such statements.
Noxopharm Limited
ABN 50 608 966 123
Annual Report for the Year
Ended 30 June 2019
Noxopharm Limited (ASX:NOX) – Annual Report
Contents
Chairman’s Letter
Management Report, Noxopharm
CEO Letter, Nyrada
Directors Report
Auditor’s Independence Declaration
Annual Financial Report - 30 June 2019
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Independent Auditor's Report to the Members
Shareholder Information
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5
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Noxopharm Limited (ASX:NOX) – Annual Report
That study finished recruiting this past year, the men have all
finished receiving their 2 weeks’ of treatment and now it is a
case of following them. In the first instance we are following
them for 6 months to see to what extent that short course of
therapy can stop the progression of their disease, or even do
better, as in shrinking both irradiated and non-irradiated
tumours; we also are looking at whether we can reduce pain
levels, in most cases a sign of having shrunk the bone
secondaries. We then are going on to see what effect we have
had on their overall survival over 12 months.
An estimated 350,000 men die from prostate cancer worldwide
each year, so there is a very large need to offer something
meaningful for these men - at the very least slowing down the
disease progression to deliver extra survival, through to
shrinking bone tumours for an extended time to relieve pain,
through to delivering a curative outcome.
So, how are we doing?
During the year we reported on the 14 men in the first (dose-
finding) arm of this study. Eight of the 14 (57%) men showed no
significant growth of their tumours over 6 months, along with
significant reductions in pain levels. We considered that an
encouraging outcome. Again, remembering that we are only
exposing between 1 and 2 tumours to radiation in a body with
multiple secondary tumours.
Chairman’s Letter
Dear Shareholder
This has been our third year of operation, and it is worth
reflecting on what has been achieved in that time.
The Company started on the basis of the clinical experience of
a single person treated with a combination of Veyonda® and
radiotherapy. This very first person had late-stage prostate
cancer with advanced metastatic
(multiple secondary
tumours) disease and as a result of the Veyonda® /radiation
treatment experienced what is known in radiation oncology
circles as an abscopal response. This is where exposure of one
or two single tumours to a beam of low-dose radiotherapy
leads to complete shrinkage of not just the one or two
irradiated tumours, but to complete remission of all other
tumours in the body. That happened to that particular patient
who remains in complete remission 5 years later.
The incidence of abscopal responses at that time was regarded
as so rare, that in 2016, we could only find about 15 clinical
reports of abscopal responses in the entire medical literature.
So, a reasonable question was, was an abscopal response in
the first patient treated with Veyonda® just a lucky shot, or was
it a sign of something potentially transformative?
We then were asked to supply Veyonda® on a compassionate
basis to a second patient, this time a lady with an advanced
metastatic sarcoma which was considered by her doctors to be
low-dose
untreatable. A combination of Veyonda® and
radiotherapy directed at the primary lesion in the abdomen
yielded shrinkage of a number of secondary (non-irradiated)
tumours in her lungs in what was diagnosed as a partial
abscopal response.
Two out of two patients was starting to look like a trend and not
merely an incredible coincidence of two consecutive rare
outcomes.
And so we set up the DARRT-1 clinical study to test just how
much of a trend and how much of a transformative treatment
we could be dealing with. DARRT-1 was set up as a mirror image
of the first patient’s experience, recruiting men with Stage 4
prostate cancer that had stopped responding to therapy, where
the disease was progressive, metastatic, involving bone
secondaries associated with considerable pain, and where the
men have a limited life expectancy typically measured in
months.
While DARRT is our major focus, it is just one of four ways we are using Veyonda®. LuPIN,
CEP and IONIC programs highlight the potential versatility of treatment using Veyonda®.
Pursuing broader use is a deliberate strategy, in part de-risking, but largely because
we would like Veyonda® to be seen as a general-purpose, anti-cancer agent across
multiple uses in oncology.
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Noxopharm Limited (ASX:NOX) – Annual Report
Then, very recently, we announced the 3-month results for the
11 men in the second arm of the study. We need to wait for the
6-month data before we can comment on the incidence of
abscopal responses, but what we are seeing in these men at 3
months is encouraging, with 55% showing a PSA response
(>50% reduction), along with evidence of significant pain
reduction in 45% of patients.
So, it appears that we are doing something meaningful for a
significant proportion of patients, given that palliative
radiotherapy on its own is reported in multiple studies to offer
very little beyond temporary relief of pain.
While DARRT is our major focus, it is just one of four ways we are
using Veyonda®. LuPIN, CEP and IONIC programs highlight the
potential versatility of treatment using Veyonda®. Pursuing
broader use is a deliberate strategy, in part de-risking, but
largely because we would like Veyonda® to be seen as a
general-purpose, anti-cancer agent across multiple uses in
oncology.
Drug development is a high-risk and expensive venture. In
relation to risk, we believe we have gone some way to de-risking
Veyonda®. It has shown to be well-tolerated, so safety issues are
unlikely to stop us. The cost of bringing a drug like Veyonda®
through the regulatory process is largely ahead of us as we
progress to larger studies; but we are seeking to minimise
expenditure.
Board Changes
The last year saw a number of changes to the structure of the
Board designed to enhance the efficiency and governance of
the Company.
In April 2019, I moved from Group CEO and Executive Director
into the role of Executive Chair. The purpose of this move was
to allow me to focus on the Company’s strategic planning, the
proposed listing of the Company on a U.S. securites exchange,
and the listing on the ASX of the Company’s majority-owned,
U.S.-registered, subsidiary company, Nyrada Inc. In a related
move, the Company’s previous Chair, Mr Peter Marks, moved
into the role of Non-Executive Deputy Chairman.
Dr Beata Niechoda MD, MBA, PhD joined Noxopharm in April
2019, as a Special Advisor to the Board, with that appointment
recently elevated to that of Non-Executive Director. Engaging
Dr Niechoda on the Board recognises the value that the
addition of strong clinical and commercial acumen as well as
significant experience in the pharmaceutical industry would
bring to the overall skills-matrix of the Board.
During the year, Mr John Moore resigned as a Non-Executive
Director to become Chairman of Nyrada Inc. The Noxopharm
Board were of the view that John’s strong entrepreneurial
background and U.S. citizenship ultimately would benefit
shareholders by having him focusing on providing leadership of
Nyrada.
One of the things we have focused on this past year is putting
in place the fundamentals that will support the next stages of
development of Veyonda®:
Nyrada Inc
a committed and energetic team
the necessary pre-clinical and clinical teams
medical advisory boards
a well-balanced and engaged Board
an appropriate governance framework.
We plan for a considerable increase in our investor relations
activities over this coming year to help people understand our
story and achievements.
As you know, Nyrada Inc, was created to hold our non-oncology
IP assets. Nyrada has made significant strides this past year
across its 3 main drug programs to the extent that it now is
being prepared for complete independence by seeking a listing
on an Australian Securities Exchange via an IPO. The Board
sees Nyrada as an exciting venture in which Noxopharm will
hold a significant shareholding to the benefit of Noxopharm
shareholders.
On behalf of the Board, I’d like to thank you for your continuing
support and look forward to bringing you further updates in the
coming months.
Yours sincerely
Dr Graham Kelly
Executive Chairman, Noxopharm Limited
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Noxopharm Limited (ASX:NOX) – Annual Report
Management Report, Noxopharm
Our Business is Developing
Veyonda® Clinical Strategy
The Company has a single-minded objective - to expedite the
work required to bring Veyonda® to market, and to lay the
foundation for a sustainable pharmaceutical company.
As noted in the Chairman’s Letter, the Company is confident
that it has a unique and major opportunity in Veyonda®, seeing
in it the potential to be a transformative treatment in a wide
range of cancers.
The key fundamentals in realising this potential come under
the following five headings:
Leadership Team
Veyonda® Clinical Strategy
Veyonda® Clinical Programs
Non-clinical Programs
Funding
Leadership Team
In the first half of the year, the Board identified the need to
increase the Company’s medical and clinical resources and
capabilities.
The first step in this process was the appointment of Dr Greg
Van Wyk as Chief Medical Officer in November 2018. Dr Van Wyk
identified the need to increase our medical affairs capacity, the
need to bring operations management capabilities into the
team, and the need to enhance our research design and
statistics capabilities.
That led to the appointment of three experts in these respective
fields. Ms Jeanette Bell BMedSc , MScM (Chief Operating Officer)
and Dr Gisela Mautner MD-PhD, MPH, MBA, FACPE (Global
Medical Director) joined the Company in January, and Mr
Richard Walton BE, PGDip, MSc (R&D Advisor) joined the
Company in May on a part-time basis to augment our research
design and statistical capabilities.
In March 2019, the executive team was joined by Mr Shawn van
Boheemen BBus, MCom, FCPA, JP as Chief Financial Officer.
Veyonda®, combined with various forms of radiotherapy and
chemotherapy, has the potential to be an extremely versatile
cancer treatment. It has a range of lethal effects on cancer cells,
affecting the cells directly as well as the area around the cells
and the body’s natural ability to attack cancer cells. Our work
is exploring Veyonda®’s ability to enhance the effectiveness of
existing cancer treatments in common use today. Remarkably,
Veyonda® has shown few side effects in our clinical studies to-
date, a feature that is rarely seen in cancer treatment.
This versatility means that the Company is quite literally spoilt
for choice. The challenge is to focus resources into those areas
that will have the maximum impact for our shareholders and
future clinicians and patients, while ensuring we maintain
enough diversity in our program to manage technological and
commercial risk.
Following the valid leads that our scientific work discovers, the
thinking behind our clinical strategy can be summarized under
three key action statements:
Focus on one cancer where the disease burden is
huge due to the number of people affected e.g.
prostate cancer
Focus on one cancer where the disease burden is
huge because treatment options are so limited e.g.
metastatic sarcoma
In focusing on prostate cancer and sarcoma, follow
immuno-
technological mega-trends e.g.
the
oncology and advancement in radiotherapeutics
This thinking has led us to two key strategic priorities:
1. Establish Veyonda® as an essential adjunct to
radiotherapy in the treatment of prostate cancer .
2. Broaden the clinical value of Veyonda® by improving
outcomes in sarcoma and increasing response rates
with immuno-oncology agents.
The Company believes that this strategy positions us well to
maximise shareholder return by optimising the size of
Veyonda®’s addressable market, while managing costs and
portfolio risk.
Noxopharm has two strategic priorities:
1. Establish Veyonda® as an essential adjunct to radiotherapy in the treatment of
prostate cancer
2. Broaden the clinical value of Veyonda® by improving outcomes in sarcoma and
increasing response rates with immuno-oncology agents
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Noxopharm Limited (ASX:NOX) – Annual Report
Veyonda® Clinical Programs
In progressing towards our two strategic priorities, the
Company currently is conducting, supporting or in late stages
of planning for four clinical trials:
Under strategic priority 1:
1. The DARRT-1 trial
2. The DARRT-2 trial
3. The LuPIN trial
Under strategic priority 2:
4. The CEP-2 trial
DARRT (Direct and Abscopal Response to
RadioTherapy )-1
The DARRT-1 trial combines
low dose, external beam
radiotherapy (RT) with Veyonda® to treat men with late-stage
metastatic castration-resistant prostate cancer (mCRPC). In
this condition the cancer has usually spread to the bones,
lymph nodes and organs such as the lungs and liver. This can
cause a wide range of symptoms, but one which particularly
affects men living with this condition is the pain caused by
cancer in the bones. The current aim of treatment at this
advanced stage is to keep patients as comfortable as possible
in the last few months of their life.
During the June quarter we announced that the combination
of Veyonda® and RT led to lasting disease control, with 57% of
the 14 patients in the first phase of the trial having no major
growth in their tumours over six months. Pain responses also
were encouraging with two patients being completely free of
pain at 6 months. In August we also announced 12-week follow
up results for the dose expansion cohort of 12 men being
treated with the 1200 mg daily dose of Veyonda®.
We were very pleased to note that 45% of patients in this
group achieved a pain response (≥ 30% improvement in
pain) and 55% achieved PSA response (≥50% fall) at any
point during follow up. Topline, 24-week follow-up results for
this cohort will be announced in November of this year
followed by full disclosure of the trial results at an international
scientific congress in H1 2020.
DARRT (Direct and Abscopal Response to
RadioTherapy)-2
to registration
Drug development requires three phases of clinical trials to be
(marketing
successfully completed prior
authorisation). Planning is well underway for a phase 2,
randomised controlled trial of the DARRT regimen (external
beam radiotherapy plus Veyonda®) in prostate cancer. A range
of potential trial designs will be discussed with clinical experts
in the U.S. and in Australia at upcoming advisory boards in Q3
2019. This trial is intended to address questions that will lay the
foundation for various phase 2/3 trial designs across the
prostate cancer disease continuum, enabling the Company to
carefully select which indications to target for regulatory
approval and how best to sequence work on these.
LuPIN
is
trial
Idronoxil
investigating
The Lu-PSMA and
the
combination of 177Lu-PSMA-617 and Veyonda® in the treatment
of patients with late-stage mCRPC. 177Lu-PSMA is an exciting
new development in the treatment of prostate cancer, where a
radioactive substance that only binds to certain prostate
cancer cells is injected into the body.
In this trial a combination of 177Lu-PMSA is used to treat men
with mCRCP. To-date 32 patients have participated in the trial,
in two groups of 16 and in the June quarter the Company
announced that the trial is being expanded again by recruiting
a further 24 patients.
This decision was driven by our need to study the 1200 mg dose
(target dose for our phase 2, DARRT regimen trial) and by the
encouraging data pertaining to the first cohort of patients in the
trial.
Abscopal effects
If this trend continues, Veyonda® could have a transformative impact on outcomes
of radiotherapy for men with prostate cancer.
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Noxopharm Limited (ASX:NOX) – Annual Report
Mechanisms of radiosensitisation and abscopal effects
Veyonda® prevents cancer cells from being able to repair DNA
that has been damaged by radiotherapy. This leads to
enhanced killing of cancer cells when Veyonda® is used in
combination with radiotherapy. In addition, Veyonda® appears
to stimulate the immune system by enhancing the signals that
these dying cells release, which make cancers ‘visible’ to the
immune cells. In some cases, cancer cells at distant sites in the
body become ‘visible’ as a result and respond to therapy,
despite having received no direct radiotherapy. These
mechanisms and responses – known as abscopal responses -
are currently being systematically explored in a series of animal
studies.
In August we announced results from the first series of these
experiments in which a combination of Veyonda® plus
radiotherapy to one tumour was demonstrated to deliver
an anti-cancer effect in both irradiated tumours and in non-
irradiated tumours which represent abscopal effects. If this
trend continues, Veyonda® could have a transformative
impact on outcomes of radiotherapy for men with prostate
cancer.
Immuno-oncology effects
During the June quarter the Company disclosed our discovery
that the active ingredient in Veyonda®, idronoxil, activates
natural killer (NK) cells and increases CD4 and CD8
lymphocyte numbers, which are key components of the
body’s own immune defense against cancer. The Company
believes that these effects may in part be due to observations
that idronoxil helps to up-regulate the STING (STimulating
InterferoN Genes) pathway in cells with damaged DNA e.g.
virally infected cells or dying cancer cells. Collectively these
discoveries have enhanced our understanding of how
Veyonda® acts on the natural immune system to help kill or
inhibit cancer cells. Knowledge of these mechanisms of action
has allowed us to design proof-of-principle studies that will
enhance our ability to discuss Veyonda®’s therapeutic effects
with potential partners, funders, regulators and investigators
and to plan for future combination immuno-oncology trials
that could broaden the potential market opportunity for
Veyonda®.
Prostate-specific antigen (PSA, a blood test indicator of
changes in the prostate) response rates in these patients were
high with 69% of patients achieving a response. Overall
survival trends in the study are also encouraging, with 81%
of the first 16 patients still alive following a median follow
up of 12 months. This compares favourably with data
published in medical journals suggesting that only half of
patients with extensively treated, end-stage mCRPC
currently have a life-expectancy of more than 1 year.
CEP (Chemotherapy Enhancement Program)-2
The CEP – 2 trial will combine Veyonda® with doxorubicin to treat
adult patients with metastatic soft tissue sarcoma (mSTS). This is
a rare but devastating group of over 70 different subtypes of
cancer that has seen few advances in pharmaceutical treatment
in the last 50 years. A new pharmaceutical for mSTS is likely to be
eligible for U.S. Food and Drug Administration (FDA) Orphan Drug
Designation. The Company is in preparation to apply to the FDA
for this designation in H2 2019 which would open access to a
range of regulatory and financial benefits including increased
access to grant funding and extended market exclusivity in the
US, all of which would be of great assistance in the development
and commercialisation of Veyonda®.
The Company has worked with world-renowned clinical
experts in the U.S. to develop the protocol for the CEP-2 trial,
which will be conducted in the U.S. Currently the Company is in
dialogue with the FDA with the goal of achieving Investigational
New Drug (IND) status in the U.S before the end of the year. If
successful, this will greatly assist the Company to develop
Veyonda® for sarcoma.
Non-clinical Programs
Preclinical research
The Company’s preclinical research program is currently
focused on complementing the Veyonda® clinical development
includes research to support regulatory
program. This
requirements such as characterising
its pharmacological
properties (e.g. pre-clinical safety) and research to inform
therapeutic indications (where Veyonda® will be likely to have
the most impact).
Our research
informing current and
therapeutic indications is focused on three main areas:
focused on
future
Mechanisms of radiosensitisation and abscopal effects
Immuno-oncology effects
Sarcoma
Veyonda® has shown few side effects in our clinical studies to-date, a feature
that is rarely seen in cancer treatment.
The challenge is to focus resources into those areas that will have the maximum
impact for our shareholders and future clinicians and patients
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Noxopharm Limited (ASX:NOX) – Annual Report
Sarcoma
Outlook
The year ahead is full of promise for Noxopharm.
The Company will continue working towards a
potential listing of its securities in the U.S.
DARRT-1 and LuPIN will continue to read-out data as
they approach last patient visit and enrolment
completion, respectively.
We will submit an
investigational new drug
application and an orphan drug application to the
United States’ Food and Drug Administration.
We will commence DARRT-2 – our first phase 2
clinical trial and we will commence CEP-2 – our first
trial in the United States and our first trial in sarcoma.
A number of candidates from our pipeline of new
oncology drug assets will enter pre-clinical testing.
Greg Van Wyk
Jeanette Bell
Gisela Mautner
John Wilkinson
Shawn van Boheemen
Noxopharm Limited
With over 70 subtypes of soft tissue sarcoma, our work has
focused on exploring how consistently Veyonda® can be
expected to work across these subtypes and we have been
excited by the broad activity that idronoxil alone demonstrates
against these various tumour types. Additional preclinical work
has been done to understand how well Veyonda® can be
expected
various
chemotherapeutic agents and we remain encouraged by the
results we have obtained. The work completed to date and the
work that is underway give us a firm foundation from which to
pursue our clinical sarcoma program.
combination with
to work
in
Manufacturing, dosage form and formulation
The maturation of Veyonda® in clinical development is being
matched by increases in data generation pertaining to the
strength, quality and purity of Veyonda®’s active ingredient
(idronoxil), as well as increases in data generation pertaining to
the product overall (e.g. detailed description of manufacturing
processes to deliver a consistent, high quality product).
Progress has also been made on our 600 mg dosage form
(meaning that one suppository in the morning and one in the
evening will achieve the 1200 mg daily dose) and, together with
the 400 mg suppository, increase the range of potential daily
doses that can be achieved (e.g. 1000 mg, 1400 mg).
Additionally, development of our placebo suppositories is
nearing completion which will be required in our imminent
phase 2 trials.
Drug Discovery
With the Veyonda® program now well-advanced, the Company
is accelerating and expanding its drug discovery efforts in its
goal to evolve into a biopharmaceutical company with a robust
pipeline of anti-cancer drug candidates developed in-house
and fully owned by the Company. In leveraging the science
and know-how that led to the discovery of Veyonda® we
have built a robust drug library and have identified several
promising leads. This emerging pipeline of assets supports the
Company’s ambition to bring more medicines to the growing
number of people living with cancer.
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Noxopharm Limited (ASX:NOX) – Annual Report
The year ahead is full of promise for Noxopharm in our
quest to bring Veyonda® to market as a transformative
treatment for prostate cancer.
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Noxopharm Limited (ASX:NOX) – Annual Report
CEO Letter, Nyrada
Dear Shareholder
A warm hello to everyone. 2019 has been a busy time for Nyrada, with the Company building a solid
foundation in the lead-up to our upcoming listing on the Australian stock exchange in Q4. Nyrada is
positioning itself as an innovator, utilising novel approaches to address significant areas of unmet
clinical need with large commercial potential, particularly in the areas of cardiovascular and
neurological disorders. Nyrada operates under a ‘virtual’ company model built around a core Sydney-
based team of talented and committed scientists using cutting edge small molecule drug discovery
tools. This makes us lean and agile, and able to move quickly when opportunities in a particular
therapeutic area emerge.
Corporate and scientific oversight is critical for any new technology company and Nyrada has now
assembled a very experienced and entrepreneurial Board, and a hugely impressive Scientific Advisory
Board made up of distinguished and highly respected individuals who are thought leaders in their
respective fields of research.
The Company’s medium term objectives are simple. Objective one is to advance our cholesterol-
lowering drug into a Phase I first-in-human clinical study within 2 years. Why does this process take so
long? The first 6-12 months will be used to optimize the compound in terms of potency and to improve
its drug-like characteristics. A further 12 months is then required to complete the mandatory safety and
toxicity studies before approval can be given to take a drug into a first-in -human study.
The second objective is to have our brain injury drug optimized and ready to take into preclinical safety
and toxicology studies in advance of a Phase I first-in-human clinical study within 12 months.
Excellent progress has been made on completing the necessary experimental groundwork across these
two lead programs as well as our preclinical anti-inflammatory program and discovery stage
autoimmunity program. The central theme of recent experiments has been to gain a better
understanding of how our drugs work so that we can optimise and improve them utilising chemistry
modelling and a rational design approach. In doing so we reduce development risk. Another key focus
in recent months has been to secure the necessary protection for our intellectual property.
To support our development efforts, key vendors have now been selected and these collaborations are
exceeding our expectations in terms of quality, timeliness and cost. One critical area and potential
bottleneck is the synthesis of new chemical analogues to test as lead candidates and this work is being
undertaken in India by Jubilant Chemsys. Earlier in the year we moved from a contract to a full-time-
equivalent basis and we now have six PhD qualified chemists dedicated to Nyrada projects. This change
is reaping rewards with much improved throughput and operational flexibility, and at a significantly
lower cost.
The Company’s four early stage drug programs are aimed at addressing areas of significant unmet
clinical need in areas where there is very large demand and market potential. NYX-330 is a PCSK9
inhibitor and our LDL-cholesterol-lowering drug. NYX-104 is a neuroprotectant, protecting the brain
from further damage after stroke and traumatic brain injury (TBI), including concussion. NYX-205 is an
anti-inflammatory drug being developed for the treatment of nerve tissue inflammation. The
Company’s anti-autoimmune program includes two classes of drugs - these being the IRAK4 and TPL2
inhibitors.
We are excited to present a new corporate look in the form of a redesigned and upgraded website. Post-
listing, there will be a news and information section where we will post regular updates and with four
programs to report on, there will certainly be a steady news flow. Another driver is so that we can
operate with a high degree of transparency about our development efforts where shareholders are kept
up-to-date on key developments. We will also use this as a platform to share, in an easy to digest way,
the basis of our science.
The Nyrada Team is excited about embarking on the next stage of the Company’s development and we
look forward to engaging with you as partners on this journey.
James Bonnar
CEO, Nyrada
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Noxopharm Limited (ASX:NOX) – Annual Report
Directors Report
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the
'consolidated entity') consisting of Noxopharm Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it
controlled at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of Noxopharm Limited during the whole of the financial year and up to the date of this report,
unless otherwise stated:
Dr. Graham Kelly, Executive Chairman
Mr. Peter Marks, Non-Executive Deputy Chairman
Dr. Ian Dixon, Non-Executive Director
Mr. John Moore, Non-Executive Director (appointed 21 November 2018, resigned 16 July 2019)
Dr. Beata Niechoda, Non-Executive Director (appointed 16 July 2019)
Principal activities
The consolidated entity's principal activity in the course of the current financial year continues to be drug development, with the
primary focus being the clinical development of Veyonda® (NOX66) as an adjuvant therapy in chemotherapy and radiotherapy in the
treatment of late-stage cancers. There were no significant changes in the nature of the Company’s principal activity during the financial
year.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax and non-controlling interest amounted to $11,222,787 (30 June 2018:
$18,283,501).
During the financial year, the consolidated entity has:
continued to refine its strategic drug development plan embracing both clinical and pre-clinical programs for Veyonda®;
made further appointments as part of its preparation for the projected expansion in the Veyonda® clinical trials program,
with the appointments covering drug manufacture, pre-clinical activities, and clinical trial management;
release of interim clinical data from the DARRT-1 study reporting both on the tolerance of a combination of Veyonda® and
radiotherapy, and the encouraging evidence of clinical signals of efficacy in patients;
achieved full enrolment for the DARRT-1 clinical study in late-stage prostate cancer;
expanded the LuPIN-1 clinical study to 56 patients at the request of the clinical investigators;
made important pre-clinical discoveries underpinning Veyonda®’s potential immuno-oncology effects;
developed and refined in vivo model for elucidating abscopal effects with Veyonda® + radiotherapy;
ramped up our drug discovery and drug formulation activities
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the consolidated entity during the financial year.
Likely developments and expected results of operations
Information on likely developments in the operations of the consolidated entity and the expected results of operations have not been
included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.
11
Noxopharm Limited (ASX:NOX) – Annual Report
Matters subsequent to the end of the financial year
On 9 May 2019, the Nyrada noteholders were asked to agree to an extension of the maturity date and change in conversion ratio of
their notes to shares from 3 shares for every 12 notes held to 15 shares for every 12 notes held, with the maturity date being extended
to 31 October 2019. No change to the option arrangements, with 2 options being issued for every 12 notes held per the original
agreement terms. The substantial majority of note holders have agreed to these changes.
On 19 July 2019 the Company secured a funding facility for up to A$26 million from two U.S. institutional investors through a share
purchase and convertible notes security agreement. The convertible note security agreement is for $3.8 million in cash (before
expenses), with a two year maturity date being 23 July 2021, and a face value of $4.56 million. The convertible notes can be converted
at a conversion price which is the lowest of a) the share price equal to 90% of the average of the five lowest daily VWAP's per share
during the 20-trading day period immediately prior to the relevant notice of conversion date, b) $0.58, and c) in the event of an IPO on
the NASDAQ, 80% of the NASDAQ IPO price. The convertible note amount can be reduced by the Company if it repays $1.5 million of
the research and development grant proceeds to the investors once the funds are received form the Australian Taxation Office. In
addition, the Company can raise up to an additional $22.2 million in capital through the share purchase agreement over twelve months
from 23 July 2019. The Company issued 4,722,222 options to the investors with an exercise price of $0.58 expiring 23 July 2023.
Except as noted above, no matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.
12
Information on directors
Noxopharm Limited (ASX:NOX) – Annual Report
Name:
Title:
Experience and
expertise:
Dr. Graham Kelly
Executive Chairman
Graham graduated with degrees in Science (1968) and Veterinary Science (1969) from The University of
Sydney. After graduation he joined the newly-formed Department of Transplant Surgery in the Faculty of
Medicine at The University of Sydney, gaining a Doctor of Philosophy in 1972. The subject of his PhD thesis
was the manufacture and use of a novel drug for the treatment of tissue rejection in kidney transplant
recipients, with that drug subsequently being commercialised and used globally in kidney transplantation.
Graham was appointed Senior Research Fellow in Experimental Surgery at The University of Sydney,
contributing through research in the areas of organ recovery for transplantation and liver transplant
surgery. The increased susceptibility of organ transplant recipients to malignant cancer eventually led
Graham to focus on the causes of that phenomenon, and in turn, to the broader issue of the link between
diet and the incidences of certain cancers. The latter area of research led to a research interest in dietary
isoflavones and their role in human health.
Graham developed a theory that dietary isoflavones were metabolised within the body into novel chemicals
that possessed important hormone-like functions, and as such made important contributions to human
health. That theory provided the basis for Graham leaving academia and founding the company, Norvet
Ltd, which listed on the ASX in 1994. That company subsequently changed its name to Novogen Ltd and
listed in the US on NASDAQ (1998). Graham was variously CEO, Executive Chairman and an Executive
Director of Novogen, 1994-2006. He also was Executive Chairman of Marshall Edwards Inc (MEI) which listed
on London’s AIM exchange (2001) and NASDAQ (2003). MEI subsequently became MEI Pharma Inc. Graham
resigned from his executive and Board positions at Novogen and MEI in 2006.
In 2011, Graham joined private biotechnology company, Triaxial Pharmaceuticals Pty Ltd, as Executive
Chairman. Concerned at the direction being taken by the Novogen Board in having stripped all assets from
the Company and leaving it without a business, Graham engineered a reverse takeover of Novogen Ltd by
Triaxial in December 2012 and set about rebuilding the Company. He remained as CEO and Executive
Chairman of Novogen until June 2015 and was responsible for in-licensing that Company’s anti-
tropomyosin drug technology, for establishing a joint venture company with Yale University, and for
establishing a solid financial base.
In early-2012, Graham addressed the matter of the transport of isoflavones in the blood of humans,
conducting formulation studies in a private capacity that led shortly thereafter to the concept behind
NOX66. After leaving Novogen in 2015, Graham established private biotechnology company Noxopharm
Limited in order to commercialise NOX66.
Other current
directorships:
Former directorships
(last 3 years):
N/A
N/A
Interests in shares:
31,410,203
Interests in options:
12,075,000
Warrants issued on the
following conditions:
110,000 warrants granted on successful listing on the ASX;
110,000 warrants granted on successful NASDAQ listing;
110,000 warrants granted on achieving market cap of A$400m;
110,000 warrants granted on achieving a successful M&A, trade sale or licence deal worth a
minimum US$500m in respect to any one of the Company's clinical programs.
Warrants will vest on the achievement of each milestone and can be exercised within 3 years of each
tranche vesting.
The exercise price for each tranche will be set at a 30% premium to the 15 day VWAP share price at the time
of vesting.
13
Noxopharm Limited (ASX:NOX) – Annual Report
Name:
Title:
Experience and
expertise:
Peter Marks
Non-Executive Deputy Chairman
Peter brings over 30 years’ experience in corporate advisory, investment banking and director/advisory
roles to the Board. With several leading firms, Peter’s corporate skills lie in capital raising for pre-IPO and
listed companies, cross border M&A transactions, corporate underwriting, and venture capital transactions
for companies in Australia, US & Israel.
Over this period Peter has been involved in a very broad range of transactions, with a special focus in the life
sciences, biotechnology, medical technology and high tech segments. He has been a Director and/or
Chairman of several public companies. He currently is a Director of Prana Biotechnology Ltd (ASX &
NASDAQ listed) since 2005 and Non-Executive Director of Emefcy Group Limited (ASX listed) since 2015.
Peter provides strategic and corporate advice at various stages of technology commercialisation for
companies to transition to an operating entity, and helps facilitate significant commercial transactions to
create shareholder value.
Peter holds a Bachelor of Economics, Bachelor of Laws and a Graduate Diploma in Commercial Law from
Monash University, Australia. He also holds an MBA from the University of Edinburgh, Scotland.
Other current
directorships:
Alterity Therapeutics Limited (ASX: ATH) - since 29 July 2005 (formerly known as Prana Biotechnology
Limited), Fluence Corporation Limited (ASX: FLC) - since 12 May 2015
Former directorships
(last 3 years):
N/A
Interests in shares:
500,000
Interests in options:
700,000
Warrants issued on the
following conditions:
11,000 warrants granted on successful listing on the ASX, (vested 31 December 2018), expiring 15
February 2021;
11,000 warrants granted on successful listing on the ASX (vesting 31 December 2019), expiring 15
February 2021.
The exercise price for each tranche is equal to the ASX IPO Price plus 30%.
14
Name:
Title:
Experience and
expertise:
Noxopharm Limited (ASX:NOX) – Annual Report
Dr. Ian Dixon
Non-Executive Director
Ian has a PhD in biomedical engineering from Monash University and an MBA from Swinburne University.
Ian brings to the Board an extensive entrepreneurial background in founding, building and running public
companies, in recognising the potential commercial value of early-stage drug development, and in
understanding the challenges involved in drug development.
Ian is an Executive Director of Exopharm Ltd, a company advancing exosomes as a new class of medicine
for regenerative medicine and is a co-inventor of the Exopharm LEAP technology.
Ian co-founded Cynata Inc and helped to progress what has become the Cymerus technology of Cynata
Therapeutics Ltd (ASX-CYP). Cymerus is presently in clinical trials and Cynata is partnered with FujiFilm.
Ian is also an inventor of the Nyrada PCSK9 inhibitor - a potential new treatment for atherosclerosis and
hypercholesterolemia through the inhibition of target PCSK9 with a small molecule.
Ian also had experience in the regenerative medicine and cancer immunotherapy fields as a non-executive
director of Cell Therapies Ltd.
Other current
directorships:
Medigard Ltd (ASX: MGZ) - since 21 November 2017
Exopharm Ltd (ASX: EX1) - since 11 December 2018
Former directorships
(last 3 years):
N/A
Interests in shares:
1,766,246
Interests in options:
1,200,000
15
Noxopharm Limited (ASX:NOX) – Annual Report
Name:
Title:
Experience and
expertise:
John Moore
Non-Executive Director
John Moore currently serves as Chairman of Trialogics a clinical trial informatics business and on the Board
of Scientific Industries Inc. (SCND-OTCQX) a leading manufacturer of laboratory equipment and intellectual
property related to bioprocessing systems.
John was CEO of Acorn Energy from 2006 to 2016 during which time the CoaLogix business was acquired
for $11 million and sold for $101 million and the Comverge business listed in the US and exited at a $600
million valuation before its sale to Constellation Energy.
In 2002 he was a partner and CEO of Edson Moore Healthcare Ventures and acquired for $148 million a
portfolio of sixteen drug delivery investments from Elan Pharmaceuticals.
He is a graduate of Rutgers University.
Other current
directorships:
Scientific Industries (OTCQB: SCND) - Since January 2019
Former directorships
(last 3 years):
N/A
Interests in shares:
0
Interests in options:
Warrants issued on the following conditions:
11,000 warrants granted on successful listing on the ASX, (vested 31 December 2018), expiring 15
February 2021;
11,000 warrants granted on successful listing on the ASX (vesting 31 December 2019), expiring 15
February 2021.
The exercise price of each tranche is equal to the ASX IPO price plus 30%.
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types
of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Mr. David Franks
David Franks (BEc, CA, FFin, FGIA, JP) has held the position of Company Secretary since 16 January 2017.
David is a Chartered Accountant, Fellow of the Financial Services Institute of Australia, Fellow of the Governance Institute of Australia,
Justice of the Peace, Registered Tax Agent and holds a Bachelor of Economics (Finance and Accounting) from Macquarie University.
With over 20 years in finance and accounting, initially qualifying with Price Waterhouse in their Business Services and Corporate Finance
Divisions, David has been CFO, Company Secretary and/or Director for numerous ASX listed and unlisted public and private companies,
in a range of industries covering energy retailing, transport, financial services, mineral exploration, technology, automotive, software
development and healthcare. David Franks is currently the Company Secretary for the following public entities: Adcorp Australia
Limited, Consolidated Operations Group Limited, Elk Petroleum Limited, Kelly Partners Group Limited, Noxopharm Limited, White
Energy Company Limited and White Energy Technology Limited. David is also a Senior Executive of Automic Group Pty Ltd.
16
Noxopharm Limited (ASX:NOX) – Annual Report
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the year ended
30 June 2019, and the number of meetings attended by each director were:
Full Board
Audit and Risk Committee
Remuneration Committee
Attended
Held
Attended
Held
Attended
Held
Dr. Graham Kelly
Mr. Peter Marks
Dr. Ian Dixon
Mr. John Moore
7
7
7
3
7
7
7
3
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
All board members are members of the Audit and Risk Committee and Remuneration committee.
Remuneration report (audited)
The Remuneration report, which has been audited, outlines the key management personnel remuneration arrangements for the
consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities
of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
Remuneration governance
The objective of the remuneration committee (constituting the full Board) is to ensure that pay and rewards are competitive and
appropriate for the results delivered. The remuneration committee charter adopted by the Board aims to align rewards with
achievement of strategic objectives and the creation of value for shareholders. The remuneration framework applied provides a mix of
fixed and variable pay and a blend of short and long-term incentives as appropriate. Issues of remuneration are considered annually
or otherwise as required.
Non-Executive Directors
Fees and payments to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. The
Company's policy is to remunerate Non-Executive Directors at market rates (for comparable companies) for time commitment and
responsibilities. Fees for Non-Executive Directors are not linked to the performance of the Company, however to align Directors’
interests with shareholders’ interests, Directors are encouraged to hold shares in the Company.
Non-Executive Directors' fees and payments are reviewed annually by the Board of Directors. The Board of Directors considers advice
from external sources (excluding remuneration consultants) as well as the fees paid to Non-Executive Directors of comparable
companies when undertaking the annual review process. Each director receives a fee for being a director of the company.
The Chairman's fees are determined independently to the fees of other Non-Executive Directors based on comparative roles in the
external market. The Chairman is not present at any discussions relating to determination of his own remuneration.
Retirement benefits and allowances
No retirement benefits are payable other than statutory superannuation, if applicable to the Directors of the Company.
Other benefits
No motor vehicle, health insurance or other similar allowances are made available to Directors (other than through salary-sacrifice
arrangements).
17
Noxopharm Limited (ASX:NOX) – Annual Report
Executive remuneration
Executive pay and reward consists of base pay, short-term performance incentives, long-term performance incentives and other
remuneration such as superannuation. Superannuation contributions are paid into the executive’s nominated superannuation fund.
Base Pay
Executives are offered a competitive level of base pay which comprises the fixed (unrisked) component of their pay and rewards. Base
pay for senior executives is reviewed annually to ensure market competitiveness. There are no guaranteed base pay increases included
in any senior executives’ contracts. Base pay was increased during the year.
Short-term and long-term incentives
The Company currently operates an Executive Share Option Plan ("ESOP") which has been approved by shareholders in the 2016
Annual General Meeting.
Performance based Remuneration
The purpose of a performance bonus is to reward individual performance in line with company objectives. Consequently, performance
based remuneration is paid to an individual where the individual’s performance clearly contributes to a successful outcome for the
consolidated entity. This is regularly measured in respect of performance against key performance indicators (KPI’s).
The Company uses a variety of KPI’s to determine achievement, depending on the role of the executive being assessed. These include:
Successful contract negotiations;
Company share price consistently reaching a targeted rate on the ASX or applicable market over a period of time;
Company undertaking clinical trials in their primary drug Veyonda® within specified time frame.
Securities trading Policy
The trading of Company's securities by employees and Directors is subject to, and conditional upon, the Securities Trading Policy
which is available on the Company's website (www.noxopharm.com).
If remuneration consultants are to be engaged to provide remuneration recommendations as defined under section 9B of the
Corporations Act 2001, then they are engaged by, and report directly to, the remuneration committee. No remuneration consultants
were engaged to provide remuneration services during the financial year.
Remuneration Policy vs Financial Performance
The Company’s policy is to remunerate based on industry practice and benchmark industry salaries rather than performance as this takes
into account the risk and liabilities assumed by directors and executives as a result of their involvement in an R&D Biotech company.
Directors and executives are fairly compensated for the extensive work they undertake.
Voting and comments made at the company's 2018 Annual General Meeting ('AGM')
At the 2018 AGM, more than 75% of the votes received supported the adoption of the remuneration report for the year ended 30 June
2018. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the consolidated entity consisted of the following directors, executives and company secretary of
Noxopharm Limited:
Dr. Graham Kelly - Executive Chairman
Mr. Peter Marks - Non Executive Deputy Chairman
Dr. Ian Dixon - Non Executive Director
Mr. John Moore - Non Executive Director
Mr. David Franks - Company Secretary
Dr. Greg Van Wyk - Chief Executive Officer
18
Noxopharm Limited (ASX:NOX) – Annual Report
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
Cash
bonus
Non-
monetary *
Super-
annuation
Long service
leave
Equity-
settled
Total
$
$
$
$
$
$
$
638,454
175,583
82,192
52,711
-
186,042
1,134,982
-
-
-
-
-
-
-
50,695
62,453
10,419
303,056
1,065,077
-
-
-
-
-
7,808
-
-
-
-
-
32,712
208,295
-
-
90,000
52,711
-
7,333
7,333
19,536
17,674
3,862
1,833
228,947
70,231
87,935
14,281
344,934
1,652,363
2019
Directors:
Dr. Graham Kelly
Mr. Peter Marks
Dr. Ian Dixon
Mr. John Moore
Other Key Management
Personnel:
Mr. David Franks
Dr. Greg Van Wyk
*provision for annual leave
Mr. David Franks, company secretary is also an associate of Automic Group (formerly Franks & Associates) who provides accounting and
company secretary services to the Company. The contracts with Automic Group Associates are based on normal commercial terms.
Payments made to Automic Group during the year are disclosed in the related party transactions note of the financial statements.
2018
Directors:
Dr. Graham Kelly
Mr. Peter Marks
Dr. Ian Dixon
Other Key Management
Personnel:
Mr. David Franks
*provision for annual leave
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
Cash
bonus
Non-
monetary *
Super-
annuation
Long service
leave
Equity-
settled
Total
$
$
$
$
$
$
$
55,323
45,433
-
-
-
-
4,555
-
55,323
49,988
-
-
-
-
-
207,249
767,303
245,220
387,152
239,900
329,900
12,686
12,686
705,055
1,497,041
459,298
141,932
85,445
-
686,675
-
-
-
-
-
19
Noxopharm Limited (ASX:NOX) – Annual Report
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
2019
2018
2019
2018
2019
2018
100%
100%
100%
100%
-
99%
73%
37%
27%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27%
63%
73%
100%
100%
100%
1%
-
Name
Directors:
Dr. Graham Kelly
Mr. Peter Marks
Dr. Ian Dixon
Mr. John Moore
Other Key Management Personnel:
Mr. David Franks
Dr. Greg Van Wyk
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these
agreements are as follows:
Name:
Title:
Dr. Graham Kelly
Executive Chairman
Agreement commenced:
9 August, 2016
Term of agreement:
Open
Details:
Noxopharm Limited
Annual salary of $360,000 plus superannuation of 9.5%. Notice period of 90 days by
Executive or the Company; 12 months by Company without cause.
Nyrada Limited
Annual salary of US$200,000 plus superannuation of 9.5%.
Warrants issued upon the following condition:
110,000 warrants granted on successful listing on ASX;
110,000 warrants granted on successful NASDAQ listing;
110,000 warrants granted on achieving market cap of A$400m;
110,000 warrants granted on achieving a successful M&A, trade sale or licensing
deal worth a minimum US$500m in respect of any one of the Company's clinical
programs.
Warrants will vest on the achievement of each milestone and can be exercised within 3
years of each tranche vesting. The exercise price for each tranche will be set at a 30%
premium to the 15 day VWAP share price at the time of the vesting.
20
Noxopharm Limited (ASX:NOX) – Annual Report
Name:
Title:
Greg Van Wyk
Chief Executive Officer
Agreement commenced:
1 March 2019
Term of agreement:
Open
Details:
Annual Salary of $350,000 plus superannuation of 9.5%.
5,208 options vesting 21 November 2019, expiring 21 November 2022;
5,208 options vesting 21 November 2020, expiring 21 November 2022;
5,209 options vesting 21 November 2021, expiring 21 November 2022.
The exercise price of each tranche of options is $0.62.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30
June 2019.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management
personnel in this financial year or future reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price
Fair value per option
at grant date
28 November 2017
28 November 2017
27 November 2020
28 November 2017
28 November 2017
27 November 2020
8 December 2017
1 December 2018
30 November 2021
8 December 2017
1 December 2019
30 November 2021
8 December 2017
1 December 2020
30 November 2021
10 December 2018
21 November 2019
21 November 2022
10 December 2018
21 November 2020
21 November 2022
10 December 2018
21 November 2021
21 November 2022
$1.0158
$1.2189
$1.0800
$1.0800
$1.0800
$0.6200
$0.6200
$0.6200
$0.495
$0.465
$0.617
$0.617
$0.617
$0.288
$0.288
$0.288
Options granted carry no dividend or voting rights.
The number of options over ordinary shares granted to and vested by directors and other key management personnel as part of
compensation during the year ended 30 June 2019 are set out below:
Number of options
granted during the
year
Number of options
granted during the
year
Number of options
vested during the
year
Number of options
vested during the
year
2019
2018
2019
2018
Name
Dr. Ian Dixon
Mr. Peter Marks
Mr. David Franks
Dr. Greg van Wyk
-
-
62,500
15,625
500,000
500,000
57,639
-
21
-
-
-
-
500,000
500,000
19,213
-
Noxopharm Limited (ASX:NOX) – Annual Report
Additional information
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end (cents)
Share price HIGH for the financial year ended 30 June (cents)
Share price LOW for the financial year ended 30 June (cents)
Additional disclosures relating to key management personnel
Shareholding
2019
47.50
72.00
35.50
2018
61.00
158.00
29.00
2017
36.50
67.50
13.50
The number of shares in the company held during the financial year by each director and other members of key management personnel
of the consolidated entity, including their personally related parties, is set out below:
Balance at the
start of the year
Received as part of
remuneration
Additions
Disposals/ other
Balance at the
end of the year
Ordinary shares
Dr. Graham Kelly
31,410,203
Mr. Peter Marks
Dr. Ian Dixon
500,000
1,766,426
33,676,629
Option holding - Company
-
-
-
-
55,553
-
-
55,553
-
-
-
-
31,465,756
500,000
1,766,426
33,732,182
The number of options over ordinary shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/ other
Balance at the
end of the year
Options over
ordinary shares
Dr. Graham Kelly
12,075,000
Mr. Peter Marks
Dr. Ian Dixon
Mr. David Franks
Dr. Greg van Wyk
700,000
1,200,000
57,639
-
14,032,639
Option holding - Subsidiaries
-
-
-
62,500
15,625
78,125
-
-
-
-
-
-
-
-
-
-
-
-
12,075,000
700,000
1,200,000
120,139
15,625
14,110,764
The number of options over ordinary shares in subsidiaries held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/ other
Balance at the
end of the year
Options over
ordinary shares
Dr. Graham Kelly *
Mr. Peter Marks *
440,000
22,000
462,000
-
-
-
-
-
-
-
-
-
440,000
22,000
462,000
*agreed to issue subject to any regulatory requirements. Not yet issued.
22
Noxopharm Limited (ASX:NOX) – Annual Report
Other transactions with key management personnel and their related parties
Company secretarial and bookkeeping services - provided by Automic Group (formerly Frank & Associates), an entity associated with
Mr. David Franks, on commercial terms and conditions. Total fees paid (excluding GST) to Automic Group for the year ended 30 June
2019 was $268,388 (2018: $285,648).
Prue Kelly, spouse of Graham Kelly (Executive Chairman) is employed as the Company's full time Investor Relations Manager on the
Company's employment terms and conditions.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Noxopharm Limited under option at the date of this report are as follows:
Grant date
Expiry date
Exercise price
Number under option
31 January 2016
28 February 2021
31 January 2016
28 February 2021
31 January 2016
28 February 2021
28 November 2017
27 November 2020
28 November 2017
27 November 2020
8 December 2017
30 November 2021
18 January 2018
19 January 2020
10 December 2018
21 November 2022
$0.3000
$0.3000
$0.3000
$1.0158
$1.2189
$1.0800
$0.8000
$0.6200
-
1,292,858
18,950,358
500,000
500,000
583,451
3,000,000
975,417
25,802,084
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company
or of any other body corporate.
Shares issued on the exercise of options
The following ordinary shares of Noxopharm Limited were issued during the year ended 30 June 2019 and up to the date of this report
on the exercise of options granted:
Date options granted
Exercise price
Number of shares issued
31 January 2016
$0.3000
833,333
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or
executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company
against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or
any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any
related entity.
23
Noxopharm Limited (ASX:NOX) – Annual Report
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the
company for all or part of those proceedings.
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
Officers of the company who are former partners of William Buck Audit (Vic) Pty Ltd
There are no officers of the company who are former partners of William Buck Audit (Vic) Pty Ltd.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately
after this directors' report.
Auditor
William Buck Audit (Vic) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Dr Graham Kelly
Executive Chairman/Director
29 August 2019
24
Auditors Independence Declaration
Noxopharm Limited (ASX:NOX) – Annual Report
25
Noxopharm Limited (ASX:NOX) – Annual Report
Annual Financial Report - 30 June 2019
General Information
The financial statements cover Noxopharm Limited as a consolidated entity consisting of Noxopharm Limited and the entities it
controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Noxopharm Limited's
functional and presentation currency.
Noxopharm Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and
principal place of business is:
Suite 3 Level 4
828 Pacific Highway
GORDON NSW 2072
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which
is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 29 August 2019. The directors have
the power to amend and reissue the financial statements.
Corporate Governance Statement
The Corporate Governance Statement is available on the Company’s website at http://www.noxopharm.com
26
Noxopharm Limited (ASX:NOX) – Annual Report
Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2019
Revenue
Other income
Expenses
Loss on disposal of assets
Corporate administration expenses
Research and development expenses
Depreciation expenses
Finance fee expenses
Consulting, employee & director expenses
Settlement agreement relating to dispute
Finance costs
Loss before income tax expense
Income tax expense
Notes
Consolidated
2019
$
2018
$
4
5
5
6
3,937,361
979,340
(2,089)
-
(3,116,897)
(2,052,887)
(6,251,006)
(4,112,765)
(62,098)
(16,297)
(58,885)
(7,602)
(6,234,042)
(4,276,076)
(176,614)
(650,899)
(8,553,330)
(238,296)
(12,572,581)
(18,320,501)
-
-
Loss after income tax expense for the year
(12,572,581)
(18,320,501)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive (loss) for the year
(12,572,581)
(18,320,501)
Loss for the year is attributable to:
Non-controlling interest
Owners of Noxopharm Limited
Total comprehensive (loss) for the year is attributable to:
Non-controlling interest
Owners of Noxopharm Limited
Basic loss per share
Diluted loss per share
(1,349,794)
(37,000)
(11,222,787)
(18,283,501)
(12,572,581)
(18,320,501)
(1,349,794)
(37,000)
(11,222,787)
(18,283,501)
(12,572,581)
(18,320,501)
27
27
Cents
(9.20)
(9.20)
Cents
(17.39)
(17.39)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
27
Noxopharm Limited (ASX:NOX) – Annual Report
Statement of Financial Position
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Plant and equipment
Intangibles
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Employee entitlements
Total current liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Issued capital
Reserves
Accumulated losses
Notes
Consolidated
2019
$
2019
$
8
9
10
11
12
13
14
15
2,909,568
12,613,534
160,400
817,785
122,643
1,339,512
3,887,753
14,075,689
256,836
37,000
118,818
317,822
37,000
118,818
412,654
473,640
4,300,407
14,549,329
1,487,142
3,930,351
333,383
886,992
-
234,919
5,750,876
1,121,911
-
-
3,279,452
3,279,452
5,750,876
4,401,363
(1,450,469)
10,147,966
28,700,897
28,449,283
4,455,342
3,732,810
(33,256,914)
(22,034,127)
Equity/(deficiency) attributable to the owners of Noxopharm Limited
(100,675)
10,147,966
Non-controlling interest
Total equity/(deficiency)
(1,349,794)
-
(1,450,469)
10,147,966
The above statement of financial position should be read in conjunction with the accompanying notes
28
Noxopharm Limited (ASX:NOX) – Annual Report
Statement of Changes in Equity
For the year ended 30 June 2019
Issued
capital
Reserves
Accumulated
losses
Non-
controlling
interest Total equity
Consolidated
Balance at 1 July 2017
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Non-controlling interest arising from Nyrada Inc
Equity reserve arising from the issue of convertible notes
Transactions with owners in their capacity as owners:
$
6,218,140
-
-
-
-
-
$
-
-
-
-
-
762,045
Contributions of equity, net of transaction costs (note 14)
16,927,750
-
Share-based payments (note 28)
Share issue costs
6,490,680
2,970,765
(1,187,287)
-
$
(3,750,626)
$
-
$
2,467,514
(18,283,501)
(37,000)
(18,320,501)
-
-
-
(18,283,501)
(37,000)
(18,320,501)
-
-
-
-
-
37,000
37,000
-
-
-
-
-
762,045
16,927,750
9,461,445
(1,187,287)
10,147,966
Balance at 30 June 2018
28,449,283
3,732,810
(22,034,127)
Consolidated
Balance at 1 July 2018
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Issued
capital
Reserves
Accumulated
losses
$
$
$
28,449,283
3,732,810
(22,034,127)
Non-
controlling
interest Total equity
$
-
$
10,147,966
-
-
-
-
-
-
(11,222,787)
(1,349,794)
(12,572,581)
-
-
-
(11,222,787) (1,349,794)
(12,572,581)
Share-based payments (note 28)
176,614
722,532
Contributions of equity, net of transaction costs (note 14)
75,000
-
-
-
-
-
899,146
75,000
Balance at 30 June 2019
28,700,897
4,455,342
(33,256,914) (1,349,794)
(1,450,469)
The above statement of changes in equity should be read in conjunction with the accompanying notes
29
Noxopharm Limited (ASX:NOX) – Annual Report
Statement of Cash Flows
For the year ended 30 June 2019
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Receipt from R&D tax rebate
Notes
Consolidated
2019
$
2019
$
(13,713,127)
(10,048,952)
186,687
3,750,675
62,806
910,518
Net cash used in operating activities
26
(9,775,765)
(9,075,628)
Cash flows from investing activities
Payments for plant and equipment
Proceeds from sale of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from convertible notes, net of costs
Share issue transaction costs
Net cash from financing activities
10
(6,397)
3,196
(3,201)
(312,349)
-
(312,349)
14
75,000
16,927,750
-
-
3,803,200
(1,187,287)
75,000
19,543,663
Net increase/(decrease) in cash and cash equivalents
(9,703,966)
10,155,686
Cash and cash equivalents at the beginning of the financial year
12,613,534
2,457,848
Cash and cash equivalents at the end of the financial year
8
2,909,568
12,613,534
The above statement of cash flows should be read in conjunction with the accompanying notes
30
Noxopharm Limited (ASX:NOX) – Annual Report
Notes to the Financial Statements
Note 1. Significant accounting policies
This note provides a list of all significant accounting policies adopted in the preparation of these financial statements. These policies
have been consistently applied in this reporting period, unless otherwise stated. The financial statements are for Noxopharm Limited
("the Company") and its subsidiaries ("the consolidated entity").
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of both AASB 9 and AASB 15
during the year had no impact on the financial statements.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Noxopharm Limited is a for-profit
entity for the purpose of preparing the financial statements. These financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
These financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the consolidated entity's accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The consolidated entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 23.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Noxopharm Limited ('company' or
'parent entity') as at 30 June 2019 and the results of all subsidiaries for the year then ended. Noxopharm Limited and its subsidiaries
together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the
consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without
the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book
value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other
comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred
by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.
31
Noxopharm Limited (ASX:NOX) – Annual Report
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity
recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Noxopharm Limited's functional and presentation currency. The
entity's subsidiary, Noxopharm Asia Limited, uses Hong Kong dollars as its functional currency and all other subsidiaries (including
Nyrada Inc) uses Australian dollars as their functional currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The
revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which
approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other
comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Other Income recognition
Other income is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be
reliably measured. Other income is measured at the fair value of the consideration received or receivable.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the
financial asset.
Government research and development tax incentives
Government grants, including research and development incentives are recognised at fair value when there is reasonable assurance
that the grant will be received and all grant conditions will be met. Grants relating to research and development expenditure are
recognised as income over the periods necessary to match the grant costs they are compensating. The incentive is recognised as
income as it is not tied to offsetting assessable income in tax.
Income tax
The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and
to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period in the countries where the Company's subsidiaries and associates operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting
period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months
after the reporting period. All other assets are classified as non-current.
32
Noxopharm Limited (ASX:NOX) – Annual Report
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right
to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Cash and cash equivalents
Cash and short-term deposits includes cash at bank (including debit cards) and in hand and short-term deposits with an original
maturity of three months or less, or redeemable at any time.
For the purposes of the Statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The
consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Plant and equipment
Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to
the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and
the cost of the item can be measured reliably.
The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the
reporting period in which they are incurred.
Depreciation on plant and equipment is calculated using the straight-line method to allocate their cost or revalued amounts, net of
their residual values, over their estimated useful lives, as follows:
Computer equipment
Furniture and fittings
Lab equipment
3 years
5 years
5 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. When
revalued assets are sold, it is the consolidated entity's policy to transfer the amounts included in other reserves in respect of those
assets to retained earnings.
Leases
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the
term of the lease.
Intangible assets
Intellectual property
Significant costs associated with intellectual property are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 10 years. Intellectual property with an indefinite useful life are not amortised, but assessed
annually for impairment. The useful life of this asset was assessed and was deemed to have an indefinite life with no impairment at
the date of this report.
Research and development costs
Research costs are expensed as incurred.
33
Noxopharm Limited (ASX:NOX) – Annual Report
Trade and other payables
Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the consolidated
entity prior to the end of the financial period that are unpaid and arise when the consolidated entity becomes obliged to make future
payments in respect of the purchase of these goods and services. Licensing fees are recognised as an expense when it is confirmed
that they are payable by the consolidated entity.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or
borrowings are classified as non-current.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement of financial
position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an equivalent non-
convertible bond and this amount is carried as a non-current liability on the amortised cost basis until extinguished on conversion or
redemption. The increase in the liability due to the passage of time is recognised as a finance cost. The remainder of the proceeds are
allocated to the conversion option that is recognised and included in shareholders equity as a convertible note reserve, net of
transaction costs. The carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding interest
on convertible notes is expensed to profit or loss.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in
which they are incurred.
Employee benefits
Short-term employee benefits
Provision is made for the consolidated entity's obligation for short-term employee benefits. Short-term employee benefits are benefits
(other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period
in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are
measured at the (undiscounted) amounts expected to be paid when the obligation is settled.
The consolidated entity's obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part
of current trade and other payables in the Balance sheet. The consolidated entity's obligations for employees’ annual leave
entitlements are recognised as provisions in the Balance sheet.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering
of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by
reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either
the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free
interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity
receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period.
The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number
of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is
the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or
Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The
cumulative charge to profit or loss until settlement of the liability is calculated as follows:
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
34
Noxopharm Limited (ASX:NOX) – Annual Report
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting
date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the
liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are
considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional
expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based
compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated
as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is
recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated
as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is
based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence
of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act
in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation
techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Noxopharm Limited, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from
the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables
and payables are stated inclusive of the amount of GST receivable or payable.
The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities, which are
recoverable from, or payable to the taxation authority, are presented as operating cash flow.
35
Noxopharm Limited (ASX:NOX) – Annual Report
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not
been early adopted by the consolidated entity for the annual reporting period ended 30 June 2019. The consolidated entity's
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated
entity, are set out below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases'
and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will
be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be
made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as
personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is
recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be
recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future
restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge
for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs).
In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as
the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the
statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating
or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
The standard will affect primarily the accounting for the Company’s operating leases. However, management has not yet determined
to what extent these commitments will result in the recognition of an asset and liability for future payments and how this will affect the
Company’s profit and classification of cash flows. The expected impact of adopting this standard will be immaterial.
Some commitments may be covered by the exception for short-term and low-value leases and some commitments may relate to
arrangements that will not qualify as leases under AASB16. This may include the commitments as disclosed in Note 24.
Interpretation 23 - Uncertainty over Income Tax Treatments
This Interpretation is applicable to annual reporting periods beginning on or after 1 January 2019. Interpretation 23 requires entities
to calculate the current tax liability in their financial statements as if the tax authorities were going to perform a tax audit, and the tax
authorities knew all the facts and circumstances about the entity’s tax position. This standard will impact the way the Company
discloses key estimates and judgements regarding the determination of uncertain tax positions, however management has not yet
assessed the impact of the application of this interpretation on the financial statement disclosures.
Going concern
The financial report has been prepared on a going concern basis, which assumes continuity of normal business activities and the
realisation of assets and the settlement of liabilities in the ordinary course of business. The consolidated entity has incurred net losses
after tax of $12,572,581 (2018: $18,320,501) and net cash outflows from operating activities of $9,775,765 (2018: $9,075,628 ) for the year
ended 30 June 2019. At 30 June 2019, the consolidated entity’s cash position was $2,909,568.
Should the Company determine in the future that it is in the best interest of shareholders to bring forward or expand its currently
anticipated clinical program, it would need to do so with completing a capital raising program to match the increased expenditure
profile.
On 19 July 2019 the Company secured a funding facility for up to $26 million from two U.S. institutional investors through a share
purchase and convertible notes security arrangement. The convertible note facility is for $3.8 million in cash (pre-expenses) with the
convertible notes maturing two years after initial cash payment is received by the Company, being July 2021, and have face value of
$4.56 million. The balance of this facility is a share purchase agreement allowing the Company to raise up to $22.2 million over twelve
months.
On 16 August 2019 the Company received $3.7 million as a cash refund from the Australian Taxation Office for the 2019 Research and
Development Grant. This refund amount was not accrued as income as at 30 June 2019 due to the uncertainty surrounding
Ausindustries approval of the claim, the fact the claim number needed to be finalised and the uncertainty due to the lack of track record
to completely recognise what the refund number may be.
Based on the cash flow forecasts and current (29 August 2019) cash position, the directors are confident that the consolidated entity
will be able to continue as a going concern.
36
Noxopharm Limited (ASX:NOX) – Annual Report
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical
experience and on other various factors, including expectations of future events, management believes to be reasonable under the
circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
(refer to the respective notes) within the next financial year are discussed below.
Research and Development Rebate
The Research and Development rebate receivable form the ATO has not been accrued into income for the year ended 30 June 2019.
This refund amount was not accrued as income as at 30 June 2019 due to the uncertainty surrounding Ausindustries approval of the
claim, the fact the claim number needed to be finalised and the uncertainty due to the lack of track record to completely recognise
what the refund number may be.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model
taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next
annual reporting period but may impact profit or loss and equity.
Non-recognition of carried forward tax losses
The balance of future income tax benefit arising from tax losses and timing differences have not been recognised as an asset because
recovery is not regarded as probable. The cumulative future income tax benefit which has not been recognised as an asset will only be
obtained if:
i)
ii)
iii)
The Group derives future assessable income of a nature and amount sufficient to enable the benefit to be realised,
The Group continues to comply with the conditions for the deductibility imposed by law, and
No changes in tax legislation adversely affecting the Group realising the benefit.
Note 3. Operating segments
The consolidated entity continues to operate in one segment, being the clinical development in the field of both oncology and non-
oncology in the pan-pacific region. The segment details are therefore fully reflected in the body of the annual report.
Note 4. Other income
Interest income
Other revenue
R&D tax incentives
Other income
Consolidated
2019
$
186,686
-
3,750,675
3,937,361
2018
$
62,806
6,016
910,518
979,340
37
Consolidated
2019
$
1,218,487
437,727
330,815
307,112
242,065
218,729
186,880
113,919
40,953
20,210
2018
$
237,152
467,820
234,315
97,939
414,735
211,432
164,835
136,276
35,640
52,743
3,116,897
2,052,887
785,728
3,771,127
621,894
332,136
219,824
503,333
76,344
2,538,348
498,134
255,135
653,556
254,559
6,234,042
4,276,076
Noxopharm Limited (ASX:NOX) – Annual Report
Note 5. Expenses
Loss before income tax includes the following specific expenses:
Corporate Administration expenses
Corporate administration expenses
Audit, accounting and company secretarial fees
Travel and entertainment expenses
Insurances
Legal fees
Rental expenses
ASX and filing fees
Office Expenses
Recruitment fees
Marketing and advertising
Consulting, Employee and Director Expenses
Consulting expenses
Employee related expenses
Superannuation and other employee related expenses
Director expenses (excluding executive directors)
Share-based payment expense - Noxopharm Limited
Share-based payment expense - Nyrada Inc
38
Note 6. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 27.5%
Noxopharm Limited (ASX:NOX) – Annual Report
Consolidated
2019
$
2018
$
(12,572,581)
(18,320,501)
(3,457,460)
(5,038,138)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
R&D tax incentives
Other expenses not deductible
1,125,203
(250,392)
(61,746)
249,732
Deferred tax assets relating to tax losses not recognised
2,503,578
4,881,062
Net movement in temporary differences not recognised
(109,575)
157,736
Income tax expense
-
-
2019
$
2018
$
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
33,221,546
21,442,783
Potential tax benefit @ 27.5%
9,135,925
5,896,765
The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax losses can only
be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed.
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary differences attributable to:
Other
Employee provisions
Total deferred tax assets not recognised
2019
$
2018
$
213,193
91,680
139,828
45,234
304,873
185,062
39
Noxopharm Limited (ASX:NOX) – Annual Report
Note 7. Kazia Therapeutics Limited
Kazia Therapeutics Limited (“Kazia”) (ASX: KZA) claimed that in relation to that Company's key asset, NOX66, it owned all intellectual
property in the formulation and use of the technology. The Company disputed that claim and that NOX66 is owned by the Company
(“Dispute”). On 22 December 2017 Noxopharm settled the Dispute, with a payment for settlement of the Dispute being:
5,317,123 ordinary shares in Noxopharm Limited, held under voluntary escrow until 14 June 2018; and
3,000,000 unlisted options in Noxopharm Limited, with an exercise price of $0.80, expiring 18 January 2020, unable to be
exercised prior to 18 July 2018.
In addition, a cash payment of $165,000 (including GST) was paid by the Company to Kazia for technical information in the form of a
report and related materials and costs.
The total value as at the original date of arrangement (22 December) has been valued at $8,141,242 and has been recognised within
the statement of profit or loss as follows:
$150,000 in the Research and Development costs; and
$7,991,242 in Settlement Agreement relating to Dispute (and which is a non-cash item for Noxopharm).
The ordinary shares were valued using market price of the shares at the date the settlement agreement ($1.115) and the fair value of
the options ($0.6876 each) were calculated using the Black-Scholes model, based the following assumptions:
Share price at date of grant: $1.115
Exercise price per option: $0.80
Volatility: 100%
Risk-free rate: 2.145%
Expiry: 2 years from issue date
On 21 May 2018, the Company issued a further 653,591 ordinary shares to Kazia for a value of $562,088 based on the market price of
the shares at that date and has been recognised within the statement of profit or loss.
On 17 December 2018, the Company issued a further 15,457 ordinary shares to Kazia for a value of $7,110 based on the market price of
the shares at that date and has been recognised within the statement of profit or loss.
On 19 March 2019, Kazia entered into an agreement with 3 existing shareholders of the Company (unrelated to Kazia), to sell its
remaining ordinary shares at a price negotiated directly between those parties. The Company paid these unrelated parties that
purchased the Kazia remaining shares, a share placement fee of 8% based on the total consideration paid for acquiring the Kazia
shares. This had the effect of waiving the anti-dilution privileges which previously accompanied those shares.
Note 8. Current assets - cash and cash equivalents
Cash at bank and in hand
Term deposits - redeemable on demand
Bank debit cards
Consolidated
2019
$
2018
$
2,824,077
2,523,144
-
10,000,763
85,491
89,627
2,909,568
12,613,534
40
Note 9. Current assets - other assets
Prepayments
Research and development lab supplies
Noxopharm Limited (ASX:NOX) – Annual Report
Consolidated
2019
$
121,385
696,400
2018
$
70,502
1,269,010
817,785
1,339,512
The research and development lab supplies are mainly materials that are used in the research and development process. These
materials are recognised as an expense as and when they are utilised in the research and development process.
Note 10. Non-current assets - plant and equipment
Furniture & fittings - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
Lab equipment
Less: Accumulated depreciation
Consolidated
2019
$
219,429
(62,935)
156,494
85,289
(49,318)
35,971
94,187
(29,816)
64,371
2018
$
219,429
(35,915)
183,514
85,131
(33,948)
51,183
94,187
(11,062)
83,125
256,836
317,822
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Additions
Depreciation expense
Balance at 30 June 2018
Additions
Disposals
Depreciation expense
Balance at 30 June 2019
Computer equipment
Furniture & fittings
Lab equipment
$
11,194
62,225
(22,236)
51,183
6,397
(6,238)
(15,371)
35,971
41
$
53,164
155,937
(25,587)
183,514
-
-
(27,020)
156,494
$
-
94,187
(11,062)
83,125
-
-
(18,754)
64,371
Total
$
64,358
312,349
(58,885)
317,822
6,397
(6,238)
(61,145)
256,836
Noxopharm Limited (ASX:NOX) – Annual Report
Note 11. Non-current assets – other
Term deposit pledged for bank guarantee
118,818
118,818
Note 12. Current liabilities - borrowings
Consolidated
2019
$
2018
$
Convertible notes payable
Refer to note 17 for further information on financial instruments.
Consolidated
2019
$
3,930,351
2018
$
-
On 16 February 2018, Nyrada Inc closed its convertible note raising, having raised $4.0 million via the issue of notes of $1.00 each. Each
note can be converted or redeemed as follows:
If Nyrada Inc lists on a stock exchange in Australia or USA within 18 months of the issue of note, each 12 notes will convert to
3 New Shares and 2 New Options, where each New Option has an exercise price of $6.00 and expiry of 30 November 2020;
If Nyrada Inc does not list on a stock exchange in Australia or USA within 18 months of the issue of note, then the notes will
be redeemed 1) to the extent possible, by the issue of shares in the Company at a 25% discount to the 10-day VWAP
immediately prior to the conversion notice or 2) payment of the face value of the notes.
On 9 May 2019, the noteholders were asked to agree to an extension of the maturity date and change in conversion ratio of
these notes to shares from 3 shares for every 12 notes held to 15 shares for every 12 notes held, with the maturity date being
extended to 31 October 2019. No change to the option arrangements, with 2 options being issued for every 12 notes held per
the original agreement terms. The substantial majority of note holders have agreed to these changes.
As the convertible notes demonstrates certain characteristics of equity, the convertible notes has been discounted using an effective
interest of 15% on the basis of observable market interest rate on similar instrument such as unsecured debt, and research and
development financing to determine the equity portion. As a result a conversion reserve of $762,045 has been recognised within equity
of the group consolidated accounts.
Note 13. Non-current liabilities – borrowings
Consolidated
2019
$
-
2018
$
3,279,452
Convertible notes payable *
Refer to note 17 for further information on financial instruments.
* Reclassified from non-current to current (see note 12)
42
Note 14. Equity - issued capital
Noxopharm Limited (ASX:NOX) – Annual Report
Consolidated
Consolidated
2019
Shares
2018
Shares
2019
$
2018
$
Ordinary shares - fully paid
122,601,393
121,901,310
28,700,897
28,449,283
Movements in ordinary share capital
Details
Balance
Date
1 July 2017
Share placement
4 September 2017
Exercise of options
7 November 2017
Exercise of options
15 November 2017
Exercise of options
7 December 2017
Exercise of options
18 December 2017
Shares issued to Kazia
22 December 2017
Exercise of options
25 January 2018
Share placement
29 March 2018
Share placement
Shares issued to Kazia
Exercise of options
Share issue costs
21 May 2018
21 May 2018
28 May 2018
Shares
85,171,429
16,666,667
100,000
350,000
807,500
100,000
5,317,123
685,000
7,264,966
4,735,034
653,591
50,000
-
Balance
30 June 2018
121,901,310
Exercise of options
28 September 2018
Exercise of options
2 October 2018
Shares issued to Kazia
17 December 2018
Share placement
Balance
25 March 2019
30 June 2019
200,000
50,000
15,457
434,626
$
6,218,140
5,500,000
30,000
105,000
242,250
30,000
5,928,592
205,500
6,538,469
4,261,531
562,088
15,000
(1,187,287)
28,449,283
60,000
15,000
7,110
169,504
122,601,393
28,700,897
43
Noxopharm Limited (ASX:NOX) – Annual Report
Movements in options
Details
Balance
Conversion of options to shares
Options issued to directors
Options issued to employees under the
employee share plan
Options issued to Kazia
Date
Options
Issue price
1 July 2017
22,585,716
(2,092,500)
$0.0000
1,000,000
$0.0000
789,470
$0.0000
3,000,000
$0.0000
Balance
30 June 2018
25,282,686
Conversion of options to shares
28 September 2018
(200,000)
$0.0000
Conversion of options to shares
2 October 2018
(50,000)
$0.0000
Options issued to employees under the
employee share plan
Options forfeited
Options forfeited
Balance
Ordinary shares
10 December 2018
975,417
$0.0000
17 December 2018
(184,877)
$0.0000
29 January 2019
(21,142)
$0.0000
30 June 2019
25,802,084
$
-
-
-
-
-
-
-
-
-
-
-
-
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the
number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a
limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost
of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total
borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current company's share price at the time of the investment. The consolidated entity is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
44
Note 15. Equity – reserves
Options reserve
Options reserve - Nyrada Inc
Other reserves
Option reserve
Noxopharm Limited (ASX:NOX) – Annual Report
Consolidated
2019
$
2018
$
2,935,405
2,716,206
757,892
762,045
254,559
762,045
4,455,342
3,732,810
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and
other parties as part of their compensation for services.
Option reserve - Nyrada Inc
The reserve is used to recognise the value of equity benefits issued by Nyrada Inc to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Other reserves
The other reserve represents the equity element of the convertible notes issued by Nyrada Inc. Refer to Note 13 for details.
Note 16. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 17. Financial instruments
Financial risk management objectives
The Board is responsible for overseeing the establishment and implementation of the risk management system, and reviews and
assesses the effectiveness of the consolidated entity's implementation of that system on a regular basis.
The consolidated entity’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The
consolidated entity uses different methods to measure different types of risk to which it is exposed.
The consolidated entity's financial instruments consist of cash and cash equivalents, trade and other receivables, trade and other
payables and convertible notes.
Consolidated
2019
$
2018
$
2,909,568
12,613,534
118,818
118,818
(1,487,142)
(886,992)
(3,930,351)
(3,279,452)
(2,389,107)
8,565,908
Cash and cash equivalents
Term Deposits
Trade and other payables
Convertible Notes
45
Noxopharm Limited (ASX:NOX) – Annual Report
Market risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated
in a currency that is not the entity's functional currency. The foreign currency risk is deemed to be minimal as most of the transactions
are primarily conducted in the entity's functional currency and changes in foreign exchange rate would not have any significant impact
to the financial position of the entity.
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The interest rate risk is deemed to be minimal as the cash is held in fixed interest rate term deposits and therefore changes in variable
rates does not affect the interest earned on these term deposits. Interest earned on non-term deposits account are minimal.
The Convertible Note interest rate risk is not material due to the terms of the note and the fact that as there is no coupon there is no
interest rate risk.
The consolidated entity does not have any external interest bearing borrowings.
Credit risk
The consolidated entity is exposed to credit risk via its cash and cash equivalents and trade and other receivables. Credit risk refers to
the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The
consolidated entity ensures that surplus cash is invested with financial institutions that maintain a high credit rating. The consolidated
entity’s major ongoing customers are Government bodies for the receipt of GST and research and development claim refunds due to
the consolidated entity from the Australian Taxation Office.
There has been no significant change in the consolidated entity's exposure to credit risk since incorporation. The Board believes that
the consolidated entity does not have significant credit risk at this time in respect of its trade and other receivables.
The consolidated entity has adopted the 12 months of expected loss basis in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the consolidated entity based on recent sales experience, historical collection rates and forward-looking
information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of
a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater
than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Company is exposed to liquidity risk via its trade and other payables.
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet the commitments associated with its
financial instruments. Responsibility for liquidity risk rests with the Board who manage liquidity risk by monitoring undiscounted cash
flow forecasts and actual cash flows provided to them by the Company's Management at Board meetings to ensure that the Company
continues to be able to meet its debts as and when they fall due. Contracts are not entered into unless the Board believes that there is
sufficient cash flow to fund the additional activity.
46
Noxopharm Limited (ASX:NOX) – Annual Report
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables
have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Weighted
average
interest rate
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 2019
%
$
$
$
$
$
Non-derivatives
Non-interest bearing
Trade payables
Convertible notes
Total non-derivatives
-
15%
1,487,142
3,990,100
5,477,242
-
-
-
-
-
-
-
-
-
1,487,142
3,990,100
5,477,242
Weighted
average
interest rate
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 2018
%
$
$
$
$
$
Non-derivatives
Non-interest bearing
Trade payables
Convertible notes
-
15%
886,992
-
-
3,990,100
Total non-derivatives
886,992
3,990,100
-
-
-
-
-
-
886,992
3,990,100
4,877,092
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Fair value of financial instruments
The fair values of cash and cash equivalents, trade and other receivables and trade and other payables approximate to their carrying
amounts largely due to being liquid assets or liabilities that will be settled within 12 months.
The convertible notes are deemed to be carried close to the fair value on the basis of market rates has been used to initially determine
the opening position of the notes.
Note 18. Key management personnel disclosures
Other key management personnel
The following persons also had the authority and responsibility for planning, directing and controlling the major activities of the
consolidated entity, directly or indirectly, during the financial year:
Dr. Graham Kelly - Executive Chairman
Mr. Peter Marks – Non-Executive Deputy Chairman
Dr. Ian Dixon – Non-Executive Director
Mr. John Moore – Non-Executive Director
Mr. David Franks - Company Secretary
Dr. Greg Van Wyk - Chief Executive Officer
47
Noxopharm Limited (ASX:NOX) – Annual Report
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set
out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Consolidated
2019
$
1,205,213
87,935
14,281
344,934
2018
$
741,998
49,988
-
705,055
1,652,363
1,497,041
Other Transactions with Key Management Personnel
Company secretarial and bookkeeping services - provided by the Automic Group (formerly Franks & Associates Pty Ltd), an entity
associated with Mr. David Franks, on commercial terms and conditions.
Note 19. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by William Buck Audit (Vic) Pty Ltd, the auditor
of the company, and unrelated firms:
Audit services - William Buck Audit (Vic) Pty Ltd
Audit or review of the financial statements
Audit services - unrelated firms (Nexia Sydney Audit Pty Ltd)
Consolidated
2019
$
2018
$
53,500
48,000
Audit or review of the financial statements
20,249
12,000
Other services - unrelated firms (Nexia Sydney Audit Pty Ltd)
Due diligence
10,985
31,234
15,000
27,000
Note 20. Contingent liabilities
The consolidated entity has given bank guarantees as at 30 June 2019 of $118,818 (2018: $118,818) to its landlords.
Further to Note 7, for a period of 2 years from the 18 January 2018, Kazia’s shareholding in the Company will not be diluted below 4.9%
of the issued share capital in the Company, or if Kazia sells any of the Company shares originally allotted, then a pro-rata percentage.
Therefore, if further shares are required to be allotted under this arrangement, the Company would recognise at that time an additional
“Settlement Agreement relating to Dispute” expense for the value of the shares issued.
On 19 March 2019, Kazia entered into an agreement with 3 existing Company shareholders to sell its remaining shares at a price
negotiated directly between the parties. As Kazia sold its remaining shareholding in the Company, this anti-dilution agreement is no
longer applicable.
48
Noxopharm Limited (ASX:NOX) – Annual Report
Consolidated
2019
$
2018
$
99,108
-
166,563
99,108
99,108
265,671
Note 21. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
Later than one year but not later than five years
Note 22. Related party transactions
Parent entity
Noxopharm Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 24.
Key management personnel
Disclosures relating to key management personnel are set out in note 18 and the remuneration report included in the directors' report.
Transactions with related parties
Company secretarial and bookkeeping / financial accounting services - provided by Automic Group Pty Limited (formerly Franks &
Associates Pty Limited), an entity associated with Mr. David Franks, on commercial terms and conditions. Total fees (excluding GST)
paid to Automic Group Pty Limited for the year ended 30 June 2019 was $268,388 (2018: $285,648). Automic is the share registry of
Noxopharm Limited. All services provided by Automic Group Pty Ltd during the year ended 30 June 2019 and to the date of this report
were on commercial terms.
Prue Kelly, spouse of Graham Kelly (Executive Chairman) is employed as the Company's full time Investor Relations Manager on the
Company's employment terms and condition.
Receivable from and payable to related parties
There were no trade receivables from related parties at the current and previous reporting date. There were trade payables to the
Automic Group (formerly Franks & Associates Pty Limited) of $65,523 as at 30 June 2019 (2018: $45,686).
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Note 23. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
49
Parent
2019
$
2018
$
(8,279,301)
(15,710,580)
(8,279,301)
(15,710,580)
Noxopharm Limited (ASX:NOX) – Annual Report
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Options reserve
Accumulated losses
Total equity
Parent
2019
$
2018
$
2,718,882
10,851,837
5,508,004
12,398,045
1,493,069
1,493,069
574,622
574,622
28,700,897
28,449,283
2,935,405
2,716,206
(27,621,367)
(19,342,066)
4,014,935
11,823,423
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 2018.
Contingent liabilities
Except as outlined in note 7, the parent entity had no contingent liabilities as at 30 June 2019 and 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments at 30 June 2019 and 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the
following:
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator
of an impairment of the investment.
50
Note 24. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
the accounting policy described in note 1:
Noxopharm Limited (ASX:NOX) – Annual Report
Name
Principal place of business /
Country of incorporation
Noxopharm Asia Limited
Hong Kong
Norbio Holding Pty Ltd
Nyrada Inc
Norbio No 1 Pty Ltd
Norbio No 2 Pty Ltd
Cardio Therapeutics Pty Ltd
Australia
USA
Australia
Australia
Australia
Ownership interest
2019
%
100.00%
100.00%
66.67%
66.67%
66.67%
66.67%
2018
%
100.00%
100.00%
66.67%
66.67%
66.67%
66.67%
Note 25. Events after the reporting period
On 9 May 2019, the Nyrada noteholders were asked to agree to an extension of the maturity date and change in conversion ratio of
their notes to shares from 3 shares for every 12 notes held to 15 shares for every 12 notes held, with the maturity date being extended
to 31 October 2019. No change to the option arrangements, with 2 options being issued for every 12 notes held per the original
agreement terms. The substantial majority of note holders have agreed to these changes.
On 19 July 2019 the Company secured a funding facility for up to $26 million from two U.S. institutional investors through a share
purchase and convertible notes security agreement. The convertible note security agreement is for $3.8 million in cash (before
expenses), with a two year maturity date being 23 July 2021, and a face value of $4.56 million. The convertible notes can be converted
at a conversion price which is the lowest of a) the share price equal to 90% of the average of the five lowest daily VWAP's per share
during the 20-trading day period immediately prior to the relevant notice of conversion date, b) $0.58, and c) in the event of an IPO on
the NASDAQ, 80% of the NASDAQ IPO price. The convertible note amount can be reduced by the Company if it repays $1.5 million of
the research and development grant proceeds to the investors once the funds are received form the Australian Taxation Office. In
addition, the Company can raise up to an additional $22.2 million in capital through the share purchase agreement over twelve months
from 23 July 2019. The Company issued 4,722,222 options to the investors with an exercise price of $0.58 expiring 23 July 2023.
Except as noted above, no matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
51
Noxopharm Limited (ASX:NOX) – Annual Report
Note 26. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(12,572,581)
(18,320,501)
Consolidated
2019
$
2018
$
Adjustments for:
Depreciation and amortisation
Share-based payments
Net loss on disposal of plant and equipment
Unwinding of the discount on convertible notes (finance costs)
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in other current assets
Decrease/(increase) in laboratory consumables
Increase in trade and other payables
Increase in employee entitlements
62,098
899,146
2,089
650,899
(37,757)
(50,883)
572,610
600,150
98,464
58,885
9,461,445
-
238,296
(60,058)
53,678
(1,269,010)
597,149
164,488
Net cash used in operating activities
(9,775,765)
(9,075,628)
52
Note 27. Earnings per share
Loss after income tax
Non-controlling interest
Noxopharm Limited (ASX:NOX) – Annual Report
Consolidated
2019
$
2018
$
(12,572,581)
(18,320,501)
1,349,794
37,000
Loss after income tax attributable to the owners of Noxopharm Limited
(11,222,787)
(18,283,501)
Loss after income tax
(12,572,581)
(18,320,501)
Weighted average number of ordinary shares used in calculating basic
earnings per share
Weighted average number of ordinary shares used in calculating
diluted earnings per share
Basic earnings per share
Diluted earnings per share
Number
Number
122,005,806
105,119,843
122,005,806
105,119,843
Cents
(9.20)
(9.20)
Cents
(17.39)
(17.39)
The 25,802,084 (2018: 20,493,216) options issued could potentially dilute basic earnings per share in the future, but were not included
in the calculation of diluted earnings per share because they are anti-dilutive for the periods presented.
53
Noxopharm Limited (ASX:NOX) – Annual Report
Note 28. Share-based payments
During the year, the Company has granted the following share-based payments:
434,626 share were issued to an existing shareholder as a share placement fee in lieu of cash payment. The value of these
shares was based on $0.39 per share.
975,417 3 years Options exercisable at $0.62 per option to certain employees of the Company; and
Shares and options issued to Kazia (see Note 7 for further details).
Set out below are summaries of options granted to the employees and directors of the Company:
2019
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
27/11/2017
27/11/2020
$1.0158
500,000
27/11/2017
27/11/2020
$1.2189
500,000
01/12/2017
01/12/2021
$1.0800
789,470
-
-
-
10/12/2018
21/11/2022
$0.6200
-
975,417
1,789,470
975,417
-
-
-
-
-
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
500,000
500,000
(223,619)
565,851
-
975,417
(223,619)
2,541,268
2018
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
27/11/2017
27/11/2020
$1.0158
27/11/2017
27/11/2020
$1.2189
01/12/2017
01/12/2021
$1.0800
-
-
-
-
500,000
500,000
789,470
1,789,470
-
-
-
-
-
-
-
-
500,000
500,000
789,470
1,789,470
Set out below are the options exercisable at the end of the financial year:
Grant date
27/11/2017
01/12/2017
Expiry date
27/11/2020
02/12/2021
2019
Number
1,000,000
188,615
2018
Number
1,000,000
-
1,188,615
1,000,000
The weighted average exercise price during the financial year was $0.93.
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.40 years.
The Company's subsidiary, Nyrada Inc has also issued various share based payment to its directors, and other executives and advisers.
54
Noxopharm Limited (ASX:NOX) – Annual Report
Set out below are summaries of options granted by Nyrada Inc during the year:
2019
Grant date
Expiry date
Balance at the
start of the
year
Granted
Exercised
Expired/
forfeited/
other
Balance at the
end of the
year
15/02/2018
See below
440,000
15/02/2018
15/02/2021
01/05/2018
15/02/2021
23/05/2018
15/02/2021
23/05/2018
See below
33,000
22,000
44,000
44,000
583,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
440,000
33,000
22,000
44,000
44,000
583,000
* The shares vest as and when various milestones are met. Once vested, the option expires 3 years from vesting date.
2018
Grant date
Expiry date
15/02/2018
See below
15/02/2018
15/02/2021
01/05/2018
15/02/2021
23/05/2018
15/02/2021
23/05/2018
See below
Balance at the
start of the
year
Granted
Exercised
Expired/
forfeited/
other
Balance at the
end of the
year
-
-
-
-
-
-
440,000
33,000
22,000
44,000
44,000
583,000
-
-
-
-
-
-
-
-
-
-
-
-
440,000
33,000
22,000
44,000
44,000
583,000
* The shares vest as and when various milestones are met. Once vested, the option expires 3 years from vesting date.
For the options granted during the previous financial year, the valuation model inputs used to determine the fair value at the grant
date, are as follows:
Grant date
Expiry date
Share price
at grant
date
Exercise
price
Expected
volatility
Dividend
Yield
Risk-free
interest rate
Fair value at
grant date
27/11/2017
27/11/2020
$0.8400
$1.0158
100.00%
27/11/2017
27/11/2020
$0.8400
$1.2189
100.00%
01/12/2017
01/12/2021
$0.9200
$1.0800
100.00%
10/12/2018
21/11/2022
$0.5200
$0.6200
88.00%
-
-
-
-
2.17%
2.17%
2.17%
2.00%
$0.495
$0.464
$0.617
$0.288
For the options issued for Nyrada Inc, the company has engaged an external valuation expert to perform the valuation as the exercise
price for the shares are based on a premium (between 20% to 30%) set on either 15 days VWAP or at the ASX IPO price.
55
Noxopharm Limited (ASX:NOX) – Annual Report
Other assumptions used includes the following:
Grant date
Expiry date
15/02/2018
See below
15/02/2018
15/02/2021
01/05/2018
15/02/2021
23/05/2018
15/02/2021
23/05/2018
See below
Expected
volatility
Dividend Yield
Risk-free interest
rate
Fair value at
grant date
75.00%
75.00%
75.00%
75.00%
75.00%
-
-
-
-
-
2.19%
2.15%
2.15%
2.15%
2.10%
$2.830
$2.050
$2.070
$2.160
$2.770
* The shares vest as and when various milestones are met. Once vested, the option expires 3 years from vesting date.
56
Noxopharm Limited (ASX:NOX) – Annual Report
Directors’ Declaration
In the directors' opinion:
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with Australian Accounting Standards as issued by the Australian
Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 30
June 2019 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Dr Graham Kelly
Executive Chairman/Director
29 August 2019
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Noxopharm Limited (ASX:NOX) – Annual Report
Independent Auditor's Report to the Members
58
Noxopharm Limited (ASX:NOX) – Annual Report
59
Noxopharm Limited (ASX:NOX) – Annual Report
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Noxopharm Limited (ASX:NOX) – Annual Report
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Noxopharm Limited (ASX:NOX) – Annual Report
Shareholder Information
The shareholder information set out below was applicable as at 22 August 2019.
Number of holders
of (Exercise price
$1.0158, expiry 27
November 2020)
Number of holders
of (Exercise price
$1.2189, expiry 27
November 2020)
Number of holders
of (Exercise price
$1.08, expiry 30
November 2021) –
Vest 1.12.2018
Number of holders
of (Exercise price
$1.08, expiry 30
November 2021) –
Vest 1.12.2019
Number of holders
of (Exercise price
$1.08, expiry 30
November 2021) –
Vest 1.12.2020
1 to 1,000
-
1,001 to 5,000
10,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
-
-
2
10,002
Equity security holders
-
-
-
-
2
2
-
-
1
8
-
9
-
-
1
8
-
9
-
-
1
8
-
9
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
Number held % of total shares issued
MILLIGENE PTY LTD (THE GE + PR KELLY FAM TRUST)
GOODRIDGE NOMINEES PTY LTD (THE GOODRIDGE FAMILY A/C)
RGT CAPITAL FUND NO 5 (NOXO) PTY LTD
DRH SUPERANNUATION PTY LIMITED (DRH SUPERFUND NO 2 A/C)
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RHLC PTY LTD (RHLC S/F A/C)
SUBURBAN HOLDINGS PTY LIMITED (SUBURBAN SUPER FUND A/C)
HELIUM MANAGEMENT PTY LTD (HELIUM S/F A/C)
BERNE NO 132 NOMINEES PTY LTD (331898 A/C)
CITICORP NOMINEES PTY LIMITED
CST CAPITAL PTY LTD (CST INVESTMENTS FUND A/C)
HALCYON NOMINEES PTY LTD (HALCYON SUPER FUND A/C)
JOHN W KING NOMINEES PTY LTD
MR DAVID HANNON
MR KENNETH JOSEPH HALL (HALL PARK A/C)
UURO PTY LTD
MR TIMOTHY FRANK ROBERTSON
FARJOY PTY LTD
MR COLIN JAMES EASTERBROOK & MRS JANET ELIZABETH EASTERBROOK (
C & J EASTERBROOK SUPER A/C)
MR JOHN SELLERS
62
31,027,568
10,128,590
5,659,706
5,451,000
3,702,224
2,650,000
2,597,225
1,766,246
1,527,523
1,462,941
1,208,132
1,115,002
1,036,060
1,000,000
900,000
860,000
850,000
830,000
725,000
700,000
75,197,217
25.31
8.26
4.62
4.45
3.02
2.16
2.12
1.44
1.25
1.19
0.99
0.91
0.85
0.82
0.73
0.70
0.69
0.68
0.59
0.57
61.35
Noxopharm Limited (ASX:NOX) – Annual Report
Unquoted equity securities
There are no unquoted equity securities.
Substantial holders
There are no substantial holders in the company.
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
Options
All quoted and unquoted options do not carry any voting rights.
There are no other classes of equity securities.
ASX Listing Rule 3.13.1 and 14.3
The Annual General Meeting is scheduled to be held on 20 November 2019.
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Noxopharm Limited (ASX:NOX) – Annual Report
64