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Annual Repor t 2019 – 2020
OUR TOMORROW STARTS TODAY
About Opthea
Opthea is committed to improving
visual function in patients suffering with
retinal eye diseases. We are developing
a novel therapeutic called OPT-302,
a VEGF-C/D ‘trap’, to be used in
combination with existing standard
of care anti-VEGF-A therapies.
OPT-302 has the potential to address
unmet medical needs in wet age-related
macular degeneration (wet AMD) and
diabetic macular edema (DME) patients,
many of whom respond sub-optimally or
become refractory to existing therapies
for these debilitating diseases.
We are advancing the clinical development
of OPT-302 in wet AMD and DME into
late stage clinical trials in support of future
registration filings for marketing approval
and commercialisation.
Opthea has successfully completed
a Phase 2b clinical trial investigating
OPT-302 in combination with Lucentis®
in treatment naïve wet AMD patients,
and also a Phase 1b/2a clinical trial in
combination with Eylea® in previously
treated patients with persistent DME.
Opthea is now currently well advanced
with the planning of two pivotal global
Phase 3 registrational trials of OPT-302,
as a treatment for wet AMD.
Opthea Limited (OPT) listed on the
Australian Securities Exchange (ASX)
in 1985.
C O N T E N T S
2
6
Where we are today?
Message from
the Chairman and
Chief Executive Officer
Directors’ Report
10
27 Management Team
30
Financial Report
IBC Corporate Information
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In this report
Opthea’s financial year 2019-20 report
is another positive chapter of the story
documenting the exciting progression
of our lead therapeutic asset, OPT-302.
It is a year that has seen the Company
take significant steps towards achieving its
vision to translate scientific breakthroughs
through research and development into
novel commercial products for the care
and benefit of patients.
The positive data reported in June 2020
from the recently completed Phase 2a
DME trial in a second disease indication,
builds upon our extensive prior clinical
studies in wet AMD which demonstrated
superiority in visual improvement with
OPT-302 combination therapy compared
to anti-VEGF-A monotherapy standard
of care, and confirms our belief that
OPT-302 has potential commercial
applications in multiple eye disease
indications. We are excited by the
significant progress achieved with the
OPT-302 clinical development program
which has generated promising clinical
data whilst also recognising that there
is still much work to be done prior to
commercialisation. That is why we have
wasted no time planning for Phase 3
development.
This report shares our achievements
so far, but more importantly, it sheds light
on our future plans and opportunities as
we move our research and development
activities into the final phase towards
becoming a commercial business.
2
Where we are today?
D M E
Initiated Phase 1b/2a DME trial in 153 prior treated patients (Jan ‘18)
Ph1b DME meets primary
safety objective 3Q ‘18 (Jul ‘18)
Ph2a DME open for enrolment (Jul ‘18)
Ph2a DME first patient dosed (Jul ‘18)
Positive data reported for Ph1b DME (Oct ‘18)
Topline Data:
Phase 2a DME
meets primary
endpoints
(Jun ‘20)
2 0 1 8
2 0 1 9
2 0 2 0
1H’18
2H’18
1H’19
2H’19
1H’20
2H ’20
w e t A M D
Initiated Phase 2b wet AMD trial in 366 treatment naive patients (Dec ‘17)
Ph2b wAMD
First patient dosed
Israel and Europe
(Mar ‘18)
Final patient
enrolment Ph2b
wAMD
(nov ‘18)
Final patient
visit Ph2b
wAMD
(May ‘19)
Topline Data:
Phase 2b wet AMD
Ph2b wAMD
meets primary
endpoint
(Aug ‘19)
D M E
Diabetic Macular Edema (DME) can cause
severe vision loss and blindness in diabetics.
Chronically elevated blood glucose levels
in Type 1 and Type 2 diabetics can lead to
inflammation, vascular dysfunction and
hypoxia, causing upregulation of members
of the VEGF family of growth factors,
particularly VEGF-A and VEGF-C. Elevated
levels of VEGF-A and VEGF-C can lead
to fluid accumulation in the macula at the
back of the eye and retinal thickening
which affects vision.
Existing standard of care treatments for
DME are limited and include inhibitors
of VEGF-A, steroids and laser therapy.
Despite these treatments, many patients
remain refractory and have sub-optimal
response to therapy with persistent fluid
and impaired vision.
OPT-302 blocks the activity of VEGF-C
and VeGF-D. used in combination with a
VEGF-A inhibitor, OPT-302 has the potential
to improve clinical outcomes in DME patients.
/ Leading complication and cause of
new cases of blindness in diabetics.
/ Too much blood sugar (glucose)
levels in diabetics damage blood
vessels in the retina and as a result
the supply of oxygen and nutrients
is compromised.
/ Members of the VEGF family are
upregulated and at high levels,
can cause blood vessels to leak
fluid and also result in the growth
of abnormal blood vessels.
/ Blocking members of the VEGF
family can help reduce the fluid
leaking into the macula which is
the part of the retina responsible
for sharp central vision.
/ Symptoms of DME occur
when inflammation and fluid
accumulation leads to macular
swelling and vision loss.
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P H A S E 2 A D M E T R I A L M E E T S
P R I M A R Y E N D P O I N T
Opthea met the primary safety and efficacy
endpoints in its Phase 2a study of OPT-302
in patients with persistent, central involved
DME despite previous treatment with
anti-VEGF-A monotherapy, in June 2020.
The OPT-302 plus Eylea® combination
therapy was well tolerated and the totality
of visual acuity and anatomical responses
indicated OPT-302 clinical activity in DME.
P H A S E 2 B W E T A M D T R I A L
M E E T S P R I M A R Y E N D P O I N T
Opthea met the primary endpoint in its
Phase 2b study of OPT-302 in wet AMD in
August 2019. The OPT-302 plus Lucentis®
combination therapy demonstrated statistically
significant vision benefit compared to
Lucentis in treatment naive wet AMD patients
at 24 weeks in a trial of 366 patients.
Phase 3 wet AMD
trial expected to
commence
Through calendar
year 2021
2 0 2 1
2 0 2 2
2 0 2 3
2H ’20
1H’21
2H’21
1H’22
2H’22
1H’23
Phase 3 wet AMD
Phase 3 wet AMD trials
OPT-302
manufacturing and
testing activities
from Jan 2020
to June 2023
Plan to initiate 2 global
trials Q1 2021 Patient
recruitment and
treatment through
to 1H 2024
W E T A M D
Wet AMD is the leading cause of
blindness in the developed world in
people aged over 50 years. The disease
affects central vision and the ability
to see fine detail, such as that required
to read, distinguish faces and drive
a car. Wet AMD is caused by the
abnormal growth and leakage of
blood vessels at the back of the eye,
which causes degeneration of the
retina and vision loss.
The abnormal growth and leakiness
of vessels can be stimulated by
members of the vascular endothelial
growth factor (VEGF) family of proteins,
which includes VEGF-A, VEGF-C
and VEGF-D. Elevated levels of
these signals and their receptors
are associated with retinal disease
progression.
Phase 3 Top-line
data read-out
expected in
1H 2023
Current treatments for wet AMD
target VEGF-A. Whilst VEGF-A inhibitors
represent a major advance in the
management of the disease, many
patients respond sub-optimally.
OPT-302 is an inhibitor of VEGF-C
and VEGF-D that is being developed
for use in conjunction with VEGF-A
inhibitors to improve vision outcomes
in wet AMD and DME patients.
/ The leading cause of
blindness in people >50 years.
/ Loss of vision in central
visual field.
/ Abnormal vascular growth
and leakage of fluid and protein
from vessels at the back of
the eye leads to swelling and
damage to the retina.
4
Planning for tomorrow
We recently successfully completed
end-of-phase 2 meetings with the u.S.
Food and Drug Administration (FDA),
and Scientific Advice meetings with
the European Medicines Agency (EMA),
to obtain guidance on the Phase 3
clinical development plans of
OPT-302 as a treatment for wet AMD.
The outcome of the meetings supports
the progression of OPT-302 into Phase 3
and pre-commercial development.
The regulatory engagement conducted
with the FDA and EMA covered key
elements of the Phase 3 clinical studies
and associated manufacturing processes
for OPT-302 that we believe will support
the submission of a Biologics License
Application in the uS and Marketing
Authorisation Application in Europe
for the targeted wet AMD indication.
The FDA and EMA agreed on key
aspects of the proposed Phase 3 clinical
trial designs, including the conduct of
two concurrent, global, multicentre,
randomised, sham-controlled studies
evaluating OPT-302 in combination
with ranibizumab (Lucentis®) (Study
OPT-302-1004, referred to as ShORe) or
aflibercept (Eylea®) (Study OPT-302-1005,
referred to as COAST). Each trial will
compare the clinical efficacy of OPT-302
administered in combination with a
VEGF-A inhibitor on an every 4-week and
every 8-week dosing regimen in order to
understand the durability of OPT-302
treatment effect with less frequent dosing.
In the Study of OPT-302 in combination
with Ranibizumab (ShORe), treatment-naïve
patients with wet AMD will be randomised
to one of three treatment arms to receive
standard of care 0.5 mg ranibizumab every
four weeks in combination with either
2.0 mg OPT-302 on a standard every four
weeks dosing regimen or 2.0 mg OPT-302
on an extended every eight weeks dosing
regimen after three monthly initiating doses,
or with sham injections every four weeks.
In COAST, Combination OPT-302
with Aflibercept Study, treatment-naïve
patients with wet AMD will be randomised
to one of three treatment arms to receive
standard of care 2.0 mg aflibercept on
its every eight-week dosing regimen,
after three monthly initiating doses, in
combination with either 2.0 mg OPT-302
on a standard every four weeks dosing
regimen or 2.0 mg OPT-302 on an
extended every eight weeks dosing
regimen after three monthly initiating
doses, or with sham injections every
four weeks.
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The primary endpoint for both trials
is mean change in visual acuity from
baseline to 52 weeks for OPT-302
and anti-VEGF-A combination therapy
compared to anti-VEGF-A monotherapy,
with the Company intending to submit
Biologics License and Marketing
Authorisation Applications with the FDA
and EMA respectively following completion
of this 12 month primary efficacy phase
of the trials. Each patient will continue
with a further 12 months of treatment
to assess durability and extended safety
over a two-year period.
These two OPT-302 Phase 3 trials
build upon and maintain key features for
consistency with the Company’s positive
Phase 2b clinical trial of OPT-302 in wet
AMD, while evaluating the administration
of OPT-302 combination therapy over
a longer treatment period and in a
greater number of patients.
In addition, we designed the Phase 3 trials
based on Phase 2b outcomes to maximise
probability of success and commercial
opportunity. Analysis of the Phase 2b trial
demonstrated that OPT-302 combination
therapy increased visual acuity by a
further +5.7 letters over Lucentis
monotherapy in wet AMD patients
with minimally classic and occult lesions,
representing the majority (~80%) of wet
AMD patients. Based on these positive
data, primary analysis of the primary
endpoint of the Phase 3 trials will be
first conducted in patients with minimally
classic and occult lesions administered
OPT-302 every 4 weeks, followed by
analysis on the every 8 week dosing
groups and total patient population.
The study design provides the Company
with several key assessment outcomes for
OPT-302 combination therapy including
benefit versus either Lucentis or Eylea,
benefit in patients with minimally classic
and occult lesions treated with OPT-302
either every four or eight weeks, and
analysis of treatment effect in the entire
wet AMD patient population. We believe
this approach can achieve the highest
probability of success for our Phase 3
program and commercialisation strategy.
The valuable guidance received from
the FDA and EMA provides clear direction
and importantly, we believe there are
now well-defined regulatory pathways
in place to advance the Phase 3 program
development of OPT-302 in the treatment
of wet AMD in support of future
registration filings for marketing approval
and commercial launch in the u.S. and
Europe. The planning for the pivotal
Phase 3 studies is well advanced, including
the manufacturing of OPT-302 drug
product to be used in the trials.
The planning for the pivotal Phase 3
studies is well advanced, including
the manufacturing of OPT‑302 drug
product to be used in the trials.
6
Message from the Chairman and
Chief Executive Officer
We are pleased to share our achievements over the past year and update you
on our strategic goals and objectives for this current fiscal year.
We are developing our Phase 3-ready product candidate, OPT-302, a biologic
designed to inhibit VEGF-C and VEGF-D, to complement existing VEGF-A inhibitors
for the treatment of ophthalmic diseases.
Anti-VEGF-A therapies represent the
standard of care for wet age-related
macular degeneration, or wet AMD, and
other retinal diseases; however, there
remains a significant unmet medical
need as many patients do not adequately
respond to these treatments. As the
only biologic inhibitor of VEGF-C
and VEGF-D in clinical development,
OPT-302 differs from standard of care
therapies and when administered in
combination with a VEGF-A inhibitor,
is designed to achieve broader inhibition
of the vascular endothelial growth factor,
or VEGF, family and target a mechanism
of clinical resistance to improve visual
acuity. Our lead indication for OPT-302
combination therapy is wet AMD, a
chronic, progressive disease and the
leading cause of vision loss for individuals
over the age of 50.
In a 366-patient Phase 2b clinical trial
for the treatment of wet AMD, OPT-302,
in combination with a standard of care
anti-VEGF-A therapy, ranibizumab
(Lucentis), demonstrated a statistically
significant superior mean gain in visual
acuity over ranibizumab monotherapy
at week 24.
We intend to initiate two pivotal Phase 3
clinical trials in treatment-naive patients
with wet AMD to evaluate the efficacy
and safety of OPT-302 in combination
with anti-VEGF-A therapy compared to
anti-VEGF-A monotherapy in the first half
of 2021. We expect to report topline data
from these Phase 3 clinical trials in 2023.
In addition to our clinical trials in wet AMD,
we have observed evidence of improved
clinical outcomes in a Phase 1b/2a clinical
trial of OPT-302 in combination with
another standard of care anti-VEGF-A
therapy, aflibercept (Eylea), in patients
with treatment-refractory diabetic macular
edema, or DME. We retain worldwide
rights to develop and commercialize
OPT-302 for the treatment of wet
AMD and DME and believe that the
novel treatment mechanism of OPT-302
has the potential to provide therapeutic
benefit for other progressive eye diseases.
Wet AMD affects
approximately one
million people in the
United States and
2.5 million people
in Europe.
Wet AMD is a rapidly progressing
disease with loss of central vision
developing over a period of weeks to
months in which abnormal new blood
vessels form in the back of the eye in a
process called choroidal neovascularization.
These newly formed vessels are highly
permeable, leaking exudate leading to fluid
accumulation and retinal lesion formation.
This, in turn, adversely affects sensory
cells in the retina and if left untreated,
results in rapid loss of visual acuity.
Wet AMD affects approximately one
million people in the united States and
2.5 million people in Europe. The standard
of care for wet AMD and other ocular
neovascular diseases is the administration
of monotherapies that primarily inhibit
VEGF-A. These therapeutic agents,
which include ranibizumab and aflibercept,
prevent VEGF-A molecules from binding
to, and activating, VEGF receptors
and thereby inhibit the formation and
permeability of blood vessels.
Ranibizumab and aflibercept had
combined annual worldwide sales
of over $11.9 billion for the treatment
of retinal diseases in 2019. As the
risk of developing wet AMD increases with
age, it is predicted that the overall aging
of the population will result in a significant
increase in the number of wet AMD cases,
both in the united States and worldwide.
Given the suboptimal clinical responses
that many patients experience despite
receiving standard of care treatments,
we believe there is a significant and
expanding market opportunity for
novel therapies that can improve
vision in patients with wet AMD.
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Geoffrey Kempler
Chairman Opthea Limited
Megan Baldwin, PhD
CEO & Managing Director
Opthea Limited
During the financial year we raised A$50 million through
a private placement to institutional investors and the R&D
tax incentive of A$14.6 million was received in September 2019.
We will use these funds to manufacture sufficient OPT‑302
drug product for pivotal Phase 3 clinical trials and commercial
use in wet AMD, as well as completing plans, feasibility and
start‑up activities to enable recruitment of patients to start
in early calendar 2021.
8
Message from the Chairman and Chief Executive Officer (Cont.)
We are well advanced in our planning
to initiate two concurrent pivotal
Phase 3 clinical trials for the treatment
of treatment-naive patients with wet AMD.
These double-masked, sham-controlled
Phase 3 clinical trials will assess the
efficacy and safety of 2.0 mg of OPT-302
in combination with anti-VEGF-A therapy
for treatment-naive patients with wet
AMD compared to a standard of care
anti-VEGF-A monotherapy. We expect
to initiate the Phase 3 trials in the first
half of calendar 2021.
We are also investigating the therapeutic
potential of OPT-302 for DME. DME is a
progressive eye disease and a complication
of diabetic retinopathy, a condition caused
by chronically elevated glucose levels
in diabetics that damages the retina.
DME can cause blurred vision, severe
vision loss and blindness.
Our clinical experience
to date, which includes
administration of over
1,800 doses of OPT‑302
to 399 patients
with retinal disease,
indicates that OPT‑302
intravitreal injections
are well tolerated.
Based on its mechanism of action and
clinical results to date, we believe that
OPT-302 also has the potential to deliver
therapeutic benefit in DME patients.
In our Phase 1b/2a clinical trial of OPT-302
in combination with aflibercept in patients
with treatment-refractory DME, we
observed evidence of improved clinical
outcomes following OPT-302 combination
therapy in this indication.
Progressing our lead OPT-302 product
candidate into late stage development
for multiple retinal diseases such as wet
AMD and DME, which represent potential
multi-billion dollar market opportunities
has been possible through the passion
of our clinical investigators, the trust of
the patients who participate in our trials,
and the foresight and dedication of our
executive and management teams.
During the financial year we raised
A$50 million through a private placement
to institutional investors and the R&D tax
incentive of A$14.6 million was received in
September 2019. We will use these funds
to support preparation for pivotal Phase 3
clinical trials as well as completing plans,
feasibility and start-up activities to enable
recruitment of patients to start in early
calendar 2021.
We are delighted with Dan Spiegelman’s
recent appointment to the Opthea
Board. Mr Spiegelman brings a wealth
of industry knowledge and has relevant
uS corporate governance, compliance
and financial management experience,
having held numerous executive and
Board roles, including as Audit and Risk
Committee Chair, with several uS public
and private companies. Mr Spiegelman is
an excellent addition to the Board as we
prepare to expand our operations in the
uS and internationally.
We will continue to explore funding
opportunities for the Company as
we advance OPT-302 through its
Phase 3 development.
In addition, we are grateful for the
support of our shareholders whose
continued confidence has provided
us with sufficient support and capital
to enable successful execution of our
clinical and commercial plans.
We remain focused on further
demonstrating, in our pivotal Phase 3
program, the potential of OPT-302
combination therapy as a novel treatment
for wet AMD that could transform the
therapeutic landscape and improve
the care and outcomes of patients
suffering vision loss and who may
have limited treatment options.
Thank you for your support and
investment in Opthea.
Geoffrey Kempler
Chairman Opthea Limited
Megan Baldwin, PhD
CEO & Managing Director
Opthea Limited
O p t h e a
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We are planning to
initiate two concurrent
pivotal Phase 3 clinical
trials for the treatment
of a treatment‑naive
patients with wet AMD.
Ranibizumab and
aflibercept had combined
annual worldwide sales
of over US$11.9 billion
for retinal diseases
in 2019.
G E O F F R E Y K E M P L E R
B.Sc. Grad. Dipp. App. Soc. Psych
Non‑Executive Director and Chairman
Geoffrey Kempler was appointed as
Opthea’s Chairman in November 2015 and
is currently CEO and Executive Chairman
of Alterity Therapeutics. Geoffrey brings
extensive experience in investment, business
development and the biotechnology industry.
As a founder of Alterity Therapeutics, he
has held both operational roles and been at
the forefront of devising and implementing
Alterity’s strategic and commercialisation
plans. Geoffrey brings experience as
Chairman of a dual‑ASX‑NASDAQ listed
biotechnology company and strategic
planning expertise to Opthea.
10
Directors’ Report
The board of directors of
Opthea Limited submits its report
for the year ended 30 June 2020
for Opthea and its subsidiary
I N F O R M A T I O N A B O U T
T H E D I R E C T O R S
The names of Opthea Limited’s (the Company or Opthea)
directors in office during the financial year and until the
date of this report are as follows:
Geoffrey Kempler
Non‑Executive Director and Chairman
Megan Baldwin
Managing Director and Chief Executive Officer
Michael Sistenich
Non‑Executive Director
Lawrence Gozlan
Non‑Executive Director
The qualifications, experience and special responsibilities
of the Company’s Directors are as follows.
C O M P A N Y S E C R E T A R Y
M I K E T O N R O E
BSc(Hons) FCA MAICD
Mike Tonroe, a fellow of the Institute of Chartered Accountants
in England and Wales and member of the Australian Institute of
Company Directors, was appointed as Chief Financial Officer
and Company Secretary on 19 May 2014.
Mike previously held CFO and senior executive and
general management positions in a number of international
and Australian companies.
Mike is also the Company Secretary for Opthea’s subsidiary
company, Vegenics Pty Ltd.
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M I C H A E L S I S T E N I C H
MSc.
Non‑Executive Director
Michael Sistenich was appointed
Non‑Executive Director of Opthea in
November 2015 and is Chairman of the
remuneration and audit & risk committees.
Michael Sistenich has advised a wide
range of global institutions, high net
worth individuals and companies on
healthcare investments over the past
20 years. He is a healthcare specialist
in international investment management
and investment banking, and led the
Bell Potter team which advised the
Company through the $17.4M capital
raising in November 2014. Michael
Sistenich is currently Chairman of the
board of Enlitic Inc. and previously
served as Director of International
Equities and Head of Global Healthcare
Investments at DWS Investments,
Deutsche Bank Frankfurt. Michael has
long standing capital market connections
and experience in the global healthcare
investment community.
L A W R E N C E G O Z L A N
B.Sc. (Hons)
Non‑Executive Director
Lawrence Gozlan was appointed as
a director on 24 July 2020. Mr Gozlan,
a leading biotechnology investor and
advisor, is the Life Sciences Investment
Manager at Jagen pty ltd, an international
private investment organisation. Mr Gozlan
is also the Chief Investment Officer and
Founder of Scientia Capital, a specialised
global investment fund focused exclusively
in life sciences. Scientia was founded to
provide high level expertise and to manage
investments for high net worth individuals,
family offices and institutional investors
wanting exposure to the life sciences
industry. Prior to this, Mr Gozlan was
responsible for the largest biotechnology
investment portfolio in Australia as
the institutional biotechnology analyst
at QIC (“the Queensland Investment
Corporation”), an investment fund
with over $60 billion under management.
He previously worked as the senior
biotechnology analyst in the equities
team at Foster Stockbroking, and gained
senior corporate finance experience
advising life science companies at Deloitte.
Mr Gozlan holds a Bachelor of
Science with Honors in microbiology
and immunology from the university
of Melbourne.
M E G A N B A L D W I N
PhD, MAICD
Managing Director and
Chief Executive Officer
Dr Megan Baldwin was appointed CEO
and Managing Director in February 2014.
Dr Baldwin brings over 20 years of
experience focussing on angiogenesis
and therapeutic strategies for cancer
and ophthalmic indications. Dr Baldwin
joined Opthea in 2008 and since then
has held various positions, including Head
of preclinical R&D and Chief executive
Officer of Opthea Pty Ltd, formerly a
100% owned subsidiary of Opthea,
developing OPT‑302 for the treatment
of wet age‑related macular degeneration.
prior to joining opthea, she was employed
at Genentech (now Roche), the world
leader in the field of angiogenesis‑based
therapies for cancer and other diseases.
Her experience included several years
as a researcher in the group of leading
angiogenesis expert Napoleone Ferrara,
before moving to Genentech’s commercial
division and having responsibility for
corporate competitive intelligence
activities. In these roles, she developed
extensive commercial and scientific
knowledge in the field of anti‑angiogenic
and oncology drug development.
She holds a PhD in Medicine from
the university of Melbourne, having
conducted her doctoral studies at the
ludwig Institute for Cancer Research
on the biology of VEGF‑C and VEGF‑D,
is a member of the Australian Institute
of Company Directors and a director
of Ausbiotech.
12
Directors’ Report (Cont.)
D I R E C T O R S H I P S O F
O T H E R L I S T E D C O M P A N I E S
Directorships of other listed companies held by directors in the
three years immediately before the end of the financial year are
as follows:
Director
Geoffrey
Kempler
Company
Alterity Therapeutics
Limited
Period of
directorship
Since 1997
Lawrence Gozlan Alterity Therapeutics
Since 2011
Limited
Megan Baldwin
Geoffrey Kempler
Michael Sistenich
Lawrence Gozlan
D I R E C T O R S ’ I N T E R E S T S
At the date of this report, the relevant interests of each director
of the Company in the contributed equity of the Company are
as follows:
Options
granted
under
LTIP and
NED Plans
Fully paid
ordinary
shares
987,723
7,000,000
900,960
3,500,000
520,178
2,500,000
1,877,357
–
S H A R E O P T I O N S
As at 30 June 2020 and the date of this report, details of opthea’s interests under option are as follows:
Long Term Incentive and Non‑Executive Director Share and Option Plans
During the 2016, 2018 and 2019 financial years the Company granted 18,919,000 options to purchase ordinary shares to directors
and employees under the Long Term Incentive (LTIP) and Non‑Executive Director Share and Option (NED) Plans. No options were
granted under these plans during the 2020 financial year.
Grant date
7 March 2016
31 March 2016
23 August 2017
Expiry date
7 March 2021
1 January 2022
1 January 2023
Granted to
Directors under the LTIP and NED plan
Employees under the LTIP
Employees under the LTIP
29 November 2018
29 November 2022
Directors under the LTIP and NED plan
3 April 2019
3 April 2023
Employees under the LTIP
Exercise
price
$0.48
$0.48
$1.16
$0.855
$0.855
Number
of options
granted
7,000,000
2,575,000
500,000
6,000,000
2,844,000
18,919,000
the Remuneration Report section of this report contains details on the terms and conditions of the options granted under the Company’s
LTIP and NED Plans.
D I V I D E N D S
No cash dividends have been paid, declared or recommended during or since the end of the financial year by the Company.
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P R I N C I P A L A C T I V I T I E S
Financial Position
The principal activity of Opthea Limited is to develop and
commercialise therapies primarily for eye disease. Opthea’s
lead asset, opt‑302, is a soluble form of VeGFR‑3 in clinical
development as a novel therapy for wet age‑related macular
degeneration (wet AMD) and diabetic macular edema (DME).
Wet AMD and DME are leading causes of blindness in the
elderly and diabetic populations respectively, and are increasing
in prevalence worldwide.
Opthea’s principal activities in 2019‑20 included the completion
of a Phase 2a clinical trial in DME patients. In addition, Opthea
conducted a number of activities to support our clinical development
programs in wAMD and DME, including clinical data analysis and
manufacturing of OPT‑302 for use in Phase 3 clinical trials.
The Group’s statement of financial position includes the
following key balances:
/ Consolidated cash balances as at 30 June 2020 amounted
to $62,020,382 (2019: $21,534,919);
/ Receivables of $8,817,514 (2019: $14,932,759) include the
opthea Group’s expected refund of R&D tax incentives for
the year to June 2020 of $8,533,123 (2019: $14,636,973);
/ The Group has a net current asset surplus of $64,397,697
(2019: $30,376,200); and
/ the net tangible asset backing per share as at 30 June 2020
was $0.24 (2019: $0.12); Opthea’s share price was $2.36
(2019: $0.67).
Opthea’s development activities are based on an extensive
intellectual property portfolio covering key targets (Vascular
Endothelial Growth Factors VEGF‑C, VEGF‑D and VEGF
Receptor‑3) for the treatment of diseases associated
with blood and lymphatic vessel growth (angiogenesis
and lymphangiogenesis respectively), as well as vascular
leakage. Angiogenesis and vascular leakage are key hallmarks
of several eye diseases, including wet AMD and DME.
O P E R A T I N G A N D
F I N A N C I A L R E V I E W
Financial performance
The consolidated results of Opthea and its subsidiary (the Group)
for the year reflect the Group’s investment in advancing its OPT‑302
ophthalmology program.
A summary of the results is as follows:
/ The major expenditure of the Group has been in relation
to R&D, in particular costs associated with the phase 2b
and Phase1b/2a clinical trials of OPT‑302 for wet AMD
and DME;
/ Direct R&D expenditure amounted to $17,954,073
(2019: $31,347,891). Including personnel costs and other
R&D support costs which are included in administrative
costs, total expenditure in R&D amounted to $19,616,375
(2019: $33,679,391);
/ opthea received an R&D tax incentive payment during
the year of $14,636,973 (2019: $12,017,247); and
/ The consolidated net loss of the Group for the year was
$16,529,281 after an income tax benefit of $8,533,123
(2019: loss of $20,910,061 after an income tax benefit
of $14,636,973).
Opthea: Company Overview
Wet (neovascular) age‑related macular degeneration (wet AMD)
and diabetic macular edema (DME) are the leading causes
of visual impairment in the elderly and diabetic populations
respectively. Globally, progressive vision loss associated with
wet AMD and DME contributes to significant healthcare and
economic costs and greatly impacts patient independence
and quality of life.
Current treatment options for wet AMD and DME patients
are limited and work sub‑optimally in the majority of patients.
With the prevalence of both diseases on the rise given the aging
population and rising incidence of diabetes worldwide, there
remains a significant market opportunity for novel therapies
that can improve vision in patients with these diseases.
OPT‑302 is a novel therapeutic being developed by Opthea
to improve vision in patients with eye diseases that affect the
back‑of‑the‑eye or retina. This lead therapeutic candidate has
been investigated in two large Phase 2 clinical trials to determine
if OPT‑302 improves visual acuity in patients receiving standard
of care therapy for wet AMD and DME. Opthea has made
significant advances in the progress of these studies over the
past 12 months and we are preparing for Phase 3 clinical trials.
In August 2019, we reported results of the Phase 2b clinical
trial in wet AMD demonstrating superior vision gains in patients
receiving OPT‑302 + ranibizumab (anti‑VEGF‑A) combination
therapy compared to ranibuzumab alone. In June 2020, we also
reported the Phase 2a clinical trial in DME had met its primary
end points.
Wet AMD and DME Represent Large Commercial
Opportunities for Novel Therapies
Both wet AMD and DME are associated with vascular dysfunction
and fluid accumulation at the back of the eye in a region of the
central retina or ‘macula’ that is needed for sharp, central vision.
Vessel growth and vascular leakage are primarily driven by members
of the vascular endothelial growth factor (VEGF) family, which
comprises 5 members including VEGF‑A, VEGF‑B, VEGF‑C,
14
Directors’ Report (Cont.)
VEGF‑D and placenta growth factor (PlGF). Elevated levels
of these signals and their receptors are associated with retinal
disease progression.
Current treatments for wet AMD and DME share a common
mechanism of action by inhibiting VEGF‑A. VEGF‑A inhibitors
approved for the treatment of these diseases include Lucentis
(ranibizumab) and Eylea (aflibercept) which together generated
revenues in excess of 11 billion uSD in 2019. Despite the
widespread use and extraordinary commercial success of this
class of therapies for retinal disease, many patients respond
sub‑optimally. As such, there remains a very large commercial
opportunity for novel therapies that can address the unmet
medical need in patients that experience sub‑optimal gains
in visual acuity and/or persistent retinal fluid despite regular
administration of existing treatments.
OPT‑302: Opthea’s Approach to Address the Unmet
Medical Need for Patients with Retinal Disease
Approved therapies for wet AMD and DME block the activity
of VEGF‑A, but not VEGF‑C and VEGF‑D which also stimulate
blood vessel growth and vascular leakage and are implicated in
the progression of retinal diseases. OPT‑302 is a fusion protein
that binds and neutralises the activity of VEGF‑C and VEGF‑D
and is being developed by Opthea as a complementary medicine
to be used in conjunction with VEGF‑A inhibitors for the
treatment of wet AMD and DME.
By combining administration of OPT‑302 with a VEGF‑A
inhibitor, complete blockade of important signalling pathways
that contribute to the pathophysiology of retinal diseases can
be achieved, which may improve visual acuity and retinal swelling
in patients. Furthermore, as both VEGF‑C and VEGF‑D can be
upregulated to compensate for VEGF‑A inhibition, OPT‑302 may
block mechanisms of resistance to existing therapies, which
may then result in improved and more durable clinical responses.
With a scarcity of novel combination therapies in development that
may offer improved outcomes for retinal disease patients, Opthea’s
OPT‑302 is a promising drug candidate with large commercial
potential that has demonstrated improved visual acuity outcomes in
patients when administered in combination with a VEGF‑A inhibitor
in a randomized, controlled, double‑masked Phase 2b clinical study.
As such, the commercial potential is substantial, as OPT‑302 has
the potential to be combined with currently available VEGF‑A
inhibitors or next generation anti‑VEGF‑A agents.
Operational update
Over the past 12 months, Opthea has continued to progress
its clinical development program investigating OPT‑302 as
a combination therapy in two distinct retinal diseases:
Wet (neovascular) AMD:
Opthea reported top‑line data from the Company’s
randomised, controlled Phase 2b clinical trial investigating
OPT‑302 administered in combination with the VEGF‑A
inhibitor Lucentis compared to Lucentis alone.
Persistent, central‑involved DME:
Opthea reported outcomes from a Phase 2a randomised,
controlled dose expansion trial of OPT‑302 administered
in combination with Eylea.
Opthea is fully funded through the remaining Phase 2b trial
close‑out activities and completion of the ongoing Phase 2a
study in diabetic macular edema. The strong cash position
of the company follows a successful capital raising completed
in December 2019: a $50m private placement supported by
Australian and uK institutional investors. In addition, in September
2019, Opthea received a A$14.6 million research and development
(R&D) tax credit from the Australian taxation office.
To facilitate the progression of Opthea’s clinical development
program, Opthea has entered into research and development
contracts with various third parties, including a global contract
research organisation (CRo) to provide services for the conduct
of clinical trials. These activities and forecast expenditure in
note 25(ii) were anticipated and are consistent with use‑of‑funds
disclosures to shareholders in support of the April 2017 and
December 2019 fund raisings.
Phase 2b wet AMD clinical trial
Opthea’s Phase 2b wet AMD clinical trial is a randomized,
controlled, double‑masked study investigating OPT‑302 +
Lucentis compared to Lucentis alone in 366 wet AMD patients.
patients were recruited across 113 trial sites in the uS, Israel and
europe (including the united Kingdom, France, poland, Hungary,
Spain, latvia, Italy and Czech Republic).
All patients recruited to the study were newly diagnosed
treatment naïve patients who have not received prior
therapy for wet AMD. Patients were assigned to one of three
treatment groups and received either Lucentis alone, or OPT‑302
(low dose, 0.5 mg) in combination with Lucentis or OPT‑302
(high dose, 2.0 mg) in combination with Lucentis. Agents are
administered on a monthly basis for six months via intravitreal
(ocular) injection.
The primary endpoint of the study was the assessment of visual
acuity at the completion of the dosing period (week 24) compared
to baseline. In addition, several secondary outcome measures
were also assessed including anatomical parameters of the wet
AMD lesion using imaging techniques such as optical coherence
tomography and fluorescein angiography.
Patient recruitment into the trial was completed in under 12 months
and a number of months ahead of projected timelines, reflecting
the commitment of both patients and clinical investigators to
advance promising new treatments for this debilitating disease.
The final patient completed their clinical visit in the Phase 2b
study on 15 May 2019 and topline results of the study, reporting
that the trial met the primary endpoint, were announced on
7 August 2019.
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Results of the Phase 2b trial of OPT‑302 in Wet AMD
Results of the Phase 1b/2a DME clinical trial
On 7 August 2019 the Company announced positive results
from its Phase 2b clinical trial of OPT‑302. The prospective,
randomized, controlled clinical trial which consisted of 366
treatment‑naïve patients with wet AMD, demonstrated that
the combination of OPT‑302 (2.0 mg) with Lucentis®, met the
pre‑specified primary endpoint of superiority in mean visual
acuity gain at 24 weeks compared to Lucentis monotherapy.
Patients receiving the combination of OPT‑302 (2.0 mg) and
Lucentis gained a mean of 14.2 letters of vision on the Early
treatment of Diabetic Retinopathy Study (etDRS) standardized
eye chart at 24 weeks, compared to 10.8 letters for patients
receiving Lucentis monotherapy, an improvement of 3.4 letters
(p=0.0107). Low dose OPT‑302 (0.5 mg) combined with Lucentis
had similar effects to Lucentis monotherapy (mean visual acuity
gain of 9.4 letters at 24 weeks). In addition, OPT‑302 (2.0 mg)
combination therapy showed improvements across multiple
secondary endpoints of functional measures in support of the
primary outcome, including a higher proportion of patients with
stable vision (defined as ≤ 15 letter loss) and also for those gaining
≥10 and ≥15 letters of visual acuity, compared to lucentis.
OPT‑302 intravitreal injections were well tolerated, with the
safety profile of either dose of OPT‑302 combination therapy
comparable to Lucentis monotherapy in line with previous studies.
The Independent Data and Safety Monitoring Board (DSMB)
confirmed that no new safety risks were identified in patients
administered OPT‑302 in combination with Lucentis compared
to those patients administered Lucentis alone. Baseline disease
and imaging characteristics were well balanced between
treatment groups.
OPT‑302 also showed encouraging results in multiple prospective
secondary efficacy endpoints, consistent with findings from the
previous first‑in‑human Phase 1/2a trial in wet AMD patients.
45.0% of patients receiving high dose OPT‑302 + Lucentis
therapy gained 15 or more letters from baseline to week 24,
compared to 40.5% of patients receiving Lucentis monotherapy.
The difference in the proportion of patients gaining 10 or more
letters was even greater with 70% of patients gaining two
or more lines of vision (≥10 letters) in the opt‑302 (2.0 mg)
combination group compared to 57.8% for Lucentis alone
(an increase of 12.2%). A high proportion of patients (99.2%)
achieved stable vision at week 24 in the OPT‑302 (2.0 mg)
combination group (defined as ≤ 15 letter loss from baseline)
compared to 96.6% in the Lucentis monotherapy group.
Retinal thickness was normalized consistently across all treatment
groups by week 24. In the OPT‑302 (2.0 mg) combination arm,
mean CST was reduced from 414 µm at baseline to 266 µm
at week 24, a reduction of 147 µm. Similarly, mean CST was
reduced by a mean of 134 µm to 278 µm from baseline to
week 24 following Lucentis monotherapy.
Opthea’s Phase 1b/2a trial in patients with diabetic macular edema
(DME) marked the expansion of the company’s clinical development
program for OPT‑302 into a second ocular indication.
The primary safety objective of the Phase 1b dose escalation study
of OPT‑302 administered in combination with Eylea via sequential
intravitreal injection on a monthly basis for three months was met
in July 2018. this marked a considerable safety milestone for
OPT‑302, with a favourable safety profile having been demonstrated
in combination with two standard of care anti‑VEGF‑A therapies,
Lucentis (in wet AMD) and Eylea (in DME).
Subsequently, in October 2018 Opthea reported positive
three‑month data from the 9 patients enrolled in the Phase 1b
dose escalation study. Vision improvement and reductions in
retinal swelling were observed following conversion to OPT‑302
combination treatment in this group of patients with persistent
DME, with a clear dose‑response relationship of gains in visual
acuity with ascending OPT‑302 dose levels.
Clinical trial sites in the uS, Australia, Israel and latvia recruited
patients into the Phase 2a randomized, controlled dose expansion
trial. Enrolment of 108 eligible patients for this trial completed in
January 2020, with treatment allocated in a 2:1 ratio to either
OPT‑302 (2 mg) with Eylea (2 mg) or Eylea (2 mg) monotherapy.
The primary objectives of the Phase 2a study were to evaluate the
(i) safety/tolerability and (ii) efficacy of OPT‑302 by determination
of clinical response rate, defined as the proportion of patients
receiving combination opt‑302 and eylea achieving a ≥5 letter
gain in visual acuity (VA) at week 12 compared to baseline.
Secondary outcome measures including evaluation of changes
in mean VA and anatomical parameters such as central subfield
thickness (CST) and retinal swelling were also investigated.
primary endpoints of the trial were reported in June 2020,
with the primary end point of response with OPT‑302 and
Eylea achieved: 52.8% of refractory DME patients gained at
least 5 letters of visual acuity at week 12 following OPT‑302
combination therapy. The co‑primary endpoint was also met:
OPT‑302 combination therapy was well tolerated and with
a similar safety profile to Eylea.
Intellectual property
Opthea owns a patent family covering the OPT‑302 molecule,
and uses thereof, extending out to February 2034. This patent
has been filed in 19 jurisdictions and has already granted in the
united States, europe (validated in 38 countries), Japan, Australia,
New Zealand, Malaysia, Singapore, Mexico, South Africa, Colombia
and Russia. the patent application has been accepted for grant in
Canada and Israel, and is currently pending in China, Brazil, India,
South Korea, Indonesia and the Philippines.
the united States patent, which granted in August 2017, includes
broad claims to the OPT‑302 molecule, and analogues thereof,
and their use to treat disorders involving neovascularisation,
including eye diseases such as wet AMD and DMe. In the united
States, Opthea has another granted patent relating to soluble
16
Directors’ Report (Cont.)
VeGFR‑3 molecules which includes composition of matter claims
to soluble VeGFR‑3 molecules (such as opt‑302) and extends
out to November 2026.
the ultimate impact on financial markets and the global economy
and the effectiveness of actions taken in Australia, the united
States and other countries to contain and treat the disease.
Investor relations
Over the past 12 months, Opthea has continued to raise the
profile of the company’s technology to both the international
and local investment community. The Company regularly
presents and meets with global institutional and retail investors
through investor meetings and forums. Opthea attended the 38th
Annual J.p. Morgan Conference in San Francisco in January 2020.
The conference attracts investors as well as pharmaceutical and
biotechnology executives from around the world and is one of
the industry’s largest healthcare investment conferences.
Several presentations were also made to the clinical
ophthalmology community, with Opthea being invited to present
at the Ophthalmology Innovation Summit (OIS) associated with
the American Academy of Ophthalmology meeting in Chicago.
An update on Opthea’s wet AMD and DME clinical trial results
was also made recently at the Ophthalmology Innovation Summit
at the American Society Retinal Specialists (oIS@ASRS) meeting
in July 2020. opthea hosted a Key opinion leader Symposium on
wet AMD and DME on 6 August 2020 in which the Company’s
clinical trial data with OPT‑302 was discussed and an overview
provided of the future clinical development path and commercial
opportunity for OPT‑302 in retinal diseases. Further data
presentations are planned over the next 12 months.
S I G N I F I C A N T C H A N G E S
I N T H E S T A T E O F A F F A I R S
In the opinion of the directors, there were no significant changes
in the state of affairs of the Company that occurred during the
financial year under review.
I M P A C T O F C O V I D ‑ 1 9
We are closely monitoring how the COVID‑19 situation is affecting
our employees, business, preclinical studies and clinical trials. In
response to the COVID‑19 pandemic, all of our employees have
transitioned to working remotely and travel has been restricted.
Although operations to date have not been materially affected by
the COVID‑19 pandemic, at this time, there is significant uncertainty
relating to the trajectory of the pandemic. The impact of related
responses and disruptions caused by the COVID‑19 pandemic
may result in difficulties or delays in initiating, enrolling, conducting
or completing future clinical trials and the Company incurring
unforeseen costs as a result of disruptions in clinical supply
or clinical trial delays.
The impact of COVID‑19 on our future results will largely depend
on future developments, which are highly uncertain and cannot
be predicted with confidence, such as the ultimate geographic
spread of the disease, the duration of the pandemic, travel
restrictions and social distancing in Australia, the united States
and other countries, business closures or business disruptions,
F U T U R E D E V E L O P M E N T S
Opthea continues to advance the clinical development of
OPT‑302 to key commercial milestones through the completion
of the Phase 2a clinical trial with OPT‑302 in persistent DME
patients, as well as manufacturing and regulatory engagement
for a Phase 3 wet AMD study.
Specifically, the key objectives of the Company over the next
12 months are to:
wet AMD:
/ Publish outcomes of the Phase 2b wet AMD trial in
a peer reviewed journal;
/ Manufacture sufficient clinical grade OPT‑302 for
Phase 3 clinical trials; and
/ Develop plans to advance OPT‑302 into Phase 3 clinical
trials for the treatment of wet AMD and initiate patient
recruitment into those studies.
DME:
/ Prepare and complete the Phase 1b/2a DME clinical
study report;
/ Publish outcomes of the 1b/2a DME trial in a peer
reviewed journal; and
/ Prepare clinical development plans to advance OPT‑302
for the treatment of DME.
Corporate:
/ Ensure the global investment and pharmaceutical/
biotechnology community is aware of the commercial
potential inherent in OPT‑302; and
/ Plan for various and all opportunities to advance further
development of OPT‑302 through investment out‑reach
and engagement with pharmaceutical/biotechnology
companies in the sector.
S I G N I F I C A N T E V E N T S
A F T E R B A L A N C E D A T E
On 21 August 2020, the Company announced it had completed
end‑of‑phase 2 meetings with the uS Food and Drug Administration
and a Scientific Advice meeting with the European Medicines Agency
to obtain guidance on the Company’s Phase 3 clinical development
plans. The outcome of the meetings support the progression of
OPT‑302 into Phase 3 and pre‑commercial development.
The Company announced on 24 August 2020, it is planning to
conduct a potential initial public offering of American Depository
Shares (ADSs) in the u.S. representing opthea’s ordinary shares,
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which will remain listed on the ASX, and concurrent listing of the
ADSs on Nasdaq. Any offering and listing of ADSs on Nasdaq
would be intended to support Opthea’s product development
activities, including its previously announced Phase 3 trials of
OPT‑302 for the treatment of wet AMD.
Except for the above, there were no other significant events
after 30 June 2020 to report.
E N V I R O N M E N T A L R E G U L A T I O N S
The Company is not subject to significant environmental
regulations.
I N D E M N I F I C A T I O N A N D I N S U R A N C E
During the financial year ended 30 June 2020, the Company
indemnified its directors, the company secretary and executive
officers in respect of any acts or omissions giving rise to a liability
D I R E C T O R S ’ M E E T I N G S
to another person (other than the Company or a related party)
unless the liability arose out of conduct involving a lack of good
faith. In addition, the Company indemnified the directors, the
company secretary and executive officers against any liability
incurred by them in their capacity as directors, company secretary
or executive officers in successfully defending civil or criminal
proceedings in relation to the Company. No monetary restriction
was placed on this indemnity.
The Company has insured its directors, the company secretary
and executive officers for the financial year ended 30 June 2020.
under the Company’s Directors’ and officers’ liabilities Insurance
Policy, the Company shall not release to any third party or otherwise
publish details of the nature of the liabilities insured by the policy
or the amount of the premium. Accordingly, the Company relies
on section 300(9) of the Corporations Act 2001 to exempt it from
the requirement to disclose the nature of the liability insured against
and the premium amount of the relevant policy.
The number of meetings of directors and meetings of committees of the board held during the year are set out below. Attendance by
the directors at these meetings as relevant to each of them is as shown. It is the Company’s practice to invite all directors to committee
meetings irrespective of whether they are members.
Number of meetings held:
Number of meetings attended:
Geoffrey Kempler
Michael Sistenich
Megan Baldwin
Committee membership
Directors’
meetings
Meetings of committees
Audit & Risk
Nomination
Remuneration
10
10
10
10
6
6
6
6
3
3
3
3
1
1
1
1
During the year, the Company had Audit and Risk, Remuneration and nomination committees.
Members acting on the committees of the board during the year were:
Audit & Risk
Nomination
Remuneration
Michael Sistenich (Chairman)
Michael Sistenich (Chairman)
Michael Sistenich (Chairman)
Geoffrey Kempler
Geoffrey Kempler
Geoffrey Kempler
A U D I T O R ’ S I N D E P E N D E N C E
D E C L A R A T I O N
P R O C E E D I N G S O N B E H A L F
O F T H E C O M P A N Y
The directors have obtained a declaration of independence from
Deloitte Touche Tohmatsu, the Company’s auditors, which is set
out on page 25 and forms part of the directors’ report for the
financial year ended 30 June 2020.
There were no persons applying for leave under section 237 of
the Corporations Act 2001 to bring, or intervene in, proceedings
on behalf of the Company.
18
Directors’ Report (Cont.)
R E M U N E R A T I O N R E P O R T – A U D I T E D
This remuneration report, which forms part of the directors’
report, sets out information about the remuneration of Opthea
Limited’s key management personnel for the financial year ended
30 June 2020. the term ‘key management personnel’ refers to
those persons having authority and responsibility for planning,
directing and controlling the activities of the Group, directly or
indirectly, including any director (whether executive or otherwise)
of the Group.
Key management personnel
The directors and other key management personnel of the
Group during or since the end of the financial year were:
Non‑executive directors
Geoffrey Kempler
Chairman, Non‑executive director
Michael Sistenich
Non‑executive director
Lawrence Gozlan
(appointed 24 July 2020)
Non‑executive director
Executive officers
Megan Baldwin
Mike Tonroe
Chief Executive Officer
and Managing Director
Chief Financial Officer
and Company Secretary
Except as noted, the named persons held their current
position for the whole of the financial year and since the
end of the financial year.
Principles of compensation
Compensation packages include a mix of fixed and variable
compensation and long‑term performance based incentives.
Diversity
The directors consider annually if the diversity of the
Company’s personnel is appropriate. During the three years
ended 30 June 2020, a third of the directors and 56% of
employees were female.
Fixed compensation
The level of fixed remuneration is set to provide a base level
of compensation which is both appropriate to the position
and is competitive in the market.
The remuneration committee accesses external advice independent
of management if required.
Fixed compensation comprises salary and superannuation and
is reviewed every 12 months by the remuneration committee.
No external advice has been sought during either 2020 or 2019
Performance linked compensation
Short Term Incentives (STI): The objective of STI is to link
the achievement of the Company’s operational targets with the
remuneration received by the executives charged with meeting
those targets. The total potential STI available is set at a level
that provides sufficient incentive to the executive to achieve
the operational targets at a cost to the Company that is
reasonable in the circumstances.
Actual STI payments in the form of cash bonuses to key
management personnel (KMP) depend on the extent to
which specific targets set at the beginning of the financial
year (or shortly thereafter) are met. The targets consist of
a number of Key Performance Indicators (KPIs) covering
corporate objectives and individual measures of performance.
Individual KPIs are linked to the Company’s development plans.
On an annual basis, after consideration of performance against
KPIs, the remuneration committee determines the amount, if any,
of the STI to be paid to KMP. Payments of the STI bonus are made
in the following reporting period.
The remuneration committee considered the STI payment for
the 2020 financial year in August 2020. Based on the achievement
of operational objectives in the financial year, the remuneration
committee has determined there will be $164,211 STI bonus
paid to KMP for the 2020 financial year (2019: $189,091).
Long term incentive plan (LTIP): The objective of the LTIP is to
reward KMP in a manner that aligns this element of compensation
with the creation of shareholder wealth. LTIP grants are made
to KMP and employees who are able to influence the generation
of shareholder wealth and have a direct impact on the Company’s
performance and development. Option vesting conditions are
based on continued service to the Company by the KMP.
The Company implemented an LTIP to attract, retain and
motivate eligible employees, essential to the continued growth
and development of the Company. The LTIP was approved
by shareholders at the Company’s 2014 AGM. The limit of the
Company’s share capital to be granted under the LTIP was
increased to 10% at the 2016 EGM.
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Consequences of performance on shareholder wealth
In considering the Company’s performance and benefits for shareholder wealth, the remuneration committee have regard
to operational contributions and the following indices in respect of the current and previous four financial years.
Revenue including finance income
808,405
914,840
1,143,822
573,421
765,274
Loss before tax
Tax benefit
Loss after tax
(25,062,404)
(35,547,034)
(28,919,488)
(9,360,808)
(8,100,978)
8,533,123
14,636,973
12,017,248
3,167,912
1,569,204
(16,529,281)
(20,910,061)
(16,902,240)
(6,192,896)
(6,531,774)
2020
$
2019
$
2018
$
2017
$
2016
$
Basic loss per share
ntA backing per share @ 30 June
opthea share price @ 30 June
2020
$
(0.06)
0.24
2.36
2019
$
(0.09)
0.12
0.67
2018
$
(0.08)
0.19
0.53
2017
$
(0.04)
0.27
0.75
2016
$
(0.04)
0.10
0.50
Change in share price is one of the financial performance targets considered in setting STI.
Service contracts
Dr Megan Baldwin, CEO and Managing Director, is employed
under an ongoing contract that commenced on 24 February 2014.
under the terms of the present contract (including any subsequent
board approvals relating to fixed remuneration) Megan:
/ Receives fixed remuneration of $440,000 per annum from
1 November 2018.
/ May resign from her position and thus terminate this contract
by giving three months’ notice.
On resignation, any unvested LTI options or conditional rights
will be forfeited. The Company may terminate this employment
agreement by providing:
/ 3 months’ notice; or
/ Payment in lieu of the notice period (as detailed above) based
on the fixed component of Megan’s remuneration.
On termination notice by the Company, any LTIP options that have
vested or that will vest during the notice period will be released.
Options granted that have not yet vested will be forfeited.
The Company may terminate the contract at any time without
notice if serious misconduct has occurred.
Where termination with cause occurs, Megan is only entitled to
that portion of remuneration that is fixed, and only up to the date
of termination. On termination with cause, any unvested options
will immediately be forfeited.
Mike Tonroe, Chief Financial Officer and Company Secretary,
has an ongoing contract. The Company may terminate the
employment agreement by providing three months’ notice or
providing payment in lieu of the notice period (based on the
fixed component of remuneration).
The Company may terminate Mike Tonroe’s contract at
any time without notice if serious misconduct has occurred.
Where termination with cause occurs the executive is only
entitled to that portion of remuneration that is fixed and only
up to the date of termination.
20
Directors’ Report (Cont.)
Non‑executive directors
The base non‑executive director fee for Chairman is $90,405 per
annum and $60,000 per annum for other non‑executive directors.
Base fees cover all main board activities and membership of all
board committees.
Non‑executive directors are not provided with retirement benefits
apart from statutory superannuation.
The Company implemented a non‑executive director share and
option plan (NED Plan) following its approval at the 2014 AGM.
Approval of further grant of options to non‑executive directors
under the neD plan was made at the 2018 AGM. under the
NED Plan, present and future non‑executive directors may:
/ elect to receive newly issued ordinary shares (Shares) or
options to acquire newly issued Shares in lieu of receiving
some or all of their entitlement to their director’s existing
cash remuneration (in accordance with article 61.8 of the
Company’s constitution);
/ be awarded newly issued Shares or options to acquire newly
issued Shares in lieu of additional cash remuneration in respect
of services provided to the Company which in the opinion of
the Board are outside the scope of the ordinary duties of the
relevant director (in accordance with article 61.5 of the
Company’s constitution); and/or
/ otherwise be awarded newly issued Shares or options to acquire
newly issued Shares as part of the directors’ remuneration
in addition to any existing cash remuneration paid to directors
(if any).
Advantages of the NED Plan are that it:
/ assists the Company in preserving its cash for use towards
advancing the Company’s lead molecule, OPT‑302, through
Phase 2 clinical studies;
/ gives non‑executive directors an opportunity to demonstrate
their commitment and support for the Company through
sacrificing some or all of their director’s fees for Shares or
options in Opthea; and
/ provides the Company with further flexibility in the design
of the directors’ remuneration packages and in turn assists
the Company with retaining existing directors and attracting
new additional directors with the relevant experience and
expertise, in both cases to further advance the prospects
of the Company.
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Directors’ and executive officers remuneration
Details of the nature and amount of each major element of remuneration of each director and key management personnel of the
Company are:
Short
Term
Post
Employ‑
ment
Salary
& Fees
$
Cash
bonus 1
$
Super‑
annuation
$
Long
Term
Long
Service
Leave
$
Term‑
ination
benefits
Term‑
ination
Pay
$
Non‑Executive directors:
Geoffrey Kempler 2020
90,405
2019
90,405
Michael Sistenich 2020
60,000
2019
60,000
Lawrence Gozlan2 2020
2019
–
–
Sub‑total
Non‑executive
directors
2020
2019
150,405
150,405
Executive directors:
–
–
–
–
–
–
–
–
Megan Baldwin
2020
440,000
100,000
2019
413,500
126,750
8,589
8,589
5,700
5,700
–
–
14,289
14,289
51,300
51,324
Other Key Management Personnel:
Mike Tonroe
2020
256,844
2019
249,363
64,211
62,341
30,500
29,612
Totals
2020
847,249
164,211
96,089
2019
813,268
189,091
95,225
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Share‑
based
payment
Options
$
Total
$
125,452
224,446
175,798
274,792
125,452
191,152
175,798
241,498
–
–
–
–
250,904
415,598
351,596
516,290
250,905
842,205
351,597
943,171
117,516
469,071
49,113
390,429
619,325
1,726,874
752,306
1,849,890
Total
perform‑
ance
related
%
56%
64%
66%
73%
–
–
60%
68%
42%
51%
39%
29%
45%
51%
1 Bonuses are paid in the financial year following the year in which they are earned.
2 lawrence Gozlan was appointed as a non‑executive director on 24 July 2020. Mr Gozlan’s annual director fee is $60,000 plus superannuation.
Equity instruments
All options refer to options over ordinary shares of Opthea Limited which are exercisable on a one‑for‑one basis under the Long Term
Incentive (LTIP) and Non‑executive share and options (NED) plans.
22
Directors’ Report (Cont.)
Options over equity instruments granted as compensation
Details of options over ordinary shares in the Company that were granted as compensation to KMP during the reporting period
and details of options that vested during the reporting period are as follows:
Name
Megan Baldwin
Geoffrey Kempler
Michael Sistenich
Mike Tonroe
During the financial year
Number of
options granted
Number of
options vested 1
–
–
–
–
3,000,000
1,500,000
1,500,000
600,000
1 options that vested during the financial year were originally granted in the year ended 30 June 2019.
All options expire on the earlier of their expiry date or termination of the individual’s employment. Option vesting is conditional
on the individual being employed or in office. The options are exercisable up to three years after they vest.
Exercise of options granted as compensation
During the reporting period, no shares were issued to KMP on the exercise of options previously granted as compensation.
Details of options affecting current and future remuneration
Details of vesting profiles of the options held by each KMP of the Company are:
Megan Baldwin
Geoffrey Kempler
Michael Sistenich
Mike Tonroe
Grant date
% vested
% forfeited 1
Number
of options
1,320,000
1,320,000
1,360,000
7 March 2016
7 March 2016
7 March 2016
3,000,000
29 November 2018
660,000
660,000
680,000
7 March 2016
7 March 2016
7 March 2016
1,500,000
29 November 2018
330,000
330,000
340,000
7 March 2016
7 March 2016
7 March 2016
1,500,000
29 November 2018
264,000
264,000
272,000
600,000
31 March 2016
31 March 2016
31 March 2016
3 April 2019
Financial
years
in which
grant vests
1 July 2015
1 July 2016
1 July 2017
1 July 2019
1 July 2015
1 July 2016
1 July 2017
1 July 2019
1 July 2015
1 July 2016
1 July 2017
1 July 2019
1 July 2016
1 July 2017
1 July 2018
1 July 2019
Vesting
Conditions
Continued
service
Continued
service
Continued
service
Continued
service
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1 The percentage forfeited in the year represents the reduction from the maximum number of options available to vest due to vesting criteria not
being achieved.
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Options over equity instruments
The movement during the reporting period by number of rights and options over ordinary shares in Opthea Limited held directly,
indirectly or beneficially, by each KMP, including their related parties, is as follows:
Number
of options:
Held at
1 July
Granted
as compen‑
sation
Options
exercised
Lapsed
Forfeited
Megan Baldwin
2020
7,000,000
–
2019
4,000,000
3,000,000
Geoffrey Kempler 2020 3,500,000
–
2019
2,000,000
1,500,000
Michael Sistenich 2020 2,500,000
–
2019
1,000,000
1,500,000
Other executives
Mike Tonroe
2020
1,400,000
–
2019
800,000
600,000
Total
2020 14,400,000
–
2019 7,800,000 6,600,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Held at
30 June
Vested
during the
year
Vested and
exercisable
7,000,000
3,000,000
7,000,000
7,000,000
–
4,000,000
3,500,000
1,500,000
3,500,000
3,500,000
–
2,000,000
2,500,000
1,500,000
2,500,000
2,500,000
–
1,000,000
1,400,000
600,000
1,400,000
1,400,000
272,000
800,000
–
–
–
–
–
–
–
–
– 14,400,000 6,600,000 14,400,000
– 14,400,000
272,000
7,800,000
24
Directors’ Report (Cont.)
K E Y M A N A G E M E N T P E R S O N N E L T R A N S A C T I O N S
Movements in shares
The movement during the reporting period in the number of ordinary shares in Opthea Limited held, directly, indirectly or beneficially,
by each KMP including their related parties is as follows:
Number of
Ordinary Shares:
Non‑executive directors
Geoffrey Kempler
Michael Sistenich
Executives
Megan Baldwin
Mike Tonroe
Total
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Balance at
beginning
of period
1 July
900,960
615,246
520,178
520,178
987,723
1,643,223
–
–
2,408,861
2,778,647
Granted as
remuneration
On Exercise
of Quoted
Options
Purchased
in the year
Sold during
the year
Balance
at end
of period
30 June
900,960
900,960
520,178
520,178
987,723
987,723
–
–
2,408,861
–
–
–
–
–
–
–
–
–
–
–
285,714
–
–
–
11,500
–
–
–
297,214
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(667,000)
–
–
–
(667,000)
2,408,861
This report has been signed in accordance with a resolution of the directors made pursuant to S.298 (2) of the Corporations Act 2001
on 28 August 2020.
For and on behalf of the board:
Megan Baldwin
CEO & Managing Director Opthea Limited
Melbourne
28 August 2020
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Declaration of Independence
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Board of Directors
Opthea Limited
Suite 0403, Level 4
650 Chapel Street
South Yarra, VIC 3141
28 August 2020
Dear Board Members
Auditor’s Independence Declaration to Opthea Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Opthea Limited.
As lead audit partner for the audit of the financial statements of Opthea Limited for the financial
year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Vincent Snijders
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
26
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Management Team
R I C H A R D C H A D W I C K
P H D
Head of Intellectual Property
Richard Chadwick, who joined opthea
in February 2008, is qualified as both
a European and Australian patent
attorney. Richard joined opthea from
FB Rice & Co, where he had been
working for five years in the Biotechnology
Group. prior to that, Richard had 10 years’
experience in intellectual property in the
uK. this included working as an in‑house
attorney at Dow Corning Limited and
five years working as an in‑house
attorney at unilever.
M I K E T O N R O E
B S C ( H o n S ) , F C A ,
M A I C D
Chief Financial Officer
and Company Secretary
Mike Tonroe is a fellow of the Institute
of Chartered Accountants in England and
Wales and was appointed Chief Financial
Officer and Company Secretary in May
2014. Mike is accountable directly to the
board, through the chair, on all matters to
do with the proper functioning of Opthea’s
board. Prior to joining Opthea, Mike was
the Chief Financial Officer and Company
Secretary at the Australian Synchrotron
in Melbourne.
Mike has over 20 years’ experience
of financial management in board‑level
positions for private and listed companies
in Australia, uK, the uS and Canada.
Mike holds a Graduate Degree in Business
Studies from Buckingham university and
is a member of the Australian Institute
of Company Directors. Mike is also the
Company Secretary of the Company’s
subsidiary, Vegenics Pty Ltd.
M E G A N B A L D W I N
P H D , M A I C D
Chief Executive Officer
and Managing Director
Dr Megan Baldwin was appointed
CEO and Managing Director of Opthea
in February 2014.
Dr Baldwin has over 20 years of
experience focusing on angiogenesis
and therapeutic strategies for ophthalmic
and cancer indications. Since joining
Opthea in 2008, she has held various
positions, including Head of Preclinical
R&D and Chief executive officer
of Opthea Pty Ltd, the 100% owned
subsidiary of Opthea, developing OPT‑302
for the treatment of wet age‑related
macular degeneration. Prior to joining
Opthea, Dr Baldwin was employed at
Genentech (now Roche), the world
leader in the field of angiogenesis‑based
therapies for cancer and other diseases.
Her experience included several years
as a researcher in the group of leading
angiogenesis expert Napoleone Ferrara,
before moving to Genentech’s commercial
division and having responsibility for
corporate competitive intelligence
activities. In these roles, she developed
extensive commercial and scientific
knowledge in the field of anti‑angiogenic
and oncology drug development.
Megan holds a PhD in Medicine from
the university of Melbourne, having
conducted her doctoral studies at the
ludwig Institute for Cancer Research.
Dr Baldwin is on the board of Ausbiotech
and is a member of the Australian Institute
of Company Directors.
28
Management Team (Cont.)
M I K E G E R O M E T T A P H D
Head of CMC Development
I A N L E I T C H P H D
Director – Clinical Research
C L A R E P R I C E B p H A R M
Director of Clinical Development
Mike Gerometta has been Head of
Chemistry, Manufacturing & Controls
(CMC) Development for Opthea since
2008 with responsibilities encompassing
outsourcing of Opthea’s biopharmaceutical
research and cGMP manufacturing
activities. Mike has over 30 years’
experience in the Australian biotechnology
industry, working with numerous Contract
Manufacturing Organisations overseas and
locally in all facets of translational CMC
from concept through to Phase 2 studies.
In this time, he has successfully guided
the manufacture of six biologics through
to the clinic, including oversight of four
nonclinical programs, as well as associated
global regulatory interactions. Previously
as Chief Operating Officer of Q‑Gen, the
manufacturing facility of the Queensland
Institute of Medical Research, he restructured
the service business to align with QIMR’s
strategic objectives. Mike has also directed
the development of numerous in vitro
diagnostic products through to the market
over 19 years at Agen Biomedical, ultimately
as Research and product Development
Director. Mike was awarded his PhD in
biotechnology from the Queensland
university of technology and has a
degree in chemistry from the university
of Technology in Sydney.
Ian Leitch has been Director of Clinical
Research of opthea since September 2011.
He has over 20 years of research and
management experience from drug
discovery through clinical development in
biotechnology/pharmaceutical companies.
Clare Price was appointed Director of
Clinical Development at opthea in July
2016. Clare has over 20 years of clinical
and drug development experience starting
her career in the main R&D function of
SmithKline Beecham in the uK.
She spent over eight years in various
clinical roles within the company with
responsibility for the design, management
and execution of clinical studies from Phase
1 to 3 across a number a therapeutic areas.
For the remaining three years Clare formed
part of the project management group
of the newly merged GlaxoSmithKline,
responsible for the project management
of full drug development programs from
molecule inception through non‑clinical
and clinical studies, regulatory aspects
and commercialisation.
Clare has held senior clinical roles in
two ASX‑listed biotechnology companies,
firstly Acrux, and then Starpharma.
Over her nine years at Starpharma she
implemented and delivered successful
Phase 2 and 3 clinical programmes,
including extensive regulatory interaction
and negotiation, leading to the successful
commercialisation of the lead
candidate product.
Clare is a registered pharmacist,
with a degree in Pharmacy, from
the university of Bath in the uK.
For the five years prior to joining Opthea,
he was a member of the Medical Sciences
group at Amgen Inc in Thousand Oaks,
California, involved in the development
of novel therapeutics in Amgen’s oncology
pipeline. In his role as Senior Manager
in the Early Development Oncology
Therapeutic Area, he had responsibility
for the oversight, design, management
and execution of Phase 1 – 2 clinical
studies in oncology.
Prior to joining Amgen, he spent eight
years at Miravant Medical Technologies
in Santa Barbara, California. He held
positions of increasing responsibility,
including Senior Program Manager for
Cardiovascular Research and Clinical
Study Director for Ophthalmology.
At Miravant, he managed preclinical
efficacy studies, developed relationships
with Key Opinion Leaders and designed
Phase 1 – 2 clinical studies in a
collaboration with the cardiovascular
device company Guidant Inc.
He previously held the position of nHMRC
Senior Research officer at the university
of newcastle and was based at the John
Hunter Hospital in Australia. He received
his BSc (Hons), PhD from the Department
of Pharmacology, Faculty of Medicine,
at Monash university and completed part
of the doctoral studies at the university
of California, Santa Barbara.
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A N N E T T E L E A H Y
Director – Clinical Research
Annette Leahy commenced at Opthea
in August 2017 as Director of Clinical
Research. Annette has 20 years clinical
research experience including operational
and project management roles across
biotechnology, pharmaceutical, and
CRo industries.
Prior to joining Opthea Annette held senior
operational roles at Swisse and Novotech
successfully building clinical trial teams
and departments.
Annette also has 12 years project
management experience including leading
a global influenza clinical trials program
under a uS government contract at Biota,
managing early phase clinical studies in
a Phase 1 unit at Nucleus Network and
managing European clinical projects while
living in the uK and working for Mitsubishi
Tanabe Pharma Europe.
Annette has a Bachelor of Health
Information Management from
la trobe university.
3030
Financial
Report
C O N T E N T S
31 ConSolIDAteD StAteMent oF pRoFIt
oR loSS AnD otHeR CoMpReHenSIVe
InCoMe FoR tHe YeAR enDeD
30 June 2020
32 CONSOLIDATED STATEMENT OF
FInAnCIAl poSItIon At 30 June 2020
33 CONSOLIDATED STATEMENT OF
CHAnGeS In eQuItY FoR tHe YeAR
enDeD 30 June 2020
34 CONSOLIDATED STATEMENT OF
CASH FloWS FoR tHe YeAR enDeD
30 June 2020
35 NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
62 DIReCtoRS’ DeClARAtIon FoR
tHe YeAR enDeD 30 June 2020
63 InDepenDent AuDItoR’S RepoRt
67 ASX ADDItIonAl InFoRMAtIon
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Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2020
Revenue
Other income
Research and development expenses
Patent expenses
Intellectual property costs
Administrative expenses
Occupancy expenses
Net foreign exchange gain/(loss)
Loss before income tax
Income tax benefit
Loss for the year
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Fair value gains on investments in financial assets
Other comprehensive income for the period, net of tax
Total comprehensive loss for the year
Loss for the year is attributable to:
Owners of the Company
Total comprehensive loss for the year is attributable to:
Owners of the Company
Loss per share attributable to the owners of the Company:
– Basic and diluted loss per share (cents)
Note
7
8
9
10
10
2020
$
87,075
783,830
2019
$
159,064
836,821
(17,954,073)
(31,347,891)
(429,229)
(114,046)
(161,148)
(112,795)
(7,001,507)
(5,174,755)
(33,846)
(108,904)
(400,608)
362,574
(25,062,404)
(35,547,034)
11
8,533,123
14,636,973
(16,529,281)
(20,910,061)
58,840
58,840
259,864
259,864
(16,470,441)
(20,650,197)
21
(16,529,281)
(20,910,061)
(16,529,281)
(20,910,061)
(16,470,441)
(20,650,197)
(16,470,441)
(20,650,197)
12
(6.34)
(8.98)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
32
Consolidated Statement of Financial Position
At 30 June 2020
Assets
Current assets
Cash and cash equivalents
Current tax receivable
Receivables
Prepayments
Total current assets
Non‑current assets
Investments in financial assets
Plant and equipment
Right‑of‑use asset
Total non‑current assets
Total assets
Liabilities
Current liabilities
Payables
Lease liabilities
Other financial liabilities
Provisions
Total current liabilities
Non‑current liabilities
Lease liabilities
Provisions
Total non‑current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Accumulated losses
Reserves
Total equity
Note
2020
$
2019
$
13
11
14
15
16
17
16
18
16
19
62,020,382
21,534,919
8,533,123
14,636,973
284,391
478,632
295,786
424,603
71,316,528
36,892,281
289,980
37,180
243,510
570,670
714,118
54,063
–
768,181
71,887,198
37,660,462
5,895,034
5,951,942
145,043
237,820
–
25,592
640,934
538,547
6,918,831
6,516,081
120,033
40,197
160,230
–
24,844
24,844
7,079,061
6,540,925
64,808,137
31,119,537
20
21
21
162,102,553
113,021,993
(102,589,341)
(86,060,060)
5,294,925
4,157,604
64,808,137
31,119,537
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
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Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Contributed
equity
$
Options
reserve
$
Share‑based
payments
reserve
$
Fair value of
investments
reserve
$
Accumulated
losses
$
Total
equity
$
98,403,149
1,989,067
2,452,838
477,391
(65,149,999)
38,172,446
–
–
–
967,511
–
–
259,864
–
259,864
–
(20,910,061)
(20,910,061)
259,864
(20,910,061)
17,522,249
–
–
–
–
–
967,511
–
–
12,629,777
3,420,349
737,255 (86,060,060)
31,119,537
3,420,349
737,255
(86,060,060)
31,119,537
–
–
–
58,840
–
58,840
–
(16,529,281)
(16,529,281)
58,840
(16,529,281)
(16,470,441)
As at 1 July 2018
Fair value gains
on investments in
financial assets*
Loss for the year*
Total comprehensive
income and expense
for the period
Recognition of
share‑based payment
Transfer from option reserve
on exercise of options
Issue of ordinary shares on
the exercise of options
Balance at 30 June 2019
As at 1 July 2019
Fair value gains
on investments in
financial assets*
Loss for the year*
Total comprehensive
income and expense
for the period
Recognition of
share‑based payment
Issue of ordinary shares on
the exercise of options
Note
21
21
20
20
21
21
20
–
–
–
–
–
–
–
–
1,989,067
(1,989,067)
12,629,777
113,021,993
113,021,993
–
–
–
–
420,000
–
–
–
–
–
–
–
–
–
Issue of ordinary shares
20
48,660,560
Balance at 30 June 2020
162,102,553
* Amounts are after tax.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
–
1,078,481
–
–
–
–
–
–
1,078,481
–
–
420,000
48,660,560
4,498,830
796,095 (102,589,341)
64,808,137
34
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
Cash flows from operating activities
Interest received
Royalty and licence income received
Grant income
Payment of lease interest
Payments to suppliers, employees and for research
& development and intellectual property costs (inclusive of GST)
Research and development tax incentive scheme credit received
Net cash flows used in operating activities
Cash flows from investing activities
Cash received on disposal of financial asset
Purchase of plant and equipment
Net cash flows provided by investing activities
Cash flows from financing activities
Payment of lease liabilities
Net proceeds on issue of shares
Cash received for ordinary shares issued on exercise of options
Net cash flows provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Effects of exchange rate changes on the balance of cash held in foreign currencies
Cash and cash equivalents at beginning of year
Cash and cash equivalents at the end of the year
Note
2020
$
2019
$
742,014
138,916
62,500
(7,680)
817,314
170,750
77,745
–
(24,354,991)
(37,268,212)
14,636,973
12,017,247
24
(8,782,268)
(24,185,156)
482,978
339,046
(7,238)
(18,070)
475,740
320,976
16
(100,189)
48,660,560
–
–
420,000
12,629,777
48,980,371
12,629,777
40,673,843
(11,234,403)
(188,380)
259,092
21,534,919
32,510,230
13
62,020,382
21,534,919
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
O p t h e a
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Notes to the Consolidated
Financial Statements
1 . R E P O R T I N G E N T I T Y
Opthea Limited (the Company) is a listed public company
incorporated in Australia. The address of its registered office
and principal place of business is: Suite 0403, Level 4, 650 Chapel
Street, South Yarra, VIC 3141, Australia. these consolidated
financial statements comprise the Company and its subsidiary
(together referred to as the Group).
The Group’s principal activity is the development of new
drugs for the treatment of eye diseases.
2 . B A S I S O F A C C O U N T I N G
These financial statements are general purpose financial statements
which have been prepared in accordance with the Corporations
Act 2001, Australian Accounting Standards and Interpretations,
and comply with other requirements of the law.
The financial statements comprise the consolidated financial
statements of the Group. For the purposes of preparing the
consolidated financial statements, the Company is a for‑profit entity.
Compliance with Australian Accounting Standards ensures
that the financial statements and notes of the Company
and the Group comply with International Financial Reporting
Standards (IFRS).
The financial statements were authorised for issue by the
directors on 28 August 2020.
3 . S U M M A R Y O F
A C C O U N T I N G P O L I C I E S
The consolidated financial statements have been prepared
using the significant accounting policies and measurement
bases summarised below.
Basis of measurement
The consolidated financial statements have been prepared
on a historical cost basis, except for the investments classified
as financial assets, which have been measured at fair value.
All amounts are presented in Australian dollars.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiary. Control is achieved
when the Company:
/ Has power over the investee;
/ Is exposed, or has rights, to variable returns from its
involvement with the investee; and
/ Has the ability to use its power to affect its returns.
Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses
control of the subsidiary.
All intragroup assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members
of the Group are eliminated in full on consolidation.
Foreign currency translation
i. Functional and presentation currency
Both the functional and presentation currency of the Group
is Australian dollars ($).
ii. Transactions and balances
Transactions in foreign currencies are initially recorded in the
functional currency by applying the exchange rates ruling at
the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the
rate of exchange ruling at the reporting date.
Non‑monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate as at
the date of the initial transaction. Non‑monetary items measured
at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Financial assets and liabilities
Recognition and derecognition of financial assets
Purchases and sales of financial assets that require delivery of
assets within the time frame generally established by regulation
or convention in the market place are recognised on the trade
date, i.e., the date that the Group commits to purchase the asset.
Financial assets are derecognised when the right to receive cash
flows from the financial assets has expired or when the entity
transfers substantially all the risks and rewards of the financial
assets. If the entity neither retains nor transfers substantially
all of the risks and rewards, it derecognises the asset if it has
transferred control of the assets.
When financial assets are recognised initially, they are measured
at fair value, plus directly attributable transaction costs.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position
comprise cash at bank and in hand and short‑term deposits
with an original maturity of three months or less that are readily
convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
For the purposes of the statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents as defined above.
36
3 . S U M M A R Y O F A C C O U N T I N G P O L I C I E S (CONT.)
Other receivables
Payables
Other receivables generally comprise bank interest receivable,
other receivables from external parties and Goods and Services
Tax (GST) credits receivable, and are recognised and carried
at original invoice amount less an allowance for any uncollectible
amounts. The amounts are usually received within 30 to 60 days
of recognition.
Payables are carried at amortised cost and due to their
short‑term nature, they are not discounted. They represent
liabilities for goods and services provided to the Group prior
to the end of the financial year that are unpaid and arise when
the Group becomes obliged to make future payments in respect
of the purchase of these goods and services.
The Group measures the loss allowance for receivables at an
amount equal to lifetime expected credit losses (ECL). The ECL
on receivables are estimated under the simplified approach as
permitted under AASB 9 “Financial Instruments.” This uses a
provision matrix by reference to past experience of the debtor
and an analysis of the debtor’s current financial position, adjusted
for factors that are specific to the debtors and general economic
conditions of the industry in which the debtors operate.
The Group writes off a receivable when there is information
indicating that the debtor is in severe financial difficulty and
there is no realistic prospect of recovery.
Investments
Investments in financial assets comprise of the Group’s
non‑current investments in listed companies.
On initial recognition, the Group may make an irrevocable election
(on an instrument‑by‑instrument basis) to designate investments
in equity instruments as fair value through other comprehensive
income (FVTOCI). Designation at FVTOCI is not permitted
if the equity instrument is held for trading.
Investments in equity instruments at FVTOCI are initially measured
at fair value plus transaction costs. Subsequently, they are measured
at fair value with gains or losses arising from changes in the fair
value recognised in other comprehensive income and accumulated
in the fair value of investments reserve. The fair values of
investments in financial assets that are actively traded in
organised financial markets is determined by reference to quoted
market bid prices at the close of business on the reporting date.
The cumulative gain or loss is not reclassified to profit or loss on
disposal of the equity instruments.
Dividends on these investments in equity instruments are
recognised in profit or loss in accordance with Australian
Accounting Standards.
Finance income
Almost all of the Group’s finance income is earned on short‑term
bank deposits, and as such, finance income is recognised when
the Group’s right to receive the payment is established.
The amounts are unsecured and are usually paid within 30 days
of recognition.
Other financial liabilities
Other financial liabilities in the Consolidated Statement of
Financial Position represent the year end marked‑to‑market
value of forward rate foreign exchange contracts to purchase
uS dollars (Contracts). these Contracts are used to settle
uS dollar denominated payables and expire within one year.
The foreign exchange loss on recognition of the Contracts is
included in ‘net foreign exchange gain/(loss)’ in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income.
Plant and equipment
Plant and equipment is stated at historical cost less accumulated
depreciation and any accumulated impairment losses. Depreciation
is calculated on a straight‑line basis over their useful economic
lives as follows:
/ Equipment and furniture – 3 to 10 years; and
/ Leasehold improvements – 8 years or the term of the lease
if shorter.
The assets’ residual values, useful lives and amortisation
methods are reviewed, and adjusted if appropriate, at each
financial year end.
An item of plant and equipment is derecognised upon disposal
or when no further economic benefits are expected from its
use or disposal.
Leases
The Group assesses at contract inception whether a contract
is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
The Group applies a single recognition and measurement
approach for all leases, except for short‑term leases and
leases of low‑value assets. The Group recognises lease liabilities
to make lease payments and right‑of‑use assets representing
the right to use the underlying assets.
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
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3 . S U M M A R Y O F A C C O U N T I N G P O L I C I E S (CONT.)
Right‑of‑use assets
Provisions and employee benefits
Right‑of‑use assets are recognised at the commencement
date of the lease (that is the date the underlying asset is available
for use). Right‑of‑use assets are measured at cost, less any
accumulated depreciation and any impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of
right‑of‑use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before
the commencement date less any lease incentives received.
Right‑of‑use assets are depreciated on a straight‑line basis
over the shorter of the lease terms and the estimated useful
lives of the assets.
Lease liabilities
Lease liabilities are recognised at the commencement date of the
lease at the present value of lease payments to be made over the
lease term. The lease payments include fixed payments (including
in‑substance fixed payments) less any lease incentives receivable.
In calculating the present value of lease payments, the Group
uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily
determinable. The incremental borrowing rate is determined using
market yields on bonds with similar terms to maturity. After the
commencement date, the amount of lease liabilities is increased
to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease
term, a change in lease payments (e.g., a change to future lease
payments resulting from a change in an index or rate).
Leases of low‑value assets
For short‑term leases (lease term of 12 months or less)
and leases of low‑value assets (such as photo copiers and
telephones), the Group has opted to recognise a lease expense
on a straight‑line basis as permitted by IFRS 16. this expense is
presented within “administrative expenses” in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income.
Research and development costs
Research costs are expensed as incurred. An intangible asset
arising from the development expenditure on an internal project
will only be recognised when the Group can demonstrate the
technical feasibility of completing the intangible asset so that it
will be available for use or sale, its intention to complete and its
ability to use or sell the asset, how the asset will generate future
economic benefits, the availability of resources to complete the
development and the ability to measure reliably the expenditure
attributable to the intangible asset during its development.
As of 30 June 2020, the Group is in the research phase and
has not capitalised any development costs to date.
i. Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non‑monetary benefits
and annual leave expected to be settled within 12 months of the
reporting date are recognised in current provisions in respect of
employees’ services up to the reporting date. They are measured
at the amounts expected to be paid when the liabilities are settled.
Expenses for non‑accumulating sick leave are recognised when
the leave is taken and are measured at the rate paid or payable.
ii. Long service leave
The liability for long service leave is recognised in the provision
for employee benefits and measured as the present value of
expected future payments to be made in respect of services
provided by employees up to the reporting date. Consideration
is given to expected future wage and salary levels, experience
of employee departures, and periods of service. Expected future
payments are discounted using market yields at the reporting
date on bonds with terms to maturity that match, as closely
as possible, the estimated future cash outflows.
Share‑based payment transactions
The Group provides benefits to directors and employees
(including key management personnel) of the Group in the
form of share‑based payments, whereby employees render
services in exchange for shares or rights over shares
(equity‑settled transactions).
The cost of these equity‑settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted. Binomial models are used to value the options issued.
The cost of the equity‑settled transactions is recognised,
together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled (the vesting
period), ending on the date on which the relevant employees
become fully entitled to the award (the vesting date).
The charge to profit or loss for the period is the cumulative
amount less the amounts already charged in previous periods.
There is a corresponding credit to equity.
until an award has vested, any amounts recorded are contingent
and will be adjusted if more or fewer awards vest than were
originally anticipated to do so.
Contributed equity
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.
38
3 . S U M M A R Y O F A C C O U N T I N G P O L I C I E S (CONT.)
Revenue recognition
License revenue in connection with licensing of the Group’s
intellectual property (including patents) to customers is recognised
as a right to use the Group’s intellectual property as it exists at
the point in time in which the license is granted. This is because
the contracts for the license of intellectual property are distinct
and do not require, nor does the customer reasonably expect,
that the Group will undertake further activities that significantly
affect the intellectual property to which the customer has the
rights. Although the Group is entitled to sales‑based royalties
from the eventual sales of goods and services to third parties
using the intellectual property licensed, these royalty arrangements
do not in themselves indicate that the customer would reasonably
expect the Group to undertake such activities, and no such
activities are undertaken or contracted in practice. Accordingly,
the promise to provide rights to the Group’s intellectual property
is accounted for as a performance obligation satisfied at a point
in time.
The following consideration is received in exchange for licenses
of intellectual property:
/ up‑front license fees – these are fixed amounts and are
recognised at the point in time when the Group transfers
the intellectual property to the customer.
/ Sales‑based royalties – these are variable consideration
amounts promised in exchange for the license of intellectual
property and are recognised when the sales to third parties
occur given the performance obligation to transfer the
intellectual property to the customer is already satisfied.
During the years ended 30 June 2020 and 2019, the Group’s
only revenue related to sales‑based royalties.
Income tax
Current tax
Current tax assets and liabilities for the current and prior periods
are measured at the amount expected to be recovered from or
paid to the taxation authorities based on the current period’s
taxable income.
The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the reporting date.
Research and development tax incentive
the Research and Development (R&D) tax Incentive Scheme
is an Australian Federal Government program under which
eligible companies with annual aggregated revenue of less than
A$20 million can receive cash amounts equal to 43.5% of eligible
research and development expenditures from the Australian
taxation office (Ato). the R&D tax Incentive Scheme incentive
relates to eligible expenditure incurred in Australia and, under
certain circumstances, overseas on the development of the
Group’s lead candidate, opt‑302. the R&D tax incentive is
applied annually to eligible expenditure incurred during the
Group’s financial year following annual application to AusIndustry,
an Australian governmental agency, and subsequent filing of its
Income tax Return with the Ato after the financial year end.
the Group estimates the amount of R&D tax incentive after
the completion of the financial year based on eligible Australia
and overseas expenditures incurred during that year.
the Group has presented incentives in respect of the R&D tax
Incentive Scheme within income tax benefit in the Statement of
Profit or Loss and Other Comprehensive Income by analogising
with AASB 112 “Income Taxes”.
Deferred tax
Deferred income tax is provided on all temporary differences at
the reporting date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable
temporary differences except when the deferred income tax
liability arises from the initial recognition of goodwill or of an asset
or liability in a transaction that is not a business combination and
that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
Deferred income tax assets are recognised for all deductible
temporary differences, carry forward of unused tax assets
(or credits) and unused tax losses, to the extent that it is probable
that taxable profit will be available against which the deductible
temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised, except when the
deferred income tax asset relating to the deductible temporary
differences arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit
or taxable profit or loss.
The carrying amount of deferred income tax assets is reviewed at
each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all
or part of the deferred income tax asset to be utilised.
unrecognised deferred income tax assets are reassessed at
each reporting date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred
tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the
tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at balance date.
Income taxes relating to items recognised directly in equity are
recognised directly in equity and not in profit or loss.
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
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39
3 . S U M M A R Y O F A C C O U N T I N G P O L I C I E S (CONT.)
Tax consolidation legislation
Tax consolidation is a system adopted by the ATO that treats a
group of entities as a single entity for tax purposes. Opthea Limited
and its 100% owned subsidiary formed a tax consolidated group
effective July 1, 2003. the head entity, opthea limited, and its
controlled entity, Vegenics Pty Ltd, are current members of the
tax consolidated group and account for their own current and
deferred tax amounts. Members of the tax consolidated group
have adopted the “separate taxpayer within group” method to
allocate the current and deferred tax amounts to each entity
within the Group.
This method requires adjustments for transactions and events
occurring within the tax consolidated group that do not give rise
to a tax consequence for the Group or that have a different tax
consequence at the level of the Group.
The head entity, which is the parent entity, in assuming the net
unused tax losses and unused relevant tax credits, has recognised
reductions to investments in subsidiaries and where the amount
of tax losses assumed is in excess of the carrying value of the
investment, the parent has recognised the difference as a
distribution from subsidiary in profit or loss.
Other taxes
Revenues, expenses, assets and liabilities are recognised net
of the amount of GST except:
/ when the GST incurred on a purchase of goods and services
is not recoverable from the taxation authority, in which case
the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable; and
/ receivables and payables are stated with the amount
of GST included.
The net amount of GST recoverable from, or payable to the
taxation authority is included as part of receivables or payables
in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross
basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to,
the taxation authority is classified as part of operating cash flows.
Commitments and contingencies are disclosed net of the amount
of GST recoverable from, or payable to, the taxation authority.
Comparatives
Where necessary, comparatives have been reclassified and
repositioned for consistency with current year disclosure.
4 . C R I T I C A L A C C O U N T I N G
J U D G E M E N T S A N D K E Y S O U R C E S
O F E S T I M A T I O N U N C E R T A I N T Y
In applying the Group’s accounting policies, management continually
evaluates judgements, estimates and assumptions based on
experience and other factors, including expectations of future
events that may have an impact on the Group. All judgements,
estimates and assumptions made are believed to be reasonable
based on the most current set of circumstances available to
management. Actual results may differ from the judgements,
estimates and assumptions.
Significant judgements, estimates and assumptions made by
management in the preparation of these financial statements
are outlined below:
4.1 Critical judgements in applying accounting policies
Research and development costs
The majority of Opthea’s expenditure is incurred as a result of
clinical trials for opt‑302. During the years ended 30 June 2019
and 2020, Opthea progressed Phase 2b wet age‑related macular
degeneration (wet AMD) and Phase 1b/2a diabetic macular
edema (DME) trials. A key measure of Opthea’s performance
is the level of expenditure incurred on the research of OPT‑302.
Judgment is required in relation to:
/ the classification of expenses in the income statement
between research and development costs and operating
expenses; and
/ whether costs relate to R&D, and consequently if they meet
the capitalisation criteria under AASB 138 “Intangible Assets.”
The directors have determined that the Group is still in a research
phase and accordingly, no development costs have been capitalised
as of 30 June 2020 (2019: nil).
Taxation
Research and development tax incentive
the Research and Development (R&D) tax Incentive Scheme is
an Australian Federal Government program under which eligible
companies can receive cash refunds of 43.5% of eligible R&D
expenditure. Judgments are required as to the R&D tax incentive
refundable offset eligibility in respect of:
/ the Group’s ability to make claims and its continued
compliance under the scheme;
/ R&D and other supporting costs previously approved by
Australian tax authorities;
/ estimated amounts, timing and geographical location of future
costs related to the projects for which applications have been
approved to date; and
/ assessment of whether expenditure on projects for which
approval has been given by Australian tax authorities relate
to Australian or overseas expenditure.
40
4 . C R I T I C A L A C C O U N T I N G J U D G E M E N T S A N D
K E Y S O U R C E S O F E S T I M A T I O N U N C E R T A I N T Y S (CONT.)
4.2 Key sources of estimation uncertainty
Share‑based payment transactions
The Group measures the cost of equity‑settled transactions
with employees by reference to the fair value of the equity
instruments at the date at which they are granted. Fair values
are determined internally using Binomial models. The related
assumptions are detailed in note 28. The accounting estimates
and assumptions relating to equity‑settled share‑based payments
have no impact on the carrying amounts of assets and liabilities
in future reporting periods but may impact expenses and equity.
Should one or more of the assumptions and estimates used in
estimating the fair value of share‑based payments change, this
could have a material impact on the amounts recognised in
equity and employee‑related expenses.
5 . A P P L I C A T I O N O F N E W A N D
R E V I S E D A C C O U N T I N G S T A N D A R D S
New and amended Accounting Standards
that are effective for the current year
The Group has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards
Board (the AASB) that are relevant to its operations and effective
for the current year.
New and revised Standards and amendments thereof and
Interpretations effective for the current year that are relevant
to the Group include:
/ AASB 16 Leases;
/ AASB 2018‑1 Amendments to Australian Accounting Standards
– Annual Improvements 2015–2017 Cycle; and
/ Interpretation 23 uncertainty over Income tax treatments and
AASB 2017‑4 Amendments to Australian Accounting Standards
– uncertainty over Income tax treatments.
For the years ended 30 June 2020 and 2019, the Group has
recognised an R&D tax incentive receivable of $8.5 million and
$14.6 million respectively within the Consolidated Statement
of Financial Position, with a corresponding amount recognised
within income tax benefit within the Consolidated Statement
of Profit or Loss and Other Comprehensive Income.
the R&D tax incentive receivable as at 30 June 2020 is based
on the legislation as currently enacted as at 30 June 2020.
Any proposed changes to the legislation, such as rate changes
to the eligibility requirements, may have a retrospective impact
if the legislation is passed in its currently proposed form.
Investment tax credits such as the R&D tax incentive are
outside of the scope of AASB 112 “Income Taxes” and AASB 120
“Accounting for Government Grants and Disclosure of
Government Assistance.” Based on the guidance in AASB 108
“Accounting Policies, Changes in Accounting Estimates and
Errors,” companies need to make an accounting policy choice
on how to present these incentives, which in practice is done
by either analogising with AASB 112 or with AASB 120. In the
Group’s opinion, the R&D tax incentive should be presented by
analogising to AASB 112 because the nature of the incentive is
considered to be more closely aligned to income taxes, based
on the following considerations:
/ the R&D tax incentive is considered an income tax offset
which will be offset against the Group’s tax obligation if and
when the Group returns to a net tax payable position. In addition,
whilst the Group is currently eligible to receive cash payments
under the scheme since its consolidated revenue is currently
below $20 million, if and when the Group generates revenue
in excess of $20 million the R&D tax incentive will become
non‑refundable and can only be offset against any future
income tax payable by the Group.
/ The ATO, which is the tax authority in Australia, manages the
annual claims process as the R&D tax incentive is included in
the Group’s annual income tax return.
/ the Ato is also responsible for making the R&D tax
incentive cash payment if a company is eligible for a cash
refund under the program, oversees compliance with the
requirements of the R&D tax incentive scheme and
performs pre‑issuance reviews.
Income tax
The Group’s accounting policy for taxation requires judgments
as to the differences between tax and accounting treatments
of income and costs recognised in the Consolidated Statement
of profit or loss and other Comprehensive Income. Judgment is
also required in assessing whether deferred tax assets and
liabilities are recognised in the statement of financial position
and if accumulated income tax losses can be used to offset
potential future tax profits.
Notes to the Consolidated Financial Statements (Cont.)
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5 . A P P L I C A T I O N O F N E W A N D R E V I S E D A C C O U N T I N G S T A N D A R D S (CONT.)
Lease incentives (e.g. rent‑free period) are recognised as part
of the measurement of the right‑of‑use assets and lease liabilities
whereas under AASB 117 they resulted in the recognition of a
lease incentive, amortised as a reduction of rental expenses
generally on a straight‑line basis. under AASB 16, right‑of‑use
assets are tested for impairment in accordance with AASB 136
Impairment of Assets.
For short‑term leases (lease term of 12 months or less) and leases
of low‑value assets (such as photo copier and telephones), the
Group has opted to recognise a lease expense on a straight‑line
basis as permitted by AASB 16. This expense is presented within
‘administrative expenses’ in profit or loss.
Financial impact of the initial application of AASB 16
The Group’s previous lease for Opthea’s office premises expired
on 14 July 2019: the adoption of AASB 16 did not have a material
impact on the Group’s results on the date of transition. Following
the renewal of the leased office premises on 15 July 2019, the
Group recognised a right‑of‑use asset of $365,264 and a
corresponding lease liability of $365,264 in respect of this
lease during the year ended 30 June 2020. the impact on
profit or loss in the year ended 30 June 2020 was to decrease
occupancy expenses by $110,800; increase depreciation by
$121,754; and increase finance interest expense by $7,680.
under AASB 117, all lease payments on operating leases are
presented as part of cash flows from operating activities.
During the year ended 30 June 2020, the impact of the changes
under AASB 16 reduced the cash used in operating activities by
$100,189 and decreased net cash generated from financing
activities by the same amount.
Other pronouncements adopted for the first time
in the current year
In the current year, the Group has applied a number of
amendments to Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards
Board (AASB) that are effective for an annual period that
begins on or after 1 July 2019. their adoption has not had
any material impact on the disclosures or on the amounts
reported in these financial statements.
AASB 16 Leases
In the current year, the Group has adopted AASB 16 Leases,
which is effective for annual periods that begin on or after
1 January 2019.
AASB 16 introduces new or amended requirements with respect
to lease accounting. It introduces significant changes to lessee
accounting by removing the distinction between operating and
finance lease and requiring the recognition of a right‑of‑use asset
and a lease liability at commencement for all leases, except for
short‑term leases and leases of low value assets. Details of these
new requirements are described in note 3.
The date of initial application of AASB 16 for the Group is
1 July 2019. the Group has applied AASB 16 using the cumulative
catch‑up approach which:
/ requires the Group to recognise the cumulative effect of initially
applying AASB 16 as an adjustment to the opening balance of
retained earnings at the date of initial application; and
/ does not permit restatement of comparatives, which continue
to be presented under AASB 117 Leases and Interpretation
4 Determining whether an Arrangement Contains a Lease.
The Group has made use of the practical expedient available
on transition to AASB 16 not to reassess whether a contract
is or contains a lease. Accordingly, the definition of a lease in
accordance with AASB 117 and Interpretation 4 will continue to
be applied to those leases entered or changed before 1 July 2019.
The change in definition of a lease mainly relates to the concept
of control. AASB 16 determines whether a contract contains
a lease on the basis of whether the customer has the right
to control the use of an identified asset for a period of time
in exchange for consideration. This is in contrast to the focus
on ‘risks and rewards’ in AASB 117 and Interpretation 4.
Impact on lease accounting
Former operating leases
AASB 16 changes how the Group accounts for leases previously
classified as operating leases. under AASB 117, operating lease
payments were recognised as an expense in profit or loss on a
straight line basis over the lease term.
Applying AASB 16, for all leases (except as noted below), the Group:
/ Recognises right‑of‑use assets and lease liabilities in the
consolidated statement of financial position, initially measured
at the present value of the future lease payments;
/ Recognises depreciation of right‑of‑use assets and interest
on lease liabilities in profit or loss; and
/ Separates the total amount of cash paid into a principal
portion (presented within financing activities) and interest
(presented within operating activities) in the consolidated
statement of cash flows.
42
5 . A P P L I C A T I O N O F N E W A N D R E V I S E D A C C O U N T I N G S T A N D A R D S (CONT.)
New and revised Australian Accounting Standards and Interpretations on issue but not yet effective
At the date of authorisation of the financial statements, the Group has not applied the following new and revised Australian Accounting
Standards, Interpretations and amendments that have been issued but are not yet effective:
Standard/amendment
AASB 17 Insurance Contracts – amendment to AASB 17
AASB 2015‑10 Amendments to Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128 and AASB 2017‑5 Amendments to Australian
Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128
and Editorial Corrections
Effective for annual reporting
periods beginning on or after
1 January 2023
1 January 2022
(Editorial corrections in AASB 2017‑5
apply from 1 January 2018)
AASB 2018‑6 Amendments to Australian Accounting Standards – Definition of a Business
1 January 2020
AASB 2018‑7 Amendments to Australian Accounting Standards – Definition of Material
1 January 2020
AASB 2019‑1 Amendments to Australian Accounting Standards – References to the
Conceptual Framework
AASB 2019‑3 Amendments to Australian Accounting Standards – Interest Rate
Benchmark Reform
AASB 2019‑5 Amendments to Australian Accounting Standards – Disclosure of the
effect of new IFRS Standards not Yet Issued in Australia
AASB 2020‑1 Amendments to Australian Accounting Standards – Classification of
Liabilities as Current or Non‑Current
AASB 2020‑3 Amendments to Australian Accounting Standards – Annual Improvements
2018‑2020 and Other Amendments
AASB 2020‑4 Amendments to Australian Accounting Standards – CoVID‑19‑Related
Rent Concessions
1 January 2020
1 January 2020
1 January 2020
1 January 2022
1 January 2022
1 June 2020
In addition, at the date of authorisation of the financial statements the following IASB Standards and IFRS Interpretations
Committee Interpretations were on issue but not yet effective, but for which Australian equivalent Standards and
Interpretations have not yet been issued:
extension of the temporary exemption from Applying IFRS 9 (Amendments to IFRS 4)
Defers the application of IFRS 9 to
1 January 2023 (eligible insurers only)
The new and revised Accounting Standards, Interpretations and amendments listed above are not expected to have a material impact
on the amounts recognised or disclosures included in the Group’s financial statements.
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
43
6 . S E G M E N T I N F O R M A T I O N
The Group operates in one industry and one geographical area, those being the biotechnology and healthcare industry
and Australia, respectively.
The Group is focused primarily on developing a novel therapy for the treatment of highly prevalent and progressive retinal diseases.
The chief executive officer regularly reviews entity wide information that is compliant with Australian Accounting Standards.
There is only one segment for segment reporting purposes, and the information reviewed by the chief executive officer for
the purpose of resources allocation and performance assessment is the same as the information presented in the consolidated
financial statements.
The Group’s only revenue stream in the current financial year is royalty income generated from licenses granted in respect of the
Group’s intellectual property that are unrelated to the Group’s core business and the development of OPT‑302 and that are not under
development. These licenses are primarily used by third‑party licensees for research purposes. All of the royalty income of $87,075
(2019: $159,064) was generated from customers based outside Australia. The Group does not have any major customers. All property,
plant and equipment is located in Australia.
7 . R E V E N U E
Sales based royalties
Total revenue
8 . O T H E R I N C O M E
Finance income
Grant income
Other
Total other income
9 . R E S E A R C H A N D D E V E L O P M E N T E X P E N S E S
Research project costs 1
Total research and development expenses
1 The research project costs relate to the research programs in respect to the treatment of eye diseases by OPT‑302.
2020
$
87,075
87,075
2019
$
159,064
159,064
2020
$
721,330
62,500
–
2019
$
755,776
77,745
3,300
783,830
836,821
2020
$
2019
$
17,954,073
31,347,891
17,954,073
31,347,891
44
1 0 . E X P E N S E S
(a) Administrative expenses
Employee benefits expenses:
Salaries and fees
Cash bonuses
Superannuation
Share‑based payments expense
Total employee benefits expense
Other expenses:
Insurance
Investor relations costs
Audit and accounting
Travel expenses
Payroll tax
Legal fees
Advisory fees
Other expenses
Total other expenses
Depreciation of:
Equipment and furniture
Leasehold improvements
Right‑of‑use asset
Total depreciation expense
Loss on disposal of non‑current assets
2020
$
2019
$
2,124,792
2,020,795
288,811
210,383
1,078,481
414,423
217,592
967,511
3,702,467
3,620,321
500,953
379,255
330,318
66,420
201,172
555,622
620,745
498,680
377,181
411,181
138,156
84,103
87,247
22,464
–
401,009
3,153,165
1,521,341
21,754
513
121,754
144,021
19,898
13,195
–
33,093
1,854
–
Total administrative expenses
7,001,507
5,174,755
(b) Occupancy expenses
Operating lease rentals
Short term and low value lease expenses
Lease incidental costs
Total occupancy expense
–
78,883
2,239
31,607
–
30,021
33,846
108,904
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
45
1 1 . I N C O M E T A X
(a) Income tax benefit
The major components of income tax benefit are:
Statement of Profit or Loss and Other Comprehensive Income
Current tax
Current income tax credit
Deferred tax
In respect of the current year
2020
$
2019
$
8,533,123
14,636,973
8,533,123
14,636,973
–
–
Total income tax benefit recognised in the Statement of Comprehensive Income
8,533,123
14,636,973
(b) Current tax receivable
Research and Development Tax Incentive Credit receivable
8,533,123
14,636,973
(c) Numerical reconciliation between aggregate income tax benefit recognised in the Statement of Profit
of Loss and Other Comprehensive Income and benefit calculated per the statutory income tax rate
A reconciliation between income tax benefit and the product of accounting loss before income tax multiplied by the Group’s
applicable income tax rate is as follows:
Accounting loss before tax
At the Company’s statutory income tax rate of 27.5%
R&D tax incentive on eligible expenses
non‑deductible R&D expenditure
Other non‑deductible expenses – share‑based payment expense
Other tax‑deductible expenditure
Amount of temporary differences and carried forward tax losses not recognised
2020
$
2019
$
(25,062,404)
(35,547,034)
6,892,161
9,775,434
8,533,123
14,636,973
(5,394,503)
(9,261,833)
(296,582)
(266,066)
243,756
304,828
(1,444,832)
(552,363)
Income tax benefit reported in the Statement of Profit or Loss and Other Comprehensive Income
8,533,123
14,636,973
46
1 1 . I N C O M E T A X (CONT.)
(d) Recognised deferred tax assets and liabilities in statement of financial position
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities:
Interest and royalty income receivable (future assessable income)
Deferred tax assets related to temporary differences:
Accrued expenses and other liabilities
Employee provisions
Other miscellaneous items
Less: temporary differences not recognised
Net deferred tax recognised in the statement of financial position
2020
$
2019
$
(103,135)
(103,135)
(56,114)
(56,114)
441,162
187,311
546,964
151,821
154,933
276,942
1,175,437
583,696
(1,072,302)
(527,582)
–
–
(e) Unrecognised temporary differences
Temporary differences with respect to deferred tax assets associated with intellectual property and other miscellaneous items
which have a low probability of realisation are unrecognised. These amounted to $1,072,302 at year end (2019: $527,582).
(f) Carry forward unrecognised tax losses
The Group had income tax losses of $17,287,687 and capital losses of $877,704 at year end (2019: income tax losses of $15,819,190
and capital losses of $877,704) for which no deferred tax asset is recognised on the statement of financial position as they are currently
not considered probable of realisation. These tax losses are available indefinitely for offset against future assessable income subject
to continuing to meet relevant statutory tests.
(g) Franking credit balance
The franking account balance at the end of the financial year at 30% is $330,630 (2019: $330,630), which represents the amount
of franking credits available for the subsequent financial year.
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
47
1 2 . E A R N I N G S P E R S H A R E
The following reflects the income used in the basic and diluted earnings per share computations:
(a) Earnings used in calculating earnings per share
Net loss attributable to ordinary equity holders of the parent
(b) Weighted average number of shares
2020
$
2019
$
(16,529,281)
(20,910,061)
Weighted average number of ordinary shares on issue for basic earnings per share
260,795,745
232,795,371
Effect of dilution:
Share options
–
–
Weighted average number of ordinary shares adjusted for the effect of dilution
260,795,745
232,795,371
Loss per share (basic and diluted in cents)
6.34
8.98
There have been no other transactions involving ordinary shares or potential ordinary shares that would significantly change the
number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of this
financial report.
Diluted earnings per share is calculated as net loss divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares. Options granted under the Long Term Incentive (LTIP) and Non‑Executive Director Share and Option (NED Plan)
plans would generally be included in the calculation due to the conditions of the issuance being satisfied. As the Group is in a loss
position, the options are anti‑dilutive and, accordingly, the basic loss per share is the same as the diluted loss per share.
A total number of 18,044,000 options outstanding 30 June 2020 were anti‑dilutive and were therefore excluded from the weighted
average number of ordinary shares for the purpose of diluted earnings per share. These options related to the following option plans:
NED Plan
LTIP
All 18,044,000 outstanding options at 30 June 2020 were exercisable as of that date (2019: 9,905,000).
1 3 . C U R R E N T A S S E T S – C A S H A N D C A S H E Q U I V A L E N T S
Cash at bank and in hand
Short‑term deposits
Total cash and cash equivalents
2020
$
2019
$
6,000,000
6,000,000
12,044,000
12,919,000
18,044,000
18,919,000
2020
$
2019
$
3,020,382
1,034,919
59,000,000
20,500,000
62,020,382
21,534,919
Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents
represent fair value.
Short term‑deposits are with two major Australian banks and are made for varying periods of between 30 and 90 days, depending
on the immediate cash requirements of the Group, and earn interest at a fixed rate for the respective short‑term deposit periods.
At year end, the average rate was 1.01% (2019: 2.36%).
48
1 4 . C U R R E N T A S S E T S – R E C E I V A B L E S
Interest receivable
GST receivable 1
Royalties receivable 1
Total current receivables
2020
$
81,478
152,866
50,047
2019
$
102,162
91,736
101,888
284,391
295,786
1 the GSt and Royalties receivables are non‑interest bearing. there were no receivables with a material expected credit loss recorded during the
financial year (2019: nil).
1 5 . N O N ‑ C U R R E N T A S S E T S – I N V E S T M E N T S I N F I N A N C I A L A S S E T S
Listed Australian shares – at fair value 1
Details of listed Australian shares
Listed investments
2020
Non‑current investments:
Antisense Therapeutics Ltd
Optiscan Imaging Limited
Total listed investments
2019
Non‑current investments:
Antisense Therapeutics Ltd
Optiscan Imaging Limited
Total listed investments
2020
$
2019
$
289,980
714,118
Ownership
interest
Fair value at
30 June 2
Disposal in
the
financial
year 3
Fair value
gain/(loss)
recognised
in OCI 4
Opening
fair value
–
1.73%
1.24%
1.76%
–
(482,978)
249,399
233,579
289,980
289,980
–
(190,559)
480,539
(482,978)
58,840
714,118
233,579
(339,047)
317,860
254,766
480,539
–
(57,996)
538,535
714,118
(339,047)
259,864
793,301
1 These financial assets are investments in equity instruments and are not held for trading, they are held for medium to long‑term strategic purposes.
Accordingly, the Group has elected to designate these investments in equity instruments as at FVTOCI as recognising short‑term fluctuations in
these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long‑term purposes
and realising their performance potential in the long run.
2 The fair value represents the share (bid) price at year end and does not include any capital gains tax or selling costs that may be applicable on the
disposal of these investments.
These non‑current investments in listed shares consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate.
3 During the year ended 30 June 2019, 49% of the Group’s investment in Antisense therapeutics ltd (Anp) was sold for net proceeds of $339,047.
As a result, $214,046 of the previously unrealised net fair value gains recorded in the fair value of investments reserve was realised at this date.
Subsequently, during the year ended 30 June 2020, the Group disposed of its remaining investment in Anp for net proceeds of $482,978. As a
result, $249,399 of the previously unrealised net fair value gains recorded in the fair value of investments reserve was realised at this date. In
accordance with the Group’s accounting policy, the realised gain remains within the fair value of investments reserve. The fair value of the
investment in ANP at the disposal date was A$482,978. The Group disposed of the investment in line with its Treasury and Investments Policy.
4 A fair value increase of $58,840 (2019: $259,864) in the carrying value of investments has been made through other comprehensive income in
the year due to a net increase in their market value in the year.
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
49
1 6 . R I G H T ‑ O F ‑ U S E A S S E T S
Right of use asset
the Group has a three‑year lease contract for its head office premises in Melbourne, Australia which commenced on 15 July 2019.
the agreement does not contain any extension options. the carrying amount of the lease at 30 June 2020 is as follows:
Right‑of‑use Asset Cost
opening balance as at 1 July
Additions
Right‑of‑use Asset Depreciation
opening balance as at 1 July
Charge for the period
Net carrying amount at 30 June
Lease liabilities
Lease liabilities are as indicated below.
2020
$
2019
$
–
365,264
365,264
–
(121,754)
(121,754)
243,510
–
–
–
–
–
–
–
At the commencement date of the lease of its office premises, the Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term ending on 14 July 2022, using an incremental borrowing rate of 3%
Carrying amount at 1 July
New lease
Payments
Carrying amount at 30 June
Maturity analysis:
Year 1
Year 2
Less: unearned interest
Analysed into:
Current portion
Non‑current portion
Amounts recognised in profit or loss:
Depreciation expense on right‑of‑use asset
Lease finance costs
Expense relating to leases of low value assets
the Group did not have any short‑term leases during the year ended 30 June 2020.
2020
$
–
365,264
(100,189)
265,076
152,723
127,713
280,436
(15,360)
265,076
145,043
120,033
265,076
121,754
7,680
9,669
139,103
2019
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50
1 7 . C U R R E N T L I A B I L I T I E S – P A Y A B L E S
Creditors (unsecured) 1
pAYG tax liability
Total current payables
1 Creditors are non‑interest bearing and are normally settled on 30 day terms.
1 8 . C U R R E N T L I A B I L I T I E S – P R O V I S I O N S
Annual leave
Long service leave
Total current provisions
1 9 . N O N ‑ C U R R E N T L I A B I L I T I E S – P R O V I S I O N S
Long service leave
2 0 . C O N T R I B U T E D E Q U I T Y
(a) Ordinary shares
Issued and fully paid at 30 June
Movement in ordinary shares:
Opening balance
Issue of shares in a private placement
Issue of shares on exercise of options granted under the LTIP
Issue of shares on exercise of quoted options
Transfer from option reserve
Ordinary shares on issue:
Opening balance
Issue of shares in a private placement
Issue of shares on exercise of options granted under the LTIP
Issue of shares on exercise of quoted options
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
2020
$
2019
$
5,838,114
5,895,925
56,919
56,017
5,895,033
5,951,942
2020
$
403,479
237,455
2019
$
320,132
218,415
640,934
538,547
2020
$
40,197
2019
$
24,844
2020
$
2019
$
162,102,553
113,021,993
113,021,993
98,403,149
48,660,560
420,000
–
–
–
–
12,629,777
1,989,067
162,102,553
113,021,993
No:
No:
249,414,839 202,637,888
18,867,930
875,000
–
–
–
46,776,951
269,157,769
249,414,839
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
51
2 0 . C O N T R I B U T E D E Q U I T Y (CONT.)
Issued capital at 30 June 2020 amounted to $162,102,553 (269,157,769 fully paid ordinary shares) net of share issue costs and tax.
During the year ended 30 June 2020 the Company issued 18,867,930 ordinary shares in a private placement for net proceeds of $48,660,560.
At 30 June 2020, the company had no quoted options on issue, all options had been exercised or expired by 25 november 2018.
The fair value of the options at their issue date of $1,989,067, originally recognised in the options reserve (note 21), was transferred
to contributed equity during the year ended 30 June 2019.
Options granted to directors and employees
The company has two share based‑payment schemes, the Long Term Incentive Plan (LTIP) and Non‑Executive Director Share and
Option Plan. Options to subscribe for the Company’s shares have been granted under these plans to certain employees and directors.
the company granted 8,844,000 options over ordinary shares under these plans during the year ended 30 June 2019 (note 28).
These options had a weighted average fair value at their grant date of $0.22 per option. During the year 875,000 options granted
under the ltIp were exercised for $420,000. no options were granted under the plans during the year ended 30 June 2020.
(b) Capital management
The Group is not subject to any externally imposed capital requirements. When managing share capital, management’s objective
is to ensure the entity continues as a going concern as well as to provide benefits to shareholders and for other stakeholders. In order
to maintain or achieve an appropriate capital structure, the Company may issue new shares or reduce its share capital, subject to the
provisions of the Company’s constitution. the Group only commits to significant R&D expenditure when this is fully funded either
by existing funds or further equity raises.
2 1 . A C C U M U L A T E D L O S S E S A N D R E S E R V E S
(a) Movements in accumulated losses were as follows:
Balance at 1 July
Net loss for the period
Balance at 30 June
(b) R eserves
Fair value of investments reserve (i)
Share‑based payments reserve (ii)
Option reserve (iii)
Total reserves
(i) Movement in fair value of investments reserve:
Opening balance
Fair value gains on investments in financial assets
Closing balance
(ii) Movement in share‑based payments reserve:
Opening balance
Share based payments expense
Closing balance
(iii) Movement in option reserve:
Opening balance
Transferred to contributed equity
Closing balance
2020
$
2019
$
(86,060,060)
(65,149,999)
(16,529,281)
(20,910,061)
(102,589,341) (86,060,060)
796,095
737,255
4,498,830
3,420,349
–
–
5,294,925
4,157,604
737,255
58,840
796,095
477,391
259,864
737,255
3,420,349
2,452,838
1,078,481
967,511
4,498,830
3,420,349
–
–
–
1,989,067
(1,989,067)
–
52
2 1 . A C C U M U L A T E D L O S S E S A N D R E S E R V E S (CONT.)
(c) Nature and purpose of reserves
Fair value of investments reserve
This reserve records fair value changes on listed investments.
Share‑based payment reserve
This reserve is used to record the value of equity benefits provided to executives and employees as part of their remuneration.
Option reserve
On 25 November 2014 the company issued options to purchase 49,726,672 ordinary shares with an exercise price of $0.27 expiring
on 25 November 2018. The fair value of the options at their issue date of $1,989,067 was recognised in the option reserve. The same
amount, $1,989,067, was transferred to contributed equity on 25 November 2018 following the exercise and expiry of all quoted options.
the balance on the option reserve at 30 June 2020 was nil (2019: nil).
2 2 . F I N A N C I A L R I S K M A N A G E M E N T O B J E C T I V E S A N D P O L I C I E S
The Group’s principal financial assets comprise cash, receivables, short‑term deposits and investments in listed shares.
The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group’s
financial risk management practices. The objective is to support the delivery of the Group’s financial targets whilst protecting
future financial security.
The Group’s other various financial assets and liabilities, such as receivables and payables, arise directly from its operations. The main
risks arising from the Group’s financial assets and liabilities are interest rate risk, foreign currency risk, equity securities price risk and
liquidity risk.
The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring
levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rates and foreign
exchange rates. Liquidity risk is monitored through future rolling cash flow forecasts.
The board reviews and agrees policies for managing each of these risks as summarised below.
Risk exposures and responses
The Group has investigated the main financial risk areas which could impact on its financial assets and determined the impact
on post tax (losses) or profits for a range of sensitivities. These can be seen in the post tax (loss)/profit impact for each risk area.
For each risk area, the equity impact relates solely to reserve movements and excludes movements in accumulated losses as the
impact of these can be seen within the post tax (loss)/profit impact.
(i) Interest rate risk
The Group’s exposure to market interest rates relates primarily to the short‑term deposits. The deposits are held with two of Australia’s
largest banks.
The objective of managing interest rate risk is to minimise the Group’s exposure to fluctuations in interest rates that might impact
its interest income and cash flow. To manage interest rate risk, the Group invests the majority of its cash in short‑term deposits
for varying periods of between 30 days and 90 days, depending on the short and long‑term cash requirements of the Group which
is determined based on the Group’s cash flow forecast. This consideration also takes into account the costs associated with recalling
a term deposit should early access to cash and cash equivalents be required. Cash is not locked into long‑term deposits at fixed rates
so as to mitigate the risk of earning interest below the current floating rate.
The Group does not have any borrowings (2019: nil).
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
53
2 2 . F I N A N C I A L R I S K M A N A G E M E N T O B J E C T I V E S A N D P O L I C I E S (CONT.)
the following sensitivity analysis (an annual effect) is based on the interest rate risk exposures at 30 June 2020.
At 30 June 2020, if interest rates moved, with all variables held constant, post tax (loss)/profit and equity would have been affected
as illustrated in the following table:
Judgements of reasonably possible movements
+ 0.50% (50 basis points) (2019: + 0.50%)
– 0.50% (50 basis points) (2019: – 0.50%)
Post tax
(loss)/profit impact
2020
$
2019
$
206,700
71,903
(206,700)
(71,903)
Cost of investment
2020
$
–
–
2019
$
–
–
the post tax figures include an offset for unrecognised tax losses (bringing the tax effect to nil) for the year ended 30 June 2020
(2019: Nil).
Significant assumptions used in the interest rate sensitivity analysis include:
/ The reasonably possible movement of 0.5% was calculated by taking the interest rates as at balance date, moving these
by plus and minus 0.5% and then re‑calculating the interest on term deposits with the ‘new‑interest‑rate’.
/ The net exposure at balance date is representative of what the Group was and is expecting to be exposed to in the next
twelve months from balance date.
(ii) Price risk
The Group’s investment in listed shares is exposed to equity securities price risk and as such their fair values are exposed to fluctuations
as a result of changes in market prices.
Equity price risk is the risk that the fair value of equities will decrease as a result of share price movements. The Group’s equity
investments are publicly traded on the ASX and are designated and accounted for as investments in financial assets.
The investments in listed shares are not held for short‑term trading. Their values are reviewed regularly by management and the
board. The strategy for realising any part of these investments is determined based on the liquidity of the respective stocks, potential
off‑market acquirers and likely developments in their values based on publicly available information.
At 30 June 2020, had the share price moved with all other variables held constant, post tax (loss)/profit and equity would have
been affected as illustrated in the table below:
Judgements of reasonably possible movements
Change in variables
10% increase in listed share price
10% decrease in listed share price
(iii) Foreign currency risk
Impact
of loss
after tax
2020
$
Impact
on equity
after tax
2020
$
Impact
of loss
after tax
2019
$
Impact
on equity
after tax
2019
$
20,299
20,299
49,988
49,988
(20,299)
(20,299)
(49,988)
(49,988)
As a result of services provided by non‑related entities in the united States, Canada, united Kingdom and europe, part of the
Group’s financial assets and liabilities are affected by movements in the exchange rate.
The Group does not enter into any hedging transactions.
54
2 2 . F I N A N C I A L R I S K M A N A G E M E N T O B J E C T I V E S A N D P O L I C I E S (CONT.)
At the reporting date, the Group has the following exposure to foreign currencies:
2020
Financial assets
Cash
Receivables
Financial liabilities
Payables
Other financial liabilities
Net exposure
2019
Financial assets
Cash
Receivables
Financial liabilities
Payables
Other financial liabilities
Net exposure
Consolidated
USD
2020
$
61,680
37,547
EURO
2020
$
–
–
GBP
2020
$
–
–
(4,878,718)
(14,887)
(34,144)
(237,820)
–
–
(5,017,313)
(14,887)
(34,144)
USD
2019
$
551,719
101,888
(5,109,497)
(25,592)
(4,481,482)
Consolidated
EURO
2019
$
GBP
2019
$
–
–
–
–
–
–
–
CAD
2020
$
–
–
–
–
–
CAD
2019
$
–
–
(51,269)
(4,351)
–
–
(51,269)
(4,351)
the following sensitivity is based on the foreign currency risk exposures in existence at 30 June 2020.
At 30 June 2020, had the Australian dollar moved with all other variables held constant, post tax (loss) profit and equity would have
been affected as illustrated in the table below:
Judgements of reasonably possible movements
Consolidated
AuD/uSD +10% (2019: +10%)
AuD/uSD –10%
Post tax
(loss)/profit impact
Cost of investment
2020
$
2019
$
2020
$
2019
$
319,284
285,185
(390,235)
(348,560)
–
–
the reasonably possible movements at 30 June 2020 are higher than at 30 June 2019 due mainly to the higher net exposure to the
uS dollar. there was minimum or insignificant exposure to the GBp, euro and CAD during the current financial year.
Significant assumptions used in the foreign currency exposure sensitivity analysis include:
The reasonably possible movement of 10% was calculated by taking the currency spot rates as at balance date, moving these
by 10% and then re‑converting the currencies into AuD with the ‘new‑spot‑rate’. this methodology reflects the translation
methodology undertaken by the Group.
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
55
2 2 . F I N A N C I A L R I S K M A N A G E M E N T O B J E C T I V E S A N D P O L I C I E S (CONT.)
The net exposure at balance date is representative of what the Group was and is expecting to be exposed to in the next twelve
months from balance date.
Management believes the balance date risk exposures are representative of the risk exposure inherent in the financial instruments.
(iv) Credit risk
Credit risk is associated with those financial assets of the Group which comprise cash and cash equivalents, receivables and
listed investments. The Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal
to the carrying amount of these investments. Credit risk is considered minimal as the Group transacts with reputable recognised
Australian banks.
(v) Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet their obligations to repay
their financial liabilities as and when they fall due. The Group has minimal liquidity risk because of the high balances of cash and cash
equivalents; however the Group manages liquidity risk by maintaining adequate reserves and by monitoring forecast and actual cash
flows and by matching the maturity profiles of financial assets and liabilities. The financial liabilities of the Group relate to trade payables
that are all expected to be paid within 12 months.
The Group’s objective is to maintain an appropriate cash asset balance to fund its operations.
(vi) Fair value
The Group has investments in listed equities which are calculated using the quoted prices in an active market and are considered
level 1 fair value measurements. The Group does not have any derivative investments where the fair value is estimated using inputs
other than quoted prices that are observable for the asset or liability, either directly (as prices) or indirectly (i.e. derived from prices).
The Group also does not hold any financial instruments where fair value measurement uses observable inputs that require significant
adjustments based on observable inputs to estimate its value.
Details of the fair value of the investment in financial assets are disclosed in note 15 of the financial statements.
the fair value of financial assets and financial liabilities in the consolidated statement of financial position at 30 June 2020 and 2019
is the same as their carrying amounts.
The methods for estimating fair value are also outlined in the relevant notes to the financial statements.
2 3 . R E L A T E D P A R T Y D I S C L O S U R E S
(a) S ubsidiaries
The consolidated financial statements include the financial statements of Opthea Limited and the subsidiary in the following table:
Name of company
Vegenics Pty Ltd 1
Parent entity
% equity interest
2020
%
100
2019
%
100
1 Opthea Limited is the ultimate parent entity. Vegenics Pty Ltd is incorporated in Australia and has the same financial year as Opthea Limited.
(b) Transactions with related parties
Balances and transactions between the Company and its subsidiary, a related party of the Company, have been eliminated on
consolidation and are not disclosed in this note.
56
2 4 . C A S H F L O W S T A T E M E N T R E C O N C I L I A T I O N
(a) Reconciliation to cash at the end of the year
Cash at bank and in hand (note 13)
(b) Reconciliation of net loss after tax to net cash flows from operations
Net loss for the year
Adjustments for:
Income tax benefit recognised in profit or loss
Depreciation of non‑current assets
Net loss on disposal of non‑current assets
Depreciation of right‑of‑use asset
Share‑based payments
Net exchange differences
Changes in:
Payables
Receivables
Prepayments
Provisions
Net cash flows used in operating activities before tax
R&D tax incentive received
Net cash flows used in operating activities
(c) Reconciliation of borrowings arising from financing activities
Balance at 1 July
Non‑cash addition 1
Payment of lease liabilities
Balance at 30 June
2020
$
2019
$
62,020,382
21,534,919
62,020,382
21,534,919
(16,529,281)
(20,910,061)
(8,533,123)
(14,636,973)
22,267
1,854
121,754
33,093
–
–
1,078,481
967,511
400,608
(259,092)
(6,908,159)
(13,895,461)
(56,907)
(1,427,978)
11,395
97,946
(54,029)
(132,346)
117,740
65,497
(23,419,241)
(36,202,403)
14,636,973
12,017,247
(8,782,268)
(24,185,156)
–
365,265
(100,189)
265,076
–
–
–
–
1 non‑cash addition represents the new lease on the Company’s office premises in Melbourne, Australia that commenced on 15 July 2019.
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
57
2 5 . C O M M I T M E N T S
(i) Lease commitments – Group as lessee
Lease commitments are in respect of low value leases which have not been recognised in the Statement of Financial Position.
These leases are expensed on a straight‑line basis over the term of the lease.
Within one year
After one year but not more than five years
2020
$
6,540
16,895
23,435
2019
$
7,029
–
7,029
(ii) Research projects and license commitments
The Group has entered into research and development contracts and intellectual property license agreements with various third parties
in respect of services for the Phase 2a DME clinical trial and the clinical grade manufacture of OPT‑302. Expenditure commitments relating
to these and intellectual property license agreements are payable as follows:
Within one year
After one year but not more than five years
After more than five years
2020
$
2019
$
11,139,196
7,776,947
427,248
109,061
85,446
128,169
11,675,505
7,990,562
2 6 . C O N T I N G E N C I E S
The Group is party to various research agreements with respect to which a commitment to pay is contingent on the achievement of
research milestones. Assuming all milestones are achieved within the timeframes stipulated in the contracts, those which could become
payable in less than one year total $382,790 (2019: $364,563) and those which could become payable in more than one year total
$16,749,885 (2019: $16,363,559).
under these license/collaboration agreements, payments are to be made only if certain research and clinical development milestones
are achieved and royalties may become payable on any eventual sales of products developed under these agreements.
the group had a bank guarantee outstanding at 30 June 2020 in respect of a rental deposit for its office premises of $57,281
(2019: $43,841).
2 7 . K E Y M A N A G E M E N T P E R S O N N E L
(a) Compensation of Key Management Personnel
Short‑term employee benefits
Post employment benefits
Share‑based payments expense
Total compensation
2020
$
2019
$
1,011,460
1,002,359
96,089
619,325
95,225
752,306
1,726,874
1,849,890
Details of the key management personnel are included within the Remuneration Report section of the Directors’ Report.
58
2 7 . K E Y M A N A G E M E N T P E R S O N N E L (CONT.)
(b) Other transactions and balances with director and key management personnel and their related parties
There were no director and key management personnel related party transactions during the current or prior financial year.
2 8 . S H A R E ‑ B A S E D P A Y M E N T S
(a) Recognised share based payment expenses
The expense recognised for share‑based payments during the year is shown in the table below:
Expense arising from equity‑settled share‑based payment transactions:
Director and employee services received
2020
$
2019
$
1,078,481
967,511
(b) Non‑executive director and employee share option plans
During the 2015 financial year, the Group introduced an ownership‑based compensation scheme for non‑executive directors,
executives and senior employees, the Long Term Incentive Plan (LTIP) and Non‑Executive Directors Share and Option Plan
(NED Plan). In accordance with the terms of the plans, as approved by shareholders at the 2014 annual general meeting, eligible
non‑executive directors, executives and senior employees with the Group may be granted options to purchase ordinary shares.
Each employee share option converts into one ordinary share of Opthea Limited on exercise. No amounts are paid or payable
by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights and are not transferable.
Options may be exercised at any time from the date of vesting to the date of their expiry.
The number of options granted is subject to approval by the board and rewards executives and senior employees to the extent
of the Group’s and the individual’s achievement judged against both qualitative and quantitative criteria as determined by the board
on a case by case basis.
The vesting condition of options granted under the LTIP and NED Plan is continuous service.
Options/Rights series
LTIP – director
Grant date
7 March 2016
ltIp – director FY2019
29 November 2018
LTIP – employees
31 March 2016
ltIp – employees FY2018
23 August 2017
ltIp – employees FY2019
NED Plan
3 April 2019
7 March 2016
neD plan FY2019
29 November 2018
Grant date
fair value
Exercise
price
$0.19
$0.20
$0.24
$0.33
$0.26
$0.19
$0.20
$0.48
$0.855
$0.48
$1.16
$0.855
$0.48
$0.855
Expiry date
7 March 2021
Vesting date
30 June 2016
29 November 2022
29 November 2019
1 January 2022
1 January 2023
3 April 2023
7 March 2021
1 January 2017
30 June 2018
3 April 2020
30 June 2016
29 November 2022
29 November 2019
There has been no alteration of the terms and conditions of the above share‑based payment arrangements since the grant date.
(c) Fair value of share options granted
Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects
of non‑transferability, exercise restrictions (including the probability of meeting market conditions attached to the option),
and behavioural considerations. Expected volatility is based on the historical share price volatility over the past 4 or 5 years.
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
59
2 8 . S H A R E ‑ B A S E D P A Y M E N T S (CONT.)
Grant
date
share
price
$0.38
$0.57
$0.70
$0.43
$0.67
$0.38
$0.57
Exercise
price
Fair
value per
option
Expected
volatility
Option
life
Dividend
yield
$0.48
$0.855
$0.48
$1.16
$0.855
$0.48
$0.855
$0.19
$0.20
$0.24
$0.32
$0.26
$0.19
$0.20
65%
58%
65%
66%
57%
65%
58%
5 years
4 years
5 years
5 years
4 years
5 years
4 years
0%
0%
0%
0%
0%
0%
0%
Risk free
interest
rate
2.09%
2.04%
2.09%
2.09%
2.04%
2.09%
2.04%
Model
used
Binomial
Binomial
Binomial
Binomial
Binomial
Binomial
Binomial
LTIP – director
ltIp – director FY2019
LTIP – employees
ltIp – employees FY2018
ltIp – employees FY2019
NED Plan
neD plan FY2019
(d) Movements in share options during the year
The following reconciles the share options outstanding at the beginning and end of the year:
Balance at beginning of year
Granted during the year:
30 June 2020
30 June 2019
Weighted
average
exercise
price
$
Number
of options
and rights
Weighted
average
exercise
price
$
Number
of options
and rights
18,919,000
0.67
10,075,000
0.46
To employees and directors under the LTIP and NED Plan
–
–
8,844,000
0.855
Exercised during the year
Expired during the year
Balance at end of year
Exercisable at end of year
(875,000)
–
18,044,000
18,044,000
0.48
–
–
–
0.68
18,919,000
0.68
9,905,000
–
–
0.67
0.50
The share options outstanding at the end of the year had a weighted average exercise price of $0.68 (2019: $0.67) and a weighted
average remaining contractual life of 626 days (2019: 716 days).
2 9 . N E T T A N G I B L E A S S E T B A C K I N G
Net tangible asset backing per ordinary security
2020
$
0.24
2019
$
0.12
60
3 0 . A U D I T O R S ’ R E M U N E R A T I O N
The auditor of Opthea Limited is Deloitte Touche Tohmatsu.
Amounts received or due and receivable by Deloitte (Australia) and related network firms for:
Audit or review of the financial report of the entity and any other entity in the consolidated group
615,000
84,565
Other services in relation to the consolidated group
–
–
615,000
84,565
2020
$
2019
$
3 1 . E V E N T S A F T E R T H E B A L A N C E S H E E T D A T E
on 21 August 2020, the Company announced it had completed end‑of‑phase 2 meetings with the uS Food and Drug Administration
and a Scientific Advice meeting with the European Medicines Agency to obtain guidance on the Company’s Phase 3 clinical development
plans. The outcome of the meetings support the progression of OPT‑302 into Phase 3 and pre‑commercial development.
The Company announced on 24 August 2020, it is planning to conduct a potential initial public offering of American Depository Shares
(ADSs) in the u.S. representing opthea’s ordinary shares, which will remain listed on the ASX, and concurrent listing of the ADSs on
Nasdaq. Any offering and listing of ADSs on Nasdaq would be intended to support Opthea’s product development activities, including
its previously announced Phase 3 trials of OPT‑302 for the treatment of wet AMD.
Except for the above events, no other matters or circumstances have arisen since the end of the reporting period, which significantly
affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group
in future financial years.
3 2 . P A R E N T E N T I T Y I N F O R M A T I O N
The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the same
as those applied in the consolidated financial statements. Refer to note 3 for significant accounting policies relating to the Group.
(a) Financial position
Current assets
Non‑current assets
Total assets
Current liabilities
Non‑current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
Option reserve
Employee equity benefits reserve
Fair value of investments reserve
Total shareholders’ equity
2020
$
2019
$
71,126,092
36,279,568
570,670
768,181
71,696,762
37,047,749
(6,767,222)
(6,368,040)
(160,229)
(24,844)
(6,927,451)
(6,392,884)
64,769,311
30,654,865
162,102,553
113,021,993
(102,628,167)
(86,524,732)
–
–
4,498,830
3,420,349
796,095
737,255
64,769,311
30,654,865
Notes to the Consolidated Financial Statements (Cont.) O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
61
3 2 . P A R E N T E N T I T Y I N F O R M A T I O N (CONT.)
(b) Financial performance
Loss of the parent entity
Other comprehensive income
Total comprehensive loss of the parent entity
Year ended
30 June
2020
$
Year ended
30 June
2019
$
(16,103,435)
(20,820,825)
58,840
259,864
(16,044,595) (20,560,961)
(c) Parent entity contractual commitments for acquisition of property, plant and equipment
The parent entity does not have any contractual commitments for the acquisition of property, plant and equipment for the year
ended 30 June 2020 (2019: nil).
(d) Parent entity contingent liabilities
The Company is party to various research agreements with respect to which a commitment to pay is contingent on the achievement
of research milestones. Assuming all milestones are achieved within the timeframes stipulated in the contracts, those which could become
payable in less than one year total $382,790 (2019: $364,563) and those which could become payable in more than one year total
$1,492,880 (2019: $1,421,797).
under these license/collaboration agreements, payments are to be made only if certain research and clinical development milestones
are achieved and royalties may become payable on any eventual sales of products developed under these agreements.
the parent entity had a bank guarantee outstanding at 30 June 2020 in respect of a rental deposit for its office premises
of $57,281 (2019: $43,841).
62
Directors’ Declaration
for the year ended 30 June 2020
In accordance with a resolution of the directors of Opthea Limited, we state that:
1.
In the opinion of the directors:
(a) the financial report and the notes thereto are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for
the year ended on that date; and
(ii) complying with Australian Accounting Standards, Corporations Regulations 2001, and International Financial Reporting
Standards (IFRS) as disclosed in note 3 of the financial statements; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A
of the Corporations Act 2001 for the financial year ended 30 June 2020.
Signed in accordance with a resolution of the directors made pursuant to S.295(5) of the Corporations Act 2001. On behalf of the directors:
Megan Baldwin
CEO & Managing Director
Opthea Limited
Melbourne
28 August 2020
Geoffrey Kempler
Chairman
Opthea Limited
O p t h e a
| 2 0 1 9 - 2 0 2 0 A n n u A l R e p o R t
63
Independent Auditor’s Report
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of
Opthea Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Opthea Limited (the “Company”) and its subsidiary (the
“Group”), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of cash flows and the consolidated statement of changes in equity for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies, and
the directors’ declaration.
In our opinion the accompanying financial report ofthe Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We gconducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to directors of the Company, would be in the same terms if given to the directors as at
the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
64
Independent Auditor’s Report (Cont.)
Key Audit Matter
Research & Development Tax
Incentive
The Group operates in the biotechnology
market and is in the clinical research
stage of developing a molecule asset,
OPT-302, for eye diseases.
The Group claims Research &
Development tax incentives (“R&D tax
incentives”) provided by the Australian
Government as disclosed in Note 4.1.
For the year ended 30 June 2020, the
Group has recognised an R&D tax
incentive receivable of $8.5 million within
the consolidated statement of financial
position, with a corresponding amount
recognised within income tax benefit
within the consolidated statement of profit
or loss and other comprehensive income.
Management exercises significant
judgement in respect of R&D tax
incentives claimed by the Group including:
Determing the accounting policy used
in accounting for the R&D tax
incentive.
Assessing the eligibility of R&D
activities and costs attributed to those
eligible R&D activities against the
rules and regulations governing the
R&D tax incentive.
Determing the estimated amounts,
timing and geographical location of
future costs related to the projects for
which R&D incentive applications have
been approved to date.
How the scope of our audit responded to
the Key Audit Matter
Our procedures included, but were not limited
to:
Assessing the design and
implementation of key controls in
relation to R&D expenditure and the
preparation and review of the R&D tax
incentive calculation.
Assessing the accounting policy adopted
by the Group to account for the R&D tax
incentive.
In conjunction with our R&D tax specialists
we:
Obtained an understanding of the rules
and regulations governing R&D tax
incentives and the basis used by the
Group to recognise the incentive.
Held meetings with the Group’s external
R&D tax advisors to understand the
process for the preparation and review
of the R&D tax incentive submissions.
Reviewed management’s documentation
addressing how the Group’s R&D
activities satisfy the eligibility criteria
outlined in the rules and regulations
governing the R&D tax incentives.
On a sample basis, tested R&D
expenses to supporting documentation.
Tested on a sample basis,
management’s apportionment of costs
to these R&D activities and whether the
underlying methodology used for the
apportionment is consistent with the
rules and regulations governing the tax
incentive.
Assessed management’s R&D project
forecasts for eligible activities, including
assessing the estimated amounts,
timing and geographical location of
future costs.
We also assessed the appropriateness of the
disclosures in Note 3, 4.1 and 11 to the
financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the annual report, but does not include the financial report and our auditor’s
report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
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If, based on the work we have performed, we conclude that there is a material misstatement of this
other information; we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud
or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group’s audit. We
remain solely responsible for our audit opinion.
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Independent Auditor’s Report (Cont.)
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate thrests or related safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 24 of the Directors’ Report for
the year ended 30 June 2020.
In our opinion, the Remuneration Report of Opthea Limited for the year ended 30 June 2020 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of Opthea Limited are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Vincent Snijders
Partner
Chartered Accountants
Perth, 28 August 2020
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ASX Additional Information
1 . D I S T R I B U T I O N O F E Q U I T Y S E C U R I T I E S
the number of shareholders, by size of holding, of quoted fully paid ordinary shares as at 24 July 2020 is as follows:
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and Over
Total
Fully paid
ordinary shares
No. of
holders
No. of
shares
2,859
1,521,817
2,680
6,933,272
722
734
5,524,301
19,548,347
103
235,630,032
7,098
269,157,769
Number of shareholders holding less than a marketable parcel of shares
349
41,971
2 . T W E N T Y L A R G E S T S H A R E H O L D E R S
the names of the 20 largest holders of quoted fully paid ordinary shares and their respective holdings at 24 July 2020 are:
Rank Name
No. of shares
% interest
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
CItICoRp noMIneeS ptY lIMIteD
HSBC CuStoDY noMIneeS (AuStRAlIA) lIMIteD‑GSCo eCA
J p MoRGAn noMIneeS AuStRAlIA ptY lIMIteD
JAGen ptY ltD
ARMADA tRADInG ptY lIMIteD
HSBC CuStoDY noMIneeS (AuStRAlIA) lIMIteD
NATIONAL NOMINEES LIMITED
Bnp pARIBAS noMS ptY ltD
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