A N N U A L
R E P O R T
2 0 1 8
Company Profile
Patrys is a therapeutic antibody development company with operations in Australia and the United States of America.
Patrys’ expertise and assets target antibody therapeutics in the field of oncology with both IgM antibodies and IgG antibody
fragments under development.
Patrys has successfully out-licensed a clinical candidate, PAT-SC1 for the Chinese oncology market and has conducted two
clinical trials with another lead candidate from its IgM platform, PAT-SM6. Patrys has in-licensed from Yale University a suite
of novel, nucleus-penetrating antibodies (Deoxymabs 3E10 and 5C6) and Deoxymab 3E10 conjugated to nanoparticles which
it will progress through development. Patrys has now humanized Deoxymab 3E10 and its lead candidate PAT-DX1 is currently
being evaluated in a number of pre-clinical settings. Patrys will continue to advance lead candidates from both its technology
platforms towards the market.
Patrys Limited is an ASX listed company (ASX:PAB) with corporate headquarters in Melbourne, Australia.
For further information on Patrys, visit www.patrys.com
Operations
o Corporate headquarters in Melbourne, Australia
o
Preclinical work conducted in multiple Australian and overseas sites, including Yale School of Medicine, Beth Israel Deaconess
Medical Center (BIDMC) in United States of America and Garvan Institute and Walter and Eliza Hall Institute in Australia.
o Patrys Limited trades on the Australian Securities Exchange (ASX:PAB)
Milestones
2H 2017
- Granted first US patent for Deoxymab portfolio
- Reported activity of PAT-DX1 in pre-clinical cancer models
- PAT-DX1 conjugated to nanoparticles shown to selectively target tumours
- U.S. patent granted for IgM pre-clinical candidate PAT-LM1
- Awarded Innovation Connections Grant with Garvan Institute of Medical Research for PAT-DX1 work on pancreatic cancer
- Collaboration with the Walter and Eliza Hall Institute of Medical Research
- Data showing synergy of PAT-DX1 with PARP inhibitor olaparib
- Research coverage initiated by NDF Research
1H 2018
- Oversubscribed Rights Issue raised $2.4 million
- PAT-DX1 targets delivery of nanoparticles to breast cancer tumors in animal model
- PAT-DX1-NP localises to lymph node metastases
- Publication of scientific paper and reporting of patent filing for humanized version of Deoxymab 3E10
- PAT-DX1 crosses blood brain barrier to reduce tumor size in animal model of glioblastoma
- PAT-DX1 improves survival in animal model of glioblastoma
- Patrys collaborators present at AACR conference
- NDF Research continues analysis and reporting on Patrys programs completed
- $4.6 million capital raise
- Announcement of collaboration with Beth Israel Deaconess Medical Center
- PAT-DX1 targets and kills brain cancer stem cells
1
Assets
• PAT-SC1 is an immunoglobulin M (IgM) type antibody which targets an isoform of the membrane-bound CD55
(DAF-B). This isoform has been shown to be significantly over-expressed on the membrane of gastric cancer tissues
(74%), while no expression was detected on healthy cells and tissues. In September 2015, Patrys signed an exclusive
development and commercialization license agreement for all oncology indications in China for PAT-SC1 with the
Chinese company Hefei Co-source Biomedical Co.
• PAT-SM6 is a fully human monoclonal antibody (mAb) of the IgM type which targets a variant of human GRP78
and human apolipoprotein B100 (apoB100) found in low-density lipoprotein (LDL) and very low-density lipoprotein
(VLDL). It has been successfully utilized in both melanoma and multiple myeloma clinical trials. Further clinical trials
for this product candidate have been deferred due to manufacturing issues.
• PAT-LM1 is a fully human IgM mAb that targets a variant of the human NONO protein (also named nmt55 and
p54nrb), which is described to be a multi-functional nuclear protein. PAT-LM1 has shown promise in a range of
preclinical cancer models.
• Deoxymab 3E10 is a lupus autoantibody that penetrates live cell nuclei by binding to DNA or its precursors
outside of cells and then following it into cell nuclei through a nucleoside transporter. Once in the nucleus,
Deoxymab 3E10 interferes with DNA repair processes. To prepare Deoxymab 3E10 for clinical development Patrys
humanised and optimised the antibody. The lead candidate, PAT-DX1, was selected from a large number of
humanised 3E10 variants that Patrys designed to optimise for efficacy, manufacturability and novelty. The selection
of PAT-DX1 was based on its performance in a suite of in vitro assays where it surpassed other variants in its ability
to penetrate into cells’ nuclei, and also subsequently kill cancers cells. PAT-DX1 has been shown to kill a wide range
of DNA repair-deficient cancer cells, and has reduced tumor size and increased survival in an animal model of
glioblastoma . Patrys acquired the rights to technology conjugating nanoparticles to Deoxymab 3E10 in 2017. The
Company will further develop PAT-DX1 conjugated to nanoparticles, designated PAT-DX1-NP.
• Deoxymab 5C6 is another lupus autoantibody that penetrates live cell nuclei. Similar to Deoxymab 3E10, 5C6
penetrates cells’ nuclei and is highly toxic to cancer cells and has similar potential to be used in cancer therapy.
Deoxymab 5C6 is currently in preclinical development.
2
Pipeline
Product
(Target)
Discovery
Preclinical
Phase I
Phase 2a
PAT-SC1
(CD55)
PAT-SM6
(GRP78)
PAT-LM1
(NONO)
PAT-DX1
(DNA)
PAT-DX1-
NP
(DNA)
Deoxymab
5C6
(DNA)
Chinese rights
out-licensed
M. Myeloma
Trial Deferred
Licensing
candidate
Licensed from
Yale University
Licensed from
Yale University
Licensed from
Yale University
3
Letter from Chairman and CEO
Dear Shareholders,
Welcome to Patrys’ 2018 Annual Report.
Patrys has had a successful 12 months with the reporting of a number of advances with its Deoxymab platform and
substantial strengthening of its financial position with both an underwritten rights issue and a follow on capital raise. The
Board and management team are pleased with progress to date and the continued opportunities in the cancer oncology
space. We believe Patrys’ technology provides a unique approach to treating cancer, especially those cancers with
reduced overall survival.
As mentioned previously, during this phase of development there may be long periods between announcements which is
reflective of the nature of the work being undertaken. The Board appreciates your patience throughout these times as we
focus Patrys’ programs and clinical strategy. In the coming months we will be reporting on the use of PAT-DX1 in a range of
animal models, and initiating the first stages of cell line development which is essential as we progress PAT-DX1 towards
the clinic.
The planned phase 1b/2a combination clinical trial of PAT-SM6 in patients with relapsed and refractory multiple myeloma
is still on hold due to previously described manufacturing issues. The Company is focusing its efforts on the licensed
novel nucleus-penetrating antibody technology platform (“Deoxymab”) from Yale University, until non-dilutive capital can
be sourced to progress the PAT-SM6 program.
Deoxymab
Deoxymab 3E10 is the name assigned by Patrys to 3E10, a lupus derived autoantibody. Unlike normal antibodies that the
body produces to bind to foreign cells (eg. pathogens) or aberrant cells (eg cancer cells) and trigger an immune response,
autoantibodies bind to normal cells. While most antibodies bind to markers on the surface of cells, Deoxymab 3E10
penetrates cells’ nuclei and binds directly to DNA. Having bound to the DNA, Deoxymab 3E10 inhibits DNA repair and
damages DNA. Normal cells repair DNA damage utilizing intact DNA repair processes, however, Deoxymab 3E10 can kill
cells that have mutations or deficiencies in DNA repair mechanisms as found in various cancer cells. As well as showing
single agent therapeutic potential, Deoxymab 3E10 has been shown to significantly enhance the efficacy of both chemo-
and radiotherapies.
Since acquiring the rights to develop and commercialize Deoxymab 3E10 Patrys has completed detailed in silico biology to
optimize Deoxymab 3E10 and selected a lead candidate PAT-DX1, a di-scFv antibody. The Company reported on a number
of pre-clinical studies in both 2H 2017 and 1H 2018. Additional pre-clinical studies are still ongoing and we are expecting
to make further announcements on the following research topics:
• Initiate stable cell line development of PAT-DX1 (H2 2018)
• PAT-DX1 - Solid cancer animal data (H2 2018)
• Select target indication for PAT-DX1 clinical development (H2 2018)
• PAT-DX1 – Further solid cancer animal data (Q4 2018)
• PAT-DX1 in combination with Temozolomide and radiation, brain cancer animal model (Q4 2018)
PAT-DX1 has potential as a therapy for cancers that remain difficult to treat including glioblastoma, endometrial, ovarian,
pancreatic, colon and some breast cancers. To date, PAT-DX1 has performed particularly well in animal models of
glioblastoma.
PAT-DX1 is a very exciting development stage asset with a number of patents filed around the technology to create a
barrier to entry for competitors. We have filed further patents to protect the humanized form, PAT-DX1. There is the
possibility to pair this technology with other existing treatments and create combination therapies, enhancing the
attractiveness of this asset to potential partners. Two further provisional patent applications have been filed and we look
forward to reporting those to our shareholders once they are published.
4
IgM assets
During the past year the Company has continued to put on hold any further research into PAT-SM6 and other IgM assets. The
Company has determined what resources would be needed to restart manufacturing, but given the significant cost and time
involved with these programs Patrys will only consider reactivation on a partnered, risk sharing basis or if non-dilutive funds
can be accessed. Discussions with a number of potential partners are ongoing.
The IgM patent portfolio has reached maturity and all of patents have now been granted. A research collaboration with
Macquarie University is ongoing, and will be extended to the end of 2018.
Patrys has been pleased to report in the period progress of its asset PAT-SC1, which was licensed in 2015 to Hefei Co-source
Biomedical, an integrated Chinese drug development company. Our Chinese partners have been working diligently to progress
the development of PAT-SC1, and the first annual Joint Development Committee meeting was held in China in October
2016. This license deal covers the exclusive development and commercialization rights for all oncology indications in China
(excluding Hong Kong and Taiwan) for PAT-SC1. Patrys received an up-front licensing fee, and may, pending the achievement of
prescribed milestones, receive multiple milestone payments and royalties on eventual product sales.
Looking ahead
The Patrys team is focused on progressing its Deoxymab platform with lead candidate PAT-DX1 and PAT-DX1 conjugated to
nanoparticles (PAT-DX1-NP) in a consolidated pre-clinical program both in the U.S. and Australia. Whilst the company has the
resources to progress its PAT-DX1 asset towards the clinic it will consider appropriate valued co-development opportunities
from reputable partner organisations. We are also focused on finding a suitable path forward for our existing IgM assets.
With prudent financial controls in place and a well credentialed Scientific Advisory Board the Company believes it’s in an
excellent position to build value from its existing base of capital and assets and looks forward to sharing this journey with its
shareholders over the coming year.
John Read
Chairman
Dr James Campbell
Managing Director and CEO
5
The Board of Directors
John Read, BSc (Hons), MBA, FAICD
Chairman
Mr. Read is an experienced Chairman and Director in public, private and government organisations. Through his
extensive career in venture capital, private equity and commercialization he has gained a depth of experience in the
formation and growth of emerging companies with an emphasis on commercial entities that provide broad societal
benefits. He is currently the Chairman of CVC Limited (ASX: CVC) and previously Chairman of Eildon Capital Limited
(ASX:EDC) from 2013 to 2016, Pro-Pac Packaging Limited (ASX:PPG) from 2005 to 2010, The Environmental Group
Limited (ASX:EGL) from 2001 to 2012 and The Central Coast Water Corporation from 2011 to 2014.
James Campbell, BSc(Hons), PhD, MBA, GAICD
Managing Director & Chief Executive Officer
Dr. Campbell has more than 25 years of international biotechnology research, management and leadership
experience and has been involved in the creation and/or transformation of multiple successful Australian
and international biotechnology companies. Dr. Campbell was previously the CFO and COO of ChemGenex
Pharmaceuticals Limited (ASX:CXS), where, as a member of the executive team he helped transform a research-based
company with a market capitalization of $10M to a company with completed clinical trials and regulatory dossiers
submitted to the FDA and EMA. In 2011 ChemGenex was sold to Cephalon for $230M. Dr. Campbell was a foundation
executive of Evolve Biosystems, and has assisted private biotechnology companies in Australia, New Zealand and the
USA with successful capital raising and partnering negotiations. Dr. Campbell sits on the IP and Commercialization
Advisory Committee of the CRC for Mental Health, and sits on the Advisory Board of Deakin University’s Centre for
Innovation in Mental and Physical Health and Clinical Treatment (IMPACT). Dr. Campbell is a Non-Executive Director
of both Invion Limited (ASX:IVX) and Prescient Therapeutics Limited (ASX:PTX).
Michael Stork, BBA
Non-Executive Director
Mr. Stork is the Managing Director of Stork Holdings Ltd, an Investment Holding company active in the Canadian
technology startup sector. Mr. Stork was until early this year active on the Board of Governors of the University of
Waterloo and is the Chairman of the Waterloo Accelerator Centre, a technology company incubator affiliated with
the University. He is currently the Chairman of Spartan Biosciences Inc., an Ottawa based DNA analytics company,
the Chairman of Dejero Labs Inc., a Waterloo based broadcast technology company, and active on the Boards of a
number of other leading Canadian technology startup companies.
Suzy Jones
Non-Executive Director
Ms. Jones is Founder and Managing Partner of DNA Ink LLC, a life sciences advisory firm in San Francisco with
clients in the United States and Europe. DNA Ink provides corporate strategic guidance to its clients that support
corporate growth. Prior to starting her own firm, Ms. Jones spent 20 years at Genentech where she served in
many roles including Interim Head of Partnering, Head of Business Development, Senior Project Manager and
Research Associate. She managed several products teams during this time including Rituxan, the first monoclonal
antibody launched to treat cancer. Ms. Jones has very extensive networks within the pharmaceutical and biotech
companies and VC community in North America. Ms. Jones is a Non-Executive Director of Calithera Biosciences,
Inc. (Nasdaq:CALA), a clinical-stage pharmaceutical company focused on discovering and developing novel small
molecule drugs directed against tumor metabolism and tumor immunology targets for the treatment of cancer.
6
Management
Melanie Leydin, BBus (Acc Corp Law)
Company Secretary
Melanie Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. She is a member of the Institute of
Chartered Accountants and is a Registered Company Auditor. She graduated from Swinburne University in 1997, became a
Chartered Accountant in 1999 and since February 2000 has been the principal of chartered accounting firm, Leydin Freyer.
The practice provides outsourced company secretarial and accounting services to public and private companies specialising
in the resources, technology, bioscience and biotechnology sector. Melanie has over 25 years’ experience in the accounting
profession and has extensive experience in relation to public company responsibilities, including ASX and ASIC compliance,
control and implementation of corporate governance, statutory financial reporting, reorganisation of companies and
shareholder relations.
Deanne Greenwood, BSc (Hons), PhD, MBA, GAICD
Vice President, Business Development & Intellectual Property
Dr. Greenwood joined Patrys in 2008 and has held various roles in the company. Dr. Greenwood’s efforts are focused on
commercialization of the IgM and Deoxymab assets and management of the intellectual property portfolio. Dr. Greenwood
has extensive experience in drug development, relationship management, contracts and grants. Dr. Greenwood led the
negotiations with Hefei Co-source Biomedical Co. LTD, a Chinese based company which has taken an exclusive license to
PAT-SC1. Prior to joining Patrys, Dr. Greenwood spent 10-years in academia conducting immunology research in the areas
of vaccine development and autoimmunity, with the last four years at the Centre for Animal Biotechnology, The University of
Melbourne. Dr. Greenwood has a PhD degree in Immunology from the Monash University, Masters of Business Administration
(Technology) from La Trobe University and is a graduate of the Australian Institute of Company Directors. Dr. Greenwood is a co-
author on 11 publications on immunological related topics.
Valentina Dubljevic, BSc, MBB, GAICD
Vice President, Scientific & Clinical Development
Ms. Dubljevic joined Patrys in June 2012 and is responsible for the pre-clinical and clinical development of Patrys’ products.
Ms. Dubljevic brings more than 20 years of scientific and commercial experience in the areas of anti- cancer therapies, vaccine
development, and diagnostics. Prior to joining Patrys, she worked at the Monash University conducting research on malaria
vaccine development; at Cytopia Limited developing small molecule anti-cancer drugs and at Monash Institute of Medical
Research (MIMR) developing antibody therapies for cancer. She has extensive experience related to the drug development,
management of pre-clinical studies, manufacturing, regulatory and clinical operations, contracts and project management
and has co-authored multiple scientific papers and grants. Ms. Dubljevic holds a Bachelor of Biomedical Science degree from
Griffith University, Brisbane, a Masters in Biotechnology and Business degree from RMIT and is a graduate of the Australian
Institute of Company Directors (GAICD).
Scientific Advisory Board
Pamela M. Klein, BA, MD
Dr. Pamela M. Klein completed her medical training at Stritch School of Medicine, Loyola University in Chicago, followed by
internal medicine training at Cedars-Sinai, Los Angeles, prior to spending 7 years working at the U.S. National Cancer Institute.
Dr. Klein then moved to Genentech where, as Vice President, Development she led the development of a large portfolio
of drugs including all the HER (Herceptin, Tarceva, Perjeta), Apoptosis (antibodies and small molecules) and Hematology
compounds. After Genentech Dr. Klein was appointed to the position of Chief Medical Officer of Intellikine where she built
the clinical development capability and brought multiple early compounds from laboratory to clinic prior to Intellikine
being acquired by Millennium/Takeda. Currently, Dr. Klein currently serves as an advisor to a range of different biotech and
investment companies, with roles on Scientific Advisory Boards and Corporate Boards as well as broader advisory roles.
Allen Ebens, BSc, PhD
Dr. Allen Ebens completed a PhD at UCLA and Post-doctoral training at UCSF before joining Exelixis as a scientist in the
Discovery Biology group. After 6 years with Exelixis, Dr. Ebens moved to Genentech where he worked in Research Oncology
for 11 years developing therapeutics from concept to clinic across multiple therapeutic platforms including antibodies, small
molecule drugs, and antibody-drug conjugates. Dr. Ebens was recruited from Genentech to establish Research Oncology
at Juno Therapeutics, and has served more recently as Senior Director of Immune Oncology at NGM Biopharmaceuticals.
Dr. Ebens is currently Chief Scientific Officer of Trucode Gene Repair. Over a twenty year career Dr. Ebens’ contributions
include significant contributions to the scientific literature as well as advancement of five discovery projects to clinical
development.
7
About Anti-DNA Autoantibodies
The study of the generation of autoantibodies has helped shape our understanding of the basic mechanisms of immune
regulation. It is a complex and growing field of research. Normally, the immune system is able to recognize and ignore the
body’s own healthy proteins, cells, and tissues, and to not overreact to non-threatening substances in the environment.
On occasion, the immune system ceases to recognize one or more of the body’s normal constituents as “self”, leading to
the production of pathological autoantibodies, and emergence of autoimmune diseases. Quantitative changes in the
profiles of particular autoantibodies can be indictors of disease status. Many autoimmune diseases (notably systemic lupus
erythematosus; SLE) are distinguished by the production of autoantibodies that specifically bind to DNA (known as anti-DNA
autoantibodies). The development of anti-DNA autoantibodies has not been fully elucidated.
It was originally thought that because the vast majority of DNA is housed within the nucleus, an area where antibodies were
considered unable to gain access, production of anti-DNA autoantibodies was unlikely to occur. It was believed that these
anti-DNA autoantibodies could only bind to the small amounts of free DNA present outside of cells (so-called extracellular
DNA, or xDNA). However, in recent years, a large body of evidence has accumulated demonstrating that a select group of
lupus anti-DNA autoantibodies can traverse into the nuclei of living cells where they can bind to their target DNA.
This finding raised the possibility that such autoantibodies could be used in molecular therapy techniques, in particular for
the treatment of cancer. Among the many antibodies that have been considered, two stand out as having great potential for
use against cancer, Deoxymabs 3E10 and 5C6.
About Deoxymab 3E10
Deoxymab 3E10 is a lupus autoantibody that penetrates live cell nuclei by binding to DNA or its precursors outside of cells
and then following it into cell nuclei through a nucleoside transporter. Once in the nucleus Deoxymab 3E10 interferes with
DNA repair processes, but with modest inhibition insufficient to kill a normal cells that have the ability to repair DNA damage.
In contrast cancer cells, that are exquisitely sensitive to DNA damage because their DNA repair machinery is already impaired,
accumulate more DNA damage than they can tolerate when they encounter Deoxymab 3E10, and ultimately die.
Deoxymab 3E10 is therefore selectively toxic to cancer cells that have deficiencies in DNA repair, including a wide range of
malignancies such as glioblastomas, endometrial, pancreatic, colon, prostate, breast and ovarian cancers. When combined
with DNA-damaging agents such as chemotherapy or radiation, Deoxymab 3E10 has an even greater effect.
• Generation of Humanized Form PAT-DX1
Since acquiring the rights to develop and commercialize Deoxymab 3E10 Patrys has completed detailed in silico analysis in
order to prepare Deoxymab 3E10 for clinical development. The Deoxymab 3E10 parental murine sequence was humanized
and de-immunized to remove any components that might cause lupus-like side effects and de-risked for manufacturing. In
addition, the new Deoxymab 3E10 variants generated were optimized to enhance their binding to DNA and increase their
effect on DNA repair-deficient cancer cells. Sixteen different sequence variants of di-scFv Deoxymab 3E10 fragments were
synthesized, cloned, expressed and tested in functional assays. The rationale behind creating di-scFv antibody format is to
allow more than one binding site to DNA (ie. di-scFv has two binding sites). The scientific article regarding the humanization
of Deoxymab 3E10 was published in leading scientific journal Biochemical and Biophysical Research Communications in
early 2018 (Z Rattray, V Dubljevic, NJW Rattray, DL Greenwood, CH Johnson, JA Campbell, JE Hansen. Re-engineering and
evaluation of anti-DNA autoantibody 3E10 for therapeutic applications. Biochem Biophys Res Commun. 2018, 496(3):
858-864).
Patrys has selected its lead candidate PAT-DX1, a di-scFv from the collection of 3E10 variants based on its physicochemical
attributes and ability to penetrate nuclei and selectively cause DNA damage and cell death in cancer cells with DNA repair defects.
3E10
3E10 (D33N) scFv
3E10 (D33N) di-scFv
PAT-DX1
CDR mutagenized to
enhance affinity for
DNA, scFv designed
to eliminate FC
di-scFv designed with
enhanced avidity and
increased effect on
HDR-deficient tumors
humanized/de-
immunized, CDR
mutagenized further
to enhance activity
The selection of PAT-DX1 allows Patrys to progress its pre-clinical program in a consistent manner. The same antibody
format and expression system is used to make multiple batches of material for pre-clinical testing.
Figure: Evolution of Deoxymab 3E10 into humanized PAT-DX1
8
PAT-DX1
Colon Cancer
In the period the Company announced that working with contract research organizations and collaborators at Yale School
of Medicine, Patrys has shown that PAT-DX1 outperformed the non-humanized 3E10 antibody in cell penetration and cancer
cell death assays. These pre-clinical studies confirmed that PAT-DX1 has the ability to kill colon cancer cells that lack key DNA
repair enzymes such as BRCA2, a modality consistent with the understanding that PAT-DX1 binds to nuclear DNA and blocks
DNA repair.
Glioblastoma
Glioblastoma is a particularly aggressive, highly malignant form of brain cancer characterized by very fast cellular
reproduction. Glioblastomas constitute approximately 17% of all primary brain cancers, with almost 12,000 new cases
diagnosed in the U.S. each year. The current standard of care for glioblastoma is surgical resection followed by radiation and
chemotherapy (temozolomide), with a median survival period of 15 months, depending on disease severity. One of the key
prognostic markers in glioblastoma is the methylation status of the promoter for DNA repair gene MGMT. Methylated MGMT is
predictive of better response to temozolomide and improved survival, while MGMT-unmethylated glioblastoma has a worse
prognosis and is more difficult to treat.
Initial experiments in the laboratory of Dr James Hansen at Yale School of Medicine showed that PAT-DX1 was active against
primary human glioblastoma tumor cells from patients.
Further work by Drs James Hansen and Jiangbing Zhou of Yale University then shared that PAT-DX1 administered by tail vein
injection significantly reduced tumour size and improved survival in an orthotopic animal model of MGMT-unmethylated
glioblastoma derived from human tumour explants. Mice treated with PAT-DX1 showed a statistically significant median
survival 20% longer than control animals with no observable toxicity.
Combination with PARP Inhibitor olaparib
The Hansen laboratory at Yale School of Medicine also found that both PAT-DX1 and the approved PARP inhibitor olaparib
killed a range of different cancer cells as single agents, and when used simultaneously their combined action was synergistic
rather than additive, supporting the understanding that they act through different but complementary pathways.
Olaparib is a targeted therapy for cancer, approved by both the FDA and EMA. Olaparib interferes with DNA repair and acts
against cancers with defects in homologous recombination due to BRCA1 or BRCA2 mutations, including some ovarian,
breast, and prostate cancers. Olaparib was the first PARP inhibitor
approved for use in humans, and numerous other PARP inhibitors
are in clinical trials. PARP inhibitors are particularly interesting in
the clinical setting because of their toxicity against cancer cells with
impaired DNA repair mechanisms.
Combinations of PAT-DX1 and olaparib were tested on both brain and
colon cancer cells with defective DNA repair pathways. In both cancers
PAT-DX1 and olaparib by themselves were toxic to the cells in a dose
responsive manner, and when used in combination they synergized to
significantly increase cancer cell death compared to use of either agent
singly. Furthermore, cells with intact DNA repair were not killed by
PAT-DX1, olaparib, or the combination. Taken together, these findings
indicate the potential for combinations of PAT-DX1 and PARP inhibitors
to have an increased impact on DNA repair-deficient tumors while still
sparing normal tissues.
Crossing the Blood Brain Barrier
In February 2018 the Company announced that PAT-DX1 administered
by tail vein injection crossed the blood brain barrier to significantly
reduce tumour size in an orthotopic animal model of glioblastoma
based on human tumor explants. Evaluation of brain sections
showed that the glioblastoma tumors in mice treated with PAT-DX1
were more than 40% smaller than the comparable tumors in control
mice. The blood brain barrier is a protective layer of endotheial cells
that only allows certain molecules to transit from the blood into the
cerebrospinal fluid that surrounds the brain. The blood brain barrier is
a significant challenge to drug development and that observation that
PAT-DX1 is able to cross and penetrate shows promise for its utility in
Originally published in BioPharma Dealmakers, September 2018
9
this space.
The Walter and Eliza Hall Institute of Medical Research
New Collaborations Established Utilising PAT-DX1
• Garvan Institute of Medical Research
An Australian Federal Government Innovation Connections grant has been awarded to support research aimed at
determining the efficacy of Patrys’ PAT-DX1 in in vitro studies of pancreatic cancer cell lines, and Garvan’s unique, genetically
well-characterised pancreatic cancer animal models, both as a single agent and in combination with therapies commonly
used in this indication. The collaboration should provide data regarding the potential effectiveness of PAT-DX1 as a treatment
for pancreatic cancer, which has the highest mortality rate of all major cancers.
•
The collaboration will be used to couple Patrys’ PAT-DX1 with a proprietary antibody from the WEHI (7D10) to generate a
bi-specific antibody with the potential to kill cancer cells via a novel pathway. Previous studies have shown that once inside
cells 7D10 interacts with the Bak protein to cause cell death, however a technology to reliably deliver 7D10 into cells has not
previously been identified. Combining the two complementary technologies by the generation of a bi-specific 7D10-PAT-
DX1 antibody will result in a novel antibody that should be able to enter a cell, bind to its target and act to help circumvent
survival pathways typically employed by cancer. Patrys and WEHI were recently awarded a $100,000 State Government
Victorian Medical Research Acceleration Fund grant to support research within the PAT-DX1 program that aims to develop
new treatments for cancer.
• Beth Israel Deaconess Medical Center (BIDMC)
This collaboration will bring together experts from Yale School of Medicine in New Haven, Connecticut and Beth Israel
Deaconess Medical Center (BIDMC) in Boston, Massachusetts. A pilot study has shown that PAT-DX1 has antitumor activity in
an orthotopic, immune-competent mouse model of triple negative breast cancer (TNBC), a particularly aggressive form of
breast cancer. The expanded research program will further investigate PAT-DX1 in this model.
PAT-DX1-NP
Glioblastoma
Glioblastoma is an aggressive form of brain cancer. Based on successful studies with PAT-DX1 alone further work was
performed with PAT-DX1 linked to nanoparticles (PAT-DX1-NP). The conjugated molecule was shown to be preferentially
attracted to tumor tissues and, as a result, delivered its payload specifically to tumors. Previous studies with murine 3E10
have shown that similar conjugations significantly increased the efficacy of drug therapy.
The Company announced that when compared to unconjugated nanoparticles, experiments in mice with orthotopic
glioblastoma brain tumors showed significantly higher localization of PAT-DX1-NP at the tumor sites. Further, PAT-DX1-
NP localization was not elevated over background in other organs, including the heart, lungs, liver, spleen and kidneys,
confirming the tumor-specificity of the conjugate. To enable visual quantification and localization of PAT-DX1-NP, the
nanoparticles used in the study were loaded with staining reagent; however, future studies will use nanoparticles loaded
with chemotherapeutic agents.
In addition, both PAT-DX1 alone and conjugated to nanoparticles have shown promise with preliminary studies on human
glioblastoma cancer stem cells. PAT-DX1-NPs showed significant increased localisation to tumor spheres and targeted cells
inside the spheres. These spheres are derived from human tumor explants and are grown in culture and resemble more
closely the heterogeneity of the tumor compared with other preclinical methodologies.
Triple Negative Breast Cancer
The Company announced studies performed in the laboratories of Dr James Hansen and Dr Jiangbing Zhou at Yale School
of Medicine in a xenograft triple negative breast cancer animal model. Mice with breast cancer tumors were treated with
free NPs or PAT-DX1-NPs, with both sets of nanocarriers loaded with a staining reagent to allow them to be directly tracked
in the mice by an imaging system. The PAT-DX1-NPs showed improved targeting of the primary tumors, which is consistent
with previous studies with murine 3E10 and PAT-DX1 in breast and glioblastoma tumor models. Significantly, it was observed
that PAT-DX1-NPs appeared not only to localise to primary tumors, but also to axillary lymph node metastases. This finding
supports the hypothesis that PAT-DX1 targets the cloud of extracellular DNA released by dying cancer cells. it is therefore not
surprising that PAT-DX1-NPs have a potential to target not only primary tumors but cancerous cells elsewhere in the body
including lymph nodes and distant metastases.
About Deoxymab 5C6
Deoxymab 5C6 is another lupus autoantibody that penetrates live cells nuclei. Similar to Deoxymab 3E10, 5C6
penetrates cells’ nuclei and is highly toxic to cancer cells and has similar potential to be used in cancer therapy. Yale
University has also found that 5C6 has a toxic effect on BRCA2-deficient cells in colon cancer.
10
IgM Assets
Patrys’ IgM natural human antibody assets have shown anti-tumor activity in mice and in humans, and have shown
a very good safety profile and signals of clinical efficacy. These antibodies can theoretically be combined with
existing chemotherapeutic treatments potentially without any cumulative toxicology effects. Patrys is one of only
a few companies worldwide with expertise in development of the IgM class of antibody. We continue with business
development efforts for all IgM assets in our portfolio.
PAT-SC1 License Update:
In 2015, the Chinese rights for PAT-SC1 were licensed to Hefei Co-source
Biomedical Co. LTD, which is progressing well with its development plans.
The Joint Development Committee met in October 2017, and Patrys’ VP,
Scientific and Clinical Development Ms. Valentina Dubljevic was pleased to
be hosted by our partner at its site in China. The pre-clinical development
of PAT-SC1 program including manufacturing utilising a CHO cell expression
system is progressing well, and a further Joint Development Meeting is
planned to be held in October 2018. This alliance provides possible future
milestone payments and royalties. Patrys has retained the right to develop and
commercialize PAT-SC1 outside of China (including Hong Kong and Taiwan).
PAT-SM6 update
Patrys in conjunction with its partners completed a review focussed on the
fundamental issues that arose with manufacturing of PAT-SM6 antibody.
Further clinical studies of PAT-SM6 in multiple myeloma will remain on hold
until non-dilutive capital can be sourced.
Intellectual Property
Patrys’ patent portfolio undergoes a constant process of expansion and
consolidation.
The six patents underlying Deoxymab 3E10, PAT-DX1, Deoxymab Nanoparticles
and 5C6 are licensed from Yale University and include:
• Cell-penetrating anti-DNA antibodies and uses thereof to inhibit DNA
repair
• Multivalent fragments of antibody 3E10 and methods of use thereof
• Cell penetrating nucleolytic antibody based cancer therapy
• Antibody-mediated autocatalytic, targeted delivery of
nanocarriers to tumors
• Binding proteins 1
• Binding proteins 2
Hefei Co-source Bio-medical Co. Ltd building
Shushan District, Hefei, Anhui, P.R China.
From left to right: Dr Shu Gao, Founder and CEO
of Hefei Co-source, Ms. Valentina Dubljevic, Patrys
VP, Scientific & Clinical Development, Dr. Shanchun
Zhang, CEO of Hefei Bio-Medicine at a meeting of
the Joint Development Committee
The first patent in the Deoxymab family “Cell-penetrating anti-DNA antibodies and uses thereof to inhibit DNA repair“
for cancer treatment has been granted in the U.S, Japan and China with pending applications in Europe and further U.S.
continuation filed. The predicted expiry date for the first filed patent is May 2032. A further two provisional applications
have been filed which are currently undisclosed.
The six patents that encompass the current IgM portfolio covering products PAT-SM6 and PAT-LM1 include:
• Adenocarcinoma specific antibody SAM-6, and uses thereof
• Human monoclonal antibody having fat-reducing effect
• Novel glycosylated peptide target in neoplastic cells
• Neoplasm specific antibodies and uses thereof
• LM-antibodies, functional fragments, LM-1 target antigen, and methods for making and using same
• PAT-LM1 epitopes and methods for using same
There are 25 granted applications in these families combined, and all cases have been granted. The first of these patents
will expire in 2024 and protection extended to 2032 for some families. Patrys is seeking to partner the IgM assets.
11
Recent Publications
Deoxymab 3E10
Rattray Z, Dubljevic V, Rattray NJW, Greenwood DL, Johnson CH, Campbell JA, Jansen JE. Re-engineering and
evaluation of anti-DNA autoantibody 3E10 for therapeutic applications. Biochem Biophys Res Commun, 2018,
496(3): 858-864.
Chen Z, Patel JM, Noble PW, Garcia C, Hong Z, Hansen JE and Zhou J. A lupus anti-DNA autoantibody mediates
autocatalytic, targeted delivery of nanoparticles to tumors. Oncotarget, 2016, 7(37): 59965-59975.
Noble PW, Bernatsky S, Clarke AE, Isenberg DA, Ramsey-Goldman R and Hansen JE. DNA-damaging autoantibodies
and cancer: the lupus butterfly theory. Nat Rev Rheumatol., 2016, 12(7): 429-34.
Weisbart RH, Chan G, Jordaan G, Noble PW, Liu Y, Glazer PM, Nishimura RN and Hansen JE. DNA-dependent
targeting of cell nuclei by a lupus autoantibody. Sci Rep., 2015, 5: 12022.
Noble PW, Chan G, Young MR, Weisbart RH and Hansen JE. Optimizing a lupus autoantibody for targeted cancer
therapy. Cancer Res., 2015, 75(11): 2285-91.
Deoxymab 5C6
Noble PW, Young MR, Weisbart RH and Hansen JE. A nucleolytic lupus autoantibody is toxic to BRCA2-deficient
cancer cells. Sci Rep., 2014, 4: 5958.
PAT-SC1
Hensel F, Timmermann W, Von Rahden B, Brändlein S, Rosenwald A, Illert B. Ten year follow up of a prospective
trial for the targeted therapy of gastric cancer with the human monoclonal antibody PAT-SC1, Oncol Rep., 2014,
31(3): 1059-66.
PAT-SM6
Rasche L, Menoret E, Dubljevic V, Menu E, Vanderkerken K, Lapa C, Steinbrunn T, Chatterjee M, Knop S, Düll J,
Greenwood DL, Hensel F, Rosenwald A, Einsele H, Brändlein S. A GRP78-directed monoclonal antibody recaptures
response in refractory multiple myeloma with extramedullary involvement, Clin. Cancer Res., 2016, 22: 4341–4349.
Rache L, Duell L, Castro I, Dubljevic V, Chatterjee M, Knop S, Hensel F, Rosenwald A, Einsele H, Topp M and
Brändlein S. GRP78-directed immunotherapy in relapsed or refractory multiple myeloma – results from a Phase I
trial with monoclonal antibody PAT-SM6, Haematologica, 2015, 100(3): 377-84.
Loos A, Gruber C, Altmann F, Mehofer U, Hensel F, Grandits M, Oostenbrink C, Stadlmayr G, Furtmuller PG and
Steinkellner H, Expression and glycoengineering of functionally active heteromultimeric IgM in plants, PNAS, 2014,
111(17): 6263-8.
12
Table of Contents
Directors’ report
Auditor’s independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report to the members of Patrys Limited
Shareholder information
14
27
28
29
30
31
32
57
58
61
13
Patrys Limited
Directors' report
30 June 2018
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of Patrys Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled
at the end of, or during, the year ended 30 June 2018.
Directors
The following persons were Directors of Patrys Limited during the whole of the financial year and up to the date of this report,
unless otherwise stated:
Mr. John Read (Non-Executive Chairman)
Dr. James Campbell (Managing Director & CEO)
Ms. Suzy Jones (Non-Executive Director)
Mr. Michael Stork (Non-Executive Director and Deputy Chairman)
Principal activities
During the financial year the principal continuing activities of the Group consisted of:
●
Commercialisation of the Group's proprietary technologies to develop novel antibody-based therapeutic products for
the treatment of cancer.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the Group after providing for income tax amounted to $2,497,252 (30 June 2017: $1,057,876).
Overview
Patrys is a biopharmaceutical company devoted to the development and commercialisation of novel antibody technologies
to improve the clinical outcomes for cancer patients.
The Company has two technology platforms;
1. Deoxymabs, which are nuclear-penetrating antibodies in pre-clinical development, and;
2. IgMs that the Company has developed over the past decade, including candidates that showed safety and signals
of efficacy in clinical trials in both melanoma and multiple myeloma.
The Company strengthened its financial position through the 2017-18 year, completing a $2.4 million rights issue in February
2018 and a $4.6 million capital raise in May 2018. These funds will predominantly be used to progress the Deoxymab
platform.
Deoxymabs
Patrys has licensed the exclusive global rights to two nuclear-penetrating antibodies (3E10 and 5C6) for cancer therapy from
Yale University.
Deoxymab 3E10 has the capacity to penetrate cancer cell nuclei, inhibit DNA repair and kill DNA repair-deficient cancer cells
with the BRCA2 and/or PTEN mutations. The antibody has the ability to sensitise cancer cells to radiation and chemotherapy
and interfere with their ability to sustain themselves through DNA repair. These characteristics of Deoxymab 3E10 open up
new avenues for researching treatment of BRCA2 and PTEN-related cancers including breast, brain gliomas, astrocytomas,
head and neck carcinoma.
Patrys has re-formatted Deoxymab 3E10 as a di-single chain fragment (scFv) to reduce the risk of non-specific activation
and associated side effects. This engineered form of Deoxymab 3E10 is known as PAT-DX1.
The past year has been particularly exciting for Patrys, and the Company has reported positive results from multiple pre-
clinical cell and animal models. Highlights of these experiments include:
• PAT-DX1 kills colon cancer cells that lack key DNA repair enzymes (BRCA2)
• PAT-DX1 is active against primary human glioblastoma explants from patients
• PAT-DX1 shows efficacy in animal model of triple negative breast cancer
• PAT-DX1 synergizes with the PARP inhibitor olaparib in cell culture
• PAT-DX1 crosses the blood brain barrier, reduces tumour size and increases survival in an orthotopic glioblastoma
model
• PAT-DX1 targets and kills glioblastoma cancer stem cells
14
Patrys Limited
Directors' report
30 June 2018
During the financial year the first patent protecting Deoxymab 3E10 as treatment for various cancers was granted by the
United States Patent and Trademark Office (USPTO) and patent protection was also filed for PAT-DX1.
Patrys has also licensed global rights to Deoxymab 3E10 linked to nanoparticles from Yale University. The nanoparticles can
be loaded with standard chemotherapeutic (or other) drugs and have been demonstrated to significantly increase the efficacy
of the drug therapy in pre-clinical models. There was some progress with this asset in the financial year, but more detailed
experiments with a range of payloads are planned for the 2018-19 financial year.
Patrys’ Scientific Advisory Board met to review the Deoxymab program most recently in April 2018 and remains enthusiastic
about the progress made with, and potential of, PAT-DX1.
IgM assets
A planned clinical trial of PAT-SM6 in 2015 was deferred because of failures in the manufacturing process. Given the
significant cost and time involved with these programs Patrys will only consider reactivation on a partnered, risk sharing basis
or if non-dilutive funds can be accessed.
Patrys’ IgM intellectual property portfolio was strengthened in October 2017 with the granting of an additional patent by the
USPTO to protect the use of PAT-LM1 for treating colon cancer metastasis.
In 2015 Patrys out-licensed the Chinese development and commercialization rights for its asset PAT-SC1 to Hefei Co-source
Biomedical, an integrated Chinese drug development company. Patrys received an up-front licensing fee, and may, pending
the achievement of prescribed milestones, receive multiple milestone payments and royalties on eventual product sales.
Patrys retains the right to develop and commercialize PAT-SC1 outside of China.
Through a Joint Development Committee and personal relationships, Patrys maintains a close alliance with Hefei Co-source
Biomedical, and is very pleased with the progress being made.
Looking ahead
The Patrys team remains focused on progressing its Deoxymab assets, particularly PAT-DX1 and cost-effectively developing
its IgM assets. Given the success of the PAT-DX1 program, the coming year will see the Company complete further pre-
clinical studies, both through contract research organisations and academic collaborations, to build understanding of the
potential applications of PAT-DX1 as it continues with efforts to progress towards a clinical trial.
The Company is also pursuing a number of insurance claims related to the failed manufacturing run of PAT-SM6 in 2014/15.
Given the magnitude, number and complexity of the claims this has been a protracted process, and the Patrys management
team continues to progress Patrys’ claims with its insurers.
Management and the Board believe that the company is well positioned to build on the significant value realised in 2017-18,
and looks forward to sharing this journey with its shareholders over the coming year.
Strategic focus
The Company’s current strategy is to build further value into the Deoxymab platform through pre-clinical activities, to
commence progression of the PAT-DX1 asset towards the clinic, and to seek to partner or fund through non-dilutive sources
the costly clinical development programs for the Company’s IgM assets.
Business development
The substantial progress made with the Deoxymab platform over the past financial year has generated a number of business
development discussions and collaboration opportunities that the Board evaluates on a case-by-case basis. Whilst the
Company has the resources to progress its PAT-DX1 asset towards the clinic it will consider appropriately valued co-
development opportunities from reputable partner organisations.
Patrys has an active alliance for the development of PAT-SC1 for the Chinese cancer market with the integrated Chinese
drug development company, Hefei Co-source Biomedical. This partnership delivers annual fees with potential milestone
payments, revenue sharing and royalties. The Company has ongoing efforts to establish additional partnerships for its IgM
assets.
Operating results
The Group held cash and term deposits of $6,605,459 (2017: $1,910,952) at reporting date. The Group's policy is to hold its
cash and cash equivalent deposits in 'A' rated or better deposits.
15
Patrys Limited
Directors' report
30 June 2018
The Group's strategy is to outsource product development expenses, including manufacturing, regulatory and clinical trial
expenses, to specialist, best of breed partner organisations. As a consequence, the Group has not incurred any major capital
expenditure for the period and does not intend to incur substantial commitments for capital expenditure in the immediate
future.
Consolidated revenue including other income during the period was $520,525 (2017: $1,355,340). This revenue includes
interest of $33,834 (2017: $44,512), R&D tax incentive income of $455,207 (2017: $410,163), licencing income of $27,500
(2017: $52,708), and other income of $Nil (2017: $823,611), mainly consisting of supplier refunds.
Total consolidated operating expenses for the period were $3,017,777 (2017: $2,413,216). Operating expenses include
research and development costs of $1,307,298 (2017: $1,265,377) which have been expensed in the year they were
incurred. The increase in R&D costs in 2018 is due to increased activity on the Deoxymab project with commencement of
pre-clinical and manufacturing works in the financial year. Administration and management costs contributed a further
$1,710,479 (2017: $1,147,839) to expenses from continuing operations. The increase during the financial year relates to a
higher legal costs for the insurance claim, and share based payments and other incentives.
Significant changes in the state of affairs
During the financial year:
- the Company issued 34,789,333 fully paid ordinary shares at a deemed issue price of $0.0051 (0.51 cents) per share,
being Tranche 2 consideration shares issued to the shareholders of Nucleus Therapeutics Pty Ltd in accordance with
the terms of the agreement and the ASX Announcement dated 29 March 2016;
- the Company issued 142,074,313 fully paid ordinary shares at an issue price of $0.017 (1.7 cents) per share pursuant
to a rights issue;
- the Company issued 8,139,744 fully paid ordinary shares at a deemed issue price of $0.017 (1.7 cents) per share as
consideration for consulting services;
- the Company issued 3,000,000 unlisted options exercisable at $0.0613 (6.13 cents) per option;
- the Company issued 2,500,000 unlisted options exercisable at $0.02 (2 cents) per option; and
- the Company issued 141,470,587 fully paid ordinary shares at an issue price of $0.034 (3.4 cents) per share pursuant
to a share placement.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
The Group will continue to pursue its objective of developing antibodies as therapies for a range of different cancers. Patrys
has a pipeline of anti-cancer antibodies for both internal development and as partnering opportunities.
The Group’s focus for the coming period will be to build further value into the Deoxymab platform through pre-clinical
activities, to commence progression of the PAT-DX1 asset towards the clinic, and on sourcing non-dilutive capital to restart
the clinical development of PAT-SM6, which has been shown to have anti-cancer properties in clinical studies.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
16
Other current directorships:
Former directorships (last 3 years): Eildon Capital Limited (ASX: EDC)
Special responsibilities:
Chairman of Nomination and Remuneration Committee
Member of Audit and Risk Committee
7,721,911 ordinary shares
Patrys Limited
Directors' report
30 June 2018
Information on Directors
Name:
Title:
Qualifications:
Experience and expertise:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
John Read
Non-Executive Chairman
BSc (Hons), MBA, FAICD
Mr. Read is an experienced Chairman and Director in public, private and government
organisations. Through his extensive career in venture capital, private equity and
commercialisation he has gained a depth of experience in the formation and growth of
emerging companies with an emphasis on commercial entities that provide broad
societal benefits. He is currently the Chairman of CVC Limited (ASX: CVC) and
previously Chairman of Eildon Capital Limited (ASX:EDC) from 2013 to 2016, Pro-Pac
Packaging Limited (ASX:PPG) from 2005 to 2010, The Environmental Group Limited
(ASX:EGL) from 2001 to 2012 and The Central Coast Water Corporation from 2011 to
2014.
CVC Ltd (since 1989).
James Campbell
Managing Director and Chief Executive Officer
Ph.D, MBA
Dr. Campbell has more than 20 years' of international biotechnology research,
management and leadership experience and has been involved in the creation and/or
transformation of multiple successful Australian and international biotechnology
companies. Dr. Campbell was previously the CFO and COO of ChemGenex
Pharmaceuticals Limited (ASX:CXS), where, as a member of the executive team he
helped transform a research-based company with a market capitalisation of $10 million
to a company with completed clinical trials and regulatory dossiers submitted to the
FDA and EMA. In 2011 ChemGenex was sold to Cephalon for $230 million. Dr.
Campbell was a foundation executive of Evolve Biosystems, and has assisted private
biotechnology companies in Australia, New Zealand and the USA with successful
capital raising and partnering negotiations. Dr. Campbell sits on the IP and
Commercialization Advisory Committee of the CRC for Mental Health, and sits on the
Advisory Board of Deakin University’s Centre for Innovation in Mental and Physical
Health and Clinical Treatment (IMPACT). Dr. Campbell is a Non-Executive Director of
both Invion Limited (ASX:IVX) and Prescient Therapeutics Limited (ASX:PTX).
Non-Executive Director of Invion Limited (ASX:IVX) and Prescient Therapeutics
Limited (ASX:PTX).
Former directorships (last 3 years): Non-Executive Director of Medibio Limited (ASX:MEB) (resigned 30/9/2016)
Interests in shares:
Interests in options:
29,546 fully paid ordinary shares
15,000,000 unlisted options exercisable at $0.0072 per option, expiring 24/11/2021
17
Patrys Limited
Directors' report
30 June 2018
Name:
Title:
Qualifications:
Experience and expertise:
Michael Stork
Non-Executive Director and Deputy Chairman
BBA
Mr. Stork is the Managing Director of Stork Holdings Ltd, an Investment Holding
company active in the Canadian technology startup sector. Mr. Stork was, until early
this year, active on the Board of Governors of the University of Waterloo and is the
Chairman of the Waterloo Accelerator Centre, a technology company incubator
affiliated with the University. He is currently the Chairman of Spartan Biosciences Inc.,
an Ottawa based DNA analytics company, the Chairman of Dejero Labs Inc., a
Waterloo based broadcast technology company, and active on the Boards of a number
of other leading Canadian technology startup companies.
Other current directorships:
None.
Former directorships (last 3 years): None.
Special responsibilities:
Member of Nomination and Remuneration Committee
Chairman of Audit and Risk Committee
98,773,814 fully paid ordinary shares (These shares are held by Stork Holdings 2010
Ltd. The shares are held by a related trust which Michael Stork in his own right does
not control).
Interests in shares:
Name:
Title:
Experience and expertise:
Suzy Jones
Non-Executive Director
Ms. Jones is Founder and Managing Partner of DNA Ink LLC, a life sciences advisory
firm in San Francisco with clients in the United States and Europe. DNA Ink provides
corporate strategic guidance to its clients that support corporate growth. Prior to starting
her own firm, Ms. Jones spent 20 years at Genentech where she served in many roles
including Interim Head of Partnering, Head of Business Development, Senior Project
Manager and Research Associate. She managed several product teams during this
time including Rituxan, the first monoclonal antibody launched to treat cancer. Ms.
Jones has very extensive networks within the pharmaceutical and biotech companies
and VC community in North America. Ms. Jones is a Non-Executive Director of
Calithera Biosciences, Inc. (Nasdaq:CALA), a clinical-stage pharmaceutical company
focused on discovering and developing novel small molecule drugs directed against
tumor metabolism and tumor immunology targets for the treatment of cancer.
Nil.
Other current directorships:
Former directorships (last 3 years): None.
Special responsibilities:
Interests in shares:
Member of Nomination and Remuneration Committee
Member of Audit and Risk Committee
3,000,000 fully paid ordinary shares.
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Ms Melanie Leydin, CA
Ms Leydin has 25 years’ experience in the accounting profession including 13 years in the Corporate Secretarial professions
and is a company secretary and finance officer for a number of entities listed on the Australian Securities Exchange. She is
a Chartered Accountant and a Registered Company Auditor. Since February 2000, she has been the principal of Leydin
Freyer, specialising in outsourced company secretarial and financial duties.
18
Patrys Limited
Directors' report
30 June 2018
Meetings of Directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the
year ended 30 June 2018, and the number of meetings attended by each Director were:
Full Board
Nomination and
Remuneration Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
John Read
James Campbell
Suzy Jones
Michael Stork
8
8
8
8
8
8
8
8
2
-
2
2
2
-
2
2
3
-
3
3
3
-
3
3
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant
committee.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward
governance practices:
●
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
capital management
The Board is responsible for determining and reviewing compensation arrangements for the Directors themselves, the Non-
Executive Chairman and the Senior Management team. The Board has established a Nomination and Remuneration
Committee, comprising of three Directors, the majority of which are Non-Executive Directors. This Committee is primarily
responsible for making recommendations to the Board on:
- The over-arching executive remuneration framework
- The operation of the incentive plans, including key performance indicators and performance hurdles
- Remuneration levels of executive directors and other key management personnel; and
- Non-executive director fees
The objective of the Committee is to ensure that remuneration policies and structures are fair and competitive and aligned
with the long term interests of the Company. The Corporate Governance Statement provides further information on the role
of this committee, and is available on the Company's website at www.patrys.com/patrys-corporate-governance/
19
Patrys Limited
Directors' report
30 June 2018
The Company has structured an executive remuneration framework that is market competitive and complimentary to the
reward strategy of the organisation.
The Company’s remuneration framework seeks alignment with shareholders’ interests and is in particular aligned to the rapid
commercialisation of the Company’s intellectual property and in achieving its milestones in a highly ethical and professional
manner.
The executive remuneration framework provides a mix of fixed and variable pay and performance incentive rewards.
Presently, the Company’s policy in relation to performance incentive rewards is to issue a mix of equity and cash bonuses
to executives. The Company does not have a policy or practice of cancelling or clawing-back performance-based
remuneration of its executives other than in accordance with the relevant plan rules.
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
Directors’ fees are determined by reference to industry standards and were last reviewed effective 1 September 2012.
Components of the remuneration package include a cash element together with equity instruments.
Directors’ fees are currently set at $95,000 for the Chairman and $60,000 per Non-Executive Director (note Ms. Jones
receives US$60,000) and reflect the demands which are made on and the responsibilities of the Directors. However, one
Non-Executive Director, Mr. Michael Stork, does not receive monetary Director fees and received no remuneration of any
kind during the year.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the Annual General Meeting held on 27 November 2009, where the
shareholders approved a maximum annual aggregate remuneration of $250,000.
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which
has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, is reviewed annually by the
Nomination and Remuneration Committee based on individual and business unit performance, the overall performance of
the Group and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the Group and provides additional value to the executive.
Incentives are payable to executives based upon the attainment of agreed corporate and individual milestones and are
reviewed and approved by the Board of Directors. The Board of Directors approved a short term incentive of $70,000 for Mr
James Campbell for the year ended 30 June 2018 which was paid in July 2018.
Executives and Directors are issued with equity instruments as LTIs (long term incentives) in a manner that aligns this
element of remuneration with the creation of shareholder wealth. LTI grants are made to executives and Directors who are
able to influence the generation of shareholder wealth and thus have a direct impact on the creation of shareholder wealth.
No such equity instruments were issued duing the year ended 30 June 2018.
20
Patrys Limited
Directors' report
30 June 2018
Consolidated entity performance and link to remuneration
Equity instruments may be issued to new employees, and upon performance review based on performance of the individual
and the Company both in absolute terms and relative to competitors in the biotechnology sector. Equity instruments that are
issued for performance are subject to performance targets set and approved by the Nomination and Remuneration
Committee.
The Company’s remuneration policy seeks to reward staff members for their contribution to achieving significant operational,
strategic, partnering, preclinical, clinical and regulatory milestones. These milestones build sustainable and long term
shareholder value.
Voting and comments made at the company's 23 November 2017 Annual General Meeting ('AGM')
At the 23 November 2017 AGM, 99.19% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2017. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables. Unless
otherwise noted, the named persons were key management personnel for the whole of the period ended 30 June 2018.
The key management personnel of the consolidated entity consisted of the following directors of Patrys Limited:
●
●
●
●
John Read (Chairman)
James Campbell (Managing Director and Chief Executive Officer)
Michael Stock (Non-Executive Director)
Suzy Jones (Non-Executive Director)
Short-term
Short-term
Post-
employment
Long-term
benefits
benefits
Cash salary
and fees benefits
Short-term
$
$
benefits
Annual
leave
$
benefits
Super-
annuation
$
Long
service
leave
$
Share-
based
payments
Equity-
settled
options
$
Total
$
95,000
77,216
-
-
-
-
-
-
-
-
-
-
95,000
77,216
279,951
70,000
7,894
20,052
4,270
16,667
398,834
96,000
548,167
-
70,000
-
7,894
-
20,052
-
4,270
-
16,667
96,000
667,050
2018
Non-Executive Directors:
John Read
Suzy Jones*
Executive Directors:
James Campbell**
Other Key Management
Personnel:
Melanie Leydin***
Ms Jones was paid $60,000 USD at an average exchange rate of $0.777 USD to $1 AUD.
Bonus of $70,000 paid to Mr Campbell in July 2018.
*
**
*** Fees shown for Ms Leydin were paid to Leydin Freyer Corporate Pty Ltd for the provision of company secretarial and
accounting services.
**** Mr Stork was not paid remuneration in 2018 and 2017.
21
Patrys Limited
Directors' report
30 June 2018
2017
Non-Executive Directors:
John Read
Suzy Jones*
Executive Directors:
James Campbell
Other Key Management
Personnel:
Melanie Leydin**
Short-term
Short-term
Post-
employment
Long-term
benefits
benefits
Cash salary
and fees benefits
Short-term
$
$
benefits
Annual
Leave
$
benefits
Super-
annuation
$
Long
service
leave
$
Share-
based
payments
Equity-
settled
options
$
Total
$
95,000
79,310
280,389
96,000
550,699
-
-
-
-
-
-
-
-
-
-
-
-
-
95,000
79,310
5,769
19,616
5,010
37,513
348,297
-
5,769
-
19,616
-
5,010
-
37,513
96,000
618,607
*
**
Ms Jones was paid $60,000 USD at an average exchange rate of $0.7565 USD to $1 AUD.
Fees shown for Ms Leydin were paid to Leydin Freyer Corporate Pty Ltd for the provision of company secretarial and
accounting services.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
John Read
Suzy Jones
Executive Directors:
James Campbell
Other Key Management
Personnel:
Melanie Leydin
Service agreements
Fixed remuneration
2017
2018
At risk - STI
At risk - LTI
2018
2017
2018
2017
100%
100%
100%
100%
-
-
78%
89%
18%
100%
100%
-
-
-
-
-
-
-
-
-
4%
11%
-
-
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
James Campbell
Managing Director and Chief Executive Officer
12 November 2014 as Non-Executive Director and 13 April 2015 as Managing Director
No fixed term for an ongoing term subject to termination by the Company with 6 months'
notice and termination by the employee with 6 months' notice of the employee to the
Company, or 12 months notice in the event of a successful takeover.
Dr Campbell will be entitled to an annual salary (inclusive of superannuation) of
$330,000 effective from 1 July 2018. The Remuneration Package is inclusive of any
fringe benefits tax for which the Company is liable in respect of the employee’s total
remuneration and any superannuation contributions. The employee's performance will
be reviewed annually or more frequently if required.
22
Patrys Limited
Directors' report
30 June 2018
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
John Read
Non-Executive Chairman
29 May 2007. A new agreement became effective 1 December 2009
No fixed term.
$95,000 per annum to be reviewed independently and annually by the Board of
Directors.
Suzy Jones
Non-Executive Director
15 December 2011
No fixed term.
$US60,000 per annum to be reviewed independently and annually by the Board of
Directors.
Melanie Leydin
Company Secretary
1 October 2015
No fixed term, with 1 months' notice.
$8,000 per month for company secretarial and accounting services
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to Directors and other key management personnel as part of compensation during the year
ended 30 June 2018.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and other key
management personnel in this financial year or future reporting years are as follows:
Name
Number of
options
granted
Grant date
24/11/2016
James Campbell
5,000,000
24/11/2016
James Campbell
5,000,000
Options granted carry no dividend or voting rights.
Vesting date and
exercisable date
Vested
24/11/2017 and
exercisable
thereafter
24/11/2018 and
exercisable
thereafter, subject
to Company
meeting share
price hurdle
Expiry date
Exercise price at grant date
Fair value
per option
21/11/2021
21/11/2021
$0.0078
$0.00360
$0.0078
$0.00309
23
Patrys Limited
Directors' report
30 June 2018
The number of options over ordinary shares granted to and vested by Directors and other key management personnel as
part of compensation during the year ended 30 June 2018 are set out below:
Name
James Campbell
Number of
Number of
Number of
Number of
options
granted
options
granted
options
vested
options
vested
during the
during the
during the
during the
year
2018
year
2017
year
2018
year
2017
-
15,000,000
5,000,000
5,000,000
Details of options over ordinary shares granted, vested and lapsed for Directors and other key management personnel as
part of compensation during the year ended 30 June 2018 are set out below:
Name
Grant date
Vesting date
Number of Value of
options
granted
options
granted
$
Value of
options
vested
$
Number of Value of
options
lapsed
$
options
lapsed
James Campbell
24/11/2016
24/11/2017
-
-
18,417
-
-
Additional information
The earnings of the Group for the five years to 30 June 2018 are summarised below:
2018
$
2017
$
2016
$
2015
$
2014
$
Revenue and other income
Net profit/(loss) before tax
Net profit/(loss) after tax
520,525
(2,497,252)
(2,497,252)
531,729
(1,057,876)
(1,057,876)
867,653
(1,080,784)
(1,080,784)
2,224,481
(8,463,492)
(8,470,382)
759,683
(7,280,929)
(7,289,090)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year start ($)
Share price at financial year end ($)
Basic earnings per share (cents per share)
0.0100
0.0580
(0.2653)
0.0100
0.0100
(0.1420)
0.0100
0.0100
(0.1500)
0.0300
0.0100
(1.2200)
0.0200
0.0300
(1.2100)
2018
2017
2016
2015
2014
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each Director and other members of key management
personnel of the Group, including their related parties, is set out below:
Balance at Received
as part of
the start of
the year
remuneration Additions
Disposals/
other*
Balance at
the end of
the year
Ordinary shares
John Read
Michael Stork
James Campbell
Suzy Jones
6,660,890
95,731,764
25,000
3,000,000
105,417,654
-
-
-
-
-
1,211,073
3,042,050
4,546
-
4,257,669
(150,052)
-
-
-
(150,052)
7,721,911
98,773,814
29,546
3,000,000
109,525,271
*
The Disposals/Other item for the 2018 financial year is cancellation of shares as part of the loan share plan.
24
Patrys Limited
Directors' report
30 June 2018
Option holding
The number of options over ordinary shares in the Company held during the financial year by each Director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Options over ordinary shares
James Campbell
Balance at
the start of
the year
Granted
15,000,000
15,000,000
Exercised
-
-
-
-
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
15,000,000
15,000,000
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Patrys Limited under option at the date of this report are as follows:
Grant date
24 November 2016
19 April 2017
19 April 2017
15 March 2018
15 March 2018
1 June 2018
Expiry date
24 November 2021
1 July 2021
19 April 2022
1 July 2022
15 March 2023
18 April 2023
Exercise
price
Number
under option
$0.0072
$0.0072
$0.0072
$0.0613
$0.0613
$0.0200
24,000,000
2,500,000
500,000
2,500,000
500,000
2,500,000
32,500,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Patrys Limited issued on the exercise of options during the year ended 30 June 2018 and
up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company
or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
25
Patrys Limited
Directors' report
30 June 2018
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the Group are important.
Details of the amount paid or payable to the auditor (BDO East Coast Partnership) for audit and non-audit services provided
during the year are set out in Note 20.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit and Risk
Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001 for the following reasons:
●
All non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the impartiality
and objectivity of the auditor.
None of the services undermine the general principles relating to auditor independence as set out in Professional
Statement APES 110, including reviewing or auditing the auditor’s own work, acting in a management or a decision-
making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.
●
Officers of the Company who are former partners of BDO East Coast Partnership
There are no officers of the Company who are former partners of BDO East Coast Partnership.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this Directors' report.
Auditor
BDO East Coast Partnership continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
Mr. John Read
Chairman
24 August 2018
26
Patrys Limited
Auditor's independence declaration
27
Patrys Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
Revenue
Other income
Expenses
Research & development expenses
Administration & management expenses
Loss before income tax expense
Income tax expense
Loss after income tax expense for the year attributable to the Owners of
Patrys Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the Owners of Patrys
Limited
Note
Consolidated
2018
$
2017
$
5
6
8
520,525
531,729
-
823,611
(1,307,298)
(1,710,479)
(1,265,377)
(1,147,839)
(2,497,252)
(1,057,876)
-
-
(2,497,252)
(1,057,876)
(5,977)
(5,977)
4,797
4,797
(2,503,229)
(1,053,079)
Cents
Cents
Basic earnings per share
Diluted earnings per share
27
27
(0.2653)
(0.2653)
(0.1420)
(0.1420)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
28
Patrys Limited
Statement of financial position
As at 30 June 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employee benefits
Total current liabilities
Non-current liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2018
$
2017
$
9
10
11
12
4,605,459
643,725
2,099,680
7,348,864
1,910,952
500,728
78,860
2,490,540
5,633
618,750
624,383
4,341
663,750
668,091
7,973,247
3,158,631
13
574,564
86,006
660,570
415,120
64,874
479,994
21,202
21,202
15,540
15,540
681,772
495,534
7,291,475
2,663,097
14
15
67,039,044
588,561
(60,336,130)
60,035,971
518,155
(57,891,029)
7,291,475
2,663,097
The above statement of financial position should be read in conjunction with the accompanying notes
29
Patrys Limited
Statement of changes in equity
For the year ended 30 June 2018
Consolidated
Foreign
currency
translation
reserve
$
Share option
reserve
$
Share loan
plan
reserve
$
Issued
capital
$
Other
reserve
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2016
60,035,971
(18,523)
9,358
154,810
360,000 (56,903,147)
3,638,469
Loss after income tax expense
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Reallocation of value of
expired and cancelled equity
Vested & lapsed options
Share based payments (note
28)
-
-
-
-
-
-
-
4,797
4,797
-
-
-
-
-
-
-
-
(1,057,876)
(1,057,876)
-
4,797
-
(1,057,876)
(1,053,079)
-
-
-
-
(5,416)
(64,578)
-
76,968
739
-
-
-
64,578
5,416
-
-
-
77,707
Balance at 30 June 2017
60,035,971
(13,726)
80,910
90,971
360,000 (57,891,029)
2,663,097
Consolidated
Foreign
currency
translation
reserve
$
Share option
reserves
$
Share loan
plan
reserve
$
Issued
capital
$
Other
reserve
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2017
60,035,971
(13,726)
80,910
90,971
360,000 (57,891,029)
2,663,097
Loss after income tax expense
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Reallocation of value of
expired and cancelled equity
Vested & lapsed options
Share issue
Share issue costs
Issue of shares in
consideration for Nucleus
Transactions with owners in
their capacity as owners:
Share-based payments (note
28)
-
-
-
-
(5,977)
(5,977)
-
-
-
-
-
-
-
-
(2,497,252)
(2,497,252)
-
(5,977)
-
(2,497,252)
(2,503,229)
-
-
7,363,641
(540,568)
180,000
-
-
-
-
-
-
(4,126)
-
-
(48,025)
-
-
-
-
-
-
-
48,025
4,126
-
-
-
-
7,363,641
(540,568)
-
-
(180,000)
-
-
-
-
308,534
-
-
-
308,534
Balance at 30 June 2018
67,039,044
(19,703)
385,318
42,946
180,000 (60,336,130)
7,291,475
The above statement of changes in equity should be read in conjunction with the accompanying notes
30
Patrys Limited
Statement of cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Payments to suppliers and employees (inclusive of GST)
Interest and other income
R&D tax incentive
Government grants
Supplier refunds
Licensing income
Note
Consolidated
2018
$
2017
$
(2,450,880)
31,447
292,776
12,435
-
27,500
(2,312,898)
60,120
203,668
15,340
729,289
27,500
Net cash used in operating activities
26
(2,086,722)
(1,276,981)
Cash flows from investing activities
Payments for property, plant and equipment
Investment in term deposit
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Net cash from financing activities
(4,125)
(2,000,000)
(2,771)
-
(2,004,125)
(2,771)
14
7,015,265
(199,015)
6,816,250
-
-
-
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
2,725,403
1,910,952
(30,896)
(1,279,752)
3,215,039
(24,335)
Cash and cash equivalents at the end of the financial year
9
4,605,459
1,910,952
The above statement of cash flows should be read in conjunction with the accompanying notes
31
Patrys Limited
Notes to the financial statements
30 June 2018
Note 1. General information
The financial statements cover Patrys Limited as a Group consisting of Patrys Limited and the entities it controlled at the end
of, or during, the year. The financial statements are presented in Australian dollars, which is Patrys Limited's functional and
presentation currency.
Patrys Limited is a listed public company limited by shares, incorporated and domiciled in Australia.
A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 24 August 2018. The
Directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective
notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Going concern
It is noted that for 2018 financial year, the Group incurred a loss from continuing operations after income tax of $2,497,252
(2017: $1,057,876) and had consolidated net operating cash outflows of $2,086,722 (2017: $1,276,981).
The financial statements have been prepared on the basis that the Group is a going concern, which contemplates normal
business activity, realisation of assets and the settlement of liabilities in the normal course of business for the following
reasons:
●
●
●
At 30 June 2018, the Group had net current assets of $6,688,294 (2017: $2,010,546);
Cash flow forecasts prepared by management demonstrate that the Group has sufficient funds to meet commitments
over the next twelve months;
At 30 June 2018, the Group recognised a receivable of $593,436 from the R&D tax incentive, which is expected to be
received in the first half of the 2019 financial year.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment
properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 23.
32
Patrys Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Patrys Limited ('Company'
or 'parent entity') as at 30 June 2018 and the results of all subsidiaries for the year then ended. Patrys Limited and its
subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises
the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Patrys Limited's functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Current and non-current classification
Assets and liabilities are presented in the Statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
33
Patrys Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. They are subsequently measured at either
amortised cost or fair value depending on their classification. Classification is determined based on the purpose of the
acquisition and subsequent reclassification to other categories is restricted.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the risks and rewards of ownership.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised
in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or
group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a
breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due to
economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy
or other financial reorganisation; the disappearance of an active market for the financial asset; or observable data indicating
that there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference between the
asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been recognised
had the impairment not been made and is reversed to profit or loss.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non -
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the Statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2018. The Group's assessment of
the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out
below.
34
Patrys Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall
be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets
are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial
recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income
('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity' s own
credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting
requirements are intended to more closely align the accounting treatment with the risk management activities of the entity.
New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be
measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since
initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The
Group will adopt this standard from 1 January 2018 and it is not expected to materially impact the Company's performance.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single
standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or impli ed)
to be identified, together with the separate performance obligations within the contract; determine the transaction price,
adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance
obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no
distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be
presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the
service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied
over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised
as the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial
position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's
performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to
understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a customer. The Group will adopt this standard from 1
July 2018 and it will not materially impact the Company's performance.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
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. The fair value is determined by using either the Binomial or Black-Scholes
model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact profit or loss and equity.
35
Patrys Limited
Notes to the financial statements
30 June 2018
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Fair value measurement hierarchy
The Group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the
lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in
active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than
quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3:
Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value
and therefore which category the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include
discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable
inputs.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations
or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously
estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written
down.
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining
the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business
for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based
on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the
carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such
determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Employee benefits provision
As discussed in note 2, the liability for employee benefits expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases
through promotion and inflation have been taken into account.
Note 4. Operating segments
Identification of reportable operating segments
A segment is a component of the consolidated entity that engages in business activities to provide products or services within
a particular economic environment. The consolidated entity operates in one business segment, being the conduct of research
and development activities in the biopharmaceutical sector. The Board of Directors assess the operating performance of the
group based on management reports that are prepared on this basis. The group has established activities in more than one
geographical area, however these activities support the research and development conducted by the consolidated entity and
are considered immaterial for the purposes of segment reporting. The group invests excess funds in short term deposits but
this is not regarded as being a separate segment.
Accounting policy for operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
36
Patrys Limited
Notes to the financial statements
30 June 2018
Note 5. Revenue
Licensing income
R&D tax incentive income
Interest income
Other income
Government grants
Revenue
Consolidated
2018
$
2017
$
27,500
455,207
33,834
-
3,984
52,708
410,163
44,512
555
23,791
520,525
531,729
Accounting policy for revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration received or receivable.
Licensing income
Licensing income is recognised over the period to which the license pertains.
R&D tax incentive income
Research and development tax incentive income is recognised in the period which the expenditure giving rise to the tax
benefit was incurred.
Interest
Interest revenue is recognised as interest accrues.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Note 6. Other income
Foreign exchange gain/(loss)
Supplier refunds
Other income
Consolidated
2018
$
2017
$
-
-
-
(22,968)
846,579
823,611
37
Patrys Limited
Notes to the financial statements
30 June 2018
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Amortisation/Impairment
License and registered patents
Total depreciation and amortisation
Operating expenses
Research and development expenses
Operating lease expenses
Employee salary and benefit expense
Defined contribution superannuation expense
Salary and employee benefit expenses
Total employment expenses
Share Based Payments Expense
Share Based Payments Expense
Note 8. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Effect of revenue that is not assessable in determining taxable loss
Effect of expenses that are not deductible in determining taxable loss
Deferred tax assets not brought to account
Income tax expense
Consolidated
2018
$
2017
$
2,833
2,545
45,000
45,000
47,833
47,545
1,307,298
-
1,265,377
16,194
1,307,298
1,281,571
41,773
781,280
43,933
710,676
823,053
754,609
308,534
77,707
Consolidated
2018
$
2017
$
(2,497,252)
(1,057,876)
(749,176)
(317,363)
145,818
403,748
199,610
(131,713)
342,840
106,236
-
-
38
Patrys Limited
Notes to the financial statements
30 June 2018
Note 8. Income tax expense (continued)
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary differences attributable to:
Tax losses - revenue
Deductible temporary differences
Total deferred tax assets not recognised
Consolidated
2018
$
2017
$
15,273,221
342,964
15,076,259
332,991
15,616,185
15,409,250
The benefit of these deferred tax assets (not recognised) will only be obtained if:
(i) the entities derive future assessable income of a nature and of an amount sufficient to enable the benefits from the
deduction for losses to be realised;
(ii) the entities continue to comply with the conditions for deductibility imposed by the law; and no changes in tax legislation
adversely affect the entities in realising the relevant benefits from deduction for the losses; and
(iii) no changes in tax legislation adversely affect the entities in realising the relevant benefits from deduction for the losses.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
- When the deferred income tax asset or liability arises from the initial recognition of goodwill or 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 nor
taxable profits; or
- When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for t he
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authori ty on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
39
Patrys Limited
Notes to the financial statements
30 June 2018
Note 9. Current assets - cash and cash equivalents
Cash at bank
Cash on deposit
Consolidated
2018
$
2017
$
4,605,459
-
1,260,952
650,000
4,605,459
1,910,952
The Group's exposure to interest rate and foreign currency risk is discussed in Note 17.
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities 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.
As at 30 June 2018, the Company held $2 million of cash on deposit with a maturity date greater than 3 months. Refer to
Note 11.
Note 10. Current assets - trade and other receivables
Accrued revenue
Research & Development incentive receivable
Other receivables
Consolidated
2018
$
2017
$
25,208
593,436
25,081
25,208
431,005
44,515
643,725
500,728
During the period, the Group recognised an accrual for the Research & Development (R&D) tax incentive receivable. Under
this regime, as Patrys has an aggregated annual turnover of under $20 million, it is entitled to a refundable R&D credit of
43.5% (2017: 43.5%) on the eligible R&D expenditure incurred on eligible R&D activities.
The 43.5% (2017: 43.5%) refundable R&D tax offset is accounted for under AASB 120 Accounting for Government Grants
and Disclosure of Government Assistance and is recorded as income in the Statement of Profit or Loss & Other
Comprehensive Income.
Accounting policy for other receivables
Other receivables are recognised at amortised cost, less any provision for impairment.
Note 11. Current assets - other financial assets
Prepayments
Term deposit
40
Consolidated
2018
$
2017
$
99,680
2,000,000
78,860
-
2,099,680
78,860
Patrys Limited
Notes to the financial statements
30 June 2018
Note 12. Non-current assets - intangibles
Intellectual property - at cost
Less: Accumulated amortisation
Consolidated
2018
$
2017
$
720,000
(101,250)
720,000
(56,250)
618,750
663,750
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2016
Amortisation expense
Balance at 30 June 2017
Amortisation expense
Balance at 30 June 2018
Intellectual
property
$
Total
$
708,750
(45,000)
663,750
(45,000)
708,750
(45,000)
663,750
(45,000)
618,750
618,750
Amortisation and impairment expense is included in the line item ‘research and development’ in the Statement of profit or
loss and other comprehensive income.
Intangible assets comprise licences, intellectual property, trademarks and registered patents and have a finite useful life.
Amortisation has been historically calculated using straight line method over the estimated useful life, which ranges from 5
to 20 years. The Group amortises the Nucleus intellectual property based on an estimated useful life of 16 years.
Intellectual property which includes platform technology and product related intellectual property is reviewed on a regular
basis and where a decision has been made not to pursue a product, the remaining value recorded as an asset is impaired.
At balance date, the directors also review the intellectual property portfolio to determine whether there are any indicators of
impairment related to intellectual property.
In 2016 the Group acquired Nucleus intellectual property. The acquisition provides Patrys with licence rights to a portfolio of
novel anti-DNA antibodies that penetrate cell nuclei. This novel pre-clinical oncology asset and platform has multiple potential
applications to treat a range of cancers.
Accounting policy for intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
Intellectual property
Significant costs associated with intellectual property are deferred and amortised on a straight-line basis over the period of
their expected benefit, being their finite life of 16 years.
41
Patrys Limited
Notes to the financial statements
30 June 2018
Note 13. Current liabilities - trade and other payables
Trade payables
Other creditors and accruals
Consolidated
2018
$
2017
$
220,383
354,181
65,276
349,844
574,564
415,120
Refer to note 17 for further information on financial instruments.
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
Note 14. Equity - issued capital
Consolidated
2018
Shares
2017
Shares
2018
$
2017
$
Ordinary shares - fully paid
1,070,225,902
744,432,206
67,039,044
60,035,971
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Expiration of shares from share loan plan
Expiration of shares from share loan plan
1 July 2016
19 December 2016
30 June 2017
745,253,370
(537,804)
(283,360)
Balance
Tranche 2 consideration shares issued to
shareholders of Nucleus Therapeutics Pty Ltd
Rights issue
Share issue costs
Share issue
Share issue
Share issue
Share issue costs
Expiration of shares from share loan plan
Expiration of shares from share loan plan
30 June 2017
744,432,206
31 July 2017
16 February 2018
23 May 2018
23 May 2018
23 May 2018
27 June 2018
30 June 2018
34,789,333
142,074,313
-
8,139,744
135,294,117
6,176,470
-
(642,781)
(37,500)
60,035,971
-
-
60,035,971
180,000
2,415,265
(99,398)
138,376
4,600,000
210,000
(441,170)
-
-
$0.0051
$0.0170
$0.0170
$0.0340
$0.0340
Balance
30 June 2018
1,070,225,902
67,039,044
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company
does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
42
Patrys Limited
Notes to the financial statements
30 June 2018
Note 14. Equity - issued capital (continued)
Capital risk management
The Group's objective when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost
of capital.
Capital is regarded as total equity, as recognised in the consolidated Statement of financial position, plus net debt. Net debt
is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current Company's share price at the time of the investment. The Group is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The capital risk management policy remains unchanged from the 30 June 2017 Annual Report.
Accounting policy for issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Note 15. Equity - reserves
Foreign currency reserve
Share options reserve
Share loan plan reserve
Other reserves
Consolidated
2018
$
2017
$
(19,703)
385,318
42,946
180,000
(13,726)
80,910
90,971
360,000
588,561
518,155
Foreign currency reserve
Exchange differences relating to translation from functional currencies of the Group’s foreign controlled entities into Australian
Dollars are bought to account by entries made directly to the foreign currency translation reserve.
Share loan plan reserve
The share loan plan reserve arises on issue of equity under the Loan Share Plan or the Executive Share Option Plan to
executives and senior employees. Amounts are transferred out of the reserves and into issued capital when the loans are
repaid or the options are exercised. Amounts are transferred to accumulated losses when the shares or options are cancelled.
Further information about share based payments to Directors and key management personnel is made at Note 28 of the
financial statements.
Share based payment reserve
The equity settled share based payment reserves arise on issue of options under the Employee Share Based Payment plan
to executives and senior employees. Amounts are transferred out of the reserves and into issued capital when the options
are converted to shares. Amounts are transferred to accumulated losses when the shares or options are cancelled. Further
information about share based payments to Directors and key management personnel is provided at Note 28 of the financial
statements.
Other reserves
The other reserve consists of Tranche 3 shares for the acquisition of Nucleus Intellectual Property. When the Group meets
the relevant milestone and the shares are issued, the amount is transferred out of the reserve and into issued capital.
43
Patrys Limited
Notes to the financial statements
30 June 2018
Note 15. Equity - reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out in the Statement of changes
in equity
Note 16. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 17. Financial instruments
Financial risk management objectives
The Group’s treasury function monitors and manages the financial risks relating to the operations of the Group through
internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including
currency risk, fair value interest rate risk and price risk), credit risk and liquidity risk. There have been no changes to these
risks since the previous financial year.
The Board of Directors ensures that the Group maintains a competent management structure capable of defining, analysing,
measuring and reporting on the effective control of risk inherent in the Group’s underlying financial activities and the
instruments used to manage risk. Key financial risks including interest rate risk and foreign currency risk are reviewed by
management on a regular basis and are communicated to the Board so that it can evaluate and impose its oversight
responsibility. The Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes. The Company and the Group have a policy regarding foreign exchange risk management. This and
other financial risks are managed prudently by the Board and the Audit and Risk Committee.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising and optimisation of the return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings as disclosed in Notes 14, and 15, respectively. The Group
operates globally, primarily through subsidiary companies established in the markets in which the Group trades. None of the
Group’s entities are subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand the Group’s assets.
Market risk
Foreign currency risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency rates. The Group’s exposure to
foreign currency is predominately in US dollars, Pound Sterling and Euros. The Group has maintained cash in US dollars,
Pound Sterling and Euros to cover a portion of its anticipated US dollar and Euro expenditures.
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuation
arise. Exchange rate exposures are managed within approved policy parameters. The Group manages the currency risk by
monitoring the trend of the US dollar, Pound Sterling and Euro. The Group maintains US dollar, Pound Sterling and Euro
bank accounts to cover a portion of its anticipated expenditures in the respective foreign currencies.
44
Patrys Limited
Notes to the financial statements
30 June 2018
Note 17. Financial instruments (continued)
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting
date were as follows:
Consolidated
US dollars
Euros
Pound Sterling
Assets
Liabilities
2018
$
2017
$
2018
$
2017
$
27,337
166,316
15,162
373,621
499
52
16,924
161,970
10,968
160,899
107,350
5,594
208,815
374,172
189,862
273,843
Consolidated - 2018
% change
AUD strengthened
Effect on loss
before tax
Effect on
equity
AUD weakened
Effect on loss
before tax
Effect on
equity
% change
US Dollars
Euros
Pound Sterling
10%
10%
10%
(946)
(395)
(382)
(946)
(395)
(382)
(10%)
(10%)
(10%)
(1,723)
(1,723)
1,158
483
465
2,106
1,158
483
465
2,106
Consolidated - 2017
% change
AUD strengthened
Effect on loss
before tax
Effect on
equity
AUD weakened
Effect on loss
before tax
Effect on
equity
% change
US Dollars
Euros
Pound Sterling
10%
10%
10%
(33,966)
(45)
(5)
(33,966)
(45)
(5)
(10%)
(10%)
(10%)
41,513
55
6
41,513
55
6
(34,016)
(34,016)
41,574
41,574
Price risk
Price risk is the risk that future cashflows derived from financial instruments will be changed as a result of a market price
movement, other than foreign currency rates and interest rates. The Group is not exposed to any material commodity price
risks.
Interest rate risk
The Group's exposure to market interest rates relates primarily to the Group's short term deposits held and deposits at call.
The variance in market interest rates on interest income is not material.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the
Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral
where appropriate as a means of mitigating the risk of financial loss from defaults.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is
not significant. There are no significant concentrations of credit risk within the Group and financial instruments are spread
amongst a number of financial institutions to minimise the risk of default of counterparties.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to pay its debts as and when they fall due. The Group has no borrowings
at reporting date and the Directors ensure that the cash on hand is sufficient to meet the commitments of the Group at all
times during the research and development phase.
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash and where necessary
unutilized borrowing facilities are maintained.
45
Patrys Limited
Notes to the financial statements
30 June 2018
Note 17. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the Statement of financial position.
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade payables
Total non-derivatives
Consolidated - 2017
Non-derivatives
Non-interest bearing
Trade payables
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
574,564
574,564
-
-
-
-
-
-
574,564
574,564
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
415,120
415,120
-
-
-
-
-
-
415,120
415,120
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 18. Fair value measurement
Accounting policy for fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and
best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable
inputs.
Note 19. Key management personnel disclosures
Directors
The following persons were Directors of Patrys Limited during the financial year:
Mr. John Read
Mr Michael Stork
Dr. James Campbell
Ms. Suzy Jones
46
Patrys Limited
Notes to the financial statements
30 June 2018
Note 19. Key management personnel disclosures (continued)
Other key management personnel
The following person also had the authority and responsibility for planning, directing and controlling the major activities of the
Group, directly or indirectly, during the financial year:
Ms. Melanie Leydin
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Note 20. Remuneration of auditors
Consolidated
2018
$
2017
$
626,061
20,052
20,937
556,468
19,616
42,523
667,050
618,607
During the financial year the following fees were paid or payable for services provided by, the auditor of the Company:
Audit services -
Audit or review of the financial statements
Other services -
Advice on taxation and other matters and review and lodgement of corporate tax returns
Consolidated
2018
$
2017
$
55,804
59,729
20,906
10,250
76,710
69,979
Note 21. Commitments
Patrys has entered into several agreements whereby Patrys is obliged to make royalty payments on future sales and make
future cash milestone payments if certain events occur. These agreements include:
- Vollmers Acquisition Agreement: milestone payments and royalty payments;
- OncoMab Acquisition Agreement: royalty payments;
- Würzburg Cooperation Agreements: royalty payments; and
- Confirmation Assignment Agreement: Patrys, University of Würzburg and Acceptys, Inc.: royalty payments.
47
Patrys Limited
Notes to the financial statements
30 June 2018
Note 21. Commitments (continued)
Vollmers Acquisition Agreement
Patrys is committed to making certain milestone payments if certain hurdles are achieved as follows:
- Milestone payments for products derived from the Vollmers Hybridomas and Residual Hybridomas, payable only once for
each product, in the amount of $250,000 upon attaining the first Phase II clinical trials and a payment upon attaining
regulatory approval in any of the following markets: US, Japan, UK, France, Germany, Italy or Spain;
- Milestone payments for products derived from the PAT-SM6 LDL Rights in the amount of $250,000 upon attaining Phase
2 clinical trials, $400,000 for attaining Phase 3 clinical trials and a payment for regulatory approval in a major market; and
- Certain later stage milestone payments (at regulatory approval) and royalties on sales of products derived from the assigned
assets are also payable in amounts and at rates that are typical in the industry for transactions of this nature and for such
products.
OncoMab Acquisition Agreement
Patrys must pay to OncoMab certain royalties on sales of products derived from the assigned assets in amounts and at rates
that are typical in the industry for transactions of this nature and for such products.
University of Wurzberg Cooperation Agreement
The University of Würzburg assigned to Patrys all of its rights, title and interest in a library of hybridomas in consideration for
payment of a lump sum of US$75,000 and royalties payable on the sale of products that derive from the New IPR. These
payments and royalty rates are typical in the industry for transactions of such nature.
Confirmation Assignment Agreement
The University of Würzburg assigned to Patrys all of its rights, title and interest in a library of hybridomas in consideration for
payment of a lump sum of US$75,000 and royalties payable on the sale of products that derive from the New IPR. These
payments and royalty rates are typical in the industry for transactions of such nature.
Capital expenditure commitments
There was no capital expenditure contracted for at reporting date but not provided for in the accounts.
Operating and finance lease commitments
There are no operating or finance lease commitments in place at 30 June 2018.
Licence agreement
Patrys has entered into a number of licence agreements in respect of technologies and assets as outlined below:
Patrys - Crucell 2009 Research Licence Agreement
In July of 2009, Patrys entered into a research licence agreement with Crucell Holland B.V., covering the use of Crucell’s
PER.C6® human antibody production technologies for potential use for 5 Patrys’ products, including PAT-SM6 and PAT-
LM1. Patrys is committed to make an annual license fee of €50,000. If Patrys wishes to commercialise any of the products
developed under the research licence agreement it has the right to enter into a commercial license with Crucell which would
incur annual payments and royalties payable on the sale of products that derive from the licensed PER.C6® cell line. These
payments and royalty rates are typical in the industry for transactions of such nature.
Patrys - Debiovision - Option License and Assignment Agreement
In August of 2009, Patrys acquired the rights to product SC-1 (renamed PAT-SC1) from Debiovision Inc. Once developed,
Patrys royalties will be payable to Debiovision on the sale of products that derive from PAT-SC1. These royalty rates are
typical in the industry for transactions of this nature.
Nucleus Therapeutics – Yale University – License, Commercialization and Development Agreement
In March of 2016, Patrys acquired the private company Nucleus Therapeutics Pty Ltd, in order to obtain the global license
for the development as anti-cancer agents the antibodies 3E10 and 5C6 from Yale University. Once developed, certain
milestone payments and royalties will be payable to Yale University regarding products that derive from 3E10 and/or 5C6.
These milestones and royalties are typical in the industry for transactions of this nature.
48
Patrys Limited
Notes to the financial statements
30 June 2018
Note 21. Commitments (continued)
Payload Therapeutics – Yale University – License, Commercialization and Development Agreement
In June of 2017, Payload Therapeutics (a wholly-owned subsidiary of Patrys) obtained the global license for the development
as anti-cancer agents the antibodies 3E10 nanoparticles from Yale University. Once developed, certain milestone payments
and royalties will be payable to Yale University regarding products that derive from 3E10 nanoparticles. These milestones
and royalties are typical in the industry for transactions of this nature.
Note 22. Related party transactions
Parent entity
Patrys Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 24.
Key management personnel
Disclosures relating to key management personnel are set out in note 19 and the remuneration report included in the
Directors' report.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
2018
$
2017
$
Current payables:
Trade payables to director related entity of Mr. John Read for directors' fees for his services*
23,750
23,750
*
The fees outstanding for 2018 were paid to Mr. Read on 6 July 2018.
Loans to/from related parties
Transactions with controlled entities
The parent entity has signed a Services Agreement with Patrys GmbH (a wholly owned subsidiary) to reimburse the
subsidiary its expenses plus 5%. The amount expensed for the period to 30 June 2018 was $1,520 (2017: $2,275). At 30
June 2018 there was an inter-Company loan balance owed to Patrys GmbH of $440,568 (2017: $442,339). This loan is non-
interest bearing and unsecured.
The parent entity also has intercompany loans with Nucleus Therapeutics and Payload Therapeutics (both wholly owned
subsidiaries). At 30 June 2018, the parent entity has receivables of $2,314,358 and $95,881 for each subsidiary respectively.
The loans are non-interest bearing and unsecured.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
49
Patrys Limited
Notes to the financial statements
30 June 2018
Note 23. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Foreign currency reserve
Share options reserve
Share loan plan reserve
Accumulated losses
Total equity
Parent
2018
$
2017
$
(1,357,926)
70,468
(1,357,926)
70,468
Parent
2018
$
2017
$
7,194,868
3,106,708
10,229,490
3,774,798
646,358
411,830
1,108,128
427,370
67,039,044
-
565,318
42,946
(58,525,946)
60,035,971
5,090
440,910
90,972
(57,225,515)
9,121,362
3,347,428
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2018.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
50
Patrys Limited
Notes to the financial statements
30 June 2018
Note 24. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Name
Principal place of business /
Country of incorporation
Patrys Limited
Patrys GmbH
Nucleus Therapeutics Pty Ltd
Payload Therapeutics Pty Ltd (incorporated on 27 May
2017)
Australia
Germany
Australia
Australia
Note 25. Events after the reporting period
Ownership interest
2017
%
2018
%
-
100.00%
100.00%
-
100.00%
100.00%
100.00%
100.00%
No matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Note 26. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Net loss on disposal of non-current assets
Unrealised foreign exchange losses
Share based payments
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in prepayments
Increase in deposits
Increase/(decrease) in trade and other payables
Increase in other provisions
Consolidated
2018
$
2017
$
(2,497,252)
(1,057,876)
47,833
-
31,744
308,534
(142,996)
(20,820)
-
159,441
26,794
47,545
1,747
29,140
77,707
(241,421)
(18,226)
9,128
(128,588)
3,863
Net cash used in operating activities
(2,086,722)
(1,276,981)
Note 27. Earnings per share
Loss after income tax attributable to the Owners of Patrys Limited
(2,497,252)
(1,057,876)
Weighted average number of ordinary shares used in calculating basic earnings per share
941,191,556
744,890,370
Weighted average number of ordinary shares used in calculating diluted earnings per share
941,191,556
744,890,370
Number
Number
Consolidated
2018
$
2017
$
51
Patrys Limited
Notes to the financial statements
30 June 2018
Note 27. Earnings per share (continued)
Basic earnings per share
Diluted earnings per share
Accounting policy for earnings per share
Cents
Cents
(0.2653)
(0.2653)
(0.1420)
(0.1420)
Basic earnings per share
Basic earnings per share is calculated by dividing the loss attributable to the Owners of Patrys Limited, excluding any costs
of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Note 28. Share based payments
The following share-based payment arrangements were in existence during the current and/or prior reporting period:
Employee equity
The Company issues equity to Patrys (including subsidiaries Patrys GmbH, Nucleus Therapeutics and Payload Therapeutics)
directors, employees and key consultants under either the Loan Share Plan (LSP) or the Executive Share Option Plan
(ESOP). Under the plans, participants are issued with equity to foster an ownership culture within the Company to motivate
them to achieve performance targets of the Group. Participation in the plans is at the Board’s discretion and no individual
has a contractual right to participate in the plans or to receive any guaranteed benefits.
The Company introduced the LSP in December 2009, following approval of the plan at the 2009 Annual General Meeting.
Only Australian residents are eligible to participate in the plan. The plan allows non-recourse, interest free loans to be
provided to eligible participants to acquire shares under the plan. When an issue is made it is treated as an in -substance
grant of options and expensed over the vesting period because of the limited recourse nature of the loans. Generally shares
issued under the plan vest over a three year period. The shares are acquired in the name of the participant and each
participant authorises and appoints the Company Secretary to act on their behalf. Any dividends paid on the shares are used
to repay the loan. If the participant leaves the Company, any shares that have not vested are bought back by the Company
and cancelled along with the loan. In respect of shares that have vested, generally, the loan balance must be paid in full
within six months of termination of appointment or the shares are sold and the proceeds applied to settle the loan balance.
The issue price of the shares in the Company held under the LSP is not included in equity until the loan has been repaid.
Options are granted under the ESOP. Under the ESOP each option granted converts into one ordinary share of Patrys
Limited. Options are granted under the plan for no consideration and carry no dividend or voting rights. Options may be
exercised at any time from the date of vesting to the date of their expiry. The options are typically issued in two or three equal
tranches which vest over a three year period, each tranche having an expiry date of five years after vesting date. The exercise
period in relation to an option, means the period in which the option may be exercised, and is specified by the Board. If a
participant ceases to be appointed as a Director or employed by any member of the group (other than due to his/her death)
then, generally, options that have vested at the date of cessation of appointment/employment will lapse if not exercised within
six months of the cessation date unless an extension is granted by the Board. In the case of death of the participant then the
exercise period is extended to twelve months. All unvested options will generally lapse on cessation.
The valuations of shares issued under the LSP and options issued under the ESOP are determined by using an industry
standard option pricing model taking into account the terms and conditions upon which the instruments were issued.
The Board aims to ensure that the aggregate number of shares or options which may be issued pursuant to the LSP and
ESOP shall not at any time exceed 5% of the total number of issued shares of the Company. All issues of shares or options
under the plans are subject to approval by the Nomination & Remuneration Committee. In accordance with the rules of both
the LSP and ESOP the Board has the ability to vary the terms in respect of issues in circumstances it considers appropriate.
52
Patrys Limited
Notes to the financial statements
30 June 2018
Note 28. Share based payments (continued)
Set out below are summaries of options granted under the Executive Share Option Plan:
2018
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
02/12/2009
01/07/2010
01/07/2010
08/12/2011
08/12/2011
08/12/2011
21/08/2012
21/08/2012
21/08/2012
20/05/2014
20/05/2014
20/05/2014
24/11/2016
24/11/2016
24/11/2016
19/04/2017
19/04/2017
15/03/2018
15/03/2018
01/06/2018
27/11/2017
01/07/2017
01/07/2018
08/12/2017
08/12/2018
08/12/2019
21/08/2018
21/08/2019
21/08/2020
20/05/2020
20/05/2021
20/05/2022
24/11/2021
24/11/2021
24/11/2021
19/04/2022
01/07/2021
15/03/2023
01/07/2022
18/04/2023
$0.1440
$0.1060
$0.1060
$0.0390
$0.0390
$0.0390
$0.0220
$0.0220
$0.0220
$0.0500
$0.0500
$0.0500
$0.0072
$0.0072
$0.0072
$0.0072
$0.0072
$0.0613
$0.0613
$0.0200
5,952
3,600
3,600
7,334
7,333
7,333
10,000
10,000
10,000
25,000
25,000
25,000
7,999,999
8,000,000
8,000,001
500,000
2,500,000
-
-
-
27,140,152
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
2,500,000
2,500,000
5,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,952)
(3,600)
(3,600)
(7,334)
(7,333)
(7,333)
(10,000)
(10,000)
(10,000)
(25,000)
(25,000)
(25,000)
-
-
-
-
-
-
-
-
(140,152)
-
-
-
-
-
-
-
-
-
-
-
-
7,999,999
8,000,000
8,000,001
500,000
2,500,000
500,000
2,500,000
2,500,000
32,500,000
Weighted average exercise price
$0.0074
$0.0425
$0.0000
$0.0491
$0.0132
2017
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
01/07/2008
02/12/2009
02/12/2009
01/07/2010
01/07/2010
01/07/2010
08/12/2011
08/12/2011
08/12/2011
21/08/2012
21/08/2012
21/08/2012
20/05/2014
20/05/2014
20/05/2014
24/11/2016
24/11/2016
24/11/2016
19/04/2017
19/04/2017
01/07/2016
27/11/2016
27/11/2017
01/07/2016
01/07/2017
01/07/2018
08/12/2017
08/12/2018
08/12/2019
21/08/2018
21/08/2019
21/08/2020
20/05/2020
20/05/2021
20/05/2022
24/11/2021
24/11/2021
24/11/2021
19/04/2022
01/07/2021
$0.3300
$0.1400
$0.1400
$0.1000
$0.1000
$0.1000
$0.0300
$0.0300
$0.0300
$0.0200
$0.0200
$0.0200
$0.0500
$0.0500
$0.0500
$0.0072
$0.0072
$0.0072
$0.0072
$0.0072
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,999,999
8,000,000
8,000,001
500,000
2,500,000
27,000,000
22,500
5,952
5,952
3,600
3,600
3,600
7,334
7,333
7,333
10,000
10,000
10,000
25,000
25,000
25,000
-
-
-
-
-
172,204
53
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(22,500)
(5,952)
-
(3,600)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(32,052)
-
-
5,952
-
3,600
3,600
7,334
7,333
7,333
10,000
10,000
10,000
25,000
25,000
25,000
7,999,999
8,000,000
8,000,001
500,000
2,500,000
27,140,152
Patrys Limited
Notes to the financial statements
30 June 2018
Note 28. Share based payments (continued)
Weighted average exercise price
$0.0903
$0.0072
$0.0000
$0.2703
$0.0074
Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
02/12/2009
01/07/2010
01/07/2010
08/12/2011
08/12/2011
08/12/2011
21/08/2012
21/08/2012
21/08/2012
20/05/2014
20/05/2014
20/05/2014
24/11/2016
24/11/2016
19/04/2017
19/04/2017
15/03/2018
15/03/2018
01/06/2018
27/11/2017
01/07/2017
01/07/2018
08/12/2017
08/12/2018
08/12/2019
21/08/2018
21/08/2019
21/08/2020
20/05/2020
20/05/2021
20/05/2022
24/11/2021
24/11/2021
19/04/2022
01/07/2021
15/03/2023
01/07/2022
18/04/2023
2018
2017
Number
Number
-
-
-
-
-
-
-
-
-
-
-
-
7,999,999
8,000,000
500,000
2,500,000
500,000
1,250,000
2,500,000
5,952
3,600
3,600
7,334
7,333
7,333
10,000
10,000
10,000
25,000
25,000
25,000
7,999,999
-
500,000
1,250,000
-
-
-
23,249,999
9,890,151
The weighted average remaining contractual life of options outstanding at the end of the financial year was 3.555 years
(2017: 4.368 years).
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
15/03/2018
15/03/2018
01/06/2018
01/07/2022
15/03/2023
18/04/2023
$0.0550
$0.0550
$0.0500
$0.0613
$0.0613
$0.0200
219.00%
219.00%
219.00%
-
-
-
2.22%
2.22%
2.25%
$0.05400
$0.05400
$0.05000
On 27 February 2018, the Group announced that following completion of the fully underwritten non-renounceable 2:11 Rights
Issue and in accordance with ASX Listing Rule 3.11.2, as a consequence of the Rights Issue, the exercise price of all unlisted
options over ordinary shares in the Company will change on 6 March 2018. Due to the change in exercise price of the unlisted
options, the fair value of the options was modified during the financial year.
Set out below are summaries of shares issued under the Loan Share Plan:
54
Patrys Limited
Notes to the financial statements
30 June 2018
Note 28. Share based payments (continued)
2018
Loan Share Plan - Series
Issue price $
Balance at
start of year
Adjustments
Loans repaid
during year
Loans
cancelled
during year
Balance at
end of year
Director LSP Tranche 3
Employee LSP Tranche 3
Employee LSP Tranche 4
Employee LSP Tranche 5
Employee LSP Tranche 6
Employee LSP Tranche 9
Employee LSP Tranche 10
Employee LSP Tranche 11
Employee LSP Tranche 12
Employee LSP Tranche 13
Employee LSP Tranche 14
Employee LSP Tranche 15
Employee LSP Tranche 16
Employee LSP Tranche 17
Employee LSP Tranche 18
Employee LSP Tranche 19
2017:
$0.144
$0.144
$0.106
$0.106
$0.106
$0.039
$0.039
$0.039
$0.022
$0.022
$0.022
$0.038
$0.038
$0.050
$0.050
$0.050
184,641
106,037
50,248
96,853
147,101
255,002
254,999
254,999
205,000
205,000
205,000
37,500
37,500
100,000
100,000
100,000
-
-
-
-
-
-
-
-
50,000
50,000
50,000
-
-
-
-
-
2,339,880
150,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(184,641)
(106,037)
(50,248)
(96,853)
-
(255,002)
(50,000)
(50,000)
-
-
-
(37,500)
-
-
-
-
-
-
-
-
147,101
-
204,999
204,999
255,000
255,000
255,000
-
37,500
100,000
100,000
100,000
(830,281)
1,659,599
Loan Share Plan - Series
Issue price $
Balance at
start of year
Adjustments
Loans repaid
during year
Loans
cancelled
during year
Balance at
end of year
Director LSP Tranche 2
Director LSP Tranche 3
Employee LSP Tranche 2
Employee LSP Tranche 3
Employee LSP Tranche 4
Employee LSP Tranche 5
Employee LSP Tranche 6
Employee LSP Tranche 9
Employee LSP Tranche 10
Employee LSP Tranche 11
Employee LSP Tranche 12
Employee LSP Tranche 13
Employee LSP Tranche 14
Employee LSP Tranche 15
Employee LSP Tranche 16
Employee LSP Tranche 17
Employee LSP Tranche 18
Employee LSP Tranche 19
$0.144
$0.144
$0.144
$0.144
$0.106
$0.106
$0.106
$0.039
$0.039
$0.039
$0.022
$0.022
$0.022
$0.038
$0.038
$0.050
$0.050
$0.050
184,641
184,641
172,727
172,727
180,436
180,436
180,436
255,002
254,999
254,999
255,000
255,000
255,000
37,500
37,500
100,000
100,000
100,000
3,161,044
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(184,641)
-
(172,727)
(66,690)
(130,188)
(83,583)
(33,335)
-
-
-
(50,000)
(50,000)
(50,000)
-
-
-
-
-
-
184,641
-
106,037
50,248
96,853
147,101
255,002
254,999
254,999
205,000
205,000
205,000
37,500
37,500
100,000
100,000
100,000
(821,164)
2,339,880
Accounting policy for share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
55
Patrys Limited
Notes to the financial statements
30 June 2018
Note 28. Share based payments (continued)
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other
vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profi t
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
56
Patrys Limited
Directors' declaration
30 June 2018
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2018 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
Mr. John Read
Chairman
24 August 2018
57
Patrys Limited
Independent auditor's report to the members of Patrys Limited
58
Patrys Limited
Independent auditor's report to the members of Patrys Limited
59
Patrys Limited
Independent auditor's report to the members of Patrys Limited
60
Patrys Limited
Shareholder information
30 June 2018
The shareholder information set out below was applicable as at 21 August 2018.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Stork Holdings 2010 Ltd
Dr Dax Marcus Calder
Kemast Investments Pty Ltd (KM Stokes S/F No 1 A/C)
Staffwear Pty Ltd (Dax Calder Super Fund A/C)
HSBC Custody Nominees (Australia) Limited
Oncomab GmBh
Marginata Pty Ltd (Roy Bolton Super Fund A/C)
Yale University
Mr Xiaoke Xie
Mr Mladen Marusic
LGL Trustee Limited (The Konda Family A/C)
Dax Calder Pty Ltd
Valui Pty Ltd (Fortis Super Fund A/C)
LGL Trustees Limited (MK Pension Plan-473278 A/C)
Phipps Family Fund Pty Ltd (Phipps Family Fund A/C)
Mr Steven James Streicher
National Nominees Limited
Goldreef Corporation Pty Ltd
Mr Paul Anthony Henry
Lamro Pty Ltd (Orama A/C)
Unquoted equity securities
Options over ordinary shares issued
61
Number
of holders
of ordinary
shares
Number
of units
106
61
148
1,577
1,123
9,979
240,658
1,279,841
72,189,092
996,543,832
3,015 1,070,263,402
455
3,245,241
Ordinary shares
% of total
Number held
shares
issued
98,773,814
82,903,526
29,411,765
23,096,474
21,979,779
20,250,000
20,000,000
16,116,324
15,300,000
14,854,546
13,999,999
12,000,000
12,000,000
10,823,529
8,300,000
8,000,000
7,662,387
7,000,000
7,000,000
7,000,000
9.23
7.75
2.75
2.16
2.05
1.89
1.87
1.51
1.43
1.39
1.31
1.12
1.12
1.01
0.78
0.75
0.72
0.65
0.65
0.65
436,472,143
40.79
Number
on issue
Number
of holders
32,500,000
10
Patrys Limited
Shareholder information
30 June 2018
Substantial holders
Substantial holders in the Company are set out below:
Dr Dax Marcus Calder
Stork Holdings 2010 Ltd
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
% of total
Number held
shares
issued
120,117,634
98,773,814
11.22
9.23
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
62
Corporate Directory
DIRECTORS
Mr John Read, Chairman
Dr James Campbell, Managing Director & CEO
Mr Michael Stork, Non-Executive Director
Ms Suzy Jones, Non-Executive Director
COMPANY SECRETARY
Ms Melanie Leydin
REGISTERED OFFICE
PRINCIPAL PLACE OF BUSINESS
Level 4, 100 Albert Road,
South Melbourne, VIC 3205
P: 03 9670 3273
E: info@patrys.com
W: www.patrys.com
AUSTRALIAN BUSINESS NUMBER
97 123 055 363
SECURITIES EXCHANGE LISTING
Australian Securities Exchange
ASX Code: PAB
AUDITORS
BDO
Melbourne
Australia
LAWYERS
Arnold Bloch Liebler
Melbourne
Australia
SHARE REGISTRY
Computershare
Yarra Falls, 452 Johnston Street, Abbotsford, VIC 3067
Ph: 03 9415 5000
F: 03 9473 2500
W: www.computershare.com.au
w w w . p a t r y s . c o m