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Contents
Letter from the Chairman
Patrys people
Patrys snapshot
Pipeline
Intellectual property
A closer look at Patrys’ research
Research platform expansion
Collaborations
Directors’ report
Auditor’s indepenence 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
Corporate governance statement
Corporate directory
Corporate and social responsibility
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From the Chairman
To our valued shareholders and supporters,
I would like to again extend my gratitude for your ongoing support of our business this year.
At a time of considerable global uncertainty and heartache due to the Coronavirus (COVID-19)
pandemic, we have managed to lean into our community of academic and commercial partners to
facilitate valuable progress in our research and development (R&D).
I am enormously proud of the work we have undertaken to develop our Deoxymab platform. Earlier
this year Patrys’ research collaborators from Yale School of Medicine, Dr James Hansen and Dr
Jiangbing Zhou, gained insights into the unique mechanism of action of our lead candidates PAT-DX1
and PAT-DX1-NP, revealing how these novel antibodies can potentially target aggressive cancers.
We now know that PAT-DX1 exploits the DNA Damage Response (DDR) mechanism to block DNA repair
and preferentially kill cancer cells. In animal models, it has shown efficacy in killing cancer cells with a
range of DDR gene mutations. Unlike other known antibodies and 98% of small molecules, it can also
cross the blood brain barrier (BBB) to access cancer cells in the central nervous system.
Our research collaborators in the US and Australia have been successful in obtaining multiple
prestigious grants to the value of US$3.13m (A$4.87m) over the next five years to progress this work.
This is a significant endorsement of their discoveries to date and an important commercial and
reputational boost for our Company too.
We look forward to progressing our development programs with the intention of working towards
finalising stable cell line development this calendar year, completing toxicology studies in the new
year and filing for a clinical trial in late 2021 or early 2022. With the PAT-DX1 development program
on track and progressing well we will also start to broaden the range of platform applications for the
Deoxymab technology, including investigating alternate formats of the antibody and expanding our
efforts on nanoparticle conjugation. This will ensure that the Company has both breadth and depth in
its development portfolio, and position us well for business development discussions.
Thank you once again for your support and we look forward to another productive and
rewarding year ahead.
John Read
Patrys Chairman
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“ We are dedicated to improving the health and
quality of life of those diagnosed with aggressive
forms of cancer with our novel Deoxymab platform.”
- Patrys Chairman, John Read
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3
Chair
Patrys people
Patrys has attracted respected global leaders in clinical research, pharmaceutical development, and commercialisation. We have a
lean, multidisciplinary team, committed to maintaining the highest standards in research and development.
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 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.
James Campbell, BSc (Hons), PhD, MBA, GAICD
Chief Executive Officer and Managing Director
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.
Michael Stork, BBA
Non-Executive Director
Mr Stork is the Managing Director of Stork Holdings Ltd, an investment company active in the
Canadian technology start-up sector. Mr Stork is active on the Boards of a number of leading
Canadian technology companies and other institutions.
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. Ms. Jones has extensive networks within the
pharmaceutical and biotech companies and venture capital community in North America.
Pamela M. Klein, BSc, MD
Non-Executive Director
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
Herceptin, Tarceva and Perjeta. More recently Dr. Klein has held a range of executive, advisory and
board positions including the board of Argenx (Euronext and NASDAQ).
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Scientific Advisory Board
Allen Ebens, BSc, PhD
Dr Allen Ebens completed a PhD at UCLA and Post-doctoral training at UCSF. Over 20 years
his distinguished career has seen significant contributions to the scientific literature as well
as advancement of five discovery projects to clinical development at companies including
Exelixis, Genentech and Juno Therapeutics.
Peter Ordentlich, BSc, PhD
Dr Peter Ordentlich completed a PhD in Immunology at the University of Pennsylvania and a
Post-Doc at the Salk Institute for Biological Studies. He worked at at X-Ceptor Therapeutics,
which was acquired by Exelixis in 2004, then in 2005 co-founded Syndax Pharmaceuticals, a
NASDAQ-listed, clinical stage biopharmaceutical company developing an innovative pipeline
of cancer therapies with three clinical stage assets.
Management team
Melanie Leydin, B Bus (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.
Deanne Greenwood, BSc (Hons), PhD, MBA, GAICD
Vice President, Business Development & Intellectual Property
Dr Greenwood’s efforts are focused on commericalisation of the Deoxymab assets and
management of the extensive intellectual property portfolio. She has considerable experience
related to research, drug development, relationship management, contracts and grants.
Valentina Dubljevic, BSc, MBB, GAICD
Vice President, Scientific & Clinical Development
Ms Dubljevic 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.
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Patrys snapshot
A noble goal
Here at Patrys we are deeply motivated to improve the lives of people diagnosed with aggressive forms of cancer,
particularly cancers within the central nervous system which are often very difficult to reach and treat. We are in the
pre-clinical stage of examining the potential of our technology, which is a noble journey underpinned by teamwork –
with patients, researchers, clinicians and existing treatment providers too.
Novel technology
Patrys is innovating methodically and with great care, to uncover the full potential of its Deoxymab 3E10 platform.
Patrys’ rights to Deoxymab 3E10 are part of a worldwide license to develop and commercialise as anti-cancer
and diagnostic agents a portfolio of novel anti-DNA antibodies and antibody fragments, variants and conjugates
discovered at Yale University.
Deoxymab 3E10 is a DNA damage-repair (DDR) antibody that was first identified in lupus as an autoantibody that
bound to normal cells. Of particular interest is that whilst most antibodies bind to cell surface markers, Deoxymab
3E10 penetrates into the cell nuclei and binds directly to DNA where it inhibits DNA repair processes and kills cells that
have mutations or deficiencies in DNA repair mechanisms as found in various cancer cells.
Deoxymab 3E10 has single agent therapeutic potential and has been shown to significantly enhance the efficacy of
both chemotherapies and radiotherapies. Deoxymab 3E10 can also be conjugated to nanoparticles to target delivery
of chemotherapeutics and imaging agents to tumors.
A targeted solution for aggressive cancer
Patrys has developed a humanised form of Deoxymab 3E10, PAT-DX1 with improved activity over the original version
of 3E10, and is progressing this, and a nanoparticle-conjugated form (PAT-DX1-NP) towards the clinic. In a range of
pre-clinical studies PAT-DX1 has shown significant ability to kill cancer cells in cell models, human tumor explants,
xenograft and orthotopic models. Treatment with PAT-DX1 has been shown to significantly improve survival in
orthotopic models of both triple negative breast cancer brain metastases and glioblastoma. PAT-DX1 has also been
shown to enhance the therapeutic effect of low dose radiation.
Patrys is targeting cancer at the nexus of two transformative anti-cancer therapies – antibodies and synthetic lethality.
Antibodies target and kill cancer cells with fewer side effects than small molecules. While in synthetic lethality, DNA
damage response (DDR) inhibition blocks ‘back up’ DDR systems, causing cancer cell death across a broad range of
cancers – while healthy cells are spared.
Treatment with PAT-DX1 has been shown to significantly improve survival
in orthotopic animal models of both triple negative breast cancer brain
metastases and glioblastoma.
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PAT-DX1
PAT-DX1
PAT-DX1-NP
Single agent
Combination therapy
Antibody drug conjugates
Synthetically lethal (targets
Couple DDR with existing
Delivering highly potent
the DNA damage repair (DDR)
therapies, such as radiation,
cancer-killing agents or drugs
process) as a single agent to block
to create synergistic,
directly to cancer cells via a linked
tumour cells’ ability to repair
anti-cancer effects
nanoparticle
A promising future
Patrys believes that PAT-DX1 may have application across a wide range of malignancies such as gliomas, prostate, breast,
pancreatic and ovarian cancers.
Preferentially localises
to tumors
and is specifically attracted to extracellular DNA from dying
cancer cells.
Penetrates the cell
membrane and nucleus
PAT-DX1 is agnostic to tumor type or the presence of specific
tumor markers.
Kills cancer cells
deficient in DNA repair
PAT-DX1 diminishes cancer cells’ ability to repair themselves.
PAT-DX1 is able to target primary and secondary tumors and has
a high therapeutic value against a wide range of cancer repair
pathways such as those with mutations in the BRCA1/2 and
PTEN genes.
Crosses the blood brain
barrier
PAT-DX1 is able to resolve one of the greatest challenges in the
development of therapeutics for brain diseases.
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Pipeline
Patrys is working hard to give people diagnosed with cancer more targeted treatment options. Our initial focus is on
Glioblastoma (GBM) and Triple Negative Breast Cancer (TNBC), with plans to expand into other solid tumors in future.
IND-enabling
activities for
PAT-DX1
2Q
CY20
3Q
CY21
4Q
1H
2H
Additional animal models
PK and Non-GLP toxicology
Expression and purification, including full IgG
(PAT-DX3)
File IND
(Aust HREA)
Complete cell line
development
GMP productions and
formulation
GLP toxicology
Conjugation
approach
PAT-DX1-NP
Grant-funded
studies
Additional animal models
Non-GLP toxicology and PK
Commercial Milestones
During FY20 Patrys was pleased to announce a fully underwritten, non-renounceable Rights Issue to raise approximately
A$4.29 million before costs. The proceeds raised will be applied to a series of value crystallising stages including; stable
cell line development; toxicology studies and filing for a clinical trial in late 2021 and early 2022. Proceeds of the Rights
Issue will also be used to support development of PAT-DX1-NP and other formats of the antibody, fund operations, the
cost of the issue, working capital, and other business development and corporate activities.
Path ahead
Initiation of non-GLP toxicology and pharmacokinetic studies
Expansion of Deoxymab platform applications (eg. nanoparticles)
Completion of stable cell line development
Initiation of GMP production and formulation program
Initiation of GLP toxicology studies
IND (as Australian HREA) submission
Scientific publications
New IP filings and patent grants
Alliances and collaborations
Q3 2020
Q3 2020
Q4 2020
Q1 2021
H1 2021
H2 2021/H1 2022
Ongoing
Ongoing
Ongoing
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Intellectual property
Patrys holds a central position in the cell penetrating antibody IP landscape with a wide portfolio of patents and patent
applications covering both the composition of matter and application of Deoxymabs in multiple fields including cancer. The
first patent in the 3E10 portfolio was granted in the US in July 2017 and further patents were granted in Japan and China in
July 2018. The most recent patent in the Deoxymab portfolio was granted in Europe in July 2019 and covers methods of using
Patrys’ novel Deoxymab 3E10 technology, including Patrys’ lead candidate (PAT-DX1), as treatment for a broad range of cancers
and malignancies including gliomas, metastases, breast, pancreatic, ovarian and prostate cancers. Patrys continues to focus on
maintaining patent protection in major jurisdictions where future regulatory approvals and product sales are targeted, with 19
pending patent applications across 10 patent families.
“Patrys remains focused on building and maintaining
patent protection across key jurisdictions. Patrys has
secured patent protection in some of the world’s largest
pharmaceutical markets including USA, Europe, China
and Japan, Patrys is well positioned to preserve future
product sales in key target markets.”
- Patrys CEO and MD, Dr James Campbell
Active intellectual property strategy in place to protect key assets
Patrys’ Deoxymab patent portfolio1
Deoxymab patent portfolio
10
5
19
Active patent
families
Granted patents2
Patent
applications
pending1
IP protection granted
IP protection pending
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A closer look at Patrys’ research
Exploiting synthetic lethality as a therapeutic approach means more people will survive
cancer – that’s our aim at Patrys. Our research shows that PAT-DX1 exploits the DNA
Damage Response (DDR) mechanism to block DNA repair and preferentially kill cancer
cells. Unlike other antibodies and 98% of small molecules, it can also cross the blood
brain barrier (BBB) to access cancer cells in the central nervous system – which could
be a game changer in the oncology space.
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DDR therapeutics and synthetic lethality: a new frontier in cancer treatment
This year has marked promising progress for Patrys’ lead asset, PAT-DX1, highlighting its capabilities to exploit the DNA
Damage Response (DDR) mechanism to block DNA repair and preferentially kill cancer cells.
In simple terms, PAT-DX1 blocks DNA repair and, as demonstrated in animal models, it kills cancer cells with a range of
DDR gene mutations such as BRCA2 and PTEN. Importantly, it does not kill cells without those mutations.
PAT-DX1 is unique because it is the only antibody to have shown innate efficacy as a single agent via the synthetic
lethality model. PAT-DX1, unlike other antibodies and 98% of small molecules, is also able to cross the blood brain barrier
– the all-important ticket to killing cancer cells in the central nervous system.
Here’s a closer look at the science of DDR for context.
In a healthy person many thousands of events of DNA damage occur every day, like radiation exposure from sunlight
or exposure to toxins. As DNA damage impairs the ability of the body to function normally, our bodies have an elegant
system of repair mechanisms to identify and fix DNA damage.
The DDR mechanism consists of more than 450 proteins that work to identify and rectify damage to the genome. There
are several different types of DNA damage, ranging from small breaks in one strand of the DNA helix through to double
strand breaks and even replication errors. The five different classes of DNA damage have resulted in the evolution of five
major DDR pathways.
As cancer cells emerge, they develop changes in a variety of cell functions that result in abnormal cell growth and
potential to spread to other parts of the body. As part of the transformation, most cancer cells lose some of their DDR
machinery and the ability to repair DNA damage in at least one of the five major pathways.
Even though cells are optimised to use specific DDR pathways, there is a degree of redundancy involved, meaning that a
cancer cell with a fault in one DDR pathway will use the other pathways to try to fix arising DNA damage. With the ability
to use less than perfect tools to patch up DNA damage, cancer cells can continue to thrive and proliferate.
This is when things get really interesting. Researchers asked what would happen if they were able to block the back-up
DDR system from working – could it kill the cancer cells?
The logic was that if one DDR pathway is not working because of a biological reason (the genes for the pathway were
turned off during the process of becoming a cancer cell), blocking an additional pathway by therapeutic means should
deactivate the whole DDR system in the cancer cells and lead to cancer cell death.
This therapeutic approach is known as synthetic lethality and has the advantage that it is the combination of two DDR
pathways not working that is lethal, and that normal cells with intact DDR systems should not be killed by the DDR
therapeutic. It remains a focus area for many players in big pharma and indeed, a significant point of value in the R&D
portfolio of our growing company.
“ PAT-DX1 is unique because it is the only antibody to
have shown innate efficacy as a single agent via the
synthetic lethality model.”
- Patrys CEO and MD, Dr James Campbell
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Blood brain barrier
Crossing the blood brain barrier (BBB) is a pivotal function for new therapeutics in the treatment of brain cancers – and
one of the key reasons why Patrys’ PAT-DX1 asset, and more broadly the Deoxymab platform, is so promising.
The common understanding of the BBB is that it is a barrier that surrounds
the brain, and plays two major roles; stopping infectious agents like bacteria
and viruses from entering; and insulating the brain from rapid changes in
the concentrations of nutrients and other compounds. It is convenient to
think of the BBB as a shield, protecting and controlling, and there is a lot
of imaging that reinforces this understanding, like the picture at right. This
understanding helps people to visualise what is happening when they hear,
for instance, ‘Almost no large molecules and 98% of all small molecules do
not cross the BBB’.
The truth is a bit more complicated than this broad-brush understanding.
The BBB is not an impenetrable protective sphere that surrounds the brain,
but is rather a refinement of blood vessels, and specifically the smallest
blood vessels called capillaries, that tightly control what can enter this most
critical and sensitive of organs. If joined end to end, these brain capillaries
would be 650 km long.
To understand what makes the BBB so special, we need to understand the difference between highly specialised
capillaries in the brain and capillaries that flow through all other organs in the body. Capillaries feed tissues with
required nutrients and gases, and help remove waste products. These interchanges of nutrients, gases and wastes are
feasible because in most instances the capillaries are not “closed” systems. There are gaps between the cells that make
up capillaries’ walls in a majority of tissues – these gaps are not so big that blood cells can leave the capillaries, but many
other substances such as nutrients, proteins, antibodies, drugs and even pathogens can freely transverse capillaries’
walls.
In contrast the cells of capillaries in the brain
are joined by tight junctions, meaning there
are no gaps between cells, but rather a range
of very specific transporter channels that
selectively allow the exit or entry of a very
small number of essential nutrients, wastes,
and peptides. The outside of the capillary is
reinforced by specialised neural cells called
glial cells that strengthen and support the
vessel.
Normal Blood Vessels vs. Brain Blood Vessesl
Pore passage
Carrier-mediated transport
Lipid-soluble
substances
Blood vessel
Blood vessel
Glial brain cells
support the barrier
Lipid-soluble
substances
Water-lined pore
Tight junction (no pores)
create the barrier
Capillaries in cross section
1 Wong, A. D. et al. (2013). The blood-brain barrier: an engineering perspective. Front Neuroeng 6:7.
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Whilst the capillaries in the body create an open system that allows most molecules, proteins, drugs and even pathogens
free access, the capillaries in the brain act like sentinels, and only allow entry of few vital molecules – but prevent entry of
circulating toxins and pathogens that could cause brain infection.
Therein lies the downside and challenge as the vast majority of potential drug treatments are not allowed entry across
BBB either.
Delivery of therapeutics, either small molecules or biologics/antibodies to cancers outside of the brain is enabled by
the leaky capillaries, but delivery of therapeutics to cancers within the brain is very difficult, because the gatekeeping
transporters need to be tricked into allowing these foreign substances across the threshold of the brain. That’s why there
is so much interest in the development of new drugs and/or technologies to enable transit of the BBB.
Our collaborators at Yale School of Medicine have previously shown that the Equilibrative Nucleoside Transporter
number 2 (ENT2) controls the entry of PAT-DX1 into cancer cells before it stops DNA repair and causes cancer cell death.
We also know that ENT2 is highly expressed in the capillaries of the brain.
This means that PAT-DX1 has the keys to open the BBB, and as we’ve previously reported, has shown an ability to reduce
the growth of both primary cancers like glioblastoma as well as metastases in the brain.
That’s why we think that PAT-DX1 is so very interesting.
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Research platform expansion
Designing complex antibodies
Our immune system acts like a security checkpoint. This high-tech system inside the human body identifies and mobilises
what kind of antibodies we need to protect us from foreign invaders.
Antibodies are typically Y-shaped proteins which are produced by the immune system to neutralise pathogens such as
bacteria and viruses. A classical antibody’s two arms will bind specifically to one binding site. The modular architecture of
antibodies means this traditional shape can be exploited to make different antibody formats.
Patrys’ Deoxymab platform consists of the murine 3E10 antibody which has now been optimised and humanised. The
reformatted antibody has been re-named PAT-DX1. Instead of making a traditional antibody the Patrys team has designed
a new format of PAT-DX1, a smaller di-single chain fragment antibody as our lead candidate. Our researchers believe that a
smaller protein may have improved penetration capabilities leading to better killing of cancer cells.
We have utilised this format of PAT-DX1 for a number of pre-clinical studies where we have, for example, seen increased
tumour suppression in brain cancers and metastases and the ability of PAT-DX1 to cross the blood brain barrier.
Patrys’ team also recognises that the traditional Y-shaped antibody features maybe important in certain clinical settings
and will investigate a full IgG antibody based on Deoxymab 3E10. It is envisioned that a range of formats of Deoxymab
antibodies will provide a great opportunity to tailor the design of the antibody to match the intended clinical application.
As our understanding of biology around the unique Deoxymab platform increases, we continue to gain a better
understanding of what features will make a therapeutic antibody more effective.
PAT-DX1
PAT-DX1-NP
PAT-DX3
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Collaborations
Patrys is fortunate to be working with a number of academic collaborators and institutes both in Australia and the US. Our
research partners in the US have attracted grants worth more than $A4.87 M from the National Institutes of Health (NIH) and
the Department of Defense (DoD) in United States this financial year. Patrys’ latest research collaboration in Australia is with
the Olivia Newton-John Cancer Research Institute (ONJCRI), which has been awarded a $50,000 Federal Government grant
to support research at ONJCRI on Patrys’ PAT-DX1 program. The aim of this program is to determine the efficacy of PAT-DX1
in in vivo studies of breast cancer with DNA damage repair (DDR) defects. The effect of PAT-DX1 on regression of primary and
metastatic breast cancers will be assessed in combination with standard-of-care radio and chemo-therapies. Looking forward,
Patrys and the ONJCRI plan to expand this collaboration to include both PAT-DX1 conjugated to nanoparticles (PAT-DX1-NP)
and anticipated new formats of the Deoxymab platform. We look forward to reporting on the research finding from these grants
from 2021 onwards.
15
Patrys Limited
Directors' report
30 June 2020
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 2020.
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)
Mr. Michael Stork (Non-Executive Director & Deputy Chairman)
Ms. Suzy Jones (Non-Executive Director)
Dr. James Campbell (Managing Director & CEO)
Dr. Pamela M. Klein (Non-Executive Director, appointed on 1 October 2019)
Principal activities
Patrys is devoted to the development and commercialisation of novel antibody technologies to improve clinical outcomes for
cancer patients. The Company’s lead technology is Deoxymab 3E10, a DNA damage-repair (DDR) antibody which
penetrates live cell nuclei and inhibits key mechanisms of DNA repair in target cancer cells.
The Company has developed a humanised form of Deoxymab 3E10, PAT-DX1, and is progressing this and a nanoparticle
conjugated form (PAT-DX1-NP) towards a possible clinical trial in H2, 2021 or H1, 2022. Currently, the Company is focusing
on PAT-DX1 as a treatment for metastatic triple negative breast cancer (MTNBC) and glioblastoma (GBM).
Patrys continues to complete pre-clinical research in collaboration with leading universities and other research partners, and
is pleased to note that in recent months its collaborators have received grants totalling more than $4.9 million to advance
research on PAT-DX1 and PAT-DX1-NP.
The Deoxymab 3E10 technology is exclusively licensed from Yale University. Patrys’ rights to Deoxymab 3E10 are part of a
worldwide license to develop and commercialise a portfolio of anti-cancer and diagnostic agents (including anti-DNA
antibodies, antibody fragments, variants and conjugates).
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 $2,748,539 (30 June 2019: $411,326).
16
Patrys Limited
Directors' report
30 June 2020
PAT-DX1 – progressing pre-clinical studies and manufacturing workstreams ahead of Phase 1 clinical trial
During the full year period, Patrys continued working towards the development of a stable cell line for the PAT-DX1 program,
led by a well-respected international manufacturing partner. As part of this the Company selected a preferred format with
potential improvements in manufacturability and cost of production. Development of a stable cell line is an important
milestone which will enable Patrys to progress Good Manufacturing Practice (GMP) production and formulation of key
toxicology studies ahead of a Phase 1 clinical trial. Stable cell line development is on track for completion in Q4 CY20.
The Company is progressing PAT-DX1 and a nanoparticle conjugated form (PAT-DX1-NP) towards a possible clinical trial
in H2, 2021 or H1, 2022. Currently, the Company is focusing on PAT-DX1 as a treatment for metastatic triple negative breast
cancer (MTNBC) and glioblastoma (GBM). Patrys continues to complete pre-clinical research in collaboration with leading
universities and other research partners.
In the past year Patrys has significantly advanced development of PAT-DX1 on two parallel fronts, pre-clinical research and
manufacturing preparation. Pre-clinical research conducted by Dr James Hansen of the Yale School of Medicine found that
in an animal model of aggressive glioblastoma PAT-DX1 in combination with low dose radiation therapy resulted in
significantly more tumour suppression and prolonged survival compared to low dose radiation alone. Dr Hansen’s team also
confirmed that PAT-DX1-NP, like its unconjugated form (PAT-DX1), is able to cross the blood brain barrier (BBB) and
successfully target triple-negative breast cancer (TNBC) brain metastases. These studies were augmented by an additional
study that confirmed that PAT-DX1 is able to cross the BBB, by exploiting the equilibrative nucleoside transporter 2 (ENT2)
pathway. Patrys’ manufacturing program is being led by a well-respected international manufacturing partner and its ongoing
work on the development of stable cell line for the PAT-DX1 program should be complete by Q4 2020.
PAT-SC1
Patrys remains committed to assisting Hefei Co-source Biomedical with the development of PAT-SC1, providing support via
Patrys’ expertise and knowledge in the IgM space. Patrys is one of the few companies globally with experience in
manufacturing commercial scale quantities of IgMs for clinical trials.
COVID-19
The Company recognises the negative impacts of COVID-19 that are being felt around the world, and while there has been
some slippage of timelines, particularly for activity based in academic institutions, the Company is on track to commence a
phase 1 study in late CY21 or early CY22.
Corporate developments
During the year to 30 June 2020 Patrys strengthened its Board of Directors and its Scientific Advisory Board with new
appointments. In October 2019, Dr. Pamela M. Klein was appointed as Non-Executive Director of Patrys. Dr Klein has a
proven track record spanning more than 20 years in oncology and the biopharmaceuticals industry and has been a member
of the Patrys Scientific Advisory Board for over two years. Dr Klein’s significant industry experience will provide the Company
with valuable support for the proposed PAT-DX1 clinical trial in CY21. In May 2020, Dr Peter Ordentlich was appointed to
the Company’s Scientific Advisory Board. Dr Ordentlich is an experienced US-based biotechnology executive who has
advanced several biologicals and small molecules from discovery stage through to the clinic.
Over the past 12 months the Company has presented at a range of investment and scientific conferences including
BioEurope, the Bioshares Biotech Conference, the Society for Neuro-Oncology inaugural conference on Brain Metastases,
and the PARP & DNA Damage Response (DDR) Inhibitors Summit. These presentations have generated significant
commercial and academic interest, and have resulted in numerous ongoing dialogs.
In July 2019, Patrys received a “Notice of Grant” for European patent (patent number: 2694555) that covers the methods of
using Patrys’ novel Deoxymab 3E10 technology as treatment for a broad range of cancers and malignancies including
gliomas, metastases, breast, pancreatic, ovarian and prostate cancers and melanomas. Patrys is focused on maintaining
patent protection in major jurisdictions where future regulatory approvals and product sales are targeted, with 19 pending
patent applications across 10 patent families.
Patrys and its research partners progressed, finalised and submitted a number of new grant applications to support further
pre-clinical studies to develop and broaden the Company’s portfolio. Grants are an attractive source of non-dilutive funding,
and in the year to 30 June 2020 Dr James Hansen of the Yale School of Medicine received $4.87 million of funding to cover
the coming five years. Further, Patrys in conjunction with Professor Robin Anderson of the Olivia Newton-John Cancer
Research
the Federal
Entrepreneur’s Programme. Both the Yale and ONJCRI programs will advance research on PAT-DX1 and PAT-DX1-NP.
Innovation Connections Grant
received a $50,000
(ONJCRI)
Institute
from
17
Patrys Limited
Directors' report
30 June 2020
Looking ahead
Under the guidance of the Board and the Scientific Advisory Board Patrys made advances in its efforts to build and realise
the value of its assets in the twelve months to 30 June 2020.
The activities for the year to June 2020 include experiments with a number of animal models of various cancer types,
development of PAT-DX1 manufacturing, maintenance of intellectual property patent filings and efforts towards the
establishment of collaborations and alliances. The development of a stable cell line is an important upcoming milestone
which will enable Patrys to progress GMP production and formulation and key toxicology studies ahead of its Phase 1 clinical
trial.
Operating results
Patrys held cash and term deposits of $3,981,210 at the reporting date. Patrys’ policy is to hold its cash and cash equivalent
deposits in 'A' rated or better deposits.
Patrys’ strategy is to outsource product development expenses, including manufacturing, regulatory and clinical trial
expenses, to specialist, best of breed partner organisations. As a consequence, Patrys 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 $772,844 (2019: $3,844,365). This revenue includes
interest of $59,891 (2019: $111,571), R&D tax incentive income of $623,197 (2019: $644,298), licencing income of $27,500
(2019: $27,500), and other income of Nil (2019: $3,000,000) related to insurance recoveries.
Total consolidated operating expenses for the period were $3,521,383 (2019: $4,255,691). Operating expenses include
research and development costs of $1,367,988 (2019: $1,685,963) which have been expensed in the year they were
incurred. The decrease in R&D costs in 2020 is due to a decrease in activity related to pre-clinical and manufacturing works
in the financial year. Administration and management costs contributed a further $2,153,395 (2019: $2,569,728) to expenses
from continuing operations. The decrease during the financial year is due to a combination of items, including legal fees,
travel cost and other general administrative costs.
Significant changes in the state of affairs
On 17 September 2019, the company issued 1,500,000 unlisted options to a consultant pursuant to their
consulting agreement.
On 1 October 2019, Dr Pamela M. Klein was appointed as a Non-Executive Director. The company issued 4,000,000 unlisted
options to Dr. Pamela M. Klein as part of her sign-on package as a Non-Executive Director.
On 11 May 2020, Dr. Peter Ordentlich an experienced US-based biotechnology executive was appointed to the Scientific
Advisory Board.
On 28 May 2020, BDO Audit Pty Ltd was appointed as auditor of the Company. The appointment follows the resignation of
BDO East Coast Partnership (“BDO ECP”), and ASIC’s consent to the resignation in accordance with s329(5) of the
Corporations Act 2001 (“the Act”). The change of auditor arose as a result of BDO ECP restructuring its audit practice
whereby audits will be conducted by BDO Audit Pty Ltd, an authorised audit company, rather than BDO ECP.
On 10 June 2020, the company issued 3,000,000 unlisted options to members of the Scientific Advisory Board pursuant to
their consulting agreements.
On 22 June 2020, the company announced a fully underwritten, non-renounceable pro-rata rights offer (Entitlement Offer) to
acquire one (1) fully paid ordinary share at $0.012 (1.2 cents) each for every three (3) existing fully paid ordinary shares held
by eligible Patrys shareholders in Australia and New Zealand at the Record Date. One (1) free attaching New Option with an
exercise price of $0.024 (2.4 cents) expiring three (3) years after grant date will also be issued for every three (3) New Shares
subscribed for and issued. The Entitlement Offer will raise approximately $4.29million before costs.
There were no other significant changes in the state of affairs of the Group during the financial year.
18
Patrys Limited
Directors' report
30 June 2020
Matters subsequent to the end of the financial year
The impact of the COVID-19 pandemic is ongoing and while it has not had a material impact on the Group up to 30 June
2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly
developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining
social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
Subsequent to the end of the financial year, the company announced that the fully underwritten non-renounceable
Entitlement Offer raised approximately $4.29 million (before costs), through the issue of 357,530,827 fully paid ordinary
shares at an issue price of $0.012 (1.2 cents) per share. The company also announced the issue of 119,177,087 free
attaching options in relation to the fully paid ordinary shares issued under the Entitlement Offer and the issue of an additional
7,500,000 options to the Underwriter and Lead Manager. The options are quoted and exercisable at $0.024 (2.4 cents) each,
expiring on 5 August 2023.
No other matter or circumstance has arisen since 30 June 2020 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.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on Directors
Name:
Title:
Qualifications:
Experience and expertise:
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 was previously the Chairman of CVC Limited (ASX: CVC) from
1989 to 2020 and 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.
None
Chairman of Nomination and Remuneration Committee
Member of Audit and Risk Committee
8,910,306 ordinary shares
6,000,000 unlisted options, exercisable at $0.035 per option, expiring 22/11/2023 and
396,132 PABO listed options, exercisable at $0.024 per option, expiring 5 August 2023
Other current directorships:
Former directorships (last 3 years): CVC Limited
Special responsibilities:
Interests in shares:
Interests in options:
19
Patrys Limited
Directors' report
30 June 2020
Name:
Title:
Qualifications:
Experience and expertise:
James Campbell
Managing Director and Chief Executive Officer
Ph.D, MBA, GAICD
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 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 Advisory Board of Deakin University’s
Centre for Innovation in Mental and Physical Health and Clinical Treatment (IMPACT).
Non- Executive Director of Prescient Therapeutics Limited (ASX:PTX)
Other current directorships:
Former directorships (last 3 years): Non-Executive Director of Invion Limited (ASX:IVX) (ceased on 21 December 2019)
Interests in shares:
Interests in options:
1,227,790 fully paid ordinary shares
25,000,000 unlisted options - 15,000,000 exercisable at $0.0072 per option, expiring
24/11/2021, 10,000,000 exercisable at $0.035 per option, expiring 22/11/2023
399,415 PABO listed options, exercisable at $0.024 per option, expiring 5 August 2023
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 start-up companies.
None
Other current directorships:
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 director has the ability to influence the voting and disposal of the shares of
this company).
4,000,000 options, exercisable at $0.0350 per option, expiring 22/11/2023
Interests in shares:
Interests in options:
20
Patrys Limited
Directors' report
30 June 2020
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. DNA Ink provides corporate strategic guidance to its clients. Prior
to starting her own firm, Ms. Jones spent 20 years at Genentech where she served in
many roles in Business Development, Product Development and Immunology
Research. She managed several products 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.
Calithera Biosciences, Inc.(Nasdaq:CALA)
Member of Nomination and Remuneration Committee
Member of Audit and Risk Committee
3,000,000 fully paid ordinary shares.
4,000,000 options, exercisable at $0.0350 per option, expiring 22/11/2023
Dr. Pamela M. Klein
Non-Executive Director
Dr. Klein has a proven track record as an executive over more than 20 years in the
oncology and biopharmaceutical industry. She is currently on the Board of Directors for
Argenx, a dual-listed (Euronext Brussels and NASDAQ), clinical-stage therapeutic
antibody company developing novel drugs in the areas of cancer and severe
autoimmune disease. She is also on the Board of Spring Bank Pharmaceuticals
(NASDAQ), a clinical stage biopharmaceutical company developing therapeutics for
both HBV and oncology. Ms. Klein is the Principal and Founder of PMK BioResearch,
which offers strategic consulting in oncology drug development
Argenx (arGEN-X ADS (NASD)), Argenx (arGENX (EURONEXT), Springbank
Pharmaceuticals (NASDAQ: SBPH), I-MAB BioPharma (NASDAQ:IMAB)
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
250,000 fully paid ordinary shares
4,500,000 unlisted options - 250,000 exercisable at $0.0613 per option, expiring
15/03/2023, 250,000 exercisable at $0.0290 per option, expiring 15/03/2024 and
4,000,000 exercisable at $0.0350 per option, expiring 15/10/2024
'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- BBus (Acc. Corp Law) CA FGIA
Melanie Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. She is a member of the Institute
of Chartered Accountants, Fellow of the Governance Institute of Australia 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 Leydin Freyer. The practice provides outsourced company secretarial and accounting services to public and
private companies across a host of industries including but not limited to the Resources, technology, bioscience,
biotechnology and health sectors.
Melanie has over 25 years’ experience in the accounting profession and over 15 years as a Company Secretary. She 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.
21
Patrys Limited
Directors' report
30 June 2020
Meetings of Directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2020, 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
Pamela Klein
6
6
6
6
5
6
6
6
6
5
-
-
-
-
-
-
-
-
-
-
2
-
2
2
-
2
-
2
2
-
Held: represents the number of meetings held during the time the Director held office.
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/
22
Patrys Limited
Directors' report
30 June 2020
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 22 November 2018.
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 and
Dr. Klein receive USD$60,000 each) and reflect the demands which are made on and the responsibilities of the Directors.
However, one Non-Executive Director, Mr. Michael Stork, did not receive monetary Director fees 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 22 November 2018, where the
shareholders approved a maximum annual aggregate remuneration of $400,000.
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 comprise 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.
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.
23
Patrys Limited
Directors' report
30 June 2020
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 21 November 2019 Annual General Meeting ('AGM')
At the 21 November 2019 AGM, 97.99% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2019. 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 2020.
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)
Pamela Klein (Non-Executive Director, appointed on 1 October 2019)
Other Key Management Personnel
●
Melanie Leydin (Company Secretary)
Short-term
benefits
Short-term
benefits
Short-term
benefits
Post-
employment
benefits
Cash salary
and fees
$
Short-term
benefits
$
Annual
leave
$
Super-
annuation
$
Long-term
benefits
Long
service
leave
$
Share-
based
payments
Equity-
settled
options
$
Total
$
95,000
89,374
-
78,361
317,577
120,000
700,312
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,708
15,354
15,354
34,970
125,708
104,728
15,354
113,331
12,345
21,003
6,600
76,770
434,295
-
12,345
-
21,003
-
6,600
-
173,156
120,000
913,416
30 June 2020
Non-Executive Directors:
John Read
Suzy Jones*
Michael Stork
Pamela Klein*
Executive Directors:
James Campbell
Other Key Management
Personnel:
Melanie Leydin**
*
**
Ms Jones was paid $60,000 USD at an exchange rate of $0.6713 USD to $1 AUD.
Ms Klein was paid $52,500 USD (from 1 October 2019) at an exchange rate of $0.6699 USD to $1 AUD. The figure
includes consulting fees of $7,500 USD paid prior to her appointment as a Director of the Company.
Fees shown for Ms Leydin were paid to Leydin Freyer Corp Pty Ltd for the provision of company secretarial and
accounting services.
24
Patrys Limited
Directors' report
30 June 2020
30 June 2019
Non-Executive Directors:
John Read
Suzy Jones*
Michael Stork
Executive Directors:
James Campbell**
Other Key Management
Personnel:
Melanie Leydin***
Short-term
benefits
Short-term
benefits
Short-term
benefits
Post-
employment
benefits
Cash salary
and fees
$
Short-term
benefits
$
Annual
leave
$
Super-
annuation
$
Long-term
benefits
Long
service
leave
$
Share-
based
payments
Equity-
settled
options
$
Total
$
95,000
83,922
-
-
-
-
-
-
-
-
-
-
-
-
-
72,518
58,159
58,159
167,518
142,081
58,159
305,022
80,000
12,158
25,000
7,125
74,369
503,674
104,000
587,944
-
80,000
-
12,158
-
25,000
-
7,125
-
263,205
104,000
975,432
Ms Jones was paid $60,000 USD at an average exchange rate of $0.715 USD to $1 AUD.
Bonus of $80,000 paid to Mr Campbell in July 2019.
*
**
*** Fees shown for Ms Leydin were paid to Leydin Freyer Corp 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
Pamela Klein
Michael Stork
Executive Directors:
James Campbell
Other Key Management
Personnel:
Melanie Leydin
Fixed remuneration
At risk - STI
30 June 2020 30 June 2019 30 June 2020 30 June 2019 30 June 2020 30 June 2019
At risk - LTI
76%
85%
68%
-
57%
59%
-
-
-
-
-
-
-
-
-
-
24%
15%
32%
-
43%
41%
100%
100%
82%
83%
2%
2%
16%
15%
100%
100%
-
-
-
-
25
Patrys Limited
Directors' report
30 June 2020
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
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
$345,690 effective from 1 July 2020. 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.
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.
$USD60,000 per annum to be reviewed independently and annually by the Board of
Directors.
Pamela Klein
Non- Executive Director
1 October 2019
No fixed term, with 1 months' notice.
$USD60,000 per annum to be reviewed independently and annually by the Board of
Directors.
Melanie Leydin
Company Secretary
1 October 2015
No fixed term
$10,000 per month for company secretarial and accounting services effective from 1
March 2019
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 2020.
26
Patrys Limited
Directors' report
30 June 2020
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
Pamela Klein
Pamela Klein
Pamela Klein
Number of
options
granted
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price at grant date
Fair value
per option
2,000,000 01/10/2019
1,000,000 01/10/2019
1,000,000 01/10/2019
01/10/2019*
01/10/2020**
01/10/2021***
01/10/2024
01/10/2024
01/10/2024
$0.0350
$0.0350
$0.0350
$0.02300
$0.02300
$0.02300
Vesting immediately
*
**
The share price is equal to or greater than a 20-day VWAP of $0.05 (5.0 cents); exercisable thereafter
*** The share price is equal to or greater than a 20-day VWAP of $0.07 (7.0 cents); exercisable thereafter
Options granted carry no dividend or voting rights.
The number of options over ordinary shares granted to and vested by Directors and other Key Management Personnel as
part of compensation during the year ended 30 June 2020 are set out below:
Name
James Campbell
John Read
Suzy Jones
Michael Stork
Pamela Klein
Number of
Number of
Number of
Number of
options
options
options
options
granted
granted
during the
during the
year
year
vested and
exercisable
as at
vested and
exercisable
as at
30 June 2020 30 June 2019 30 June 2020 30 June 2019
-
-
-
-
4,000,000
10,000,000
6,000,000
4,000,000
4,000,000
250,000
15,000,000
2,000,000
2,000,000
2,000,000
2,500,000
15,000,000
2,000,000
2,000,000
2,000,000
500,000
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 2020 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
Pamela Klein
Pamela Klein
Pamela Klein
01/10/2019
01/10/2019
01/10/2019
01/10/2019
01/10/2020
01/10/2021
2,000,000
1,000,000
1,000,000
21,800
11,400
12,400
21,800
-
-
-
-
-
-
-
-
Additional information
The earnings of the Group for the five years to 30 June 2020 are summarised below:
2020
$
2019
$
2018
$
2017
$
2016
$
Revenue and other income
Net profit/(loss) before tax
Net profit/(loss) after tax
772,844
(2,748,539)
(2,748,539)
3,844,365
(411,326)
(411,326)
520,525
(2,497,252)
(2,497,252)
531,729
(1,057,876)
(1,057,876)
867,653
(1,080,784)
(1,080,784)
27
Patrys Limited
Directors' report
30 June 2020
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)
0.0300
0.0120
(0.2566)
0.0580
0.0300
(0.0384)
0.0100
0.0580
(0.2653)
0.0100
0.0100
(0.1420)
0.0100
0.0100
(0.1500)
2020
2019
2018
2017
2016
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
James Campbell
John Read
Suzy Jones
Michael Stork
Pamela Klein*
29,546
7,721,911
3,000,000
98,773,814
250,000
109,775,271
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29,546
7,721,911
3,000,000
98,773,814
250,000
109,775,271
*
Balance at the start of the year were held on date of appointment.
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
John Read
Suzy Jones
Michael Stork
Pamela Klein*
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
25,000,000
6,000,000
4,000,000
4,000,000
500,000
39,500,000
-
-
-
-
4,000,000
4,000,000
-
-
-
-
-
-
-
-
-
-
-
-
25,000,000
6,000,000
4,000,000
4,000,000
4,500,000
43,500,000
*
Balance at the start of the year were held on date of appointment.
This concludes the remuneration report, which has been audited.
28
Patrys Limited
Directors' report
30 June 2020
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
22 November 2018
15 March 2019
12 September 2019
1 October 2019
10 June 2020
10 June 2020
5 August 2020
Expiry date
24 November 2021
1 July 2021
19 April 2022
1 July 2022
15 March 2023
18 April 2023
22 November 2023
15 March 2024
31 August 2024
1 October 2024
15 March 2025
8 May 2025
5 August 2023
Exercise
price
Number
under option
$0.0072
$0.0072
$0.0072
$0.0613
$0.0613
$0.0200
$0.0350
$0.0290
$0.0290
$0.0350
$0.0220
$0.0170
$0.0240
24,000,000
2,500,000
250,000
2,500,000
500,000
2,500,000
32,000,000
3,000,000
1,500,000
4,000,000
2,750,000
250,000
126,677,087
202,427,087
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
During the financial year ending 30 June 2020 no options were exercised.
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.
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 Audit Pty Ltd) for audit and non-audit services provided during the
year are set out in note 19
29
Patrys Limited
Directors' report
30 June 2020
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 Audit Pty Ltd
There are no officers of the Company who are former partners of BDO Audit Pty Ltd.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this Directors' report.
Auditor
On 28 May 2020 BDO Audit Pty Ltd was appointed as auditor of the Company.
The appointment follows the resignation of BDO East Coast Partnership (“BDO ECP”), and ASIC’s consent to the resignation
in accordance with s329(5) of the Corporations Act 2001 (“the Act”).
The change of auditor arose as a result of BDO ECP restructuring its audit practice whereby audits will be conducted by
BDO Audit, an authorised audit company, rather than BDO ECP.
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 2020
30
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
DECLARATION OF INDEPENDENCE BY TIM FAIRCLOUGH TO THE DIRECTORS OF PATRYS LIMITED
As lead auditor of Patrys Limited for the year ended 30 June 2020, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Patrys Limited and the entities it controlled during the period.
Tim Fairclough
Director
BDO Audit Pty Ltd
Melbourne, 24 August 2020
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Patrys Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
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
Basic earnings per share
Diluted earnings per share
Note 30 June 2020 30 June 2019
Consolidated
$
$
5
6
8
772,844
844,365
-
3,000,000
(1,367,988)
(2,153,395)
(1,685,963)
(2,569,728)
(2,748,539)
(411,326)
-
-
(2,748,539)
(411,326)
-
-
909
909
(2,748,539)
(410,417)
Cents
Cents
26
26
(0.2566)
(0.2566)
(0.0384)
(0.0384)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
32
Patrys Limited
Statement of financial position
As at 30 June 2020
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 30 June 2020 30 June 2019
Consolidated
$
$
9
10
11
12
3,981,210
679,955
182,912
4,844,077
6,473,840
740,548
139,356
7,353,744
3,598
528,750
532,348
6,384
573,750
580,134
5,376,425
7,933,878
13
313,249
160,189
473,438
479,266
141,810
621,076
24,946
24,946
16,348
16,348
498,384
637,424
4,878,041
7,296,454
14
15
67,086,513
1,252,973
(63,461,445)
67,066,992
953,741
(60,724,279)
4,878,041
7,296,454
The above statement of financial position should be read in conjunction with the accompanying notes
33
Patrys Limited
Statement of changes in equity
For the year ended 30 June 2020
Consolidated
Balance at 1 July 2018
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Reallocation of value of expired and cancelled equity
Transactions with owners in their capacity as owners:
Share based payments
Share issue costs/adjustment
Share issue
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
67,039,044
588,561
(60,336,130)
7,291,475
-
-
-
-
-
909
(411,326)
-
(411,326)
909
909
(411,326)
(410,417)
(23,177)
23,177
-
-
26,148
1,800
387,448
-
-
-
-
-
387,448
26,148
1,800
Balance at 30 June 2019
67,066,992
953,741
(60,724,279)
7,296,454
Consolidated
Balance at 1 July 2019
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share based payments
Share issue
Share issue costs/adjustment
Transfer from option reserve to issued capital
Reallocation of value of expired and cancelled equity
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
67,066,992
953,741
(60,724,279)
7,296,454
-
-
-
-
-
-
(2,748,539)
-
(2,748,539)
-
(2,748,539)
(2,748,539)
-
54,000
(35,926)
1,447
-
312,052
-
-
(1,447)
(11,373)
-
-
-
-
11,373
312,052
54,000
(35,926)
-
-
Balance at 30 June 2020
67,086,513
1,252,973
(63,461,445)
4,878,041
The above statement of changes in equity should be read in conjunction with the accompanying notes
34
Patrys Limited
Statement of cash flows
For the year ended 30 June 2020
Cash flows from operating activities
Payments to suppliers and employees (inclusive of GST)
Receipts from interest and other income
Receipts from R&D tax incentive
Receipts from government grants
Receipts from insurance recoveries
Receipts from licensing income
Note 30 June 2020 30 June 2019
Consolidated
$
$
(3,324,418)
73,752
672,143
55,498
-
27,500
(3,875,262)
101,452
556,129
60,996
3,000,000
27,500
Net cash used in operating activities
25
(2,495,525)
(129,185)
Cash flows from investing activities
Payments for property, plant and equipment
Receipts from term deposit
Net cash from investing activities
Cash flows from financing activities
Proceeds from exercise of options
Net cash from financing activities
-
-
-
-
-
(4,062)
2,000,000
1,995,938
1,800
1,800
14
Net (decrease)/increase 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
(2,495,525)
6,473,840
2,895
1,868,553
4,605,459
(172)
Cash and cash equivalents at the end of the financial year
9
3,981,210
6,473,840
The above statement of cash flows should be read in conjunction with the accompanying notes
35
Patrys Limited
Notes to the financial statements
30 June 2020
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 2020. 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.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the Group.
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019 and has been applied by the
company from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of
operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the Statement of
financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term.
The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers
and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or
lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be
recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any
future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a
depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease
liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB
16 will be higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax,
Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and
depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be
separated into both a principal (financing activities) and interest (either operating or financing activities) component. For
lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Group has adopted this
standard from 1 July 2019 but there is no material effect on Patrys recognition or measurement as Patrys is not involved in
any lease agreements.
36
Patrys Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
AASB Interpretation 23: Uncertainly over income tax treatments (FRIG 23):
IFRIC 23 clarifies the application of recognition and measurement requirements of AASB 112 Income Taxes where there is
uncertainty over income tax treatments. The Interpretation specifically addresses:
• Whether an entity considers uncertain tax treatments separately;
• That the entity should assume a tax authority will examine the uncertain tax treatments and have full knowledge of all
related information, i.e. that detection risk should be ignored;
• That the entity should reflect the effect of the uncertainty in its income tax accounting when it is not probable that the tax
authorities will accept
the treatment;
• That the impact of the uncertainty should be measured using either the most likely amount or the expected value method,
depending on which method best predicts the resolution of the uncertainty; and
• That the judgements and estimates made must be reassessed whenever circumstances have changed or there is new
information that affects the judgements.
The Group has assessed the impact of IFRIC 23 on the financial statements. The assessment concluded that the
Interpretation did not have any material impact on the Group's financial statements. Consequently, no retrospective
adjustment is required.
Going concern
It is noted that for 2020 financial year, the Group incurred a loss from continuing operations after income tax of $2,748,539
(2019: $411,326) and had consolidated net operating cash outflows of $2,495,525 (2019: $129,185).
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 2020, the Group had net current assets of $4,370,639 (2019: $6,732,668);
Cash flow forecasts prepared by management demonstrate that the Group has sufficient funds to meet commitments
over the next twelve months;
At 30 June 2020, the Group recognised a receivable of $623,197 from the R&D tax incentive, which is expected to be
received in the first half of the 2021 financial year.
The Directors have considered the impacts of COVID-19 that are being felt around the world, and while there has been some
slippage of timelines, particularly for activity based in academic institutions, the Company is on track to commence a phase
1 study in late CY21 or early CY22.
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 financial assets and liabilities at fair value through profit or loss.
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 22.
37
Patrys Limited
Notes to the financial statements
30 June 2020
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 2020 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.
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 individual company in the group, 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.
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.
38
Patrys Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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.
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. Such assets are subsequently measured at
either amortised cost or fair value depending on their classification. Classification is determined based on both the business
model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of
recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business
model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial
asset represent contractual cash flows that are solely payments of principal and interest.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised
cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's
assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly
since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to
obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit
loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a
default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is
determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is
recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss
allowance reduces the asset's carrying value with a corresponding expense through profit or loss.
Impairment of non-financial assets
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.
As a part of the impairment assessment for June 2020, management reviewed changes to laws and regulations affecting the
IP, technological obsolescence, issues with funding commitment, along with a host of other indicators. There was no
indicators of impairment of the asset for the year ended 30 June 2020 as a result of this review.
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.
39
Patrys Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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 2020. The Group has not yet
assessed the impact of these new or amended Accounting Standards and Interpretations.
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.
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.
COVID-19 pandemic
Judgement has been exercised in considering the impacts that the COVID-19 pandemic has had, or may have, on the Group
based on known information. Other than as addressed in specific notes, there does not currently appear to be either any
significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which
may impact the Group unfavourably as at the reporting date or subsequently as a result of the COVID-19 pandemic.
40
Patrys Limited
Notes to the financial statements
30 June 2020
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.
Note 5. Revenue
Licensing income
R&D tax incentive income
Interest income
Government grants & incentives
Revenue
Accounting policy for revenue recognition
The Group recognises revenue as follows:
Consolidated
30 June 2020 30 June 2019
$
$
27,500
623,197
59,891
62,256
27,500
644,298
111,571
60,996
772,844
844,365
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.
Government grant
Government grant is recognised when the company has fulfilled all its obligations associated with the grant.
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
Insurance recoveries
Consolidated
30 June 2020 30 June 2019
$
$
-
3,000,000
In relation to insurance settlement for the failed manufacturing runs for PAT-SM6 in 2014 and 2015.
41
Patrys Limited
Notes to the financial statements
30 June 2020
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Amortisation
License and registered patents
Total depreciation and amortisation
Operating expenses
Research and development 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 (option expense and payment to consultant)*
*It includes shares issued to a consultant of $54,000.
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
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
42
Consolidated
30 June 2020 30 June 2019
$
$
2,786
3,311
45,000
45,000
47,786
48,311
1,367,988
2,144,349
46,656
860,828
51,464
919,078
907,484
970,542
366,052
387,449
Consolidated
30 June 2020 30 June 2019
$
$
(2,748,539)
(411,326)
(824,562)
(123,398)
(206,570)
546,282
484,850
(212,728)
561,156
(225,030)
-
-
Consolidated
30 June 2020 30 June 2019
$
$
15,829,023
348,772
15,207,273
363,540
16,177,795
15,570,813
Patrys Limited
Notes to the financial statements
30 June 2020
Note 8. Income tax expense (continued)
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;
(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 the
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 authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Note 9. Current assets - cash and cash equivalents
Cash at bank
Consolidated
30 June 2020 30 June 2019
$
$
3,981,210
6,473,840
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 2020, the Company held a total of $1.1 million in cash deposits with a maturity term of 3 months.
43
Patrys Limited
Notes to the financial statements
30 June 2020
Note 10. Current assets - trade and other receivables
Accrued revenue
Research & Development incentive receivable
Other receivables
Consolidated
30 June 2020 30 June 2019
$
$
25,208
632,659
22,088
25,208
681,605
33,735
679,955
740,548
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% (2019: 43.5%) on the eligible R&D expenditure incurred on eligible R&D activities.
The 43.5% (2019: 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 allowance for expected credit losses.
Note 11. Current assets - other financial assets
Prepayments
Note 12. Non-current assets - intangibles
Intellectual property - at cost
Less: Accumulated amortisation
Consolidated
30 June 2020 30 June 2019
$
$
182,912
139,356
Consolidated
30 June 2020 30 June 2019
$
$
720,000
(191,250)
720,000
(146,250)
528,750
573,750
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 2018
Amortisation expense
Balance at 30 June 2019
Amortisation expense
Balance at 30 June 2020
44
Intellectual
property
$
618,750
(45,000)
573,750
(45,000)
528,750
Patrys Limited
Notes to the financial statements
30 June 2020
Note 12. Non-current assets - intangibles (continued)
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.
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.
Amortisation and impairment expense is included in the line item ‘research and development’ in the Statement of profit or
loss and other comprehensive income.
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.
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.
Note 13. Current liabilities - trade and other payables
Trade payables
Other creditors and accruals
Consolidated
30 June 2020 30 June 2019
$
$
77,973
235,276
198,994
280,272
313,249
479,266
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
Ordinary shares - fully paid
1,071,318,226 1,069,757,969
67,086,513
67,066,992
Consolidated
30 June 2020 30 June 2019 30 June 2020 30 June 2019
Shares
Shares
$
$
45
Patrys Limited
Notes to the financial statements
30 June 2020
Note 14. Equity - issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Share issue
Share issue costs
Expiration of shares from share loan plan
1 July 2018
30 September 2018
30 June 2019
30 June 2019
1,070,225,902
250,000
-
(717,933)
Balance
Share issue*
Share issue costs
Transfer from option reserve to issued capital
Expiration of shares from share loan plan
30 June 2019
1 July 2019
30 June 2020
30 June 2020
30 June 2020
1,069,757,969
2,076,923
-
-
(516,666)
Balance
30 June 2020
1,071,318,226
$0.0072
$0.0000
$0.0000
$0.0260
$0.0000
$0.0000
$0.0000
67,039,044
1,800
26,148
-
67,066,992
54,000
(35,926)
1,447
-
67,086,513
*Share issue on 1 July consists of an adjustment to include the 2,076,923 shares issued to a consultant in prior period.
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.
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 2019 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.
46
Patrys Limited
Notes to the financial statements
30 June 2020
Note 15. Equity - reserves
Foreign currency reserve
Share options reserve
Share loan plan reserve
Other reserves
Consolidated
30 June 2020 30 June 2019
$
$
(18,794)
1,083,371
8,396
180,000
(18,794)
772,766
19,769
180,000
1,252,973
953,741
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 arise 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 27 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 27 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.
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
47
Patrys Limited
Notes to the financial statements
30 June 2020
Note 15. Equity - reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2018
Other comprehensive income for the year, net
of tax
Reallocation of value of expired and cancelled
equity
Share based payments
Balance at 30 June 2019
Reallocation of value of expired loan and
equity
Share based payments
Transfer from share option reserve to issued
capital
Share loan
plan reserve
$
Share option
reserve
$
Other reserve
$
Foreign
exchange
translation
reserve
$
Total
$
42,946
385,318
180,000
(19,703)
588,561
-
-
(23,177)
-
-
387,448
-
-
-
909
909
-
-
(23,177)
387,448
19,769
772,766
180,000
(18,794)
953,741
(11,373)
-
-
312,052
-
(1,447)
-
-
-
-
-
-
(11,373)
312,052
(1,447)
Balance at 30 June 2020
8,396
1,083,371
180,000
(18,794)
1,252,973
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 note 14 and note 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.
48
Patrys Limited
Notes to the financial statements
30 June 2020
Note 17. Financial instruments (continued)
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.
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
30 June 2020 30 June 2019 30 June 2020 30 June 2019
$
$
$
$
2,034,880
2,859
14,199
28,090
169,557
14,337
14,582
-
-
13,429
164,219
-
2,051,938
211,984
14,582
177,648
Consolidated - 30 June 2020
% 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%
(183,663)
(260)
(1,291)
(183,663)
(260)
(1,291)
(10%)
(10%)
(10%)
224,478
318
1,577
224,478
318
1,577
(185,214)
(185,214)
226,373
226,373
Consolidated - 30 June 2019
% 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%
(1,332)
(486)
(1,303)
(1,332)
(486)
(1,303)
(10%)
(10%)
(10%)
(3,121)
(3,121)
1,630
593
1,593
3,816
1,630
593
1,593
3,816
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.
49
Patrys Limited
Notes to the financial statements
30 June 2020
Note 17. Financial instruments (continued)
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through
the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the Group based on recent sales experience, historical collection rates and forward-looking
information that is available.
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.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
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
unutilised borrowing facilities are maintained.
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 - 30 June 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Total non-derivatives
Consolidated - 30 June 2019
Non-derivatives
Non-interest bearing
Trade payables
Other 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
$
-
-
77,973
235,726
313,699
-
-
-
-
-
-
-
-
-
77,973
235,726
313,699
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
198,994
280,272
479,266
-
-
-
-
-
-
-
-
-
198,994
280,272
479,266
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.
50
Patrys Limited
Notes to the financial statements
30 June 2020
Note 18. Key management personnel disclosures
Directors
The following persons were Directors of Patrys Limited during the financial year:
Mr. John Read
Mr. Michael Stork
Ms. Suzy Jones
Dr. James Campbell
Dr. Pamela M. Klein
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 19. Remuneration of auditors
Consolidated
30 June 2020 30 June 2019
$
$
712,657
21,003
179,756
680,102
25,000
270,330
913,416
975,432
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 -
Review and lodgement of corporate tax returns
Consolidated
30 June 2020 30 June 2019
$
$
58,311
55,705
26,403
18,589
84,714
74,294
Note 20. 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.
51
Patrys Limited
Notes to the financial statements
30 June 2020
Note 20. 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 USD$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.
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, Commercialisation 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.
Payload Therapeutics – Yale University – License, Commercialisation and Development Agreement
In June 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.
52
Patrys Limited
Notes to the financial statements
30 June 2020
Note 21. Related party transactions
Parent entity
Patrys Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 23.
Key management personnel
Disclosures relating to key management personnel are set out in note 18 and the remuneration report included in the
Directors' report.
Transactions with related parties
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
30 June 2020 30 June 2019
$
$
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 2020 were paid on 15 July 2020.
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 2020 was $nil (2019: nil). At 30 June 2020
there was an inter-company loan balance owed to Patrys GmbH of $440,344 (2019: $440,344). 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 2020, the parent entity has receivables of $6,117,205 and $162,443 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.
Note 22. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
(Loss)/profit after income tax
Other comprehensive income for the year, net of tax
Total comprehensive income
53
Parent
30 June 2020 30 June 2019
$
$
(1,046,179)
1,615,575
-
-
(1,046,179)
1,615,575
Patrys Limited
Notes to the financial statements
30 June 2020
Note 22. Parent entity information (continued)
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Foreign currency reserve
Share options reserve
Share loan plan reserve
Accumulated losses
Total equity
Parent
30 June 2020 30 June 2019
$
$
10,499,425
11,291,603
532,347
580,133
11,031,772
11,871,736
473,438
605,948
24,946
16,348
498,384
622,296
10,533,388
11,249,440
67,086,513
1
1,263,371
8,396
(57,824,893)
67,066,992
-
952,767
19,769
(56,790,088)
10,533,388
11,249,440
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 2020 (2019: Nil)
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 (2019: Nil).
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 (2019: Nil).
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.
Note 23. 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
Patrys GmbH
Nucleus Therapeutics Pty Ltd
Payload Therapeutics Pty Ltd
Principal place of business /
Country of incorporation
Ownership interest
30 June 2020 30 June 2019
%
%
Germany
Australia
Australia
54
100%
100%
100%
100%
100%
100%
Patrys Limited
Notes to the financial statements
30 June 2020
Note 24. Events after the reporting period
The impact of the COVID-19 pandemic is ongoing and while it has not had a material impact on the Group up to 30 June
2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly
developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining
social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
Subsequent to the end of the financial year, the company announced that the fully underwritten non-renounceable
Entitlement Offer raised approximately $4.29 million (before costs), through the issue of 357,530,827 fully paid ordinary
shares at an issue price of $0.012 (1.2 cents) per share. The company also announced the issue of 119,177,087 free
attaching options in relation to the fully paid ordinary shares issued under the Entitlement Offer and the issue of an additional
7,500,000 options to the Underwriter and Lead Manager. The options are quoted and exercisable at $0.024 (2.4 cents) each,
expiring on 5 August 2023.
No other matter or circumstance has arisen since 30 June 2020 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 25. 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
Unrealised foreign exchange losses
Share based payments- Vesting share options
Share based payments- Shares issued
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in prepayments
Decrease in trade and other payables
Increase in other provisions
Consolidated
30 June 2020 30 June 2019
$
$
(2,748,539)
(411,326)
47,786
(2,904)
312,052
54,000
60,593
(43,549)
(201,941)
26,977
48,311
1,085
387,448
-
(96,823)
(39,676)
(95,298)
77,094
Net cash used in operating activities
(2,495,525)
(129,185)
Note 26. Earnings per share
Consolidated
30 June 2020 30 June 2019
$
$
Loss after income tax attributable to the Owners of Patrys Limited
(2,748,539)
(411,326)
Weighted average number of ordinary shares used in calculating basic earnings per share
1,071,318,226 1,070,431,381
Weighted average number of ordinary shares used in calculating diluted earnings per share 1,071,318,226 1,070,431,381
Number
Number
Basic earnings per share
Diluted earnings per share
55
Cents
Cents
(0.2566)
(0.2566)
(0.0384)
(0.0384)
Patrys Limited
Notes to the financial statements
30 June 2020
Note 26. Earnings per share (continued)
Accounting policy for earnings per share
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.
On 22 June 2020, the company announced a fully underwritten, non-renounceable pro-rata rights offer (Entitlement Offer) to
acquire one (1) fully paid ordinary share at $0.012 (1.2 cents) each for every three (3) existing fully paid ordinary shares held
by PAB shareholders in Australian and New Zealand at the record date. If this had been finalised prior to the year-end then
it would have an impact on the EPS reported.
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.
The number of options i.e. 75,750,000 are not included in the diluted calculation as they are anti-dilutive during the current
and prior period.
Note 27. 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.
56
Patrys Limited
Notes to the financial statements
30 June 2020
Note 27. Share based payments (continued)
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 (not including any issues made
under the ESOP to Directors of the Company). All issues of shares or options under the plans are subject to approval by the
Nomination & Remuneration Committee.
Set out below are summaries of options granted under the Executive Share Option Plan:
30 June 2020
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
24/11/2016
24/11/2016
24/11/2016
19/04/2017
19/04/2017
15/03/2018
15/03/2018
01/06/2018
22/11/2018
15/03/2019
12/09/2019
01/10/2019
15/03/2020
08/05/2020
24/11/2021
24/11/2021
24/11/2021
19/04/2022
01/07/2021
15/03/2023
01/07/2022
18/04/2023
22/11/2023
15/03/2024
31/08/2024
01/10/2024
15/03/2025
05/05/2025
$0.0072
$0.0072
$0.0072
$0.0072
$0.0072
$0.0613
$0.0613
$0.0200
$0.0350
$0.0290
$0.0290
$0.0350
$0.0220
$0.0170
7,999,999
8,000,000
8,000,001
250,000
2,500,000
500,000
2,500,000
2,500,000
32,000,000
3,000,000
-
-
-
-
67,250,000
-
-
-
-
-
-
-
-
-
-
1,500,000
4,000,000
2,750,000
250,000
8,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,999,999
8,000,000
8,000,001
250,000
2,500,000
500,000
2,500,000
2,500,000
32,000,000
3,000,000
1,500,000
4,000,000
2,750,000
250,000
75,750,000
Weighted average exercise price
$0.0243
$0.0292
$0.0000
$0.0000
$0.0248
30 June 2019
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
24/11/2016
24/11/2016
24/11/2016
19/04/2017
19/04/2017
15/03/2018
15/03/2018
01/06/2018
30/09/2019
22/11/2018
15/03/2019
24/11/2021
24/11/2021
24/11/2021
19/04/2022
01/07/2021
15/03/2023
01/07/2022
18/04/2023
19/04/2022
22/11/2023
15/03/2024
$0.0072
$0.0072
$0.0072
$0.0072
$0.0072
$0.0613
$0.0613
$0.0200
$0.0072
$0.0350
$0.0290
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
-
-
-
-
-
-
-
-
-
32,000,000
3,000,000
35,000,000
-
-
-
-
-
-
-
-
(250,000)
-
-
(250,000)
-
-
-
-
-
-
-
-
-
-
-
-
7,999,999
8,000,000
8,000,001
500,000
2,500,000
500,000
2,500,000
2,500,000
(250,000)
32,000,000
3,000,000
67,250,000
Weighted average exercise price
$0.0132
$0.0345
$0.0072
$0.0000
$0.0242
Set out below are the options exercisable at the end of the financial year:
57
Patrys Limited
Notes to the financial statements
30 June 2020
Note 27. Share based payments (continued)
Grant date
Expiry date
24/11/2016
24/11/2016
24/11/2016
19/04/2017
19/04/2017
15/03/2018
15/03/2018
01/06/2018
22/11/2018
15/03/2019
12/09/2019
01/10/2019
15/03/2020
08/05/2020
24/11/2021
24/11/2021
24/11/2021
19/04/2022
01/07/2021
15/03/2023
01/07/2022
18/04/2023
22/11/2023
15/03/2024
31/08/2024
01/10/2024
15/03/2025
08/05/2025
30 June 2020 30 June 2019
Number
Number
7,999,999
8,000,000
8,000,001
250,000
2,500,000
500,000
2,500,000
2,500,000
6,000,000
3,000,000
1,250,000
2,000,000
1,500,000
250,000
7,999,999
8,000,000
8,000,001
250,000
2,500,000
500,000
2,500,000
2,500,000
6,000,000
3,000,000
-
-
-
-
46,250,000
41,250,000
The weighted average remaining contractual life of options outstanding at the end of the financial year was 4.77 years (2019:
3.525 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
12/09/2019
01/10/2019
15/03/2020
08/05/2020
31/08/2024
01/10/2024
15/03/2025
08/05/2025
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
$0.0230
$0.0021
$0.0140
$0.0120
$0.0290
$0.0350
$0.0220
$0.0170
217.00%
100.00%
215.00%
215.00%
-
-
-
-
0.89%
0.78%
0.56%
0.39%
$0.02261
$0.01157
$0.01372
$0.01177
Set out below are summaries of shares issued under the Loan Share Plan:
2020
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
Employee LSP Tranche 14
Employee LSP Tranche 19
Employee LSP Tranche 20
Employee LSP Tranche 23
Employee LSP Tranche 24
Employee LSP Tranche 25
$0.039
$0.022
$0.022
$0.050
$0.050
$0.050
191,666
225,000
225,000
100,000
100,000
100,000
941,666
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(191,666)
(225,000)
-
(100,000)
-
-
-
-
225,000
-
100,000
100,000
(516,666)
425,000
58
Patrys Limited
Notes to the financial statements
30 June 2020
Note 27. Share based payments (continued)
2019:
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
Employee LSP Tranche 6
Employee LSP Tranche 10
Employee LSP Tranche 11
Employee LSP Tranche 12
Employee LSP Tranche 13
Employee LSP Tranche 14
Employee LSP Tranche 16
Employee LSP Tranche 17
Employee LSP Tranche 18
Employee LSP Tranche 19
$0.106
$0.039
$0.039
$0.022
$0.022
$0.022
$0.038
$0.050
$0.050
$0.050
147,101
204,999
204,999
255,000
255,000
255,000
37,500
100,000
100,000
100,000
1,659,599
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(147,101)
(204,999)
(13,333)
(255,000)
(60,000)
-
(37,500)
-
-
-
-
-
191,666
-
195,000
255,000
-
100,000
100,000
100,000
(717,933)
941,666
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.
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 profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
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.
59
Patrys Limited
Notes to the financial statements
30 June 2020
Note 27. Share based payments (continued)
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.
60
Patrys Limited
Directors' declaration
30 June 2020
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Act 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
2020 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 2020
61
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Patrys Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Patrys Limited (the Company) and its subsidiaries (the Group),
which comprises the statement of financial position as at 30 June 2020, the statement of profit or loss
and other comprehensive income, the statement of changes in equity and the statement of cash flows
for the year then ended, and notes to the financial report, including a summary of significant
accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
(ii)
Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
Recoverability of Nucleus Intellectual Property How the matter was addressed in our audit
Refer to Note 12 of the accompanying financial
In assessing intellectual property for any indicators of
statements.
impairment we have performed the following audit
At 30 June 2020 the statement of financial position
procedures:
includes an intangible asset with a carrying value of
•
Obtained a copy of management’s
$528,750 in relation to the Nucleus Intellectual
impairment assessment and challenged the
Property acquired in 2016.
As an intangible asset with a finite life, management
must perform an annual review to test for any
indicators of impairment. Considerable judgement is
required with respect to a number of assumptions
relating to the asset’s development potential including
future market and economic conditions.
key assumptions and adherence to AASB 136
Impairment of Assets and AASB 138
Intangible assets.
Verified the existence of research and
development expenditure incurred as
evidence of the ongoing development of the
Nucleus IP.
Considered whether there were any external
factors that may impact the intangible asset
impairment assessment including the impact
of COVID-19.
•
•
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2020, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 28 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Patrys Limited, for the year ended 30 June 2020, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
Tim Fairclough
Director
Melbourne, 24 August 2020
Patrys Limited
Shareholder information
30 June 2020
The shareholder information set out below was applicable as at 13 August 2020.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Number
Number
of holders
of
%
of
Number
Number
of holders
of
%
of
Number
Number
of holders
of
%
of
of
ordinary
shares ordinary shares
ordinary
shares
of quoted
options
quoted
options
quoted
options
of unlisted
options
unlisted
options
unlisted
options
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
9,896
100
225,784
56
953,519
112
932
42,596,074
945 1,386,335,879
2,145 1,430,121,152
0.00
0.02
0.07
2.98
96.93
100.00
0.00
1,184
4
0.08
95,265
33
0.16
200,318
27
4.67
146
5,915,176
113 120,465,144
95.09
323 126,677,087 100.00
-
-
-
-
-
-
-
-
11 75,750,000
11 75,750,000
-
-
-
-
100.00
100.00
Holding less than a
marketable parcel
735
11,566,627
0.81
202
5,411,943
4.27
-
-
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
Number held
shares
issued
98,773,814
88,082,929
79,670,849
68,434,904
57,722,667
39,215,687
30,000,000
27,000,000
26,499,994
26,000,000
25,039,068
20,250,000
16,116,324
16,000,000
15,000,000
14,000,014
10,823,529
9,939,395
8,744,148
8,250,000
6.91
6.16
5.57
4.79
4.04
2.74
2.10
1.89
1.85
1.82
1.75
1.42
1.13
1.12
1.05
0.98
0.76
0.70
0.61
0.58
685,563,322
47.94
STORK HOLDINGS 2010 LTD
DR DAX MARCUS CALDER
NATIONAL NOMINEES LIMITED
CS THIRD NOMINEES PTY LIMITED (HSBC CUST NOM AU LTD 13 A/C)
DAX CALDER PTY LTD
KEMAST INVESTMENTS PTY LTD (KM STOKES S/F NO 1 A/C)
AJAVA HOLDINGS PTY LTD
MARGINATA PTY LTD (ROY BOLTON SUPER FUND A/C)
LGL TRUSTEES LIMITED (THE KONDA FAMILY A/C)
STAFFWEAR PTY LTD (DAX CALDER SUPER FUND A/C)
MR MLADEN MARUSIC
ONCOMAB GMBH
YALE UNIVERSITY
ESTELLEANNE PTY LTD
MR XIAOKE XIE
VALUI PTY LTD (FORTIS SUPER FUND A/C)
LGL TRUSTEES LIMITED (MK PENSION PLAN-473278 A/C)
MS KARIN JONES
MR NIGEL ROBERT STRONG
MR STEVEN JAMES STREICHER
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Patrys Limited
Shareholder information
30 June 2020
CS THIRD NOMINEES PTY LIMITED (HSBC CUST NOM AU LTD 13 A/C)
DAX CALDER PTY LTD
AJAVA HOLDINGS PTY LTD
LAZARUS CORPORATE FINANCE PTY LTD (FACILITATION TRADING A/C)
NATIONAL NOMINEES LIMITED
MR CRAIG MANNERS
LGL TRUSTEES LIMITED (THE KONDA FAMILY A/C)
KEMAST INVESTMENTS PTY LTD (KM STOKES S/F NO 1 A/C)
MARGINATA PTY LTD (ROY BOLTON SUPER FUND A/C)
MR XIAOKE XIE
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD (CUSTODIAN A/C)
ESTELLEANNE PTY LTD
DALHIGH PTY LTD (DALHIGH INVESTMENTS A/C)
VALUI PTY LTD (FORTIS SUPER FUND A/C)
RIYA INVESTMENTS PTY LTD
MR SEAMUS IAN CORNELIUS
MS KARIN JONES
STELLA EQUITY PTY LTD
NEAROLOGY PTY LTD
MR YONG WANG
Unquoted equity securities
Options over ordinary shares issued
Options over ordinary shares
% of total
options
issued
Number held
27,227,752
13,888,889
10,000,000
7,500,000
6,666,683
5,600,000
4,166,665
3,267,974
2,333,334
1,833,334
1,333,334
1,333,334
1,301,804
1,166,668
1,000,000
833,334
828,283
792,263
775,000
733,334
92,581,985
21.49
10.96
7.89
5.92
5.26
4.42
3.29
2.58
1.84
1.45
1.05
1.05
1.03
0.92
0.79
0.66
0.65
0.63
0.61
0.58
73.09
Number
on issue
Number
of holders
75,750,000
11
Substantial holders
Substantial holders in the Company, as disclosed in substantial holding notices given to the Company, are set out below:
Ordinary shares
% of total
Number held
shares
issued
120,117,634
98,773,814
56,239,233
11.19
6.91
5.24
Dr Dax Marcus Calder
Stork Holdings 2010 Ltd
Mason Stevens Limited
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
All issued shares carry voting rights on a one-for-one basis.
Quoted PABO Options
There are no voting rights attached to the quoted PABO options.
Unquoted Options
There are no voting rights attached to the unquoted options.
There are no other classes of equity securities.
66
Patrys Limited
Shareholder information
30 June 2020
Corporate Governance Statement
Refer to the Company's Corporate Governance statement at: https://www.patrys.com/patrys-corporate-governance/
Annual General Meeting
Patrys Limited advises that its Annual General Meeting will be held on Thursday, 19 November 2020. The time and other
details relating to the meeting will be advised in the Notice of Meeting to be sent to all shareholders and released to ASX in
due course. In accordance with the ASX Listing Rules and the Company’s Constitution, the closing date for receipt of
nominations for the position of Director are required to be lodged at the registered office of the Company by 5.00pm (AEST)
on 1 October 2020.
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Corporate directory
DIRECTORS
Mr. John Read (Non-Executive Chairman)
Dr. James Campbell (Managing Director & CEO)
Mr. Michael Stork (Non-Executive Director and Deputy Chairman)
Ms. Suzy Jones (Non-Executive Director)
Dr. Pamela Klein (Non-Executive Director)
COMPANY SECRETARY
Ms. Melanie Leydin
REGISTERED OFFICE
Level 4, 100 Albert Road
South Melbourne VIC 3205
Phone: 03 9692 7222
PRINCIPAL PLACE
OF BUSINESS
Level 4, 100 Albert Road
South Melbourne VIC 3205
Phone: 03 9692 7222
SHARE REGISTER
Computershare Investor Services Pty Limited
452 Johnston Street
Abbotsford VIC 3067
Phone: 1300 850 505 (within Australia)
Phone: +61 3 9415 5000
AUDITOR
BDO Audit Pty Ltd
Tower 4, Level 18, 727 Collins Street
Melbourne VIC 3008
Australia
STOCK EXCHANGE
LISTING
Patrys Limited shares are listed on the Australian
Securities Exchange (ASX code: PAB and Listed Options: PABO)
WEBSITE
www.patrys.com
ANNUAL GENERAL
MEETING
Patrys Limited advises that its Annual General Meeting will be held on Thursday, 19 November
2020. The time and other details relating to the meeting will be advised in the Notice of Meeting
to be sent to all shareholders and released to ASX in due course. In accordance with the ASX
Listing Rules and the Company’s Constitution, the closing date for receipt of nominations for
the position of Director are required to be lodged at the registered office of the Company by
5.00pm (AEST) on 1 October 2020.
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Corporate and social responsibility
Patrys is a leading therapeutic development company developing a platform of cell-penetrating antibodies for a range
of cancers. In pursuing this objective, Patrys acknowledges its role within society and believes its success will deliver
long-term positive benefits to all stakeholders. Patrys’ corporate governance principles and code of conduct set the
framework for how the company, management and employees are expected to conduct themselves.
Our people
The employees of Patrys are essential to the company achieving business success. To ensure Patrys remains a safe,
healthy, and attractive workplace for our employees, Patrys has established workplace policies and practices.
Patrys’ code of conduct reflects the core values of the company and sets out standards of behaviour in matters
including compliance with all legal operations of the company. Patrys has significantly lower rates of employee
turnover than the industry average. This higher rate of employee retention is indicative of its positive and collegiate
workplace. Patrys prides itself on a strong culture based on accountability, performance, and ethical and respectful
behaviours. The Board has adopted a diversity policy to provide a framework for Patrys to achieve a number of
diversity objectives including, but not limited to, gender, age, ethnicity, disability, sexual orientation and cultural
background. Within the limits of a small organisation, Patrys believes that it is tracking well on measures of diversity,
including five of the eight leadership roles in the Board and Management being held by females, and similarly five
being born outside of Australia. Patrys strives to put in place measures, such as flexible working arrangements,
specifically to encourage participation by all.
Employee option schemes are used to provide the opportunity for all staff to share in the success of the company and
to assist in aligning the objectives of employees with those of shareholders.
The community
Through innovative research and development, Patrys is creating products for needs which are currently unmet within
the health and medical markets. All of Patrys’ preclinical research activities comply with strict regulatory and ethical
approval processes.
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