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Starpharma annual report 2001
Starpharma:
targeting the prevention
and treatment of major
human diseases using
dendrimers…
[Dendrimers are synthetic nanoscale molecules that have precise, defined structures and properties]
1 Chairman’s Letter
2 CEO’s Report
4 Targeting the Major Diseases and Health
Issues for Humans
4 A Range of Major Disease Targets
4 The Lead Product
6 Market potential for STD Microbicide Therapies
6 Investigational New Drug Application
6 Research and Development Team –
Skills and Expertise
7 Global Research Network
8 Dendrimers, Nanotechnology and Starpharma’s
Leading Position
10 Dendritic Nanotechnologies Limited –
Major Commercial Development Opportunities
10 Starpharma Group Corporate Structure
11 Growing Preclinical Development Capabilities
11 A Quality Assurance System to Add Value
to Products
11 Profiles
13 Financial Statements
Starpharma Annual Report 1
Dear Shareholder,
Over the past twelve months, Starpharma Pooled Development Limited (“the company”)
group of companies has developed key in-house capabilities required for drug discovery,
design, development and commercialisation. Starpharma has a true platform technology and
is focused on commercial drug development arising from its research program.
The major milestones outlined in the prospectus issued in September 2000 are being
achieved. The company has continued to attract strong interest and funding support for its
development projects. As a result of the successful fund raising and subsequent listing on
the Australian Stock Exchange in October 2000, the company has a strong cash position.
Significant achievements in the past financial year have been:
n
n
the granting in the U.S. of the broad-based antiviral dendrimer patent;
successful preclinical development of Starpharma’s lead compound to target prevention of
sexually transmitted diseases;
n ongoing research success in a wide range of disease applications for dendrimer
compounds; and
n
the continued expansion of Starpharma’s intellectual property.
A more recent achievement was the establishment of Dendritic Nanotechnologies Limited
as another company in the Pooled Development Fund structure, and the association of
Donald A. Tomalia, Ph.D., the founder of dendrimer chemistry and his team with Starpharma.
The last twelve months have also seen changing sentiment worldwide towards biotechnology
stocks. The Board and management of Starpharma believe we are well placed to create
shareholder value resulting from our combined focus on product development and maintaining
our current dominant intellectual property position relating to dendrimer-based drugs.
I look forward to an exciting future as Starpharma becomes progressively recognised as a
focused drug development company with world leading technology.
I thank you for your support as a shareholder.
Richard Oliver AM
Chairman
2 Starpharma Annual Report
Starpharma Annual Report 3
CEO’s Report
When Starpharma was established, a key asset was a licence from the Biomolecular Research
Institute to commercialise technology in an area described as the use of dendrimers to develop
drugs targeting major diseases. Many in the scientific and pharmaceutical communities
regarded the area as being of novelty interest. Subsequently there has been a major shift in
attention with more dendrimer publications in the last twelve months than in the previous 10
years combined. In the past year, significant changes also occurred at Starpharma. The
company has established a team with expertise in key disciplines of commercial drug
discovery and development.
Establishment of an In-House Drug Discovery Team
Starpharma has employed a team of scientists including the inventors of Starpharma’s original
technology, Dr Barry Matthews and Dr George Holan. The team has a with a chemistry focus
but with multidisciplinary skills, a critical factor contributing to their success. The team
focuses on the development of synthetic structures, called dendrimers. Dendrimers are precise
nanoscale molecules, and are significantly larger than traditional synthetic drugs.
Starpharma’s expertise and intellectual property position in pharmaceutical applications of
dendrimers is internationally competitive. Starpharma’s dendrimer chemistry capabilities were
recently enhanced by the establishment of Dendritic Nanotechnologies Limited and the
engagement of Donald A. Tomalia, Ph.D., an international pioneer of dendrimer technology,
and his team.
Focused Product Development Expertise
Compounds from Starpharma’s drug discovery program are evaluated in disease models by a
broadly based group of international collaborators, who are excited by the compounds’ activity
against a wide range of diseases. New drug candidates must satisfy strict preclinical safety
and efficacy testing criteria. Starpharma has established a preclinical development team
focused on developing lead drug candidates, and gaining approval from the U.S. regulatory
authority for testing in humans. There is limited expertise in preclinical development in
Australia making it necessary to assemble a team of international consultants and contractors.
This team is coordinated by our Preclinical Development Manager, Tom McCarthy, Ph.D.
Starpharma’s lead drug candidates, a vaginal microbicide for prevention of sexually transmitted
diseases and a topical treatment for genital herpes, represent significant commercial opportunity.
Starpharma plans to submit an Investigational New Drug (IND) application for its microbicide
product to the U.S. Food and Drug Administration in late 2001. Approval of this application
would allow the first synthetic nanoscale drug to be tested in humans.
Establishment of a Commercial Management Infrastructure
The broad strategy of the Starpharma group is to discover new drug opportunities, protect
intellectual property and add value to products by developing them to the point where new
drugs demonstrate efficacy in humans, before licensing to major pharmaceutical companies
Photo above: The new home of Starpharma,
the Baker Medical Research Institue
in Prahran, Melbourne.
with the resources for later stage development, manufacturing and marketing. This business
model is well established in the U.S. and Europe and allows Starpharma to maximise value
with minimum resource input. The Starpharma commercial management team, headed by Tim
Grogan, has the expertise to effectively manage agreements with collaborators, product licensing
and major commercial alliances, winning respect with the successful establishment of Dendritic
Nanotechnologies Ltd, an Australian entity which will employ a world-renowned research group.
The Future
In December, Starpharma’s team will come together at one site as the first commercial
tenant of the new Baker Medical Research Institute in Melbourne. The challenge ahead is
to grow the company in order to fully exploit a unique intellectual property position, and
the wide range of opportunities arising from our core competency in developing drugs
based on dendrimer nanotechnologies. Starpharma will remain focused on the goals
described above, and has the people with the expertise necessary to be successful.
John Raff, Ph.D.
CEO
2 Starpharma Annual Report
Starpharma Annual Report 3
CEO’s Report
When Starpharma was established, a key asset was a licence from the Biomolecular Research
Institute to commercialise technology in an area described as the use of dendrimers to develop
drugs targeting major diseases. Many in the scientific and pharmaceutical communities
regarded the area as being of novelty interest. Subsequently there has been a major shift in
attention with more dendrimer publications in the last twelve months than in the previous 10
years combined. In the past year, significant changes also occurred at Starpharma. The
company has established a team with expertise in key disciplines of commercial drug
discovery and development.
Establishment of an In-House Drug Discovery Team
Starpharma has employed a team of scientists including the inventors of Starpharma’s original
technology, Dr Barry Matthews and Dr George Holan. The team has a with a chemistry focus
but with multidisciplinary skills, a critical factor contributing to their success. The team
focuses on the development of synthetic structures, called dendrimers. Dendrimers are precise
nanoscale molecules, and are significantly larger than traditional synthetic drugs.
Starpharma’s expertise and intellectual property position in pharmaceutical applications of
dendrimers is internationally competitive. Starpharma’s dendrimer chemistry capabilities were
recently enhanced by the establishment of Dendritic Nanotechnologies Limited and the
engagement of Donald A. Tomalia, Ph.D., an international pioneer of dendrimer technology,
and his team.
Focused Product Development Expertise
Compounds from Starpharma’s drug discovery program are evaluated in disease models by a
broadly based group of international collaborators, who are excited by the compounds’ activity
against a wide range of diseases. New drug candidates must satisfy strict preclinical safety
and efficacy testing criteria. Starpharma has established a preclinical development team
focused on developing lead drug candidates, and gaining approval from the U.S. regulatory
authority for testing in humans. There is limited expertise in preclinical development in
Australia making it necessary to assemble a team of international consultants and contractors.
This team is coordinated by our Preclinical Development Manager, Tom McCarthy, Ph.D.
Starpharma’s lead drug candidates, a vaginal microbicide for prevention of sexually transmitted
diseases and a topical treatment for genital herpes, represent significant commercial opportunity.
Starpharma plans to submit an Investigational New Drug (IND) application for its microbicide
product to the U.S. Food and Drug Administration in late 2001. Approval of this application
would allow the first synthetic nanoscale drug to be tested in humans.
Establishment of a Commercial Management Infrastructure
The broad strategy of the Starpharma group is to discover new drug opportunities, protect
intellectual property and add value to products by developing them to the point where new
drugs demonstrate efficacy in humans, before licensing to major pharmaceutical companies
Photo above: The new home of Starpharma,
the Baker Medical Research Institue
in Prahran, Melbourne.
with the resources for later stage development, manufacturing and marketing. This business
model is well established in the U.S. and Europe and allows Starpharma to maximise value
with minimum resource input. The Starpharma commercial management team, headed by Tim
Grogan, has the expertise to effectively manage agreements with collaborators, product licensing
and major commercial alliances, winning respect with the successful establishment of Dendritic
Nanotechnologies Ltd, an Australian entity which will employ a world-renowned research group.
The Future
In December, Starpharma’s team will come together at one site as the first commercial
tenant of the new Baker Medical Research Institute in Melbourne. The challenge ahead is
to grow the company in order to fully exploit a unique intellectual property position, and
the wide range of opportunities arising from our core competency in developing drugs
based on dendrimer nanotechnologies. Starpharma will remain focused on the goals
described above, and has the people with the expertise necessary to be successful.
John Raff, Ph.D.
CEO
4 Starpharma Annual Report
Starpharma Annual Report 5
Lead products target STDs
Targeting Major Diseases and Health Issues for Humans
Starpharma’s business philosophy is product-focused and has an applied emphasis that
targets major human diseases and health issues. As Starpharma grows, the necessary
capabilities are being developed within the company to provide for rapid product
development and release. Starpharma has been structured to participate in all stages of
product development and to manage aspects of licensing with commercial partners or
registration with regulatory bodies, with the aim of bringing the benefits of Starpharma’s
novel drugs to those in need.
A Range of Major Disease Targets
Starpharma’s priority disease targets are:
1
2
3
4
5
6
7
n Sexually transmitted diseases such as HIV, hepatitis B, herpes, genital warts
1 Malaria
n Cancer (tumour-related)
n Toxin-related illnesses such as cholera
Starpharma’s dendrimer compounds have also shown activity against respiratory illnesses
such as influenza and respiratory syncytial virus, exotic viruses such as Ebola and Dengue,
and other diseases including malaria.
The Lead Product
Starpharma’s lead product in development, SPL7013, is a vaginal microbicide product for
the prevention of the transmission of major STDs such as HIV, genital herpes, genital
warts, hepatitis B and chlamydia. Preclinical development and testing of the drug is
progressing well, with human trials of the product planned for 2002. Another product, also
based on SPL7013, is being developed as a topical treatment for genital herpes outbreaks
in already infected people. Importantly, recent animal trials of the product for this
indication showed positive results, with SPL7013 significantly reducing the severity of
sores and swelling caused when mice were infected with herpes simplex virus.
2
3
4
5
6
7
Respiratory Viruses
Respiratory Syncitial Viruses
Influenza
Adenovirus
Cancer
Angiogenesis inhibition
Hepatitis B
Anti-Toxins
Bacterial Entero-toxins
Venoms
Exotic Viruses
Ebola
Dengue
SexuallyTransmitted Diseases
HIV
Herpes Simplex Virus
Genital Warts (Human papilloma Virus)
Chlamydia
Page 5:
1+2 HIV attacks a T-cell.
3
HIV infection of a T-cell begins with
attachment of a protein on the surface
of the virus, gp12O, to CD4 receptors
on the T-cell.
4
Starpharma's dendrimers may prevent
HIV infection by preventing binding of
viral gp12O proteins to the CD4
receptors on the cell, thus preventing
viral attachment and entry into the cell.
HIV
GP120
Co-scuptor
CD4
2
4
1
3
SPL7013
Lead Product:
Mechanism of Starpharma’s compound SPL7013
preventing HIV infection.
4 Starpharma Annual Report
Starpharma Annual Report 5
Lead products target STDs
Targeting Major Diseases and Health Issues for Humans
Starpharma’s business philosophy is product-focused and has an applied emphasis that
targets major human diseases and health issues. As Starpharma grows, the necessary
capabilities are being developed within the company to provide for rapid product
development and release. Starpharma has been structured to participate in all stages of
product development and to manage aspects of licensing with commercial partners or
registration with regulatory bodies, with the aim of bringing the benefits of Starpharma’s
novel drugs to those in need.
A Range of Major Disease Targets
Starpharma’s priority disease targets are:
1
2
3
4
5
6
7
n Sexually transmitted diseases such as HIV, hepatitis B, herpes, genital warts
1 Malaria
n Cancer (tumour-related)
n Toxin-related illnesses such as cholera
Starpharma’s dendrimer compounds have also shown activity against respiratory illnesses
such as influenza and respiratory syncytial virus, exotic viruses such as Ebola and Dengue,
and other diseases including malaria.
The Lead Product
Starpharma’s lead product in development, SPL7013, is a vaginal microbicide product for
the prevention of the transmission of major STDs such as HIV, genital herpes, genital
warts, hepatitis B and chlamydia. Preclinical development and testing of the drug is
progressing well, with human trials of the product planned for 2002. Another product, also
based on SPL7013, is being developed as a topical treatment for genital herpes outbreaks
in already infected people. Importantly, recent animal trials of the product for this
indication showed positive results, with SPL7013 significantly reducing the severity of
sores and swelling caused when mice were infected with herpes simplex virus.
2
3
4
5
6
7
Respiratory Viruses
Respiratory Syncitial Viruses
Influenza
Adenovirus
Cancer
Angiogenesis inhibition
Hepatitis B
Anti-Toxins
Bacterial Entero-toxins
Venoms
Exotic Viruses
Ebola
Dengue
SexuallyTransmitted Diseases
HIV
Herpes Simplex Virus
Genital Warts (Human papilloma Virus)
Chlamydia
Page 5:
1+2 HIV attacks a T-cell.
3
HIV infection of a T-cell begins with
attachment of a protein on the surface
of the virus, gp12O, to CD4 receptors
on the T-cell.
4
Starpharma's dendrimers may prevent
HIV infection by preventing binding of
viral gp12O proteins to the CD4
receptors on the cell, thus preventing
viral attachment and entry into the cell.
HIV
GP120
Co-scuptor
CD4
2
4
1
3
SPL7013
Lead Product:
Mechanism of Starpharma’s compound SPL7013
preventing HIV infection.
6 Starpharma Annual Report
Starpharma Annual Report 7
Developing Drug Solutions for people
Market Potential for STD Microbicide Therapies
A recent bill introduced into the U.S. Congress, entitled the Microbicide Development Act of
2001, highlighted that in 2002, approximately 15.4 million people in the U.S. will acquire
a new STD. Importantly, the risk of acquiring HIV is significantly increased in those with
existing STDs. Globally, 36.1 million people live with HIV while another 15,000 new
infections occur daily, and more than 26 million people have died from AIDS since it was
first detected in 1983. Each year, the estimated direct medical costs of STDs in the U.S.
amount to some $8.4 billion, while indirectly STDs cost the general community in the U.S.
alone some $20 billion. The microbicide bill specifically identifies microbicidal products as
a promising new approach, which would kill, or render inactive, STDs including HIV.
Starpharma is focused on the development of a broad spectrum vaginal microbicide product
to prevent the transmission of STDs such as HIV, herpes and hepatitis B. In the U.S., it is
estimated that some 21 million women would be interested in using a microbicidal product,
but there is currently no effective microbicide on the market. Therefore, there exists a large
potential for novel products such as Starpharma’s vaginal microbicide, which is planned to
enter trials in humans in 2002, to be a market leader in this area.
Investigational New Drug Application
Global Research Network
continues to be, the foundation of Starpharma’s success in creating new intellectual
property, in developing and analysing lead compounds for effective disease targeting, and
in managing preclinical development of products.
Earlier this year, Starpharma was notified by the U.S. Patent Office that the patent,
“Antiviral Dendrimers” was issued as U.S. Patent Number 6,190,650. This patent
provides Starpharma with broad patent protection related to the antiviral applications of
dendrimer nanotechnologies, such as prevention of sexually transmitted diseases, and
other applications. The activities of Starpharma’s R&D team in increasing patent coverage
led to a further three patent applications being filed in the period from July 1, 2000 to
June 30, 2001, and another one in the period after July 1, 2001.
Starpharma employees are encouraged to develop multidisciplinary skills, which strengthen
and diversify the research and development team, optimise the use of resources, and help to
minimise the time from discovery to product registration or licensing.
In addition to its Australian-based R&D team, Starpharma maintains an extensive global
research network which consists of world leaders in fields including HIV/AIDS, hepatitis
B, respiratory syncytial virus, influenza and other major diseases.
An investigational new drug (IND) application is planned to be submitted to the U.S. Food
and Drug Administration (FDA) later this year. This IND will describe the safety and efficacy
profile of the vaginal microbicide product as demonstrated by in vitro and animal studies.
The approval of the IND application by the FDA is an important milestone in the product
development process as it allows for the commencement of Phase 1 clinical trials in humans,
to establish the safety and efficacy of the product.
Ongoing liaison with the FDA throughout the drug development process, including during
clinical trials, will facilitate successful licensing or registration of a product. The evolving
Regulatory Affairs roles and responsibilities within the company will also be of great benefit
to Starpharma’s product development prospects.
Research and Development Team - Skills and Expertise
Starpharma significantly expanded its research and development team in 2000-2001 to
include scientists with significant expertise in the areas of synthetic chemistry, analytical
chemistry and pharmacology/toxicology. Many of the synthetic chemists who joined
Starpharma this year were previously employed by the Biomolecular Research Institute
(BRI) and worked on specific projects for Starpharma. Starpharma’s core technical
competency is in synthetic chemistry, which allows for the design and synthesis of novel
dendrimer compounds with specific biological activity. The research team has been, and
The Americas
1
Vancouver, Canada
Viridae Clinical Sciences Inc
Project: Vaginal Microbicide, Hepatitis B,
Antitoxins, Exotic Viruses, Consultant
Ohio, USA
University Medical Centre
Project: Vaginal Microbicide
Viridae USA
Project: Vaginal Microbicide
Utah, USA
University of Utah Virology Laboratory
Project: Respiratory Viruses, Exotic Viruses
Pennsylvania, USA
Fox Chase Institute for Cancer Research
Project: Hepatitis B/Liver Cancer
Texas, USA
Baylor University Medical College
Project: Respiratory Viruses
Alabama, USA
University of Alabama
Project: Vaginal Microbicide, CMV
2
3
4
5
6
7 Maryland, USA
NIAID-NIH
Project: Administration of US Funds
Georgetown University
Project: Hepatitis B/Liver Cancer,
Vaginal Microbicide
US Army Medical Research Institute
Project: Exotic Viruses, Antitoxins
New York, USA
Cornell University
Project: Hepatitis B/Liver Cancer
8
7
8
2
4
1
3
6
5
9
10
Europe
9
Leuven, Belgium
REGA Medical Research Institute
Project: HIV/CMV
10 Prague, Czech Republic
Institute of Organic Chemistry and Biochemistry
Project: Angiogenesis Inhibitors/Enhancers
Australia
11 Queensland, Australia
University of Queensland
Project: Vaginal Microbicide/HPV
12 Sydney, Australia
Pharmatox
Project: Pharmacology
Chris Virgona, North Ryde Laboratory
Project: Angiogenesis/Toxicology/
General Biology
13 Melbourne, Australia
Starpharma Head Office
Project: Management & Administration
Starpharma Chemistry Laboratory
Project: Synthetic Chemistry
Monash Microbiology Department
Project: Malaria, Exotic Viruses
Monash Pharmacology Department
Project: Pharmacology
IDT
Project: Scale-up GMP synthesis, Angiogenesis
Monash Surgery Department
Project: Angiogenesis
Peter MacCallum Cancer Institute
Project: Angiogenesis
RMIT, Department of Applied Biology
& Biotechnology
Project: Anti-toxins
Kendle
Project: Consultant
11
12
13
6 Starpharma Annual Report
Starpharma Annual Report 7
Developing Drug Solutions for people
Market Potential for STD Microbicide Therapies
A recent bill introduced into the U.S. Congress, entitled the Microbicide Development Act of
2001, highlighted that in 2002, approximately 15.4 million people in the U.S. will acquire
a new STD. Importantly, the risk of acquiring HIV is significantly increased in those with
existing STDs. Globally, 36.1 million people live with HIV while another 15,000 new
infections occur daily, and more than 26 million people have died from AIDS since it was
first detected in 1983. Each year, the estimated direct medical costs of STDs in the U.S.
amount to some $8.4 billion, while indirectly STDs cost the general community in the U.S.
alone some $20 billion. The microbicide bill specifically identifies microbicidal products as
a promising new approach, which would kill, or render inactive, STDs including HIV.
Starpharma is focused on the development of a broad spectrum vaginal microbicide product
to prevent the transmission of STDs such as HIV, herpes and hepatitis B. In the U.S., it is
estimated that some 21 million women would be interested in using a microbicidal product,
but there is currently no effective microbicide on the market. Therefore, there exists a large
potential for novel products such as Starpharma’s vaginal microbicide, which is planned to
enter trials in humans in 2002, to be a market leader in this area.
Investigational New Drug Application
Global Research Network
continues to be, the foundation of Starpharma’s success in creating new intellectual
property, in developing and analysing lead compounds for effective disease targeting, and
in managing preclinical development of products.
Earlier this year, Starpharma was notified by the U.S. Patent Office that the patent,
“Antiviral Dendrimers” was issued as U.S. Patent Number 6,190,650. This patent
provides Starpharma with broad patent protection related to the antiviral applications of
dendrimer nanotechnologies, such as prevention of sexually transmitted diseases, and
other applications. The activities of Starpharma’s R&D team in increasing patent coverage
led to a further three patent applications being filed in the period from July 1, 2000 to
June 30, 2001, and another one in the period after July 1, 2001.
Starpharma employees are encouraged to develop multidisciplinary skills, which strengthen
and diversify the research and development team, optimise the use of resources, and help to
minimise the time from discovery to product registration or licensing.
In addition to its Australian-based R&D team, Starpharma maintains an extensive global
research network which consists of world leaders in fields including HIV/AIDS, hepatitis
B, respiratory syncytial virus, influenza and other major diseases.
An investigational new drug (IND) application is planned to be submitted to the U.S. Food
and Drug Administration (FDA) later this year. This IND will describe the safety and efficacy
profile of the vaginal microbicide product as demonstrated by in vitro and animal studies.
The approval of the IND application by the FDA is an important milestone in the product
development process as it allows for the commencement of Phase 1 clinical trials in humans,
to establish the safety and efficacy of the product.
Ongoing liaison with the FDA throughout the drug development process, including during
clinical trials, will facilitate successful licensing or registration of a product. The evolving
Regulatory Affairs roles and responsibilities within the company will also be of great benefit
to Starpharma’s product development prospects.
Research and Development Team - Skills and Expertise
Starpharma significantly expanded its research and development team in 2000-2001 to
include scientists with significant expertise in the areas of synthetic chemistry, analytical
chemistry and pharmacology/toxicology. Many of the synthetic chemists who joined
Starpharma this year were previously employed by the Biomolecular Research Institute
(BRI) and worked on specific projects for Starpharma. Starpharma’s core technical
competency is in synthetic chemistry, which allows for the design and synthesis of novel
dendrimer compounds with specific biological activity. The research team has been, and
The Americas
1
Vancouver, Canada
Viridae Clinical Sciences Inc
Project: Vaginal Microbicide, Hepatitis B,
Antitoxins, Exotic Viruses, Consultant
Ohio, USA
University Medical Centre
Project: Vaginal Microbicide
Viridae USA
Project: Vaginal Microbicide
Utah, USA
University of Utah Virology Laboratory
Project: Respiratory Viruses, Exotic Viruses
Pennsylvania, USA
Fox Chase Institute for Cancer Research
Project: Hepatitis B/Liver Cancer
Texas, USA
Baylor University Medical College
Project: Respiratory Viruses
Alabama, USA
University of Alabama
Project: Vaginal Microbicide, CMV
2
3
4
5
6
7 Maryland, USA
NIAID-NIH
Project: Administration of US Funds
Georgetown University
Project: Hepatitis B/Liver Cancer,
Vaginal Microbicide
US Army Medical Research Institute
Project: Exotic Viruses, Antitoxins
New York, USA
Cornell University
Project: Hepatitis B/Liver Cancer
8
7
8
2
4
1
3
6
5
9
10
Europe
9
Leuven, Belgium
REGA Medical Research Institute
Project: HIV/CMV
10 Prague, Czech Republic
Institute of Organic Chemistry and Biochemistry
Project: Angiogenesis Inhibitors/Enhancers
Australia
11 Queensland, Australia
University of Queensland
Project: Vaginal Microbicide/HPV
12 Sydney, Australia
Pharmatox
Project: Pharmacology
Chris Virgona, North Ryde Laboratory
Project: Angiogenesis/Toxicology/
General Biology
13 Melbourne, Australia
Starpharma Head Office
Project: Management & Administration
Starpharma Chemistry Laboratory
Project: Synthetic Chemistry
Monash Microbiology Department
Project: Malaria, Exotic Viruses
Monash Pharmacology Department
Project: Pharmacology
IDT
Project: Scale-up GMP synthesis, Angiogenesis
Monash Surgery Department
Project: Angiogenesis
Peter MacCallum Cancer Institute
Project: Angiogenesis
RMIT, Department of Applied Biology
& Biotechnology
Project: Anti-toxins
Kendle
Project: Consultant
11
12
13
8 Starpharma Annual Report
Starpharma Annual Report 9
Dendrimers, Nanotechnology and Starpharma’s Leading Position
Starpharma has discovered a large number of dendrimer compounds that have demonstrated
efficacy against a range of major diseases. Starpharma’s lead vaginal microbicide compound
is expected to be the first dendrimer, and perhaps more significantly, the first synthetic nano-
sized structure, to be used in pharmaceutical products for human use.
Dendrimers are precisely controlled, highly branched, nano-sized materials that provide a
platform for the development of products in a wide range of commercial applications, from
life sciences to the electronics and materials industries. As opposed to miniaturization of
large objects or devices, the synthetic chemistry techniques employed by Starpharma
allow for precise, piece by piece construction of nanotech objects in the range of 1 to 100
nanometres in size (1 billionth to 100 billionths of a meter, or around 50,000 times
smaller than the thickness of a human hair). While other materials such as natural proteins
and polymers exist in the nanoscale size range, no material compares with dendrimers for
the level of control over size, shape and functionality of the final compound. As a result,
dendrimer-based pharmaceuticals are reproducible, predictable and defined, and can be
precisely constructed to specifically target certain diseases, cells or whole organs within
the human body.
Nanotechnology is emerging as an exciting new frontier in science. The U.S., Japanese and
South Korean governments, for example, recognise nanotechnology as being of major
national importance and have made large commitments to nanotechnology development
programs. The U.S. federal government, through its National Nanotechnology Initiative, has
allocated more than half a billion U.S. dollars in 2001 alone to research projects across
various government departments, including the U.S. National Institutes of Health (NIH).
Starpharma’s preclinical and early-stage development projects benefit from NIH funding
through grants to support U.S. based studies on our compounds, and the company is
positioned to participate in the increased U.S. government investment in nanotechnology.
Dendrimers were identified in the U.S. National Nanotechnology Initiative as an attractive
foundation for nanomedicine products.
Dendrimers as pharmaceuticals are much larger than conventional drug molecules and
employ the principle of polyvalent, or multiple receptor-site, binding. Polyvalent
interactions are common in many natural biological interactions, including virus-cell
interactions within the human body. Through polyvalent interactions with receptors or
binding sites, dendrimers may be designed to achieve higher activity than small-molecule
drugs. In addition, dendrimers may be constructed and modified to have longer duration
of action, reduced side effects and other beneficial effects compared with currently
available pharmaceuticals.
Starpharma’s work with dendrimers represents the leading edge of global research and
development of the biological application of nanotechnology.
1
2
3
4
Photo 1,2,3: Dendrimers are
capable of multiple interactions
with cells.
Photo 4: Monovalent binding of a
traditional drug to a cell receptor.
Starpharma has a world leading position in the design,
development, application and commercialisation of
dendrimer based drugs
8 Starpharma Annual Report
Starpharma Annual Report 9
Dendrimers, Nanotechnology and Starpharma’s Leading Position
Starpharma has discovered a large number of dendrimer compounds that have demonstrated
efficacy against a range of major diseases. Starpharma’s lead vaginal microbicide compound
is expected to be the first dendrimer, and perhaps more significantly, the first synthetic nano-
sized structure, to be used in pharmaceutical products for human use.
Dendrimers are precisely controlled, highly branched, nano-sized materials that provide a
platform for the development of products in a wide range of commercial applications, from
life sciences to the electronics and materials industries. As opposed to miniaturization of
large objects or devices, the synthetic chemistry techniques employed by Starpharma
allow for precise, piece by piece construction of nanotech objects in the range of 1 to 100
nanometres in size (1 billionth to 100 billionths of a meter, or around 50,000 times
smaller than the thickness of a human hair). While other materials such as natural proteins
and polymers exist in the nanoscale size range, no material compares with dendrimers for
the level of control over size, shape and functionality of the final compound. As a result,
dendrimer-based pharmaceuticals are reproducible, predictable and defined, and can be
precisely constructed to specifically target certain diseases, cells or whole organs within
the human body.
Nanotechnology is emerging as an exciting new frontier in science. The U.S., Japanese and
South Korean governments, for example, recognise nanotechnology as being of major
national importance and have made large commitments to nanotechnology development
programs. The U.S. federal government, through its National Nanotechnology Initiative, has
allocated more than half a billion U.S. dollars in 2001 alone to research projects across
various government departments, including the U.S. National Institutes of Health (NIH).
Starpharma’s preclinical and early-stage development projects benefit from NIH funding
through grants to support U.S. based studies on our compounds, and the company is
positioned to participate in the increased U.S. government investment in nanotechnology.
Dendrimers were identified in the U.S. National Nanotechnology Initiative as an attractive
foundation for nanomedicine products.
Dendrimers as pharmaceuticals are much larger than conventional drug molecules and
employ the principle of polyvalent, or multiple receptor-site, binding. Polyvalent
interactions are common in many natural biological interactions, including virus-cell
interactions within the human body. Through polyvalent interactions with receptors or
binding sites, dendrimers may be designed to achieve higher activity than small-molecule
drugs. In addition, dendrimers may be constructed and modified to have longer duration
of action, reduced side effects and other beneficial effects compared with currently
available pharmaceuticals.
Starpharma’s work with dendrimers represents the leading edge of global research and
development of the biological application of nanotechnology.
1
2
3
4
Photo 1,2,3: Dendrimers are
capable of multiple interactions
with cells.
Photo 4: Monovalent binding of a
traditional drug to a cell receptor.
Starpharma has a world leading position in the design,
development, application and commercialisation of
dendrimer based drugs
10 Starpharma Annual Report
Starpharma Annual Report 11
International Commercial Relationships
and Opportunities
Dendritic Nanotechnologies Limited - Major Commercial Development Opportunities
Starpharma recently announced that it is to enter into a venture with the pioneer of
dendrimer technology, Donald A. Tomalia, Ph.D., to develop dendrimers as products for life
science and other applications. Under the proposed venture, Starpharma Pooled Development
Limited (PDL) will invest up to U.S.$2.18 million over the next three years in Dendritic
Nanotechnologies Ltd, a new Australian company, with its head office in Melbourne,
Australia, and a branch office and laboratory facilities at Central Michigan University in
Mount Pleasant, Michigan, U.S.A. This venture will bring together two of the most advanced
groups in dendrimer research and development, and will create important new opportunities
with other business partners for commercialising dendrimer products with unique properties.
For shareholders, this venture represents several major benefits to Starpharma as it:
n
n
links Starpharma to the latest advances in leading edge dendrimer technology;
is consistent with Starpharma’s objective of increasing its U.S. presence;
n provides for synergistic research benefits and the exchange of new intellectual property
between the two groups, in pharmaceutical and other fields of application;
n provides new drug development opportunities based on novel dendrimer structures.
Starpharma PDL is a Pooled Development Fund structure that, as well as investing in
external opportunities, invests in the companies Starpharma Ltd, Angiostar Ltd and Viralstar
Ltd. Dendritic Nanotechnologies Ltd represents the fourth entity under the Pooled Development
Fund structure.
Profiles
Tim Grogan (LLB, B.Sc.) Manager, Commercial Development and Intellectual Property
Tim plays a crucial role in managing, developing and protecting Starpharma’s intellectual property
portfolio consistent with strategic corporate and product development objectives, and he is overseeing
the implementation of quality assurance systems. Tim is also involved in establishing major collaborations
and alliances and recently initiated the formation of the venture with Donald A. Tomalia, Ph.D., which
lead to the establishment of Dendritic Nanotechnologies Ltd.
Tom McCarthy Ph.D. Preclinical Development Manager
Tom exemplifies the encouragement by Starpharma management of a multidisciplinary approach to drug
development. Tom is a synthetic chemist who is currently overseeing the preclinical development of the
vaginal microbicide product. This program includes in vitro and animal safety and efficacy studies on
our compound, which are being carried out at centres across the U.S., and the filing of the IND
application for the commencement of human clinical trials. Successful management of this program
requires a sound understanding of both chemical and biological science, as well as regulatory processes.
Above: Donald A. Tomalia, Ph.D.
explains dendrimer chemistry to
the press at the official launch of
Dendritic Nanotechnologies Limited
at Central Michigan University, U.S.A.
Centre: The CEO of Starpharma,
John Raff, Ph.D., with Donald A.
Tomalia, Ph.D., and the President
of Central Michigan University,
Michael Rao, Ph.D.
Bottom: Barry Matthews, Ph.D.,
Starpharma’s Director of Research
and David Lombard-Harrison,
Assistant General Counsel, Central
Michigan University, at the press
conference.
Left to Right:
Prof Peter Colman, Dr Peter Jenkins,
Ben Rogers, David O’Keefe,
Dr Sue Pallich, Dr John Raff,
Dr George Holan, Chris Virgona,
Dr Scott Henderson,
Suzie Parker-Scott, Peter Karellas,
Tim Grogan, Dr Greg Raymond,
Dr Jeremy Paull, Lisa Stewart,
Richard Oliver, Ross Dobinson,
Maria Felsinger, Dr Tom McCarthy,
Michael Giannis, Dr Romina Di Florio
and Dr Belinda Braggs.
Growing Preclinical Development Capabilities
One of the most important aspects of drug development after the discovery phase is the
evaluation of the safety and efficacy of the drug in a series of rigorous laboratory tests and
analyses prior to exposure of humans to the drug in clinical trials (preclinical development).
Presently, external contractors, based in the U.S., Canada and Australia, conduct much of
Starpharma’s preclinical drug development and their activities are co-ordinated by Starpharma’s
Preclinical Development Manager, Tom McCarthy, Ph.D. (see profile). In addition to external
activities, Starpharma is developing a GLP standard analytical laboratory, as well as systems
such as quality assurance and regulatory affairs to assist in the planning and management of
preclinical research activities carried out by contractors and collaborators. Therefore, Starpharma
is developing the in-house expertise to deal with the many procedural, quality and regulatory
issues faced by pharmaceutical companies during the preclinical stages of drug development.
A Quality Assurance System to Add Value to Products
In an initiative to enhance preclinical development and the management of product
development risk, Starpharma is investing significant effort in the implementation of quality
systems infrastructure to achieve successful compliance with the requirements of various
regulatory bodies including the U.S. FDA. The quality system aims to meet product regulatory
requirements to ensure the successful transition of drugs from the discovery stage through to
preclinical development, clinical trials, registration and marketing.
Recently, Starpharma retained a pharmaceutical systems consultant to assist in defining the
scope and aims of the Starpharma Quality Assurance (QA) Systems. Processes are underway to
implement the QA systems throughout the company, beginning with the training of employees
and the set-up of company policies, guidelines and procedures documentation. The QA system
will encompass all of Starpharma’s internal activities, as well as external activities with contractors
and consultants, with the aim of increasing productivity and protecting against business risks.
10 Starpharma Annual Report
Starpharma Annual Report 11
International Commercial Relationships
and Opportunities
Dendritic Nanotechnologies Limited - Major Commercial Development Opportunities
Starpharma recently announced that it is to enter into a venture with the pioneer of
dendrimer technology, Donald A. Tomalia, Ph.D., to develop dendrimers as products for life
science and other applications. Under the proposed venture, Starpharma Pooled Development
Limited (PDL) will invest up to U.S.$2.18 million over the next three years in Dendritic
Nanotechnologies Ltd, a new Australian company, with its head office in Melbourne,
Australia, and a branch office and laboratory facilities at Central Michigan University in
Mount Pleasant, Michigan, U.S.A. This venture will bring together two of the most advanced
groups in dendrimer research and development, and will create important new opportunities
with other business partners for commercialising dendrimer products with unique properties.
For shareholders, this venture represents several major benefits to Starpharma as it:
n
n
links Starpharma to the latest advances in leading edge dendrimer technology;
is consistent with Starpharma’s objective of increasing its U.S. presence;
n provides for synergistic research benefits and the exchange of new intellectual property
between the two groups, in pharmaceutical and other fields of application;
n provides new drug development opportunities based on novel dendrimer structures.
Starpharma PDL is a Pooled Development Fund structure that, as well as investing in
external opportunities, invests in the companies Starpharma Ltd, Angiostar Ltd and Viralstar
Ltd. Dendritic Nanotechnologies Ltd represents the fourth entity under the Pooled Development
Fund structure.
Profiles
Tim Grogan (LLB, B.Sc.) Manager, Commercial Development and Intellectual Property
Tim plays a crucial role in managing, developing and protecting Starpharma’s intellectual property
portfolio consistent with strategic corporate and product development objectives, and he is overseeing
the implementation of quality assurance systems. Tim is also involved in establishing major collaborations
and alliances and recently initiated the formation of the venture with Donald A. Tomalia, Ph.D., which
lead to the establishment of Dendritic Nanotechnologies Ltd.
Tom McCarthy Ph.D. Preclinical Development Manager
Tom exemplifies the encouragement by Starpharma management of a multidisciplinary approach to drug
development. Tom is a synthetic chemist who is currently overseeing the preclinical development of the
vaginal microbicide product. This program includes in vitro and animal safety and efficacy studies on
our compound, which are being carried out at centres across the U.S., and the filing of the IND
application for the commencement of human clinical trials. Successful management of this program
requires a sound understanding of both chemical and biological science, as well as regulatory processes.
Above: Donald A. Tomalia, Ph.D.
explains dendrimer chemistry to
the press at the official launch of
Dendritic Nanotechnologies Limited
at Central Michigan University, U.S.A.
Centre: The CEO of Starpharma,
John Raff, Ph.D., with Donald A.
Tomalia, Ph.D., and the President
of Central Michigan University,
Michael Rao, Ph.D.
Bottom: Barry Matthews, Ph.D.,
Starpharma’s Director of Research
and David Lombard-Harrison,
Assistant General Counsel, Central
Michigan University, at the press
conference.
Left to Right:
Prof Peter Colman, Dr Peter Jenkins,
Ben Rogers, David O’Keefe,
Dr Sue Pallich, Dr John Raff,
Dr George Holan, Chris Virgona,
Dr Scott Henderson,
Suzie Parker-Scott, Peter Karellas,
Tim Grogan, Dr Greg Raymond,
Dr Jeremy Paull, Lisa Stewart,
Richard Oliver, Ross Dobinson,
Maria Felsinger, Dr Tom McCarthy,
Michael Giannis, Dr Romina Di Florio
and Dr Belinda Braggs.
Growing Preclinical Development Capabilities
One of the most important aspects of drug development after the discovery phase is the
evaluation of the safety and efficacy of the drug in a series of rigorous laboratory tests and
analyses prior to exposure of humans to the drug in clinical trials (preclinical development).
Presently, external contractors, based in the U.S., Canada and Australia, conduct much of
Starpharma’s preclinical drug development and their activities are co-ordinated by Starpharma’s
Preclinical Development Manager, Tom McCarthy, Ph.D. (see profile). In addition to external
activities, Starpharma is developing a GLP standard analytical laboratory, as well as systems
such as quality assurance and regulatory affairs to assist in the planning and management of
preclinical research activities carried out by contractors and collaborators. Therefore, Starpharma
is developing the in-house expertise to deal with the many procedural, quality and regulatory
issues faced by pharmaceutical companies during the preclinical stages of drug development.
A Quality Assurance System to Add Value to Products
In an initiative to enhance preclinical development and the management of product
development risk, Starpharma is investing significant effort in the implementation of quality
systems infrastructure to achieve successful compliance with the requirements of various
regulatory bodies including the U.S. FDA. The quality system aims to meet product regulatory
requirements to ensure the successful transition of drugs from the discovery stage through to
preclinical development, clinical trials, registration and marketing.
Recently, Starpharma retained a pharmaceutical systems consultant to assist in defining the
scope and aims of the Starpharma Quality Assurance (QA) Systems. Processes are underway to
implement the QA systems throughout the company, beginning with the training of employees
and the set-up of company policies, guidelines and procedures documentation. The QA system
will encompass all of Starpharma’s internal activities, as well as external activities with contractors
and consultants, with the aim of increasing productivity and protecting against business risks.
Size Comparison
Hair 50,000nm
Red Blood Cell 7,500nm
Bacteria 3,000nm
HIV 100nm
Enlarged Area
HIV 100nm
Dendrimer 5nm
Enlarged Area
Dendrimer 5nm
Conventional Drug 0.5nm
Dendrimers are large compared with traditional
drugs, but the nanoscale is small compared to other
objects such as the HIV virus, bacteria, red blood
cells and human hair.
Shareholder Information
A. Distribution of equity shareholders
Analysis of numbers of equity security holders by size of holding:
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Class of equity security
Ordinary shares
Shares
55
551
486
666
100
1,858
Options
-
-
-
11
7
18
There were 19 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest security holders
The names of the twenty largest holders of equity securities in a class which is quoted are listed below:
Name
Peter Malcolm Colman
Arran Bay Pty Ltd
Gilridge Pty Ltd
John William Raff
Espasia Pty Ltd
Davambros Pty Ltd
UBS Warburg Private Clients Nominees Pty Ltd
Ruth Raie Holan
Barry Matthews
National Nominees Ltd
HSBC Custody Nominees (Australia) Limited
Natalie Jane Le Sueur
Mr Hugo Frijlink
Applecross Secretarial Services Pty Ltd
Dapali Pty Ltd
Jagen Pty Ltd
Sheila Gail Jenkins
Westpac Custodian Nominees Ltd
APV Nominees Pty Ltd
Equity Trustees Limited
Ordinary shares
Number held
Percentage of issued shares
5,982,482
4,357,600
4,000,000
3,602,581
3,505,289
2,470,250
2,240,350
2,051,045
2,019,045
1,451,469
1,439,689
1,200,000
1,095,069
1,077,000
1,070,000
1,000,000
880,000
833,751
800,000
759,267
6.73
4.90
4.50
4.05
3.94
2.78
2.52
2.31
2.27
1.63
1.62
1.35
1.23
1.21
1.20
1.12
0.99
0.94
0.90
0.85
41,834,887
47.04
Unquoted equity securities
Restricted shares
Number on issue
Number of holders
The restriction on these shares will cease on 28 September 2002.
33,834,942
Options issued under the Starpharma Pooled Development Limited
Executive and Employee Share Option Plan (ASX code SPLAK)
2,360,000
Options issued under the Starpharma Pooled Development Limited
Employee Share Option Plan (ASX code SPLAM)
300,000
26
7
11
C. Substantial holders
Substantial holders in the company are set out below:
Ordinary shares
Peter M Colman
Ross Dobinson
Leon Gorr
Richard J D Oliver
D. Voting Rights
Number held
Percentage
5,982,482
4,705,289
5,872,100
4,512,000
6.73
5.29
6.61
5.08
The voting rights attached to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and on a poll each share
shall have one vote.
(b) Options
No voting rights.
Financial
Statements:
14 Company Particulars
15 Directors’ Report
22 Corporate Governance Statement
24 Statements of Financial Performance
25 Statements of Financial Position
26 Statements of Cash Flows
27 Notes to the Financial Statements
42 Directors’ Declaration
43 Independent Audit Report to the Members
14 Starpharma Annual Report
Company Particulars
Directors
R J D Oliver AM (Chairman)
P M Colman BSc (Hons), PhD, FAA, FTSE
R Dobinson B Bus (Acc)
P J Jenkins MB, BS (Melb), FRACP
L Gorr B Juris, LLB, M.Admin
J W Raff Dip Ag Sc, BSc, PhD
Chief Executive Officer
J W Raff Dip Ag Sc, BSc, PhD
Secretary
B P Rogers
Registered Office
343 Royal Parade Parkville Victoria 3052 Australia
Telephone 61 3 9662 7123 Facsimile 61 3 9662 7129
Notice of annual general meeting
The annual general meeting of Starpharma Pooled Development Limited
will be held at:
ASX Theatrette (530 Collins Street, Melbourne)
Time: 4:00pm
Date: Thursday 15 November 2001
Share Register
Computershare Registry Services Pty Ltd
Level 12 565 Bourke Street Melbourne Victoria 3000 Australia
Telephone: 03 9615 5970 Facsimile: 03 9611 5710
Stock exchange listing
Starpharma Pooled Development Limited’s shares are listed on the
Australian Stock Exchange (ASX)
Level 3, 530 Collins Street Melbourne Victoria 3000 Australia
ASX Code: SPL
Auditor
PricewaterhouseCoopers
333 Collins Street Melbourne Victoria 3000 Australia
Solicitors
Blake Dawson Waldron
Level 39, 101 Collins Street Melbourne Victoria 3000 Australia
Bankers
Website
Commonwealth Bank of Australia
www.starpharma.com
Starpharma Annual Report 15
Directors’ Report
Your directors present their report on the consolidated accounts of Starpharma Pooled Development Limited and the entities it
controlled at the end of, or during, the year ended 30 June 2001.
Directors
The following persons were directors of Starpharma Pooled Development Limited during the whole of the financial year and
up to the date of this report:
R J D Oliver (Chairman)
P M Colman
R Dobinson
L Gorr
P J Jenkins
J W Raff
Principal activities
During the year the principal activity of the consolidated entity constituted by Starpharma Pooled Development Limited and
the entities it controlled consisted of management and funding of pharmaceutical research and development. There were no
significant changes in the nature of those activities during the financial year.
Review of operations and consolidated results
Operating Loss
For the year ended 30 June 2001 the consolidated entity incurred an operating loss after income tax of $3,906,427.
Expenditure on direct research activities was $4,004,525.
Research and Development Programs
The consolidated entity’s research and development activities are managed by the controlled entity Starpharma Limited.
Activities are directed towards the development of compounds as preventatives or treatments for a range of human diseases and
conditions, using technology based on synthetic structures called dendrimers. The priority disease targets are:
n Sexually transmitted diseases such as HIV, hepatitis B, herpes, genital warts;
n Cancer (tumour-related);
n Toxin-related illnesses such as cholera.
During the year Starpharma Limited selected one of its compounds known as SPL7013 for development as a vaginal
microbicide product for the prevention of the transmission of major sexually transmitted diseases. Preclinical development and
testing of SPL7013 is progressing and human trials of the product are planned for the 2002 calendar year. Another product,
also based on SPL7013, is being developed as a topical treatment for genital herpes outbreaks in already infected people.
Intellectual Property
Starpharma Limited received notification from the US Patent Office that the patent “Antiviral Dendrimers” was issued as
US Patent No. 6,190,650 on 20 February 2001. This patent provides Starpharma with broad patent protection related to
the antiviral applications of dendrimer nanotechnologies, such as prevention of sexually transmitted diseases, and other
applications. The activities of Starpharma’s R&D team in increasing patent coverage led to a further three patent applications
being filed in the period from 1 July 2000 to 30 June 2001.
Capital Raising and ASX Listing
The company issued a Prospectus on 18 August 2000 for the issue of 26,400,000 shares including up to 2,400,000 by
oversubscriptions at the issue price of $0.85 per share. The offer raised $22.4 million including $2 million in
16 Starpharma Annual Report
oversubscriptions. The company was admitted to the official list of the Australian Stock Exchange Limited and quotation of its
shares commenced on 28th September 2000. The company's shares previously traded on an exempt stock market operated by
Austock Management Limited, and this market was terminated on 27th September 2000.
Staff
Starpharma Limited has employed a team of scientists with a chemistry focus but with multidisciplinary skills. Staff have also
been recruited to form a preclinical development team to take lead drug candidates through the testing and regulatory
processes necessary to gain approval to commence trials in humans. At the date of this report a total of twenty staff were
employed by Starpharma Limited.
Employee Share Option Plan
At the Annual General Meeting held on 16th November 2000 members approved the introduction of a new Starpharma
Employee Share Option Plan, which was drafted to take into account recent amendments to the Corporations Law and the
ASX Listing Rules. At the date of this report 300,000 share options had been issued under this plan.
Dividends
No dividend has been paid or declared since the end of the previous financial year, and the directors do not recommend the
declaration of a dividend.
Significant changes in the state of affairs
Significant changes in the state of affairs of the consolidated entity during the financial year were as follows:
An increase in share capital from $12,279,472 to $33,034,058 as a result of:
Issue of 26,400,000 fully paid ordinary shares at $0.85 each:
Less: Issue costs
Net increase in share capital:
2001
$
22,440,000
(1,685,414)
20,754,586
In the opinion of the directors there were no other significant changes in the state of affairs of the consolidated entity
that occurred during the financial year under review not otherwise disclosed in this report or in the financial statements.
Matters subsequent to the end of the financial year
On 6 August 2001, Starpharma Pooled Development Ltd entered into an agreement with Dr Donald A. Tomalia, to establish a
new venture to develop products using dendrimer nanotechnology. Under the proposed venture Starpharma intends to invest up
to US$2.18 million over the next three years in Dendritic Nanotechnologies Limited, a new Australian company which will have
its head office in Melbourne and a branch office and laboratory at Central Michigan University, Michigan USA. Dr Tomalia’s
team of experienced dendritic polymer scientists will be employed by the new company.
Except for the venture discussed above, no other matter or circumstance has arisen since 30 June 2001 that has significantly
affected, or may significantly affect:
(a) the consolidated entity’s operations in future financial years, or
(b) the results of the operations in future financial years, or
(c) the consolidated entity’s state of affairs in future financial years.
Likely developments and expected results of operations
In the opinion of the Directors, the consolidated entity will continue its activities as described. Further information on likely
developments in the operations of the consolidated entity and the expected results of operations have not been included in this
report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.
Starpharma Annual Report 17
Information on Directors
Director
Experience
Special Responsibilities
Particulars of directors'
interests in shares and options
Shares
Options
RJD Oliver
AM
Non-executive director for 4 years
Non-executive Chairman.
4,713,000
360,000
Former Executive Chairman, Willis
Chairman of Remuneration
Corroon International Pty Ltd, and
Committee
Willis Corroon Richard Oliver Pty Ltd,
a global risk management consulting
group that he had established in
1972.
PM Colman
Non-executive director for 4 years.
Member of Research Committee
5,982,482
280,000
BSc(Hons), PhD
Head, Structural Biology Division,
FAA, FTSE
The Walter & Eliza Hall Institute of
Medical Research. Former Executive
Director, Biomolecular Research
Institute. Published widely in the
field of structural biology. In 1983
his Laboratory determined the
structure of the surface proteins of
influenza virus, and a major result of
that work was the discovery of Relenza.
One of the founding directors of Biota
Holdings Ltd.
R Dobinson
B.Bus (Acc)
Non-executive director for 4 years
Chairman of Audit Committee,
4,775,789
280,000
Merchant banker with a background
member of Remuneration
in investment banking and stockbroking.
Committee
Has acted as corporate director for
two leading stockbrokers, and was an
executive director of the NAB’s corporate
advisory subsidiary. Later headed the
Corporate Advisory Division of Dresdner
Australia Ltd. Managing Director of TSL
Group Ltd, a corporate advisory company
specialising in establishing and advising
biotechnology companies. Also a director
of Acrux Ltd, Nutrihealth Pty Ltd, Plantic
Technologies Ltd, and Roc Oil Company Ltd.
18 Starpharma Annual Report
Director
Experience
Special Responsibilities
Particulars of directors'
interests in shares and options
Shares
Options
L Gorr, B. Juris
Non-executive director since May
Member of Audit Committee.
5,872,100
280,000
LLB, M. Admin
2000. Senior Partner, Herbert
Geer & Rundle. 29 years’ experience
as a solicitor. Extensive experience
in providing advice on the negotiation
and interpretation of technology
licensing agreements. Clients include
investors in, and advisors to the
biotechnology industry.
PJ Jenkins
Non-executive director for
Chairman of Research
1,874,000
280,000
MB, BS (Melb),
4 years. Consultant physician and
Committee
FRACP
gastroenterologist. Holds a number
of clinical and research positions
with the Alfred Hospital and has
held clinical positions with the
Baker Medical Research Centre.
Foundation director of Anadis Ltd,
a listed bio-pharmaceutical company.
Judge of the Australian Technology
Awards for the past four years.
JW Raff
Previously General Manager of the
Chief Executive Officer
4,333,581
600,000
Dip. Ag. Sc.,
Biomolecular Research Institute.
BSc. PhD
Co-founder, director and major
shareholder of a technology based
agricultural seed company. Also
founder and investor in a number
of other start-up technology
companies.
Directors’ meetings
The number of meetings of the company’s board of directors and of each committee held during the year ended
30 June 2001, and the numbers of meetings attended by each director were:
Full meetings of directors
Meetings of committees
Audit
Remuneration
Research
Mr Richard Oliver
Prof Peter Colman
Mr Ross Dobinson
Mr Leon Gorr
Dr Peter Jenkins
Dr John Raff
A
18
13
15
18
17
18
B
18
18
18
18
18
18
A
*
*
3
3
*
*
B
3
3
3
3
3
3
A
1
*
1
*
*
*
B
1
1
1
1
1
1
A
*
5
*
*
5
5
B
5
5
5
5
5
5
A = Number of meetings attended
B = Number of meetings held during the time the director held office or was a member of the committee during the year.
* = Not a member of the relevant committee.
Starpharma Annual Report 19
Retirement, election and continuation in office of Directors
Dr Peter Colman retires by rotation as director at the annual general meeting and, being eligible, offers himself for re-election.
Mr Ross Dobinson retires by rotation as director at the annual general meeting and, being eligible, offers himself for re-election.
Directors' and executives' emoluments
The remuneration committee, consisting of two non-executive directors, advises the Board on remuneration policies and
practices generally, and makes specific recommendations on remuneration packages and other terms of employment for
executive directors, other senior executives and non-executive directors.
Executive remuneration and other terms of employment are reviewed annually against goals set at the start of the year, relevant
comparative information and if required independent expert advice. As well as a base salary, remuneration packages include
superannuation, retirement and termination entitlements, performance-related bonuses and fringe benefits. Executives are also
eligible to participate in the Starpharma Pooled Development Limited Employee Share Option Plan.
Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the
consolidated entity's operations.
Remuneration and other terms of employment for the Chief Executive Officer and certain other senior executives are formalised
in service agreements.
Remuneration of non-executive directors is determined by the Board within the maximum amount approved by the shareholders
from time to time.
The Board undertakes an annual review of its performance and the performance of the Board committees against goals set at
the start of the year. Performance related bonuses are available to executives. Bonuses are not payable to non-executive directors.
Details of the nature and amount of each element of the emoluments of each director of Starpharma Pooled Development
Limited and each of the 5 officers of the company and the consolidated entity receiving the highest emoluments are set out in
the following tables.
Non-executive directors of Starpharma Pooled Development Limited
Name
Base Fee
Committee Fees
Superannuation
Mr Richard Oliver, Chairman
Prof Peter Colman
Mr Ross Dobinson
Mr Leon Gorr
Dr Peter Jenkins
27,133
20,374
20,374
20,374
20,374
-
-
-
-
-
Executive directors of Starpharma Pooled Development Limited
1,121
1,630
1,630
1,630
1,630
Name
Base salary
Motor vehicle
Super-annuation
Bonus
Options
Other benefits
$
$
$
Dr John Raff
175,000
31,719
26,950
$
$
-
$
-
Total
28,254
22,004
22,004
22,004
22,004
Total
$
233,669
20 Starpharma Annual Report
Other executives of Starpharma Pooled Development Limited
Name
Base salary
Motor vehicle
Superannuation
Bonus
Options
Other benefits
Total
$
$
$
120,000
17,224
18,480
99,862
20,517
15,379
85,658
23,388
13,191
84,922
-
12,183
$
-
-
-
-
$
-
-
-
-
$
-
-
-
$
155,704
135,758
122,237
8,600*
105,705
Dr Barry Matthews
Research Director
Mr Tim Grogan
Manager, Intellectual
Property and Business
Development
(From 24/7/00
to 30/6/01)
Mr Ben Rogers
Company Secretary
and Finance Manager
Dr Leigh Hammond
Pharmaceutical Manager
(From 1/7/2000
to 28/2/2001)
*Consultancy fee for work performed during March 2001 following resignation.
Starpharma Pooled Development Limited and the consolidated entity employ no other executive officers.
Share options granted to directors and the most highly remunerated officers
Options over unissued ordinary shares of Starpharma Pooled Development Limited granted during or since the end of the
financial year to any of the directors or the 5 most highly remunerated officers of the company and consolidated entity as part
of their remuneration were as follows:
Mr Tim Grogan, Manager, Intellectual Property and Business Development
Options Issued
100,000
The options were granted under the Starpharma Pooled Development Limited Employee Share Option Plan (ASX code SPLAM)
on 7th February 2001.
Shares under option
Unissued ordinary shares of Starpharma Pooled Development Limited under option at the date of this report are as follows:
Starpharma Pooled Development Limited Executive
2,360,000
93.75 cents
28 September 2002
and Employee Share Option Plan (ASX code SPLAK)
Starpharma Pooled Development Limited Employee
300,000
93.75 cents
31 January 2005
Share Option Plan (ASX code SPLAM)
Number
Issue price of shares
Expiry date
Options issued under Plan SPLAK are exercisable during the period from 1 February 2002 to 28 September 2002. Options
issued under Plan SPLAM are exercisable during the period from 1 January 2003 to 31 December 2005. No option holder has
any right under the options to participate in any other issue of the company or of any other entity.
Starpharma Annual Report 21
Shares Issued on the Exercise of Options
No shares in Starpharma Pooled Development Limited have been issued on the exercise of options.
Insurance of officers
During the financial year Starpharma Pooled Development Limited and officers of the company and related bodies corporate
arranged through Willis Australia Ltd for a Directors’ and Officers’ Liability insurance policy with HIH Casualty and General
Insurance Ltd ("HIH") to indemnify certain officers of the company and related bodies corporate.
Following advice from Willis Australia Ltd ("Willis") that HIH represented unacceptable security for the underwriting of Willis'
client policies, the company instructed Willis to seek an alternative underwriter. A Directors' and Officers' Liability Insurance
policy was subsequently arranged through Willis with Royal and Sun Alliance as the underwriter, with effect from 23 April 2001.
It is a condition of the policy that the company not publish details of the nature of the liabilities insured by the policy or the
amount of the premium paid.
The officers of the company covered by the insurance policy include the directors and executive officers.
Agreement to indemnify officers
During the financial year the company entered into agreements to indemnify the directors of the company and its controlled
entities (subject to certain qualifications):
(i) against all liabilities incurred in the capacity of an officer of the company or any related body corporate of the company
unless liability arises out of conduct involving lack of good faith; and
(ii) for costs and expenses incurred by a director in defending any proceedings in which judgement is given in favour of the
director or in which the director is acquitted.
Under the agreements the company must maintain a Directors’ and Officers’ Liability insurance policy while the director holds
office and for a further 7 years after the directors ceases to be a director of the company or of any related bodies corporate.
Environmental regulations
The consolidated entity has complied with all applicable environmental regulations.
Auditor
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the Directors.
R J D Oliver
Director
24 September, 2001
Melbourne
22 Starpharma Annual Report
Corporate Governance Statement
A description of the company’s main corporate governance practices is set out below. All these practices, unless otherwise
stated, were in place for the entire year.
The Board of Directors and its committees
The Board is responsible for the overall corporate governance of the company and its controlled entities, including development
of corporate strategies, establishing goals for management and monitoring progress towards the achievement of these goals.
Composition of the Board
The constitution of the company requires that one third of directors (or if their number is not a multiple of three then the
number nearest to one third) retire at every annual general meeting and be eligible for re-election. The minimum number of
directors is three and the maximum is fifteen unless the company passes a resolution varying that number.
The chairman is an independent non-executive director who is elected by the full Board.
At the date of signing the directors’ report the board consisted of five non-executive directors and one executive director, Dr J W Raff.
Details of the directors at the date of this statement are set out in the directors’ report under the heading "Information on Directors".
Independent professional advice
Directors have the right, in connection with their duties and responsibilities as directors, to seek independent professional
advice at the company’s expense. Prior approval of the Chairman is required, but this will not be unreasonably withheld.
Administrative structure and internal control framework
Board meetings are held on a monthly basis, or more frequently if required. A detailed management report is prepared by senior
management and distributed with board papers prior to each meeting. The Chief Executive Officer and the Company Secretary
attend all Board meetings.
The Board reviews and approves the investment plans and annual budget for the company and oversees the research
& development plans of investee companies.
Ethical standards
The directors are committed to the principles underpinning best practice in corporate governance, with a commitment to the
highest standards of legislative compliance and financial and ethical behaviour.
Trading in company securities
The purchase and sale of company securities by directors, executives and employees is only permitted during the thirty day
period following the annual general meeting and the release of the half yearly and annual financial results to the market, unless
prior approval is given to each transaction by the Chairman.
Committees
The Board has established the following committees to assist in the discharge of its responsibilities:
Audit committee
The Audit committee consists of Mr Ross Dobinson (Chairman) and Mr Leon Gorr. The committee meets at least twice a year,
and has direct access to the company’s auditors. The charter of the Audit Committee is:
n
to review and report to the Board on the annual report and financial statements, and to review the adequacy of external
audit arrangements, particularly the scope and quality of the audit;
Starpharma Annual Report 23
n
n
to provide assurance to the Board that it is receiving adequate, up to date and reliable information;
to assist the Board in reviewing the effectiveness of the organisation’s internal control environment covering:
- effectiveness and efficiency of operations
- reliability of financial reporting
- compliance with applicable laws and regulations;
n
to assist the board in the development and monitoring of risk management, statutory compliance and ethics programs.
Remuneration committee
The Remuneration committee advises the Board on remuneration policies and practices. This committee consists of:
Mr Richard Oliver
Mr Ross Dobinson
Research Committee
This is a committee of the board of the controlled entity Starpharma Limited and was established in September 2000 and
consists of Dr Peter Jenkins (Chairman), Prof Peter Colman and Dr John Raff. The Charter of the Research Committee is:
n
to ensure that the Board of Starpharma Limited is kept fully informed of developments relating to the company's research
activities and development progress against milestones; and
n
to advise the Board of Starpharma Pooled Development Limited on scientific matters in relation to the company's continuous
disclosure obligations under the listing rules of the Australian Stock Exchange.
The committee members have been chosen on the basis of their expertise and the composition of the committees is reviewed
annually by the Board.
Continuous Disclosure
The Company Secretary has been appointed as the person responsible for communications with the Australian Stock Exchange
(ASX). This person is also responsible for ensuring compliance with the continuous disclosure requirements in the ASX Listing
rules and overseeing and co-ordinating information disclosure to the ASX, analysts, brokers, shareholders, the media and the public.
24 Starpharma Annual Report
Statements of Financial Performance for the year ended 30 June 2001
Revenue from ordinary activities
Administration Expenses
Occupancy Expenses
Research and Development Expenses
Other expenses from ordinary activities
Profit (loss) from operating activities before tax
Income tax attributable to ordinary activities
Profit (loss) from ordinary activities
after income tax
Consolidated
Parent Entity
Notes
2001
$
2000
$
2001
$
2000
$
2
3
4
1,964,151
1,609,750
964,590
199,464
(1,498,347)
(650,602)
(268,344)
(63,022)
(18,496)
(19,062)
(4,004,525)
(2,631,559)
(349,210)
(80,541)
-
-
-
-
-
-
(3,906,427)
(1,772,014)
696,246
136,442
-
-
-
-
13
(3,906,427)
(1,772,014)
696,246
136,442
Basic Earnings per share
24
Cents
(4.74)
Cents
(3.10)
The above statements of financial performance should be read in conjunction with the accompanying notes.
Starpharma Annual Report 25
Statements of Financial Position as at 30 June 2001
Consolidated
Parent Entity
Notes
2001
$
2000
$
2001
$
2000
$
Assets
Current Assets
Cash assets
Receivables
Other
Total Current Assets
Non-Current Assets
Property, plant and equipment
Other financial assets
Total Non Current Assets
Total Assets
Liabilities
Current Liabilities
Payables
Provisions
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed Equity
Retained profits (Accumulated losses)
5
6
7
8
9
10
11
12
13
25,412,466
7,225,730
23,886,871
5,431,807
305,208
71,541
698,237
225,976
42,376
4,909
3,251
67,804
25,789,215
8,149,943
23,934,156
5,502,862
236,240
116,832
-
-
-
-
10,000,006
7,000,006
236,240
116,832
10,000,006
7,000,006
26,025,455
8,266,775
33,934,162
12,502,868
1,044,934
64,868
159,854
39,427
1,109,802
199,281
1,109,802
199,281
8,305
-
8,305
8,305
27,843
-
27,843
27,843
24,915,653
8,067,494
33,925,857
12,475,025
33,034,058
12,279,472
33,034,058
12,279,472
(8,118,405)
(4,211,978)
891,799
195,553
Total Equity
24,915,653
8,067,494
33,925,857
12,475,025
The above statements of financial position should be read in conjunction with the accompanying notes.
26 Starpharma Annual Report
Statements of Cash Flows for the year ended 30 June 2001
Consolidated
Parent Entity
Cash Flows from Operating Activities
Receipts from trade and other debtors
Grant income (Inclusive of GST)
Payments to suppliers and employees
(Inclusive of GST)
Interest received
Net cash inflows (outflows) from
operating activities
Cash Flows from Investing Activities
Payments for the purchase of share
in controlled entities
Notes
2001
$
178,052
$
-
1,354,163
517,141
2000
2001
2000
$
-
-
$
-
-
(5,025,504)
(3,437,974)
(292,791)
(61,313)
1,039,554
263,902
925,465
200,108
18
(2,453,735)
(2,656,931)
632,674
138,795
-
-
(3,000,000)
(3,000,000)
Payments for property, plant and equipment
(181,919)
(109,794)
-
-
Net cash flows from investing activities
(181,919)
(109,794)
(3,000,000)
(3,000,000)
Cash Flows from Financing Activities
Proceeds from issue of shares
Share issue transaction costs
22,440,000
7,812,500
22,440,000
7,812,500
(1,617,610)
(533,028)
(1,617,610)
(533,028)
Net cash flows from financing activities
20,822,390
7,279,472
20,822,390
7,279,472
Net Increase in Cash Held
18,186,736
4,512,747
18,455,064
4,418,267
Cash at the beginning of the financial year
7,225,730
2,712,983
5,431,807
1,013,540
Cash at the end of the financial year
25,412,466
7,225,730
23,886,871
5,431,807
The above statements of cash flows should be read in conjunction with the accompanying notes.
Starpharma Annual Report 27
Notes to the Financial Statements for the year ended 30 June 2001
Note 1: Summary of Significant Accounting Policies
This general purpose financial report has been prepared in accordance with Accounting Standards, other authoritative pronouncements
of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.
It is prepared in accordance with the historical cost convention. The accounting policies adopted are consistent with those of
the previous year. As a result of applying the revised Accounting Standard AASB 1018 Statement of Financial Performance,
revised AASB 1034 Financial Report Presentation and Disclosures and AASB 1040 Statement of Financial Position for the first
time, a number of comparative amounts were presented or reclassified to ensure comparability with the current reporting
period.
(a) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Starpharma Pooled
Development Limited (the ‘company’ or ‘parent entity’) as at 30 June 2001 and the results of all controlled entities for the year
then ended. Starpharma Pooled Development Limited and its controlled entities together are referred to in this financial report
as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full.
Where control of an entity is obtained during the financial year, its results are included in the consolidated profit and loss
account from the date on which control commences.
(b) Income tax
Tax effect accounting procedures are followed whereby the income tax expense in the profit and loss account is matched with
the accounting profit after allowing for permanent differences. The future tax benefits relating to tax losses and timing
differences are not carried forward unless the benefits are virtually certain of realisation.
(c) Receivables
The debtors comprise grants receivable and they are recognised as they are due for settlement no more than 60 days from the
date of recognition.
(d) Acquisition of assets
The cost method of accounting is used for all acquisitions regardless of whether shares or other assets are acquired. Cost is
determined as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus
incidental costs directly attributable to the acquisition.
(e) Revenue recognition
Amounts disclosed as revenue are payments under the Federal Government R&D START grant, interest income on short term
deposits and sundry items. Revenue is recognised for the major business activities as follows:
(i) Grant Funding
Grant funding is provided under the consolidated entity’s agreements with the Commonwealth of Australia. Grant funding is
equivalent to 50% of the consolidated entity’s spend on eligible research and is capped at the maximum of approved grants
on specific projects. Grant revenue is recognised when eligible research expenditure has been incurred.
(f) Recoverable amount of non-current assets
The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its
continued use and subsequent disposal. Where the carrying amount of a non-current asset is greater than its recoverable
amount, the asset is revalued to its recoverable amount. In assessing recoverable amounts the relevant cash flows have not
been discounted to their present value.
(g) Depreciation and amortisation of property, plant and equipment
Depreciation is calculated on a straight line basis to write off the net cost or revalued amount of each item of property, plant
and equipment over its expected useful life to the consolidated entity. The expected useful life of items of property, plant and
equipment ranges from 4 to 8 years.
28 Starpharma Annual Report
(h) Good and services tax systems changes
Costs incurred to update existing systems or to design, develop and implement new system to deal with the GST are charged as
expenses as incurred.
(i) Employee entitlements
(i) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, annual leave and sick leave are recognised, and are measured as the amount unpaid at the
reporting date at current pay rates in respect of employees’ services up to that date.
(ii) Superannuation
The consolidated entity contributes to employee superannuation on the basis of legal and contractual requirements, with
contributions being charged against income.
(j) Research expenditure
Research expenditure is charged against income when incurred.
(k) Trade and other creditors
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year which are unpaid. These amounts are unsecured and are paid in accordance with supplier terms.
(l) Cash
For the purpose of the statements of cash flows, cash includes deposits at call which are readily convertible to cash on hand
and are subject to an insignificant risk of changes in value.
(m) Transaction costs arising in relation to the issue of equity
Transaction costs in relation to the future issue of equity are deferred and recognised directly as a reduction against the
proceeds of the future capital raising to which they relate.
(n) Investments
Investments in controlled entities are accounted for in the consolidated financial statements in the manner set out in Note 1(a).
(o) Earnings per share
(i) Basic earnings per share
Basic earnings per share is determined by dividing the net loss after income tax attributable to members of the company,
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 year.
(ii) 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 ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(p) Foreign currency translation
Foreign currency transactions are initially translated into Australian currency at the rate of exchange at the date of the
transaction. At balance date amounts payable and receivable in foreign currencies are translated to Australian currency at rates
of exchange at that date. Resulting exchange differences are recognised in determining the profit or loss for the year.
Starpharma Annual Report 29
Consolidated
2001
$
2000
$
886,194
1,344,173
Parent Entity
2001
2000
$
-
$
-
1,076,553
265,577
964,590
199,464
1,404
-
-
-
1,964,151
1,609,750
964,590
199,464
Consolidated
Parent Entity
2001
$
2000
$
2001
$
2000
$
Note 2: Revenue
Revenue from outside operating activities
Government grants
Interest revenue
Other
Note 3: Operating Profit/Loss
(i) Operating expenses
Profit/loss from ordinary activities
before income tax expense includes
the following specific expenses:
Depreciation (plant & equipment)
Employee entitlements
Research and development expense
Rental expense on operating leases
(ii) Auditors' remuneration
Amounts received, or due and receivable, by the
auditor of the consolidated entity for:
Auditing the financial statements
Taxation services, other support
54,550
43,441
23,250
44,240
62,511
25,441
15,314
20,538
4,004,525
2,631,559
162,957
63,828
-
-
-
-
-
-
-
-
-
-
-
-
30 Starpharma Annual Report
Note 4: Income Tax
The income tax expense for the financial year differs from the amount calculated on the operating profit/(loss). The differences
are reconciled as follows:
Consolidated
Parent Entity
2001
$
2000
$
2001
$
2000
$
Current
Profit/(loss) from ordinary activities before income tax
(3,906,427)
(1,772,014)
Income tax expense/(benefit) @ 34% (2000: 36%)
(1,328,185)
(637,925)
696,246
236,723
136,442
49,119
Tax effect of permanent differences:
Brokerage fees
Entertainment
Legal expenses
Research and development allowance
Other
-
4,034
-
(119,000)
272
276
-
1,310
-
-
-
-
-
-
68
-
-
-
-
-
Income tax expense/(benefit) adjusted for
permanent differences
(1,442,879)
(636,339)
Under/(over) provision arising in prior year
(93,528)
(84,224)
236,791
5,650
49,119
-
Less loss transferred to controlling entity
-
-
(242,441)
(49,119)
Future income tax benefits written off/not
brought to account
Income tax expense/(benefit) attributable to
operating profit/loss
Future income tax benefits
1,536,407
720,563
-
-
-
-
-
-
Potential future income tax benefits of $2,622,895 (2000: $1,262,329) attributable to tax losses carried forward by controlled
entities have not been brought to account in the accounts at balance date because the directors do not believe it appropriate to
regard the realisation of the future income tax benefits as virtually certain. A net deferred income tax liability attributable to timing
differences of $51,085 (2000: $225,075) has been netted off against gross tax loss future tax benefits (valued at 30%) of
$2,673,980 (2000: $1,487,404) on the basis that these timing differences will reverse out in periods in which carried forward
tax losses are available.
These future income tax benefits will only be obtained if:
(i) the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deduction for the loss to be realised; or
(ii) the consolidated entity continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the loss.
Adjustment to deferred income tax balances
Legislation reducing the company tax rate from 36% to 34% in respect of the 2000-2001 income tax year and then to 30% from
the 2001-2002 income tax year was announced on 21 September 1999 and received Royal Assent on 10 December 1999. As
a consequence, future income tax benefits attributable to carried forward losses, net of a provision for deferred income tax liability,
have been revalued at 30% on the basis that the consolidated entity is not expected to be in a tax payable position until the year
ended 30 June 2002 at the earliest.
Starpharma Annual Report 31
Note 5: Current Assets – Cash Assets
Cash at bank and on hand
3,419,476
3,129,124
1,893,881
1,335,201
Deposits at call
21,992,990
4,096,606
21,992,990
4,096,606
Consolidated
Parent Entity
2001
$
2000
$
2001
$
2000
$
25,412,466
7,225,730
23,886,871
5,431,807
Consolidated
Parent Entity
2001
$
2000
$
2001
$
2000
$
Balance of cash as shown in the
statements of cash flows
25,412,466
7,225,730
23,886,871
5,431,807
Deposits at call
The deposits are bearing floating interest rates of 4.98% (2000-6.05%)
Consolidated
Parent Entity
2001
$
2000
$
2001
$
2000
$
49,014
12,015
42,376
3,251
256,194
686,222
-
-
305,208
698,237
42,376
3,251
Note 6: Current Assets – Receivables
Interest receivable
Other receivables
Interest receivable
The carrying amount of interest receivable
approximates net fair values.
Other receivables
The receivables comprise grant income, and the
carrying amounts of the other receivables approximate
net fair values and are subject to normal terms of
settlement within 60 days.
32 Starpharma Annual Report
Note 7: Current Assets – Other
Prepayments
Deferred (future) share issue costs
GST Claimable
Note 8: Non-Current Assets – Property, Plant and Equipment
Plant and equipment (at cost)
Less: Accumulated depreciation
Reconciliations
Consolidated
2001
$
2000
$
12,777
158,172
-
67,804
58,764
-
71,541
225,976
Consolidated
2001
$
2000
$
322,248
140,329
(86,008)
(23,497)
236,240
116,832
Parent Entity
2001
2000
$
-
-
4,909
4,909
$
-
67,804
-
67,804
Parent Entity
2001
2000
$
-
-
-
$
-
-
-
Reconciliations of the carrying amounts of plant & equipment at the beginning and end of the current financial year are set out below.
Consolidated
Carrying amount at 1 July 2000
Additions
Depreciation Expense
Carrying amount at 30 June 2001
Plant & Equipment
$
116,832
181,919
(62,511)
236,240
Note 9: Non-Current Assets – Other Financial Assets
Non-traded Investments
Shares in controlled entities – at cost (Note 15)
Consolidated
2001
2000
$
-
$
-
Parent Entity
2001
$
2000
$
10,000,006
7,000,006
Starpharma Annual Report 33
Consolidated
Parent Entity
2001
$
2000
$
1,016,493
159,854
28,441
-
2001
$
8,305
-
2000
$
27,843
-
1,044,934
159,854
8,305
27,843
Consolidated
2001
$
2000
$
64,868
39,427
Parent Entity
2001
2000
$
-
$
-
Parent Entity
Parent Entity
2001
Shares
2000
Shares
2001
$
2000
$
Note 10: Current Liabilities – Payables
Trade creditors
GST Payable
Note 11: Current Liabilities – Provisions
Employee entitlements
Note 12: Contributed Equity
(a) Share Capital
Ordinary shares - fully paid
88,900,000
62,500,000
33,034,058
12,279,472
Former share premium account included in equity
2,500,000
2,500,000
34 Starpharma Annual Report
(b) Movements in ordinary contributed capital of the company during the past two years were as follows:
Date
Details
Number of shares
Issue Price
$
1 July 1999
Opening balance
12,500,000
5,000,000
Rights issue
(c)
3,125,000
$0.01
31,250
20 Dec 1999
Final call of $2.49 per
share on rights issue
Issue costs in relation to
the rights issue and
final call
20 April 2000
Share split of 4 for 1
-
$2.49
7,781,250
(533,028)
12,279,472
30 June 2000
Balance
62,500,000
12,279,472
20 September 2000
Issue of Fully Paid
Ordinary shares
(d)
26,400,000
$0.85
22,440,000
Issue costs in relation
to share issue
30 June 2001
Balance
88,900,000
(1,685,414)
33,034,058
(c) Rights Issue
On the 15 September 1999 the company invited its shareholders to subscribe to a rights issue of 3,125,000 ordinary shares at
an issue price of $2.50 per share on the basis of 4 shares for every 1 fully paid ordinary shares held.
(d) Ordinary Shares
On the 20 September 2000 the company issued 26,400,000 at an issue price of $0.85 per share. These shares entitle the
holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts
paid on the shares held.
Starpharma Annual Report 35
Note 13: Retained Profits (Accumulated Losses)
Consolidated
Parent Entity
2001
$
2000
$
2001
$
2000
$
Retained profits (accumulated losses)
at beginning of the year
(4,211,978)
(2,439,964)
195,553
59,111
Net profit (loss) for the year
(3,906,427)
(1,772,014)
696,246
136,442
Retained profits (accumulated losses)
at end of the year
Note 14: Commitments for Expenditure
Lease commitments
Commitments in relation to leases contracted for at
the reporting date but not recognised as liabilities,
payable:
Not later than one year
Later than one year and not later than five years
Later than five years
Representing Cancellable operating leases
(8,118,405)
(4,211,978)
891,799
195,553
Consolidated
Parent Entity
2001
$
2000
$
2001
$
2000
$
76,604
85,514
-
162,118
162,118
74,092
40,853
-
114,945
114,945
-
-
-
-
-
-
-
-
-
-
36 Starpharma Annual Report
Note 15: Controlled Entities
Wholly-owned Group
The consolidated entity consists of Starpharma Pooled Development Limited and its controlled entities, Starpharma Limited,
Angiostar Limited and Viralstar Limited. Ownership interest in these controlled entities is set out below.
Investments in Controlled Entities
Country of Incorporation
Class of Shares
Equity Holding
Cost of Parent Entity's Investment
Starpharma Limited
Angiostar Limited
Viralstar Limited
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
100%
100%
100%
2001
$
3,400,001
3,300,005
3,300,000
2000
$
2,400,001
2,300,005
2,300,000
10,000,006
7,000,006
Note 16: Remuneration of Directors
Income paid or payable, or otherwise made
available, to directors of entities in the
consolidated entity in connection with the
management of affairs of the parent entity
or its controlled entities
Directors of Entities in the Economic Entity
Directors of Parent Entity
2001
$
2000
$
2001
$
2000
$
349,937
300,006
349,937
300,006
The numbers of parent entity directors whose total income from the parent entity or related parties was within the specified
bands are as follows:
$
$
2001
2000
10,000 -
19,999
20,000 -
29,999
200,000 - 219,999
230,000 - 239,999
-
5
-
1
5
-
1
-
Starpharma Annual Report 37
Executive Officers of the Consolidated Entity
Executive Officers of the Parent Entity
2001
$
2000
$
2001
$
2000
$
Note 17: Remuneration of Executives
Remuneration received, or due and
receivable from entities in the consolidated
entity and related parties by Australian
based executive officers (including directors)
whose remuneration was at least $100,000:
Executive officers of the parent entity
753,073
215,744
491,664
215,744
The numbers of Australian based executive officers (including directors) whose remuneration from entities in the consolidated
entity and related parties was within the specified bands are as follows:
Executive Officers of the Consolidated Entity
Executive Officers of the Parent Entity
2001
2000
2001
2000
$
100,000
120,000
130,000
150,000
210,000
230,000
$
109,999
129,999
139,999
159,999
219,999
239,999
-
-
-
-
-
-
$
1
1
1
1
-
1
$
-
-
-
-
1
-
$
-
1
1
-
-
1
$
-
-
-
-
1
-
Options are granted to executive officers under the Starpharma Pooled Development Limited Employee Share Option Plan,
details of which are set out in Note 23.
A summary of options granted and exercised by Australian based executive officers (with income of at least $100,000)
during the year ended 30 June 2001 is set out below.
Australian based executive officers of the parent entity
100,000
-
Granted
Exercised
Outstanding
100,000
The amounts disclosed as remuneration of executive officers in this note include the assessed fair value of the options at the
date they were granted to executive officers during the year ended 30 June 2000. On issue of the options, the exercise price
was equivalent to the share price on the date of issue. After taking this into account and the earliest date on which the options
may be exercised, namely 1 February 2002, the fair value of the options at the date of issue has been assessed as $nil.
38 Starpharma Annual Report
Note 18: Cash Flow Information
Reconciliation of net cash flows from operating activities
to operating profit/(loss) after income tax
Consolidated
Parent Entity
2001
$
2000
$
2001
$
2000
$
Operating profit/(loss) after income tax:
(3,906,427)
(1,772,014)
696,246
136,442
Depreciation and amortisation:
62,511
15,314
-
-
Change in operating assets and liabilities
(Increase) decrease in receivables and other assets
393,029
(814,256)
(39,125)
28,477
(Increase) decrease in other operating assets
86,631
-
(4,909)
-
Increase (decrease) in trade creditors
885,080
(106,513)
(19,538)
(26,124)
Increase (decrease) in employee provisions
25,441
20,538
-
-
Net cash inflows/(outflows) from operating activities
(2,453,735)
(2,656,931)
632,674
138,795
Note 19: Events Subsequent to Balance Date
On 6 August 2001, Starpharma Pooled Development Ltd entered into an agreement with Dr Donald A. Tomalia, to establish a
new venture to develop products using dendrimer nanotechnology. Under the proposed venture Starpharma intends to invest up
to US$2.18 million over the next three years in Dendritic Nanotechnologies Limited, a new Australian company which will have
its head office in Melbourne and a branch office and laboratory at Central Michigan University, Michigan USA. Dr Tomalia’s
team of experienced dendritic polymer scientists will be employed by the new company.
Note 20: Related Parties
Directors
The names of persons who were directors of Starpharma Pooled Development Limited at any time during the financial year are
as follows: P M Colman, R Dobinson, L Gorr, P J Jenkins, R J D Oliver and J W Raff. All of these persons were also directors
during the year ended 30 June 2000.
Details of directors’ remuneration are set out in Note 16.
Starpharma Annual Report 39
Transactions of Directors and Director-related entities concerning shares or share options
Aggregate numbers of shares of Starpharma Pooled Development Limited issued to and held directly, indirectly or beneficially
by directors of the company or the economic entity or their director-related entities at balance date:
Acquisitions
Ordinary shares
Options over ordinary shares
Disposals
Ordinary shares
Options over ordinary shares
Currently held
Ordinary shares
Options over ordinary shares
2001
Number
1,396,371
-
-
-
2000
Number
8,545,984*
2,080,000*
8,197,840*
-
27,550,952
2,080,000
26,154,581*
2,080,000*
*Total number of shares or options following a 4 for 1 share split effective from 6 April 2000.
Other transactions with Directors and Director-related Entities
For part of the year a director, Prof P M Colman was the Managing Director of The Biomolecular Research Institute Limited,
which has provided contract research and research management services to the consolidated entity. All such dealings with
the consolidated entity are in the ordinary course of business and on normal terms and conditions.
Two directors, Mr R Dobinson and Mr L Gorr are directors of the company, Technology Structuring Limited which has
rendered consulting services to the consolidated entity. All such dealings with the consolidated entity are in the ordinary
course of business and on normal terms and conditions.
A director, Mr L Gorr is a partner of Herbert Geer & Rundle, who have provided legal services to the consolidated entity.
All such dealings with the consolidated entity are in the ordinary course of business and on normal terms and conditions.
Aggregate amounts of each of the above types of transactions with directors and their director-related entities are:
Contract research and research management services
273,208
1,090,039
Consolidated
2001
$
2000
$
Parent Entity
2001
2000
$
-
$
-
Consulting services
Legal fees
9,000
167,562
9,000
131,562
22,172
164,501
18,809
150,085
Apart from the above no director has entered into a material contract with the consolidated entity since the end of the previous
financial year and there were no material contracts involving directors’ interests subsisting at year end.
Wholly owned group
The wholly-owned group consists of Starpharma Pooled Development Limited and its wholly-owned controlled entities, Angiostar
Limited, Starpharma Limited and Viralstar Limited. Ownership interests in these controlled entities are set out in note 15.
Controlling entity
The ultimate parent entity in the wholly owned group is Starpharma Pooled Development Limited.
40 Starpharma Annual Report
Note 21: Financial Instruments
(a) Credit risk exposures
The credit risk on the financial assets (limited to interest receivable) of the company and consolidated entity which have been
recognised on the balance sheet is generally the carrying amount of those financial assets net of any provisions where raised.
(b) Interest rate risk
The company’s and consolidated entity’s exposure to interest rate risk is limited to that exposure which arises from the holding
of cash balances and bills of exchange. Interest is earned on cash balances at the prevailing floating rate, which at 30 June
2001 was 3% and on bills of exchange at 4.98%. Cash balances are at call and bills of exchange have a maturity of no more
than 60 days. All other financial assets and liabilities are non interest bearing.
(c) Carrying amounts and net fair values of financial asset and liabilities
The company’s and the consolidated entity’s balance sheet reflect net assets. All balances stated in these balance sheets are,
respectively, considered to form part of the company’s and the consolidated entity’s net financial assets and liabilities with the
exception of property, plant and equipment assets, other receivables, employee entitlement liabilities and investments in
subsidiary companies (where included therein).
The carrying value of financial assets and liabilities as stated in the company’s and consolidated entity’s balance sheets is
equivalent to the net fair value of those financial assets and liabilities.
Note 22: Segment Information
The consolidated entity operates in the pharmaceutical research and development industry and in one geographical segment
within Australia.
Note 23: Employee Entitlements
(a) Employee entitlement liabilities
Provision for employee entitlements current (Note 11)
64,868
39,427
Consolidated
2001
$
2000
$
Parent Entity
2001
2000
$
-
$
-
Employee Numbers
Number of employees at the reporting date
20
7
-
-
2001
Number
2000
Number
2001
Number
2000
Number
(b) Employee option plans
(i) Starpharma Pooled Development Limited Executive and Employee Option Plan
The establishment of the Starpharma Pooled Development Limited Executive and Employee Option Plan was approved by
members at the annual general meeting held on 25 November 1999.
Under the plan, directors of the parent entity may from time to time determine that an eligible person is entitled to
participate in the plan and will determine the number of employee options which may be granted to that person or any
Starpharma Annual Report 41
associate of that person. In making these determinations the directors are required to have regard to the person’s
- length of service with the consolidated entity;
- record of employment with the consolidated entity;
- potential contribution to the future growth of the consolidated entity; and
to any other matters which tend to warrant the person’s participation in the plan.
Under the plan, eligible persons include employees of the consolidated entity, including directors and consultants acting in
management roles.
A total of 590,000 options were issued under the plan to 7 employees. Subsequent to the 4 for 1 share subdivision on 6 April
2000, the number of options on issue was adjusted on a consistent basis, resulting in 2,360,000 options on issue. The options
were issued for no consideration and are capable of being exercised no earlier than 1 February 2002. The amount which may be
received upon the exercising of these options post 1 February 2002 will be recognised as issued capital at the date of issue of
the underlying shares. Following the share subdivision, the exercise price of the options was reduced from $3.75 to $0.9375.
(ii) Starpharma Pooled Development Limited Employee Share Option Plan
At the Annual General Meeting held on 16th November 2000 members approved the introduction of a new Starpharma Employee
Share Option Plan, which was drafted to take into account amendments to the then Corporations Law and the ASX Listing Rules.
A total of 300,000 options were granted under the plan on the 7 February 2001. These options were issued no
consideration and are capable of being exercised no earlier than 1 January 2003.
At 30 June 2001 the total number of unissued shares under these options is 2,660,000. The market selling price per
ordinary share at 30 June 2001 was $0.59.
Note 24: Earnings per Share
Basic Earnings per share
Diluted earnings per share is not materially different to basic earnings per share.
Weighted average number of shares used as the denominator
in calculating basic earnings per share
Potential ordinary shares not considered dilutive:
As at the 30 June, the company had on issue:
Consolidated
2001
Cents
(4.74)
2000
Cents
(3.10)
Consolidated
2001
Number
2000
Number
82,462,739
57,125,537
2,360,000 options over unissued capital exercisable on or before the 28 September 2002 at the price of 93.75 cents
per ordinary share. These options are not considered dilutive.
300,000 options over unissued capital exercisable on or before the 31 January 2005 at the price of 93.75 cents
per ordinary share. These options are not considered dilutive.
42 Starpharma Annual Report
Directors’ Declaration
The directors declare that the financial statements and notes set out on pages 24 to 41:
(a) Comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(b) Give a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2001 and of their
performance, as represented by the results of their operation and their cash flows, for the financial year ended on that date.
In the directors opinion:
(a) the financial statements and notes are in accordance with the Corporations Act 2001; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable.
This statement is made in accordance with a resolution of the directors.
R J D Oliver
Director
24 September, 2001
Melbourne
Starpharma Annual Report 43
PricewaterhouseCoopers
ABN 52 780 433 757
333 Collins Street
MELBOURNE VIC 3000
GPO Box 1331L
MELBOURNE VIC 3001
DX 77 Melbourne
Australia
www.pwcglobal.com/au
Telephone +61 3 8603 1000
Facsimile +61 3 8603 1999
Independent audit report to the members of Starpharma Pooled Development Limited
Scope
We have audited the financial report of Starpharma Pooled Development Limited (the Company) for the financial year ended 30
June 2001 as set out on pages 24 to 42. The Company’s directors are responsible for the financial report which includes the
financial statements of the Company and the consolidated financial statements of the consolidated entity comprising the
Company and the entities it controlled at the end of, or during, the financial year. We have conducted an independent audit of
the financial report in order to express an opinion on it to the members of the Company.
Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether
the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence
supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant
accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the
financial report is presented fairly in accordance with Accounting Standards, other mandatory professional reporting
requirements and the Corporations Act 2001 in Australia so as to present a view which is consistent with our understanding of
the Company’s and the consolidated entity’s financial position, and performance as represented by the results of their
operations and their cash flows.
The audit opinion expressed in this report has been formed on the above basis.
Audit opinion
In our opinion, the financial report of the Company is in accordance with:
(a)
the Corporations Act 2001, including:
(i)
giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2001 and of
their performance for the financial year ended on that date; an
(ii)
complying with Accounting Standards and the Corporations Regulations 2001; and
(b)
other mandatory professional reporting requirements.
PricewaterhouseCoopers
Chartered Accountants
Nick Ridehalgh
Partner
Melbourne
24 September, 2001
44 Starpharma Annual Report
Glossary
Clinical Trials - Studies conducted to investigate in a controlled manner, the safety and efficacy of a drug, compound, device or
procedure in living human subjects. There are several distinct phases of clinical trial for a new chemical entity being developed as a
new pharmaceutical:
Phase 1: A small trial in 20-50 healthy volunteers to assess the safety of the new drug.
Phase 2: A restricted (e.g. white only) trial in people of the new drug in 50-200 people belonging to the target population
(i.e. females) to assess the efficacy of the new drug.
Phase 3: Large, multi-centre trials in 3,500-50,000 people belonging to the target population to confirm the efficacy, and
to determine the complete safety profile, of the new drug.
Dendrimers - Precisely controlled, highly branched, nanoscale materials that provide a platform for the development of products in a
wide range of commercial applications from life sciences to electronics.
FDA - United States Food and Drug Administration; the regulatory body that regulates the development, approval and marketing of new
and existing pharmaceuticals in the U.S.
GLP - Good Laboratory Practices; the regulations governing the conduct of preclinical safety and efficacy studies for new drugs, which
aim to assure the quality and integrity of data submitted in support of an IND or New Drug Approval (NDA) application.
Investigational New Drug (IND) application - An application to the U.S. Food and Drug Administration to commence trials of a drug in
humans. The application details the findings of in vitro and animal studies of drug product safety and efficacy prior to human trials.
Nanotechnology - The exploitation of the unique properties and phenomena of matter at the atomic and molecular level, or nanoscale.
Polyvalent - A property or mechanism describing multiple interactions between two single entities. A dendrimer is a compound capable
of a polyvalent interaction with a cell by virtue of the many surface active groups on the dendrimer interacting with many receptors on
the cell surface.
Preclinical Studies - Studies carried out in vitro or in animals to determine the effect and toxicity of a drug prior to studies in humans.
However, preclinical, or better referred to as nonclinical studies may be ongoing throughout clinical trials to determine, for example,
the effects of long-term use of a drug in animals.
Quality Assurance System - A system to guarantee the excellence, security and dependability of a process or its product, by monitoring,
validating and certifying the steps of the process.
Regulatory Affairs - Applies the meaning of laws, guidelines and policies of regulatory bodies to a product development program, and
predicts changes and trends in regulations governing pharmaceutical development, testing and registration that may affect product
development.
Designed and produced by Campbell Design Group Pty Ltd Graphics produced by Leapfrog Newmedia
Starpharma:
targeting the prevention
and treatment of major
human diseases using
dendrimers…
[Dendrimers are synthetic nanoscale molecules that have precise, defined structures and properties]
1 Chairman’s Letter
2 CEO’s Report
4 Targeting the Major Diseases and Health
Issues for Humans
4 A Range of Major Disease Targets
4 The Lead Product
6 Market potential for STD Microbicide Therapies
6 Investigational New Drug Application
6 Research and Development Team –
Skills and Expertise
7 Global Research Network
8 Dendrimers, Nanotechnology and Starpharma’s
Leading Position
10 Dendritic Nanotechnologies Limited –
Major Commercial Development Opportunities
10 Starpharma Group Corporate Structure
11 Growing Preclinical Development Capabilities
11 A Quality Assurance System to Add Value
to Products
11 Profiles
13 Financial Statements
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