Annual Report 2020
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Highlights
Chairman’s Letter
CEO’s Report
Environment, Social & Governance
Directors’ Report
Operating & Financial Review
Remuneration Report
Auditor’s Independence Declaration
Corporate Governance Statement
Annual Financial Report
Independent Audit Report to the Members
Shareholder Information
Intellectual Property Report
Corporate Directory
2020 HIGHLIGHTS
►► Okamoto added 11
more Asian countries
to its VivaGel® condom
licence
►► VivaGel® condom
received regulatory
approval in Europe
►► Five DEP® posters
presented at AACR
showcasing
AstraZeneca’s first
DEP® product,
AZD0466, as well as
DEP® docetaxel, DEP®
cabazitaxel and DEP®
irinotecan
►► TGA licence granted
to Starpharma to
manufacture DEP®
Active Pharmaceutical
Ingredient for
clinical trials
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 1
►► Kinghorn Cancer Centre trial site opened for DEP® irinotecan and DEP® cabazitaxel clinical trials ►► VivaGel® BV launched in the UK following earlier launches in Europe ►► VivaGel® BV approved and launched in multiple countries in Asia, with further roll-out underway ►► VivaGel® BV launched in Central and Eastern Europe ►► Fleurstat BVgel ranked as #1 topical BV treatment in Australia ►► Fleurstat BVgel launched in New Zealand ►► SPL7013 shown to be active against SARS-CoV-2 (coronavirus)►► DEP® radiotherapeutic candidate, DEP® lutetium, showed significant anti-cancer activity and 100% survival in a human prostate cancer model ►► DEP® irinotecan + immuno-oncology agent resulted in superior anti-tumour activity and significant survival benefit in two human colorectal cancer models ►► DEP® irinotecan, alone and in combination with Lynparza®, showed significant anti-tumour efficacy and synergy in an irinotecan-refractory human colon cancer model ►► New DEP® candidate, DEP® gemcitabine, demonstrated significantly enhanced anti-tumour activity in a human pancreatic cancer model ►► New DEP® candidate, DEP® HER-2 ADC, demonstrated significant tumour regression and 100% survival in a preclinical human ovarian cancer model ►► AstraZeneca’s first DEP® product, AZD0466, commenced phase 1, triggering US$3M milestone ►► Leading cancer site, MD Anderson Cancer Center, opened for AstraZeneca's AZD0466 trial ►► DEP® irinotecan phase 1/2 trial commenced and advanced into phase 2 ahead of schedule on positive results ►► DEP® cabazitaxel trial advanced into phase 2 on positive results ►► DEP® docetaxel + gemcitabine combination study commenced CHAIRMAN'S LETTER
2 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
In parallel with advancing our clinical-stage
assets, we also expanded our DEP®
pipeline with three new preclinical
programs, including in the growing,
high-value area of radiotherapy. Each of
these new DEP® assets demonstrated
compelling and impressive preclinical
data and addresses therapeutic areas that
have significant unmet need for patients.
The DEP® science is truly world class
and momentum for the DEP® platform
is building with new partners and new
therapeutic areas, including anti-infectives
and antivirals.
Developing new pharmaceutical and
medical products is both challenging and
rewarding. Our people care passionately
about improving patient health and the
company’s culture is embedded with a
mix of patient-centric and commercially-
focussed values. These values are
featured in our inaugural Environment,
Social and Governance (ESG) Report.
We sincerely thank our CEO, Dr Jackie
Fairley, and the entire Starpharma team
for their commitment and work during the
year. I also thank my fellow board
members, and collectively we congratulate
retiring director, Richard Hazleton, for his
invaluable contribution over the past 13
years. We are committed to developing our
Board capability and we were delighted to
welcome David McIntyre as a director in
March this year. David has extensive and
broad life sciences experience including in
finance, strategy and commercialisation
both in Australia and the USA.
We are grateful for the continued support
of Starpharma’s shareholders, customers
and business partners. The company has
an increasingly broad and high-value
product pipeline, with 150+ patents and a
growing list of partners – and has potential
to deliver a substantial contribution to
patient and customer health while creating
significant long-term value for our
shareholders.
Yours Sincerely,
Rob Thomas AO
Starpharma Chairman
!
company continued to achieve critical
milestones in both its VivaGel® and DEP®
portfolios. In FY20, Starpharma expanded
its global footprint for VivaGel® BV, securing
regulatory approvals including in Asia and
other regions, and successfully launched
the product in the UK, in countries in
Central and Eastern Europe, Asia and New
Zealand. Further manufacturing campaigns
and regulatory submissions were
completed which will support additional
launches in FY21. The global expansion for
VivaGel® BV remains on track despite the
disruption of COVID-19 to partner sales
and marketing activities and some impact
on consumer demand.
Our commercialisation journey with
VivaGel® BV has brought much value to
the company, and also some challenges in
relation to the US, given the request for
confirmatory data despite the fact that other
regulators in Europe, Australia and Asia
have already approved the product. We
continue to diligently work with expert
advisers through an administrative review
process with the FDA.
As the commercialisation of our DEP®
platform progresses further, it has the
potential to deliver immense value to
the company. This year our partner
AstraZeneca advanced its first DEP®
product, AZD0466, into a multicentre
phase 1 trial in the US. AZD0466 was
also the subject of three scientific posters
presented at this year’s American
Association of Cancer Research annual
meeting, and this partnered program
continues to demonstrate the significant
commercial potential of our DEP® platform.
I cannot overemphasise the potential
value of DEP®. The versatility and broad
applicability of this platform is further
demonstrated with the signing of new
research agreements this year, including
with Chase Sun and other commercial
partners, in anti-infectives, oncology and
other therapeutic areas. It is one of the
most compelling commercial benefits of
the platform, that DEP® can be licensed
to multiple partners, and be applied to
multiple products in parallel, which
creates remarkable optionality.
From both a commercial and community
perspective, we were extremely pleased to
see positive results for patients treated with
our DEP® products. We now have clinical
data for each of our three phase 2 DEP®
products including clear efficacy signals as
well as reduced impacts of a range of side
effects typically experienced with originator
(non-DEP®) products. Starpharma is
making every effort to accelerate these
trials, including opening new sites, to
achieve the requisite phase 2 data to
support licensing of our internal DEP®
assets.
On behalf of the Board, I am delighted to present our 2020 Annual Report.FY2020 was a year of growth for Starpharma. We achieved launches of VivaGel® BV in the UK, Europe and Asia. Our internal DEP® clinical-stage assets were advanced with three products now in phase 2 while multiple new development programs, including antivirals and radiotherapy, were advanced. Before I detail those achievements and how we are delivering on our strategy, I want to first reflect on the current environment and our response to the COVID-19 pandemic.This has been an unprecedented period that has called for clear planning and leadership. As the pandemic emerged, our company employed a broad range of measures to protect the health and safety of our staff and clinical trial patients. Starpharma’s leadership team is managing the changes to business activities very effectively and to date, disruptions to our laboratory, office and supply chain have been minimal although some clinical trials have obviously been impacted. While our team adapted quickly to addressing the challenges during this pandemic, they never lost sight of our commercial strategy: to utilise our proprietary dendrimer technology to build a stable of high-value products and partnerships that address significant unmet patient need for the betterment of the community and our shareholders.All our development programs continued to progress well. Importantly our scientists also identified new opportunities to use Starpharma’s technology and assets to develop therapies to combat COVID-19.With the knowledge that our proprietary dendrimer SPL7013 (the active component in VivaGel®) had significant antiviral activity against viruses such as HIV, HSV, HPV, Adenovirus, HBV, and Zika – it made sense to test VivaGel® against the coronavirus and we were pleased to see it demonstrate significant activity against SARS-CoV-2, the coronavirus that causes COVID-19.Starpharma’s SPL7013 preventative nasal spray for COVID-19 is being developed with great urgency given the immense need for such a product for the broader population and especially for frontline workers in the health, aged care and the travel industry. With VivaGel® already approved in many major markets, we expect the product to be ready for market within 12 months. The product may also have application beyond COVID-19 including for common respiratory viruses and potential use in future pandemics. Notwithstanding the immense workload of this new antiviral program, and the challenges of the COVID-19 pandemic, the
CEO'S REPORT
As companies and research organisations race to develop a
vaccine and treatments for COVID-19, Starpharma is also playing
a role. We already knew that SPL7013 has broad spectrum
antiviral activity against a range of viruses, so following the
emergence of the pandemic, we independently tested SPL7013
for COVID-19 activity. Data from multiple studies has shown
SPL7013 has significant antiviral activity against SARS-CoV-2,
the coronavirus that causes COVID-19.
A key advantage in repurposing SPL7013 as a preventative
COVID-19 nasal spray is that it has already been shown to be
safe and well tolerated in humans. SPL7013 has been approved
– as the active in VivaGel® products – and is already on market,
which means the development pathway can be much faster than
developing a product from scratch.
EXTENSIVE & GROWING PIPELINE
OF PROPRIETARY ASSETS
MULTIPLE CLINICAL
STAGE ASSETS
APPROVED
PRODUCTS
RESEARCH
PRECLINICAL
DEVELOPMENT
PHASE 1
PHASE 2
LATE STAGE
DEVELOPMENT/
REGULATORY
PRODUCTS
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 3
We entered 2020 with a deep portfolio and a strong balance sheet, which provided an excellent foundation to handle the challenging environment presented by the COVID-19 pandemic. Our team responded rapidly to the evolving situation, implementing a business continuity plan to mitigate the impacts of COVID-19 and a comprehensive program of measures to protect the health and safety of our staff and trial patients. Starpharma has continued to operate with minimal disruption, including the Company’s laboratory and in-house GMP manufacturing facilities.We stayed the course by focussing on strategic priorities to advance and commercialise our products, while repurposing our approved VivaGel® active and leveraging the DEP® platform. I am pleased to report on the milestones achieved in both of our portfolios – notably, additional regulatory approvals and market launches for VivaGel® BV – and progression of our lead DEP® products through clinical trials and three exciting new candidates in our preclinical pipeline.During the year, VivaGel® BV continued to increase its geographic footprint with launches in the UK, Central and Eastern Europe – and also in Asia, following first approvals in that region. We were pleased to expand our licence with Okamoto, our Japanese VivaGel® condom partner, adding 11 additional countries. While in the European market, we achieved EU approval for the VivaGel® condom.We also advanced each of our lead DEP® products, including commencing a new combination study for DEP® docetaxel focused on pancreatic cancer; advancing DEP® cabazitaxel to phase 2; and commencing the first human trial for DEP® irinotecan. The trial for DEP® irinotecan made excellent progress and, despite COVID-19, moved into phase 2 ahead of schedule on positive results. In parallel, our partner, AstraZeneca, commenced a clinical trial for its first DEP® product, AZD0466, most recently opening the highly prestigious MD Anderson Cancer Center, in the US, as a site. We also advanced three new DEP® candidates from discovery into our preclinical pipeline, including in the exciting area of radiopharmaceuticals.Dr Jackie Fairley, Chief Executive Officer“With four DEP® products now in the clinic, and a pipeline of otherhigh-potential candidates, the DEP® platform is generating a deep portfolio of valuable assets. During the year, we added three new DEP® products to ourpreclinical program – which has continued to generate consistent, impressive results in a range of cancer types that have otherwise limited options for patients.” Starpharma's portfolio of high-value assets including products on marketSUBMISSION VivaGel® BV global launch
Global expansion of VivaGel® BV
continued in FY20 with launches in the UK,
in Europe, Asia and New Zealand
Mundipharma further expanded VivaGel® BV’s geographic
footprint by also launching in Asia in 2020, following receipt of the
first regulatory approvals during the period. BETADINE™ BV Gel
was initially launched in multiple countries in South East Asia, and
is available over-the-counter without a prescription.
Asia is the second major region in which Mundipharma has
launched VivaGel® BV and is a significant market, with more
than 1 billion women. Mundipharma have a leading position in
feminine care in Asia with their successful international brand
BETADINE.
Starpharma’s and Mundipharma’s marketing, supply and
regulatory teams continue to work actively together on further
launches of VivaGel® BV in Mundipharma’s territories.
A significant number of additional regulatory submissions were
made during the year and further submissions and approvals
are expected in the coming months, which will
facilitate further launches.
Starpharma’s Australia and New Zealand partner,
Aspen, launched Fleurstat BVgel in New Zealand
earlier in the year, where the product is also being
distributed in pharmacies throughout the country.
In the US, Starpharma continues to explore
regulatory options with ongoing input from a team
of expert FDA consultants (regulatory, statistical,
clinical, legal – including senior ex-FDA staffers). Starpharma
continues to progress the formal review of some of the FDA’s
initial conclusions via an administrative review process. This
review is ongoing and has been impacted by COVID-19. In
parallel, Starpharma had made preparations for a BV treatment
trial in the US to commence only if required by the FDA, however,
due to the significant disruption to the US healthcare system
caused by COVID-19, activities relating to a potential BV
treatment trial in the US remain on hold.
4 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
VivaGel® BV is a highly novel, non-antibiotic therapy for the treatment of bacterial vaginosis (BV) and prevention of recurrent BV. BV is the most common vaginal infection worldwide and twice as common as thrush. Approximately one in three women will experience BV and half of these women will have recurrent BV. VivaGel® BV is an Australian innovation – invented, fully developed, registered and commercialised by Starpharma.BV is a troublesome and often recurrent condition that causes unpleasant vaginal odour and discharge, symptoms that have significant social impact for women. BV is also associated with a range of other serious reproductive health-related medical problems including infertility and still birth.VivaGel® BV is marketed in multiple countries under the brand names Betafem® BV Gel (UK), BETADINE BV™ Gel (Europe), BETADINE™ BV Gel (Asia) and Fleurstat BVgel (Australia and New Zealand).During the year, VivaGel® BV was launched in the UK, Central and Eastern Europe, Asia and New Zealand. VivaGel® BV, was also launched in the UK, under the brand Betafem® BV Gel. The UK launch followed the first European launches in Germany and other countries in 2019.VivaGel® BV was launched in the Central and Eastern European region in June 2020 and Mundipharma expects to roll-out the product in additional countries in Europe throughout the year ahead. CEO'S REPORT
SPL7013 COVID-19 – antiviral mechanism of action
SPL7013 has been shown to bind to viral spike proteins, thereby
inhibiting the interactions leading to attachment of viruses to
human cells and thereby preventing infection. The antiviral activity
of SPL7013 against SARS-CoV-2 is thought to be mediated by a
similar mechanism.
The broad spectrum antiviral
activity of SPL7013 creates
potential for COVID-19 and future
pandemic preparedness products
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 5
European approval granted for the VivaGel® condomIn November 2019, Starpharma was granted marketing approval for the VivaGel® condom in Europe.Since this approval was granted, Starpharma has been working closely with its marketing partner in Europe, LifeStyles, as they undertake marketing preparations ahead of the launch of the VivaGel® condom under their brand name Absolute™ DUAL PROTECTION.SPL7013► Broad-spectrum antiviral agent► Shown to be safe and well tolerated in multiple clinical trials► Approved and marketed in products in the UK, Europe, Japan, Asia, Canada, Australia and New Zealand► Manufactured at an industrial scaleSPL7013 has broad spectrum antiviral activity including against HIV, HSV, HPV, Adenovirus, HBV, and Zika. SPL7013 is the active ingredient included in marketed VivaGel® products and has been shown to be safe and well tolerated in multiple large clinical trials.Following the emergence of the coronavirus pandemic, Starpharma instigated independent testing of SPL7013 by an expert laboratory and the results showed significant activity against SARS-CoV-2, the coronavirus that causes COVID-19.Starpharma is repurposing SPL7013, initially as a nasal spray, to help prevent acquisition of SARS-CoV-2, and to potentially reduce severity of and treat infection. Prevention strategies which complement vaccine use are expected to play an important role in an effective response to managing COVID-19 in the future. Due to its broad spectrum activity, SPL7013 could also play a role for future pandemic preparedness. Such a preventative product would provide an additional line of defence (in addition to conventional PPE and vaccines) including for those in the frontline of this crisis, such as doctors, nurses and other essential workers and in crowded and high-risk environments, such as public transport and aged care.Importantly, SPL7013 is already approved for use in other products (VivaGel® BV and VivaGel® condom) that are marketed globally, including in the UK, Europe, Asia, Canada, Australia and New Zealand. This situation enables Starpharma to leverage existing approvals to fast-track regulatory development, with the potential to have a product ready for market within 12 months, and regulators have confirmed that minimal re-development is required. The regulatory documentation is already well progressed. Starpharma has developed a range of formulations, selected the product manufacturer and appropriate device components, and is about to manufacture pilot batches, in parallel with commercial discussions.SPL7013Mucosal cell membraneCell surface proteins mediate virus-receptor interactionsACE2 ReceptorSpike proteinBased on the previously established antiviral mechanism of action of SPL7013, it is thought to bind to the SARS-CoV-2 spike protein, blocking the ability of the virus to attach to and enter mucosal (human) cells.VivaGel® condom: Okamoto added 11 more Asian countries to its licenceFollowing the Japanese launch of VivaGel® antiviral condom under Okamoto’s highly successful Zero Zero Three (003) brand, Okamoto sought an expansion of its licensed territory to include 11 additional countries in Asia. In March 2020, Starpharma granted Okamoto marketing rights to further countries in Asia which include South Korea, Indonesia, Malaysia, Thailand, Singapore, and the consumer (non-government) Chinese market.Under this licence, Starpharma is eligible to receive royalties on sales of the VivaGel® condom and will also receive revenue on supply of SPL7013 active. Okamoto will be responsible for regulatory submissions, marketing, and other related costs.Okamoto has an outstanding condom product portfolio and leading market positions within the Asian region with a number 1 or 2 ranking in multiple relevant Asian countries. 6 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma’s DEP® drug delivery technology is designed to improve the delivery of existing and novel drugs. The technology enables a drug’s properties to be enhanced with improved targeting and pharmacokinetics so that more drug is directed to diseased or cancerous tissue in preference to healthy cells. The technology has been shown to reduce side effects and improve overall performance. By focusing on existing drugs, Starpharma is able to accelerate development of improved DEP® therapies to market. For novel drugs, the DEP® technology provides potential benefits to overcome critical issues such as insolubility or toxicities that hinder their development, as well as creating valuable additional intellectual property and patent life.Starpharma’s internal DEP® strategy is to develop enhanced DEP® versions of existing drugs to create value through clinical proof-of-concept data, followed by partnering and licensing. Three DEP® products are already in phase 2 trials and further DEP® assets are currently progressing through the development pipeline toward clinical trials. DEP® docetaxel: Phase 2► Promising efficacy signals observed in phase 2► New combination study: DEP® docetaxel + gemcitabineDuring the year, further promising efficacy signals were observed in the current DEP® docetaxel phase 2 trial. Patients treated with DEP® docetaxel have experienced impressive results including substantial target tumour shrinkage and stable disease in cancers including pancreatic, lung, prostate, gastric and oesophageal.Two new sites, the Christie (Manchester) and the Beatson (Glasgow), were initiated during the year. During COVID-19, enrolled patients continued treatment, however recruitment of new patients was paused during the height of the crisis. The majority of sites have recommenced recruitment although some hospitals have reduced capacity which may impact timelines.A new combination study commenced with gemcitabine, based on strong interest from clinicians following release of compelling preclinical data for DEP® docetaxel in combination with gemcitabine in pancreatic cancer models. Starpharma has three clinical-stage DEP® products in phase 2 trials across 10 sites – in the UK and in Australia DEP® cabazitaxel: Phase 2► Successfully completed phase 1 with promising efficacy signals in 67% evaluable patients► Commenced phase 2 and promising efficacy signals observedDuring the year, the phase 1 trial for DEP® cabazitaxel was completed with encouraging efficacy signals observed in 67% of evaluable patients. Efficacy signals have included prolonged stable disease in multiple tumour types, including prostate cancer. Efficacy signals were also observed in cancers not usually responsive to conventional cabazitaxel (Jevtana®), such as ovarian cancer, and responses were seen at doses significantly lower than standard for Jevtana®.Two new sites were initiated: Imperial College London and Velindre Cancer Centre in Cardiff, in addition to Guy’s Hospital and University College London Hospital. A further site, the Kinghorn Cancer Centre in Sydney, was also recently opened for DEP® cabazitaxel.Phase 2 is now progressing well, notwithstanding COVID-19 impacts on paused recruitment. Further encouraging efficacy signals have been observed in multiple patients, including significant target tumour shrinkage, prolonged stable disease (>47 weeks), and substantial tumour marker reductions (e.g. Prostate Specific Antigen), in cancers including prostate, gastro-oesophageal, breast, ovarian and cholangiocarcinoma.One patient case study from the DEP® cabazitaxel trial is detailed below.PATIENT PROFILETREATMENT RESPONSE Advanced (metastatic) ovarian cancer► Heavily pre-treated; her cancer progressed on three other anti-cancer therapies including paclitaxel (another taxane)► Previously had 14 cycles of other treatment therapies and multiple surgeries Patient has received 6 cycles of DEP® cabazitaxel to date► Response seen after 3 cycles of DEP® cabazitaxel treatment; well tolerated► Response maintained after 6 cycles, 43% reduction in some tumours, 40% overall reduction across all target tumour lesions CEO'S REPORT
Phase 2 is now well underway and the trial is actively recruiting at
five sites, including The Kinghorn Cancer Centre (Sydney) and the
Beatson (Glasgow), which were recently opened. The objective of
the trial is to establish anti-tumour activity (efficacy) and safety of
DEP® irinotecan. The first stage will enrol approximately 20-30
patients with colorectal and other cancers.
Combinations with immuno-oncology
In addition to the monotherapy part of the trial program
Starpharma is exploring commercially relevant value-adding
combinations for DEP® irinotecan, including with immuno-oncology
(IO) agents. A recent study with an anti-PD-1 antibody resulted
in enhanced anti-tumour activity and significant survival benefit
compared to the IO therapy alone in two preclinical colorectal
cancer (CRC) models. This combination benefit was not observed
when conventional irinotecan was used together with the same
IO therapy (anti-PD1 antibody).
These results indicate that DEP® irinotecan in combination with
an anti-PD-1 antibody could boost the efficacy of the anti-PD-1
antibody alone.
IO agents including anti-PD-1 antibodies have yielded excellent
efficacy results in some patient groups and certain cancer types,
but not in CRC. Between 30-60% of patients do not respond to IO
treatments alone and CRC is one of the least responsive to IO so
there is significant commercial interest in combination approaches,
including with chemotherapeutics, to overcome these limitations.
IO agents are now important treatments in several major cancers
and the market for these agents is expected to exceed
US$55 billion by 2025, and include Merck’s Keytruda®, BMS’s
Yervoy® and AstraZeneca’s Imfinzi®.
AACR Poster # 1716 Anticancer activity of the taxane nanoparticles, DEP docetaxel
and DEP cabazitaxel
David J Owen1, Brian D. Kelly1, Victoria McLeod2, Rachael Walker2, Jeannette Schreuders2, Susan Jackson2, Michael Giannis1, Christine Dietinger1, Pauline Reitano1, Rashmi Pathak1, Shirley Xia1, Anne Cargill1,
Aynaz Seta1, Richard Hufton1, Graham Heery1, Carleen Cullinane2 1. Starpharma Pty Ltd, Melbourne, Australia, 2. Peter MacCallum Cancer Centre, Melbourne, Australia
AZD0466, a nanomedicine of a potent dual Bcl-2/Bcl-xL inhibitor, exhibits
anti-tumor activity in a range of haematological and solid tumor models
Srividya B. Balachander1, Areya Tabatabai1, Shenghua Wen1, Steven Criscione1, Francis D. Gibbons2, Giulia Fabbri3, David Jenkins1, Courtney Anderson1, Jeffery
Tyner4, Steven Kurtz4, Guangnong ‘Sunny’ Zhang2, Justin Cidado1, Alwin Schuller1, Lorraine Graham5, Marianne Ashford6, and Barry Davies7
1Bioscience, 2DMPK, 3Translational Medicine, Early Oncology, AstraZeneca, Boston, USA, 4Knight Cancer institute, OHSU, 5CMC Projects, 6Advanced Drug Delivery, Biopharmaceuticals R&D, AstraZeneca, Macclesfield, UK, 7Projects, Oncology R&D, Research
& Early Development, AstraZeneca, Cambridge, UK
P - 56
Contact:
David.owen@starpharma.com or www.starpharma.com
INTRODUCTION
Docetaxel (Taxotere®) and cabazitaxel (Jevtana®) are mitotic inhibitors that function as effective
cytotoxic agents and are widely used in many chemotherapy regimens. However, treatment with
taxanes is limited by serious adverse toxicities, notably bone marrow toxicity (neutropenia,
leukopenia and anemia) and hepatotoxicity. Taxanes are poorly water soluble and must be
formulated with surfactants such as polysorbate, which can cause systemic adverse events (e.g.
anaphylaxis and fluid retention) requiring pre-dosing with corticosteroids. These combined drug
and excipient toxicities limit their clinical use and make them ideal candidates for improvement
using dendrimer technology.
Starpharma’s novel dendrimer nanoparticle DEP platform has broad applicability in drug delivery
through improved drug solubility, efficacy and pharmacokinetics, reductions in certain toxicities
(e.g. bone marrow toxicity) and generation of new intellectual property. The DEP platform has
shown reproducible benefits across a wide range of drug classes including small molecules,
peptides and proteins. Currently there are four DEP candidates in the clinic; DEP docetaxel (DEP
DTX), DEP cabazitaxel (DEP CTX), and DEP irinotecan. The fourth DEP candidate, AZD0466, is a
promising Bcl-2/Bcl-xL inhibitor, partnered with AstraZeneca, and is in Phase 1 clinical trials in the
US (See AACR Poster # P-56, P-1718 & Abs 3066).
Starpharma’s DEP DTX and DEP CTX are both PEGylated G5 polylysine dendrimers with the drug
conjugated to the surface via a hydrolytically labile linker. Both products have demonstrated
superior efficacy and survival compared to the standard drug formulations in a range of xenograft
cancer models in immunocompromised mice.
METHODS AND RESULTS
Mouse xenograft studies were carried as following:
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DENDRIMER CONJUGATES AS THERAPEUTICS
Improved efficacy:
DEP improves anti-cancer efficacy through
better
improved
targeting
pharmacokinetics.
drug
&
DEP® dendrimer
Linker
Benefits in combination:
DEP drugs are ideal candidates for combination
therapy including with immuno-oncology (IO)
agents and other chemo. DEP® drugs show
synergistic benefits over the original versions
and given they have been shown to reduce
bone marrow toxicity and do not require pre-
treatment with cortisone, they are particularly
well suited to combine with IO.
Reduced side-effects:
DEP reduces important side effects such as bone marrow toxicity / low white blood
cells (neutropenia) and alopecia (hair loss). DEP® removes the need for toxic
detergents in current formulations, which are highly soluble in aqueous formulations.
Optional Targeting group
Drug
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Figure 1a
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Figure 4b
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Abraxane + Vehicle
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Abraxane + Gemcitabine
DEP docetaxel + Vehicle
DEP cabazitaxel + Vehicle
DEP docetaxel + Gemcitabine
The induction of apoptosis in tumor cells represents a
promising approach to the treatment of cancer. In
tumor cells, the B cell lymphoma 2 (Bcl-2) protein
family promotes cell survival through upregulation of
anti-apoptotic Bcl-2 proteins, such as Bcl-2, Bcl-xL,
Mcl-1 and Bfl-1. Clinical activity of the Bcl-2 inhibitor
Survival Combination Therapy
venetoclax has validated the approach of targeting this
class of molecules, but additional value remains in
jointly targeting Bcl-2 with other family members.
AZD0466 is a novel drug-dendrimer conjugate, where
the active moiety, AZD4320, is chemically conjugated
to Starpharma’s clinically validated DEP® dendrimer
platform, a 5-generation PEGylated poly-lysine
dendrimer via a hydrolytically labile linker. AZD4320 is
a dual Bcl-2/Bcl-xL inhibitor that is equipotent to
venetoclax and 3-fold more potent than navitoclax.
AZD0466 has been optimized to maintain efficacy
whilst mitigating anticipated on-target toxicities of
AZD43201.
Introduction
DEP cabazitaxel + Gemcitabine
40
Days
t
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100
80
20
60
80
50
0
0
DEP CTX MONOTHERAPY (EXPERIMENT 4)
Results from a human pancreatic cancer model (CAPAN-1) (Figures 4a – 4d) showed;
Abraxane administered alone and in combination with gemcitabine inhibited tumour growth to a similar
extent (Percent tumour growth inhibition on Day 37 = 85% and 81 %, respectively).
DEP CTX and DEP DTX treatment inhibited tumour growth more effectively than Abraxane (P= 0.004,
Abraxane vs DEP DTX; P <0.0001, Abraxane vs DEP CTX).
DEP CTX given alone and in combination with gemcitabine induced complete regression of CAPAN-1 tumours
for the duration of the study.
DEP DTX given alone and in combination with gemcitabine resulted in complete tumour regression to day 58,
after which slow tumour regrowth occurred in the DEP DTX cohort, but not the gemcitabine combination
cohort, treated mice (P<0.0001, t-test, Day 107 tumour volume).
ABT-737
ABT-263/navitoclax
AZD4320/AZD0466
Vehicle
Abraxane + Gemcitabine
DEP® docetaxel
+ Gemcitabine
DEP® cabazitaxel
+ Gemcitabine
20
40
Day
60
DEP TOXICITY ASSESSMENT;
The relative toxicities of the DEP DTX formulation and docetaxel were compared in a study where
equivalent doses (based on docetaxel; 9mg/kg) were administered to male and female rats by intravenous
ABT-199
/ venetoclax
injection on Day 0. Blood samples were taken at day 0 prior to dosing, then at days 7, 14 and 21. The level
S55746
of neutrophils, expressed as the mean absolute count across all animals in the dose group (n=6 per group)
at each time point, are shown in Figures 5a and 5b. Of particular significance was the absence of
neutropenia for the DEP taxane candidates.
AZD5991
AMG176
S63845
Contact:
David.owen@starpharma.com or www.starpharma.com
Balb/c nude mice were inoculated subcutaneously with MDA-MB-231 (breast) cancer cell
line (Exp 1 and 2, 10 mice/group).
SCID mice were inoculated subcutaneously with DU145 (prostate) cancer cell line (Exp 3, 10
mice/group).
NOD-scid interleukin-2 receptor gamma chain null were inoculated subcutaneously with
CAPAN-1 (colon) cancer cell line (Exp 4, 9 mice/group).
DEP DTX MONOTHERAPY (EXPERIMENT 1)
Complete tumour regression was observed in both the DEP DTX (until day 75) and docetaxel (until
day 45) treated animals bearing the breast cancer tumour cell line, MDA-MB-231 (Figure 1a). The
tumour inhibition and survival effects of DEP DTX were significantly improved compared with the
docetaxel treated group (Figures 1a and 1b; P< 0.007 and 0.007 respectively).
In each experiment mice were dosed with saline as control and;
AACR Poster # 1716 Anticancer activity of the taxane nanoparticles, DEP docetaxel
and DEP cabazitaxel
Mean Tumour Volume
Figure 2b
Figure 2a
Survival
1400
)
3
Saline
•
Exp 1 – DEP DTX (28 mg/kg) and docetaxel (15 mg/kg) by IV injection on days 1, 8 and 15 at
0.1 ml/10g body weight (all drug groups were dosed at the pre-determined maximum
tolerated dose for each therapy).
David J Owen1, Brian D. Kelly1, Victoria McLeod2, Rachael Walker2, Jeannette Schreuders2, Susan Jackson2, Michael Giannis1, Christine Dietinger1, Pauline Reitano1, Rashmi Pathak1, Shirley Xia1, Anne Cargill1,
Saline
Aynaz Seta1, Richard Hufton1, Graham Heery1, Carleen Cullinane2 1. Starpharma Pty Ltd, Melbourne, Australia, 2. Peter MacCallum Cancer Centre, Melbourne, Australia
Cabazitaxel
(9mg/kg)
v
r
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S
1000
800
i
l
DEP cabazitaxel
(10mg/kg)
Cabazitaxel (9mg/kg)
Neutrophil count overtime for
DEP docetaxel vs docetaxel
Survival Monotherapy
AZD0466
Nanomedicine
Figure 4b
m
m
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V
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m
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1200
600
400
200
Contact:
David.owen@starpharma.com or www.starpharma.com
DENDRIMER CONJUGATES AS THERAPEUTICS
0
0 10 20 30 40 50 60 70 80 90 100 110
Day
•
•
Exp 2 – DEP CTX (10 mg/kg), and cabazitaxel (9 mg/kg) by IV injection on days 1, 8 and 15 at
0.1 ml/10g body weight (all drug groups were dosed at the pre-determined maximum
INTRODUCTION
Improved efficacy:
tolerated dose for each therapy).
Docetaxel (Taxotere®) and cabazitaxel (Jevtana®) are mitotic inhibitors that function as effective
DEP improves anti-cancer efficacy through
Exp 3 – DEP CTX (10 mg/kg), and cabazitaxel (11 mg/kg) by IV injection on days 1, 8 and 15 at
cytotoxic agents and are widely used in many chemotherapy regimens. However, treatment with
better
improved
targeting
taxanes is limited by serious adverse toxicities, notably bone marrow toxicity (neutropenia,
0.1 ml/10g body weight (all drug groups were dosed at the pre-determined maximum
pharmacokinetics.
leukopenia and anemia) and hepatotoxicity. Taxanes are poorly water soluble and must be
tolerated dose for each therapy).
formulated with surfactants such as polysorbate, which can cause systemic adverse events (e.g.
anaphylaxis and fluid retention) requiring pre-dosing with corticosteroids. These combined drug
and excipient toxicities limit their clinical use and make them ideal candidates for improvement
using dendrimer technology.
Exp 4 – Abraxane (40 mg/kg), gemcitabine (80 mg/kg), DEP DTX (20 mg/kg), DEP DTX (20
mg/kg) + gemcitabine (80 mg/kg), DEP CTX (7.5 mg/kg) and DEP CTX (7.5 mg/kg) +
gemcitabine (80 mg/kg). Abraxane, DEP DTX and DEP CTX were given via IV injection and
gemcitabine by IP injection on days 1, 8 and 15 at 0.1 ml/10g body weight.
drug
•
Starpharma’s novel dendrimer nanoparticle DEP platform has broad applicability in drug delivery
through improved drug solubility, efficacy and pharmacokinetics, reductions in certain toxicities
(e.g. bone marrow toxicity) and generation of new intellectual property. The DEP platform has
shown reproducible benefits across a wide range of drug classes including small molecules,
peptides and proteins. Currently there are four DEP candidates in the clinic; DEP docetaxel (DEP
DTX), DEP cabazitaxel (DEP CTX), and DEP irinotecan. The fourth DEP candidate, AZD0466, is a
promising Bcl-2/Bcl-xL inhibitor, partnered with AstraZeneca, and is in Phase 1 clinical trials in the
US (See AACR Poster # P-56, P-1718 & Abs 3066).
Throughout experiments all dosing groups were generally well tolerated with mean weight loss
not exceeding 10% and tumour size not exceeding the ethical end point of 1200 mm3. Both criteria
were determined as ethical endpoints for all animals.
Tumour growth data (mean ± standard error of the mean (SEM)) were analysed in GraphPad
Prism. Statistics were carried out using two-way ANOVA followed by Dunnett’s post-hoc test.
Kaplan-Meier survival curves were analysed using the Log-rank (Mantel-Cox) test. For Exp 4 – two-
way ANOVA with repeated measures followed by i) Dunnett’s multiple comparison test to
compare monotherapies to vehicle control and ii) Tukey's multiple comparisons test for
comparisons between treatment groups.
Starpharma’s DEP DTX and DEP CTX are both PEGylated G5 polylysine dendrimers with the drug
conjugated to the surface via a hydrolytically labile linker. Both products have demonstrated
superior efficacy and survival compared to the standard drug formulations in a range of xenograft
cancer models in immunocompromised mice.
1500
m
m
)
3
(Note: If error bars do not display on the graphs, they are not visible because they are shorter than
the height of the symbol).
1000
l
Mean Tumour Volume
Vehicle
Docetaxel 15 mg/kg
DEP docetaxel
28mg/kg
)
Linker
Benefits in combination:
DEP drugs are ideal candidates for combination
therapy including with immuno-oncology (IO)
agents and other chemo. DEP® drugs show
synergistic benefits over the original versions
and given they have been shown to reduce
bone marrow toxicity and do not require pre-
treatment with cortisone, they are particularly
well suited to combine with IO.
Reduced side-effects:
DEP reduces important side effects such as bone marrow toxicity / low white blood
cells (neutropenia) and alopecia (hair loss). DEP® removes the need for toxic
detergents in current formulations, which are highly soluble in aqueous formulations.
Optional Targeting group
Figure 3a
PEG
Mean Tumour Volume
DEP cabazitaxel
(9mg/kg)
Cabazitaxel
(11mg/kg)
Drug
r
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m
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n
a
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M
100 120 140
e
m
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Saline
m
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500
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1200
50
1000
Day
800
m
m
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1200
1000
Survival
800
600
400
200
0
0
20
l
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m
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a
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M
Tumour Growth Monotherapy
DEP cabazitaxel
(10mg/kg)
1400
Figure 4a
)
3
100
Vehicle + Vehicle
DEP® dendrimer
DEP CTX MONOTHERAPY (EXPERIMENT 2)
&
Complete tumour regression was observed in both the DEP CTX and cabazitaxel treated animals
bearing the breast cancer tumour cell line, MDA-MB-231 (Figures 2a and 2b). Tumour regrowth in
the cabazitaxel group was evident by day 43 with 9 of 10 tumours reaching an ethical tumour
volume endpoint by day 98. DEP CTX treatment significantly prolonged mouse survival beyond
Tumour Growth Combination Therapy
that of cabazitaxel (P <0.001).
m
m
1400
Day
100
200
400
600
20
40
60
80
0
0
(
)
3
Vehicle + Gemcitabine
Abraxane + Vehicle
DEP docetaxel + Vehicle
DEP cabazitaxel + Vehicle
Figure 5a
Abraxane
t
n
e
c
r
e
P
small molecule inhibitor of Bcl-2 and Bcl-xL
• Enhanced solubility compared to AZD4320
• Once weekly dosing schedule with PK properties
CONCLUSION AND CLINICAL PROGRESS
In summary, both DEP taxanes are well tolerated and show significantly better efficacy, survival benefits and
40
lower toxicity compared to current standard of care therapies Taxotere® and Jevtana®. Both DEP taxanes
Figure 4c
work well in combination with other agents, which further improves their anticancer effectiveness.
optimized to maximize therapeutic index
Survival Combination Therapy
40
Days
Figure 4d
DEP® cabazitaxel
DEP® docetaxel
100
20
60
80
0
0
l
l
• AZD0466: a dendrimer-conjugate of AZD4320,
Gemcitabine
15
0
0
Vehicle
l
a
v
i
v
r
u
s
100
50
a
v
i
Gemcitabine
Abraxane
DEP® docetaxel
DEP® cabazitaxel
AZD0466 active moiety potently reduces
viability of heme cancer cell lines, SCLC cell
lines and primary leukemic cells
A: Sanger Panel
Figure 4d
B: AML PDX xenograft
s
l
l
e
c
100
i
c
m
e
k
u
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l
+
3
3
D
C
+
5
4
D
C
%
w
o
r
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a
m
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b
n
i
80
60
40
20
0
V ehicle
A R A-C
V enetoclax
V enetoclax+ A Z A
A R A-C + A Z D 0466
(A) AZD0466 induces dose dependent tumor regression
and cleaved caspase 3 induction. (B) AZD0466 in
combination with AraC decreases tumor burden in bone
marrow of mice implanted with primary AML cells.
AZD0466 combinations drive deep and durable
response in preclinical DLBCL models
A: OCI-LY10 ABC DLBCL xenograft
)
3
m
m
l
(
e
m
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o
V
r
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m
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1500
dosing period
Vehicle
1000
500
0
20
Acalabrutinib 12.5 mg/kg BID
AZD0466 103 mg/kg qw
AZD0466 103 mg/kg +
Acalabrutinib 12.5 mg/kg
40
60
80
Days post implant
B: SUDHL-4 GCB DLBCL xenograft
1500
1000
Vehicle
AZD0466 172 mg/kg
Rituximab 10 mg/kg
AZD0466 34 mg/kg + Rituximab
AZD0466 103 mg/kg + Rituximab
AZD0466 172 mg/kg + Rituximab
)
3
m
m
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l
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±
n
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G
0
25
50
75
Days Post Dosing
100
125
150
B: Beat AML Screen
AZD0466 is more efficacious in SCLC PDX models
compared to standard-of-care
A: SCLC PDX screen
AZD0466 103 mpk
AZD0466 355 mpk
Venetoclax 100mpk
Etoposide/Platinum
100
AACR Poster #1715: Anti-cancer activity of a SN-38 nanoparticle, DEP® irinotecan, in
human colon and pancreatic cancer xenograft models
e
s
a
b
m
o
f
500
e
n
50
0
i
l
l
David J Owen1, Brian D. Kelly1, Victoria McLeod2, Rachael Walker2, Jeannette Schreuders2, Susan Jackson2, Michael Giannis1, Christine Dietinger1, Shirley Xia1, Anne Cargill1, Aynaz
Seta1, Richard Hufton1, Graham Heery1, Carleen Cullinane2 1. Starpharma Pty Ltd, Melbourne, Australia, 2. Peter MacCallum Cancer Centre, Melbourne, Australia
e
m
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o
V
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-50
e
g
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a
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t
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P
Improved efficacy:
S C L C-04
S C L C-02
DEP® improves anti-cancer efficacy through
(A) Subset of cancer cell lines sensitive to single agent
better
improved
targeting
AZD4320 (active moiety of AZD0466) in Sanger panel.
pharmacokinetics.
(B) Broader activity of AZD4320 in primary AML patient
samples compared to venetoclax (red box).
&
No response
drug
DENDRIMER CONJUGATES AS THERAPEUTICS
S C L C-12
S C L C-08
L U-5223
S C L C-09
S C L C-11
S C L C-05
S C L C-06
DEP® dendrimer
S C L C-07
S C L C-14
S C L C-13
S C L C-03
S C L C-10
-100
TGI/Regression 103 mpk
B: SCLC molecular analysis
INTRODUCTION
Starpharma’s novel polylysine dendrimer-based DEP® platform has broad commercial
applicability in drug delivery by enhancing the therapeutic utility of drugs through
improved solubility, efficacy and pharmacokinetics, reductions in certain toxicities (e.g.
bone marrow toxicity) and generation of new intellectual property. The novel DEP
platform has shown reproducible advantages across a wide range of drug classes and can
be utilised with both small molecule drugs, peptides and proteins. Currently there are four
Neutrophil count overtime for
DEP candidates in the clinic; DEP docetaxel, DEP cabazitaxel, and DEP irinotecan. The
DEP cabazitaxel vs cabazitaxel
AZD0466 has potent antitumor activity in
fourth DEP candidate, AZD0466,
is a promising Bcl-2/Bcl-xL inhibitor, partnered with
AstraZeneca, and is in Phase 1 clinical trials in the US (See AACR Poster # P-56, P-1718 &
preclinical hematological models
Abs 3066).
.
A: RS4;11 ALL xenograft
2500
is a pro-drug, which,
Conventional
following intravenous
administration, needs to be converted in the liver to the active anti-cancer agent, known
2000
as SN-38 (Figure 1). In contrast, Starpharma’s DEP irinotecan (Starpharma’s third internal
1500
DEP® candidate to enter the clinic) incorporates the active irinotecan derivative SN-38,
avoiding the need for hepatic conversion and avoiding the variability in SN-38 for
1000
therapeutic effect. DEP irinotecan is expected to accumulate preferentially in tumour
500
tissue to exert its superior anti-tumour effect, as is seen with DEP docetaxel, DEP
0
cabazitaxel and other DEP conjugates.
AZD4320
Active moiety
irinotecan (Campostar®)
Vehicle
AZD0466 10 mg/kg qw
3mg/kg AZD4320
AZD0466 103 mg/kg qw
30mg/kg AZD4320
AZD0466 34 mg/kg qw
10mg/kg AZD4320
Figure 5b
M
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±
n
a
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(
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10
Days
Dosing Period
3
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e
s
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s
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C
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a
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C
)
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l
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e
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d
o
f
(
DEP cabazitaxel
Vehicle only
Cabazitaxel
m
m
100
0.1
20
24
48
10
5
3
8
3
1
)
3
l
50
60
70
80
90
2
1
L
/
9
0
1
x
t
n
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C
l
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h
p
o
r
t
u
e
N
Days post implant
34 mg/kg AZD0466
103 mg/kg AZD0466
72
8
Time (h) post dose
24
48
72
Benefits in combination:
DEP® drugs are ideal candidates for combination
therapy including with immuno-oncology (IO)
agents and other chemo. DEP® drugs show
synergistic benefits over the original versions
and given they have been shown to reduce
bone marrow toxicity and do not require pre-
treatment with cortisone, they are particularly
well suited to combine with IO.
1000
10000 R
e
l
e
a
s
e
d
t
u
m
o
r
A
Z
D
4
3
2
0
100
10
M
(A) Monotherapy activity of AZD0466 in a
Reduced side-effects:
population-based PDX screen. (B) AZD0466
DEP® reduces important side effects such as bone marrow toxicity / low white blood
response is predominantly associated with SCLC-A
cells (neutropenia) and alopecia (hair loss). DEP® removes the need for toxic detergents
and SCLC-P subtypes in cell lines and PDX models
in current formulations, which are highly soluble in aqueous formulations.
Optional Targeting group
1
R
e
g
r
e
s
s
o
n
i
Linker
(MCL1)
(BCL2A1)
(BCL2L2)
(BCL2L1)
(BCL2L11)
(BCL2)
PEG
Drug
(A) Combination of AZD0466 with BTK inhibitor
Acalabrutinib drives durable regression in ABC
DEP IRINOTECAN + CETUXIMAB (EXPERIMENT 2)
DLBCL. (B) AZD0466 combined with rituximab results
In the irinotecan-refractory human colon cancer model HT-29 xenograft, the combination of cetuximab
in complete and durable regressions in GCB DLBCL
(Erbitux®) and irinotecan displayed limited tumour inhibition (Figures 6 and 7). In contrast, DEP irinotecan
in combination with cetuximab resulted in significantly enhanced anti-cancer efficacy and survival despite
Conclusions
the DEP irinotecan doses being approximately one third (low dose) and approximately two thirds (high
dose) of the maximum tolerated dose for this combination.
• AZD0466 and its active moiety AZD4320
demonstrate differentiated activity from the Bcl-2
selective inhibitor venetoclax in preclinical models
of SCLC and AML.
• AZD0466 has potential as a combinatorial agent
to increase the depth and duration of response to
novel and standard of care therapies, as
Fig. 6
demonstrated in models of DLBCL.
Fig. 7
DEP IRINOTECAN + OLAPARIB (EXPERIMENT 3)
References
DEP irinotecan showed a significant and dose-related inhibition of growth in the irinotecan-refractory
1. Design and optimization of a dendrimer-conjugated dual Bcl-2/Bcl-xL
human colon cancer (HT-29) xenograft (Figure 8). At day 28, standard irinotecan showed modest tumour
inhibitor, AZD0466, with improved therapeutic index, Ashford M et al,
growth inhibition of 33% versus the vehicle control (P<0.05). Treatment with DEP irinotecan provided a
AACR (2020)
significantly greater level of inhibition – 62% for low dose and 97% for high dose (P<0.0001).
Figure 3b
Vehicle + Vehicle
Abraxane + Gemcitabine
DEP docetaxel + Gemcitabine
DEP cabazitaxel + Gemcitabine
Saline
40
60
Cabazitaxel (11mg/kg)
80
Day
100
DEP cabazitaxel (9mg/kg)
50
v
r
u
s
Both DEP taxanes are water-soluble and do not require surfactants such as polysorbate 80 for dissolution
which negates the need for pretreatment with corticosteroids in the clinical setting. Of particular significance
is the lack of neutropenia in preclinical studies, the major dose-limiting toxicity of current taxane therapies.
This lack of bone marrow toxicities may allow for more effective combination treatments when used with
other anticancer agents, including immunotherapies.
Vehicle
Abraxane + Gemcitabine
DEP® docetaxel
+ Gemcitabine
DEP® cabazitaxel
+ Gemcitabine
60
Supported by
Irintotecan
t
n
e
c
r
e
P
20
80
0
0
40
Days
DEP® irinotecan
SN-38
In clinical studies both candidates have experienced significantly fewer side effects such as nausea and bone
marrow toxicity (neutropenia, anaemia, thrombocytopenia) than are typically seen with conventional
taxanes, and no anaphylaxis has been observed.
Fig. 1
REMOVE IF NOT PERMITTED
Presented at the AACR Virtual Annual Meeting II:E-Poster Submission BCL-2 Family and Mitochondrial Apoptosis Session P-56, 22-23 June 2020
DEP IRINOTECAN MONOTHERAPY (EXPERIMENT 1)
Complete tumour regression and 100% survival was observed in DEP irinotecan treated animals
bearing the colon cancer tumour cell line, SW620 (Figures 2 and 3). The tumour inhibition and survival
effects of DEP irinotecan were markedly improved compared with the irinotecan treated group and the
differences were highly statistically significant (P<0.0001 and P<0.0045, respectively)
0
0
0
0
60
20
80
Day
DEP CTX MONOTHERAPY (EXPERIMENT 3)
Complete tumour regression and 100% survival with no tumour regrowth out to day 126, was
observed in DEP CTX treated animals bearing the prostate cancer tumour cell line, DU145 (Figures
3a and 3b). The tumour inhibition and survival effects of DEP CTX were markedly improved
compared with the cabazitaxel treated group where tumour regrowth was evident in all animals
by day 60. The differences were highly statistically significant (P<0.0001).
DEP CTX MONOTHERAPY (EXPERIMENT 4)
Results from a human pancreatic cancer model (CAPAN-1) (Figures 4a – 4d) showed;
Abraxane administered alone and in combination with gemcitabine inhibited tumour growth to a similar
extent (Percent tumour growth inhibition on Day 37 = 85% and 81 %, respectively).
DEP CTX and DEP DTX treatment inhibited tumour growth more effectively than Abraxane (P= 0.004,
Abraxane vs DEP DTX; P <0.0001, Abraxane vs DEP CTX).
DEP CTX given alone and in combination with gemcitabine induced complete regression of CAPAN-1 tumours
for the duration of the study.
DEP DTX given alone and in combination with gemcitabine resulted in complete tumour regression to day 58,
after which slow tumour regrowth occurred in the DEP DTX cohort, but not the gemcitabine combination
cohort, treated mice (P<0.0001, t-test, Day 107 tumour volume).
Vehicle
Docetaxel
15 mg/kg
DEP docetaxel
28 mg/kg
Figure 1b
Figure 1a
Survival
l
a
v
i
v
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S
t
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c
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100
150
100
50
50
METHODS
Balb/c nude mice were inoculated subcutaneously with a cancer cell line
Exp 1 – HT-29 or SW620; 10 and 6 mice/group respectively
•
Exp 2 –HT-29; 8 mice/group
•
Exp 3 –HT-29; 10 mice/group
•
Mean TV
1600
)
3
m
m
1200
Vehicle
Irinotecan
100
l
a
v
i
v
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u
s
t
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c
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P
DEP CTX and DEP DTX are two of four clinical stage products from Starpharma’s DEP platform. Both
compounds are currently under investigation in Phase 2 clinical trials against a broad range of tumour types
at a number of leading UK cancer hospitals including; Guy’s and St Thomas’, University College London
Hospital, Imperial College London, Velindre Cancer Centre, The Christie, The Beatson, The Leeds Teaching
Hospital and The Newcastle upon Tyne.
Design and optimisation of a dendrimer-conjugated dual Bcl-2/Bcl-xL
inhibitor, AZD0466, with improved therapeutic index
Marianne B Ashford1, Srividya B. Balachander2, Lorraine Graham1, Francis D Gibbons2, Iain Grant3, Kathryn J. Hill3, Alexander R. Harmer4, Sonya Gales4,
Sean Redmond5, Brian Kelly7, William McCoull6, Shenghua Wen2, Martin Wild6, Eric Gangl2, David J. Owen7, Barry R. Davies6
1 Pharmaceutical Sciences, R&D, AstraZeneca, Macclesfield, UK. 2Oncology R&D, AstraZeneca, Boston, US. 3Pharmaceutical Technology and Development, AstraZeneca, Macclesfield, UK. 4Clinical Pharmacology & Safety Sciences, R&D, AstraZeneca,
Cambridge, UK. 5Clinical Pharmacology & Safety Sciences, R&D, AstraZeneca, Boston, US. 6Oncology R&D, AstraZeneca, Cambridge, UK. 7Starpharma, Melbourne, VIC, Australia.
Exp 1 – DEP irinotecan (15mg/kg) and irinotecan (90mg/kg) IV once per week on days 1,
8 and 15 (all drug groups were dosed at the pre-determined maximum tolerated dose
for each therapy).
Mice were dosed with saline as control and;
DEP irinotecan was also shown to be very effective in the HT-29 colon cancer model, which typically
responds poorly to irinotecan.
DEP iriniotecan
100 120 140
p.o. olaparib daily, 5 days a week
Fig. 2
Fig. 3
80
Day
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400
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i.v. DEP ® irinotecan or irinotecan (dosed on days 1, 8, 15)
Fig. 8
P-1718
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Mean TV
5 mg/kg
8 mg/kg
***
***
*
*
***
***
Vehicle- Control
Olaparib (50 mg/kg)
Irinotecan (80 mg/kg)
Irinotecan (80 mg/kg) + Olaparib
DEP irinotecan (5mg/kg)
DEP irinotecan (5mg/kg) + Olaparib
DEP irinotecan (8mg/kg)
DEP irinotecan (8mg/kg) + Olaparib
The combination of DEP® irinotecan
and olaparib was synergistic, leading
to tumour regression
30
40
Day
50
60
70
80
At Day 28 comparision to vehicle
* P<0.05
*** P<0.0001
METHODS AND RESULTS
Mouse xenograft studies were carried as following:
Balb/c nude mice were inoculated subcutaneously with MDA-MB-231 (breast) cancer cell
line (Exp 1 and 2, 10 mice/group).
SCID mice were inoculated subcutaneously with DU145 (prostate) cancer cell line (Exp 3, 10
mice/group).
NOD-scid interleukin-2 receptor gamma chain null were inoculated subcutaneously with
CAPAN-1 (colon) cancer cell line (Exp 4, 9 mice/group).
In each experiment mice were dosed with saline as control and;
•
•
•
•
Exp 1 – DEP DTX (28 mg/kg) and docetaxel (15 mg/kg) by IV injection on days 1, 8 and 15 at
0.1 ml/10g body weight (all drug groups were dosed at the pre-determined maximum
tolerated dose for each therapy).
Exp 2 – DEP CTX (10 mg/kg), and cabazitaxel (9 mg/kg) by IV injection on days 1, 8 and 15 at
0.1 ml/10g body weight (all drug groups were dosed at the pre-determined maximum
tolerated dose for each therapy).
Exp 3 – DEP CTX (10 mg/kg), and cabazitaxel (11 mg/kg) by IV injection on days 1, 8 and 15 at
0.1 ml/10g body weight (all drug groups were dosed at the pre-determined maximum
tolerated dose for each therapy).
Exp 4 – Abraxane (40 mg/kg), gemcitabine (80 mg/kg), DEP DTX (20 mg/kg), DEP DTX (20
mg/kg) + gemcitabine (80 mg/kg), DEP CTX (7.5 mg/kg) and DEP CTX (7.5 mg/kg) +
gemcitabine (80 mg/kg). Abraxane, DEP DTX and DEP CTX were given via IV injection and
gemcitabine by IP injection on days 1, 8 and 15 at 0.1 ml/10g body weight.
Throughout experiments all dosing groups were generally well tolerated with mean weight loss
not exceeding 10% and tumour size not exceeding the ethical end point of 1200 mm3. Both criteria
were determined as ethical endpoints for all animals.
Tumour growth data (mean ± standard error of the mean (SEM)) were analysed in GraphPad
Prism. Statistics were carried out using two-way ANOVA followed by Dunnett’s post-hoc test.
Kaplan-Meier survival curves were analysed using the Log-rank (Mantel-Cox) test. For Exp 4 – two-
way ANOVA with repeated measures followed by i) Dunnett’s multiple comparison test to
compare monotherapies to vehicle control and ii) Tukey's multiple comparisons test for
comparisons between treatment groups.
(Note: If error bars do not display on the graphs, they are not visible because they are shorter than
the height of the symbol).
0
0
25
50
75
100
125
Day
0
0
100
50
Time (Days)
150
DEP DTX MONOTHERAPY (EXPERIMENT 1)
Complete tumour regression was observed in both the DEP DTX (until day 75) and docetaxel (until
day 45) treated animals bearing the breast cancer tumour cell line, MDA-MB-231 (Figure 1a). The
tumour inhibition and survival effects of DEP DTX were significantly improved compared with the
docetaxel treated group (Figures 1a and 1b; P< 0.007 and 0.007 respectively).
DEP TOXICITY ASSESSMENT;
The relative toxicities of the DEP DTX formulation and docetaxel were compared in a study where
equivalent doses (based on docetaxel; 9mg/kg) were administered to male and female rats by intravenous
injection on Day 0. Blood samples were taken at day 0 prior to dosing, then at days 7, 14 and 21. The level
of neutrophils, expressed as the mean absolute count across all animals in the dose group (n=6 per group)
at each time point, are shown in Figures 5a and 5b. Of particular significance was the absence of
neutropenia for the DEP taxane candidates.
Introduction
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Mean Tumour Volume
Figure 2a
Survival
Figure 2b
1400
1200
1000
800
600
400
200
0
Saline
Cabazitaxel
(9mg/kg)
DEP cabazitaxel
(10mg/kg)
0 10 20 30 40 50 60 70 80 90 100 110
Day
100
50
l
a
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Saline
Cabazitaxel (9mg/kg)
DEP cabazitaxel
(10mg/kg)
50
Day
100
Neutrophil count overtime for
DEP docetaxel vs docetaxel
Neutrophil count overtime for
DEP cabazitaxel vs cabazitaxel
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/
9
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10
Days
Figure 5a
DEP CTX MONOTHERAPY (EXPERIMENT 2)
Complete tumour regression was observed in both the DEP CTX and cabazitaxel treated animals
bearing the breast cancer tumour cell line, MDA-MB-231 (Figures 2a and 2b). Tumour regrowth in
the cabazitaxel group was evident by day 43 with 9 of 10 tumours reaching an ethical tumour
volume endpoint by day 98. DEP CTX treatment significantly prolonged mouse survival beyond
that of cabazitaxel (P <0.001).
)
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500
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Mean Tumour Volume
Figure 3a
Survival
Figure 3b
Saline
Cabazitaxel
(11mg/kg)
DEP cabazitaxel
(9mg/kg)
0
20
40
60
100 120 140
80
Day
100
50
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Saline
Cabazitaxel (11mg/kg)
DEP cabazitaxel (9mg/kg)
50
100
150
DEP CTX MONOTHERAPY (EXPERIMENT 3)
Complete tumour regression and 100% survival with no tumour regrowth out to day 126, was
observed in DEP CTX treated animals bearing the prostate cancer tumour cell line, DU145 (Figures
3a and 3b). The tumour inhibition and survival effects of DEP CTX were markedly improved
compared with the cabazitaxel treated group where tumour regrowth was evident in all animals
by day 60. The differences were highly statistically significant (P<0.0001).
CONCLUSION AND CLINICAL PROGRESS
In summary, both DEP taxanes are well tolerated and show significantly better efficacy, survival benefits and
lower toxicity compared to current standard of care therapies Taxotere® and Jevtana®. Both DEP taxanes
work well in combination with other agents, which further improves their anticancer effectiveness.
Both DEP taxanes are water-soluble and do not require surfactants such as polysorbate 80 for dissolution
which negates the need for pretreatment with corticosteroids in the clinical setting. Of particular significance
is the lack of neutropenia in preclinical studies, the major dose-limiting toxicity of current taxane therapies.
This lack of bone marrow toxicities may allow for more effective combination treatments when used with
other anticancer agents, including immunotherapies.
In clinical studies both candidates have experienced significantly fewer side effects such as nausea and bone
marrow toxicity (neutropenia, anaemia, thrombocytopenia) than are typically seen with conventional
taxanes, and no anaphylaxis has been observed.
DEP CTX and DEP DTX are two of four clinical stage products from Starpharma’s DEP platform. Both
compounds are currently under investigation in Phase 2 clinical trials against a broad range of tumour types
at a number of leading UK cancer hospitals including; Guy’s and St Thomas’, University College London
Hospital, Imperial College London, Velindre Cancer Centre, The Christie, The Beatson, The Leeds Teaching
Hospital and The Newcastle upon Tyne.
Exp 2 – DEP irinotecan (low and high dose), and irinotecan (35 mg/kg) IV once per week
and cetuximab (Erbitux® 25 mg/kg) IP twice per week.
Irinotecan and cetuximab
(Erbitux®) were dosed at the pre-determined maximum tolerated dose for the
combination; however, DEP irinotecan doses were low dose (5 mg/kg) and high dose (10
mg/kg) of the maximum tolerated dose for this combination.
Figure 1 Structure of AZD4320-dendrimer conjugates
Exp 3 – DEP irinotecan (low and high dose), and irinotecan (80 mg/kg) IV once per week.
Olaparib (50 mg/kg, Lynparza®) dosed PO (per oral) five times per week (5 days on/2
days off).
Irinotecan and olaparib were dosed at the pre-determined maximum
tolerated dose for the combination; however, DEP irinotecan doses were deliberately
reduced in this experiment to allow for demonstration of synergy and were low dose (5
mg/kg) and high dose (8 mg/kg) of the maximum tolerated dose of single agent when
used in this combination.
Tumour growth data (mean ± standard error of the mean (SEM)) were analysed in GraphPad
Prism
properties
•
Exp 1 and Exp 2 – two-way ANOVA followed by Dunnett’s post-hoc test. Kaplan-Meier
survival curves were analysed using the Log-rank (Mantel-Cox) test.
Exp 3 – two-way ANOVA with repeated measures followed by i) Dunnett’s multiple
comparison test to compare monotherapies to vehicle control and ii) Tukey's multiple
comparisons test for comparisons between treatment groups.
(Note: If error bars do not display on the graphs, they are not visible because they are shorter
than the height of the symbol).
Results
Efficacy & Tolerability of Initial Conjugates
Three drug-dendrimer conjugates had measured
release half-lives of 1.7 h (SPL-8933), 5.4 h (SPL-
8932), 217 h (SPL-8931). The results of the efficacy
study are shown in Figure 2. SPL-8933 and SPL-8932
with the faster release half-life initially produced tumor
regression with similar kinetics to AZD4320 however
the conjugate with the slowest release rate, SPL-8931,
showed no efficacy.
Figure 2 Efficacy of AZD4320 and initial drug dendrimer
conjugates
•
15
20
Cabazitaxel
Vehicle only
DEP cabazitaxel
Figure 5b
physicochemical
Dual Bcl-2/Bcl-xL inhibitors are expected to deliver
therapeutic benefit in many hematological and solid
tumors, but their clinical application has been limited
by tolerability issues,
including thrombocytopenia.
AZD4320, a potent dual Bcl-2/Bcl-xL inhibitor,
showed good efficacy but encountered dose limiting
cardiovascular toxicity in preclinical species, and had
challenging
which
prevented its clinical development. Nanocarriers can
provide prolonged circulation time, controlled release,
tumor accumulation and retention. Consequently,
they have been explored to improve the therapeutic
index of small molecules in oncology.
This work describes the design and development of
AZD0466, a novel drug-dendrimer conjugate, where
AZD4320 is chemically conjugated to Starpharma’s
DEP® dendrimer platform, a 5-generation PEGylated
poly-lysine dendrimer via a hydrolytically labile linker
(Figure 1). Release of AZD4320 is through hydrolytic
cleavage of the linker , which is characterized by a
“release half-life”, defined as the time to release 50%
of
the active moiety. This release half-life can be
modified through linker design. This work describes
the optimisation of the release half life
•
Methods
• Initially three drug-dendrimer conjugates with a
half-lives were
range
synthesised and their release half-lives measured
• Efficacy was investigated in C.B-17 SCID mice
of AZD4320
release
bearing RS4;11 tumors
• Cardiovascular parameters and tolerance were
assessed in a telemetered rat model
• A mathematical model was developed and used to
optimize the desired release rate of
the active
moiety, AZD4320, from the dendrimer conjugate for
maximal
therapeutic index in terms of preclinical
anti-tumor efficacy and cardiovascular profile.
• AZD0466, with a modelled optimum release half-life
of 25.5 h, was synthesised
• Efficacy studies were carried out
in RS4;11
xenograft model and cardiovascular studies carried
out in rat and dog telemetered models
In this study, irinotecan did not achieve appreciable anti-cancer activity compared to saline, whereas
tolerability study only SPL-8931,
DEP irinotecan exhibited a significant anti-cancer effect (Figure 4). DEP irinotecan was significantly
more effective than irinotecan (P<0.0001) for both enhanced efficacy and survival and was well
tolerated in this model (see Figures 4 and 5).
In the rat
the
conjugate with the slowest release half-life and no
efficacy, showed no effect on QRS amplitude (Figure
3)
Figure 3 Cardiovascular Effects of AZD4320 and initial drug
dendrimer conjugates
Fig. 4
Fig. 5
Mathematical Modelling Guided Optimization
A mathematical model was developed to describe
aspects of the in-vivo disposition of AZD4320 dosed
as drug dendrimer conjugates.
Output from the modelling allows the prediction of the
maximum released concentration of AZD4320 in both
tumor and plasma as a function of
the release
rate. The highest tumor Cmax is predicted for a drug
dendrimer conjugate with a 5 h release half-life but this
is at the expense of high systemic levels. A release
half-life in the range 20 – 30 h results in the best
compromise between tumor and systemic Cmax
;
maximising
efficacy whilst minimising
cardiovascular risk (Figure 4).
AZD0466 with a release half-life of 25.5 h falls within
the optimum range identified from the mathematical
modelling.
potential
Figure 4 (a and b) Simulated dependence of
released AZD4320 tumour and plasma Cmax on release half-
life (per unit dose)
(c) Optimisation Index (Therapeutic Index per unit dose) as a
function of release half-life.
Olaparib, dosed either as a monotherapy, or dosed in combination with irinotecan, provided little effect
on tumour growth. However, when olaparib was used in combination with DEP irinotecan, the enhanced
anti-tumour activity observed was greater than the effect of each individual treatment alone. This
statistically significant synergistic effect was observed in both the low-dose and high-dose DEP irinotecan +
olaparib treated groups (P<0.0001).
AZD0466 was shown to be efficacious in the RS4; 11
xenograft model (Figure 5).
Figure 5 Efficacy of AZD0466 in RS4;11 tumour xenograft
model at various doses
Notwithstanding the statistical significance of the efficacy of DEP irinotecan alone, the addition of olaparib
to DEP irinotecan provided an even greater level of tumour efficacy, with regression of tumours seen with
both doses, as illustrated in figure 8 (P<0.0001). This was despite being dosed at significantly lower levels
than the maximum tolerated dose (most efficacious dose). No other groups exhibited tumour regression
in the refractory colon cancer model.
CLINICAL PROGRESS
DEP irinotecan is Starpharma’s third internal DEP clinical candidate and recently completed the phase 1
portion of its development having met its objective of evaluating safety, tolerability, pharmacokinetics and
preliminary efficacy data, and identifying a recommended phase 2 dose.
Results from the phase 1 study demonstrated that DEP irinotecan was well-tolerated and patients generally
experienced less severe side effects, including no cases of severe diarrhea, which is particularly
problematic (FDA black box warning) with the marketed form of irinotecan (Camptosar®)
Encouraging efficacy signals observed in 50% of evaluable patients to date – not only in patients with
colorectal cancer, for which conventional irinotecan is approved, but also in patients with breast and
pancreatic cancer. DEP irinotecan phase 2 clinical trial is currently underway at leading UK hospitals.
AZD0466 had no effect on QRS amplitude in a rat
telemetry study (Figure 6).
In the dog telemetry study
60 mg/kg AZD0466 (equivalent to 18 mg/kg AZD4320)
was not associated with any adverse clinical signs and
gave significantly less decrease in QRS amplitude
than 1 mg/kg AZD4320 (Figure 7).
Figure 6 Effects of AZD0466 on QRS amplitude in rat
Figure 7 Effects of AZD0466 on QRS amplitude in dog versus
AZD4320
Conclusions
AZD4320-dendrimer
The
AZD0466,
identified in this study has delivered an improved
therapeutic index enabling this promising Bcl-2/Bcl-xL
inhibitor to progress into clinical development.
conjugate,
Supported by
Presented at the AACR Virtual Annual Meeting II:E-Poster Submission, Targeted Delivery of Small Molecules and Biologics 1, 22-24 June 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 7
DEP® irinotecan: Phase 2► Commenced first human clinical trial for DEP® irinotecan, a highly novel SN-38 nanoparticle► Successful completed phase 1 with promising efficacy signals in >50% evaluable patients► Commenced phase 2 and efficacy signals already observedStarpharma commenced its phase 1/2 clinical trial for DEP® irinotecan, a highly novel SN-38 nanoparticle. The escalation part of the trial was conducted at leading UK cancer centres: The Christie, The Royal Marsden, and Newcastle Freeman Hospital. Phase 1 was successfully completed ahead of schedule in May 2020, with promising efficacy signals in >50% evaluable patients and phase 2 commenced immediately after.Phase 1 enrolled seven patients with colorectal cancer, pancreatic cancer, and breast cancer, who were each dosed with up to 10 cycles of DEP® irinotecan. DEP® irinotecan was well-tolerated and patients generally experienced less severe side-effects, including no cases of severe diarrhoea, which is particularly problematic and is the basis of an FDA black box warning for the marketed forms of irinotecan. Encouraging efficacy signals were observed in >50% of evaluable patients, and in all three tumour types enrolled, despite the fact that enrolled patients were heavily pre-treated – the majority with more than 10 cycles and some with up to 100+ cycles of prior treatment.One patient case study from the DEP® irinotecan trial is detailed below.PATIENT PROFILETREATMENT RESPONSE Diagnosis: stage IV breast cancer patient with extensive liver metastases► Extensive metastases including in the liver► Heavily pre-treated – more than 100 cycles of 11 different treatment regimens Patient has received a total of 16 cycles of DEP® irinotecan to date► Response seen after just 3 cycles of treatment► Prolonged stable disease >45 weeks► Well tolerated DEP® posters presented at the 2020 AACR Annual MeetingFive posters featuring products based on Starpharma’s DEP® platform were presented at the AACR (American Association for Cancer Research) Annual Meeting in June 2020.The AACR Annual Meeting brings together leading cancer research and medicine from institutions all over the world and is an important forum for both raising product awareness and commercial interactions.Three posters covered AstraZeneca’s first DEP® oncology product in the clinic, AZD0466, and two posters showcased Starpharma’s DEP® docetaxel, DEP® cabazitaxel and DEP® irinotecan.These posters highlight the reproduceable improvements in efficacy and therapeutic index enabled by the DEP® technology that are key benefits of the platform seen in Starpharma’s internal products and partner programs.The AACR Annual Meeting is one of the most widely attended cancer research meetings each year. AACR 2020 was held as a virtual event due to COVID-19 restrictions. In 2020 the two-day virtual meeting attracted more than 61,000 registrants from 140 countries, including cancer scientists, industry personnel and clinicians.
Lung, prostate & other cancer types
DEP® DOCETAXEL
Prostate, ovarian & other cancer types
DEP® CABAZITAXEL
Colorectal, pancreatic & other cancer types
DEP® IRINOTECAN
Pancreatic, lung & other cancer types
DEP® GEMCITABINE
Antibody Drug Conjugates
DEP® HER-2 ADC
Radiotherapeutic
DEP® LUTETIUM
Antiviral
DEP® ANTIVIRAL
PHASE 2
PHASE 2
PHASE 2
PRECLINICAL
PRECLINICAL
BREAST
LUNG
CANCER
(NSCLC)
PANCREATIC
PRECLINICAL
OVARIAN
PRECLINICAL
PROSTATE
COLORECTAL
1 Nuclear medicine world market report & directory, MEDraysintell, 2016
8 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
DEP® Pipeline DEP® radiotherapeuticsThe versatility of Starpharma’s DEP® platform means it can be used with a wide range of therapies and types of molecules (e.g. small molecule drugs, peptides, antibodies, radioisotopes). This flexibility has allowed Starpharma to develop a range of DEP® radiotherapeutics as well as its other DEP® programs. In keeping with other DEP® products, DEP® radiotherapeutic products have the potential to target cancer tissue, reduce off-target toxicity and enhance efficacy. They can also be used alone or in combination with other therapeutic approaches and provide additional commercial opportunities for co-development of therapeutic and diagnostic products.During the year, Starpharma’s first DEP® radiotherapy candidate, DEP® lutetium was tested in a human prostate cancer model (DU-145) and showed highly statistically significant anti-cancer activity, with tumour regression and 100% survival. DEP® lutetium is a Starpharma patented nanoparticle that incorporates the radioisotope, Lutetium-177, on a DEP® dendrimer scaffold.Radiopharmaceuticals are a rapidly developing area of cancer treatment and diagnosis, and this area has recently generated several high-value transactions. Sales in the category are estimated to grow rapidly with forecast sales of $12–15 billion by 20301. DEP® lutetium is one of several promising DEP® radiotherapeutic candidates in development by Starpharma.DEP® gemcitabineStarpharma advanced the development of a further new exciting internal DEP® candidate, DEP® gemcitabine, during the year.DEP® gemcitabine is a DEP® version of Lilly’s Gemzar® (gemcitabine) – a well-established anti-cancer drug, which had peak sales of US$1.7 billion. Gemzar® (gemcitabine) is one of the leading chemotherapeutic drugs used to treat pancreatic cancer – and there are otherwise limited options for these patients. Gemzar® is administered as a monotherapy or in combination with other therapies such as Abraxane®. Pancreatic cancer is a leading cause of cancer death, with a 1-year survival rate of 20%, and a 5-year survival rate of only 7% and therefore represents a significant unmet need.DEP® gemcitabine demonstrated significantly enhanced anti-tumour activity compared with Gemzar® (conventional gemcitabine), both alone and in combination with Nab-paclitaxel (Abraxane®) in a preclinical human pancreatic cancer model. Pancreatic cancer represents a significant unmet need with very low response rates to treatment.DEP® HER-2 ADCBuilding on Starpharma’s previously announced internal Targeted DEP® programs, the company developed a novel DEP® HER-2 Targeted ADC (antibody drug conjugate).This DEP® HER-2 Targeted ADC demonstrated significant tumour regression and 100% survival in a preclinical human ovarian cancer model and significantly outperformed leading HER-2 products, Kadcyla®, a HER-2 targeted ADC, and Herceptin® itself.Starpharma’s novel DEP® HER-2 Targeted ADC binds to the same target (HER-2) as the leading monoclonal antibody cancer therapy, Herceptin®, which had 2018 sales in excess of US$7 billion. The use of ADCs is an innovative and cutting-edge area in cancer therapy that continues to grow and the company also has a number of partner programs in the area.Starpharma is developing multiple other DEP® candidates to add to its high-value preclinical pipeline. Starpharma's internal DEP® pipeline & other development programsStarpharma’s DEP® products address significant needs and opportunities in oncology. Lung, prostate & other cancer types
DEP® DOCETAXEL
Prostate, ovarian & other cancer types
DEP® CABAZITAXEL
Colorectal, pancreatic & other cancer types
DEP® IRINOTECAN
Pancreatic, lung & other cancer types
DEP® GEMCITABINE
Antibody Drug Conjugates
DEP® HER-2 ADC
Radiotherapeutic
DEP® LUTETIUM
Antiviral
DEP® ANTIVIRAL
PRECLINICAL
PRECLINICAL
PRECLINICAL
PRECLINICAL
PHASE 2
PHASE 2
PHASE 2
CEO'S REPORT
Partnered DEP® programs
Starpharma’s business model provides pharmaceutical partners
with access to its novel DEP® drug delivery platform under
commercial licences – creating significant leverage and optionality
in returns for Starpharma.
Starpharma assists its partners by creating DEP® versions of
their molecules, initially under a research collaboration, with the
potential to licence rights to Starpharma for development and
commercialisation. DEP® provides partners with a number of
benefits: it can assist partners as a lifecycle management tool
by improving their existing drugs – to increase sales and margins
through differentiated product benefits and new intellectual
property. For partners developing novel drugs that have issues
(e.g. toxicity, insolubility, suboptimal pharmacokinetics etc), the
DEP® platform can address such suboptimal drug characteristics
that would otherwise limit future use and patient acceptability.
Starpharma’s research team provide highly specialised
expertise in dendrimers to partner programs. Having a
TGA licence and in-house capabilities also allows
Starpharma to accelerate the development of DEP®
products, scale up products and facilitate partnered
programs whilst generating additional revenues.
AstraZeneca commenced its first DEP® trial
In December 2019, AstraZeneca commenced its first-in-human
phase 1 clinical trial for AZD0466 in a range of cancers, at multiple
sites in the US. Most recently, MD Anderson Cancer Center,
the internationally renowned cancer center in Houston (Texas),
opened as a trial site. The commencement of this trial followed
the achievement of US FDA approval of an investigational new
drug (IND) application for AZD0466.
The development of AZD0466 is being progressed under a
multi-product licence whereby Starpharma is eligible to receive
development, launch and sales milestones. The commencement
of the AZD0466 phase 1 trial triggered a milestone payment to
Starpharma of US$3 million.
AZD0466 is a highly optimised nanomedicine formulation of a
novel dual Bcl2/xL inhibitor which utilises Starpharma’s DEP®
technology. AstraZeneca describes AZD0466 as having the
potential to be a ‘best-in-class’ agent in this field due to its
ability to target both Bcl2 and Bcl/xL with a broad opportunity in
solid and haematological tumours (blood cancers). AZD0466 is
Starpharma’s first partnered DEP® product to enter the clinic and
illustrates the significant benefits that can be created for novel
agents using the DEP® platform.
In June 2020, AZD0466 was presented in three scientific posters
at the 2020 American Association for Cancer Research (AACR)
Annual Meeting. These posters highlight the marked improvement
in therapeutic index achieved with AZD0466 through the
application of the DEP® technology, enabling its progression
into the clinic and attracting significant interest from clinicians.
The AACR posters also highlighted the potent and broad
ranging anti-cancer activity of AZD0466 which results from
the dual Bcl2 and Bcl/xL activity. AZD0466 has demonstrated
superior anti-cancer activity in a wide range of preclinical
tumour models including Acute Myeloid Leukemia (AML),
Acute Lymphoblastic Leukemia (ALL), Non-Hodgkin’s
Lymphoma and Small Cell Lung Cancer (SCLC).
During the AACR meeting, AstraZeneca also presented
an overview of AZD0466 as part of its oncology portfolio,
including the extract below.
Extract from AstraZeneca’s AACR presentation:
“AZD0466 is a nanomedicine of a potent inhibitor
of BCL-2 and BCL-XL. AZD0466 conjugated with
Starpharma DEP® biodegradable poly-L-lysine
dendrimers is specifically designed to disrupt both
BCL-2 and BCL-XL interactions with pro-death
proteins. AZD0466 administered on a weekly
intravenous schedule releases the active
moiety over a period of time to potentially
maximize therapeutic index. AZD0466 is
currently being investigated as a potential
therapy in both hematologic
malignancies and solid cancers”.
Other partnered DEP® programs
During the year, Starpharma progressed its other DEP® partnered
programs, including Targeted DEP® partnerships with world
leading antibody-drug conjugate companies.
Starpharma also signed up a new DEP® program with an existing
partner in a novel area of cancer. The company also progressed
discussions with two new pharmaceutical partners, for several
partnered DEP® drug delivery programs in oncology and non-
oncology areas.
Starpharma recently signed a new research partnership with
leading Chinese Pharmaceutical company Tianjin Chase Sun
Pharmaceutical Co., Ltd. (Chase Sun) to develop several DEP®
nanoparticle formulations for an anti-infective drug.
The agreement also provides for the potential to
conduct additional DEP® programs, which can be
across therapeutic areas beyond anti-infectives.
Chase Sun is a leading listed Chinese
pharmaceutical company focussed on R&D and
commercialisation of healthcare products. Chase
Sun is a rapidly growing and innovative company
with a market capitalisation exceeding A$3 billion
and its 2019 sales were in excess of A$1 billion.
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 9
10 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Overview of Financial ResultsTotal revenue and other income for the year was $7.1 million, which included a $4.3 million development milestone from AstraZeneca for the first dose of AZD0466 administered in the phase 1 trial of its first DEP® product, and $1.5 million from product sales and royalties related to VivaGel® BV and the VivaGel® condom.Starpharma reported a net loss of $14.7 million, compared to $14.3 million last year. The increase in expenditure from the prior year reflected the expanded clinical programs, with ongoing clinical expenditure on clinical trials for DEP® docetaxel, and DEP® cabazitaxel, the commencement of the DEP® irinotecan clinical trial, and preparations for a potential VivaGel® BV treatment clinical trial.The net operating cash outflows for the year were $10.8 million, compared to $10.3 million last year. Starpharma ended the financial year with a strong cash balance of $30.1 million.2020 $M2019 $M2018 $MRevenue & other income 6.6 1.7 3.9Interest revenue0.5 1.0 1.1Total revenue and other income7.1 2.7 5.0Expenditure(21.8) (17.0) (15.3)Loss for the period(14.7) (14.3) (10.3)Net operating cash outflows(10.8)(10.3)(10.2)Net investing and financing cash outflows(0.7) (0.3) (0.4)Cash and cash equivalents at end of year30.1 41.3 51.33 Year Financial Summary CEO'S REPORT
Review and Future Outlook
The past year has been an extraordinary period for all of us.
Despite the challenges posed by a global pandemic, I am very
proud of our small and talented team of 45 people, who have
navigated through the COVID-19 environment with unwavering
commitment, dedication and agility. Our performance-driven
culture has never been more apparent and is reflected in the
multitude of important milestones achieved throughout the year
despite the challenging external environment. I thank all our staff
for their hard work and resilience throughout this period.
Thus far, we have had no material disruptions to our R&D output,
operations, or supply chain although we have experienced pauses
in recruitment of varying duration in most DEP® trial sites as they
deal with COVID-19 in their areas. Our executive team worked
rapidly to implement a broad range of measures for the safety of
our employees, patients, and consumers. The risks associated
with this virus remain and we will continue to proactively manage
all aspects of our business operations.
As the pandemic emerged, we moved quickly to test our
proprietary antiviral dendrimer, SPL7013, against the virus. The
high potency of SPL7013 means that a final formulated product
will have a concentration of SPL7013 that is several thousand-fold
higher than required to inactivate SARS-CoV-2. It is with the
highest sense of urgency that our team works to develop and
progress this product to provide people like our front-line
healthcare workers with a much-needed preventative product.
We now plan to leverage our existing regulatory approvals,
production and commercialisation expertise and relationships
to progress this product as rapidly as possible.
We are also very pleased to have achieved key milestones
within both of our portfolios, with VivaGel® BV launched in multiple
countries, and expanded licensing and EU approval for the
VivaGel® condom. It will take some time for revenues to build for
these products and we will continue to support our partners to
establish a long-lasting and valuable brand presence for these
important products.
Starpharma’s team, which is developing a range of internal and
partnered DEP® products, have shown remarkable dedication,
flexibility and tenacity during the year – progressing further
DEP® products into the clinic and advancing multiple new DEP®
candidates through the preclinical pipeline, including our first
radiotherapeutic candidate. The progression of our DEP® assets
are made possible by the clear and compelling benefits that are
consistently demonstrated in preclinical and clinical studies.
Our people appreciate that the very nature of Starpharma's
products affords the opportunity of changing lives for the better.
This year, Starpharma has prepared its first, standalone
Environment, Social and Governance (ESG) report. Our
ESG Report showcases how we, as a company, contribute to and
care for, the broader community – while driving to achieve our
goal to bring important medicines to patients in need – and our
pursuit of responsible business practices to achieve this goal.
We encourage you visit our website and read the report.
Looking to the year ahead, we remain focussed on progressing
our clinical DEP® assets and continuing to expand this portfolio,
moving up our preclinical programs and exploring value-adding
combinations to broaden the market opportunity. In parallel, we
will work assiduously on further approvals in our VivaGel®
portfolio, including in the US, to enable additional launches as
well as the development of our SPL7013 COVID-19 product.
Starpharma’s strong balance sheet and anticipated building
revenues place the company in an excellent position for growth.
Starpharma is well placed to leverage its expertise, resources
and, most importantly, its human capital and IP portfolio to
drive success and increase shareholder value.
As we move forward, I thank our staff, partners and our
shareholders and remain committed to our purpose of creating
innovative therapies which have the potential to profoundly improve
patient health worldwide, and generate shareholder value.
Jackie Fairley
Chief Executive Officer
Starpharma’s VivaGel® products are based on its proprietary
dendrimer, SPL7013 and are currently on market in the UK,
Europe, Asia & AUS/NZ
Starpharma’s DEP® platform enhances the commercial and
therapeutic value of a wide range of drugs, making it a highly
valuable partnering technology
VivaGel®
Products
DEP®
Platform
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 11
Diverse, High-Value VivaGel® and DEP® PortfoliosSPL7013INTERNAL DEP®PARTNERED DEP® D i s p o s a l
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12 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
ENVIRONMENT, SOCIAL & GOVERNANCE At Starpharma, occupational health and safety is key and is considered every employee’s responsibility. Starpharma’s occupational, health and safety program is designed to prevent work related injuries and accidents and the company has an excellent track record in this regard. The company’s zero harm objective is promoted through a culture of safety and hazard reporting and overseen by an active OH&S committee. OH&S is monitored by both lead and lag indicators. Incidents and near misses are reported and investigated in order to understand root causes and prevent recurrence. During FY20 and at least the previous 10 years, Starpharma has had no WorkSafe notifiable incidents.Our PartnersStarpharma has established important business and scientific partnerships with leading global companies, international medical research organisations and key governmental and non-governmental departments and institutions. These relationships offer critical inputs from world experts and provide a pathway for products to enter the market and change daily lives.Product & Patient SafetyAll Starpharma’s products, are developed in compliance with the relevant regulatory requirements, including for the areas of research, clinical trials, commercialisation and manufacturing.Starpharma takes product quality very seriously and has a comprehensive quality management system with well-developed quality systems processes, including (but not limited to): change control, internal auditing, complaint handling, post market surveillance and supplier management. Starpharma also ensures that its manufacturing suppliers have all the necessary controls in place for quality performance.SuppliersThe company’s supplier code includes a wide range of business practices to provide suppliers with clear expectations regarding their conduct. Starpharma is conscious of responsible and ethical sourcing and is actively reviewing its procedures in this area. The company is continually reviewing the applicable guidance on responsible sourcing and sustainable procurement with the aim of creating greater social and sustainability benefits through its purchasing activities.Environment Starpharma is committed to conducting its operations in an environmentally responsible manner, as healthy people rely on a healthy environment. Reducing our environmental footprint is not only important for human and environmental health – it also leads to the long-term health of economies and our business. The company ensures it has appropriate systems in place to comply with relevant Federal, State and Local regulations, and has adopted documented procedures and processes to ensure all waste products are disposed of strictly in accordance with relevant environmental regulations.The full ESG Report is available at www.starpharma.com. As an ASX300 biopharmaceutical company, Starpharma produces positive societal outcomes for its stakeholders, including patients, consumers, shareholders, employees, the broader community and the environment. The very nature of Starpharma's products affords the opportunity of changing lives for the better. Through innovative research and development, Starpharma and its partners are creating therapies which have the potential to profoundly improve patient health worldwide.This year, Starpharma published its first standalone ESG Report to further communicate the company’s established practices and its focus on continuous improvement in this area. The report details how Starpharma contributes to and cares for the broader community, and the company’s commitment to responsible business practices to ensure its products are being developed safely and ethically, in strict compliance with the relevant regulatory requirements, including for the areas of research, commercialisation and supply.Our ESG Framework comprises Products & Patient Health, Our People, Governance, and the Environment, and is embedded with specific activities and initiatives to achieve high standards in each of these areas.Our People, Our ValuesDeveloping new pharmaceutical and medical products is both challenging and rewarding. Doing so requires a culture where our people have the right balance of both patient-centric and commercially-focussed values. Working with a sense of urgency, innovative thinking, resilience and collaboration are central to our company values: Teamwork, Superior Performance, Innovation, Integrity and Accountability. Our people have a strong sense of how their work benefits the broader community.Starpharma is committed to continued development of its organisational capabilities, including a focus on initiatives that promote diversity and inclusiveness in the workplace. We believe having a diverse workforce drives better outcomes for our business and provides the company with greater breadth of experience and ideas.As at 30 June 2020, almost half of our employees were born outside of Australia and approximately half of our employees are female. Half of the leadership roles at Starpharma are held by women, and at Board level, 33% per cent of directors are female. Since 2011 Starpharma has maintained female representation on its board of between 33–40% .We have a highly skilled and specialised workforce. The employees of Starpharma are critical to the company achieving business success. To ensure a positive culture and that Starpharma remains a safe, healthy, and attractive workplace for our employees, Starpharma has well developed workplace policies and practices. Starpharma’s code of conduct reflects the core values of the company and sets out standards of behaviour in matters including equal employment opportunity and best practice in recruitment.
Directors’ Report
Your directors have pleasure in presenting this report on the consolidated entity (referred to hereafter as the “group”, “company”, or
“Starpharma”) consisting of Starpharma Holdings Limited (the “Parent Entity”) and the entities it controlled at the end of, or during, the year
ended 30 June 2020.
Directors
The following persons were directors of Starpharma Holdings Limited at the date of this report and during the whole of the financial year:
R B Thomas (Chairman)
R A Hazleton
Z Peach
P R Turvey
D J McIntyre was a director from 1 March 2020 to the date of this report.
Information on Directors
J K Fairley (Chief Executive Officer)
Robert B Thomas AO, BEc, MSAA, SF Fin, FAICD, FRSN
Independent non-executive director (appointed 4 December 2013)
and Chairman from 13 June 2014
Jacinth (Jackie) K Fairley BSc, BVSc (Hons), MBA, GAICD,
FTSE
Chief Executive Officer and Director (appointed 1 July 2006)
Experience
Mr Thomas has a strong background in financial services and
capital markets and is a non-executive director of several
Australian listed companies. Formerly he was a Partner of Potter
Partners (now UBS) where he was also Head of Research.
He is the former Chief Executive Officer (“CEO”) of County
NatWest Securities and then became CEO and then Chairman of
Citibank Corporate and Investment Bank in Australia. Mr Thomas
has also held the position of Chairman at Australian Wealth
Management Ltd (ultimately IOOF Ltd), TAL (Australia’s largest life
insurance company) and HeartWare® International Inc, the second
largest global manufacturer of left ventricular assist heart pumps.
Mr Thomas is Chair of AusBio Ltd and Grahger Retail Securities,
and a director of Biotron Limited and O’Connell Street Associates.
For many years Mr Thomas was regarded as one of Australia’s
leading financial analysts and regularly lectured with Financial
Services Institute of Australia (“FINSIA”). He has considerable
expertise in Mergers & Acquisition (“M&A”) and capital markets
including advising on the floats of Commonwealth Bank of
Australia and Qantas, and vast experience in Audit and Risk
Management. Mr Thomas is also approved under the NSW
prequalification scheme for Audit and Risk Committee Independent
Chairs and Members for government/public sector agencies and
has previously served as the Chairman of the Audit and Risk
Committee of Virgin Australia Limited (for 11 years), HeartWare®
International Inc, REVA Medical Ltd and the State Library of NSW.
Mr Thomas holds a Bachelor of Economics from Monash
University, a Diploma of Business (Accounting) from Swinburne
and is a fellow of FINSIA. He is also a Master Stockbroker, a
Fellow of the Australian Institute of Company Directors and a
Fellow of the Royal Society of New South Wales.
Committee membership
Member of Remuneration & Nomination Committee;
Member of Audit & Risk Committee.
Other current directorships of ASX listed entities: Biotron
Limited.
Directorships of other ASX listed entities within last three
years: Virgin Australia Limited and REVA Medical Inc.
Specific skills and experience areas
In addition to Mr Thomas’ significant finance and M&A/capital
markets experience, Mr Thomas’ non-executive roles with various
ASX listed companies have deepened his skills and experience in
relation to accounting/corporate finance, audit and risk;
governance; licensing and commercialisation of innovation;
strategy and risk management; occupational health & safety
(“OH&S”); and remuneration. He has also had significant
experience with US based companies as they progress from
research to commercialisation.
Interests in Starpharma Holdings Limited
825,000 ordinary shares
Experience
Dr Jackie Fairley has more than 30 years of operational
experience in the pharmaceutical and biotechnology industries
working in senior management roles with companies including
CSL Limited (‘CSL”) and Faulding (now Pfizer). In those roles she
had responsibilities which included clinical, regulatory, business
development, product development management and general
management. At Faulding she was responsible for Global Product
Development, Regulatory Affairs and Business Development for
Faulding’s Hospital Business which operated in more than 60
countries.
Jackie holds first class honours degrees in Science (pharmacology
and pathology) and Veterinary Science from Melbourne University
and was a practicing veterinary surgeon prior to joining CSL.
Whilst at CSL she obtained an MBA from the Melbourne Business
School where she was the recipient of the prestigious Clemenger
Medal. Jackie is also a Graduate of the Australian Institute of
Company Directors.
Jackie currently sits on the board of the Melbourne Business
School, is a non-executive director of listed investment company
Mirrabooka Investments Limited and Chairman of the Invest
Victoria Advisory Board. She is a past member of the Federal
Government’s Commonwealth Science Council and
Pharmaceutical Industry Working Group and the Federal
Ministerial Biotechnology Advisory Council.
Committees
Attends Board Committee meetings by invitation.
Other current directorships of ASX listed entities: Mirrabooka
Investments Limited.
Directorships of other ASX listed entities within the last three
years: None.
Specific skills and experience areas
With more than 30 years’ experience in executive roles up to and
including as CEO and executive director of ASX listed and unlisted
pharmaceutical and biotechnology companies, Dr Fairley’s
experience covers all key areas described in the Board skills
matrix. In particular, Dr Fairley has significant leadership skills in
healthcare and scientific research; pharmaceutical development;
international experience; licensing and commercialisation of
innovation; business development; strategy and risk management;
and M&A/capital markets.
Interests in Starpharma Holdings Limited
3,905,434 ordinary shares
4,453,114 employee performance rights
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 13
13
Directors’ Report
Richard A Hazleton BSChE, MSChE, MBA, HonDrEng,
HonDrCommSc
Independent non-executive director (appointed 1 December 2006)
– resides in the United States
Experience
Mr Hazleton is a former Chairman and CEO of US-based global
corporation Dow Corning. He joined Dow Corning in 1965 and held
numerous positions in engineering, manufacturing and finance,
both in the US and Europe. He was appointed as CEO of the
company in 1993, and Chairman of the Board of Directors and
CEO in 1994. During his career with Dow Corning, Mr Hazleton
performed the roles of European Area Vice President and Director
of Finance, and after returning to the US, Corporate Controller and
Chief Accounting Officer. In this latter global role he was
responsible for the preparation of all public financial reports, and
relationships with financial regulatory agencies and independent
auditors. Mr Hazleton retired from Dow Corning in 2001.
Mr Hazleton is based in the US and brings to the table an
international lens on product development, manufacturing, science
and technology. He has significant experience in the areas of
strategy, accounting/corporate finance and audit and risk.
Mr Hazleton has served on the boards of the American Chemistry
Council and the Chemical Bank and Trust Company (Midland, MI,
USA) as well as several non-profit social service agencies in
Michigan and Belgium.
Committee membership
Member of Audit & Risk Committee;
Member of Remuneration & Nomination Committee.
Other current directorships of ASX listed entities: None.
Directorships of other ASX listed entities within the last three
years: None.
Specific skills and experience areas
Having held various executive roles up to and including as
Chairman and CEO of Dow Corning over a 36 year period as well
as non-executive directorships, Mr Hazleton brings the following
significant skills and experience to the Board – international
experience; regulation/public policy, licensing and
commercialisation of innovation, science and technology;
governance; strategy and risk management; accounting/corporate
finance, audit and risk; OH&S; and remuneration. Mr Hazleton has
been assessed as an independent non-executive director
notwithstanding his 13-year tenure. The corporate memory he
provides is advantageous to the company and such tenure is
commonplace in the pharmaceutical/biotech sector, due to the
longer development timelines involved.
Interests in Starpharma Holdings Limited
208,466 ordinary shares
Zita Peach BSc, GAICD, FAMI
Independent non-executive director (appointed 1 October 2011)
Experience
Ms Peach has more than 25 years of executive commercial
experience in the pharmaceutical, biotechnology, medical devices
and health services industries. She worked for major industry
players such as CSL Limited and Merck Sharp & Dohme, the
Australian subsidiary of Merck Inc. Ms Peach’s most recent
executive position was as the Managing Director for Australia and
New Zealand and Executive Vice President, South Asia Pacific for
Fresenius Kabi, a leading provider of pharmaceutical products and
medical devices to hospitals. Previously, Ms Peach was Vice
President, Business Development, for CSL Limited, a position she
held for ten years.
Ms Peach has substantial international and local expertise in the
areas of pharmaceutical/medical device product development,
commercialisation of products and technologies, marketing and
sales, licensing, M&A and international expansions. She has
overseen manufacturing, logistics, regulatory affairs, quality
assurance, clinical services, human resources, finance,
information technology, public policy, business development,
marketing and sales at Managing Director and CEO level.
Ms Peach is Chairman of Pacific Smiles Group Limited, and a
Non-Executive Director of the ASX-listed Monash IVF Group
Limited, and Visioneering Technologies, Inc. Ms Peach is also a
member of the Hudson Institute of Medical Research Board.
Ms Peach is a Fellow of the Australian Institute of Company
Directors and a Fellow of the Australian Marketing Institute.
Committee membership
Chair of the Remuneration & Nomination Committee.
Other current directorships of ASX listed entities: Monash IVF
Group Limited, Visioneering Technologies, Inc. and Pacific Smiles
Group Limited.
Directorships of other ASX listed entities within the last three
years: AirXpanders, Inc.
Specific skills and experience areas
With over 25 years’ experience in various senior executive roles
within ASX listed and international pharmaceutical and
biotechnology companies, as well as numerous non-executive
directorships in the biotechnology/pharmaceutical sector, Ms
Peach’s experience covers all key areas described in the Board
skills matrix. In particular, Ms Peach has substantial expertise as a
leader in healthcare and scientific research;
pharmaceutical/product development; licensing and
commercialisation of innovation; science and technology; sales,
marketing and business development; strategy and risk
management; remuneration; and M&A/capital markets.
Interests in Starpharma Holdings Limited
48,975 ordinary shares
14 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
14
Directors’ Report
Peter R Turvey BA/LLB, MAICD
Independent non-executive director (appointed 19 March 2012)
and Deputy Chairman from 26 November 2019
David McIntyre CPA, LL.B., MBA and B. Econs (Acc)
Independent non-executive director (appointed 1 March 2020) –
resides in the United States
Experience
Mr Turvey has had more than 30 years of experience in the
biotech/pharmaceutical industry having been former Executive
Vice President Licensing, Group General Counsel and Company
Secretary of global biopharmaceutical company CSL, retiring in
2011.
Mr Turvey played a key role in the transformation of CSL from a
government owned enterprise, through ASX listing in 1994, to a
global plasma and biopharmaceutical company. He also had
responsibility for the protection and licensing of CSL's intellectual
property and for risk management within CSL, which included
management of the internal audit function, reporting to the Audit &
Risk Management Committee of the Board as well as being the
Chairman of the Corporate Risk Management Committee. In his
senior executive role at CSL, Mr Turvey was actively involved in
CSL’s extensive M&A and equity capital raising activities over a 15
year period, including during the time of the float of CSL as a
publicly listed company. This experience has been further
enhanced by Mr Turvey’s non-executive directorships of various
ASX listed biotechnology companies.
In addition to his expertise in corporate finance, audit and risk
management, Mr Turvey has extensive experience in
commercialisation and pharmaceutical product development.
Mr Turvey is currently Chairman of ImmVirX Pty Ltd, a Non-
Executive Director of Cell Therapies Pty Ltd (a subsidiary of the
Peter MacCallum Cancer Centre), and a director of Victorian
Government owned entity Agriculture Victoria Services Pty Ltd and
Phytogene Pty Ltd.
Committee membership
Chair of Audit & Risk Committee.
Other current directorships of ASX listed entities: None.
Experience
Mr McIntyre has more than 20 years of executive experience
including 18 years in the life science sector, having held various
executive roles including Chief Financial Officer and Chief
Operating Officer at HeartWare® International, Inc, and Chief
Financial Officer & Head of Technical Operations at Braeburn, Inc.
Mr McIntyre is currently the Chief Financial Officer of AVITA
Therapeutics, Inc.
Mr McIntyre’s experience includes seven years as a Partner at
Apple Tree Partners, a multi-billion-dollar life science venture
capital and growth equity fund, giving him a deep knowledge of,
and extensive contacts, in the US pharma, medical device and
biotech markets. During this time, Mr McIntyre served as a non-
executive director of several US life science companies.
Prior to entering life sciences, Mr McIntyre practiced as a senior
attorney at Baker & McKenzie and KPMG specialising in M&A,
initial public offerings, and corporate law and also held various
senior finance roles in both multi-national companies and small
growth companies.
Mr McIntyre is based in the US and brings to the table an
international lens on licensing and commercialisation, marketing
and business and development, and M&A/capital markets. He has
significant experience in the areas of accounting/corporate finance,
audit and risk, strategy and risk management.
Mr McIntyre holds a Bachelor of Economics (Accounting) from the
University of Sydney, Australia, a Bachelor of Laws from the
University of Technology, Sydney and an MBA from Duke
University Fuqua School of Business (Fuqua Scholar) from
Durham, North Carolina, in the United States of America. Mr
McIntyre is a CPA and is also admitted as a legal practitioner of
the Supreme Court of New South Wales and of the High Court of
Australia.
Directorships of other ASX listed entities within the last three
years: Viralytics Limited.
Committee membership
Member of Audit & Risk Committee.
Other current directorships of ASX listed entities: Redflex
Holdings Ltd.
Directorships of other ASX listed entities within the last three
years: None.
Specific skills and experience areas
With more than 20 years of executive experience including 18
years in the life science sector, Mr McIntyre’s experience covers all
key areas described in the Board skills matrix. In particular, Mr
McIntyre has substantial expertise in accounting/corporate finance,
audit and risk; M&A/capital markets; governance; licensing and
commercialisation of innovation; strategy and risk management,
having held executive roles including Chief Financial Officer and
Chief Operating Officer. He has also had significant experience
with US based companies in the medical device, biotechnology
and pharmaceutical sector.
Interests in Starpharma Holdings Limited
16,240 ordinary shares
Specific skills and experience areas
With over 30 years of executive experience in the biotechnology
industry of which 20 years were at CSL, followed by non-executive
directorships at a number of ASX listed pharmaceutical and
biotechnology companies, Mr Turvey has significant leadership
skills and experience in healthcare and/or scientific research;
pharmaceutical/product development; international experience and
skills in regulation/public policy; licensing and commercialisation of
innovation; business development; governance; strategy; risk
management; audit and risk; and M&A/capital markets.
Interests in Starpharma Holdings Limited
179,821 ordinary shares
Company Secretary
The Company Secretary is Mr Nigel Baade, holding the position
since 2013. Mr Baade also holds the position of Chief Financial
Officer, which he has held since January 2009. Mr Baade is a
Certified Practising Accountant (“CPA”) with extensive experience
in the pharmaceutical and biotechnology industries. Prior to joining
Starpharma as Financial Controller in 2006, he has held positions
at Hagemeyer, Cerylid Biosciences, Faulding (now Pfizer) and
UMT (Fonterra). He holds qualifications from University of
Tasmania and Monash University.
Mr Baade is a director of BioMelbourne Network Inc, serving as its
Treasurer and Chairman of the Finance, Audit and Risk Committee.
Mr Baade is a member of the Australian Institute of Company
Directors.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 15
15
Directors’ Report Operating & Financial Review
Principal activities
The principal activities of the group consist of research,
development and commercialisation of dendrimer products for
pharmaceutical, life-science and other applications. Activities
within the group are directed towards the development of precisely
defined nanoparticles called dendrimers, including on the
development of VivaGel® for the management and prevention of
bacterial vaginosis, and as a condom coating. Starpharma is also
applying its proprietary dendrimers to drug delivery to create
improved pharmaceuticals and has developed the valuable DEP®
delivery platform.
Result
The financial report for the financial year ended 30 June 2020, and
the results herein, have been prepared in accordance with
Australian Accounting Standards.
The consolidated loss after income tax attributable to ordinary
shareholders for the financial year ended 30 June 2020 was
$14,678,000 (2019: $14,254,000). The net operating cash outflows
for the year were $10,776,000 (2019: $10,344,000). The cash
balance at 30 June 2020 was $30,054,000 (June 2019:
$41,251,000).
Dividends and distributions
No dividends were paid or declared during the period and no
dividends are recommended in respect to the financial year ended
30 June 2020 (2019: Nil).
Review of operations
Key activities until the date of this report include:
VivaGel® and SPL7013 Portfolio
•
SPL7013 was tested and found to have significant activity
against SARS-CoV-2, the coronavirus that causes COVID-19.
Significant progress was made with product development for
a nasal spray;
VivaGel® BV was launched in the United Kingdom (“UK”) by
Mundipharma under the brand Betafem® BV Gel, and in
Central and Eastern European countries under the brand
Betadine BV™;
First Asian regulatory approvals were granted for VivaGel®
BV and the product was subsequently launched in South East
Asia by Mundipharma under the brand Betadine™ BV;
Australian roll-out of VivaGel® BV under the brand Fleurstat
BVgel by Aspen, and product launched in New Zealand;
Strategy undertaken to progress US Food and Drug
Administration (“FDA”) approval of VivaGel® BV including
commencing an administrative review process;
• Okamoto expanded its licence for the VivaGel® condom in 11
•
further Asian countries (in addition to Japan); and
VivaGel® condom was granted EU approval and Lifestyles
commenced marketing preparations for launch in Europe.
DEP® Drug Delivery Platform
•
AstraZeneca commenced phase 1 for its first DEP® product,
AZD0466. The successful dosing of the first patient in
December 2019 triggered a US$3 million milestone payment
to Starpharma;
Signed a new DEP® partnership with leading Chinese
Pharmaceutical company Tianjin Chase Sun Pharmaceutical
Co., Ltd, in a new therapeutic area (anti-infectives), with
potential for additional programs in other therapeutic areas;
Starpharma’s three internal clinical DEP® trials progressed
well with encouraging efficacy signals observed in each trial
and multiple new sites opened, including leading cancer
centres, The Marsden in the UK and the Kinghorn Cancer
Centre in Sydney;
DEP® docetaxel + gemcitabine clinical combination study
commenced following ethics committee and regulatory
approvals;
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
DEP® cabazitaxel phase 1 met its objective of identifying a
Recommended Phase 2 Dose (RP2D) and transitioned to
phase 2;
DEP® irinotecan phase 1 / 2 trial commenced and met its
phase 1 objective of identifying a RP2D and transitioned to
phase 2;
DEP® irinotecan in combination with an immuno-oncology
agent (anti PD-1 antibody) showed superior anti-tumour
activity and significant survival benefit compared to the anti
PD-1 antibody alone in two human colorectal cancer models;
Impressive data were reported for DEP® irinotecan, alone and
in combination with Lynparza®, in a refractory human colon
cancer model;
DEP® gemcitabine demonstrated significantly enhanced anti-
tumour activity compared with Gemzar® (gemcitabine) in a
human pancreatic cancer model;
A novel HER-2 Targeted DEP® (ADC) conjugate
demonstrated significant tumour regression and 100%
survival in a preclinical human ovarian cancer model;
Starpharma’s first DEP® radiotherapy product, DEP® lutetium,
showed statistically significant and durable anti-cancer
activity in a human prostate cancer model;
Signed a new DEP® program with an existing partner in a
novel area of cancer therapeutics, and progressed DEP®
program discussions with two further major pharmaceutical
companies; and
TGA licence granted to Starpharma to manufacture DEP®
active pharmaceutical ingredient (“API”) in-house for clinical
trial purposes.
SPL7013 Portfolio
Following the emergence of the coronavirus pandemic, SPL7013
was tested and found to have significant activity against
SARS-CoV-2, the coronavirus that causes COVID-19. Starpharma
moved quickly and is now developing a nasal spray with SPL7013
aimed at preventing infection and/or reducing severity of disease.
The company has already held discussions with regulators, who
have confirmed that minimal re-development is required for a
SPL7013 COVID-19 nasal spray. The expedited program is now
well underway with Starpharma aiming to have the product ready
for market within 12 months.
VivaGel® Portfolio
During the year, VivaGel® BV achieved multiple further
registrations and market launches. VivaGel® BV was launched by
Mundipharma under the brand names, Betafem® BV Gel in the UK,
and Betadine BVTM in several countries in Central and Eastern
Europe. VivaGel® BV was approved in multiple Asian countries
and was subsequently launched in the region, initially in South
East Asia, and work continues on further registrations and
launches. Aspen continued to roll-out Fleurstat BVgel in Australia
and also launched the product in New Zealand. Starpharma
earned revenue from the supply of product to its partners and
received payments triggered by multiple registration milestones.
Starpharma continued to progress its strategy regarding FDA
approval of VivaGel® BV with ongoing support from a team of
expert FDA consultants (regulatory, statistical, clinical, legal;
several ex-FDA). The company progressed the formal review of
some of the FDA’s initial conclusions via an ongoing administrative
review process. Due to the significant disruption to the US
healthcare system caused by COVID-19, activities relating to a
potential BV treatment trial in the US were put on hold.
Okamoto expanded its licence for the VivaGel® condom to a
further 11 countries in Asia, in addition to its initial agreement for
Japan. Starpharma is eligible to receive royalties on sales of the
VivaGel® condom under this licence and will also receive revenue
on supply of SPL7013 active. The VivaGel® condom also achieved
EU approval and LifeStyles commenced marketing preparations
for its European launch under the brand name Absolute™ DUAL
PROTECTION.
16 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
16
Directors’ Report Operating & Financial Review
clinical trials, there was disruption to new patient recruitment
associated with the impact of COVID-19 on UK hospitals.
Recruitment has now resumed at the majority of sites for the DEP®
clinical trials and as previously advised, a number of new sites
have been opened.
As experienced by companies around the world, Starpharma’s
partners for VivaGel® BV have had some disruption to their sales
and marketing activities, and the COVID-19 lockdowns have
delayed some launches and may impact consumer demand.
As set out above, the company identified a product opportunity in
response to the pandemic, and is currently developing a COVID-
19 nasal spray.
Matters subsequent to the end of the financial year
No matters or circumstances have arisen since 30 June 2020 that
have significantly affected, or may significantly affect:
(a) the consolidated entity’s operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the consolidated entity’s state of affairs in future financial years.
Strategy, future developments and prospects
Starpharma aims to create value for its shareholders through the
commercial development and exploitation of proprietary products
based on its dendrimer technology in pharmaceutical and
healthcare applications. The company’s key focus is to advance
and broaden its product pipeline, including internal and partnered
DEP® programs and to advance commercial opportunities for
VivaGel®. Starpharma intends to achieve this by continuing to
utilise a combination of internally funded and partnered programs
across its dendrimer portfolio. The company commercialises its
development pipeline with corporate partners via licencing
agreements at various stages in a product’s development lifecycle;
depending on the product, patent opportunity, a partner’s
commercial strategy and relative strength of product and market
expertise, comparison of current and future potential returns, and
the risks involved in advancing the product to the next value
inflection point or milestone.
Starpharma’s strategy remains consistent with previous years.
Starpharma has extensive expertise, a strong intellectual property
portfolio, deep product portfolio, a culture and ability to innovate
and develop its technology platform to commercial opportunities,
proven risk management practices, and a strong cash position.
The company will continue using its cash resources and VivaGel®
revenues to invest in selected research and development activities
to achieve its objectives.
Proceedings on behalf of the company
No proceedings have been brought or intervened in on behalf
of the Company with leave of the Court under section 237 of the
Corporations Act 2001.
DEP® Drug Delivery Platform
During the year, Starpharma continued to actively progress
development of its internal DEP® portfolio, including advancing a
third internal DEP® product into the clinic – increasing its clinical
program to three phase 2 assets. Positive patient findings were
observed in the ongoing phase 2 DEP® docetaxel trial, and the
company gained ethics committee and regulatory approvals for a
combination study with gemcitabine. Both DEP® cabazitaxel and
DEP® irinotecan were advanced to phase 2 following successful
positive phase 1 results during the year. Encouraging efficacy
signals were observed in each of the DEP® trials and will feed into
commercial discussions, and new sites were opened in the UK and
Australia.
Further studies were undertaken for DEP® irinotecan to explore its
performance in combination separately with Lynparza and also
with an immuno-oncology agent (anti PD-1 antibody) in human
colorectal cancer models. In several preclinical colorectal studies,
including refractory ones, DEP® irinotecan delivered impressive
improvements in performance and these studies have resulted in
significant interest from investigators and potential partners.
Starpharma continued to build its DEP® pipeline, advancing three
new DEP® candidates: DEP® gemcitabine, DEP® lutetium and a
novel HER-2 Targeted DEP® (ADC) conjugate, and presented
positive results with each candidate in multiple preclinical studies.
With regard to partnered DEP® programs, the FDA approved an
investigational new drug (IND) application for AstraZeneca’s first
DEP® product, AZD0466, and the phase 1 clinical trial commenced
shortly after and is now recruiting at in multiple sites in the US
including the internationally renowned MD Anderson Cancer
Center. The first dose of AZD0466 administered to a patient
triggered a milestone payment to Starpharma of US$3 million.
Starpharma signed a new research partnership with leading
Chinese pharmaceutical company Tianjin Chase Sun
Pharmaceutical Co., Ltd. in a new therapeutic area (anti-
infectives). The company also progressed its other partnered
programs during the year, including its Targeted DEP®
partnerships with world leading antibody-drug conjugate
companies. Starpharma signed up a new DEP® program with an
existing partner in a novel area of cancer therapeutics and
commenced work on the program. The company also progressed
discussions with two further major pharmaceutical companies for
several partnered DEP® drug delivery programs in both oncology
and non-oncology areas.
Starpharma’s DEP® platform was showcased in five posters
presented at the 2020 American Association for Cancer Research
(“AACR”) Annual Meeting. Three posters featured AstraZeneca’s
first DEP® oncology product, AZD0466, and two posters
showcased Starpharma’s clinical-stage products - DEP®
docetaxel, DEP® cabazitaxel and DEP® irinotecan.
The company underwent a detailed review and inspection process
and as a result was successful in being granted a TGA licence to
manufacture API in-house. This licence enables Starpharma to
manufacture API for a range of DEP® products for human clinical
trials, including late-stage phase 3 trials. This licence also allows
Starpharma to accelerate the development of DEP® products both
for internal and partnered programs through rapid manufacture
and development of DEP® materials and also opens up new
revenue potential in partnered programs.
COVID-19 pandemic
In recent months, Starpharma has employed a broad range of
measures to protect the health and safety of staff and clinical trial
patients. Starpharma’s COVID-19 management response team
continues to actively monitor the situation, and measures have
been implemented and revised as appropriate. Regular reports are
provided to the Board.
Disruptions to the company’s laboratory and office operations and
its supply chain continue to be minimal, although, in Starpharma’s
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 17
17
Directors’ Report Operating & Financial Review
Review of Financials
Income statement
Revenue
Cost of goods sold
Other income
Research and product
development expense
Commercial and regulatory
operating expense
Corporate, administration and
finance expense
30 June 2020
$’000
30 June 2019
$’000
6,556
(890)
559
2,708
(251)
12
(14,808)
(10,454)
(3,426)
(3,774)
(2,669)
(2,495)
Loss for the period
(14,678)
(14,254)
Income statement
The reported loss for the period was $14,678,000 (2019:
$14,254,000).
Revenue for the year was $6,556,000 (2019: $2,708,000),
comprising $6,033,000 (2019: $1,651,000) for product sales,
royalty, licensing and research revenue from commercial partners,
and interest income of $523,000 (2019: $1,057,000). Revenue
from commercial partners includes $4,339,000 from AstraZeneca
for a development milestone achieved on the first dose of
AZD0466 administered in the phase 1 trial of its first DEP®
product, and the remaining $1,694,000 is predominantly related to
VivaGel® BV and VivaGel® condom product sales and royalties in
the year.
Other income was $559,000 (2019: $12,000) and primarily relates
to the Australian Government’s COVID-19 stimulus measures
including JobKeeper ($399,000) and Cash Flow Boost ($100,000)
programs. Starpharma is eligible for the JobKeeper program from
30 March 2020 through to 27 September 2020. Starpharma has
maintained its staff through COVID-19, with these receipts
mitigating some of the increased expense associated with the
management of clinical trials and other COVID-19 related costs.
Research and product development expense includes the costs of
all internal DEP® drug delivery programs, and certain VivaGel® BV
related expenditure. The increase in expenditure from the prior
year reflects the expanded DEP® clinical programs, with ongoing
expenditure on clinical trials for DEP® docetaxel, and DEP®
cabazitaxel, the commencement of the DEP® irinotecan clinical
trial, and preparations for a potential VivaGel® BV treatment
clinical trial. A contra research and development expense of
$5,669,000 (2019: $5,071,000) has been recorded for activities
eligible under the Australian Government’s Research and
Development Tax Incentive program. The increase reflects the
additional expenditure on the DEP® internal programs.
Commercial and regulatory operating expense includes the
expenditure related to the commercialisation of both VivaGel® and
DEP® portfolios, including business development, regulatory,
supply chain and quality assurance activities. The decrease in the
year reflects additional internal and external costs related to
commercial licences and the launch of VivaGel® BV in the prior
year.
Corporate, administration and finance expense includes corporate
costs, as well as gains/losses on foreign currency held. The
increase over the prior corresponding period predominately
reflects a lower foreign currency gain in the current year.
Balance sheet
At 30 June 2020 the group’s cash position was $30,054,000 (June
2019: $41,251,000). Trade and other receivables of $6,128,000
(June 2019: $6,159,000) includes $5,670,000 (June 2019:
$4,898,000) receivable from the Australian Government under the
R&D tax incentive program.
18 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
On the adoption of AASB 16 Leases from 1 July 2019, the group
recognised lease liabilities and right-of-use assets in relation to
leases which had previously been classified as ‘operating leases’
under AASB117 Leases. See Note 1(x) for further details.
Statement of cash flows
The net operating cash outflows for the year were $10,776,000
(2019: $10,344,000). During the financial year, $4,898,000 (2019:
$4,019,000) was received from R&D tax incentives associated with
eligible expenditure and activities from the prior financial year, and
a US$3M milestone was received from AstraZeneca on the first
human dose of AZD0466 being administered in the phase 1 trial of
this highly novel DEP®-based cancer medicine.
Earnings Per Share
Basic & diluted earnings/(loss) per
share
2020
2019
($0.04)
($0.04)
Material Business Risks
The group operates in the biotechnology and pharmaceutical
sectors and is in the development and early commercialisation
phase. Any investment in these sectors is considered high-risk.
The group is subject to normal business risks, including but not
limited to interest rate movements, labour conditions, government
policies, securities market conditions, exchange rate fluctuations
and a range of other factors which are outside the control of the
Board and management, such as pandemics. More specific
material risks of the sector and the group include, but are not
limited to:
•
Scientific, technical and clinical – product development
requires a high level of scientific rigour, the outcomes of
which cannot be known beforehand. Activities are
experimental in nature, so the risk of failure or delay is
material. Key development activities, including clinical trials,
are undertaken by specialist contract research organisations;
and there are risks in managing the quality and timelines of
these activities.
•
•
•
•
•
•
Regulatory – products and their testing may not be approved,
or may be delayed or withdrawn, by regulatory bodies (eg. US
Food and Drug Administration) whose approvals are
necessary before products can be sold in market.
Financial – the group currently, and since inception, does not
receive sufficient recurrent income to cover operating
expenses. Although current cash reserves are sound, there is
no certainty that additional capital funding may not be
required in the future, and no assurance can be given that
such funding will be available, if required.
Intellectual property (IP) – commercial success requires the
ability to develop, obtain and maintain commercially valuable
patents, trade secrets and confidential information. Gaining
and maintaining IP across multiple countries and preventing
the infringement of the group’s exclusive rights involves
management of complex legal, scientific and factual issues.
The company must also operate without infringing upon the
IP of others.
Commercialisation – the company relies, and intends to rely,
upon corporate partners to market, and in some cases finalise
development and registration of its products, on its behalf.
There are risks in establishing and maintaining these
relationships, and with the manner in which partners execute
on these licensing and collaborative agreements.
Product supply – the company is required to manufacture and
supply product under certain licencing agreements. The
manufacture of product is undertaken by specialist, regulatory
approved, third party contract manufacturing organisations
experienced in the sector. However, there are quality and
supply delays/failure risks associated with the supply of
product.
Product acceptance and competitiveness – a developed
product may not be considered by key opinion leaders (eg.
doctors), reimbursement authorities (eg. Pharmaceutical
Benefits Scheme listing) or the end customer to be an
18
Directors’ Report Operating & Financial Review
Meetings of Directors
The number of meetings of the company’s Board of Directors and
of each committee held during the year ended 30 June 2020, and
the numbers of meetings attended by each director were:
Directors
Board
Audit & Risk
Committee
Remuneration
& Nomination
Committee
J K Fairley
R A Hazleton
Z Peach
R B Thomas
P R Turvey
D J McIntyre
9 of 9
9 of 9
9 of 9
9 of 9
8 of 9
2 of 2
N/A
2 of 2
N/A
2 of 2
2 of 2
0 of 0
N/A
6 of 6
6 of 6
6 of 6
N/A
N/A
The table above illustrates the number of meetings attended
compared with the number of meetings held during the period that
the director held office or was a member of the committee. “N/A”
denotes that the director is not a member of the relevant
committee.
•
•
effective alternative to products already on market, or other
products may be preferred.
Product liability – a claim or product recall may significantly
impact the company. Insurance, at an acceptable cost, may
not be available or be adequate to cover liability claims or any
product recall costs (if any) if a product is found to be unsafe.
Key personnel – the company’s success and achievements
against timelines depend on key members of its highly
qualified, specialised and experienced management and
scientific teams. The ability to retain and attract such
personnel is important.
• Grant and R&D incentives – the company may undertake
R&D activities part-funded by incentive programs (eg. R&D
tax credits) and under other competitive grants. There is no
certainty that grants or incentive programs will continue to be
available to the company, and changes in government policy
may reduce their applicability.
In accordance with good business practice in the pharmaceutical
industry, the group’s management actively and routinely employs a
variety of risk management strategies. These are broadly
described in the Corporate Governance Statement (section 7.2
Risk assessment and management).
Health and Safety
The Board, CEO and senior management team of the group are
committed to providing and maintaining a safe and healthy working
environment for the company’s employees and anyone entering its
premises or with connections to the company’s business
operations. Employees are encouraged to actively participate in
the management of occupational health and safety (“OH&S”)
issues. The company has adopted an OH&S Policy and has an
established OH&S Committee as part of its overall approach to
workplace safety. The OH&S Committee provides a forum for
management and employees to consult on health and safety
matters. The primary role of the OH&S Committee is to coordinate
the development and implementation of OH&S policy and
procedures, to consider any work-related safety matters or
incidents, and to ensure compliance with relevant legislation and
guidelines. The committee includes representatives of
management, and employees from each operational area
generally in proportion to the number of people working in the area
and the perceived safety risks associated with working in that area.
The OH&S Committee meets on a regular basis over the year.
Updates on OH&S matters are provided at Board meetings.
Additional OH&S practices were implemented and monitored since
the emergence of the COVID-19 pandemic, under the guidance of
a specific COVID-19 management response team.
Environment and Regulation
The group is subject to environmental regulations and other
licenses in respect of its research and development facilities.
There are adequate systems in place to ensure compliance with
relevant Federal, State and Local environmental regulations and
the Board is not aware of any breach of applicable environmental
regulations by the group. There were no significant changes in
laws or regulations during the 2020 financial year or since the end
of the year affecting the business activities of the group, and the
Board is not aware of any such changes in the near future.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 19
19
Directors’ Report Remuneration Report
The remuneration report for the year ended 30 June 2020 sets out remuneration information for non-executive directors, executive directors and
other key management personnel of the group.
The remuneration report is presented under the following sections:
Introduction, including impact of COVID-19 on remuneration
1.
2. Remuneration governance
3. Non-executive director remuneration policy
4. Executive remuneration policy
a) Approach to setting and reviewing remuneration
b) Remuneration principles and strategy
c) Details of executive equity incentive plans
d) Grant of equity incentives to KMP executives in FY20
5. Executive remuneration outcomes, including link to performance
6. Details of remuneration
7. Executive employment agreements
8. Additional disclosures relating to employee equity schemes
1.
Introduction
Remuneration strategy
Starpharma aims to ensure that its remuneration strategy successfully aligns the interests of its executives and employees with those of its
shareholders. In framing its remuneration strategy, the Board is conscious that Starpharma only has a small number of employees (<50) so
endeavours to keep its remuneration relatively straightforward. Our staff are required to have specialist knowledge and experience allowing
them to develop products over the medium to long-term. The fact that Starpharma operates in a global pharmaceutical industry environment
also influences its remuneration strategy.
The structure of remuneration comprises fixed remuneration, short-term incentives (“STI”) in both cash and equity, and equity based long-term
incentives (“LTI”). Starpharma’s remuneration structure is transparent and based on Key Performance Indicators (“KPIs”) which are designed to
align with the interests of shareholders and to reward performance across multi-year timeframes related to product development value-adding
milestones. In some cases, the Board may exercise discretion to take account of events and circumstances not envisaged.
Impact of COVID-19 on remuneration
Given the ongoing global uncertainty and evolving situation related to the COVID-19 pandemic, the Board has determined that there will be no
increase in fixed remuneration for KMP executives from 1 July 2020 despite significant additional activities related to COVID-19, the COVID-19
nasal spray and additional safety measures, with a review to be undertaken in December. In assessing KMP STI performance for FY20, the
Board has utilised existing KPIs and in some cases, a small adjustment has been made (where applicable) to recognise the significant effort
involved in developing the SPL7013 COVID-19 nasal spray which was not previously contemplated. Additionally, the Board will exercise its
discretion to issue performance rights with a vesting date of 30 June 2021 (subject to continued employment) in lieu of cash bonuses for FY20.
While this initiative will result in higher share-based payments in FY21 due to the delayed vesting, the Board believes it will conserve cash, act
as a retention incentive and further align executive and shareholder outcomes. The conversion of cash bonuses to equity will also have a one-
off impact on the KMP executive target remuneration mix for FY21.
There is no increase in non-executive director base fees or committee fees for FY21, other than a $5,000 increase to the Deputy Chairman with
a commensurate decrease in the Chairman’s fee.
The impacts of COVID-19 on the business are detailed further in the operating and financial report. COVID-19 government incentives, including
JobKeeper, totalled $499,000. Starpharma has maintained its staff through COVID-19, with these receipts mitigating some of the increased
expense associated with the management of clinical trials and other COVID-19 related costs.
Key management personnel
The remuneration report details the remuneration arrangements for key management personnel (“KMP”) who are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the group, directly or indirectly including any
director (whether executive or otherwise) of the parent.
The table below outlines the KMP of the group during the financial year ended 30 June 2020. The individuals were KMP for the entire financial
year, except for D J McIntyre who was appointed non-executive director on 1 March 2020. There were no changes in KMP from the reporting date
up to the date of this report. For the purposes of this report, the term “KMP executives” includes the executive director and other KMP executives
of the group. “Other KMP executives” refers to KMP executives excluding the CEO. Profiles for each of the directors and company secretary can
be found at the beginning of the Directors’ Report.
(i) Non-executive directors
(ii) Executive director
R B Thomas
Non-executive Chairman
P R Turvey
Non-executive Director (Deputy Chairman)
J K Fairley
Chief Executive Officer & Managing Director
(CEO)
R A Hazleton
Non-executive Director
(iii) Other KMP executives
Z Peach
D J McIntyre
Non-executive Director
Non-executive Director, appointed 1 March
2020
N J Baade
A Eglezos
D J Owen
J R Paull
Chief Financial Officer & Company Secretary
VP, Business Development
VP, Research
VP, Development & Regulatory Affairs
20 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
20
Directors’ Report Remuneration Report
2. Remuneration governance
The Remuneration and Nomination Committee, consisting of three independent 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
non-executive directors, KMP executives and other senior executives. Where required, external remuneration advice may be sought by the
Remuneration and Nomination Committee or the Board.
Specifically, the Board approves the remuneration arrangements of the CEO including awards made under the STI and LTI plans, following
recommendations from the Remuneration and Nomination Committee. The Board approves, having regard to recommendations made by the
CEO to the Remuneration and Nomination Committee, the level of remuneration, including STI and LTI awards, for executives. The Board also
sets the aggregate fee pool for non-executive directors (which is subject to shareholder approval) and non-executive director fee levels.
The company’s remuneration structure aims to:
•
Attract and retain exceptional people to lead and manage the group and to support internal development of executive talent within the
group, recognising that Starpharma is operating in a competitive global pharmaceutical industry environment;
•
Drive sustainable growth and returns to shareholders, as executives are set both short-term and long-term performance targets which are
linked to the core activities necessary to build competitive advantages and shareholder value;
• Motivate and reward superior performance by the executive team whilst aligning performance elements/KPIs to the interests of
shareholders; and
•
Create a respectful culture based on superior performance and innovation through appropriately structured individual assessments.
Benchmarking
Extensive salary and remuneration benchmarking is undertaken by Starpharma each year for executive and non-executive positions.
Starpharma benchmarks fixed and total remuneration against employment positions of comparable specialisation, size and responsibility within
the industry. Fixed remuneration is supplemented by providing incentives (variable remuneration) to reward superior performance.
Performance reviews
At the beginning of a performance period all staff have KPIs set, specific to their role. At the conclusion of the performance period a
performance review against these KPIs is conducted and this feeds into the annual salary review process. The performance reviews consider
behavioural and cultural aspects of performance, as well as objective planning and professional and personal development. The objective of the
salary review is to ensure that all employees are appropriately remunerated based on performance, that remuneration is competitive within the
relevant industry sector, and that increases in employees’ skills and responsibilities are recognised. During the year a performance review of all
staff took place in accordance with this process. As part of the process, each employee’s performance is assessed against their pre-agreed
individual KPIs and/or business unit performance and corporate KPIs and this assessment determines, subject to business considerations such
as cash availability, if an incentive award is payable, and if so, at what level.
Use of remuneration consultants
If remuneration consultants are to be engaged to provide remuneration recommendations as defined in section 9B of the Corporations Act 2001,
they are to be engaged by, and report directly to, the Remuneration and Nomination Committee. No remuneration consultants have been
engaged to provide such remuneration services during the financial year.
Voting at the company’s 2019 Annual General Meeting (AGM)
Of the votes cast on the company’s remuneration report for the 2019 financial year, over 93% were in favour of the resolution.
As part of the group’s commitment to continuous improvement, the Remuneration and Nomination Committee and the Board consider
comments made by shareholders and proxy advisers in respect of remuneration related issues. Members of the Remuneration and Nomination
Committee routinely engage with proxy advisors to discuss a range of governance and remuneration matters.
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Starpharma remuneration process summary
Has overall responsibility for oversight of Starpharma’s remuneration policy and its principles and processes, and ensures
appropriate benchmarking and the group’s ability to pay are considered in remuneration related decision making.
BOARD
Following recommendations from the Remuneration and Nomination Committee, the Board considers and approves:
•
•
•
•
Starpharma’s executive remuneration policy;
The remuneration packages of the CEO and other senior executives;
The ‘at-risk’ components of executive remuneration packages, including the structure and operation of equity based
plans; and
The remuneration of non-executive directors.
Oversee
&
Approve
Inform &
Recom-
mend
REMUNERATION & NOMINATION COMMITTEE
Reviews and recommends the following to the Board:
Support & Advise
REMUNERATION
CONSULTANTS & OTHER
EXTERNAL ADVISORS
Where required, support the
Remuneration and Nomination
Committee by providing
independent advice on matters
including:
•
•
Benchmarking data;
Legal and regulatory
advice on remuneration
related issues for directors
and executives; and
Advice on incentive plans.
Engage & Oversee
•
•
•
•
•
Starpharma’s executive remuneration
policies;
Specific remuneration recommendations
for the CEO and other senior executives;
Design of incentive plans; and
Remuneration for non-executive directors.
Oversee
&
Approve
Inform &
Recom-
mend
CEO
Reviews and recommends remuneration
arrangements and outcomes of performance
assessments to the Remuneration and Nomination
Committee for senior executives.
Further information on the Remuneration and Nomination Committee’s role, responsibilities and membership is outlined in the charter available
at http://www.starpharma.com/corporate_governance.
Trading in company securities
The trading of shares issued to participants under any of the company’s employee equity plans is governed by the company’s securities dealing
policy. All employees and directors are prohibited from entering into any hedging arrangements over unvested securities and from margin
lending on Starpharma securities. Further information regarding the company’s dealing in securities policy is set out in the Corporate
Governance Statement and the policy is available at http://www.starpharma.com/corporate_governance.
Clawback of remuneration
In the reasonable opinion of the Board, if a KMP executive has acted fraudulently or dishonestly, the Board may determine that any equity right
(including an exercisable, vested right) should lapse.
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3. Non-executive director remuneration policy
Determination of fees and the maximum aggregate fee pool
The Board seeks to set non-executive directors’ fees at a level which provides the group with the ability to attract and retain non-executive
directors of the highest calibre with relevant professional expertise. The fees also reflect the demands which are made on, and the
responsibilities of, the non-executive directors, whilst incurring a cost which is acceptable to shareholders.
Non-executive directors’ fees and the aggregate fee pool are reviewed annually by the Remuneration and Nomination Committee against fees
paid to non-executive directors in a group of comparable peer companies within the biotechnology sector and relevant companies in the broader
ASX-listed market. The Chairman’s fees are determined by the Remuneration and Nomination Committee independently of the fees of non-
executive directors based on the same role, again using benchmarking data from comparable companies in the biotechnology sector. The
Board is ultimately responsible for approving any changes to non-executive director fees, upon consideration of recommendations put forward
by the Remuneration and Nomination Committee.
The company’s constitution and the ASX listing rules specify that the non-executive directors’ maximum aggregate fee pool shall be determined
from time to time by a general meeting of shareholders. The latest determination was at the AGM held on 20 November 2014 when
shareholders approved an aggregate fee pool of $550,000. The Board will not seek any increase in the non-executive directors’ maximum fee
pool at the 2020 AGM.
Fee policy
Non-executive directors’ fees consist of base fees and committee fees. The payment of committee fees recognises the additional time,
responsibility and commitment required by non-executive directors who serve on board committees. The Chairman of the Board is a member of
all committees but does not receive any committee fees in addition to his base fee. From 1 July 2020, the Deputy Chair base fee will be $73,000
to further recognise the additional responsibility, time and commitment of the position, and in FY21, to ensure the applicable board fees do not
increase in the year, the Chair reduced his base fee by $5,000.
Non-executive directors did not receive bonuses or forms of equity securities, or any performance-related remuneration during the financial
year. Statutory superannuation contributions are required under the Australian superannuation guarantee legislation to be paid on any fees paid
to Australian directors. There are no retirement allowances paid to non-executive directors. The non-executive directors’ fees reported below
include any statutory superannuation contributions.
Fees paid in FY20
The aggregate amount paid to non-executive directors for the year ended 30 June 2020 was $392,167 (2019: $355,500) reflecting the
appointment of an additional non-executive director from 1 March 2020 as part of Board renewal and transition. The details of remuneration for
each non-executive director for the years ended 30 June 2020 and 30 June 2019 are outlined in the tables in section 6.
Proposed fee adjustments for FY21
There is no increase in base non-executive director fees or committee fees for FY21. Following the appointment of Peter Turvey as Deputy
Chairman, from 1 July 2020, there will be a rebalance between the Chairman and Deputy Chair fees, whereby the Chairman’s fee will be
reduced by $5,000, with a commensurate increase to non-executive director fees for the Deputy Chairman. The proposed fees, compared to the
FY20 levels, are outlined in the table below.
Annual Non-Executive Directors’ Fees
Board fees
Chair (no additional fees for serving on Board committees)
Deputy Chair
Base fee for other non-executive directors
Committee fees
Audit and Risk Committee
Remuneration and Nomination Committee
Proposed Fees
from 1 July 2020
Actual Fees to
30 June 2020
$
129,000
73,000
68,000
10,500
4,500
10,500
4,500
$
134,000
–
68,000
10,500
4,500
10,500
4,500
Chair
Member
Chair
Member
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4. Executive remuneration policy
a) Approach to setting and reviewing remuneration
The group aims to reward executives with a level and mix of remuneration appropriate to their position, experience and responsibilities, whilst
being market competitive and enabling the company to retain staff whilst structuring awards which conserve cash reserves.
The Remuneration and Nomination Committee, together with the Board, actively reviews the group’s remuneration structure, and benchmarks
the overall package and proportion of fixed remuneration, short-term incentives and long-term incentives against relevant comparators to ensure
the policy objectives are met and are in-line with good corporate practice for Starpharma’s size, industry and stage of development.
Remuneration levels are considered annually through the remuneration review, which considers industry benchmarks and the performance of
the group and the individual. Other factors taken into account in determining remuneration include a demonstrated record of performance and
the group’s ability to pay. In the case of executives, the CEO provides recommendations to the Remuneration and Nomination Committee.
As in prior years, remuneration benchmarking was undertaken for FY20 with reference to industry peers, together with, where appropriate, other
benchmarking reports which apply to specific positions. A group of peer companies were included in the benchmarking exercise for FY20, from
within the pharma/biotechnology sector. These peer companies included Bionomics, Clinuvel, Immutep, Impedimed, Imugene, Mayne Pharma,
Medical Developments International, Mesoblast, Monash IVF, Nanosonics, Neuren, Pharmaxis, Polynovo, Opthea, Osprey, Reva Medical, Telix,
and Virtus Health. Starpharma reviews and develops this benchmark list of peer companies annually to add and remove companies based on
their current operations; their size; market capitalisation; and the complexity of their business. For some executive roles it may be necessary to
add or modify the composition of the peer group to ensure comparable roles are benchmarked.
In reviewing the benchmarking data and determining the level of CEO pay, the Board considers the experience and calibre of its CEO in
comparison to Starpharma’s peers, ensuring that remuneration is commensurate with talent, skills and experience. There are no guaranteed
base pay increases or bonuses in any executive contracts.
Other executives do not have a pre-specified maximum cash bonus entitlement; however, bonuses are awarded from a target shared pool for
executives as a percentage of total fixed remuneration, based on personal and business unit KPIs and subject to cash availability. The
Remuneration and Nomination Committee considers that this approach provides flexibility in rewarding superior executive performance and is
appropriate for the size of the company at this time, enabling it to manage its cash reserves as required. For FY20, the STI target cash bonus
pool for other KMP executives was 25% of fixed remuneration to align with the strategy to balance the STI ‘at risk’ portions of remuneration for
other KMP executives between cash and equity.
The CEO has a maximum cash bonus entitlement as a component of STI, which for FY20 was $249,775, representing a target of 15% of total
remuneration. Due to the uncertain impact of COVID-19 on the business and economy more broadly, it has been agreed between the CEO and
the Board that the CEO will waive the right to a cash bonus for FY20. This policy has also been adopted for Other KMP executives. The Board
has determined that additional STI equity rights will be offered in lieu of the value that would otherwise be awarded as a cash bonus following
the assessment of performance. This approach aligns with the policy of prudently managing cash reserves, despite key achievements by KMP
executives during the year.
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b) Remuneration principles and strategy
The group’s executive remuneration strategy is designed to attract, motivate and retain high performing individuals and align the interests of
executives with shareholders, recognising it is operating in the international pharmaceutical industry, and is summarised below.
Remuneration strategy linkages to group objectives
Align the interests of executives with shareholders
Attract, motivate and retain high performing individuals
•
•
The remuneration framework incorporates “at risk”
components, which are determined by performance, through
STI and LTI
Performance is assessed against a suite of measures
relevant to the success of the group and generating growth
and returns for shareholders
•
•
The remuneration offering is competitive for companies of similar
size and complexity within the industry through benchmarking
The mix of short and longer-term remuneration encourages
retention and performance across multiple years as appropriate
for the lifecycle of the group
Component
Vehicle
Purpose
Link to Performance
Fixed remuneration
Base salary, superannuation
contributions and other
benefits (breakdown of fixed
remuneration is at the
executive’s discretion).
To provide competitive fixed
remuneration set with reference
to the role, market and
experience.
Group and individual performance
are considered during the annual
remuneration review.
Short-Term Incentives (STI)
Cash and equity
(Performance period of less
than 3 years)
The equity instrument is
currently performance rights,
which is based on a
performance assessment, with
a one year performance
period and deferred vesting of
a further one year, subject to
continued employment.
Rewards executives for their
contribution to achievement of
business outcomes. Deferred
equity acts as a retention tool
and aligns with interests of
shareholders.
Allocation of cash bonuses and
vesting of equity linked to internal
KPIs, both business unit and
corporate, over the medium term
which are important drivers of value
and typical within the biotechnology
industry. For example, achievement
of specified development, clinical,
regulatory and commercial
milestones.
Long-Term Incentives (LTI)
Equity
(Performance period of
3 years or more)
The equity instrument is
currently performance rights
with a 3-year performance
period.
Rewards executives for their
contribution to the creation of
shareholder value over the
longer term, acts as a retention
tool and aligns with interests of
shareholders.
Vesting of grants are dependent on
internal measures, both business
unit and corporate over the longer
term; and total shareholder return
(TSR) relative to the S&P/ASX300
Index.
The target remuneration mix is outlined in the diagrams below. Having implemented several structural improvements in recent years, to increase
the proportion of remuneration directed to LTIs to achieve the desired target mix to ensure management remain focused on long term outcomes.
The transition was conducted in a thoughtful and deliberate manner to take into account the impact in motivating and retaining executives.
Target Remuneration Mix
The STI and LTI components of remuneration are variable and are linked to pre-determined performance conditions, such as KPIs, that are
designed to reward executives based on the company’s performance, the performance of the relevant business unit and demonstrated
individual superior performance. The details are outlined on pages 26 to 29 of this report.
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4. Executive remuneration policy (continued)
To achieve the target remuneration mix, the below performance pay structure was adopted in FY20 and is consistent with the prior year.
c) Details of executive equity incentive plans
Starpharma Short-Term Incentives (STI) – includes cash bonus and short-term equity
The group operates an annual STI program available to executives and awards cash and equity incentives subject to the attainment of clearly
defined KPIs. The STI is ‘at risk’ remuneration and subject to achieving relevant KPIs.
Who participates?
Executives
How are STIs delivered?
What is the STI opportunity?
Cash bonus and performance rights, both based on a one year performance period, with the
performance rights conditional upon a deferred vesting date of a further one year, subject to continued
employment.
Providing some rights that vest in the short-term allows the company to preserve cash by offering
equity as a short-term incentive in addition to smaller cash bonuses. This is common practice for
companies at a similar stage of their life cycle.
During FY20 the CEO and executives were awarded STI equity with a 1 year performance period
(1 July 2019 to 30 June 2020), with a deferred vesting date of 30 June 2021 dependent on continued
employment to the vesting date.
The STI opportunity is a target of ~25% and ~20% of total remuneration for the CEO and other KMP
executives, respectively. The CEO STI opportunity for FY20 was equal to the 25% target, comprising of
a cash component (~60%) and an equity component (~40%). The cash opportunity component was
equivalent to 45% of total fixed remuneration.
As outlined above, due to the uncertainties of the impact of COVID-19 on the company and the
economy more broadly, no cash bonuses were awarded to KMP executives for the performance period
1 July 2019 to 30 June 2020, however new STI equity will be awarded in lieu of cash bonuses. This is
despite KMP executives achieving important milestones in their pre-determined KPIs, which are
described in more detail in section 6. KMP executives were awarded STI equity for the 1 July 2019 to
30 June 2020 performance period based on the achievement of their pre-determined KPIs.
The result of these decisions in FY20 is that the CEO was awarded STI of 17% (target 25%) of total
remuneration and other KMP executives achieved an average of 15% (target 20%) of total
remuneration, all of which was STI equity.
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What are the STI performance
conditions for FY20?
Actual STI payments awarded to each executive depend on the extent to which they meet specific KPIs
set at the beginning of the period. The KPIs are typical of a biotechnology company at Starpharma’s
stage of development, and may include corporate KPIs and business unit KPIs relating to strategic and
operational objectives. Details of the corporate KPIs for performance, which was assessed during
FY20, are explained in section 5 of the remuneration report. Given the company’s stage of
development, financial metrics (such as earnings per share) are not entirely relevant in linking pay to
performance.
The proportion of performance measures applicable in determining STI awards for the CEO and other
executives are noted in the table below:
Corporate KPIs
Business Units KPIs
STI cash bonus
CEO 100%
Other executives 100%
STI performance rights
CEO 100%
Other executives 30%
Other executives 70%
Details regarding LTI performance conditions are contained on page 28.
How is performance
assessed?
At the end of each performance period (typically annually), after consideration of actual performance
against KPIs, the Remuneration and Nomination Committee recommends for Board approval of the
amount of STI to be paid from the maximum entitlement to the CEO.
For executives other than the CEO, the Remuneration and Nomination Committee seeks
recommendations from the CEO, and then makes recommendations to the Board.
When is performance
assessed and when are
awards paid or vest?
The end of the financial year corresponds with the end of each performance period. Performance is
assessed following the end of the financial year to allow for timely disclosure in the annual
remuneration report. This is usually within two months of the end of the financial year.
The STI cash component is paid approximately three months following the end of the financial year and
once the performance assessment review is complete.
For STI equity, a proportion of rights, based on the performance assessment, will remain available
(deferred) to vest on 30 June the following year. Any rights forfeited based on the performance
assessment will be forfeited within the first three months of the new financial year following the
performance assessment.
The vesting of deferred rights on 30 June is subject to the continued employment condition being
satisfied. Once vested, KMP executives can elect to convert vested rights into shares during prescribed
exercise windows throughout future periods. The maximum period for the exercise of vested rights is
15 years from grant date.
Is performance against KPIs
disclosed?
Whilst the company’s policy is not to disclose commercially sensitive information, consistent with best
practice disclosure obligations, it will retrospectively disclose achievement of corporate KPIs to the
extent commercially practicable.
Specific metrics are applied to each KPI to assist in the assessment undertaken for each performance
period. In some cases, the Board may exercise discretion to take account of events and circumstances
not envisaged.
Contractual entitlement?
Only the CEO has a STI cash bonus entitlement whereby the maximum amount achievable is set.
There is no predetermined STI equity entitlement. No other executive service agreements contain any
contractual entitlement to STI cash or equity. See page 31 for details of the special circumstances that
apply for FY20.
What happens if an executive
leaves?
If an employee ceases employment, all unvested rights lapse except for certain circumstances relating
to a “good leaver”. The “good leaver” provisions allow the Board to determine the accelerated vesting of
the rights if the employee ceases employment due to death, illness, permanent disability, redundancy
or any other circumstance approved by the Board after considering the portion of the performance
period that has elapsed and the extent to which performance conditions have been met.
What happens on a change of
control?
Board discretion, after considering the portion of the performance period that has elapsed and the
extent to which performance conditions have been met.
What happens in the case of
fraud/dishonesty?
If, in the opinion of the Board, an employee has acted fraudulently or dishonestly, the Board may
determine that any unvested right granted to that employee, or any vested right, not exercised, would
lapse.
Re-testing
There is no re-testing of KPIs in subsequent years if performance conditions are not met.
How is the conversion of
performance rights to shares
satisfied?
The conversion of performance rights is currently satisfied by the issue of new shares, rather than a
purchase of shares on market, to conserve the company’s cash reserves. This is common practice for
companies at a similar stage of their life cycle. This is reviewed periodically and purchases of shares on
market may be undertaken in the future if appropriate.
Are performance rights
eligible for dividends?
Performance rights - whether unvested, or vested and not exercised, are not eligible to receive
dividends.
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4. Executive remuneration policy (continued)
Starpharma Long-Term Incentives (LTI) – Equity
Participation in these plans is at the Board’s discretion. For key appointments, an initial allocation of long-term equity incentives may be offered
as a component of the initial employment agreement. The LTI is ‘at-risk’ remuneration and subject to achieving the relevant KPIs.
Who participates?
Executives
How are LTIs delivered?
Performance rights with a performance/vesting period of 3 years or more. The LTI performance rights
awarded during FY20 have 3 year performance periods for all executives.
What is the LTI opportunity?
The CEO’s LTI opportunity for FY20 was 41% of total remuneration. For other KMP executives, the LTI
opportunity for FY20 was ~30% of total remuneration. As outlined in section 4 of the remuneration
report, the target LTI opportunity is 40% and 30% of total remuneration for the CEO and other KMP
executives, respectively.
What are the LTI performance
conditions for rights granted
in FY20?
Corporate KPIs reflect long-term (3 year) strategic, operational and financial management objectives.
These relate to key value creating events and significant milestones that are linked to Starpharma’s
business areas. For the performance period to 30 June 2020 these were:
•
•
The monetisation of the VivaGel® and Drug Delivery portfolios represented by the completion
of a number of commercial deals that build shareholder value and/or generate income; and
The development of new DEP® candidates and/or the licensing of DEP® candidates.
Due to the commercially sensitive nature of the specific performance metrics within these KPIs,
Starpharma will retrospectively disclose achievement of corporate KPIs to the extent commercially
practicable in the annual report.
In maintaining the link between executive remuneration outcomes and the returns to shareholders,
relative total shareholder return (“TSR”) is considered a relevant performance condition in respect of
LTIs. The relative TSR hurdle reflects Starpharma’s TSR compared to the S&P/ASX300
Accumulation Index (Index), and includes share price growth, and any dividends and capital returns.
The Board has chosen this Index for the TSR comparator group as it provides an external, market-
based performance measure to which the company’s performance can be compared in relative terms.
The Index is considered appropriate as it provides a comparison of shareholder returns that is
relevant to investors, and reflects the aspiration of the company.
The Board considers that the Index is a more appropriate comparator than a customised group of
peer companies due to the inherent volatility of each of these companies, typical within the
biotechnology industry. In recent years, the performance of Starpharma’s industry peers has been
particularly volatile, with a number of companies experiencing significant decreases in market
capitalisation, and a number have gone through some type of corporate activity (e.g. takeovers) or
are no longer ASX listed. Given that the relative TSR is measured over a three year period, the Index
is favoured as a more stable and appropriate comparator. Also, the published S&P/ASX 200
Healthcare Index was considered as a possible comparator, however, was determined to be
inappropriate given its concentrated composition including CSL Limited and other large service
oriented companies, such as private hospitals. Each year, the Remuneration and Nomination
Committee, and the Board, review the suitability of the Index as a comparator.
To achieve the full relative TSR performance condition, Starpharma’s TSR must achieve 10% per
annum (or 30% over 3 years) above the Index, which is considered a realistic stretch target.
The table below sets out the percentage of performance rights that will vest depending on the
company’s TSR compared to the Index over the relevant period.
Annualised Starpharma TSR compared
with the Index
Percentage of rights subject to the relative
TSR performance condition which vest
Below Index
Equal to Index
0%
50%
Between Index and Index + 9.99%
Pro rata basis from 51% to 99%
At least 10% per annum above Index
(or ≥ 30% over 3 years)
100%
For example, if the TSR of the Index is 10% per annum, then Starpharma would need to achieve a
TSR of 20% per annum or more for all of the relative TSR related performance rights to vest. The
above hurdle recognises the return that investors expect when investing in the biotechnology sector.
The Board considers an additional return of 10% per annum (or 30% over 3 years) above the Index to
be a realistic stretch target for all relative TSR rights to vest.
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The performance measures applicable in determining LTI awards for the CEO and other executives
and the relative proportions are noted in the table below:
Corporate KPIs
CEO
Other executives
70%
15%
TSR
30%
15%
Business Unit KPIs
N/A
70%
The Board considers 30% and 15% of LTI equity as the appropriate portion for relative TSR for the
CEO and other executives, respectively. In determining the percentages, the Board considered input
from investors and proxy advisers to arrive at a level that is considered meaningful as a measure of
performance, and sufficient to be relevant.
The relative TSR performance measure does not allow for a portion of the award to vest at below
median performance, which is consistent with good market practice. Additionally, the Board maintains
absolute discretion in finalising remuneration outcomes for incentive-based awards to the CEO and
other executives. The Board may exercise its discretion (either up or down) to take into account the
impacts of external market conditions outside the control of management. The Board is cognisant of
ensuring fairness and that any exercise of discretion reinforces Starpharma’s strategy and
remuneration policy. Accordingly, in the event that the Index has performed particularly poorly, the
Board may exercise its discretion to prevent excessive executive awards in years of poor shareholder
returns.
At the end of each performance period, after consideration of actual performance against KPIs, the
Remuneration and Nomination Committee recommends the amount of LTIs to vest to the CEO for
approval by the Board. For executives other than the CEO, the Remuneration and Nomination
Committee seeks recommendations from the CEO, and then make recommendations to the Board.
Relative TSR is calculated independently by a professional services firm with specialist expertise.
How is performance
assessed?
When is performance
assessed and when are
awards paid or vest?
The end of the financial year corresponds with the end of each performance period. Performance is
assessed following the end of the financial year to allow for the timely disclosure in the annual
remuneration report. This is usually within two months of the end of the financial year.
For LTI equity, the rights will vest on 30 September following the performance assessment. Once
vested, KMP executives can elect to convert vested rights into shares during prescribed exercise
windows throughout future periods. The maximum period for the exercise of vested rights is 15 years
from grant date.
Is performance against KPIs
disclosed?
Same as for STI.
Contractual entitlement?
There are no predetermined LTI equity entitlements.
What happens if an executive
leaves?
Same as for STI.
What happens on a change of
control?
Same as for STI.
What happens in the case of
fraud/dishonesty?
Same as for STI.
Re-testing
Same as for STI.
How is the conversion of
performance rights to shares
satisfied?
Same as for STI.
Are performance rights eligible
for dividends?
Same as for STI.
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4. Executive remuneration policy (continued)
d) Grant of equity incentives to KMP executives in FY20
In FY20, the Board determined the number of rights granted for STI and LTI equity based on the face value of rights (see below) and the target
remuneration mix as set out on page 25.
Starpharma uses and reports face value for determining the allocation of equity as it provides transparency on the value of the allocations
compared with fair value. This practice reflects the increasingly accepted view by industry that presenting remuneration equity at face value
provides a more accurate representation of the true value of that equity and for users to understand the value of these awards.
The face value of each right is based on the volume weighted average price (“VWAP”) of the company’s shares traded on the ASX over the 3
month period to 30 June 2019, which reflects the beginning of the performance period. The 3 month period has been determined to be the
appropriate duration for the calculation of the VWAP as it limits any unintended consequences of short-term volatility in the company’s share
price and is consistent with the duration used in the calculation of TSR for the relative TSR performance condition. The face value is not
adjusted for changes (increase or decreases) in share price post 30 June, which has been the practice since 2015. The face value for each right
was $1.2664.
The below tables summarise the equity incentives granted in FY20:
Performance Period
Deferral Period
Deferred STI equity
LTI equity
1 July 2019 to 30 June 2020
1 July 2019 to 30 June 2022
12 months from end of
performance period
Not applicable
Vesting Date
30 June 2021
30 September 2022
Face Value per Right
Based on 3 month VWAP to 30 June 2019 of $1.2664
Method for calculating number Total value of grant at face value divided by the face value per right
of rights
J K Fairley
(CEO and Managing
Director)
Face Value of grant
Number of Rights
Fair value per AASB2#
$169,950
134,199
$172,886
$679,800
536,797
$620,788
Performance Conditions
100% Corporate KPIs
70% Corporate KPIs
30% relative TSR performance
J Paull
(Other KMP executives)
N J Baade
A Eglezos
D J Owen
(Other KMP executives)
Face Value of grant
Number of Rights
Fair value per AASB2†
Performance Conditions
Face Value of grant
Number of Rights
Fair value per AASB2†
Performance Conditions
$53,442
42,200
$48,530
$213,768
168,800
$182,855
70% Business Unit KPIs
30% Corporate KPIs
70% Business Unit KPIs
15% Corporate KPIs
15% relative TSR performance
$48,883
38,600
$44,390
$195,532
154,400
$167,256
70% Business Unit KPIs
30% Corporate KPIs
70% Business Unit KPIs
15% Corporate KPIs
15% relative TSR performance
Other Vesting Conditions
Remains employed until the vesting date and has not engaged in fraud or dishonesty
# The grant date to calculate the fair value of the award under AASB2 is the AGM date when shareholders approved the grant of the rights.
† The grant date to calculate the fair value of the award under AASB2 is the date when the performance rights were offered.
30 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
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Directors’ Report Remuneration Report
5. Executive remuneration outcomes, including link to performance
Given the company’s stage of development, financial metrics (such as profitability) are not necessarily an appropriate measure of executive
performance. The company’s remuneration policy aligns executive reward with the interests of shareholders. The primary focus is on growth in
shareholder value through achievement of development, regulatory and commercial milestones, and therefore performance goals are not
necessarily linked to typical financial performance measures utilised by companies operating in other market segments. However, the Board
recognises that share price performance is clearly relevant to the extent that it reflects shareholder returns, and as such Starpharma’s TSR
relative to the S&P/ASX300 Index is used as a relevant metric for portions of executive equity awards. Details of share price, earnings and the
impact of share price performance on the vesting of certain performance rights over the last 5 years is detailed in the table below.
Closing share price 30 June
Share price high
Share price low
Profit/(Loss) for the year ($M)
Number of performance rights forfeited by CEO based
on share price performance for the period ending 30
June (or otherwise in the FY).
% of performance rights forfeited by CEO based on
share price performance (as a percentage of total
performance rights) period ending 30 June, or
otherwise in the FY).
FY20
$1.13
$1.43
$0.62
(14.7)
-
FY19
$1.36
$1.66
$0.87
(14.3)
-
FY18
$1.17
$1.67
$0.71
(10.3)
FY17
$0.73
$0.88
$0.59
8.2
FY16
$0.645
$0.98
$0.54
(22.7)
-
244,500
430,000
0%
0%
0%
13%
50%
Fixed remuneration:
The average increase in KMP executive fixed remuneration for FY20 was 3.2% (FY19: 3.2%). There was no increase above 3.3% in the total
fixed remuneration package for any KMP executive in the year. The revised total fixed remuneration is consistent with similar roles in the sector
and reflects the evolution of the company and associated greater responsibility of executives.
For FY21, the Board has determined that there will be no increase in fixed remuneration for KMP executives from 1 July 2020, with a review to
be undertaken in December.
Performance related pay:
In the assessment of STI and LTI KPIs, the Board took account of the significant achievements obtained in the performance periods and the
effort and dedication required to accomplish these milestones. These achievements include those listed on pages 33 to 35.
Short-term incentives (STI):
Summary of performance pay related to FY20 for the CEO
Maximum
Available
STI Awarded
% Awarded
STI cash#
($)
$249,775
$ -
-%
STI equity
(# of rights)
134,199
101,320
75.5%
# See below on allocation of additional STI equity rights in lieu of STI cash.
The Remuneration and Nomination Committee and the Board determined that the CEO had achieved a performance assessment of 75.5% of
STI awards for the performance period 1 July 2019 to 30 June 2020, based on the annual review of actual performance against KPIs.
These targets were set by the Remuneration and Nomination Committee and the Board at the beginning of the performance period and align
to the company’s strategic, operational and financial objectives. STI equity awards for the CEO in FY20 were based on the scorecard
measures and weightings as disclosed below.
There was no STI cash awarded for FY20 due to the uncertainties of the impact of COVID-19 on the company and the economy more
broadly. However, based on the CEO’s performance achievement, the Board has determined an allocation of new STI equity rights will be
awarded equivalent to the STI cash amount. The number of new STI equity rights to the CEO to be approved at the 2020 AGM will be
176,755 rights, based on the face value of $1.0669, being the VWAP for the 3 month period to 30 June 2020. The face value has been
determined to be the appropriate basis for allocation as it represents the market value at the end of the performance period of 30 June 2020
and is consistent with the allocation method for awards of equity more generally. These STI equity rights will vest on 30 June 2021 based on
satisfying the continued employment condition to this date. As the number of allocated rights is based on the assessed performance against
the CEO’s predetermined KPIs for FY20, no further performance conditions beyond the service condition will be required.
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5. Executive remuneration outcomes, including link to performance (continued)
Summary of performance pay related to FY20 for Other KMP executives
For STI awards for other KMP executives, the CEO assesses the other KMP executives’ performance against predetermined KPIs relevant
to their business unit. These business unit KPIs relate directly to specific elements of the corporate KPIs, with 30% of STI equity awards based
on the percentage achievement of corporate KPIs as disclosed above. The achievement of corporate KPIs requires significant input and strong
performance from the executive team. The CEO makes recommendations to the Remuneration and Nomination Committee and the Board in
respect of the STI performance assessment and amounts to be awarded.
The Remuneration and Nomination Committee and the Board determined that other KMP executives had achieved an average performance
assessment of 85.1% of STI awards (between 80% and 89%) for the performance period 1 July 2019 to 30 June 2020. STI equity awards to
Other KMP executives for FY20 were consistent with their performance assessment.
There was no STI cash awarded for FY20 due to the uncertainties of the impact of COVID-19 on the company and the economy more
broadly. Like the CEO, based on the Other KMP executive’s performance achievement, the Board has determined an allocation of new STI
equity rights will be awarded equivalent to the STI cash amount, based on the $1.0669 face value per right. The number of STI equity rights
to be awarded to Other KMP executives in lieu of STI cash for the performance period 1 July 2019 to 30 June 2020 is between 65,610 and
74,983 rights for each Other KMP executive. These new STI equity rights will vest on 30 June 2021 based on satisfying the continued
employment condition to this date. As the number of allocated rights is based on the assessed performance against the predetermined KPIs
for FY20, no further performance conditions beyond the service condition will be attached to the grant of these rights.
Long-term incentives (LTI):
Summary of performance pay for the CEO for the three years ended 30 June 2020
Maximum Available
LTI Achieved
KPIs for 3 years to 30 June 2020
Relative TSR for 3 years to 30 June 2020
Total LTI Achieved
% Achieved
LTI equity
(# of Rights)
895,879
376,602
360,063
736,665
82.2%
% Achieved
70.3%
100.0%
Performance assessment of relative TSR for the three years ended 30 June 2020
The company’s TSR was tested against the performance of the S&P/ASX300 Index for the three-year performance period ended 30 June
2020. The company’s TSR over the period was 49.4% compared with an Index TSR over the period of only 3.3%. The company’s annualised
TSR for the period was 14.3% compared to the S&P/ASX300 Index annualised TSR of 1.1% above the additional 10% per annum required. As
a result, 100% of the relative TSR component vested. The TSR calculations were performed by an independent professional services firm.
The table below provides a summary of the achievement of annualised TSR performance:
Performance Period
Starpharma annualised TSR
Index annualised TSR
Starpharma outperformance of Index (annualised over 3 years)
% of relative TSR awarded
3 years to
30 June 2020
3 years to
30 June 2019
14.3%
1.1%
13.2%
100%
22.1%
8.1%
14.0%
100%
Summary of performance pay for other KMP executives for the three years ended 30 June 2020
For LTI awards for Other KMP executives, the CEO assesses their performance against predetermined KPIs relevant to their business unit.
These business unit KPIs relate directly to specific elements of the corporate KPIs, with 15% of LTI equity awards based on the percentage
achievement of corporate KPIs, and the remaining 15% based on relative TSR (as disclosed above). The achievement of corporate KPIs
requires significant input and superior performance from the executive team. The CEO makes recommendations to the Remuneration and
Nomination Committee and the Board in respect of the LTI performance assessment and amounts to be awarded.
The Remuneration and Nomination Committee and the Board determined that other KMP executives had achieved a performance assessment of
between 85.7% and 91.3% (average 87.7%) for business unit KPIs for the performance period 1 July 2017 to 30 June 2020 for determining LTI
awards.
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STI Performance
Assessment
Performance category
Metric
Performance period
1 July 2019 to 30 June 2020
Weighting
Satisfied
Regulatory activities for
VivaGel® BV
Advance further VivaGel® BV registrations in multiple countries, with
priority given to major markets
15%
Partially Met
Commercialisation of
VivaGel® BV
Other VivaGel® products
Facilitate partners to launch VivaGel® BV in the UK and in multiple
countries in Europe and Asia; pursue partnerships for remaining
unlicensed countries; whilst optimising returns
Progress with regulatory and commercialisation activities for product
opportunities with SPL7013 (VivaGel® active) with priority given to major
market opportunities
15%
Met
5%
Met
Clinical stage internal DEP®
programs
Progress with clinical trials for DEP® docetaxel, DEP® cabazitaxel and
DEP® irinotecan, including expansion in relation to further indications and
combination therapies, in parallel with partnering discussions
Preclinical DEP®
candidate(s)
Advance preclinical studies on another DEP® candidate, in preparation for
clinical trials; and develop the DEP® internal pipeline with further DEP®
product candidates
25%
Partially Met
12.5%
Partially Met
Partnered-DEP® programs
Progress with existing partnered-DEP® programs and/or expanded
field/products and/or progress with new partnering deals
17.5%
Partially Met
Capital management,
culture and leadership
Manage company’s capital in a prudent manner to create value, increase
recurrent revenues and maintain and develop a highly results oriented
culture with exceptional leadership
10%
Met
100%
In making this STI assessment, the Remuneration and Nomination Committee and the Board considered the following factors (other
commercially sensitive matters were also taken into account. As KPIs were established in 2019 before the pandemic occurred, a COVID-19
product was not included in the KPIs, but given the effort undertaken and potential market opportunity, this was included in the assessment):
•
Significant VivaGel® BV regulatory activities, including:
-
-
Starpharma obtained regulatory approvals for numerous countries, including first approvals in Asia.
Starpharma facilitated the submission of numerous regulatory applications in multiple regions as quickly as practicable including in
Asia, the Middle East and Africa.
Publishing VivaGel® BV publications which provided critical support for marketing activities by Mundipharma.
Continued to aggressively pursue FDA approval for VivaGel® BV, working with a team of expert consultants, lawyers, statisticians and
ex-FDA advisers, to progress a formal review, including detailed submissions, as well as preparations for a possible further clinical
trial. COVID-19 necessitated that plans for the trial were put on hold.
-
-
•
•
VivaGel® BV was launched in the UK, South East Asia, Central and Eastern Europe, and New Zealand during the year. Starpharma
actively supported both partners, Aspen Pharmacare (Fleurstat BVgel) and Mundipharma (Betadine®), to launch products as rapidly as
possible.
Extensive support to Mundipharma to achieve multiple launches as rapidly as possible, including critical and comprehensive input for
the training of representatives, marketing materials, regulatory matters, product labelling, finalisation of product claims, manufacturing,
packaging and other elements of supply.
• Obtaining regulatory approval of the VivaGel® condom in Europe, and regulatory progress in China and other markets.
•
Upon emergence of the pandemic, Starpharma rapidly initiated antiviral screening and development of SPL7013 for COVID-19 with an
initial focus on a preventative nasal/oral spray. The company confirmed classification with regulators and has undertaken an
accelerated development program. Starpharma has engaged contract manufacturing organisations, contract research organisations,
multiple specialist viral laboratories and consultants to conduct necessary testing to support registration of the product. Starpharma also
undertook activities to source program funding in addition to partnering discussions.
Progress with clinical-stage DEP® assets, including:
-
DEP® docetaxel, DEP® cabazitaxel and DEP® irinotecan trials progressed well with encouraging efficacy signals observed in each trial
and multiple new sites opened, including the Kinghorn Cancer Centre in Sydney. All three DEP® trials experienced a period of paused
new patient recruitment, with a greater impact on DEP® docetaxel due to its trial site locations. Despite this impact, DEP® irinotecan
phase 1 trial was completed ahead of schedule.
DEP® docetaxel + gemcitabine clinical combination study initiated.
DEP® cabazitaxel phase 1 met its objective of identifying a Recommended Phase 2 Dose (“RP2D”) and generating early safety and
efficacy data and transitioned to phase 2 ahead of schedule.
DEP® irinotecan phase 1 / 2 trial commenced and met its phase 1 objective of identifying a RP2D and generating early safety and
efficacy data and transitioned to phase 2 ahead of schedule.
Conducted multiple preclinical studies with DEP® irinotecan to explore value-adding combinations, including with Lynparza® and an
immuno-oncology agent – with impressive performance achieved in both studies. Data will contribute to the selection of potential
clinical combinations for the phase 2 DEP® irinotecan trial and will also support commercial discussions.
-
-
-
-
Advanced the preclinical DEP® pipeline, including development of:
-
New candidate, DEP® gemcitabine – which demonstrated significantly enhanced anti-tumour activity compared with Gemzar®
(gemcitabine) in a human pancreatic cancer model.
New candidate, a novel HER-2 Targeted DEP® (ADC) – which demonstrated significant tumour regression and 100% survival in a
preclinical human ovarian cancer model.
New radiotherapy candidate, DEP® lutetium – which showed statistically significant and durable anti-cancer activity in a human
prostate cancer model.
-
-
•
•
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Directors’ Report Remuneration Report
5. Executive remuneration outcomes, including link to performance (continued)
•
•
•
•
Progressed partnered DEP® programs, including:
-
Commencement of AstraZeneca’s phase 1 trial for its first DEP® product, AZD0466. The successful dosing of the first patient triggered
a US$3 million milestone payment to Starpharma.
Progress with other AstraZeneca DEP® programs, including the development of a DEP® version of one of their major oncology
medicines.
Advanced arrangements with potential partners of new Targeted (ADC) and non-ADC DEP® programs.
Signed up a new DEP® program with an existing partner in a novel area of cancer therapeutics and separately progressed an
agreement for a DEP® program in a new therapeutic area (anti-infectives) with a new commercial partner.
Progressed commercial discussions with two further major pharmaceutical companies for several partnered DEP® drug delivery
programs in oncology and non-oncology areas.
-
-
-
-
Five posters featuring products based on Starpharma’s DEP® platform were presented at the 2020 American Association for Cancer
Research (”AACR”) Annual Meeting.
The company was granted a TGA licence to manufacture API in-house, enabling Starpharma to prepare API for a range of DEP®
products for the conduct of human clinical trials, including late-stage phase 3 trials. This allows Starpharma to accelerate the
development of DEP® products for internal and partnered programs through rapid manufacture and development of DEP® materials.
Prudent management of Starpharma’s cash reserves during the COVID-19 pandemic and preserved Starpharma’s stable, highly
dedicated and skilled work-force.
In the assessment of STI KPIs, the Board took account of the significant achievements attained over the performance period and the effort and
dedication required to accomplish these milestones, particularly during the COVID-19 pandemic which posed challenges for trial recruitment
and supply chain continuity. These achievements include the successful launch of VivaGel® BV in the UK, Asia, Central and Eastern Europe
and New Zealand, obtaining regulatory approval in Europe for the VivaGel® condom and development of a new product category, a SPL7013
nasal/oral spray for COVID-19. In addition, the company achieved several DEP® milestones, across both the internal and external portfolio
including positive interim clinical trial results for three internal DEP® assets and the commencement of phase 1 for AstraZeneca’s first DEP®
product, as well as the advancement of three new internal DEP® candidates and progressing new agreements with new partners.
LTI Performance Assessment
Performance period
1 July 2017 to 30 June 2020
Performance category
Metric
Weighting
Satisfied
VivaGel® BV and Drug Delivery
DEP® Platform
Relative TSR
Monetisation of the VivaGel® and Drug Delivery portfolios
represented by the completion of a number of commercial
deals that build shareholder value and/or generate income.
Development of new DEP® candidates and the
commercialisation of DEP® candidates.
40%
Partially Met
30%
Partially Met
Starpharma’s TSR compared to the performance of the
S&P/ASX300 Index over a 3-year period
30%
Met
100%
In making this LTI assessment, the Remuneration and Nomination Committee and the Board considered the following factors (other
commercially sensitive matters not disclosed were also taken into account):
• VivaGel® and Drug Delivery:
- Signed a second commercial agreement with AstraZeneca to progress a DEP® version of one of AstraZeneca’s major existing
oncology medicines.
- Achieved launch of VivaGel® BV in the UK, Europe, Eastern Europe, Asia, Australia and New Zealand.
- Successfully licensed VivaGel® BV to ITF Pharma, Inc. for the US market for US$101M in milestones plus royalties.
- Signed licensing deals for VivaGel® BV with Mundipharma covering: Europe, Russia, CIS, Asia, Middle East, Africa, Latin America.
- Okamoto added 11 more Asian countries to its VivaGel® condom licence.
- Onset of revenue receipts from Aspen, Mundipharma and Okamoto.
- Achieved regulatory approvals for VivaGel® BV in several further regions including for countries in Asia and in the Middle East,
Australia and New Zealand. Achieved European approval for a second BV indication, for the prevention of recurrent BV.
- VivaGel® condom was approved in Japan and Europe and launched in Japan.
- VivaGel® BV NDA prepared, submitted, and subsequently accepted for filing.
- Supported the IND preparation, scale-up and final preclinical work to enable progression of AZD0466 into first human clinical trial in
-
the US.
Installed and commissioned in-house DEP® scale-up facilities and achieved TGA approval/GMP certification allowing manufacture
of DEP® products for clinical trials. This facility accelerates the development of both internal and partnered DEP® products by
providing more rapid and cost-effective manufacture of preclinical and clinical grade materials than with third-party manufacturers.
This facility has already provided significant savings for internal programs and revenues from manufacture of DEP® candidates for
partner programs.
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• DEP® Platform:
- DEP® docetaxel phase 1 trial was successfully completed, with a phase 2 trial commencing immediately after.
- Commenced and successfully completed DEP® cabazitaxel phase 1 trial, with a phase 2 trial commencing immediately after.
- Commenced and successfully completed DEP® irinotecan phase 1 trial, with a phase 2 trial commencing immediately after.
- Partnering discussions underway for internal DEP® candidates with licences to be sought at the most appropriate time to maximise
commercial value.
- Other preclinical DEP® candidates have been developed and advanced into preclinical development.
- Development of DEP® radiopharmaceutical candidates and targeted DEP® candidates, both currently undergoing preclinical
testing.
- Progressed several agreements with existing and new DEP® research partners.
• Relative TSR:
-
-
The company’s TSR was tested against the performance of the S&P/ASX300 Index for the three-year performance period ended
30 June 2020. The company’s annualised TSR for this period was 14.3% compared to the S&P/ASX300 Index annualised TSR of
1.1%, above the additional 10% per annum required.
The relative TSR is calculated independently by a professional services firm and more information regarding the relative TSR
hurdle is provided on page 28.
6. Details of remuneration
The following tables show details of the remuneration received by the directors and the key management personnel of the group for the current
and previous financial year. As required by the Accounting Standards, the value of performance rights included in the remuneration tables
relates to the fair value of the performance rights (which may include performance rights granted in prior years), rather than their face value.
2020
Name
Short-term benefits
Post-
employment
Cash salary &
fees†
$
Cash bonus#
$
Non-monetary
benefits
$
Superannuation
$
Long-term
benefits
Long service
leave
$
Share-based
payments
Performance
Rights#
$
Non-executive directors
R B Thomas
R A Hazleton
Z Peach
P R Turvey
D J McIntyre
122,374
77,000
71,689
71,689
24,167
Executive director
J K Fairley
519,499
Other KMP executives
N J Baade
A Eglezos
D J Owen
J R Paull
Totals
223,091
253,842
240,458
227,887
1,831,696
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11,626
–
6,811
6,811
–
–
–
–
–
–
–
–
–
–
–
Total
$
134,000
77,000
78,500
78,500
24,167
24,397
21,003
14,254
868,418
1,447,571
36,664
6,547
22,210
42,495
21,003
21,003
21,003
21,003
2,320
13,199
2,170
8,012
232,505
515,583
227,712
522,303
226,581
512,422
259,653
559,050
132,313
130,263
39,955
1,814,869
3,949,096
† Increases in overall total fixed remuneration packages for KMP executives were under 3.3% in FY20. Executives may elect to salary sacrifice
part of their total fixed remuneration package. Cash salary & fees represent gross salary earned less any salary sacrifice amounts. The two
forms of salary sacrifice in FY20 were leasing a motor vehicle under a novation arrangement, and the use of a car park. These amounts are
reported in non-monetary benefits, and these amounts for cash salary & fees may vary from one year to the next, depending on the elections
chosen.
# All performance related remuneration, including and cash bonuses and performance rights granted, are determined to be an ‘at risk’
component of total remuneration.
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Directors’ Report Remuneration Report
6. Details of remuneration (continued)
2019
Name
Short-term benefits
Post-
employment
Cash salary &
fees†
$
Cash bonus#*
$
Non-monetary
benefits
$
Superannuation
$
Long-term
benefits
Long service
leave
$
Share-based
payments
Performance
Rights#
$
Non-executive directors
R B Thomas
R A Hazleton
Z Peach
P R Turvey
118,721
74,500
68,950
68,950
–
–
–
–
–
–
–
–
11,279
–
6,550
6,550
–
–
–
–
–
–
–
–
Total
$
130,000
74,500
75,500
75,500
Executive director
J K Fairley
Other KMP executives
N J Baade
A Eglezos
D J Owen
J R Paull
Totals
491,564
202,488
35,081
20,531
13,453
980,260
1,743,377
214,738
76,000
36,700
244,475
80,000
7,529
232,678
70,000
22,073
218,479
80,000
42,633
20,531
20,531
20,531
20,531
2,079
2,566
2,277
7,591
201,322
551,370
204,064
559,165
203,047
550,606
230,888
600,122
1,733,055
508,488
144,016
127,034
27,966
1,819,581
4,360,140
† Increases in overall total fixed remuneration packages for KMP executives were under 5% in the year. Executives may elect to salary sacrifice
part of their total fixed remuneration package. Cash salary & fees represents gross salary earned less any salary sacrifice amounts. The two
forms of salary sacrifice in FY19 were leasing a motor vehicle under a novation arrangement, and the use of a car park. These amounts are
reported in non-monetary benefits, and these amounts for cash salary & fees may vary from one year to the next, depending on the elections
chosen.
# All performance related remuneration, including cash bonuses and performance rights granted are determined to be an ‘at risk’ component of
total remuneration.
* The cash bonus reported relates to amounts assessed to be paid for the performance period 1 July 2018 to 30 June 2019. The actual cash
payment of the bonuses will occur in the following financial year.
The relative proportions of remuneration for FY20 that are linked to performance and those that are fixed are as follows:
CEO
J K Fairley
Other KMP executives
N J Baade
A Eglezos
D J Owen
J R Paull
Fixed
remuneration
At risk - STI
cash
At risk - STI
Equity1
At risk - STI
Total
At risk - LTI
Equity1
Target
Actual
Target
Actual
Actual
Actual
Actual
35%
40%
50%
55%
56%
56%
54%
-%
-%
-%
-%
-%
17%
15%
15%
15%
15%
25%
17%
20%
15%
15%
15%
15%
40%
43%
30%
30%
29%
29%
31%
1 Where applicable, the expenses include negative amounts for expenses reversed during the year due to a failure to satisfy the vesting
conditions.
The actual remuneration mix for the CEO and other KMP executives for FY20 has deviated from the target ranges due to the STI cash bonus
not being awarded and the additional STI equity rights to be allocated in lieu of cash bonuses.
Non-statutory Executive Remuneration
The non-statutory executive remuneration is the remuneration earned by KMP executives in FY20 and is set out below with calculations of
equity value both at the vesting date and based on the face value at the beginning of the relevant performance period. Starpharma discloses
non-statutory remuneration voluntarily because it includes the face value of equity that vested in FY20. For LTI equity, the reported value
reflects the KMP executive performance over three years including the impact of the increase in the share price over the three year period.
The table differs from the remuneration details prepared above in this section 6 of this report which are prepared in accordance with statutory
obligations and accounting standards, and presents the expensing of the fair value of performance rights over their vesting period, and may
include the expensing of rights that may not ultimately vest into ordinary shares.
36 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
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Directors’ Report Remuneration Report
2020
Name
Fixed
remuneration
(1)
STI cash
paid in FY20
(2)
STI equity
vested in
FY20 based
on face value
(3)
LTI equity
vested in
FY20 based
on face value
(3)
STI equity
vested in
FY20 based
on share
price at
vesting date
(4)
LTI equity
vested in
FY20 based
on share
price at
vesting date
(4)
Total non-
statutory
remuneration
earned based
on face value
of equity (3)
Total non-
statutory
remuneration
earned
based on
share price
at vesting
date (4)
Total
remuneration
per
Accounting
Standards
(5)
($)
($)
($)
($)
($)
($)
($)
($)
($)
J K Fairley
564,899
202,488
131,305
131,305
543,659
977,455
1,442,261
1,876,146
1,447,571
N J Baade
A Eglezos
D J Owen
J R Paull
280,758
281,392
283,671
291,385
76,000
80,000
70,000
80,000
38,966
38,966
38,021
43,288
38,966
38,966
38,021
43,288
116,387
231,176
512,111
626,899
515,583
116,690
231,769
517,048
632,127
522,303
117,904
229,397
509,595
621,089
512,422
146,216
261,894
560,889
676,267
559,050
1 Base salary, superannuation and non-monetary benefits such as novated motor vehicle lease and car park benefits.
2 STI cash paid during the financial year. The amount disclosed for FY20 reflects the FY19 STI paid in October 2019 following the release of the
FY19 results.
3 Value of equity rights that vested during the year, based on the face value of the performance rights based on the 3 month VWAP prior to the
start of the relevant performance period (1 July). Vested rights will remain as rights in subsequent periods until exercised. The STI equity was
granted in FY19 and the LTI equity was granted in FY17.
4 Value of equity rights that vested during the year, based on the opening price on the date of vesting. Vested rights will remain as rights in
subsequent periods until exercised. The STI equity was granted in FY19 and the LTI equity was granted in FY17.
5 In accordance with statutory obligations and accounting standards in section 6 of this report, which includes expensing of rights over their
entire vesting period, and rights that may not ultimately vest into ordinary shares.
Equity awards and share price
The total non-statutory remuneration based on the vesting date share price is higher than the total remuneration per Accounting Standards and
the non-statutory remuneration based on face value. The higher amount is primarily driven by the value attached to the equity awards that
vested in FY20. As illustrated in the graph below, this reflects the strong share price performance over the relevant periods of up to a 1.8x fold
increase in share price compared with the face value of those rights at the time of allocation. The 3 year LTI rights are predominately driving the
higher reported value at the vesting date. Alternatively, if the share price were to have significantly decreased, the value of these equity awards
would have reduced accordingly. Furthermore, despite being reported in non-statutory remuneration the STI and LTI rights do not automatically
convert to shares, and no executives have exercised rights, so these values have not yet been realised.
Face value of equity awards granted
(based on 3 month VWAP to 30 June)
Equity awards vested (based on share price on
vesting date)
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 37
37
Directors’ Report Remuneration Report
6. Details of remuneration (continued)
Details of remuneration: cash bonuses, shares, and performance rights
For each cash bonus and grant of equity included in the tables on pages 35 to 40, the percentage of the available bonus or grant that was paid,
or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and performance
objectives is set out below. Performance rights vest over the specified periods provided vesting criteria are met. No rights will vest if the
conditions are not satisfied, hence the minimum value of the rights yet to vest is nil. The maximum value of the rights yet to vest has been
determined as the amount of the grant date fair value of the rights that is yet to be expensed. The CEO was awarded 0% of her maximum cash
bonus entitlement of $249,775 in FY20, with the total cash amount forfeited as described above in the report. In addition, no other KMP
executives were awarded cash bonuses in FY20. STI cash bonuses for other KMP executives are paid at the absolute discretion of the Board
based on an individual’s performance within the year, hence there is no component forfeited to report.
Grant date
fair value of rights
granted during
20201,2
$
793,684
Name
J K Fairley
N J Baade
211,646
A Eglezos
211,646
D J Owen
211,646
J R Paull
231,385
Year
granted
Vested
Forfeited
Performance rights
Maximum
fair value yet to
vest
Financial
years in which
rights may
vest
2020
2020
2019
2019
2018
2017
2020
2020
2019
2019
2018
2017
2020
2020
2019
2019
2018
2017
2020
2020
2019
2019
2018
2017
2020
2020
2019
2019
2018
2017
%
-
-
83%
-
-
96%
-
-
87%
-
-
91%
-
-
87%
-
-
91%
-
-
85%
-
-
90%
-
-
88%
-
-
94%
%
25%
-
17%
-
18%
4%
17%
-
13%
-
13%
9%
21%
-
13%
-
14%
9%
18%
-
15%
-
14%
10%
15%
-
12%
-
11%
6%
30/06/2021
30/06/2023
30/06/2020
30/06/2022
30/06/2021
30/06/2020
30/06/2021
30/06/2023
30/06/2020
30/06/2022
30/06/2021
30/06/2020
30/06/2021
30/06/2023
30/06/2020
30/06/2022
30/06/2021
30/06/2020
30/06/2021
30/06/2023
30/06/2020
30/06/2022
30/06/2021
30/06/2020
30/06/2021
30/06/2023
30/06/2020
30/06/2022
30/06/2021
30/06/2020
$
130,531
572,680
-
285,171
71,801
-
18,466
115,825
-
71,296
12,580
-
17,456
115,825
-
71,296
12,526
-
18,233
115,825
-
71,296
12,419
-
20,613
126,628
-
77,945
14,248
-
1 The value at grant date calculated in accordance with AASB 2 Share-based Payments of performance rights granted during the year as part of
remuneration.
2 The maximum value of performance rights is determined at grant date and is amortised over the applicable vesting period. The amount which
will be included in a given KMP executive’s remuneration for a given year is consistent with this amortised amount. No performance rights will
vest if the conditions are not satisfied, hence the minimum value yet to vest is nil.
38 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
38
Directors’ Report Remuneration Report
7. Executive employment agreements
Remuneration and other terms of employment for executives are formalised in employment agreements which set out duties, rights and
responsibilities, and entitlements on termination. All executives also have a formal position description for their role.
Major provisions of the agreements relating to remuneration are set out below for those KMP executives who are employed at the date of this
report.
CEO and Managing Director (J K Fairley)
•
•
•
•
•
No fixed term of agreement.
Base salary, inclusive of superannuation, per annum as at 30 June 2020 of $561,680, to be reviewed annually by the Remuneration and
Nomination Committee.
A cash bonus up to $249,775 for the year to 30 June 2020 allocated proportionately on the achievement of predetermined KPIs.
The CEO is entitled to participate in a STI and LTI equity plan, subject to receiving any required or appropriate shareholder approval.
Fringe benefits consist of on-site car parking.
The CEO’s termination provisions are as follows:
Notice Period
Payment in lieu
of notice
Treatment of equity STI
Treatment of LTI
Resignation
12 months
Termination for cause
None
N/A
None
Unvested awards forfeited
Unvested awards forfeited
Unvested awards (including an
exercisable, vested right)
forfeited
Unvested awards (including an
exercisable, vested right)
forfeited
Termination without cause,
including redundancy
12 months
6 months
payment in lieu
of notice with 6
month notice
period
Unvested awards lapse unless
the Board determines otherwise
after considering the portion of
the performance period that has
elapsed and the extent to which
performance conditions have
been met. Vesting of the rights
may be accelerated in this case.
Termination in cases of death,
disablement or other cause
approved by the Board
N/A
N/A
Unvested awards lapse, unless
the Board determines otherwise
after considering the portion of
the performance period that has
elapsed and the extent to which
performance conditions have
been met. Vesting of the rights
may be accelerated in this case.
Unvested awards lapse unless
the Board determines
otherwise after considering the
portion of the performance
period that has elapsed and
the extent to which
performance conditions have
been met. Vesting of the rights
may be accelerated in this
case.
Unvested awards lapse,
unless the Board determines
otherwise after considering the
portion of the performance
period that has elapsed and
the extent to which
performance conditions have
been met. Vesting of the rights
may be accelerated in this
case.
Other KMP executives
Standard executive termination provisions are as follows:
Notice Period
Payment in lieu
of notice
Treatment of equity STI
Treatment of LTI
Resignation
Termination for cause
Termination without cause,
including redundancy
3 months
None
Typically 3
months
(range 3-6
months)
N/A
None
3 months
(3-6 months)
Same as for CEO
Same as for CEO
Same as for CEO
Same as for CEO
Same as for CEO
Same as for CEO
Termination in cases of death,
disablement, or other cause
approved by the Board
N/A
N/A
Same as for CEO
Same as for CEO
There are no loans to the CEO or Other KMP executives.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 39
39
Directors’ Report Remuneration Report
8. Additional disclosures relating to employee equity schemes
Ordinary shares
The number of ordinary shares in the company provided as remuneration during the financial year to any of the directors or the key
management personnel of the group, including their close family members and entities related to them, are set out below. The table may also
reflect changes to shareholdings which are unrelated to remuneration.
2020
Name
Directors
R B Thomas
J K Fairley
R A Hazleton
Z Peach
P R Turvey
D J McIntyre#
Other KMP executives
N J Baade
A Eglezos
D J Owen
J R Paull
Balance at the
start of the year
Granted during
the year as
compensation
On exercise of
performance rights
during the year
Other changes
during the year*
Balance at the
end of the year
825,000
3,905,434
208,466
48,975
179,821
16,240
600,291
331,003
637,482
291,106
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(106,212)
(8,461)
(57,680)
(60,000)
825,000
3,905,434
208,466
48,975
179,821
16,240
494,079
322,542
579,802
231,103
* Other changes relate to market transactions
# Appointed as a non-executive director on 1 March 2020, balance at the start of the year reflects his shareholding as at 1 March 2020.
Performance rights
The number of rights over ordinary shares in the company provided as remuneration during the financial year to any of the executive directors
and the KMP executives, including their close family members and entities related to them, are set out below. No non-executive director held
performance rights in FY20 or the prior year.
2020
Name
Directors
Balance at the
start of the
year
Granted during
the year as
compensation
Exercised
during the year
Other changes
during the year#
Balance at the
end of the year
Vested and
exercisable at
the end of the
year Total Unvested
J K Fairley
3,835,087
670,996
Other KMP executives
N J Baade
A Eglezos
D J Owen
993,492
994,658
997,575
193,000
193,000
193,000
J R Paull
# Other changes during the year relate to the forfeiture of rights.
1,127,478
211,000
-
-
-
-
-
(52,969)
4,453,114
2,346,318
2,106,796
(25,001)
(24,487)
(27,352)
(18,295)
1,161,491
1,163,171
1,163,223
1,320,183
558,091
559,771
559,823
660,383
603,400
603,400
603,400
659,800
The market value at vesting date of performance rights that vested into shares during 2020 was $2,222,235 (2019: $3,667,459). No other
shares were issued on the vesting of performance rights provided as remuneration to any of the directors or the KMP of the group in the current
year.
The market value is calculated using the opening share price on the respective vesting/exercise date or forfeit date.
Dilutionary impact of performance rights on issue
As at 30 June 2020 there were 14,780,525 performance rights on issue, representing 4.0% of the 372,562,687 shares on issue (SOI) at 30 June
2020. There were 9,261,182 rights which were held by KMP, representing 2.5% of SOI, of which 4,453,114 (1.2% of SOI) were approved by
shareholders.
40 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
40
Directors’ Report Remuneration Report
The terms and conditions of the grant of performance rights to the directors or the key management personnel of the group in the current year or
which impact future years are as follows:
Grant date
Vesting date
Performance measure
Number
of rights
granted
Fair value per right
at grant date % vested
13 October 2016
30 September 2019 765,000
Achievement of KPIs
13 October 2016
30 September 2019 135,000
TSR
29 November 2016
30 September 2019 537,191
Achievement of KPIs
29 November 2016
30 September 2019 339,787
TSR
10 August 2017
30 September 2020 890,800
Achievement of KPIs
10 August 2017
30 September 2020 157,200
TSR
29 November 2017
30 September 2020 535,816
Achievement of KPIs
29 November 2017
30 September 2020 360,063
TSR
16 August 2018
30 June 2020 158,000
Achievement of KPIs
16 August 2018
30 September 2021 537,200
Achievement of KPIs
16 August 2018
30 September 2021 94,800
TSR
29 November 2018
30 June 2020 134,980
Achievement of KPIs
29 November 2018
30 September 2021 377,945
Achievement of KPIs
29 November 2018
30 September 2021 161,976
TSR
17 October 2019
30 June 2021 158,000
Achievement of KPIs
17 October 2019
30 September 2022 537,200
Achievement of KPIs
17 October 2019
30 September 2022 94,800
TSR
21 November 2019
30 June 2021 134,199
Achievement of KPIs
21 November 2019
30 September 2022 375,758
Achievement of KPIs
21 November 2019
30 September 2022 161,039
TSR
$0.68
$0.43
$0.68
$0.41
$0.77
$0.54
$1.29
$1.23
$1.26
$1.26
$0.85
$1.48
$1.48
$1.13
$1.15
$1.15
$0.71
$1.29
$1.29
$0.85
90
100
94
100
Nil
Nil
Nil
Nil
87
Nil
Nil
83
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Information of the performance measures:
Achievement of KPIs:
The achievement of certain key business performance indicators linked to matters which the Board believes
are key drivers of shareholder value.
Relative TSR (TSR):
As set out on page 28 of the remuneration report.
- end of remuneration report -
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 41
41
Directors’ Report
Shares under rights
Insurance of officers
Unissued ordinary shares of Starpharma Holdings Limited under
the Employee Performance Rights Plan at the date of this report
are as follows:
Grant date
Vesting date
Number of
rights
granted
Balance of
rights
at date of
report
11 Nov 2015
30 Sep 2018
2,076,800
1,115,794
During the financial year, Starpharma Holdings Limited paid a
premium to insure the directors and executive officers of the
company and related bodies corporate, against certain liabilities
and expenses.
In accordance with normal commercial practice, the disclosure of
the amount of premium payable, and the nature of the liabilities
and expenses covered by the policy, is prohibited by a
confidentiality clause in the contract.
11 Nov 2015
30 Jun 2017
519,200
251,625
Audit & non-audit services
19 Nov 2015
30 Sep 2018
893,851
836,260
19 Nov 2015
30 Jun 2017
219,395
181,001
13 Oct 2016
30 Jun 2018
594,450
281,314
13 Oct 2016
30 Sep 2019
2,377,800
1,528,234
29 Nov 2016
30 Jun 2018
223,022
172,842
29 Nov 2016
30 Sep 2019
876,978
846,281
10 Aug 2017
30 Jun 2019
694,120
434,260
10 Aug 2017
30 Sep 2020
2,776,480
2,451,673
29 Nov 2017
30 Jun 2019
224,121
197,226
29 Nov 2017
30 Sep 2020
895,879
895,879
16 Aug 2018
30 Jun 2020
203,500
170,356
16 Aug 2018
30 Sep 2021
814,000
814,000
2 Nov 2018
30 Jun 2020
259,147
210,827
2 Nov 2018
30 Sep 2021
1,036,587
833,409
29 Nov 2018
30 Jun 2020
134,980
112,708
29 Nov 2018
30 Sep 2021
539,921
539,921
17 Oct 2019
30 Jun 2021
459,767
448,344
17 Oct 2019
30 Sep 2022
1,839,067
1,787,575
21 Nov 2019
30 Jun 2021
134,199
134,199
21 Nov 2019
30 Sep 2022
536,797
536,797
Performance rights and the resultant shares are granted for nil
consideration.
The company may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with the company and/or the group are
important. Details of the amounts paid or payable to the auditor
(PricewaterhouseCoopers) for audit services provided during the
year is set out below. There were no non-audit services provided
by the auditor during the financial year.
During the year, the following fees were paid or payable for
services provided by the auditor (PricewaterhouseCoopers) of the
company, its related practices and non-related audit firms.
Assurance Services
Audit or review of financial reports of the
entity or any entity in the group under the
Corporations Act 2001
2020
$
2019
$
146,462
137,537
No other assurance services, taxation or advisory services have
been provided by the auditor in either the current or prior year.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 is set out on
page 43.
Rounding of amounts
The company is of a kind referred to in ASIC Corporations
(Rounding Financial/Directors' Reports) Instrument 2016/191,
issued by the Australian Securities and Investments Commission,
relating to the “rounding off’’ of amounts in the directors’ report.
Amounts in the directors’ report have been rounded off in
accordance with that Instrument to the nearest thousand dollars, or
in certain cases, the nearest dollar.
Shares issued on the exercise of vested rights
Auditor
The following ordinary shares of Starpharma Holdings Limited
were issued during the year to the date of this report on the
exercise of vested performance rights granted under the Employee
Performance Rights Plan. The shares are issued for nil
consideration.
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.
Date rights granted
Issue price of shares
(Exercise price of
right)
Number of shares
issued
11 Nov 2015
13 Oct 2016
10 Aug 2017
$ -
$ -
$ -
296,461
377,269
161,690
Robert B Thomas AO
Chairman
Melbourne, 27 August 2020
42 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
42
Auditor’s Independence Declaration
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
Auditor’s Independence Declaration
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
As lead auditor for the audit of Starpharma Holdings Limited for the year ended 30 June 2020, I declare
that to the best of my knowledge and belief, there have been:
The Group operates in the biotechnology industry, undertaking development of dendrimer technology
for pharmaceutical, life science and other applications. The Group owns a portfolio of proprietary
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation
technology with applications in different stages between development and commercialisation.
to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Starpharma Holdings Limited and the entities it controlled during the
period.
Materiality
Audit scope
Key audit matters
Amongst other relevant topics, we
Melbourne
communicated the following key
27 August 2020
audit matters to the Audit and Risk
Committee:
Disposal of Starpharma
Agrochemicals
Research and development tax
incentive
These are further described in the
Key audit matters section of our
report.
Our audit focused on where the
Group made subjective judgements;
for example, significant accounting
estimates involving assumptions
and inherently uncertain future
events.
All audit procedures are performed
by PwC Australia, consistent with
the location of Group management
and financial records.
We tailored the scope of our audit
taking into account the accounting
processes and controls, and the
industry in which the Group
operates.
For the purpose of our audit we used
Brad Peake
overall Group materiality of $0.76
Partner
million, which represents approximately
PricewaterhouseCoopers
5% of the Group’s adjusted loss before
tax.
We applied this threshold, together with
qualitative considerations, to determine
the scope of our audit and the nature,
timing and extent of our audit procedures
and to evaluate the effect of
misstatements on the financial report as a
whole.
We chose Group adjusted loss before tax
because, in our view, it is the benchmark
against which the performance of the
Group is most commonly measured. We
adjusted for the impact of the gain on
disposal of Starpharma Agrochemicals as
the financial statement line item is not
expected to reoccur and has a
disproportionate impact on the earnings
result for the period.
We utilised a 5% threshold based on our
professional judgement, noting it is
within the range of commonly acceptable
profit related thresholds in the
biotechnology industry.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Page 80 of 88
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 43
43
Corporate Governance Statement
Starpharma Holdings Limited (“the company”) and the Board are
committed to achieving and demonstrating the highest standards
of corporate governance. The Board guides and monitors the
company’s activities on behalf of the shareholders. In developing
policies and setting standards, the Board considers the Australian
Securities Exchange (“ASX”) Corporate Governance Principles
and Recommendations (3rd Edition) (“the 3rd Edition CGC
Recommendations”).
The Corporate Governance Statement set out below describes the
company’s current corporate governance principles and practices
which the Board considers to comply with the 3rd Edition CGC
Recommendations. All of these practices, unless otherwise stated,
were in place for the entire financial year 2020. The ASX has also
published a 4th edition of the Corporate Governance Principles and
Recommendations (“4th Edition CGC Recommendations”) for
reporting on in the FY21 Annual Report. Notwithstanding this,
Starpharma already complies with a number of these 4th Edition
CGC Recommendations, as detailed below. This Corporate
Governance Statement is available on the company’s website. The
company and its controlled entities together are referred to as the
group in this statement. This report is current as at 27 August 2020
and was approved by the Board on that date.
Principle 1: Lay solid foundations for management and oversight
Relationship between the Board and management
The relationship between the Board and senior management is
critical to the group’s long-term success. The directors are
responsible to the shareholders for the performance of the group in
both the short and the longer term and seek to balance sometimes
competing objectives in the best interests of the group as a whole.
Their focus is to enhance the interests of shareholders and other
key stakeholders and to ensure the group is properly managed.
1.1 Responsibilities of the Board
The responsibilities of the Board include oversight, accountability
and approval in relation to certain:
-
-
-
-
-
-
Strategic issues;
Shareholding items;
Financial items;
Expenditure items;
Audit related items; and
Board and senior management, delegation and succession.
Other Board responsibilities include:
-
enhancing and protecting the reputation and culture of the
group;
overseeing the operation of the group, including its systems
for control, accountability, and risk management;
-
- monitoring financial performance;
-
-
liaising with the company’s auditors;
ensuring there are effective management processes in place
and approving major corporate initiatives;
company values and code of conduct;
satisfying itself regarding the risk management framework
and setting risk appetite;
overseeing the process for timely and balanced disclosure of
material information; and
reporting to shareholders.
-
-
-
-
Further details regarding the responsibilities of the Board are
detailed in the Board charter. The Board’s conduct is governed by
the company’s constitution. Both documents are available at
www.starpharma.com/corporate_governance
1.2 Director appointment and election
Before appointing a director or putting forward a candidate to
shareholders for election, the Remuneration and Nomination
Committee will undertake appropriate background checks. The
Remuneration and Nomination Committee will also provide all
material information which is relevant to whether or not a person
should be elected or re-elected as a director to the Board for
provision to shareholders (including in relation to independence
and a recommendation regarding support or otherwise to the
candidate’s appointment or election).
The other commitments of non-executive directors are routinely
reviewed by the Board in addition to being considered by the
Remuneration and Nomination Committee prior to their
appointment to the Board, and are reviewed at least annually. Prior
to appointment or being submitted for re-election, each non-
executive director is required to specifically acknowledge that they
have and will continue to have the time available to discharge their
responsibilities to the company.
The company’s constitution specifies that all non-executive
directors must retire from office no later than three years or the
third annual general meeting (AGM) following their last election
(whichever is longer), and that an election of directors must take
place each year. Any director, excluding the Managing Director
44 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
(CEO) who has been appointed during the year must stand for
election at the next AGM.
In relation to director tenure, the Board charter provides that it is
anticipated that non-executive directors would generally hold office
for up to ten years, and shall serve a maximum of fifteen years
from date of first election by shareholders.
The Board, on its initiative and on an exceptional basis, may
exercise discretion to extend this maximum term where it
considers that such an extension would benefit the company.
Starpharma’s policy on non-executive director tenure is consistent
with ASX guidance which acknowledges that shareholders are
likely to be served well by a mix of directors, including some with a
longer tenure who have accumulated experience and developed a
‘corporate memory’ over a substantial period.
Director
R B Thomas
R A Hazleton
Z Peach
P R Turvey
J K Fairley
D J McIntyre
Date first elected by shareholders
November 2014
November 2007*
November 2011
November 2012
N/A appointed by the Board in 2006
N/A appointed by the Board in 2020,
standing for election at 2020 AGM
* Mr Hazleton was appointed in 2006 prior to being elected by
shareholders the following year. The Board has considered the
tenure of Mr Hazleton as part of its independence assessment of
all directors. Despite the length of time served on the Board, Mr
Hazleton has been assessed as ‘independent’. In determining this,
the Board took into consideration his physical location in the U.S.,
whereby there is no suggestion that he is involved in the day-to-
day operations or activities of the senior management team of
Starpharma. Mr Hazleton will retire at the 2020 AGM.
David McIntyre was appointed to the Board on 1 March 2020, and
will stand for election at the 2020 AGM.
1.3 Written agreements with Directors and Senior Executives
New directors receive a letter of appointment, which outlines the
company’s expectations of the director in relation to their
participation, time commitments and compliance with policies and
regulatory requirements.
Senior executives and all employees are required to sign
employment agreements which set out the key terms of their
employment. All roles have formal position descriptions.
1.4 Responsibilities of the Company Secretary
The Company Secretary supports the effective functioning of the
Board and its committees. The Company Secretary is accountable
directly to the Board, through the Chair, on all matters related to
the proper functioning of the Board. The specific responsibilities of
the Company Secretary are detailed in the Board charter, which is
available at www.starpharma.com/corporate_governance
1.5 Diversity objectives and achievement
The company is committed to workplace diversity, and the Board
values the level of diversity already present within the organisation,
believing that continuing to promote diversity is in the best
interests of the company, its employees and its shareholders.
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Corporate Governance Statement
The Board last revised its Diversity Policy in March 2020, which
operates alongside the Code of Conduct (including Anti-
Discrimination, Bullying and Harassment) policy, providing a
framework for Starpharma to achieve a number of diversity
objectives. The Diversity Policy is available at
www.starpharma.com/corporate_governance
Independent of external corporate governance initiatives, the
company has embraced a culture of inclusion and equal
opportunity across diversity areas recognised as potentially
impacting upon equality in the workplace, with a focus on gender
but without limiting other aspects of diversity.
The company recognises the corporate benefits of diversity of its
workforce and the Board, and realises the importance of being
able to attract, retain and motivate employees from the widest
possible pool of available talent. In accordance with the Diversity
Policy, the Board has established measurable objectives for
achieving gender diversity and has conducted an assessment of
the objectives and progress in achieving them.
Objectives set by the Board for the 2020 financial year, and
progress against these objectives is set out below:
Objective
Measurement
FY20 Performance
Female participation/talent
pipeline
Achieve greater than 40% female
participation for direct reports to the CEO
or senior executives (CEO minus 2).
Actively support and encourage training,
networking and development opportunities
for high potential employees.
50% of CEO minus 2 positions are held by females.
Professional development opportunities and options
that are aligned with the company’s needs and the
individual’s role are considered for all employees as
part of the company’s annual performance review
process and as needed during the year. Investments
in formal/external development programs are made
where appropriate and in FY20, 58 professional
development programs including conferences were
attended by female employees across all levels of the
organisation.
The company also continues to support participation of
all female staff in a biotech industry networking
initiative, which included presentations by industry role
models, however in FY20 this event was impacted by
COVID-19 and was postponed.
Equal opportunity employer
Inclusion of female candidates in
recruitment process for each role with
female applicants, including for Board
appointments.
Female candidates participated in every recruitment
process throughout FY20. 57% of the positions
advertised and filled externally were filled with female
candidates.
Remuneration parity
Consistent and merit-based selection
criteria and recruitment processes used
when choosing successful candidates in
all cases.
Ensure no significant remuneration
difference for individuals in similar roles,
based on gender.
100% of successful candidates were selected on
merit-based criteria after taking part in Starpharma’s
selection process.
Analysis was completed of pre- and post-remuneration
review “remuneration differentials to benchmarks” by
gender, and confirmed there were no significant
gender differences in remuneration relative to role
benchmarks.
Flexible working arrangements
Employees working under flexible working
arrangements (including part time).
18% of employees work under flexible working
arrangements, unrelated to the COVID-19 restrictions.
Granting a majority of requests for flexible
work arrangements for family
responsibilities.
Mutually satisfactory flexible work arrangements were
reviewed and agreed between the requesting
employee and the company in 100% of cases during
FY20.
Support a return to work after
parental leave
Target a return to work following primary
care parental leave of 75%.
No employees were due to return from primary care
parental leave during FY20. Three employees went on
primary care parental leave during this period.
Just under half (49%) of Starpharma’s employees are female,
maintaining a similar gender representation to that of previous
years. As captured in Starpharma’s diversity objectives (above),
the company strives to put in place measures, such as flexible
working arrangements, specifically to encourage participation by
all. The table below sets out the proportion of female employees in
the whole organisation, in leadership/management roles, in senior
executive positions and on the Board as at July 2020.
Starpharma continues to have a high level of both gender and
general diversity, however given the relatively small number of
total employees, a change of one or few employees may have a
significant impact on the company’s performance in respect of the
measurable diversity objectives.
Starpharma is also proud of the ethnic diversity of our employee
population, with 45% of all employees born outside Australia in 15
different countries.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 45
45
Corporate Governance Statement
% Female
2020
2019
Whole organisation (staff and
Board)
49% (24/49)
50% (24/48)
Leadership/management roles 50% (9/18)
60% (12/20)
Senior executive (CEO &
direct reports)
43% (3/7)
43% (3/7)
Board
33% (2/6)
40% (2/5)
Principle 2: Structure the Board to add value
2.1 Board committees
The Board has established two committees to assist in the
execution of its duties and to allow detailed consideration of
complex issues. The appropriateness of the committee structure
and membership is reviewed on an annual basis. Board
committees are chaired by an independent director other than the
Chairman of the Board. Where applicable, matters determined by
committees are submitted to the full Board as recommendations
for Board decisions.
The committees established by the Board are:
-
-
Remuneration and Nomination Committee; and
Audit and Risk Committee.
Each committee’s charter sets out its role, responsibilities,
composition and structure. The committee charters are reviewed
annually and were last reviewed in March 2020. Committee
charters are available at
www.starpharma.com/corporate_governance
Both committees report regularly to the Board and minutes of
committee meetings are provided to the Board.
2.1.1 Remuneration and Nomination Committee
The Remuneration and Nomination Committee is composed of
three independent non-executive directors. At the date of this
report the committee consisted of the following:
Ms Z Peach (Chairman)
Mr R B Thomas
Mr R Hazleton
Details of these directors’ qualifications and attendance at
committee meetings are set out in the directors’ report on pages
13 to 19.
The charter of the Remuneration and Nomination Committee deals
with items, to the extent delegated by the Board, related to
reviewing and making recommendations to the Board in respect of
the following:
-
Board and director candidate identification, appointments,
elections, composition, independence, tenure and
succession;
Remuneration and incentive policies and practices generally;
Remuneration packages and other terms of employment for
executive directors, other senior executives and non-
executive directors;
The succession of the CEO and other senior executives;
Diversity related items;
Board skills matrix;
Background checks for director candidates;
-
-
-
-
-
-
1.6 Board, committee and director performance
The performance of the Board and its committees are reviewed
each year by the Chairman based on the completion of a formal
feedback questionnaire by each director. The summarised results
are then reported back to and discussed by the Board. This
performance evaluation took place in FY20.
1.7 CEO and senior executive performance
Performance assessments for senior executives take place
annually and took place during the year. Performance review
timing of executives occur throughout July/August in respect of the
prior financial year. The process for these assessments is
described in the remuneration report under the heading
“Remuneration governance” on page 21 of this report.
As part of the Board discussion on executive performance,
directors give consideration to succession planning and
development to ensure continuity and a smooth leadership
transition in the event of senior executive movements. Separate
succession planning discussions are also held as appropriate
during the year.
-
Provision and oversight of induction and training development
opportunities for directors;and
- Minimum shareholding requirements for non-executive
directors (if any).
The Remuneration and Nomination Committee charter is available
at www.starpharma.com/corporate_governance
2.1.2 Audit and Risk committee
The Audit and Risk Committee is comprised of four independent
non-executive directors. At the date of this report the committee
consisted of the following:
Mr P Turvey (Chairman)
Mr R B Thomas
Mr R Hazleton
Mr D McIntyre
Details of these directors’ qualifications and attendance at
committee meetings are set out in the directors’ report on pages
13 to 19.
Each member of the Audit and Risk Committee is financially
literate, and jointly possess a number of relevant finance
qualifications and experience. As a collective, the members of the
Audit and Risk Committee between them have substantial
financial, accounting and risk management related/technical
expertise, as well as a sufficient understanding of the
biotechnology industry, to be able to discharge the committee’s
mandate effectively. Members have held relevant senior positions
in finance and risk management in large, complex international
companies and are or have been members of other ASX-listed
company audit committees. Such positions include chief financial
officer, financial controller, director of finance, chief accounting
officer, head of risk management and Chairman of Corporate Risk
Management Committee, and broker/analyst roles. Mr McIntyre is
a CPA, and Mr Thomas is approved under the NSW
prequalification scheme for Audit and Risk Committee Independent
Chairs and Members for government/public sector agencies.
The Board continually reviews committee membership to ensure
the appropriate qualifications, skills and experience, which are
currently optimal.
The committee meets at least twice a year, and has direct access
to the company’s auditor.
The charter of the Audit and Risk Committee deals with items, to
the extent delegated by the Board, related to reviewing and
making recommendations to the Board in respect of the following:
-
Annual report, half-year financial report and financial
forecasts or guidance given to the market;
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Starpharma Holdings Limited Annual Report 2020
46
Corporate Governance Statement
-
Systems of risk management and internal controls and review
and recommendations on certain material exposure;
All aspects related to the external auditor;
Related party transactions;
-
-
- Material incidents; and
-
Insurance.
The Audit and Risk Committee charter is available at
www.starpharma.com/corporate_governance
2.2 Board skills
Part of the role of the Remuneration and Nomination Committee is
to assist the Board to review Board composition and succession
planning. Both the Board and the Remuneration and Nomination
Committee work to ensure that the Board continues to have the
right balance and mix of diversity (including gender), skills,
experience, background and independence necessary to
discharge its responsibilities.
The current composition of Starpharma’s Board includes directors
with core industry experience, as well as senior finance and risk
management experience, essential for the Audit and Risk
Committee.
A skills and experience matrix is used to review the combined
capabilities of the Board. A mix of general and specialty skills and
experience areas critical to the success of the company are
selected for directors to assess themselves against. Each area is
closely linked to the company’s core objectives and strategy.
The directors rated the depth of their skill and experience in each
of the following areas:
Leadership in Healthcare and/or Scientific Research;
Licensing and commercialisation of innovation;
1.
2. Pharmaceutical/Product Development;
3.
International experience;
4. Regulation/Public Policy;
5.
6. Science and Technology
7. Sales, Marketing and Business Development;
8. Governance;
9. Strategy & Risk Management;
10. Accounting/Corporate Finance;
11. Health, Safety & Environment;
12. Remuneration;
13. M&A/Capital Markets; and
14. Audit and Risk.
The results of the matrix show that there are three or more
directors with intermediate to deep skills and experience in each of
the fourteen areas above.
The breadth and depth of the desired skills and experience
represented by the directors is notable considering the size of the
Board, and no existing or projected competency gaps have been
identified. This process provides an important input to succession
planning for the Board.
Having regard to the current and future activities of the company,
the Board considers that collectively it has the appropriate skills
and experience in each area.
2.3 Board members
Details of the members of the Board, their experience,
qualifications, term of office and independence status are set out in
the directors’ report under the heading “Information on Directors”.
There are five non-executive directors, all of whom are deemed
independent under the principles set out below, and one executive
director, at the date of signing the directors’ report. The Board
seeks to ensure that:
– at any point in time, its membership represents an appropriate
balance between directors with experience and knowledge of the
group and directors with an external or fresh perspective; and
– the size of the Board is appropriate for the company and
conducive to effective discussion and efficient decision-making.
The Board reviews the commitments of each non-executive
director, such as other directorships, to consider each director’s
capacity to dedicate sufficient time to the company.
Starpharma’s CEO also sits on the board of listed small-cap
investment company Mirrabooka as a non-executive director. This
external post exposes both Dr Fairley and Starpharma to insights
from institutional investors and further extends the company’s
network and provides her with a different vantage point. Dr Fairley
remains fully committed to her CEO role at Starpharma and the
Board has carefully considered the time commitment to ensure her
leadership of Starpharma is not impacted.
Prior to David McIntyre’s appointment, the Remuneration and
Nomination Committee and Board considered David’s executive
and non-executive roles. There was no question as to the
commitment that he would provide to the role and his impressive
skills and industry experience which would provide significant
benefit to Starpharma.
2.4 Directors’ independence
The Board charter contains guidelines for assessing the materiality
of directors’ relationships that may affect their independence.
These guidelines are aligned with the 3rd Edition CGC
Recommendations. The Board charter is available at
www.starpharma.com/corporate_governance
The Board reviews the independence of directors before they are
appointed, on an annual basis and at any other time where the
circumstances of a director change such as to require
reassessment. The Board has determined that all non-executive
directors are independent at the date of this report. Refer to
Section 1.2 for additional information on the independence of Mr
Hazleton.
The CEO is not considered independent by virtue of being an
executive director and a member of management.
2.5 Chairman and Chief Executive Officer (CEO)
The current Chairman, Mr Thomas, is an independent non-
executive director appointed in 2013 and Chairman in June 2014.
The CEO, Dr Jackie Fairley, was appointed as a director and CEO
on 1 July 2006. The Chairman is responsible for leading the Board,
ensuring directors are properly briefed in all matters relevant to
their role and responsibilities, facilitating Board discussions and
managing the Board’s relationship with the company’s senior
executives. The Board has established the functions delegated to
the CEO. The CEO is responsible for implementing company
strategies and policies, and for the day to day business operations
of the group in accordance with the strategic objectives of the
group as approved by the Board from time to time.
In accordance with current practice, the Board’s policy is for the
roles of Chairman and CEO to be undertaken by separate people.
2.6 Director induction and professional development
The Remuneration and Nomination Committee oversees, reviews
and make recommendations to the Board in relation to the
induction, training and development of non-executive directors, to
ensure they have access to appropriate learning and development
opportunities to develop and maintain the skills and knowledge
required to effectively perform in their role as a director.
The Board receives regular updates at Board meetings and Board
workshops which assist directors in keeping up to date with
relevant market and industry developments.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 47
47
Corporate Governance Statement
Principle 3: Act ethically and responsibly
3.1 Code of conduct
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. The company has established a code of conduct
reflecting the core values of the company and setting out the
standards of ethical behaviour expected of directors, officers and
employees in all dealings and relationships including with
shareholders, contractors, customers and suppliers, and with the
company. The code of conduct is provided to new starters as part
of their induction and behaviour is continually monitored to ensure
compliance.
Principle 4: Safeguard integrity in financial reporting
4.1 Audit and Risk Committee
The company has established an Audit and Risk Committee
consisting of four independent non-executive directors. Details
regarding composition, meetings and charter are set out in
sections 2.1 and 2.1.2 of this Corporate Governance Statement.
4.2 CEO and CFO Declarations for financial statements
Before the Board approves the company’s financial statements for
the half year or full year, the CEO and CFO are required to provide
a declaration that, in their opinion, the financial records of the
entity have been properly maintained and that the financial
statements comply with the appropriate accounting standards and
give a true and fair view of the financial position and performance
of the entity and that the opinion has been formed on the basis of a
sound system of risk management and internal control which is
operating effectively.
These declarations have been provided by the CEO and CFO to
the Board in respect of the 2020 half year financial statements and
the 2020 full year financial statements which are included in this
annual report.
Principle 5: Make timely and balanced disclosures
5.1. Continuous disclosure
The company has developed a continuous disclosure and
shareholder communication policy to ensure compliance with the
ASX Listing Rules and to facilitate effective communication with
shareholders.
The Board has appointed the Company Secretary as the person
responsible for disclosure of information to the ASX. The CEO and
Company Secretary are responsible for ensuring that all
announcements made by Starpharma to the ASX are accurate,
balanced and comply with legal and ASX requirements, and are
expressed in a clear and objective manner that allows an investor
or its professional advisers to understand its ramifications and to
assess its impact on the price or value of Starpharma securities.
The policy also sets out the requirements for ensuring compliance
with the continuous disclosure requirements of the ASX Listing
Rules and overseeing and co-ordinating disclosure to the ASX,
analysts, brokers, shareholders, the media and the public.
The code of conduct is reviewed periodically and was last updated
in March 2020. The code of conduct covers employment practices,
equal opportunity, harassment and bullying, conflicts of interest,
use of company assets and disclosure of confidential information.
During the year, aspects related to whistleblowing and anti-bribery
and corruption were separated from the code of conduct and
embodied in separate specific policies. The code of conduct is
available at www.starpharma.com/corporate_governance.
4.3 External auditors
The company’s policy is to appoint external auditor who clearly
demonstrates quality and independence. The performance of the
external auditor is reviewed annually. The current auditor,
PricewaterhouseCoopers, has been the external auditor of the
company since it commenced operations. It is
PricewaterhouseCoopers’ policy to rotate audit engagement
partners on listed companies at least every five years, with a new
audit engagement partner for FY20. An analysis of fees paid to the
external auditor is provided in note 19 to the financial statements.
It is the policy of the external auditor to provide an annual
declaration of their independence to the Audit and Risk
Committee. The external auditor attends each AGM and is
available to answer questions shareholders may have in relation to
the Auditor’s Report and the conduct of the audit.
Procedures have been established for reviewing whether there is
any price sensitive information that should be disclosed to the
market or whether any price sensitive information may have been
inadvertently disclosed.
Except in exceptional circumstances, all ASX announcements
(other than standard compliance announcements or newsletters
with no new material information) require the approval of the
Chairman, or another non-executive director in his absence.
The Board receives copies of all ASX announcements prior to
lodgement with ASX.
A copy of the policy is available on the company’s website at
www.starpharma.com/corporate_governance
Principle 6: Respect the rights of shareholders
6.1 Information on website
The company provides ready access to its shareholders and
members of the public to information about the company and its
governance on its website at www.starpharma.com
6.2 Communication with investors
The company recognises that shareholders may not be aware of
all company developments at all times, notwithstanding the release
of information to the ASX in accordance with the company’s
continuous disclosure policy and the law. In addition to ensuring
that all ASX announcements and company reports are available on
the company’s website as soon as possible following confirmation
by the ASX of receipt of the announcement, the company will send
to each shareholder who has so requested, either by post or email
to their nominated address, annual reports.
ASX announcements are also posted on the OTCQX website
(www.otcqx.com) in order to provide timely disclosure to US
investors trading in the company’s Level One ADRs
(OTCQX:SPHRY). The company’s website also has an option for
shareholders to register their email address for direct email
updates which the company may send for material company
matters to, where they have previously been released to ASX and
OTCQX.
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Starpharma Holdings Limited Annual Report 2020
48
Corporate Governance Statement
6.3 Participation at Annual General Meetings
The Annual General Meeting (AGM) is generally held in November
each year. The Notice of Meeting and related Explanatory Notes
are distributed to shareholders in accordance with the
requirements of the Corporations Act.
The AGM provides an opportunity for the Board to communicate
with shareholders through the Chairman’s address and the CEO’s
presentation.
Shareholders are given the opportunity, through the Chairman, to
ask general questions of the Board. Shareholders who are unable
to attend the meeting in person may submit written questions
together with their proxy form, to be addressed in the Chairman’s
address, CEO’s presentation or put to the meeting by the
Chairman. The external auditor attends each AGM and is available
to answer questions shareholders may have in relation to the
Auditor’s Report and the conduct of the audit.
Principle 7: Recognise and manage risk
7.1. Audit and Risk Committee
The company has established an Audit and Risk Committee
consisting of four independent non-executive directors. Details
regarding composition, meetings and charter are set out in section
2.1 and 2.1.2 of this Corporate Governance Statement.
7.2 Risk assessment and management
The Board, through the Audit and Risk Committee, is responsible
for ensuring there are adequate policies in relation to risk
management, compliance and internal control systems. The
company operates in a challenging and dynamic environment, and
risk management is viewed as integral to realising new
opportunities as well as identifying issues that may have an
adverse effect on the company’s existing operations and its
sustainability. The company is committed to a proactive approach
towards risk management throughout its entire business
operations. The Board aims to ensure that effective risk
management practices become embedded in the company’s
culture and in the way activities are carried out at all levels of the
company. The Board and management recognise the importance
that risk management plays in ensuring the business is able to fully
capitalise on the opportunities available to it, as well as mitigating
potential loss.
Health and safety are considered to be of paramount importance
and are the focus of significant risk management activities within
the company. Other risk areas that are addressed include product
liability, business continuity and disaster recovery, reputation,
intellectual property, product development and clinical trials.
Adherence to the code of conduct is required at all times and the
Board actively promotes a culture of quality and integrity. The
Board has required management to design and implement a risk
management and internal control system to manage the group’s
material business risks. The risk management policy sets out
Principle 8: Remunerate fairly and responsible
8.1 Remuneration and Nomination Committee
The company has established a Remuneration and Nomination
Committee consisting of three independent non-executive
directors. Details regarding composition, meetings and charter are
set out in sections 2.1 and 2.1.1 of this Corporate Governance
Statement.
8.2 Non-executive and executive remuneration
Each member of the senior executive team has signed a formal
employment contract covering a range of matters including their
duties, rights, responsibilities and any entitlements on termination.
Each role has a position description which is reviewed by the CEO
(or the committee in the case of the CEO) and relevant executive.
Further information on directors’ and executives’ remuneration,
including principles used to determine remuneration, is set out in
the remuneration report on pages 20 to 41.
All resolutions at AGMs are voted on by poll rather than by show of
hands.
6.4 Electronic communication with the company and its share
registry
Shareholders and other interested parties are able to subscribe to
Starpharma news via the company’s website or to certain
information via the company’s share registry. Significant ASX
announcements and financial reports are emailed to subscribers
promptly following confirmation by the ASX of receipt of the
relevant report or announcement.
Shareholders are also able to contact the company or submit
questions or comments to the company’s investor relations email
address, and where appropriate, a response will be provided. No
price sensitive information will be provided unless previously
released to the ASX.
policies for the oversight of material business risks, and describes
the responsibilities and authorities of the Board, the Audit and Risk
Committee, the CEO, CFO & Company Secretary, and the senior
management team. A summary of the policy is available on the
company’s website at
www.starpharma.com/corporate_governance
The CEO and CFO & Company Secretary are responsible to the
Board through the Audit and Risk Committee for the overall
implementation of the risk management program. During the
financial year management has reported to the Board as to the
effectiveness of the group’s management of its material risks.
7.3 Internal audit function
Given the size of the company, there is no internal audit function.
As detailed in section 7.2, detailed risk assessments are carried
out in respect of a wide range of items, and where appropriate and
possible, risk mitigation strategies are implemented to minimise
the chance of the risks occurring, and to minimise any impact
where a risk eventuates.
7.4 Sustainability risks and management
The company’s key economic, environmental and social
sustainability risks are outlined on pages 18 to 19 of the directors’
report under the heading ‘Material Business Risks’.
In addition to the risk assessment and management strategies
outlined in section 7.2 and set out in the Environmental, Social and
Governance (“ESG”) section on page 12 of the annual report, as
well as in the ESG Report available on Starpharma’s website, the
company utilises a number of risk mitigation strategies including
employing qualified staff and consultants, external advisors,
maintaining a portfolio/pipeline of products and applications, and
holding insurance in a number of areas.
Executive directors and senior management receive a mix of fixed
and variable pay, comprising both cash and equity incentives.
Non-executive directors receive fees only and do not receive
bonus payments or equity incentives. Non-executive directors do
not receive termination/retirement benefits, whereas executive
directors and senior management are entitled to termination
payments in accordance with the terms of their contracts (detailed
on page 39).
8.3 Prohibition on hedging of unvested/restricted entitlements
Employees are prohibited from entering into transactions in
products which limit the economic risk of any equity granted under
an employee incentive scheme which are unvested or subject to a
disposal restriction. Details in relation to this policy are contained
in the securities dealing policy which is available at
www.starpharma.com/corporate_governance
Starpharma Holdings Limited Annual Report 2020
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49
Annual Financial Report for the year ended 30 June 2020
Contents
•
•
•
•
•
•
•
•
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report to the Members
51
52
53
54
55
56
79
80
These financial statements are the consolidated financial statements for the consolidated entity consisting of Starpharma Holdings Limited and
its subsidiaries. The financial statements are presented in Australian currency. Starpharma Holdings Limited is a company limited by shares,
incorporated and domiciled in Australia.
Its registered office and principal place of business is:
Starpharma Holdings Limited
4-6 Southampton Crescent
Abbotsford, Victoria, 3067
Australia
A description of the nature of the group’s operations and its principal activities is included in the CEO’s Report on pages 3 to 11 and in the
operating and financial review in the directors’ report on pages 16 to 19, which are not part of this financial report.
The financial statements were authorised for issue by the directors on 27 August 2020. The directors have the power to amend and reissue the
financial report.
Through the use of the internet, Starpharma ensures that corporate reporting is timely and complete. All recent press releases, financial reports
and other information are available on its website: www.starpharma.com
50 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
50
Consolidated Income Statement for the year ended 30 June 2020
30 June 2020
30 June 2019
Continuing operations
Revenue
Cost of goods sold
Other income
Research and product development expense
(net of R&D tax incentive)
Commercial and regulatory operating expense
Corporate, administration and finance expense
Loss before income tax
Income tax expense
Loss from continuing operations attributable to equity holders
of the company
Loss per share for loss from continuing operations attributable
to the ordinary equity holders of the company
Basic loss per share
Diluted loss per share
Notes
5
5
6
6
6
7
25
25
$'000
6,556
(890)
559
(14,808)
(3,426)
(2,669)
(14,678)
-
(14,678)
$
($0.04)
($0.04)
The above consolidated income statement should be read in conjunction with the accompanying notes.
$'000
2,708
(251)
12
(10,454)
(3,774)
(2,495)
(14,254)
-
(14,254)
$
($0.04)
($0.04)
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 51
51
Consolidated Statement of Comprehensive Income for the year ended 30 June 2020
Loss for the period
Other comprehensive income (loss)
Items that may be reclassified to profit or loss
Other comprehensive income (loss) for the period
Total comprehensive income (loss) for the period
Notes
30 June 2020
30 June 2019
$'000
(14,678)
$'000
(14,254)
-
-
-
-
(14,678)
(14,254)
The above statement of consolidated comprehensive income should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2020
52 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
52
Consolidated Balance Sheet as at 30 June 2020
30 June 2020
30 June 2019
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total Current Assets
Non-Current Assets
Property, plant and equipment
Right-of-use assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Lease liabilities
Provision for employee benefits
Deferred income
Total Current Liabilities
Non-Current Liabilities
Lease liabilities
Provision for employee benefits
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed capital
Reserves
Accumulated losses
Total Equity
Notes
8
9
10
11
13
12
13
14
5
13
14
15
16
17
$'000
30,054
6,128
494
36,676
877
1,525
2,402
39,078
4,472
604
1,184
437
6,697
970
85
1,055
7,752
31,326
$'000
41,251
6,159
399
47,809
1,050
-
1,050
48,859
4,917
26
1,056
427
6,426
-
38
38
6,464
42,395
193,661
20,340
(182,675)
31,326
193,621
16,775
(168,001)
42,395
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2020
53
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 53
Consolidated Statement of Changes in Equity for the year ended 30 June 2020
Balance at 1 July 2018
Loss for the year
Other comprehensive income (loss)
Total comprehensive income (loss) for the year
Transactions with owners, recorded directly in equity
Employee share plans
Employee performance rights plan
Total transactions with owners
Balance at 30 June 2019
Application of AASB 16 Leases
Loss for the year
Other comprehensive income (loss)
Total comprehensive income (loss) for the year
Transactions with owners, recorded directly in equity
Employee share plans
Employee performance rights plan
Total transactions with owners
Balance at 30 June 2020
15
16
Contributed
capital
Reserves
Accumulated
losses
Notes
$'000
$'000
$'000
193,583
13,440
(153,746)
Total
equity
$'000
53,277
-
-
-
38
-
38
-
-
-
-
3,334
3,334
15
16
(14,254)
(14,254)
-
-
(14,254)
(14,254)
-
-
-
-
-
-
38
3,334
3,372
42,395
4
40
3,565
3,605
31,326
(14,678)
(14,678)
-
-
(14,678)
(14,678)
193,621
16,775
(168,001)
-
-
4
-
-
-
40
-
40
-
-
-
-
3,565
3,565
193,661
20,340
(182,675)
Restated total equity at 1 July 2019
193,621
16,775
(167,997)
42,399
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2020
54 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
54
Consolidated Statement of Cash Flows for the year ended 30 June 2020
30 June 2020
30 June 2019
Notes
$'000
$'000
Cash Flows from Operating Activities
Receipts from trade and other debtors (inclusive of GST)
Grant income and R&D tax incentives (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Net cash outflows from operating activities
24
Cash Flow from Investing Activities
Payments for property, plant and equipment
Proceeds from sale of available-for-sale financial assets
Net cash outflows from investing activities
Cash Flow from Financing Activities
Lease repayments
Net cash outflows from financing activities
1(x)
Net increase (decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
7,229
5,261
(23,749)
562
(79)
(10,776)
(125)
-
(125)
(584)
(584)
(11,485)
41,251
288
30,054
2,807
4,019
(18,244)
1,076
(2)
(10,344)
(314)
8
(306)
(26)
(26)
(10,676)
51,319
608
41,251
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2020
55
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 55
Notes to the Consolidated Financial Statements 30 June 2020
Contents
1.
2.
3.
4.
5.
6.
7.
8.
9.
Significant Accounting Policies
Financial Risk Management
Critical Accounting Estimates and Judgements
Segment Information
Revenue and Other Income
Expenses
Income Tax Expense
Current Assets – Cash and Cash Equivalents
Current Assets – Trade and Other Receivables
10.
Current Assets – Inventories
11.
Non-Current Assets – Property, Plant and Equipment
12.
Current Liabilities – Trade and Other Payables
13.
Current and Non-Current Assets/Liabilities – Leases
14.
Current and Non-Current Liabilities – Provision for Employee Benefits
15.
Contributed Equity
16.
Reserves
17.
Accumulated Losses
18.
Related Party Transactions
19.
Remuneration of Auditors
20.
Events Occurring After the Balance Sheet Date
21.
Commitments
22.
Contingencies
23.
Subsidiaries
24.
Reconciliation of Profit After Income Tax to Net Cash Inflow from Operating Activities
25.
Earnings Per Share
26.
Share-Based Payments
27.
Parent Entity Financial Information
56 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
57
62
63
63
63
64
65
66
67
67
68
69
69
70
70
71
71
71
72
72
72
72
72
73
73
74
78
56
Notes to the Consolidated Financial Statements 30 June 2020
1. Significant Accounting Policies
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated. The financial statements are for the
consolidated entity consisting of Starpharma Holdings Limited and
its subsidiaries (the group).
(a) Basis of preparation
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001. Starpharma Holdings
Limited is a for-profit entity for the purpose of preparing the
financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the group also comply
with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the group
The group has applied the following standards and amendments
for the first time for the annual reporting period commencing 1 July
2019:
•
•
AASB 16 Leases
AASB 2017-6 Amendments to Australian Accounting
Standards – Prepayment Features with Negative
Compensation
AASB 2017-7 Amendments to Australian Accounting
Standards – Long-term Interests in Associates and Joint
Ventures
AASB 2018-1 Amendments to Australian Accounting
Standards – Annual Improvements 2015-2017 Cycle
AASB 2018-2 Amendments to Australian Accounting
Standards – Plan Amendment, Curtailment or Settlement
Interpretation 23 Uncertainty over Income Tax Treatments.
•
•
•
•
The group had to change its accounting policies as a result of
adopting AASB 16. The group elected to adopt the new rules
retrospectively but recognised the cumulative effect of initially
applying the new standard on 1 July 2019. This is disclosed in note
1(x). The other amendments listed above did not have any impact
on the amounts recognised in the current or prior periods and are
not expected to significantly affect the future periods.
(iii) Early adoption of standards
The group has not elected to apply any pronouncements before
their operative date in the annual reporting period beginning
1 July 2019.
(iv) Historical cost convention
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
available-for-sale financial assets, financial assets and liabilities
(including derivative instruments) at fair value through profit or
loss, certain classes of property, plant and equipment and
investment property.
(v) Critical accounting estimates
The preparation of financial statements requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the group’s
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed
in note 3.
(vi) Going Concern
For the year ended 30 June 2020, the consolidated entity has
incurred losses from continuing operations of $14,678,000 (2019:
$14,254,000) and experienced net cash outflows of $10,776,000
from operations (2019: $10,344,000), as disclosed in the income
statement and statement of cash flows, respectively. The company
is in the development and early commercialisation phase, and
given the entity’s strategic plans, the directors are satisfied
regarding the availability of working capital for the period up to at
least 31 August 2021. Accordingly, the directors have prepared the
financial report on a going concern basis in the belief that the
consolidated entity will realise its assets and settle its liabilities and
commitments in the normal course of business and for at least the
amounts stated in the financial report.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of Starpharma Holdings Limited
(“company” or “parent entity”) as at 30 June 2020 and the results
of all subsidiaries for the year then ended. Starpharma Holdings
Limited and its subsidiaries together are referred to in this financial
report as the group or the consolidated entity.
Subsidiaries are all entities (including structured entities) over
which the group has control. The group controls an entity when the
group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the group. They are deconsolidated from the date
that control ceases.
Intercompany transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred. Accounting
policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the group.
(c) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Chief Executive Officer.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’).
The consolidated financial statements are presented in Australian
dollars, which is Starpharma Holdings Limited’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Foreign exchange gains and losses that relate to borrowings are
presented in the income statement, within finance costs. All other
foreign exchange gains and losses are presented in the income
statement on a net basis within other income or other expenses.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 57
57
Notes to the Consolidated Financial Statements 30 June 2020
1. Significant Accounting Policies (continued)
(e) Revenue Recognition
The accounting policies for the group’s revenue from contracts
with customers are explained in note 5.
(f) Government Grants
Grants from the government are recognised at their fair value
where there is a reasonable assurance that the grant will be
received and the group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised
in income statement over the period necessary to match them with
the costs that they are intended to compensate. All Government
Grants, with the exception of the R&D Tax Incentive (note 3(ii)),
are recorded in the income statement within Other Income (note
5).
(g) Income Tax
The income tax expense or revenue for the period is the tax
payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses. Deferred tax
assets and liabilities are recognised for temporary differences at
the tax rates expected to apply when the assets are recovered or
liabilities are settled, based on those tax rates which are enacted
or substantively enacted for each jurisdiction. The relevant tax
rates are applied to the cumulative amounts of deductible and
taxable temporary differences to measure the deferred tax asset or
liability. An exception is made for certain temporary differences
arising from the initial recognition of an asset or a liability. No
deferred tax asset or liability is recognised in relation to these
temporary differences if they arose in a transaction, other than a
business combination, that at the time of the transaction did not
affect either accounting profit or taxable profit or loss. Deferred tax
assets are recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to
control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the foreseeable
future. Current and deferred tax balances attributable to amounts
recognised directly in other comprehensive income or equity are
also recognised directly in other comprehensive income or equity,
respectively. Starpharma Holdings Limited and its wholly-owned
Australian controlled entity are not consolidated for tax purposes.
(i) Investment allowances and similar tax incentives
Companies within the group may be entitled to claim special tax
deductions for investments in qualifying assets or in relation to
qualifying expenditure (eg. investment allowances). The group
accounts for such allowances as tax credits, which means that the
allowance reduces income tax payable and current tax expense. A
deferred tax asset is recognised for unclaimed tax credits that are
carried forward as deferred tax assets.
(h) Leases
As explained in note 1(a) above, the group has changed its
accounting policy for leases where the group is the lessee. The
new policy is described in note 13 and the impact of the change in
note 1(x).
Until 30 June 2019 leases of property, plant and equipment where
the group has substantially all the risks and rewards of ownership
were classified as finance leases (note 11). Finance leases were
capitalised at the lease’s inception at the lower of the fair value of
the leased property, and the present value of the minimum lease
payments.The corresponding rental obligations, net of finance
charges, were included in short-term and long-term payables.
Each lease payment was allocated between the liability and
finance cost. The finance cost was charged to profit or loss over
the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
The property, plant and equipment acquired under finance leases
was depreciated over the asset’s useful life, or over the shorter of
the asset’s useful life and the lease term if there is no reasonable
certainty that the group will obtain ownership at the end of the
lease term.
Leases in which a significant portion of the risks and rewards of
ownership were not transferred to the group as lessee were
classified as operating leases (note 21). Payments made under
operating leases (net of any incentives received from the lessor)
were charged to profit or loss on a straight-line basis over the
period of the lease. Lease income from operating leases where the
group is a lessor is recognised in income on a straight-line basis
over the lease term.
(i) Impairment of assets
Goodwill and intangible assets that have an indefinite life are not
subject to amortisation. They are tested annually for impairment or
more frequently if events or changes in circumstances indicate that
they might be impaired. Other assets are tested for impairment
whenever events or changes in circumstance indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs of disposal and value in
use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash
inflows from other assets or groups of assets (cash generating
units).
(j) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents include cash on hand, deposits held
with financial institutions, and other short-term, highly liquid
investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
The amount of significant cash and cash equivalents not available
for use is disclosed in note 8.
(k) Trade Receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Trade receivables
are generally due for settlement within 30 to 60 days. They are
presented as current assets unless collection is not expected for
more than 12 months after reporting date. Collectability of trade
receivables is reviewed on an ongoing basis. Debts which are
known to be uncollectible are written off by reducing the carrying
amount directly. An allowance account (provision for impairment of
trade receivables) is used when there is objective evidence that
the group will not be able to collect all amounts due according to
the original terms of the receivables. Significant financial difficulties
of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation, and default or delinquency in payments
(more than 90 days overdue) are considered indicators that the
trade receivable is impaired. The amount of the impairment
allowance is the difference between the asset’s carrying amount
and the present value of estimated future cash flows, discounted at
the original effective interest rate. Cash flows relating to short-term
receivables are not discounted if the effect of discounting is
immaterial. The amount of the impairment loss is recognised in
profit or loss within administration expenses. When a trade
receivable for which an impairment allowance had been
recognised becomes uncollectable in a subsequent period, it is
written off against the allowance account. Subsequent recoveries
of amounts previously written off are credited against other
expenses in profit or loss.
58 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
58
Notes to the Consolidated Financial Statements 30 June 2020
(l) Inventories
Raw materials, work in progress and finished goods are stated at
the lower of cost and net realisable value. Cost includes
expenditure incurred in acquiring the inventories and bringing them
to their existing condition and location. Costs are assigned to
individual items of inventory on the basis of weighted average
costs. Costs of purchased inventory are determined after
deducting rebates and discounts. Net realisable value is the
estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary
to make the sale.
(m) Investments and other financial assets
(i) Classification
The group classifies its financial assets in the following categories:
financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments and available-for-sale
financial assets. The classification depends on the purpose for
which the investments were acquired. Management determines
the classification of its investments at initial recognition and, in the
case of assets classified as held-to-maturity, re-evaluates this
designation at each reporting period.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for those with
maturities greater than 12 months after the reporting date which
are classified as non-current assets. Loans and receivables are
included in trade and other receivables (note 9) in the balance
sheet.
(n) Property, Plant and Equipment and Leasehold
improvements
Property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Subsequent costs are
included in the asset’s carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the group
and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is
derecognised when replaced. All other repairs and maintenance
are charged to profit or loss during the financial period in which
they are incurred. Depreciation is calculated using the straight-line
method to allocate their cost or revalued amounts, net of the
residual values, over their estimated useful lives. The expected
useful lives are 2 to 20 years. The assets’ residual values and
useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date. An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount. Gains
and losses on disposals are determined by comparing proceeds
with the carrying amount. These are included in profit or loss.
The cost of improvements to or on leasehold properties is
amortised over the remaining notice period under the premises
lease (being 2.5 years at the balance date) or the estimated useful
life of the improvement to the group, whichever is shorter.
(o) Intangible Assets
(i) Patents and licenses
Costs associated with patents are expensed as incurred. Licenses
and acquired patents with a finite useful life are carried at cost less
accumulated amortisation and impairment losses. Amortisation is
calculated using the straight-line method to allocate the cost of
licenses and patents over the period of the expected benefit, which
is up to 20 years. As at the reporting date no patents or licenses
are recognised as intangible assets.
(ii) Research and development
Research and development expenditure is expensed as incurred
except that costs incurred on development projects, relating to the
design and testing of new or improved products, are recognised as
intangible assets when it is probable that the project will, after
considering its commercial and technical feasibility, be completed
and generate future economic benefits and its costs can be
measured reliably. To date no research and development costs
have been recognised as intangible assets.
(p) Trade and other payables
These amounts represent liabilities for goods and services
provided to the group prior to the end of the financial year which
are unpaid. The amounts are unsecured and are usually paid
within 30 to 45 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12
months from the reporting date.
(q) Provisions
Provisions for legal claims, service claims and make good
obligations are recognised when the group has a present legal or
constructive obligation as a result of past events, and it is more
probable than not that an outflow of resources will be required to
settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses. Where
there are a number of similar obligations, the likelihood that an
outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even
if the likelihood of an outflow with respect to any one item in the
same class of obligations may be small. Provisions are measured
at the present value of management’s best estimate for the
expenditure required to settle the present obligation at the balance
date. The discount rate used to determine the present value
reflects current market assessment of the time, value of money,
and the risks specific to the liability. The increase of the provision
due to the passage of time is recognised as interest expense.
(r) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits,
annual and long-service leave expected to be settled within 12
months after the end of the period in which the employees render
the related service are recognised in respect of employees’
services up to the period and are measured at the amounts
expected to be paid when the liabilities are settled. The liability for
annual and long service leave is recognised in the provision for
employee benefits. All other short-term employee benefit
obligations are presented as payables.
(iii) Superannuation and Pension Benefits
Group companies make the statutory superannuation guarantee
contribution in respect of each employee to their nominated
complying superannuation or pension fund. In certain
circumstances pursuant to an employee’s employment contract the
group companies may also be required to make additional
superannuation or pension contributions and/or agree to make
salary sacrifice superannuation or pension contributions in addition
to the statutory guarantee contribution. The group’s legal or
constructive obligation is limited to the above contributions.
Contributions to the employees’ superannuation or pension plans
are recognised as an expense as they become payable. Prepaid
contributions are recognised as an asset to the extent that a cash
refund or reduction in future payments is available.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 59
59
Notes to the Consolidated Financial Statements 30 June 2020
1. Significant Accounting Policies (continued)
(iv) Share-based payments
Share-based compensation benefits are offered to employees via
an Employee Performance Rights Plan and an Employee Share
Plan ($1,000 Plan). Information relating to these plans is set out in
note 26 and in the remuneration report under the directors’ report.
The fair value of performance rights granted is recognised as an
employee benefit expense with a corresponding increase in equity.
The fair value of employee services received, measured by
reference to the grant date fair value, is recognised over the
vesting period. Depending on the performance measure of the
right vesting, the fair value at grant date represents either a
volume weighted average price (VWAP) of shares leading up to
the grant date, or a value calculated using a hybrid Monte-Carlo-
trinomial option pricing model taking into account the absolute TSR
target, the term of the right, the share price at grant date, the risk
free rate, the expected dividend yield, expected share price
volatility, the volatility of the relevant index, and the correlation
between the share price and that index. The fair value excludes
the impact of any non-market vesting conditions (for example,
profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of
performance rights that are expected to become exercisable. At
each balance sheet date, the entity revises its estimate of the
number of performance rights that are expected to become
exercisable. The employee benefit expense recognised in each
period takes into account the most recent estimate. The impact of
the revision to original estimates, if any, is recognised in the
income statement with a corresponding adjustment to equity.
Under the Employee Share Plan ($1,000 Plan) shares are issued
to employees for no cash consideration and vest at the earlier of
three years or cessation of employment. On this date, the market
value of the shares issued is recognised as an employee benefits
expense with a corresponding increase in equity.
(v) Bonus payments
The group recognises a liability and an expense for bonuses
based on a formula that takes into consideration performance
criteria that have been set. The group recognises a provision
where contractually obliged or where there is a past practice that
has created a constructive obligation.
For non-cash incentives where equity is granted, please refer to
note 26 and the remuneration report under the directors’ report.
(vi) Termination benefits
Termination benefits are payable when employment is terminated
before the normal retirement date, or when an employee accepts
voluntary redundancy in exchange for these benefits. The group
recognises termination benefits when it is demonstrably committed
to either terminating the employment of current employees
according to a detailed formal plan without possibility of withdrawal
or providing termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits falling due more than
12 months after the end of the reporting period are discounted to
present value.
(s) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or performance rights are
shown in equity as a deduction, net of tax, from the proceeds.
Incremental costs directly attributable to the issue of new shares or
performance rights, for the acquisition of a business, are not
included in the cost of the acquisition as part of the purchase
consideration.
(t) Dividends
Provision is made for the amount of any dividend declared, being
appropriately authorised and no longer at the discretion of the
entity, on or before the end of the reporting period but not
distributed at the end of the reporting period.
(u) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to owners 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 and excluding treasury shares.
(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 potential ordinary shares and the weighted
average number of additional ordinary shares that would have
been outstanding assuming the conversion of all dilutive potential
ordinary shares.
(v) Goods and Services Tax (“GST”)
Revenues, expenses and assets are recognised net of the amount
of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case it is recognised as part of
the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of
GST receivable from, or payable to, the taxation authority and are
included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components
of cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are
presented as operating cash flows.
(w) Rounding of amounts
The company is of a kind referred to in ASIC Corporations
(Rounding Financial/Directors' Reports) Instrument 2016/191,
issued by the Australian Securities and Investments Commission,
relating to the ‘rounding off’ of amounts in the financial statements.
Amounts in the financial statements have been rounded off in
accordance with that Instrument to the nearest thousand dollars, or
in certain cases, the nearest dollar.
60 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
60
Notes to the Consolidated Financial Statements 30 June 2020
(x) Changes in accounting policies
(i) AASB 16 Leases
AASB 16 results in leases being recognised on the balance sheet,
as the distinction between operating and finance leases is
removed. Under the new standard, an asset (the right to use the
leased item) and a corresponding financial liability to pay rentals
are recognised on the balance sheet. An exception applies for
short-term and low-value leases under the standard.
The group has adopted AASB 16 from 1 July 2019 using the
simplified (cumulative effect) approach and therefore has not
restated comparative amounts for the 2019 reporting period.
On adoption of AASB 16, lease liabilities were measured at the
present value of the remaining lease payments, discounted using
either the interest rate implicit in the lease or the incremental
borrowing rate as of 1 July 2019. The group's weighted average
incremental borrowing rate applied to the lease liabilities on 1 July
2019 was 4.4%, being the rate the lessee would have to pay to
borrow the funds necessary to obtain an asset of similar value to
the right-of-use asset in a similar economic environment with
similar terms, security and conditions.
Right-of-use assets are generally depreciated over the shorter of
the asset's useful life and the lease term on a straight-line basis. If
the group is reasonably certain to exercise a purchase option, the
right-of-use asset is depreciated over the underlying asset’s useful
life. The group has chosen not to revalue right-of-use premises
assets held by the group.
Subsequent to initial measurement, the lease liability is reduced for
payments made and increased for interest incurred. The liability is
remeasured to reflect any reassessment or modification, or if there
are changes to insubstance fixed payments. When the lease
liability is remeasured, a corresponding adjustment is made to the
value of the right-of-use asset.
Payments associated with short-term leases and all leases of low-
value assets are recognised on a straight-line basis as an expense
in profit or loss. Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise of IT equipment.
(ii) There are no other standards that are not yet effective and that
are expected to have a material impact on the entity in the current
or future reporting periods and on foreseeable future transactions.
1 July 2019
$’000
2,315
(z) Parent entity financial information
The financial information for the parent entity, Starpharma
Holdings Limited, disclosed in note 27 has been prepared on the
same basis as the consolidated financial statements, except as set
out below.
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities
are accounted for at cost in the financial statements of Starpharma
Holdings Limited. Dividends received from associates are
recognised in the parent entity’s profit or loss when its right to
receive the dividend is established.
(ii) Share-based payments
The grant by the parent entity of rights over its equity instruments
to the employees of subsidiary undertakings in the group is treated
as a capital contribution to that subsidiary undertaking. The fair
value of employee services received, measured by reference to
the grant date fair value, is recognised over the vesting period as
an increase to investment in subsidiary undertakings, with a
corresponding credit to equity.
Operating lease commitments as at 30 June
2019
Discounted using group's incremental
borrowing rate at date of initial application
Add: finance lease recognised as at 30
June 2019
Less: low-value leases recognised on
straight-line basis as expense
Lease liability recognised as at 1 July 2019
2,151
26
(16)
2,160
The associated right-of-use assets for leases were initially
measured at the amount equal to the lease liability, and relate to
the following types of assets:
Premises
Plant and equipment
30 June 2020
$’000
1,525
-
Total right-of-use assets
1,525
1 July 2019
$’000
2,134
26
2,160
The net impact on retained earnings at 1 July 2019 on the
adoption of AASB 16 was a decrease of $4,000.
The adoption of AASB 16 removes the lease rental repayments
from the income statement. Instead, the income statement reflects
straight-line depreciation expense on the right-of-use asset, and an
interest expense on the lease liability. Reported expenses have
increased by $51,000 for the 2020 financial year, due to the
interest component calculated on the lease liability under the new
standard. Also operating cash outflows have decreased, and
financing cash outflows have increased by $561,000 for the 2020
financial year, as repayment of the principal portion of the lease
liabilities will be classified as cash flows from financing activities.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 61
61
Notes to the Consolidated Financial Statements 30 June 2020
2. Financial Risk Management
The group’s activities expose it to a variety of financial risks;
including market risk, credit risk and liquidity risk. The group’s
overall risk management program focuses on the unpredictability
of financial markets and seeks to minimise potential adverse
effects on the financial performance of the group. The Chief
Executive Officer, and Chief Financial Officer & Company
Secretary, under the guidance of the Audit and Risk Committee
and the Board, have responsibility for the risk management
program.
(a) Market risk
(i) Foreign Exchange Risk
Foreign exchange risk arises when future commercial transactions
and recognised assets and liabilities are denominated in a
currency that is not the entity’s functional currency. The group
operates internationally and is exposed to foreign exchange risk
arising from currency exposures to major currencies including the
US dollar and Great British pound.
On the basis of the nature of these transactions, the group does
not use derivative financial instruments to hedge such exposures
but maintains cash and deposits in Australian dollars, US dollars
(US$) and Great British pounds (£). The directors are regularly
monitoring the potential impact of movements in foreign exchange
exposure.
The exposure to foreign currency risk at the reporting date using
the closing exchange rate as at 30 June 2020 for US$ of $0.6863
and for £ of $0.5586 was as follows:
30 June 2020
US$
30 June 2019
US$
$’000
30 June 2020
30 June 2019
£
£
£’000
£’000
Cash and cash equivalents
Trade and other receivables
Trade and other payables
$’000
6,317
17
331
5,405
671
542
1,518
-
1,426
2,438
-
1,266
Group Sensitivity
The group is mainly exposed to US dollars (US$) and Great British pounds (£) on foreign currencies held, receivable and payable. The following
table details the group’s sensitivity to a 10% increase and decrease in the Australian dollar against the US dollar or Great British pounds. A
positive number indicates a favourable movement; that is an increase in profit or reduction in the loss.
Impact on profit / (loss) on a movement of
Australian dollar strengthens (increases) against
the foreign currency by 10%
Australian dollar weakens (decreases) against
the foreign currency by 10%
(ii) Cash Flow Interest Rate Risk
30 June 2020
$’000
30 June 2019
$’000
30 June 2020
£’000
30 June 2019
£’000
US$
(795)
972
US$
(717)
877
£
(15)
18
£
(192)
235
The group holds interest bearing assets and therefore the income and operating cash flows are exposed to market interest rates.
At the end of the reporting period, the group had the following value of term and at call deposits. Refer to note 8 for additional information.
Term Deposits and deposits at call
Group Sensitivity
30 June 2020
$’000
25,984
30 June 2019
$’000
38,306
At 30 June 2020, if interest rates had changed by 50 basis points either higher or lower from the year end rates with all other variables held
constant, group profit for the year would have been $131,000 higher or lower (2019 - change of 50 bps: $193,000 higher/lower) due to either
higher or lower interest income from cash or cash equivalents.
(b) Credit risk
Credit risk is managed on a group basis. Credit risk arises from
cash and cash equivalents with banks and financial institutions, as
well as credit exposures from royalty, product supply and licensing
agreements. Credit risk for cash and deposits with banks and
financial institutions is managed by maximising deposits held
under major Australian banks. All cash and deposits are held with
major Australian banks, with the majority being held with the
National Australia Bank and Commonwealth Bank of Australia.
Other than government grants, tax incentives and taxes
receivable, third party receivables largely consist customer
receivables from leading, multinational organisations.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and marketable securities. The directors regularly monitor the
cash position of the group, giving consideration to the level of
expenditure and future capital commitments entered into.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be
estimated for recognition and measurement for disclosure
purposes. The carrying value less impairment provision of trade
receivables and payables are assumed to approximate their fair
values due to their short-term nature. The fair value of financial
liabilities for disclosure purposes is estimated by discounting the
future contractual cash flows at the current market interest rate
that is available to the group for similar financial instruments.
62 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
62
Notes to the Consolidated Financial Statements 30 June 2020
3. Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the
related actual results. The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below.
i) Income Taxes
The group is subject to income taxes in Australia. There are transactions and calculations undertaken during the ordinary course of business for
which the ultimate tax determination may be uncertain. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made. The
group has not recognised deferred tax assets or liabilities, including from carried forward losses, due to the realisation of such benefits being
uncertain. The utilisation of tax losses also depends on the ability of the entity to satisfy certain tests at the time the losses are recouped.
ii) R&D Tax Incentives
The group’s research and development activities are eligible under an Australian Government tax incentive for eligible expenditure from 1 July
2011. Management has assessed these activities and expenditure to determine which are likely to be eligible under the incentive scheme. For
the period to 30 June 2020 the group has recorded a contra research and development expense of $5,669,000 (2019: $5,071,000). The total
R&D Tax Incentive receivable recorded at 30 June 2020 is $5,670,000 (2019: $4,898,000)
In December 2019, the Treasury Laws Amendment (R&D Tax Incentive) Bill 2019 was introduced into Parliament and contains proposed
amendments to the R&D Tax Incentive. Under the proposed amendments, the refundable tax offset rate for companies with an aggregated
turnover of less than $20 million will be 41% (based on a 13.5% permanent benefit added to the relevant corporate tax rate) and the maximum
rebate will be capped at $4 million (excluding costs related to clinical trial activities), effective from 1 July 2019.
In accordance with AASB 112, tax assets should be measured at the amount expected to be recovered from the taxation authorities, using the
tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period. Substantive enactment occurs when
any future steps in the enactment process will not change the outcome. Management does not consider the R&D Tax Offset rate reduction to be
substantially enacted at the end of the reporting period due the continued legislative debate in the parliament. The group has therefore
calculated the R&D tax incentive by applying the currently legislated R&D Tax Offset rate of 43.5% to eligible expenditure.
If the Bill is passed, the $4 million refundable tax offset cap is not expected to have any impact on the amount of Starpharma’s FY20 refundable
tax offset due to the level of exempted clinical trials expenditure during the period.
4. Segment Information
The group has determined that on the basis of internal reporting and monitoring to the Chief Executive Officer, who is the chief operating
decision maker, the group operates in one business segment, being the discovery, development and commercialisation of dendrimers for
pharmaceutical, life science and other applications.
5. Revenue and Other Income
Revenue and other income from continuing operations
30 June 2020
$’000
30 June 2019
$’000
Revenue from contracts with customers
Interest revenue
Total revenue from continuing operations
Other income
Total revenue and other income from continuing operations
6,033
523
6,556
559
7,115
1,651
1,057
2,708
12
2,720
Disaggregation of revenue from contracts with customers
Revenue from contracts with customers includes licensing revenue, products sales, royalties, and research revenue from partners.
Total revenue from contracts with customers for the year was $6,033,000 (2019: $1,651,000) and includes $4,339,000 on AstraZeneca
triggering a milestone for the first dose of AZD0466 administered in the phase 1 clinical trial of its first DEP® product. The remaining $1,694,000
is predominately product sales, milestones and royalties on VivaGel® BV and VivaGel® condom products.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 63
63
Notes to the Consolidated Financial Statements 30 June 2020
5. Revenue and Other Income (continued)
Assets and liabilities related to contracts with customers
The group has recognised the following current assets and current liabilities related to contracts with customers:
Trade and other receivables
Contract Liabilities - deferred income
30 June 2020
$’000
30 June 2019
$’000
40
(437)
1,009
(427)
Trade and other receivables as at 30 June 2020 are $40,000. The higher trade and other receivables in the prior year reflected the
Mundipharma VivaGel® BV European launch milestone and VivaGel® BV product sales.
Contract Liabilities (deferred income) relate to potential liabilities for product discounts, that are dependent on product registrations in certain
countries.
Performance obligations
Revenue is recognised when the company satisfies a performance obligation by transferring control of the promised good or service to a
customer at an amount that reflects the consideration to which the company expects to be entitled in exchange for the goods or services.
Information about the company’s performance obligations are summarised below:
(i) Licensing revenue and royalties
Typically, a licence granted by the company provides the customer with the right to use, but not own, the company’s intellectual property as it
exists at the point in time the licence is granted. The company may receive signature payments, milestone payments for specific development
(such as clinical or regulatory) or commercial based outcomes, and/or sales-based royalties as consideration for the licence. The performance
obligation(s) for a licence are usually satisfied upon, or soon after, the granting of the licence to the partner. Signature payments are normally
fixed, where-as development and commercial milestones are variable consideration as they are dependent on the achievement of certain events
in the future. The company’s estimate of variable consideration will only be recognised to the extent it is highly probable that a significant
revenue reversal will not occur in future periods.
Royalties based on sales of product are recognised when the customer's sales of product occur. Where consideration includes guaranteed
minimum royalties, they are recognised when the licence is granted or when they are no longer subject to constraint.
Milestones payments are generally due within 30 to 60 days from timing of the milestone event. Royalties are generally due 30 to 60 days after
the end of the defined royalty reporting period.
(ii) Product sales
The performance obligation is satisfied upon delivery of the goods and payment is generally due within 30 to 60 days from delivery. Some
contracts provide customers with a right of return for product non-conformance which may give rise to variable consideration subject to
constraint.
(iii) Research revenue
The performance obligation is satisfied over-time upon completion of outlined deliverables and payment is generally due within 30 to 60 days of
achievement of each deliverable.
Other income
Other income of $559,000 (2019: $12,000) primarily relates to the Australian Government’s COVID-19 stimulus measures including JobKeeper
Payment ($399,000) and Cash Flow Boost ($100,000) programs. There are no unfulfilled conditions or other contingencies attaching to these
grants.
6. Expenses
Loss from continuing operations before income tax expense
includes the following items:
30 June 2020
$’000
30 June 2019
$’000
R&D tax incentive (contra expense)1
Employee benefits expenses (including share-based payments)
Depreciation of property, plant and equipment
Depreciation of right-of-use assets2
Rental expense on operating leases2
(5,669)
10,275
275
636
-
(5,071)
10,548
298
-
586
1 Included within the research and product development expense line item in the consolidated income statement.
2 The adoption of AASB 16 Leases eliminates the lease rental expense from the income statement, rather depreciation is expensed on the right-
of-use asset, and an interest expense on the lease liability. Refer to Note 1(x) for further information
64 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
64
Notes to the Consolidated Financial Statements 30 June 2020
7. Income Tax Expense
(a) Income tax expense/(credit)
Current Tax / Deferred Tax
Total income tax expense
Income tax attributable to continuing operations
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2019: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Eligible expenses claimed under R&D tax incentive
Share-based payments
Unearned income
Sundry items
Future income tax benefits not brought to account
Income tax expense
(c) Tax losses
Unused tax losses for which no deferred tax asset has been
recognised (as recovery is currently not probable)
Potential tax benefit
(d) Unrecognised temporary differences
Temporary differences for which no deferred tax asset has been
recognised as recoverability is not probable
Unrecognised deferred tax relating to the temporary differences
(e) Deferred tax liabilities
Deferred tax liabilities comprise temporary differences attributable to:
Lease right-of-use assets
Sundry items
Total deferred tax liabilities
Set-off of deferred tax assets pursuant to set-off provisions
Net deferred tax liabilities
30 June 2020
$’000
30 June 2019
$’000
–
–
–
(14,678)
(4,403)
2,209
1,081
-
(287)
1,400
–
119,974
35,992
3,439
1,032
457
5
462
(462)
–
–
–
–
(14,254)
(4,276)
1,857
1,012
1
(101)
1,506
–
115,313
34,594
4,133
1,240
-
3
3
(3)
–
Deferred tax assets and deferred tax liabilities have been set-off as there is a legally recognised right to set-off current tax assets and liabilities,
and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority. Deferred tax assets are mainly
attributable to unused tax losses. Potential future income tax benefits attributable to tax losses carried forward have not been brought to account
at 30 June 2020 because the directors do not believe that it is appropriate to regard realisation of the future income tax benefit as probable.
Similarly, future benefits attributable to net temporary differences have not been brought to account as the directors do not regard the realisation
of such benefits as probable.
Realisation of the benefit of tax losses would be subject to the group satisfying the conditions for deductibility imposed by tax legislation and no
subsequent changes in tax legislation adversely affecting the group. The group has made an assessment as to the satisfaction of deductibility
conditions at 30 June 2020 which it believes will be satisfied.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 65
65
Notes to the Consolidated Financial Statements 30 June 2020
8. Current Assets – Cash and Cash Equivalents
Cash at bank and on hand
Term Deposits and deposits at call
30 June 2020
$’000
30 June 2019
$’000
4,070
25,984
30,054
2,945
38,306
41,251
Cash at bank and on hand
The cash is bearing floating interest rates based on current
bank rates.
Term deposits and deposits at call
The term deposits have maturities of 3 months or less. Funds in
deposits at call allow the group to withdraw funds on demand.
Deposits not available
There is $558,000 (2019: $548,000) of term deposits not available
for use due to funds being provided as security for a bank
guarantee on the premises lease, and for a finance lease facility.
Interest rate risk
Current receivables are non-interest bearing.
30 June 2020
Floating
Interest
rate
Fixed interest maturing Non-interest
bearing
Notes
$’000
1 year or less
$’000
1 to 2 years
$’000
2 to 3 years
$’000
$’000
Total
$’000
Contractual
cash flows
Financial Assets
Cash & deposits
Receivables
8
9
4,571
21,655
–
–
4,571
21,655
–
–
–
–
–
–
Weighted average interest rate
0.8%
0.7%
–%
–%
Financial Liabilities
Payables
Lease liabilities
12
13
–
–
–
–
604
604
–
649
649
–
321
321
3,828
6,128
9,956
–%
4,472
–
4,472
30,054
6,128
36,182
4,472
1,574
6,046
N/A
6,128
6,128
4,472
1,574
6,046
Weighted average interest rate
–%
4.4%
4.4%
4.4%
–%
30 June 2019
Floating
Interest
rate
Fixed interest maturing
Non-interest bearing
Notes
$’000
1 year or less
$’000
1 to 2 years
$’000
2 to 3 years
$’000
$’000
Total
$’000
Contractual
cash flows
Financial Assets
Cash & deposits
Receivables
8
9
2,972
35,631
–
–
2,972
35,631
–
–
–
–
–
–
Weighted average interest rate
1.7%
2.1%
–%
–%
Financial Liabilities
Payables
Lease liabilities
12
13
–
–
–
–
26
26
–
–
–
–
–
–
2,648
6,159
8,807
–%
4,917
–
4,917
41,251
6,159
47,410
4,917
26
4,943
Weighted average interest rate
–%
5.8%
–%
–%
–%
66 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
N/A
6,159
6,159
4,917
26
4,943
66
Notes to the Consolidated Financial Statements 30 June 2020
9. Current Assets – Trade and Other Receivables
Trade and grant receivables
Interest receivables
Prepayments
Other receivables
30 June 2020
$’000
30 June 2019
$’000
5,905
10
41
172
6,128
5,857
49
79
174
6,159
Trade and grant receivables
Trade and grant receivables primarily comprise of $5,670,000 (2019: $4,898,000) of expenditure reimbursable under the Australian
Government’s R&D tax incentive scheme, with the balance related to other government grants receivable, and customer receivables from
VivaGel® partners. Customer receivables are subject to normal terms of settlement within 30 to 60 days.
Other receivables
Other receivables comprise sundry debtors and GST/VAT claimable and are subject to normal terms of settlement within 30 to 90 days.
Credit risk
The group considers that there is no significant credit risk with respect to trade and other receivables. Grant receivables are with government
bodies and trade receivables are from large, well respected companies.
Impaired receivables
As at 30 June 2020, there were no material trade and grant receivables that were past due (2019: nil). No receivables are considered impaired
at 30 June 2020 (2019: nil).
10. Inventories
Current Assets
Raw materials
Finished goods
30 June 2020
$’000
30 June 2019
$’000
494
-
494
248
151
399
Assigning costs to inventories
The costs of individual items of inventory are determined using the weighted average cost method. See note 1(l) for detail on the group’s
accounting policy for inventories.
Amounts recognised in profit or loss
Inventories recognised as an expense during the year ended 30 June 2020 amounted to $890,000 (2019: $251,000). These were included in
cost of goods sold.
Finished goods
Finished goods are products that are subject to a customer purchase order, have completed production, and are awaiting delivery to the
customer.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 67
67
Notes to the Consolidated Financial Statements 30 June 2020
11. Non-Current Assets – Property, Plant and Equipment
Plant and Equipment
$’000
Leasehold
improvements
$’000
At 30 June 2018
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2019
Opening net book amount
Additions
Disposals
Depreciation
Closing net book amount
At 30 June 2019
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2020
Opening net book amount
Adjustment for change in accounting policy, see note 1(x)
Restated opening net book amount
Additions
Disposals
Depreciation
Closing net book amount
At 30 June 2020
Cost
Accumulated depreciation
Net book amount
68 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
3,514
(2,616)
898
898
236
-
(255)
879
3,607
(2,728)
879
879
(22)
856
126
(1)
(225)
756
3,671
(2,915)
756
602
(442)
160
160
54
-
(43)
171
656
(485)
171
171
-
171
-
-
(50)
121
656
(535)
121
Total
$’000
4,116
(3,058)
1,058
1,058
290
-
(298)
1,050
4,263
(3,213)
1,050
1,050
(22)
1,028
126
(1)
(275)
877
4,327
(3,450)
877
68
Notes to the Consolidated Financial Statements 30 June 2020
As at 30 June 2019, plant and equipment included the following amounts where the group is a lessee under a finance lease (refer to note 13 for
further details):
Leased equipment
Cost
Accumulated depreciation
Net book amount
30 June 2020
$’000
30 June 2019
$’000
-
-
-
72
(50)
22
From 1 July 2019 leased assets are presented as a separate line item in the balance sheet, see note 13. Refer to note 1(x) for details about the
changes in accounting policy.
12. Current Liabilities – Trade and Other Payables
Trade payables and accruals
Other payables
30 June 2020
$’000
30 June 2019
$’000
4,394
78
4,472
4,098
819
4,917
Trade payables and accruals
The majority of trade payables are related to expenditure associated with the group’s research and product development programs.
13. Current and Non-Current Assets/Liabilities – Leases
The balance sheet shows the following amounts relating to leases:
Right-of-use assets
Premises
Plant and equipment
Lease liabilities
Current
Non-current
30 June 2020
$’000
1 July 2019*
$’000
1,525
-
1,525
604
970
1,574
2,134
26
2,160
586
1,574
2,160
* In the previous year, the group only recognised lease assets and lease liabilities in relation to leases that were classified as ‘finance leases’
under AASB 117 Leases. The assets were presented in property, plant and equipment and the liabilities as part of the group’s borrowings. For
adjustments recognised on adoption of AASB 16 Leases on 1 July 2019, please refer to note 1(x).
The group leases premises (laboratory and offices space) until 19 December 2022, with an extension option. Payments associated with the
option period are not included in the initial measurement of lease assets and liabilities as they are uncertain.
The group also leases scientific equipment generally over a three to five year term.
The statement of profit or loss shows the following amounts relating to leases:
Depreciation charge of right-of-use assets
Premises
Plant and equipment
Depreciation charge of right-of-use assets
Interest expense on lease liabilities
Expense relating to leases of low-value assets
Expense relating to variable lease payments not included in lease liabilities
Total cash outflow for leases
30 June 2020
$’000
30 June 2019
$’000
610
26
636
79
8
68
664
-
-
-
-
-
-
-
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 69
69
Notes to the Consolidated Financial Statements 30 June 2020
14. Current and Non-Current Liabilities – Provision for Employee Benefits
Leave obligations
Current
Non-current
30 June 2020
$’000
30 June 2019
$’000
1,184
85
1,269
1,056
38
1,094
The leave obligations cover the group’s liability for long service leave and annual leave. The current portion of this liability includes all of the
accrued annual leave, and the unconditional entitlements to long service leave where employees have completed the required period of service.
However, based on past experience, the group does not expect all employees to take the full amount of current accrued leave or require
payment within the next 12 months. Current leave obligations expected to be settled after 12 months is $843,000 (2019: $747,000).
Refer to note 1(r) for further information.
15. Contributed Equity
(a) Share capital
Share Capital
2020
Shares
2019
Shares
2020
$’000
2019
$’000
Ordinary shares – fully paid
372,562,687
371,694,347
193,661
193,621
(b) Movements in ordinary share capital
Date
Details
1 Jul 2019
29 Jul 2019
Employee performance rights plan share issue
1 Oct 2019
Employee performance rights plan share issue
17 Oct 2019
Employee performance rights plan share issue
4 Dec 2019
Employee performance rights plan share issue
24 Jan 2020 Employee share plan ($1,000) issue
24 Jan 2020 Employee performance rights plan share issue
20 Mar 2020 Employee performance rights plan share issue
Number of shares
Issue Price
371,694,347
26,196
233,730
33,600
495,895
32,920
25,600
20,399
$ –
$ –
$ –
$ –
$1.22
$ –
$ –
Balance at 30 June 2020
372,562,687
Date
Details
1 Jul 2018
5 Oct 2018
Employee performance rights plan share issue
11 Dec 2018 Employee performance rights plan share issue
8 Feb 2019
Employee share plan ($1,000) issue
19 Mar 2019 Employee performance rights plan share issue
Number of shares
Issue Price
370,544,775
706,356
369,411
34,542
39,263
$ –
$ –
$1.10
$ –
$’000
193,621
–
–
–
–
40
–
–
193,661
$’000
193,583
–
–
38
–
Balance at 30 June 2019
371,694,347
193,621
(c) Ordinary shares
As at 30 June 2020 there were 372,562,687 issued ordinary
shares. Ordinary 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.
On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy, is entitled to one vote, and upon a
poll each share is entitled to one vote. Ordinary shares have no
par value and the company does not have a limited amount of
authorised capital. There is no current on-market share buy-back.
(d) Employee Share Plan ($1,000 Plan)
Information relating to the Employee Share Plan, including details
of shares issued under the plan, is set out in note 26.
70 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
(e) Employee Performance Rights Plan
Information relating to the Employee Performance Rights Plan,
including details of rights issued under the plan, is set out in note
26.
(f) Capital risk management
The group’s and the parent entity’s objectives when managing
capital are to safeguard their ability to continue as a going
concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders. In order to
maintain or adjust the capital structure, the group may adjust the
amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets.
70
Notes to the Consolidated Financial Statements 30 June 2020
16. Reserves
(a) Reserves
Share-based payments reserve
(b) Movement in reserves
Share-based payments reserve
Balance at 1 July
Performance right expense
Balance at 30 June
30 June 2020
$’000
30 June 2019
$’000
20,340
20,340
16,775
16,775
30 June 2020
$’000
30 June 2019
$’000
16,775
3,565
20,340
13,440
3,334
16,775
(c) Nature and purpose of reserves
The share-based payments reserve is used to recognise the fair value of options and performance rights granted.
17. Accumulated Losses
Accumulated losses balance at 1 July
Application of AASB 16 Leases, refer to note 1(x)
Net loss for the year
Accumulated losses balance at 30 June
30 June 2019
$’000
30 June 2019
$’000
(168,001)
4
(14,678)
(182,675)
(153,746)
-
(14,254)
(168,001)
18. Related Party Transactions
(a) Parent entity and subsidiaries
The parent entity of the group is Starpharma Holdings Limited. Interests in subsidiaries are set out in note 23.
(b) Transactions with related parties
There are related party transactions within the group between the parent and subsidiaries. Transactions include funds advanced to/from entities
and the associated interest charge; and management and services fees. All transactions were made on an arm’s length basis.
(c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
30 June 2020
$
30 June 2019
$
1,964,009
130,263
39,955
1,814,869
3,949,096
2,385,559
127,034
27,966
1,819,581
4,360,140
Detailed remuneration disclosures are provided in the remuneration report on pages 20 to 41.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 71
71
Notes to the Consolidated Financial Statements 30 June 2020
19. Remuneration of Auditors
The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and
experience with the company and/or the consolidated group are important. Details of the amounts paid or payable to the auditor
(PricewaterhouseCoopers) for audit and non-audit services provided during the year are set out below. During the year the following fees were
paid or payable for services provided by the auditor (PricewaterhouseCoopers) of the parent entity, its related practices and non-related audit
firms:
30 June 2020
$
30 June 2019
$
Statutory audit services
Audit or review of financial reports of the entity or any entity in the
consolidated entity
PricewaterhouseCoopers
Total remuneration for statutory audit services
No other non-audit services were performed in the current or prior year.
20. Events Occurring After the Balance Sheet Date
146,462
146,462
137,537
137,537
No matters or circumstances have arisen since 30 June 2020 that have significantly affected, or may significantly affect:
(a) the consolidated entity’s operations in future financial years; or
(b) the results of those operations in future financial years; or
(c) the consolidated entity’s state of affairs in future financial years.
21. Commitments
(a) Capital Commitments
There is no material capital expenditure contracted not recognised as liabilities at the reporting date (2019: nil).
(b) Operating Lease Commitments
The group leases laboratory and offices space under an operating lease until 19 December 2022. The group also leases office equipment
generally over a three to five year term. From 1 July 2020, the group has recognised right-of-use assets for these leases, except for short-term
and low-value leases, see note 13 and note 1(x) for further information.
30 June 2020
$’000
30 June 2019
$’000
Commitments for minimum lease payments in relation operating leases
are payable as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
Representing non-cancellable operating leases
-
-
-
-
649
1,666
-
2,315
(c) Termination Commitments
The service contracts of key management personnel include benefits payable by the group on termination of the employee’s contract. Refer to
the remuneration report for details of these commitments.
22. Contingencies
Starpharma has licensed VivaGel® BV in the United States to ITF Pharma and is eligible to receive up to US$101M in regulatory approval and
commercialisation milestones, plus royalties on net sales. Upon receipt of cash proceeds under the licence, Starpharma is required to pay a
small proportion of its receipts to an investment bank which advised on the competitive licence process, up to a maximum of US$1.35M over the
life of the licence (2019: US$1.35M).
The company has no contingent assets at 30 June 2020 (2019: nil).
23. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(b).
Name of entity
Country of
Incorporation
Class of Shares
Equity Holding
2020
%
2019
%
Starpharma Pty Limited
Australia
Ordinary
100.00%
100.00%
72 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
72
Notes to the Consolidated Financial Statements 30 June 2020
24. Reconciliation of Profit After Income Tax to Net Cash Inflow from Operating Activities
Operating profit/(loss) after tax
Depreciation and amortisation
Foreign exchange (gain)/loss
Non-cash employee benefits: share-based payments
Net gain/(loss) on sale of property, plant and equipment
Net (gain)/loss on sale of available for sale financial assets
Change in operating assets and liabilities, net of effects of acquisitions and
disposals of entities:
Decrease/(increase) in receivables and other assets
(Increase)/decrease in inventories
Increase/(decrease) increase in trade creditors
Increase in employee provisions
Increase/(decrease) in deferred income
Net cash outflows from operating activities
25. Earnings Per Share
Basic earnings/(loss) per share / Diluted earnings/(loss) per share
Total earnings/(loss) per share attributable to the ordinary equity holders of the
company ($)
Reconciliations of earnings/(loss) used in calculating earnings per share
Profit/(loss) attributable to the ordinary equity holders of the company used in
calculating basic earnings/(loss) per share: ($’000)
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings/(loss) per share
30 June 2020
$’000
(14,678)
30 June 2019
$’000
(14,254)
911
(288)
3,605
(1)
-
31
(95)
(445)
175
9
298
(608)
3,372
-
(8)
(23)
(399)
1,140
117
21
(10,776)
(10,344)
30 June 2020
30 June 2019
(0.04)
(0.04)
(14,678)
(14,254)
372,231,992
371,293,413
As at 30 June 2020 the company had on issue 14,780,525 (30 June 2019: 13,183,915) performance rights. The rights are not included in the
determination of basic earnings per share. The rights are also not included in the determination of diluted earnings per share. They are not
considered dilutive as their conversion would not increase loss per share from continuing operations.
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 73
73
Notes to the Consolidated Financial Statements 30 June 2020
26. Share-Based Payments
Performance Rights
(a) Employee Performance Rights Plan
In 2010 the Board approved the introduction of the Employee Performance Rights Plan (Plan), which was subsequently approved by
shareholders at the 2011, 2014 and 2017 annual general meetings. All executives and staff, including the CEO, are eligible to
participate in the Plan. The Plan allows for the issue of performance rights (being rights to receive fully paid ordinary shares subject to
continued employment with the company and the satisfaction of certain performance hurdles over a specified period). Performance
rights are granted under the Plan for no consideration. The objective of the Plan is to assist in the recruitment, reward, retention and
motivation of employees of the company.
(b) Fair value of performance rights granted
The weighted average assessed fair value at grant date of performance rights granted during the year ended 30 June 2020 was $1.14
per right (2019: $1.33). There were 2,969,830 performance rights granted in the current year (2019: 2,988,135).
The estimated fair value at grant date of rights with a Total Shareholder Return (TSR) performance measure have been valued using a
hybrid Monte-Carlo-trinomial option pricing model taking into account the absolute TSR target, the term of the right, the share price at
grant date, the risk free rate, the expected dividend yield, expected share price volatility, the volatility of the relevant index, and the
correlation between the share price and that index. All other rights incorporate Key Performance Indicator (KPI) measures, and the fair
value at grant date of these rights represents a volume weighted average price (VWAP) of shares leading up to the grant date.
Set out below are summaries of performance rights:
2020
Grant Date
Vesting
Date
11 Nov 2015
30 Jun 20171
Balance
at start of
the year
Number
299,325
11 Nov 2015
30 Sep 20181
1,364,555
19 Nov 2015
30 Jun 20171
19 Nov 2015
30 Sep 20181
13 Oct 2016
30 Jun 20181
181,001
836,260
351,084
13 Oct 2016
30 Sep 20191
1,990,600
29 Nov 2016
30 Jun 20181
29 Nov 2016
30 Sep 20191
10 Aug 2017
30 Jun 20191
172,842
876,978
595,950
10 Aug 2017
30 Sep 2020
2,546,080
29 Nov 2017
30 Jun 20191
197,226
29 Nov 2017
30 Sep 2020
895,879
16 Aug 2018
30 Jun 20201
203,500
16 Aug 2018
30 Sep 2021
814,000
2 Nov 2018
30 Jun 20201
236,747
2 Nov 2018
30 Sep 2021
946,987
29 Nov 2018
30 Jun 20201
134,980
29 Nov 2018
30 Sep 2021
539,921
Granted
during
the year
Number
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17 Oct 2019
30 Jun 2021
17 Oct 2019
30 Sep 2022
21 Nov 2019
30 Jun 2021
21 Nov 2019
30 Sep 2022
–
–
–
–
459,767
1,839,067
134,199
536,797
Converted
during
the year
Number
47,700
248,761
–
–
69,770
Forfeited
during
the year
Number
–
–
–
–
–
Balance
at end of
the year
Number
251,625
1,115,794
181,001
836,260
281,314
307,499
154,867
1,528,234
–
–
–
30,697
172,842
846,281
161,690
–
434,260
–
–
–
–
–
–
–
–
–
–
–
–
–
94,407
2,451,673
–
–
197,226
895,879
33,144
170,356
–
814,000
25,920
210,827
113,578
833,409
22,272
112,708
–
539,921
11,423
448,344
51,492
1,787,575
–
–
134,199
536,797
Total
13,183,915
2,969,830
835,420
537,800
14,780,525
1 The balance of rights at end of the year have vested and remain available for employees to exercise into shares.
74 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
74
Notes to the Consolidated Financial Statements 30 June 2020
2019
Grant Date
Vesting
Date
30 Jan 2015
30 Sep 2018
11 Nov 2015
30 Jun 20171
Balance
at start of
the year
Number
714,750
319,693
11 Nov 2015
30 Sep 20181
1,785,600
19 Nov 2015
30 Jun 20171
19 Nov 2015
30 Sep 20181
13 Oct 2016
30 Jun 20181
181,001
893,851
462,284
13 Oct 2016
30 Sep 2019
2,022,600
29 Nov 2016
30 Jun 20181
29 Nov 2016
30 Sep 2019
10 Aug 2017
30 Jun 2019
10 Aug 2017
30 Sep 2020
29 Nov 2017
30 Jun 2019
29 Nov 2017
30 Sep 2020
16 Aug 2018
30 Jun 2020
16 Aug 2018
30 Sep 2021
2 Nov 2018
30 Jun 2020
2 Nov 2018
30 Sep 2021
29 Nov 2018
30 Jun 2020
29 Nov 2018
30 Sep 2021
Granted
during
the year
Number
–
–
–
–
–
–
–
–
–
–
–
–
–
Converted
during
the year
Number
706,356
20,368
Forfeited
during
the year
Number
8,394
Balance
at end of
the year
Number
–
–
299,325
289,747
131,298
1,364,555
–
–
98,559
–
–
–
–
–
–
–
–
–
–
–
–
–
–
57,591
12,641
181,001
836,260
351,084
32,000
1,990,600
–
–
69,370
115,200
26,895
–
–
–
172,842
876,978
595,950
2,546,080
197,226
895,879
203,500
814,000
22,400
236,747
89,600
946,987
–
–
134,980
539,921
–
–
–
–
–
–
203,500
814,000
259,147
1,036,587
134,980
539,921
172,842
876,978
665,320
2,661,280
224,121
895,879
Total
11,876,199
2,988,135
1,115,030
565,389
13,183,915
1 The balance of rights at end of the year have vested and remain available for employees to exercise into shares.
Starpharma Holdings Limited Annual Report 2020
75
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 75
Notes to the Consolidated Financial Statements 30 June 2020
26. Share-Based Payments (continued)
Information used in assessing the fair value of performance rights granted during the year ended 30 June 2020 is as follows:
Right grant date
Number of rights granted
Vesting date
Performance Measure
Expected price volatility of the company's
shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
Right grant date
Number of rights granted
Vesting date
Performance Measure
Expected price volatility of the company's
shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
17 October 2019
17 October 2019
17 October 2019
459,767
1,716,967
122,100
30 June 2021
30 September 2022
30 September 2022
KPIs
50%
0.61%
–
$1.15
$1.15
KPIs
50%
0.75%
–
$1.15
$1.15
TSR
50%
0.75%
–
$1.15
$0.71
21 November 2019
21 November 2019
21 November 2019
134,199
375,758
161,039
30 June 2021
30 September 2022
30 September 2022
KPIs
50%
0.57%
–
$1.29
$1.29
KPIs
50%
0.70%
–
$1.29
$1.29
TSR
50%
0.70%
–
$1.29
$0.85
Information used in assessing the fair value of performance rights granted during the year ended 30 June 2019 is as follows:
Right grant date
16 August 2018
16 August 2018
16 August 2018
2 November 2018
Number of rights granted
203,500
691,900
122,100
259,147
Vesting date
Performance Measure
Expected price volatility of the
company's shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
30 June 2020
30 September 2021
30 September 2021
30 June 2020
KPIs
50%
1.76%
–
$1.26
$1.26
KPIs
50%
2.04%
–
$1.26
$1.26
TSR
50%
2.04%
–
$1.26
$0.85
KPIs
50%
1.71%
–
$1.39
$1.39
Right grant date
2 November 2018
29 November 2018
29 November 2018
29 November 2018
Number of rights granted
1,036,587
134,980
377,945
161,976
Vesting date
30 September 2021
30 June 2020
30 September 2021
30 September 2021
Performance Measure
Expected price volatility of the
company's shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
KPIs
50%
2.05%
–
$1.39
$1.39
KPIs
50%
1.68%
–
$1.48
$1.48
KPIs
50%
2.01%
–
$1.48
$1.48
Share price volatility and the risk-free interest rate are obtained through an independent valuation.
76 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
TSR
50%
2.01%
–
$1.48
$1.13
76
Notes to the Consolidated Financial Statements 30 June 2020
Shares
(a) Employee Share Plan ($1,000 Plan)
All staff are eligible to participate in the Starpharma Employee Share Plan ($1,000 Plan). The objective of the $1,000 Plan is to assist in
the reward, retention and motivation of employees of the group. An annual allocation of up to $1,000 of shares may be granted and
taxed on a concessional basis. Shares are granted under the $1,000 Plan for no consideration and are escrowed for 3 years whilst
participants are employed by the group.
(b) Fair value of shares granted
The weighted average fair value at grant date of shares granted under the $1,000 Plan during the year ended 30 June 2020 was $1.22
(2019: $1.10 per share). The fair value at grant date is determined by the share price on the date of grant. These shares were granted
for no consideration. There was no allocation of shares under the plan to key management personnel.
Information used in assessing the fair value of shares granted during the year ended 30 June 2020 is as follows:
Share grant date
Number of shares granted
Share price at grant date
Assessed fair value
Information used in assessing the fair value of shares granted during the year ended 30 June 2019 is as follows:
Share grant date
Number of shares granted
Share price at grant date
Assessed fair value
24 January 2020
32,920
$1.22
$1.22
8 February 2019
34,542
$1.10
$1.10
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Employee shares issued
Employee performance rights
30 June 2020
$’000
30 June 2019
$’000
40
3,565
3,605
38
3,334
3,372
Starpharma Holdings Limited Annual Report 2020
77
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 77
Notes to the Consolidated Financial Statements 30 June 2020
27. Parent Entity Financial Information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Contributed equity
Reserves
Accumulated losses
Loss for the year
Total comprehensive income
(b) Contingencies of the parent entity
The parent entity has no contingent assets or liabilities at 30 June 2020 (2019: nil).
30 June 2020
$'000
Parent
30 June 2019
$'000
25,514
25,514
691
691
193,661
19,433
(188,270)
(15,651)
(15,651)
37,897
37,897
630
630
193,621
16,266
(172,619)
(12,935)
(12,935)
78 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
78
Directors’ Declaration for the year ended 30 June 2020
In the directors’ opinion:
(a) the financial statements and notes set out on pages 50 to 78 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance for the financial year
ended on that date; 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.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations
Act 2001.
This declaration is made in accordance with a resolution of the directors.
Robert B Thomas AO
Chairman
Melbourne, 27 August 2020
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 79
79
Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 2]
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
Independent auditor’s report
users taken on the basis of the financial report.
To the members of Starpharma Holdings Limited
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Report on the audit of the financial report
Our opinion
In our opinion:
The Group operates in the biotechnology industry, undertaking development of dendrimer technology
for pharmaceutical, life science and other applications. The Group owns a portfolio of proprietary
technology with applications in different stages between development and commercialisation.
The accompanying financial report of Starpharma Holdings Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2020 and of its financial
performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
Materiality
Audit scope
●
●
●
●
●
●
●
For the purpose of our audit we used
overall Group materiality of $0.76
million, which represents approximately
5% of the Group’s adjusted loss before
tax.
the consolidated balance sheet as at 30 June 2020
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
Group made subjective judgements;
the consolidated statement of cash flows for the year then ended
for example, significant accounting
estimates involving assumptions
the consolidated income statement for the year then ended
and inherently uncertain future
the notes to the consolidated financial statements, which include a summary of significant
events.
accounting policies
the directors’ declaration.
Our audit focused on where the
Agrochemicals
Amongst other relevant topics, we
communicated the following key
audit matters to the Audit and Risk
Committee:
Disposal of Starpharma
Key audit matters
Research and development tax
incentive
These are further described in the
Key audit matters section of our
report.
Basis for opinion
We applied this threshold, together with
qualitative considerations, to determine
the scope of our audit and the nature,
timing and extent of our audit procedures
and to evaluate the effect of
misstatements on the financial report as a
whole.
All audit procedures are performed
by PwC Australia, consistent with
the location of Group management
and financial records.
We tailored the scope of our audit
taking into account the accounting
processes and controls, and the
industry in which the Group
operates.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial report
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We chose Group adjusted loss before tax
because, in our view, it is the benchmark
against which the performance of the
Group is most commonly measured. We
adjusted for the impact of the gain on
disposal of Starpharma Agrochemicals as
the financial statement line item is not
expected to reoccur and has a
disproportionate impact on the earnings
result for the period.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We utilised a 5% threshold based on our
professional judgement, noting it is
within the range of commonly acceptable
profit related thresholds in the
biotechnology industry.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Page 80 of 88
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Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 3]
Our audit approach
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
An audit is designed to provide reasonable assurance about whether the financial report is free from
our audit of the financial report for the current period. The key audit matters were addressed in the
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
users taken on the basis of the financial report.
particular audit procedure is made in that context.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and management structure of the
Group, its accounting processes and controls and the industry in which it operates.
How our audit addressed the key audit matter
Key audit matter
The Group operates in the biotechnology industry, undertaking development of dendrimer technology for
pharmaceutical, life science and other applications. The Group owns a portfolio of proprietary technology
with applications in different stages between development and commercialisation.
We read the Starpharma Agrochemicals share sale and
purchase agreement (SPA) to obtain an understanding of
the terms of the transaction and performed the following
procedures:
Disposal of Starpharma Agrochemicals (Refer to
note 23)
During June 2017 the Group disposed of the Starpharma
Agrochemical business and associated net assets with
carrying value of $7.5m for a cash consideration of $35
million, as described in note 23, realising a gain of $24.7
million within the consolidated income statement.
On disposal the accumulated foreign currency translation
reserve (FCTR) of $1.3 million related to Dendritic
Nanotechnologies Inc has been recycled to the
consolidated income statement.
This is a key audit matter due to the fact that the
transaction is material to the financial statements.
Assessed the presentation and disclosure of the
Agrochemicals business as a discontinued
operation against the requirements of the
relevant Australian Accounting Standards.
Obtained managements calculation of the gain
on disposal and agreed:
Materiality
Audit scope
o Cash proceeds to the SPA and bank
Key audit matters
records
● For the purpose of our audit we used
overall Group materiality of $714,000,
which represents approximately 5% of
the Group’s loss before tax.
● We applied this threshold, together
with qualitative considerations, to
determine the scope of our audit and
the nature, timing and extent of our
audit procedures and to evaluate the
effect of misstatements on the financial
report as a whole.
● We chose Group loss before tax
because, in our view, it is the
benchmark against which the
performance of the Group is most
commonly measured.
● We utilised a 5% threshold based on
our professional judgement, noting it is
within the range of commonly
acceptable thresholds.
● Our audit focused on where the
Group made subjective
judgements; for example,
significant accounting estimates
involving assumptions and
inherently uncertain future
events.
o Material transaction costs incurred to
● Amongst other relevant
bank records
topics, we
o Net assets transferred to the SPA and
communicated the
their value to the Group’s financial
following key audit
records
matters to the Audit
o FCTR to the Group’s financial records
and Risk Committee:
Agreed the calculation of the results of
− Research and
development Tax
discontinued operations for both the current
Incentive
year and prior year to the Group’s financial
records.
● − Revenue Recognition
Assessed management’s rationale and
under AASB 15
Revenue from
judgement in determining the classification of
Contracts with
the gain on disposal in the Group’s income tax
Customers
provision calculations.
● These are further
● All audit procedures are
performed by PwC Australia,
consistent with the location of
Group management and
financial records
● We tailored the scope of our
audit taking into account the
accounting processes and
controls, and the industry in
which the Group operates.
described in the Key
audit matters section of
our report.
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STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 81
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81
Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 4]
Key audit matters
Key audit matter
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. The key audit matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. Further, any commentary on the outcomes of a particular audit
procedure is made in that context. We communicated the key audit matters to the Audit and Risk
Committee.
Research and development tax incentive (Refer
to note 3 critical accounting estimates)
How our audit addressed the key audit matter
Key audit matter
Research and Development Tax Incentive
(Refer to note 3 critical accounting estimates and
judgements, note 6 expenses and note 9 current assets
- trade and other receivables)
Starpharma’s research and development (R&D)
activities are eligible for a refundable tax offset under an
Australian Government tax incentive. Management has
assessed these activities and expenditure to determine
their eligibility under the incentive scheme. The R&D
Tax Incentive receivable recorded for the year ended 30
June 2017 was $3.5 million.
The Group’s research and development (R&D)
activities are eligible for a refundable tax offset under
an Australian Government Tax Incentive. The Group
This is a key audit matter due to the fact that the
has assessed these activities and related expenditure to
amount accrued in the financial statements is material
determine their eligibility under the incentive scheme.
and there is a degree of judgement and interpretation of
the R&D tax legislation required by management to
assess the eligibility of the R&D expenditure under the
scheme.
The R&D Tax Incentive receivable recorded as at 30
June 2020 was $5.67 million and $5.67 million was
recognised as contra R&D expense in the income
statement for the period ended 30 June 2020.
This is a key audit matter due to:
● the significance of the amount receivable as at 30
June 2020; and
● the degree of judgement and interpretation of the
R&D tax legislation required by the Group to assess
the eligibility of the R&D expenditure under the
scheme.
How our audit addressed the key audit matter
We tested management’s estimate of the R&D Tax
Incentive receivable to assess the amount accrued as at
30 June 2017. As part of our procedures we:
Compared the estimate recorded in the
We have performed the following procedures to assess
the Group’s estimate of the R&D Tax Incentive
receivable as at 30 June 2020:
financial statements as at 30 June 2016 to the
amount of cash received after lodgement of the
R&D Tax Incentive claim to assess historical
accuracy of the estimate.
● compared the estimate recorded in the financial
statements as at 30 June 2019 to the amount of cash
received after lodgement of the R&D Tax Incentive
claim to assess historical accuracy of the estimate;
Compared the nature of the R&D expenditure
included in the current year estimate to the
prior year estimate.
● compared the nature of the underlying R&D
expenditure included in the current year estimate to
the prior year estimate;
Assessed the nature of the expenses against the
eligibility criteria of the R&D Tax Incentive
programme.
● assessed the nature of the expenses against the
eligibility criteria of the R&D Tax Incentive
programme;
Agreed the eligible expenditure in the estimate
to the general ledger.
● assessed the treatment of the JobKeeper receipts
within the eligible R&D expenditure calculation;
Obtained copies of correspondence with the
ATO related to the claim and agreed the
assessment to management’s estimate.
● agreed the eligible expenditure in the estimate to the
general ledger or other underlying accounting
records;
Obtained copies of correspondence with the
company’s external tax specialist and agreed
the advice to the current calculation and the
● obtained copies of correspondence with the
2016 lodgement.
company’s external tax advisor and agreed the
advice to the R&D Tax Incentive calculation for the
current financial year; and
Assessed the classification of the amount in the
financial statements.
● assessed the classification of the amount in the
financial statements.
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Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 5]
Key audit matter
How our audit addressed the key audit matter
Other information
Revenue recognition under AASB 15 Revenue
from Contracts with Customers
(Refer to note 1 Significant Accounting Policies and
note 5 revenue and other income)
The directors are responsible for the other information. The other information comprises the
Chairman’s Letter to shareholders, CEO’s Report, Corporate and Social Responsibility, Director’s
Report, Operating and Financial Review, Corporate Governance Statement, Shareholder Information,
Intellectual Property Report and Corporate Directory included in the Group’s annual report for the year
ended 30 June 2017 but does not include the financial report and our auditor’s report thereon.
We have performed the following procedures to assess
the Group’s revenue recognition for the period ended
30 June 2020:
The Group recognises licensing, product sales, royalty
and research revenues from arrangements with
commercial partners.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
● obtained an understanding of the Group’s
The Group has recognised $6.03 million of revenue
from contracts with customers for the period ended 30
June 2020.
In connection with our audit of the financial report, our responsibility is to read the other information
This is a key audit matter due to the nature of the
identified above and, in doing so, consider whether the other information is materially inconsistent
Group’s contractual arrangements and complexity of
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
applying the accounting standard to those contractual
misstated.
arrangements.
contractual arrangements with commercial
partners, focusing on the identification of
performance obligations, license arrangements and
the associated recognition of fixed and variable
consideration, royalty income and product sales;
● tested a selection of transactions to the underlying
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
● evaluated the adequacy of disclosures in the annual
supporting documentation;
Responsibilities of the directors for the financial report
financial report required under AASB 15.
Other information
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
The directors are responsible for the other information. The other information comprises the information
fraud or error.
included in the annual report for the year ended 30 June 2020, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
If, based on the work we have performed on the other information that we obtained prior to the date of
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
audit conducted in accordance with the Australian Auditing Standards will always detect a material
required to report that fact. We have nothing to report in this regard.
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
Responsibilities of the directors for the financial report
decisions of users taken on the basis of the financial report.
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
A further description of our responsibilities for the audit of the financial report is located at the
such internal control as the directors determine is necessary to enable the preparation of the financial
Auditing and Assurance Standards Board website at:
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
error.
auditor's report.
Starpharma Holdings Limited Annual Report 2019
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 83
83
Page 83 of 88
Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 5]
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Key audit matter
How our audit addressed the key audit matter
Auditor’s responsibilities for the audit of the financial report
Research and development tax incentive (Refer
to note 3 critical accounting estimates)
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
We tested management’s estimate of the R&D Tax
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
Incentive receivable to assess the amount accrued as at
conducted in accordance with the Australian Auditing Standards will always detect a material
30 June 2017. As part of our procedures we:
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
Starpharma’s research and development (R&D)
activities are eligible for a refundable tax offset under an
Australian Government tax incentive. Management has
assessed these activities and expenditure to determine
their eligibility under the incentive scheme. The R&D
Tax Incentive receivable recorded for the year ended 30
June 2017 was $3.5 million.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our auditor's report.
This is a key audit matter due to the fact that the
amount accrued in the financial statements is material
and there is a degree of judgement and interpretation of
the R&D tax legislation required by management to
assess the eligibility of the R&D expenditure under the
scheme.
Compared the nature of the R&D expenditure
included in the current year estimate to the
prior year estimate.
financial statements as at 30 June 2016 to the
amount of cash received after lodgement of the
R&D Tax Incentive claim to assess historical
accuracy of the estimate.
Report on the remuneration report
Our opinion on the remuneration report
Compared the estimate recorded in the
We have audited the remuneration report included in pages 20 to 41 of the directors’ report for the year
ended 30 June 2020.
Assessed the nature of the expenses against the
eligibility criteria of the R&D Tax Incentive
programme.
In our opinion, the remuneration report of Starpharma Holdings Limited for the year ended 30 June
2020 complies with section 300A of the Corporations Act 2001.
Agreed the eligible expenditure in the estimate
to the general ledger.
Responsibilities
Obtained copies of correspondence with the
The directors of the Company are responsible for the preparation and presentation of the remuneration
ATO related to the claim and agreed the
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
assessment to management’s estimate.
opinion on the remuneration report, based on our audit conducted in accordance with Australian
Auditing Standards.
Obtained copies of correspondence with the
company’s external tax specialist and agreed
the advice to the current calculation and the
2016 lodgement.
PricewaterhouseCoopers
Assessed the classification of the amount in the
financial statements.
Brad Peake
Partner
Melbourne
27 August 2020
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Starpharma Holdings Limited Annual Report 2020
84
Page 82 of 88
Shareholder Information
The shareholder information set out below was applicable as at 19 August 2020.
Supplementary information as required by ASX listing requirements.
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
Total
There were 586 holders of less than a marketable parcel of ordinary shares.
B. Equity Security Holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
National Nominees Limited
T & N Argyrides Investments P/L
Mirrabooka Investments Limited
Applecross Secretarial Services Pty Ltd
Ms Jacinth Fairley
1.
2.
3.
4.
5.
6.
7.
8.
9
10.
Mr Kingsley Bryan Bartholomew
11.
Mr Peter Murray Jackson
12
BNP Paribas Nominees Pty Ltd
13.
HSBC Custody Nominees (Australia) Limited - A/C 2
14.
Dollar Coin Investments Pty Ltd
15.
Merrill Lynch (Australia) Nominees Pty Limited
16.
Commonwealth Scientific and Industrial Research Organisation
17.
Mr Mario Thomas Argyrides
18.
Mr David Michael Hosey + Mrs Andrea Jane Hosey
19.
Mr Richard Grant Oliver
20.
Applecross Secretarial Services Pty Ltd
Class of equity security
Shares
Performance rights
1,671
2,423
1,075
1,493
253
6,915
–
–
–
20
22
42
Number held
121,436,040
49,959,725
20,348,290
9,579,940
8,387,362
5,000,000
3,979,571
3,361,550
3,252,386
3,067,072
3,000,000
2,956,271
2,487,616
1,990,030
1,622,100
1,448,798
1,439,900
1,395,684
1,345,267
1,118,588
Ordinary shares
Percentage
of issued shares
32.59
13.41
5.46
2.57
2.25
1.34
1.07
0.90
0.87
0.82
0.81
0.79
0.67
0.53
0.44
0.39
0.39
0.37
0.36
0.30
247,176,190
66.34
Starpharma Holdings Limited Annual Report 2020
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020 85
85
Shareholder Information
Name
Employee Performance Rights
C. Substantial Holders
Unquoted equity securities over ordinary shares
Number on issue
14,750,525
Number of holders
42
Substantial shareholders with a shareholding greater than 5% as shown in substantial shareholder notices received by the company as at 19
August 2020:
Name
Allan Gray Australia Pty Ltd
M&G Investment Funds
UIL Limited
Allianz SE
FIL Limited
D. Voting Rights
Number held
53,431,698
45,186,512
19,046,000
18,648,131
18,632,740
Ordinary shares
Percentage of
issue shares
14.37
12.15
5.12
5.01
5.00
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) Performance Rights
No voting rights.
86 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
86
Intellectual Property Report
The Starpharma patent portfolio currently has around 15 active patent families with over 150 granted patents and more than 30 patent
applications pending.
This year Starpharma also filed new provisional patents covering our SPL7013 COVID-19 nasal spray, DEP® radiotherapeutic products, DEP®
HER-2 Targeted ADC’s and DEP® gemcitabine.
Key patents within the Starpharma portfolio as at 31 July 2020:
Title
Priority Date &
Publication Number
Patents Granted
Applications Pending
VivaGel® Patent Portfolio
Agents for the Prevention & Treatment
of Sexually Transmitted Diseases
30 March 2001
WO02/079299
Microbicidal Dendrimer Composition
Delivery System (Condom related)
18 October 2005
WO2007/045009
Method of Treatment or Prophylaxis of
Bacterial Vaginosis
16 May 2011
WO2012/000891
Australia, Brazil, Canada,
China, Europe, Hong Kong,
Japan, Mexico, New Zealand,
Singapore, South Korea, USA
Australia, Canada, Europe,
Hong Kong, India, Japan,
Malaysia, Mexico, New
Zealand, Russian Federation,
South Korea, Taiwan, USA
Australia, Canada, China,
Europe, Israel, Japan, Mexico,
Russia, South Korea, USA
Brazil, China, Hong Kong,
India
Method of Treatment or Prophylaxis of
Infection of the Eye
13 September 2012
WO2014/043576
China, Europe, Hong Kong,
Japan, USA
Canada, China, India,
Japan, USA
Drug Delivery Patent Portfolio (includes DEP® Patents)
Macromolecules Compounds having
Controlled Stoichiometry
25 October 2005
WO2007/048190
Australia, Canada, Europe,
USA
Modified Macromolecules
20 January 2006
WO2007/082431
Australia, Canada, China,
Hong Kong, India, Japan, USA
Targeted Polylysine Dendrimer
Therapeutic Agent
11 August 2006
WO2008/017125
China, India, USA
Macromolecules (Drug linkers)
6 June 2011
WO2012/167309
Australia, China, Japan, South
Korea, USA
Europe
Europe
Brazil, Canada, China,
Europe, Hong Kong, India,
USA
Dendrimer Drug Conjugates
(Insulin/GLP1)
Therapeutic Dendrimer (Cabazitaxel)
Dendrimer for Therapy and Imaging
Therapeutic Dendrimer (Irinotecan)
6 June 2014
WO 2015/184510
19 July 2018
WO2020/014750
29 November 2018
WO2020/107078
20 November 2018
WO2020/102852
Europe
India, USA
International Patent
Cooperation Treaty (PCT)
application
International Patent
Cooperation Treaty (PCT)
application
International Patent
Cooperation Treaty (PCT)
application
Starpharma Holdings Limited Annual Report 2020
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87
Corporate Directory
Company name
Starpharma Holdings Limited
ABN 20 078 532 180
Solicitors
DLA Piper
21/140 William Street
Melbourne VIC 3000 Australia
Directors
R B Thomas AO – Chairman
J K Fairley – Chief Executive Officer and Managing Director
P R Turvey – Deputy Chairman
R A Hazleton
Z Peach
D J McIntyre
Stock exchange listing
ASX Limited
Level 4, North Tower, Rialto, 525 Collins Street,
Melbourne VIC 3000 Australia
ASX Code: SPL
Starpharma’s American Depositary Receipts (ADRs) trade under
the code SPHRY (CUSIP number 855563102). Each Starpharma
ADR is equivalent to ten ordinary shares of Starpharma as traded
on the ASX. The Bank of New York Mellon is the depositary bank.
Starpharma’s ADRs are listed on OTCQX International
(www.otcmarkets.com), a premium market tier in the U.S. for
international exchange-listed companies, operated by OTC
Markets Group.
Website address
www.starpharma.com
Company Secretary
Nigel Baade
Registered office
4-6 Southampton Crescent
Abbotsford, Victoria 3067 Australia
Telephone +61 3 8532 2700
Fax +61 3 9510 5955
Postal address
PO Box 2022
Preston VIC 3072 Australia
Share register
Computershare Investor Services Pty Limited
452 Johnston Street, Abbotsford VIC 3067
GPO Box 2975
Melbourne, VIC 3001
1300 850 505 (within Australia)
+613 9415 4000 (outside Australia)
www.computershare.com
Auditor
PricewaterhouseCoopers
2 Riverside Quay
Southbank VIC 3006 Australia
88 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2020
Starpharma Holdings Limited Annual Report 2020
88
STARPHARMA HOLDINGS LIMITED
ABN 20 078 532 180
4-6 Southampton Crescent
Abbotsford
VIC 3067 Australia
Telephone +61 3 8532 2700
www.starpharma.com