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STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 1
VIRALEZE™ agent (SPL7013) outperforms other antiviral agents, iota-carrageenan and HPMC, against influenza A and B Receipt of $7.7 million R&D tax incentive refund in January 2022 Three promising clinical-stage internal DEP® oncology assets Highly experienced former CSL executive, Dr Jeff Davies, joins Starpharma's Board DEP® gemcitabine advancing through preclinical in preparation for a Phase 1/2 clinical study VIRALEZE™ sales and distribution arrangements signed for Italy, Vietnam and the Middle East DEP® drug delivery platform showcased at Novel Format Conjugates Summit in Boston US patent issued for DEP® cabazitaxel VIRALEZE™ registered in more than 30 countries VivaGel® BV regulatory approvals achieved in Middle Eastern countries New VivaGel® condom range launched in Japan by Okamoto VIRALEZE™ agent (SPL7013)confirmed to be virucidal against influenza A and B VIRALEZE™ demonstrates high levels of protection against Omicron in an in vivo viral challenge model Additional trial sites opened for AstraZeneca’s global Phase 1/2 clinical trial of DEP® AZD0466 in patients with advanced haematological malignancies New and expanded DEP® Research Agreement with Genentech Recruitment initiated for the 2nd global Phase 1/2 clinical trial of Starpharma and AstraZeneca's partnered DEP® product, AZD0466, in patients with non-Hodgkin's lymphoma Expanding portfolio of DEP® partnerships with leading pharmaceutical companies, including AstraZeneca, Genentech and Merck & Co., Inc. Strong cash position with a balance of $49.9 million as at 30 June 2022 Revenue up 128% from FY21 reflecting the further rollout of VIRALEZE™ New VIRALEZE™ product launches in Vietnam and Italy and relaunch by LloydsPharmacy in the UK Positive interim efficacy findings from the prostate cancer cohort of the Phase 2 DEP® cabazitaxel trial showing efficacy signals in 100% of evaluable patients New DEP® Research Agreement with Merck & Co., Inc., involving antibody drug conjugates Sales of VIRALEZE™ – a broad spectrum
antiviral nasal spray developed by our team
as the COVID-19 pandemic emerged – have
continued to increase, as has the number of
countries where the product is registered and
sold (now over 30 countries).
In close collaboration with The Scripps
Research Institute in the US, Starpharma
has continued to undertake antiviral testing
of VIRALEZE™ and SPL7013. Importantly,
VIRALEZE™ has demonstrated consistent
and increasingly broad-spectrum results
across a range of key respiratory viruses,
including multiple variants of SARS-CoV-2
(Omicron and Delta), influenza and RSV,
highlighting its value in seasonal flu outbreaks
as well as future pandemic preparedness. The
broad-spectrum activity, excellent stability and
room temperature storage are all significant
advantages of VIRALEZE™, particularly as
the world transitions to living with COVID-19.
FY22 also saw two board changes for
Starpharma with Lynda Cheng and Dr Jeff
Davies joining. Ms Cheng has extensive
experience as a finance executive and Dr
Davies, a former CSL executive, brings a
wealth of biopharmaceutical experience.
I would like to thank Ms Cheng, Dr Davies
and the rest of my fellow board members
for all their work and support in FY22.
I would also like to reiterate the valuable
contribution of our CEO, Dr Fairley, as well
as that of the executive management team,
to the company.
Our business remains strong and FY22 has
provided us with a great platform for the
commercial opportunities before us in FY23
and beyond.
We continue to champion our Environment,
Social and Governance (ESG) pillars by
creating important products with the potential
to be life-changing and make a significant
contribution to the health and wellbeing of
millions around the world. That contribution
is something we should all be very proud of.
Yours sincerely,
!
Rob Thomas, AO
Starpharma Chairman
2 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
On behalf of the Board, I am delighted to present our 2022 Annual Report.I would like to start by acknowledging the continuing support of our shareholders, customers and business partners through these very challenging times. While there has been widespread pressure on share prices across our sector, including that of Starpharma, this belies the steady progress made by the company during FY22 to advance our wide range of programs. Importantly, Starpharma finished the year with net cash of $49.9 million.I also want to acknowledge the commitment of our staff and management team, led by Dr Jackie Fairley, through this difficult period, which was still impacted by the COVID-19 pandemic. FY22 was another busy year for Starpharma as we signed two significant new partner agreements for our dendrimer enhanced product (DEP®) drug delivery platform, advanced our internal DEP® programs, and continued to increase our global footprint for the sale of our consumer products, including our broad-spectrum antiviral nasal spray VIRALEZE™.Pivotal to our longer-term future is the new DEP® agreements we have in place with some of the world’s largest pharmaceutical companies. Starpharma now has DEP® partnerships with three of the top 10 global pharmaceutical companies. Starpharma’s growing portfolio of partnerships with leading pharmaceutical companies is built on our proprietary cutting-edge DEP® platform, which has the potential to create life-changing products for many cancer patients. It is important to note that our nanotechnology dendrimer delivery platform can be applied to a wide range of therapeutic areas, including chemotherapy, immunotherapy and radiotheranostics. Recently, in August 2022, we signed a second DEP® Research Agreement with MSD (Merck & Co., Inc.), involving DEP® antibody drug conjugates, following a successful initial agreement signed with them in early 2021.We were also delighted to begin a new research collaboration with Genentech, part of the Roche Group, initially focusing on the evaluation of DEP® drug conjugates. We were pleased to expand this research agreement just prior to the end of the financial year to add an additional DEP® program.Chairman’s LetterThese positive and rapid developments for our partnered DEP® programs signal the growing interest in the benefits and value afforded by our DEP® technology.This year, it was really exciting to see AstraZeneca further expand its clinical program for its novel anti-cancer DEP® drug, AZD0466. This drug is now being progressed through two global multi-centre Phase 1/2 trials in patients with certain blood cancers. The addition of a new indication (non-Hodgkin’s lymphoma) in this clinical program is excellent news for Starpharma given the expanded market potential, and importantly, the ability to help more patients who are suffering from these difficult to treat cancers.Our internal DEP® programs have continued to advance, with recruitment picking up again for our multiple clinical-stage oncology assets, following some COVID-19 related delays. We have seen impressive patient responses in our Phase 2 clinical trials, such as significant tumour shrinkage (e.g., partial response), reductions in tumour marker levels and long-standing stable disease, in cases of prostate, ovarian, lung, stomach, oesophageal, colorectal, pancreatic and breast cancers.The team was very pleased to report the interim findings for DEP® cabazitaxel from the prostate cancer cohort of our Phase 2 trial. Prostate cancer is the second most common cancer diagnosed in men worldwide and a leading cause of death. Our interim findings showed that 100% of patients assessed for efficacy following treatment with DEP® cabazitaxel demonstrated one or more efficacy signals and clinical benefit.Starpharma has also continued to deepen its internal pipeline of DEP® assets, exploring and developing new candidates in the innovative and valuable research areas of radiotheranostics and antibody drug conjugates. We look forward to sharing further results for our internal DEP® products.In parallel with our partnered and internal DEP® drug delivery programs in oncology, Starpharma has increased the commercialisation of its consumer products, including VIRALEZE™, in collaboration with its marketing and distribution partners. These products are based on our patented dendrimer, SPL7013, which has demonstrated potent antiviral and antibacterial activity against a variety of infectious pathogens and is supported by numerous clinical trials and scientific publications. STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 3
2022 has proved to be another exciting year for Starpharma and I am very pleased to report on our significant achievements over the past 12 months. Starpharma is well positioned and funded for growth, with a cash balance of $49.9 million (at 30 June 2022) and an increasingly diverse and growing product and partner portfolio. We continue to expand the company’s commercial footprint in more international markets and to explore short- and long-term opportunities for the development of new and innovative products using our proprietary dendrimer technology.Our DEP® products continue to demonstrate impressive responses in Phase 2 trials, including significant tumour shrinkage and stable disease, in some of the most common and deadly cancers. We were pleased to report the positive interim findings from the prostate cancer cohort of our DEP® cabazitaxel trial in which efficacy signals were observed in all evaluable patients treated with our DEP® version of the leading prostate cancer drug cabazitaxel. Efficacy signals included prolonged stable disease, tumour shrinkage and significant reductions in tumour biomarker levels, and improvements in bone disease. These positive findings were particularly encouraging given that all patients in this trial cohort had late-stage prostate cancer and had failed multiple other therapies, including taxanes, before entering our study. We look forward to sharing further updates on this trial.Our other internal DEP® drug candidates in Phase 2 – DEP® docetaxel and DEP® irinotecan – have continued to recruit and progress well through their clinical trials. We are seeing encouraging responses in patients and are receiving positive feedback from clinicians in a range of cancers. Alongside these programs, the addition of new and exciting DEP® partnerships with leading, global pharmaceutical companies demonstrates the growing momentum and value in our DEP® platform. Starpharma signed a DEP® Research Agreement with Genentech, part of the Roche Group, in December 2021, and within six months, this agreement was expanded to include an additional DEP® program evaluating further compounds using our DEP® technology. More recently, we also signed a second DEP® Research Agreement with Merck & Co., Inc., further building on our partnership with them in the innovative and valuable area of antibody drug conjugates. Our expanding DEP® partnerships with these and other leading pharmaceutical companies, like AstraZeneca, illustrate the utility and optionality of Starpharma’s novel drug delivery platform.Our existing DEP® partner, AstraZeneca, continued to progress its novel DEP® product, AZD0466, through clinical development. AZD0466, a highly novel Bcl2/xL inhibitor, is being trialled by AstraZeneca in patients with advanced blood cancers as part of a global clinical program, which was expanded during the year to include a new indication. These resistant/refractory blood cancers are difficult to treat and AZD0466 represents both an important therapeutic option for patients and a significant commercial opportunity for AstraZeneca and Starpharma. We now have DEP® partnerships with several of the world’s largest pharmaceutical companies, including AstraZeneca, Genentech, and Merck & Co., Inc. These companies are highly regarded as industry leaders and our partnerships with them further validate our DEP® technology and the work we are doing in the exciting and dynamic oncology space. Meanwhile, our marketed products have reached more people this year than ever before, with revenues significantly increasing.During the year, VIRALEZE™ was launched in Vietnam and Italy, and sales resumed at LloydsPharmacy in the UK following the successful resolution of queries raised by the MHRA. The product is now registered in more than 30 countries and Starpharma continues to expand its availability and partnerships around the world. In parallel with commercial activities for VIRALEZE™, we have continued to test the efficacy of SPL7013, the agent in VIRALEZE™, against important respiratory viruses, including multiple variants of SARS-CoV-2 and influenza. SPL7013 has demonstrated consistent, potent activity against a broad spectrum of respiratory viruses and has outperformed other marketed products when tested head-to-head. Our VivaGel® BV product is now registered in more than 45 countries and is sold under different brand names in the UK, Europe, Southeast Asia, South Africa, Australia and New Zealand. New product launches are planned, including in Asia later this calendar year. Importantly, VivaGel® BV also featured in a highly regarded peer-reviewed European journal this year, which will further support marketing activities and its inclusion in clinical management guidelines for BV.I hope you enjoy reading about Starpharma’s progress in this report. Dr Jackie Fairley, Chief Executive OfficerCEO’s ReportPartnered DEP® ProgramsInternal DEP® ProgramsVIRALEZE™ Nasal SprayVivaGel® BV & VivaGel® CondomNew OpportunitiesStarpharma has a deep portfolio of high-value products on market, clinical-stage assets and external partnerships with leading, global companies Internal Clinical-Stage DEP® Programs –
Oncology/Chemotherapy
Starpharma has three internal oncology assets in international Phase
2 clinical trials, which are investigating the use of our novel DEP®
products as treatments for multiple cancers, including prostate,
ovarian, pancreatic, colorectal, and oesophageal cancers. The three
DEP® chemotherapeutic agents, currently in clinical trials, are DEP®
irinotecan, DEP® docetaxel and DEP® cabazitaxel.
DEP® irinotecan (Phase 2)
DEP® irinotecan is an improved version of conventional
irinotecan, which in its standard form is predominantly
used to treat colorectal cancer, despite having multiple
US FDA “Black Box” warnings.
Starpharma’s Phase 2 trial of DEP® irinotecan has
continued to make good progress in the past 12 months,
with 83 patients recruited to date. Encouraging efficacy signals
including prolonged stable disease, impressive tumour shrinkage and
reductions in tumour marker levels have been observed in a number of
cancer types, including breast, colorectal, ovarian, pancreatic, lung and
oesophageal cancers as well as a notable absence of some severe,
dose limiting toxicities often experienced with irinotecan.
DEP® irinotecan + 5-FU (combination arm)
In parallel with the Phase 2 monotherapy trial of DEP® irinotecan,
Starpharma is progressing a combination arm that will explore the
use of DEP® irinotecan in combination with 5-FU + leucovorin – a
commonly used treatment regimen in colorectal cancer. Enrolment of
patients in this combination arm of the study has now commenced. It
is not expected that this combination arm will delay completion of the
monotherapy component of the trial.
DEP® docetaxel (Phase 2)
DEP® docetaxel is a dendrimer version of the conventional
drug formulation of docetaxel, which is widely used to treat
breast, lung and prostate cancers.
Starpharma’s clinical program for DEP® docetaxel
continued to advance this year, with 72 patients recruited
to date across the monotherapy and combination arms.
During the trial, we have observed encouraging efficacy
signals in patients suffering from lung, pancreatic, oesophageal,
cholangiocarcinoma, gastric cancers, and other cancers.
Clinical information and clinical case studies given in this document are given for illustrative
purposes only and are not necessarily a guide to product performance and no representation
or warranty is made by any person as to the likelihood of achievement or reasonableness of
future results. Nothing contained in this document, nor any information made available to you
is, or shall be relied upon as, a promise, representation, warranty or guarantee as to the past,
present or the future performance of any Starpharma product.
4 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Improving medicines for patients through better drug deliveryDendrimer Enhanced Products (DEP®)Anti-cancer therapies with fewer side effects and improved effectiveness – this is what Starpharma’s novel drug delivery platform is aimed at providing, and not only for cancer treatments, but for drugs that treat a range of medical conditions.Starpharma’s dendrimers can enhance the properties of existing and novel drugs by reducing toxicities, hence the name “Dendrimer Enhanced Products” or “DEP”. Our drug delivery technology is based on precise nanoscale particles called dendrimers, which can deliver therapeutic drugs to target tissues in a controlled manner, providing enhanced patient benefits. Using our DEP® technology to enhance and control drug delivery has the potential to offer multiple commercial and therapeutic benefits, including: Reduced side effects compared to the original formulation of drugs Extended duration of therapeutic activity inside the body Selective targeting of drugs to organs, tissues or molecular receptors Improved solubility Greater flexibility in a wide range of therapeutic areas Multiple revenue streams and potential for new intellectual property (IP) / patent extensionsStarpharma’s DEP® technology offers a broad range of clinical applications and commercial opportunities. Starpharma has internal and partnered DEP® programs in multiple therapeutic areas, including oncology/chemotherapy, radiotheranostics, antibody drug conjugates and other therapeutic areas.Internal DEP® productsPreclinicalPhase 1Phase 2DEP® cabazitaxelDEP® irinotecanDEP® docetaxelDEP® gemcitabinePhase 1/2 clinical program expected to commence shortlyDEP® radiotheranosticsDEP® antibody drug conjugatesDEP® non-oncology Case Study: 80-year-old man with stage IV prostate cancer
Prostate cancer is the
second most common
cancer in males
worldwide, and now the
most common cancer
diagnosed in Australia.
CT scans of lymph node metastasis
Baseline
Post-treatment
62% reduction in size of cancerous lymph node,
returned to normal size
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 5
DEP® cabazitaxel (Phase 2)DEP® cabazitaxel is a dendrimer enhanced formulation of the leading prostate cancer drug, cabazitaxel, originally developed by Sanofi and marketed as Jevtana®. Starpharma’s DEP® cabazitaxel has the advantage of being a detergent-free formulation, which means that patients are not required to take steroids and antihistamines prior to treatment to avoid/minimise potential anaphylaxis. DEP® cabazitaxel has been designed to improve the safety profile of standard cabazitaxel formulations, while also enhancing its tumour-targeting capabilities to improve efficacy.Starpharma is currently advancing DEP® cabazitaxel through a Phase 2 clinical trial in patients with prostate, ovarian and gastro-oesophageal cancers. 70 patients have been recruited into this trial to date. In November 2021, Starpharma reported positive interim findings from the prostate cancer cohort of this Phase 2 trial. A summary of the patient cohort and interim findings are detailed below.Prostate Cancer Patient CohortThe Phase 2 trial enrolled twenty five heavily pre-treated patients with an average age of 73 years suffering from stage IV hormone-refractory prostate cancer. Trial participants had received an average of four prior anti-cancer regimens, and more than 70 cycles/months before entering the study More than 95% of patients treated with DEP® cabazitaxel had previously received taxanes (conventional docetaxel and standard cabazitaxel)Since DEP® cabazitaxel is a detergent-free formulation, the patients did not need to take prophylactic steroids or antihistamines before being administered with DEP® cabazitaxel.Phase 2 Interim Findings in Prostate Cancer Patient Cohort Compared with Jevtana® (original formulation of cabazitaxel)100% of evaluable patients treated with DEP® cabazitaxel exhibited one or more efficacy signals: 64% had soft tissue disease control for up to 36 weeks 90% had a prostate specific antigen (PSA) decrease 83% had no progression of secondary bone disease 18% had significant tumour shrinkage, a partial response 52% achieved a ≥50% decrease in PSA (Jevtana® – 29.5%) 56% evaluable for all three of these measures (soft tissue disease, bone disease and PSA) showed positive efficacy signals in all threeSignificantly fewer and less severe adverse events were reported in the DEP® cabazitaxel cohort than for Jevtana®: Fewer and less severe bone marrow toxicities, particularly neutropenia No anaphylaxis observed with DEP® cabazitaxel formulation (aqueous formulation – polysorbate 80-free) No severe hypersensitivity or hair loss with DEP® cabazitaxel Vast majority of adverse events were mild to moderate Very few patients required G-CSF therapy for myelosuppressionThese interim findings in the prostate cancer cohort demonstrate a favourable efficacy and safety profile of DEP® cabazitaxel, compared to the original formulation of the drug, highlighting the significant value that Starpharma’s DEP® technology can deliver to patients.Starpharma’s DEP® cabazitaxel trial continues recruitment of patients with ovarian and gastroesophageal cancers, following observation of encouraging efficacy signals in these tumour types.100% of evaluable prostate cancer patients treated with DEP® cabazitaxel demonstrated one or more efficacy signalsPatient was heavily pre-treated prior to entering the DEP® cabazitaxel study• Patient had progressed following 33 cycles/months of three different anti-cancer therapiesFollowing treatment with DEP® cabazitaxel (seven cycles), the patient achieved these responses:• 87% reduction in PSA (prostate specific antigen)• Partial response (significant tumour shrinkage) lasting more than 24 weeks, including a 62% decrease in size of target lymph node• No G-CSF therapy required• Notable absence of clinically significant neutropenia, anaemia, and thrombocytopeniaCEO’s Report Figure 1: DEP® HER2 ADC provides enhanced antitumour efficacy
versus selected marketed HER therapies
6 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
DEP® radiotheranosticsRadiotheranostics refers to the combined use of small doses of radioactive drugs, or radionuclides, for imaging and therapeutic applications in cancer treatment.As well as conventional chemotherapeutic drugs, Starpharma’s DEP® technology can be applied to radiotheranostics, creating DEP® radiotheranostic conjugates, which have the potential to better target cancer tissue, minimise off-target toxicity and enhance efficacy.Radiotheranostics is a rapidly developing area of cancer treatment and sales in this category are estimated to grow substantially in the coming years.Starpharma has developed multiple novel DEP® radiotheranostic candidates, including two radiotherapeutics (DEP® lutetium and DEP® HER2-lutetium) and one radiodiagnostic (DEP® zirconium).The company is exploring a number of opportunities to progress these candidates, including through internal and partnered programs.Example of a DEP® radiotherapeutic, where the radioisotopes are attached to a DEP® ‘scaffold’Application of DEP® beyond oncologyGiven the highly versatile and flexible nature of Starpharma’s DEP® technology, it can be applied to a wide range of therapies, therapeutic areas, and types of molecules, beyond oncology applications. These therapies include, but are not limited to, antivirals and anti-infectives.Starpharma has previously demonstrated the benefits of using DEP® in antivirals such as improved pharmacokinetics and improved solubility.In parallel with our work in oncology, the company continues to identify potential opportunities for developing DEP® compounds for therapeutic areas beyond oncology. Starpharma also has a partnership with Chase Sun to explore the potential of DEP® in the area of anti-infectives.Internal Preclinical DEP® Programs DEP® gemcitabine – Advancing towards the clinic DEP® gemcitabine is a dendrimer-enhanced version of conventional gemcitabine, which is commonly used to treat pancreatic cancer and a wide range of other cancer types. Starpharma is in the final stage of preparation for a Phase 1/2 clinical trial of DEP® gemcitabine, following strong preclinical results and significant clinician interest.DEP® antibody drug conjugatesAntibody drug conjugates (ADCs) are a class of targeted medicines that comprise a targeting molecule (e.g., antibody) chemically linked to a drug. ADCs are designed to target, enter and kill certain types of cells, such as cancer cells, while minimising harm to other cells.Starpharma’s DEP® technology provides multiple therapeutic benefits compared to conventional ADCs, including: Greater homogeneity Site-specific attachment of drug conjugates High affinity Delivery of signficantly higher drug payload levels than conventional ADCs Improved solubility and aggregationADCs have become an increasingly valuable class of therapeutic agents in oncology and haematology and Starpharma is working on a number of internal and partnered programs in this area.Starpharma has demonstrated the benefits of DEP® ADCs in preclinical studies, such as in Figure 1 below, which shows that Starpharma’s HER2 targeted DEP® ADC demonstrated significant tumour regression and 100% survival, outperforming marketed drugs in a human ovarian cancer model.Starpharma’s DEP® technology is highly versatile and can be used across a range of therapeutic areas AstraZeneca commences clinical
program for DEP® agent, AZD0466,
triggering milestone payment
to Starpharma
'19
Expanded DEP®
partnership
with AstraZeneca
Momentum building
for partnered
DEP® programs
New DEP®
partnership
with Chase Sun
New DEP® ADC
Research Agreement
with MSD
AstraZeneca
global
expansion for
DEP® AZD0466
clinical program
'22
Expanded DEP® Research
Agreement with Genentech
AstraZeneca expands
DEP® AZD0466
clinical program further
to include new cancer type
New DEP® Research
Agreement with Genentech
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 7
Partnered DEP® ProgramsThe exceptional clinical and commercial potential of Starpharma’s DEP® platform makes it a highly valuable partnering proposition. The nature of Starpharma’s DEP® drug delivery platform means partners can work under a research collaboration or licence for a specific drug type or category, or geography without limiting Starpharma’s ability to partner with others, creating significant optionality. Given Starpharma does not fund partnered programs, they also create leverage for Starpharma’s shareholders.In a significant endorsement of the DEP® technology, Starpharma has established partnerships with several of the world’s largest biotechnology and pharmaceutical companies, including AstraZeneca, Genentech and Merck & Co., Inc.The company is collaborating with its partners to explore the application of the DEP® technology in multiple therapeutic areas, including oncology and anti-infectives. Partnered programs have the potential to generate significant returns for Starpharma through milestones and royalties.AstraZeneca expands the DEP® AZD0466 global clinical program to include a new indicationStarpharma has a multi-product licence with AstraZeneca that includes the development of AstraZeneca’s novel DEP® agent AZD0466 – a novel dendrimer formulation of AstraZeneca’s highly potent Bcl2/xL dual inhibitor. AZD0466 is a high-profile program progressing through clinical trials for the treatment of several types of blood cancers.During the year, an exciting expansion of the AZD0466 clinical program was announced by AstraZeneca to include a new indication outside leukaemia – non-Hodgkin’s lymphoma (NHL). NHL is one of the 10 most commonly occurring cancers worldwide. This expanded program is recruiting NHL patients in parallel with the ongoing global Phase 1/2 study in patients with acute myeloid leukaemia (AML) and acute lymphoblastic leukaemia (ALL), which continues to recruit patients and open new sites.Clinical program for AZD0466StatusGlobal Phase 1/2 study in advanced haematological malignancies (AML & ALL)Recruiting & opening new sitesGlobal Phase 1/2 study in non-Hodgkin's lymphomaRecruiting & opening new sitesAdditional indication plannedDetails TBAIn addition to these two trials, AstraZeneca also intends to expand the AZD0466 clinical program to include an additional cancer type. Starpharma welcomes these positive developments for AZD0466 and its expanding market potential. New DEP® Research Agreements with two large US biopharmaceutical companies, Merck & Co., Inc., and GenentechIn August 2022, Starpharma expanded its DEP® ADCs program with Merck & Co., Inc., signing a second DEP® Research Agreement, which will involve generating and evaluating additional DEP® ADCs.In December 2021, Starpharma also announced a new DEP® Research Agreement with Genentech, a member of the Roche Group, for the development and evaluation of DEP® drug conjugates. In June 2022, Starpharma was pleased to announce an expansion of this agreement to include an additional DEP® program.Other DEP® partnerships and collaborations In addition to these partnered programs with AstraZeneca, Merck & Co., Inc., and Genentech, Starpharma continued working on its DEP® anti-infective program with Chase Sun during the year.Starpharma also continues to pursue new partnering opportunities and is advancing negotiations for potential new programs and partners.Starpharma has secured DEP® partnerships with several of the world’s largest biotechnology and pharmaceutical companiesCEO’s Report Innovative broad-spectrum
antiviral nasal spray now
registered in over 30 countries
8 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
VIRALEZE™ protects against highly infectious Omicron variant of SARS-
CoV-2 in Viral Challenge Model – Before or After Exposure
VIRALEZE™ recently demonstrated high levels of protection against
infection with the highly transmissible SARS-CoV-2 Omicron variant in
a stringent viral challenge model.
In a study conducted at Scripps Research in the United States, 100%
of animals treated with VIRALEZE™ before and after Omicron virus
challenge had no detectable virus in lung, trachea, or nasal cavity at up
to four days post-challenge.
VIRALEZE™ was also highly effective even if used only after exposure
to virus – animals treated with VIRALEZE™ only after virus exposure
exhibited a >99.999% reduction in viral load in both lung and trachea,
compared with saline-treated animals, at day seven. This finding is
important because it suggests that even when VIRALEZE™ is used
only after exposure to virus (e.g., if you forget to use the spray before
exposure in a high-risk situation), it still has potential to provide
significant benefit.
Data from the study, showing viral load in lung tiussue, are provided in
Figure 2 below.
Figure 2: SARS-CoV-2 Omicron Viral Load in Lung
VIRALEZE™ vs Saline (PBS) Control
** p <0.01
**** p < 0.0001
These new in vivo data build on the in vitro antiviral and virucidal
testing at Scripps Research earlier in the year, where the VIRALEZE™
agent (SPL7013) achieved the maximum possible reduction of >99.5%
virus infectivitiy against the Omicron variant of SARS-CoV-2 – also
consistent with the high levels of viral reduction seen in previous
studies of other SARS-CoV-2 variants and other respiratory viruses.
Collectively, the data show that VIRALEZE™ is highly effective in
trapping and blocking virus in the nasal cavity and suggest that
VIRALEZE™ could be used to help protect from infection with
respiratory viruses, including multiple SARS-CoV-2 variants, and
potentially as post-exposure prophylaxis to reduce severity of viral
respiratory disease.
VIRALEZE™ Nasal SprayVIRALEZE™ is a broad-spectrum nasal spray that traps and blocks respiratory viruses in the nasal cavity. VIRALEZE™ is applied in the nose where it forms a physical moisture barrier over the nasal mucous membranes, which traps and blocks viruses. VIRALEZE™ nasal spray was successfully developed by Starpharma in response to the COVID-19 outbreak in 2020 and the product was launched less than 12 months after the company first reported the antiviral activity of SPL7013 against SARS-CoV-2. VIRALEZE™ is now registered in more than 30 countries and available in pharmacies, retail outlets and online in a number of countries.During the period, Starpharma reported a number of positive developments for VIRALEZE™, including launches in new regions such as Vietnam and Italy, relaunch in the UK market, and additional registrations in other countries. The company also conducted multiple antiviral and virucidal studies at the prestigious Scripps Research Institute throughout the year to further support the product. The results of these studies have proved highly valuable in commercialising and marketing VIRALEZE™.International rollout of VIRALEZE™Starpharma continues to progress registration and commercialisation for VIRALEZE™ across multiple new markets to support its international rollout. In December 2021, VIRALEZE™ launched in Vietnam and Italy, following the execution of sales and distribution arrangements. In Vietnam, VIRALEZE™ is being distributed through local pharmacy chains and independent retail outlets, while in Italy the product is being sold through LloydsFarmacia. VIRALEZE™ continues to be well received by both consumers (online and instore) and healthcare professionals.Sales of VIRALEZE™ have significantly increased in FY22, following these new product launches. Starpharma's VIRALEZE™ product webstore also achieved growing sales during the year. VIRALEZE™ relaunched by LloydsPharmacy in the UKIn June 2022, VIRALEZE™ was relaunched through LloydsPharmacy in the UK. LloydsPharmacy is one of the largest pharmacy groups in the UK, and its affiliated wholesale arm, AAH, is one of the largest pharmaceutical wholesalers in the UK, supplying more than 14,000 independent UK pharmacies.Starpharma was awarded $1 million in funding in September 2020 for the development of VIRALEZE™ by the Australian Government’s Medical Research Future Fund (MRFF) under the Biomedical Translation Bridge (BTB) program. In August 2022, Starpharma was announced as winner of the ‘Most Significant Commercial Outcome’ award for the successful, rapid development and commercialisation of VIRALEZE™ antiviral nasal spray. SPL7013 in VIRALEZE™ virucidal against influenza A and B
During the year, SPL7013 was also shown to be virucidal against
influenza A and B – the two most common influenza viruses. In studies
conducted at Scripps Research, SPL7013 achieved 95% and 99.7%
reductions in viral infectivity against influenza A and B respectively.
The broad spectrum antiviral activity of SPL7013 that has been
progressively demonstrated, is a positive feature of VIRALEZE™,
which highlights the immense opportunities for the product to support
programs to combat seasonal flu outbreaks and strengthen pandemic
preparedness.
The impressive comparative results of these studies contribute to
the growing body of scientific data supporting VIRALEZE™ and our
innovative antiviral and antimicrobial agent, SPL7013, which is also
used in our VivaGel® products.
VivaGel® BV
VivaGel® BV is a novel, non-antibiotic therapy for the treatment of
bacterial vaginosis (BV) and the prevention of recurrent BV. BV is the
most common vaginal infection worldwide and is twice as common as
thrush. One in three women will experience BV and half of
these women will have recurrent BV.
SPL7013 in VIRALEZE™ has now demonstrated strong antiviral effects
against the following pandemic and endemic viruses:
SARS-CoV-2 (the coronavirus that causes COVID-19), including
the Alpha, Beta, Gamma, Delta, Omicron and Kappa variants
MERS-CoV (the coronavirus that causes MERS)
SARS-CoV (the coronavirus that causes SARS)
H1N1 (the influenza virus that caused Swine Flu)
H3N2 (the influenza virus that caused Avian Flu)
RSV (Respiratory syncytial virus)
Influenza A and B (the two most common influenza viruses)
VIRALEZE™ outperforms other antiviral agents in influenza studies
As well as testing the antiviral effects of SPL7013 against a broad
spectrum of respiratory viruses, Starpharma conducted a number
of comparative antiviral studies at Scripps Research throughout
the year.
In our studies of influenza, A and B, we assessed the activity of two
antiviral agents used in widely available nasal sprays: hydroxypropyl
methyl cellulose (HPMC) and iota-carrageenan. In contrast to the
potent and rapid effect of SPL7013, HPMC and iota-carrageenan
did not exhibit virucidal effects in this experiment, even after
30 minutes exposure (see Figure 3 below).
Figure 3: Infectivity of influenza A virus (log10 pfu/mL) following
incubation with SPL7013 or HPMC (mg/mL)
VivaGel® BV is registered in more than 45 countries, has been
licensed in 160 countries, and is sold under different brand
names in the UK, Europe, Southeast Asia, South Africa, Australia
and New Zealand.
This year, regulatory approvals for
VivaGel® BV were achieved in the Middle
Eastern countries, Bahrain and Qatar.
Starpharma and its commercial partner,
Mundipharma, continue to work together
to complete other registrations across
the Mundipharma territories and to pursue additional launches of
VivaGel® BV in countries where it has been registered.
VivaGel® BV was also featured in the highly regarded peer-reviewed
European journal, Archives of Gynecology and Obstetrics. The article
highlights the significant unmet need for new treatment and prevention
options in BV and the role that VivaGel® BV can play in addressing
this need. This publication will support further marketing activities and
inclusion of the product in clinical management guidelines for BV.
Starpharma’s partners for VivaGel® BV have experienced some
disruption to sales and marketing activities due to COVID-19, and in
the US, where a formal FDA review process is ongoing, COVID-19
has impacted that review process and associated activities.
VivaGel® Condom
During the year, Starpharma’s VivaGel® condom partner in
Japan, Okamoto, launched an additional VivaGel® condom
range under the brand name Pure Marguerite, targeting
younger demographics. The range is being distributed
through major national retail chains in Japan. In parallel,
Okamoto is continuing to progress registration activities for
the product in a number of other Asian countries.
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 9
02468100.51.01.52.0Compound Concentration (mg/mL)InfluenzaAInfectivity(log10pfu/mL)0Concentration ofcompounds in marketednasal spraysSPL7013HPMCSPL7013 achieved95% reduction inviral infectivityNo reduction in viralinfectivity with HPMCMedical productswith a global footprint CEO’s Report 3 Year Financial Summary
10 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Overview of FY22 Financial ResultsStarpharma ended the financial year with a strong cash balance of $49.9 million.Revenue for the year was up 128% to $4.9 million, which includes $4.7 million in product sales, royalty, and research revenue from corporate partners (2021: $1.8 million). The increase in revenue from contracts with customers reflects the rollout of VIRALEZE™ to new markets, including Vietnam. The reported loss of $16.2 million is a decrease of 18%, compared to the $19.7 million loss last year. The decreased loss compared to the prior year reflects the higher sales and partner revenue and lower R&D expenditure due to the completion of VIRALEZE™ development and the stage of DEP® clinical programs. The reduced loss is also impacted by a favourable unrealised foreign exchange movement of $0.9 million, primarily on foreign currency held.The net operating cash outflows for the year were $13.2 million. Net investing and financing cash inflows for the year were $2.4 million. 2022 $M2021 $M2020 $MRevenue 4.9 2.26.6Other Income0.31.30.5Total revenue and other income5.23.57.1Expenditure, including cost of goods sold(21.4)(23.2)(21.8)Loss for the period(16.2)(19.7)(14.7)Net operating cash outflows(13.2)(14.8)(10.8)Net investing and financing cash inflows (outflows)2.446.1(0.7)Cash and cash equivalents at end of year49.960.530.1 CEO’s Report
DEP® Drug Delivery
SPL7013 Products
Internal DEP® Clinical-stage Assets
• Progress and complete Phase 2 trials
• Progress value-adding combination studies
• Licences for DEP® assets
Partnered DEP® Programs
• Progress existing partnerships with AstraZeneca, Merck & Co.,
Inc., Chase Sun, and Genentech
• Execute new and/or expand existing DEP® partnerships
AZD0466 Clinical Program
• Clinical progress, including expansion of trial sites
and recruitment
• Further milestones
Preclinical DEP® Programs
• Advance DEP®
radiotheranostics, DEP®
ADCs and other DEP®
candidates
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 11
Partnered DEP® programs have have the potential to generate multiple revenue streams through significant future milestones and royalties for Starpharma through licensing, creating signifcant leverage and optionality, all while being funded externally. In the year ahead, we will also continue to focus on expanding the footprint of our marketed products across the globe through our commercial partners and also directly to consumers. Additional testing demonstrating the effectiveness of VIRALEZE™ against a broad spectrum of respiratory viruses, beyond SARS-CoV-2, such as influenza viruses, has further broadened the potential for the product. Likewise, comparative studies showing that SPL7013, the agent in VIRALEZE™, is more effective than other nasal sprays and their ingredients, have further strenthened the commercial positioning of VIRALEZE™. We look forward to making this product more widely available and driving further revenue in the year ahead. For our VivaGel® products, we will continue working with our partners to achieve additional registrations and launches for these important products in new regions. Our DEP® products and SPL7013 products (VIRALEZE™ and VivaGel®) are excellent examples of how we leverage our dendrimer technology to develop and commercialise new and innovative medical products that can make a real and positive difference to people’s lives. Moving forward we intend to leverage new, short and long-term opportunities using our proprietary dendrimer technology to continue building on our portfolio of highly valuable assets.Starpharma is in an excellent position for accelerated growth, with a strong balance sheet and anticipated growing revenues. Together, with the support of our staff, partners, industry stakeholders, and shareholders, the company will continue its pursuit of improving patient outcomes around the world.Jackie FairleyChief Executive OfficerVIRALEZE™ Nasal Spray • Further commercial rollout and product launches • Further registrations in other regions• Further distribution and marketing arrangements with commercial partners• Continued testing to support commercialisationVivaGel® BV• Commercial rollout in other markets• Further regulatory approvals and launches; milestones, product sales/royalties• FDA review processVivaGel® Condom• Approvals/launches in additional countriesSPL7013• Further development/co-development of other products• Continued testing against important infectious pathogensReview and future outlookReflecting on the past 12 months, Starpharma’s Board and I are very proud of our dedicated team who have worked exceptionally hard. Starpharma has a highly skilled workforce and every member of our team is critical to the success and development of our business. The impact of the global pandemic is still being felt throughout the community, however, I am pleased to report that Starpharma has continued to operate with minimal disruption. Our executive team has monitored the situation and taken action where appropriate to ensure the safety of our staff and trial participants, to maintain product supply for our customers, and to continue advancing our business. This year, we have welcomed the opportunity to again particpate in conferences and to resume face-to-face meetings with partners, industry stakeholders, and shareholders.Starpharma has concluded FY22 with a strong balance sheet and a growing portfolio of revenue-generating products on market and valuable partnerships.Looking ahead, our strategic focus is clear – to leverage our proprietary dendrimer technology to build a portfolio of high-value products and partnerships that address significant unmet patient needs for the betterment of our community and our shareholders.Starpharma’s DEP® products continued to yield impressive responses in our Phase 2 oncology trials, including significant tumour shrinkage and stable disease in late-stage patients with prostate, ovarian, lung, stomach, oesophageal, colorectal, pancreatic and breast cancers. These patients have few options for treatment, so these responses are all the more important.Our DEP® platform remains a key value driver given its broad applicability to a wide range of therapeutics, remarkable optionality and value in multiple partnerships. Internally, we will continue creating additional DEP® candidates for large, high-value markets, with a view to progress into clinical trials ahead of licensing. This includes advancing our three Phase 2 DEP® clinical candidates and value-adding combinations as appropriate, as well as progressing our work in innovative and valuable research areas such as improved antibody drug conjugates and radiotheranostics. In parallel to this, we will continue progressing our existing partnered DEP® programs with AstraZeneca, Merck & Co., Inc., Chase Sun, and Genentech, while also seeking new opportunities. Compliance
with ASX
Corporate
Governance
Principles
and Recommendations
ESG SNAPSHOT
No breaches of:
- Code of Conduct
- Anti-bribery
- Whistleblowing
Director Independence
Small, diverse
workforce
represented by
18 countries
No WorkSafe
notifiable
incidents in
the last 5 years
Strong, innovative
and performance-
driven culture
Board 83%
Committees 100%
Supplier Code of
Conduct outlines
expectations for
all suppliers
Critical suppliers
monitored through audits
and ongoing assessment
of quality
Women represented at all levels of the company
50% Women
50% Women
35% Women
Whole Organisation
Staff & Board
Committed to
conducting
operations
in an
environmentally
responsible
manner
Board of Directors
Leadership/Management
Clinical programs
undertaken in
accordance with
strict international
guidelines
Climate Change Position
Statement Published
12 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
As a biopharmaceutical company, Starpharma is uniquely positioned to help address global health challenges by bringing important medicines and health products to patients in need. We acknowledge this important role and believe our innovative products will deliver long-term value to all stakeholders. Alongside developing important products for patients, Starpharma is committed to corporate sustainability. As part of this commitment, the company releases a standalone Environment, Social and Governance (ESG) Report each year alongside this Annual Report.Starpharma’s ESG Report showcases how we operate our business responsibly and contribute to the wider community, with consideration for global ESG goals, principles and frameworks. Our ESG Report presents the sustainability related risks and opportunities that are material and relevant for Starpharma, with particular consideration to the changing, perceived and potential issues arising from our progress with developing pharmaceutical products through to their registration, supply and commercialisation. The ESG Report is centred around Starpharma’s ESG framework, which comprises four pillars: Governance, Our People, Products & Patient Health, and Environment. Our ESG framework is strongly embedded throughout all parts of our business and during the year we have continued to prioritise activities and initiatives to achieve high standards in each of these pillars. Several key achievements are captured in our ESG snapshot (right), highlighting our commitments to good governance, our people, responsible supply chains and mitigating our impact on the environment. We encourage you to view our full ESG Report online on our website.Environment, Social & Governance 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 2022.
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)
D J McIntyre
J K Fairley (Chief Executive Officer)
Z Peach
L Cheng was appointed as a director on 1 August 2021 and continues in office at the date of this report.
J R Davies was appointed as a director on 1 April 2022 and continues in office at the date of this report.
P R Turvey was a director from the beginning of the financial year until his resignation on 29 July 2021.
Information on Directors
experience with US based companies as they progress from
research to commercialisation.
Robert B Thomas AO, BEc, MSAA, SF Fin, FAICD, FRSN
Independent non-executive director (appointed 4 December 2013)
and Chairman from 13 June 2014
Interests in Starpharma Holdings Limited
900,000 ordinary shares
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 Mr Thomas was a Partner of
Potter Partners (now UBS) where he was also Head of Research.
Mr Thomas 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 currently a non-executive director of ASX-listed
Biotron Limited and Clarity Pharmaceuticals Limited. Mr Thomas is
also Chair of AusBio Ltd, Grahger Retail Securities, Co-Chair of
the State Library of NSW Foundation and a director of 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 Limited 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. Mr Thomas 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 and Clarity Pharmaceuticals Limited.
Directorships of other ASX listed entities within last three
years: 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
Starpharma Holdings Limited Annual Report 2022
Jacinth (Jackie) K Fairley BSc, BVSc (Hons), MBA, GAICD,
FTSE
Chief Executive Officer and Director (appointed 1 July 2006)
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 Dr
Fairley had responsibilities which included clinical, regulatory,
business development, product development management and
general management. At Faulding Dr Fairley was responsible for
Global Product Development, Regulatory Affairs and Business
Development for Faulding’s Hospital Business which operated in
more than 60 countries.
Dr Fairley 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 Dr Fairley obtained a Master of
Business Administration from the Melbourne Business School
where she was the recipient of the prestigious Clemenger Medal.
Dr Fairley is also a Graduate of the Australian Institute of
Company Directors.
Dr Fairley is a non-executive director of the listed investment
company Mirrabooka Investments Limited and a member of the
Invest Victoria Advisory Board (IVAB) and Carnegie Venture
Capital’s investment Committee. Dr Fairley has previously served
on the Melbourne Business School Board, the Australian Federal
Government’s Commonwealth Science Council and
Pharmaceutical Industry Working Group, and the Australian
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
3,975,434 ordinary shares
5,502,890 employee performance rights
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 13
13
Directors’ Report
Zita Peach BSc, GAICD, FAMI
Independent non-executive director (appointed 1 October 2011)
David McIntyre CPA, LL.B., MBA and B. Econs (Acc)
Independent non-executive director (appointed 1 March 2020)
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 Chair of Pacific Smiles Group Limited, and a Non-
Executive Director of the ASX-listed Monash IVF Group Limited.
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;
Member of Audit & Risk Committee.
Other current directorships of ASX listed entities: Monash IVF
Group Limited, and Pacific Smiles Group Limited.
Directorships of other ASX listed entities within the last three
years: Visioneering Technologies, Inc., 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
57,449 ordinary shares
Experience
Mr McIntyre has more than 20 years of executive experience
including 18 years in the life sciences sector, having held various
C-suite level roles at Tessa Therapeutics, Inc., AVITA
Therapeutics, Inc., HeartWare® International, Inc., and Braeburn,
Inc.
Mr McIntyre’s experience also 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 United States 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 United States and brings to the table
an international lens on life science licensing and
commercialisation, marketing and business and development, and
M&A/capital markets. Mr McIntyre 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 a Masters of Business
Administration from Duke University Fuqua School of Business
(Fuqua Scholar) from Durham, North Carolina, in the United States
of America. Mr McIntyre is a Certified Practising Accountant and is
also admitted as a legal practitioner of the Supreme Court of New
South Wales and of the High Court of Australia.
Committee membership
Acting Chair of Audit & Risk Committee.
Other current directorships of ASX listed entities: None.
Directorships of other ASX listed entities within the last three
years: Redflex Holdings Limited.
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 United States based companies in the medical device,
biotechnology and pharmaceutical sector.
Interests in Starpharma Holdings Limited
16,240 ordinary shares
14 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
14
Directors’ Report
Lynda Cheng B.Com, LLB (Hons), GAICD
Independent non-executive director (appointed 1 August 2021)
Jeff R Davies PhD, BSc (Hons)
Independent non-executive director (appointed 1 April 2022)
Experience
Ms Cheng has a strong background in finance with more than 25
years of experience as a finance executive including more than 15
years at Visy Industries/Pratt Holdings and 10 years in investment
banking. She has significant commercial and international
corporate expertise including experience in financial services,
manufacturing, export finance, infrastructure, education as well as
market entry, growth and technology.
Ms Cheng is currently Director of Corporate Development and
Mergers & Acquisitions at Visy Industries / Pratt Holdings and has
held various other roles in the group including CFO. Ms Cheng’s
earlier roles include as a lawyer at Blake Dawson, before moving
into investment banking with J.P. Morgan in their Melbourne,
Sydney, San Francisco and New York offices.
Ms Cheng is currently an independent, non-executive member of
the board of directors JRJJ Capital, the parent company of
Merricks Capital, in an observer/advisory capacity. Ms Cheng
previously served as a non-executive director of Export Finance
Australia, a member of the Australian Government's International
Development Policy Expert Panel and Deputy Chair and Chair of
the Finance, Audit and Risk Committee of South East Water.
Ms Cheng holds a Bachelor of Law (Honours) and Commerce
degree, majoring in actuarial studies and economics, from the
University of Melbourne and is a graduate member of the
Australian Institute of Company Directors.
Committee membership
Member of Audit & Risk Committee;
Member of Remuneration and 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
With over 25 years’ experience as a finance executive, including
substantial international experience and several non-executive
directorships, Ms Cheng’s experience covers the majority of key
areas described in Starpharma’s Board skills matrix. In particular,
she has substantial expertise in accounting/corporate finance,
audit and risk; M&A/capital markets; strategy and risk
management; governance; as well as business development. Ms
Cheng has had involvement in the commercialisation of new
innovations during her tenure at South East Water and also while
working with disruptive technology companies in Silicon Valley.
Interests in Starpharma Holdings Limited
60,000 ordinary shares
Experience
Dr Davies is a former CSL executive, with over 35 years of
biopharmaceutical experience, holding senior executive roles at
CSL, including Executive Vice President & General Manager at
CSL for the Asia-Pacific region, and Global Head of Plasma
Product Research and Development at CSL-Behring, Switzerland.
As Executive Vice President & General Manager at CSL for the
Asia-Pacific region Dr Davies had overall P&L responsibility for the
commercial and operational aspects of the business and oversaw
the pharmaceutical, plasma, vaccine, and diagnostic businesses in
Australia, New Zealand, China, and the broader Asia-Pacific
region.
As the Global Head of CSL-Behring’s Plasma Product Research
and Development portfolios, Dr Davies oversaw and played an
important role in the development of leading products, including
the multi-billion-dollar Privigen® immunoglobulin product. Dr
Davies was part of CSL’s due diligence teams, which led to the
acquisitions of the Plasma Fractionation businesses of Swiss Red
Cross (2000) and Aventis Behring (2003) thus transforming CSL
into a global company.
Dr Davies is a partner and founding director of the pharmaceutical
consulting firm, Centre for Biopharmaceutical Excellence. Dr
Davies has held a number of senior industry board and advisory
roles, including representation on the Pharmaceutical Industry
Council, the Australian Red Cross Advisory Board and Medicines
Australia.
Dr Davies holds a PhD in Biochemistry from Monash University
and is a Graduate of the London Business School’s Senior
Executive Program.
Committee membership
Member of Remuneration and 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
With over 35 years of experience within the biopharmaceutical
industry, Dr Davies is an accomplished executive skilled in R&D,
Product Development and commercialisation strategy; business
development, manufacturing and clinical & regulatory affairs. Dr
Davies has significant leadership skills and experience in
commercialising scientific research for healthcare products.
Interests in Starpharma Holdings Limited
50,000 ordinary shares
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 15
15
Directors’ Report Operating & Financial Review
Peter R Turvey BA/LLB, MAICD
Independent non-executive director (appointed 19 March 2012)
and Deputy Chairman from 26 November 2019; resigned 29 July
2021)
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 was 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 had extensive experience in
commercialisation and pharmaceutical product development.
Committee membership (until resignation)
Chair of Audit & Risk Committee
Member of Remuneration and 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
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.
Mr Turvey resigned as a director on 29 July 2021 due to ill health.
Interests in Starpharma Holdings Limited
193,155 ordinary shares (at time of resignation)
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). Mr Baade holds qualifications from University of
Tasmania and Monash University.
Mr Baade is a former director of BioMelbourne Network Inc, and
served as its Treasurer and Chairman of the Finance, Audit and
Risk Committee. Mr Baade is a member of the Australian Institute
of Company Directors.
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 nano-scale materials, including on the development of
VivaGel® for the management and prevention of bacterial
vaginosis, and as an antiviral condom coating, and VIRALEZE™ -
an antiviral nasal spray. 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 group for the financial year ended 30
June 2022, 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 2022 was
$16,154,000 (2021: $19,732,000), with revenue for the year of
$4,899,000 (2021: $2,151,000). The net operating cash outflows
for the year were $13,162,000 (2021: $14,808,000). The cash
balance at 30 June 2022 was $49,918,000 (June 2021:
$60,500,000).
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 2022 (2021: Nil).
Review of operations
Key activities until the date of this report include:
DEP® Drug Delivery
Partnered DEP® Programs
Signed and commenced a second DEP® Research Agreement
with Merck & Co., Inc., building on our DEP® partnership with them
in the innovative and valuable research area of antibody drug
conjugates (ADCs). This second agreement follows an initial DEP®
ADC agreement signed with Merck & Co., Inc., in February 2021.
Signed and commenced an exploratory DEP® Research
Agreement with Genentech, which involves the design and
synthesis of DEP® dendrimer conjugates incorporating a
Genentech proprietary molecule. This agreement was expanded
within six months of the initial agreement to include an additional
DEP® program.
Under Starpharma’s DEP® licence with AstraZeneca, the global
clinical program for AZD0466 continued to advance with multiple
new sites opening and commencement of a new clinical trial in an
additional cancer type – non-Hodgkin’s lymphoma (NHL). The new
NHL Phase 1/2 trial of AZD0466 is now recruiting at sites in the US
and Korea. AstraZeneca plans to further expand recruitment for
this trial, with additional sites expected to open across the US,
Canada, Europe, Australia, and Asia. In the Phase 1/2 leukemia
trial of AZD0466 in patients with advanced haematological
malignancies, additional sites were also opened. This leukemia
trial is now recruiting at sites in the US, Australia, Italy, Germany,
and Korea.
AstraZeneca and MD Anderson Cancer Center researchers
presented new data for AZD0466 in two scientific poster
presentations at the 63rd American Society of Hematology (ASH)
Annual Meeting in December 2021.
Starpharma also continued to progress its DEP® program with
Chase Sun, which involves the development of a DEP® anti-
infective product for Chase Sun, with the view of enhancing its
performance and expanding its therapeutic utility.
Starpharma continues to pursue further partnering opportunities for
its DEP® drug delivery platform and active commercial discussions
are underway in a number of research areas including DEP®
radiotheranostics.
16 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
16
Directors’ Report Operating & Financial Review
Internal DEP® Programs
Starpharma’s Phase 2 clinical trial of DEP® cabazitaxel continues
to recruit well with 70 patients enrolled to date. During the year,
Starpharma reported positive interim findings from the prostate
cancer cohort of this trial, where 100% of patients1 treated with
DEP® cabazitaxel demonstrated one or more efficacy signals.
Starpharma’s DEP® cabazitaxel Phase 2 trial continues
recruitment of patients with ovarian and gastroesophageal
cancers, following observation of encouraging efficacy signals in
these tumour types, thereby expanding the market potential for
DEP® cabazitaxel. A US patent was also issued for DEP®
cabazitaxel during FY22.
The DEP® irinotecan Phase 2 clinical trial continues to progress
well, with 83 patients now enrolled. Efficacy signals such as
prolonged tumour shrinkage and reductions in tumour markers
have been observed in multiple tumour types, including colorectal,
breast, ovarian, pancreatic, lung, and oesophageal cancers.
Starpharma is finalising preparations for the commencement of a
combination arm for DEP® irinotecan in combination with 5-FU +
Leucovorin (‘FOLFIRI’, a commonly used combination treatment
regimen in colorectal cancer) to run in parallel with the ongoing
monotherapy study. The combination arm is expected to
commence shortly at sites in the UK and Australia.
The clinical program for DEP® docetaxel has enrolled 72 patients
to date across the monotherapy and combination arms.
Encouraging efficacy signals such as prolonged stable disease
and significant tumour shrinkage have been observed in heavily
pre-treated patients with lung, pancreatic, oesophageal,
cholangiocarcinoma and gastric cancers.
Manufacture of DEP® gemcitabine product is now complete in
readiness for Starpharma to commence a Phase 1/2 clinical trial,
with planned clinical trial sites in the UK and Australia.
Preparations for trial commencement are well advanced, with the
clinical research organisation (CRO) and site selection processes,
regulatory and ethics preparations nearing completion.
Starpharma also continues to deepen its pipeline of DEP® assets
by actively progressing a number of its own internal programs in
areas including DEP® radiotheranostics and DEP® ADCs.
Marketed Products
VIRALEZE™ Nasal Spray
VIRALEZE™ nasal spray was relaunched in the UK through
LloydsPharmacy, one of the largest pharmacy groups in the UK
with ~1,400 stores. LloydsPharmacy’s affiliated wholesale arm,
AAH, is also one of the largest pharmaceutical wholesalers in the
UK, supplying over 14,000 independent pharmacies.
VIRALEZE™ was registered and launched in Vietnam in
December 2021. Several launch events were held across Vietnam
and attended by clinicians, healthcare professionals, politicians,
and media networks.
Following the signing of a sales and distribution agreement for
VIRALEZE™ in Italy with leading pharmaceutical retail and
wholesale distribution company, ADMENTA Italia Group,
VIRALEZE™ was launched through ADMENTA’s LloydsFarmacia.
ADMENTA’s LloydsFarmacia comprises ~260 retail pharmacies
and an online platform.
VIRALEZE™ was registered in Saudi Arabia in December 2021
and Starpharma subsequently signed a sales and distribution
agreement for VIRALEZE™ with Etqan & Nazahah Company
(E&N) for nine countries in the Middle East, including Saudi
Arabia.
During the year, Starpharma continued its scientific collaboration
with The Scripps Research Institute, to test VIRALEZE™ and
SPL7013 against a range of respiratory viruses, including multiple
variants of SARS-CoV-22 (Omicron and Delta) and influenza.
1 Assessed for efficacy
2 SARS-CoV-2 is the virus that causes COVID-19
3 The study used the K18-hACE2 mouse model, which is an in vivo
humanised mouse model that expresses the human angiotensin converting
enzyme (hACE2) receptor, the receptor used by SARS-CoV-2 to infect cells
in the human nasal cavity and respiratory tract.
Starpharma Holdings Limited Annual Report 2022
VIRALEZE™ demonstrated excellent protection against infection
with the highly transmissible SARS-CoV-2 Omicron variant in a
stringent in vivo viral challenge model3. The findings of this study,
conducted at Scripps Research, are important because they
indicate, even when VIRALEZE™ is only used after exposure to
virus, it still has potential to provide significant benefit. Further,
these in vivo findings build on the in vitro findings reported by
Starpharma earlier in the financial year, which showed that
VIRALEZE™ achieved the maximal possible reduction of virus
infectivity against the Omicron variant of SARS-CoV-2 in
laboratory-based antiviral and virucidal assays.
VIRALEZE™ also demonstrated highly protective effects against
SARS-CoV-2 (Washington strain) in a humanised mouse
challenge model of coronavirus infection. The results of this study
were published in the international, peer-reviewed journal, Viruses,
in a special edition titled, Medical Interventions for Treatment and
Prevention of SARS-CoV-2 Infections4.
VIRALEZE™ achieved more than 99.99% reduction of the highly
infectious Delta variant of SARS-CoV-2 in laboratory-based
virucidal assays conducted at Scripps Research.
The broad-spectrum activity of VIRALEZE™ was further
demonstrated with impressive results for SPL7013, in
VIRALEZE™, against influenza A and B. SPL7013 achieved more
than 90% reduction in viral infectivity of both influenza A and B
viruses within one minute. SPL7013 also demonstrated irreversible
virucidal properties against both types of influenza virus and
outperformed other antiviral agents used in marketed nasal sprays.
Starpharma also reported the results of its VIRALEZE™ clinical
safety study, with the product shown to be safe and well tolerated
when administered nasally. SPL7013, the antiviral agent in
VIRALEZE™, was not absorbed in the bloodstream following nasal
application.
VIRALEZE™ is registered in more than 30 countries and is
available in pharmacies, retail outlets and online in a number of
countries. Sales of VIRALEZE™ have significantly increased in
FY22.
Starpharma continued to pursue registration and
commercialisation for VIRALEZE™ in multiple other countries, with
regulatory submissions in progress and active commercial
discussions underway. In Australia, the review by the TGA for the
nasal spray application as a medical device is ongoing.
VivaGel® BV and VivaGel® condom
VivaGel® BV is registered in more than 45 countries and is sold
under different brand names in the UK, Europe, Southeast Asia,
South Africa, Australia and New Zealand. Regulatory approvals for
VivaGel® BV were achieved in Bahrain and Qatar and pre-launch
marketing activities have commenced. Starpharma’s marketing
partner, Mundipharma is also progressing further launches of
VivaGel® BV in Asia. Starpharma continues to support
Mundipharma and pursue registrations for VivaGel® BV in various
other countries, including in Asia, the Middle East and Africa.
An important publication for VivaGel® BV was achieved in the
highly regarded peer-reviewed European journal, Archives of
Gynecology & Obstetrics. The publication highlights the significant
unmet need for new treatment and prevention options in bacterial
vaginosis (BV), and the role that Starpharma’s VivaGel® BV can
play in addressing that need. This publication will support
marketing activities and importantly, the inclusion of the product in
clinical management guidelines for BV.
Starpharma’s partner, Okamoto, launched a new VivaGel® condom
range in Japan, under the brand name Pure Marguerite, targeting
younger demographics. The range is being distributed through
major retail chains in Japan. Okamoto has also commenced
regulatory processes for the VivaGel® condom in additional
countries in Asia.
4 Paull, J.R.A. et al. Protective Effects of Astodrimer Sodium 1% Nasal
Spray Formulation against SARS-CoV-2 Nasal Challenge in K18-hACE2
Mice (2021) Viruses. https://doi.org/10.3390/v13081656
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 17
17
Directors’ Report Operating & Financial Review
Corporate
Ms Lynda Cheng was appointed as an independent non-executive
director on 1 August 2021. Ms Cheng has more than 25 years of
experience as a finance executive including more than 15 years at
Visy Industries/Pratt Holdings and 10 years in investment banking.
Dr Jeff Davies, former CSL executive, was appointed as an
independent non-executive director on 1 April 2022, bringing over
35 years of biopharmaceutical industry experience to Starpharma’s
Board. Dr Davies previously held senior roles at CSL, including
Executive Vice President & General Manager at CSL for the Asia-
Pacific region, and Global Head of Plasma Product Research and
Development at CSL-Behring, Switzerland.
Mr Peter Turvey resigned as a non-executive director of
Starpharma on 29 July 2021, due to ill health.
Starpharma participated in a number of international conferences
during the year, including American Society of Clinical Oncology
(ASCO), BIO International, the Novel Format Conjugates Summit
and the Partnership Opportunities in Drug Delivery (PODD)
conference.
COVID-19 pandemic
During the year, Starpharma’s laboratory and internal operations
continued to operate under a COVID safe plan, with minimal
disruption. Starpharma’s partners for VivaGel® BV have
experienced some disruption to sales and marketing activities due
to COVID-19, and in the US, where a formal FDA review process
is ongoing, COVID-19 has impacted that review process and
associated activities. Recruitment and treatment continued in all
DEP® clinical trials during the period, however the impact of
COVID-19 in the UK, where DEP® trials are taking place, has had
an effect on the programs depending on site-specific factors
including the trial site location and type of hospital.
Matters subsequent to the end of the financial year
No matters or circumstances have arisen since 30 June 2022
through the date of this report 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
clinical development and commercial exploitation of its proprietary
products based on its patented 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® and VIRALEZE™. 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 and sales and distribution 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 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.
18 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
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 2022
$’000
30 June 2021
$’000
4,899
(2,776)
263
2,151
(791)
1,336
(11,680)
(15,075)
(3,568)
(3,336)
(3,292)
(4,017)
Loss for the period
(16,154)
(19,732)
Income statement
The reported loss for the period was $16,154,000 (2021:
$19,732,000).
Revenue for the year was up 128% to $4,899,000 (2021:
$2,151,000), comprising $4,682,000 (2021: $1,798,000) for
product sales, royalty, and research revenue from commercial
partners, and interest income of $217,000 (2021: $353,000).
Revenue received from commercial partners during the year were
predominately product sales and royalties from VIRALEZE™ and
VivaGel® products, with VIRALEZE™ sales to Vietnam a major
contributor to revenue for the year.
Other income of $263,000 (2021: $1,336,000) represents
$263,000 (2021: $877,000) of grant funding received from the
Medical Research Future Fund (MRFF) to expedite development
and commercialisation of VIRALEZE™.
Research and product development expense of $11,680,000
(2021: $15,075,000) includes the costs of the internal DEP® drug
delivery programs including DEP® docetaxel, DEP® cabazitaxel,
and DEP® irinotecan, and certain VIRALEZE™ development
related expenditure. The expenditure was lower in the current year
on reduced clinical trial expenditure for the internally funded DEP®
programs, and VIRALEZE™ development costs. A contra research
and development expense of $7,261,000 (2021: $7,248,000) has
been recognised for activities eligible under the Australian
Government’s Research and Development Tax Incentive program.
Commercial and regulatory operating expense includes the
expenditure related to the commercialisation of VivaGel®,
VIRALEZE™ and the DEP® portfolio, including business
development, marketing, regulatory, supply chain and quality
assurance activities.
Corporate, administration and finance expense includes corporate
costs, as well as gains/losses on foreign currency held. There was
a decrease compared to the prior corresponding period
predominately reflecting a favourable foreign currency movement
of $940,000.
Balance sheet
At 30 June 2022 the group’s cash position was $49,918,000 (June
2021: $60,500,000). Trade and other receivables of $7,916,000
(June 2021: $8,534,000) includes $6,747,000 (June 2021:
$7,233,000) receivable from the Australian Government under the
R&D tax incentive program. Non-current borrowings include the
$4,000,000 Invest Victoria R&D loan from Treasury Corporation of
Victoria. The increase in the right-of-use assets and lease liabilities
over the prior year represents an extension period on the premises
lease for a further 5-year term from December 2022.
18
Directors’ Report Operating & Financial Review
Statement of cash flows
The net operating cash outflows for the year were $13,162,000
(2021: $14,808,000). Cash inflows from financing activities for the
year include the $4,000,000 Invest Victoria R&D loan (2021:
$46,931,000, includes net proceeds from an equity placement and
share purchase plan).
Earnings Per Share
Basic & diluted earnings/(loss) per
share
2022
2021
($0.04)
($0.05)
Risk Management
The group is subject to business risks typical of companies
operating in the biotechnology and pharmaceutical sectors at the
development and early commercialisation phase. Any investment
in these sectors is considered high-risk. Company management
has implemented a risk management and internal control system
in order to manage the group’s material business risks.
The company’s risk management system is comprised of four
steps; 1) risk identification, 2) analysis, 3) implementation of
mitigation controls & actions and 4) monitoring & reporting of
identified risks.
The Audit & Risk Committee, on behalf of the Board, monitors the
risk management system to ensure it is operating effectively and
receives reports on material risks. The material and specific risks
of the industry sector and the group identified through the
company’s risk management system 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, unexpected
outcomes or delay is both material. Key development
activities, including clinical trials, are undertaken by specialist
contract research organisations; and there are risks in
designing and completing those activities, including managing
the quality and timelines of these activities.
Regulatory – company products and their testing may not be
approved, or may be delayed, amended or withdrawn, by
regulatory bodies (e.g. US Food and Drug Administration)
whose approvals are necessary before products can be sold
in market. Changes in the regulatory environment may also
impact product development and commercialisation. Breach
of regulations, local or international law, or industry codes of
conduct may subject the company to financial penalty and
reputational damage.
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. Securing,
defending 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 predominately relies, and
intends to largely rely, upon corporate partners to market,
distribute 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 agreements.
Product manufacturing and supply – the company is required
to manufacture and supply product under certain licencing
and distribution agreements, and under highly stringent
quality and regulatory requirements. The manufacture of
product is undertaken by specialist, regulatory approved, third
party contract manufacturing organisations experienced in the
sector. There is a risk of quality/failure of manufacture and a
risk that supply chain disruptions lead to manufacturing and
supply delays/interruptions which could impact profitability
and/or damage relationships with partners. Further, changes
in economic circumstances may increase the cost and
availability of product, negatively impacting the business.
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
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 incentive) 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.
Cyber security and data protection – the company recognises
the increasing risk associated with cyber security and the
potential impact on business operations.
Environment and climate change impact – the company
continues to identify and manage any material risks and
opportunities presented by a changing global climate.
Currently the impact of climate change has been assessed to
not be a material risk on the company’s business activities.
The company is committed to reducing and minimising its
environmental impact across the business and value chain to
support more sustainable operations and to improve human
health.
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).
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 19
19
Directors’ Report Operating & Financial Review
Health and Safety
Meetings of Directors
The Board, Chief Executive Officer 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. Measures
implemented include working from home and social distancing
requirements.
Environment and Regulation
The group is subject to environmental regulations and other
licenses in respect of its research and development facilities and
there are adequate systems in place to ensure compliance with
relevant Federal, State and Local environmental regulations. 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 2022 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.
The number of meetings of the company’s Board of Directors and
of each committee held during the year ended 30 June 2022, and
the numbers of meetings attended by each director were:
Directors
Board
Audit & Risk
Committee
Remuneration
& Nomination
Committee
R B Thomas
11 of 11
2 of 2
5 of 5
J K Fairley
11 of 11
N/A
N/A
P R Turvey1
0 of 2
0 of 0
0 of 2
Z Peach
11 of 11
2 of 2
5 of 5
D J McIntyre
11 of 11
2 of 2
N/A
L Cheng2
9 of 9
2 of 2
3 of 3
J R Davies3
2 of 2
N/A
1 of 1
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.
1 P R Turvey was granted a special leave of absence during the year for health reasons.
P R Turvey resigned as a non-executive director on 29 July 2021.
2 L Cheng was appointed as a non-executive director on 1 August 2021.
3 J R Davies was appointed as a non-executive director on 1 April 2022.
20 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
20
Directors’ Report Remuneration Report
The remuneration report for the year ended 30 June 2022 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 FY22
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 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. Starpharma’s 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.
The remuneration and nominations committee and Board explicitly considered the FY22 share price underperformance in determining the STI
cash bonus and STI deferred equity incentives for FY22, and in setting appropriate remuneration for directors and executives for the forward
year.
Impact of COVID-19 on remuneration
In the course of assessing the CEO and Executive’s achievement of long term Corporate KPIs for the three-year period to 30 June 2022, the
Board identified specific areas where performance measures required minor amendment to take account of unforeseen circumstances and new
opportunities, which arose as a result of COVID-19 and the persistent conditions, and as such, determined to use its discretion to adjust for
appropriate outcomes. The circumstances include the unforeseen development and commercialisation of VIRALEZE™ nasal spray as well as
the impact on clinical timelines of pauses or delays to patient recruitment of the DEP® and potential VivaGel® BV clinical trials due to COVID-19
and the associated impact on partnering opportunities. The Board carefully exercised independent judgement and discretion in relation to these
specific long term KPIs to ensure that the remuneration outcomes appropriately reflect the overall performance of Starpharma during the period,
to align with the experience of shareholders while also taking into consideration the unforeseen impacts and opportunities created by the global
pandemic.
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 2022. The individuals were KMP for the entire financial
year, except where indicated in the table below. 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
P R Turvey
Z Peach
D J McIntyre
L Cheng
J R Davies
Non-executive Chairman
Non-executive Director (Deputy Chairman),
resigned 29 July 2021
Non-executive Director
Non-executive Director
Non-executive Director,
appointed 1 August 2021
Non-executive Director,
appointed 1 April 2022
J K Fairley
Chief Executive Officer & Managing Director
(CEO)
(iii) Other KMP executives
N J Baade
Chief Financial Officer & Company Secretary
A Eglezos
D J Owen
J R Paull
VP, Business Development
VP, Research, resigned 6 May 2022
VP, Development & Regulatory Affairs
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 21
21
Directors’ Report Remuneration Report
2. Remuneration governance
The Remuneration and Nomination Committee, consisting of at least 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 2021 Annual General Meeting (AGM)
Of the votes cast on the company’s remuneration report for the 2021 financial year, over 92% 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.
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.
Support & Advise
Engage & Oversee
Oversee
&
Approve
Inform &
Recom-
mend
REMUNERATION & NOMINATION COMMITTEE
Reviews and recommends the following to the Board:
Starpharma’s executive remuneration
policies;
Specific remuneration recommendations for
the CEO and other senior executives;
Remuneration for non-executive directors;
Design of incentive plans; and
Impacts of external market factors.
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 2022 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.
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 FY22
The aggregate amount paid to non-executive directors for the year ended 30 June 2022 was $399,699 (2021: $396,902). In FY21, the Chair
base fee increased $5,000 to $134,000 (reverting back to the FY20 level), with the base director fees increasing by $2,000 to $70,000 for non-
executive directors. Committee chair and member fees increased $500 to $11,000 for the committee chair and $5,000 for a committee member.
The details of remuneration for each non-executive director for the years ended 30 June 2022 and 30 June 2021 are outlined in the tables in
section 6.
Proposed fee adjustments for FY23
From 1 July 2022, there is no proposed change in non-executive director fees which remain at the lower end of benchmarks, as 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
4. Executive remuneration policy
Proposed Fees
from 1 July 2022
Actual Fees to
30 June 2022
$
134,000
73,000
70,000
11,000
5,000
11,000
5,000
$
134,000
73,000
70,000
11,000
5,000
11,000
5,000
Chair
Member
Chair
Member
a) Approach to setting and reviewing remuneration
The group aims to reward executives with a level and mix of remuneration appropriate to their position, skills, 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 industry 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.
Starpharma undertakes remuneration benchmarking each year with reference to multiple industry peers, together with, where appropriate, other
benchmarking reports which apply to specific positions. A group of peer companies from within the pharma/biotechnology sector are included in
the benchmarking exercise. In the benchmarking conducted, for FY22, the peer companies included Antara Lifesciences, Amplia Therapeutics,
Bionomics, Clinuvel, Immutep, Impedimed, Imugene, Mayne Pharma, Medical Developments International, Mesoblast, Monash IVF,
Nanosonics, Pharmaxis, Polynovo, Opthea, Telix, and Virtus Health. Starpharma typically 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.
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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 industry peers, ensuring that remuneration is commensurate with talent, skills and experience. There are no
guaranteed base pay increases or bonuses in any executive contracts.
The CEO has a maximum cash bonus entitlement as a component of STI, which for FY22 was $256,769, representing a target of 15% of total
remuneration. 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 FY22, the STI
target cash bonus pool for other KMP executives was 26% 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.
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.
Target Remuneration Mix
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4. Executive remuneration policy (continued)
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.
To achieve the target remuneration mix, the below performance pay structure was adopted in FY22 and is consistent with the prior years,
except in FY21 there was additional STI equity awarded related to FY20 performance as no cash bonuses were awarded to KMP executives for
the performance period 1 July 2019 to 30 June 2020, with STI equity awarded in lieu of cash bonuses.
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 FY22 the CEO and executives were awarded STI equity with a 1 year performance period
(1 July 2021 to 30 June 2022), with a deferred vesting date of 30 June 2023 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 FY22 was equal to the 25% target, comprising of
a cash component (~60%) and an equity component (~40%). The STI cash opportunity component was
equivalent to 45% of total fixed remuneration.
Other KMP executives were awarded STI equity for the 1 July 2021 to 30 June 2022 performance
period based on the achievement of their pre-determined KPIs.
In FY22, other KMP executives had an average target STI opportunity of 20% of total remuneration.
The cash bonuses awarded to other KMP executives in FY22 equated to an average of 13% of total
remuneration or an average of 26% of total fixed remuneration, based on achievements in the year.
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What are the STI
performance conditions for
FY22?
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 FY22,
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.
What happens if an
executive leaves?
If an employee ceases employment, all unvested rights lapse.
In certain circumstances the Board may determine the accelerated vesting of rights if the employee
ceases employment due to death, illness, permanent disability, redundancy or any other exceptional
circumstance approved by the Board. The Board determination is after considering theportion 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 FY22 have 3 year performance periods for all executives.
What is the LTI opportunity?
The CEO’s LTI opportunity for FY22 was 41% of total remuneration. For other KMP executives, the LTI
opportunity for FY22 was 27% 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 the performance
period to 30 June 2022?
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 3-year performance period to 30 June 2022 these were:
The monetisation of the VivaGel® and DEP® drug delivery portfolios represented by the
generation of revenue; or value from assets sales(s); through the completion of a number of
commercial deals that build shareholder value; and
Optimisation of returns from VivaGel® revenue, development of new DEP® candidates and/or
the licensing (and/or asset sales) 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 the past, 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 FY22
In FY22, 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 2021, 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 $1.7706.
The below tables summarise the equity incentives granted in FY22:
Performance Period
Deferral Period
Deferred STI equity
LTI equity
1 July 2021 to 30 June 2022
1 July 2021 to 30 June 2024
12 months from end of performance
period
Not applicable
Vesting Date
30 June 2023
30 September 2024
Face Value per Right
Based on 3-month VWAP to 30 June 2021 of $1.7706
Total value of grant at face value divided by the face value per right
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#
$174,708
98,672
$107,795
Performance Conditions
100% Corporate KPIs
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†
$54,534
30,800
$35,124
70% Business Unit KPIs
30% Corporate KPIs
$49,931
28,200
$32,159
Performance Conditions
70% Business Unit KPIs
30% Corporate KPIs
$698,834
394,688
$372,710
70% Corporate KPIs
30% relative TSR
$218,138
123,200
$130,961
70% Business Unit KPIs
15% Corporate KPIs
15% relative TSR
$199,724
112,800
$119,906
70% Business Unit KPIs
15% Corporate KPIs
15% relative TSR
# The grant date to calculate the fair value of the award under AASB2 is the AGM date when shareholders approved the grant of the rights.
† The grant date to calculate the fair value of the award under AASB2 is the date when the performance rights were granted.
Other Vesting Conditions Remains employed until the vesting date and has not engaged in fraud or dishonesty
30 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
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Directors’ Report Remuneration Report
5. Executive remuneration outcomes, including link to performance
Given the company’s stage of development, financial metrics (such as profitability) are not necessarily an appropriate measure of executive
performance. The company’s remuneration policy aligns executive reward with the interests of shareholders. The primary focus is on growth in
shareholder value through achievement of development, regulatory and commercial milestones, and therefore performance goals are not
necessarily linked to typical financial performance measures utilised by companies operating in other market segments. However, the Board
recognises that share price performance is clearly relevant to the extent that it reflects shareholder returns, and as such Starpharma’s TSR
relative to the S&P/ASX300 Index is used as a relevant metric for portions of executive equity awards. Details of share price, earnings and the
impact of share price performance on the vesting of certain performance rights over the last 5 years is detailed in the table below. No dividends
have been paid in the last 5 years.
Closing share price 30 June
Share price high
Share price low
Profit/(Loss) for the year ($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).
FY22
$0.74
$1.55
$0.62
(16.2)
FY21
$1.50
$2.52
$1.02
(19.7)
FY20
$1.13
$1.43
$0.62
(14.7)
161,039
22,293
-
FY19
$1.36
$1.66
$0.87
(14.3)
-
FY18
$1.17
$1.67
$0.71
(10.3)
-
25%
3%
0%
0%
0%
Fixed remuneration:
The average increase in KMP executive fixed remuneration for FY22 was 2.7% (FY21: 0.0%). The increases in the total fixed remuneration
package for individual KMP executive were between 2.5% and 2.9% for the year.
Performance related pay:
In the assessment of STI and LTI KPIs, the Board took account of the significant achievements obtained in the performance periods and the
effort and dedication required to accomplish these milestones. These achievements include those listed on pages 33 to 35.
Short-term incentives (STI):
Summary of performance pay related to FY22 for the CEO
Maximum
Available
STI Awarded
% Awarded
STI cash
($)
$256,769
$179,738
70.0%
STI equity
(# of rights)
98,672
69,070
70.0%
The Remuneration and Nomination Committee and the Board determined that the CEO had achieved a performance assessment of 70.0% of
STI awards for the performance period 1 July 2021 to 30 June 2022, based on the annual review of actual performance against
predetermined 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 FY22 were
based on the scorecard measures and weightings as disclosed below.
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5. Executive remuneration outcomes, including link to performance (continued)
Summary of performance pay related to FY22 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 78% of STI awards (between 77% and 78%) for the performance period 1 July 2021 to 30 June 2022. STI equity awards to
Other KMP executives for FY22 were consistent with their performance assessment.
Long-term incentives (LTI):
Summary of performance pay for the CEO for the three years ended 30 June 2022
Maximum Available
LTI Achieved
KPIs for 3 years to 30 June 2022
Relative TSR for 3 years to 30 June 2022
Total LTI Achieved
% Achieved
LTI equity
(# of Rights)
536,797
203,983
-
203,983
38.0%
% Achieved
54.3%
-%
Performance assessment of relative TSR for the three years ended 30 June 2022
The company’s Total Shareholder Return was benchmarked against the performance of the S&P/ASX300 Index for the three-year performance
period ended 30 June 2022. The company’s TSR over the period was (39.8%) compared with an Index TSR over the period of (0.8%). The
company’s annualised TSR for the period was (15.6%) compared to the S&P/ASX300 Index annualised TSR of (0.3%). As a result, 0% relative
TSR component vested based on the prescribed sliding scale as set out on page 28. 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 over/(under) performance of Index (annualised over 3 years)
% of relative TSR awarded
3 years to
30 June 2022
3 years to
30 June 2021
(15.6%)
(0.3%)
(15.3%)
-%
13.1%
5.9%
7.2%
86.2%
Summary of performance pay for other KMP executives for the three years ended 30 June 2022
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 83% and 87% (average 85%) for business unit KPIs for the performance period 1 July 2019 to 30 June 2022 for determining LTI
awards.
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STI Performance
Assessment
Performance category
Metric
Performance period
1 July 2021 to 30 June 2022
Weighting
Satisfied
Development, registration
and commercialisation of
VIRALEZE™
Regulatory and
commercialisation activities
for VivaGel® BV
Continue commercial roll-out of VIRALEZE™ and further development
activities to support regulatory and marketing activities
25%
Partially Met
Advance further VivaGel® BV registrations in multiple countries, with
priority given to major markets and facilitate partners to roll-out and
launch the product in multiple markets; pursue partnerships for remaining
unlicensed countries; whilst optimising returns
10%
Partially Met
Other VivaGel® products
Progress with regulatory and commercialisation activities for the VivaGel®
condom
2%
Partially Met
Clinical stage internal DEP®
programs
Progress internal clinical DEP® programs into and through clinical
development (or signing a licence, as appropriate) with a focus on
expediting outcomes and building value which may be through additional
indications and/or combinations
26%
Partially Met
Preclinical DEP®
candidate(s)
Advancing additional internal DEP® product candidates through preclinical
development (or signing a licence, as appropriate)
12%
Partially Met
Partnered DEP® programs
Support and further develop existing partnered DEP® programs and/or
expanded field/products and/or progress with new partnering
deals/licences
Capital management,
culture and leadership
Manage company’s capital and cashflows to create value, increase
recurrent revenues and maintain and develop a highly results oriented
culture with exceptional leadership
17%
Partially Met
8%
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).
Starpharma successfully registered and launched VIRALEZE™ in multiple countries, including relaunch in the UK, and
undertook the following key activities:
-
VIRALEZE™ relaunched in the UK through LloydsPharmacy, one of the largest pharmacy groups in the UK. This relaunch
followed extensive dialogue and data submission between Starpharma and the MHRA, resulting in the successful resolution
of queries raised by the MHRA, clearing the way for the product’s relaunch in the UK.
Signed sales and distribution arrangements for VIRALEZE™ with commercial partners in Italy (ADMENTA Italia Group),
Vietnam (Health Co), and nine countries in the Middle East (E&N).
Supported commercial partners with marketing materials, supported timely launches and ongoing product supply.
VIRALEZE™ was successfully launched in pharmacies and retail outlets in Italy and Vietnam, with preparations underway for
countries in the Middle East.
VIRALEZE™ is now registered in more than 30 countries, including in Europe, Asia and the Middle East. Further submissions
have been made in other regions.
Collaborated extensively with The Scripps Research Institute in the US, completing further antiviral and virucidal testing of SPL7013
against multiple respiratory viruses, including multiple variants of SARS-CoV-2 (Delta and Omicron) and influenza, including
comparative data to support marketing and publications.
Completed several challenge studies at Scripps Research, testing the efficacy of VIRALEZE™ against SARS-CoV-2 in a well-
established animal challenge model of coronavirus infection.
In vivo antiviral data was published in the prestigious international journal, Viruses.
-
-
-
-
-
-
-
Ongoing VivaGel® BV regulatory and commercial activities, including:
-
-
-
-
-
-
Achieved registrations for VivaGel® BV in Vietnam, Bahrain and Qatar during the year, with further approvals expected across
the Middle East later this calendar year.
Starpharma continues to pursue registrations in various other territories including in Asia, the Middle East and Africa.
Supported commercial partners with marketing materials, technical input, and ongoing product supply.
An important publication for VivaGel® BV was achieved in the highly regarded peer-reviewed European journal, Archives of
Gynecology & Obstetrics. The publication highlights the significant unmet need for new treatment and prevention options in
bacterial vaginosis (BV), and the role that Starpharma’s VivaGel® BV can play in addressing that need. This publication will
support marketing activities and importantly, the inclusion of the product in clinical management guidelines for BV.
Provided extensive support to Mundipharma, to pursue additional launches of VivaGel® BV in countries where registration has
been achieved.
Continued to pursue FDA approval for VivaGel® BV, working with a team of expert regulatory advisers, lawyers, and
statisticians to progress a formal review, including detailed submissions. The formal FDA review is ongoing.
Starpharma’s partner, Okamoto, launched a new VivaGel® condom range in Japan, under the brand name Pure Marguerite,
targeting younger demographics. The range is being distributed through major retail chains in Japan. Starpharma supported
commercial partners with marketing materials, technical input, and material supply. Okamoto has also commenced regulatory
processes for the VivaGel® condom in additional countries in Asia. Ongoing regulatory activities in China.
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Directors’ Report Remuneration Report
5. Executive remuneration outcomes, including link to performance (continued)
-
-
-
-
-
-
-
-
Progress with internal clinical-stage DEP® assets, including:
-
The DEP® docetaxel clinical program (monotherapy and combination arms) has continued to progress and following encouraging
efficacy responses, additional patients are being recruited into this trial.
The DEP® cabazitaxel Phase 2 trial has continued to make good progress. Starpharma reported interim findings from the
prostate cancer cohort of this trial during FY22. Following encouraging efficacy signals in patients with late stage ovarian and
gastro-oesophageal cancers, additional patients are being enrolled.
The DEP® irinotecan Phase 2 trial has continued to recruit patients and progress well, with encouraging efficacy signals observed
across a range of tumour types. In parallel, Starpharma is finalising preparations for commencement of a combination arm for
DEP® irinotecan in combination with 5-FU + Leucovorin (‘FOLFIRI’, a commonly used combination treatment regimen in
colorectal cancer).
Starpharma is in the final stage of preparation to commence a Phase 1/2 clinical trial of DEP® gemcitabine.
-
Develop the preclinical DEP® pipeline:
-
Continued to progress multiple DEP® radiotheranostic candidates, targeted and untargeted, including DEP® lutetium, DEP®
HER2-lutetium and DEP® zirconium.
Continued to progress Starpharma’s internal DEP® Antibody Drug Conjugate (ADC) candidates and other internal preclinical
candidates.
Progressed existing and cultivated new partnered DEP® programs, including:
-
Signed a second DEP® Research Agreement with MSD (Merck & Co., Inc.) to develop and synthesize a number of DEP®
dendrimer conjugates. This new agreement follows the initial DEP® ADC agreement signed with Merck & Co., Inc., in February
2021.
Signed a DEP® Research Agreement with Genentech during FY22, to evaluate DEP® dendrimer conjugates. This agreement
was then expanded to include an additional program within six months of the initial agreement.
Supported AstraZeneca’s clinical development of its novel DEP® product, AZD0466. During FY22, AstraZeneca commenced a
new clinical trial of AZD0466 in a new cancer type – non-Hodgkin’s lymphoma (NHL). The new NHL trial is now recruiting at
sites in the US and Korea, with recruitment planned at sites across the US, Canada, Europe, Australia, and Asia. This expanded
NHL clinical trial is running in parallel with the ongoing global Phase 1/2 trial in patients with acute myeloid leukemia (AML) and
acute lymphoblastic leukemia (ALL), which continues to recruit patients and open new sites.
Progressed other DEP® programs with AstraZeneca.
Progressed other partnered DEP® programs, including with Chase Sun.
Undertook commercial discussions with major pharmaceutical companies for several new partnered DEP® drug delivery programs
in oncology and non-oncology areas, including in DEP® ADCs and DEP® radiopharmaceuticals.
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 while the ongoing COVID-19 pandemic poses direct and indirect
challenges to trial recruitment, workforce organisation and supply chain continuity. These achievements include the regulatory and
commercialisation activities for VIRALEZE™, VivaGel® BV and the VivaGel® condom, including supporting the company’s marketing
partners for each of these products. In addition, the company achieved a number of important milestones for its DEP® drug delivery
programs, both internally and with external partners. These included the positive interim findings from the prostate cancer cohort of the
Phase 2 trial of DEP® cabazitaxel and the commencement of two new DEP® Research Agreements with leading, global companies,
Genentech and Merck & Co., Inc.
LTI Performance Assessment
Performance period
1 July 2019 to 30 June 2022
Performance category
Metric
Weighting
Satisfied
Financial KPIs for VivaGel® BV and
DEP®
Business KPIs for VivaGel® and DEP®
Monetisation of the VivaGel® and Drug Delivery portfolios
represented by the generation of revenue, or value from asset
sale(s), through the completion of a number of commercial
deals that build shareholder value.
Optimisation of returns from VivaGel® revenue, represented by
programs to maximise product returns to Starpharma;
Development of new DEP® candidates; and/or Licensing
(and/or asset sales) of DEP® candidates.
40%
Partially Met#
30%
Partially Met
Relative TSR
Starpharma’s TSR compared to the performance of the
S&P/ASX300 Index over a 3-year period
30%
Not Met
# The Board has used its discretion in relation to activities in this KPI including deals and revenue generated from VIRALEZE™, not
contemplated at the time of setting the KPIs.
100%
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Directors’ Report Remuneration Report
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):
- A new product, VIRALEZE™ nasal spray was fully developed and launched in Europe, Vietnam, Italy, and the UK during
the period, with product revenue increasing from customer receipts.
- Signed sales and distribution arrangements for VIRALEZE™ nasal spray with commercial partners in the UK
(LloydsPharmacy), Italy (ADMENTA), Vietnam (Health Co), and the Middle East (E&N).
- New registrations of VivaGel® BV achieved in countries in Asia, the Middle East, South Africa and New Zealand. In
Europe and Australia, achieved approval for a second BV indication, for the prevention of recurrent BV.
- VivaGel® BV launched in the UK, Asia, and central and eastern European countries during the period, with revenue
receipts from Aspen and Mundipharma.
- Okamoto licensed VivaGel® condom for additional countries in Asia and commenced and progressed regulatory activities.
A new VivaGel® condom range was launched by Okamoto in Japan, targeting younger demographics.
- Signed a DEP® Research Agreement with MSD whereby Starpharma will design and synthesize a number of dendrimer-
based Antibody Drug Conjugates (ADCs) and will provide them to MSD for testing and characterization.
- Signed a second DEP® Research Agreement with MSD whereby Starpharma will design and synthesize a number of
additional DEP® dendrimer conjugates and will provide them to MSD for testing and characterization.
- Signed and commenced a new DEP® Research Agreement with Genentech to evaluate DEP® drug conjugates.
- Genentech DEP® agreement was expanded within six months to add an additional DEP® program.
- Supported AstraZeneca’s development of AZD0466. AstraZeneca significantly expanded the clinical program for its DEP®
product, AZD0466, which is now being progressed through two global, Phase 1/2 trials in patients with certain blood
cancers.
- Signed and commenced a new DEP® partnership with Chinese company Chase Sun to develop several DEP®
nanoparticle formulations of an anti-infective drug with the view of enhancing its performance and expanding its
therapeutic utility.
- Significantly progressed three internal DEP® clinical programs (DEP® docetaxel, DEP® cabazitaxel and DEP® irinotecan)
with enrolment now well advanced. Encouraging efficacy signals have been observed in each trial and multiple new sites
opened. Undertook ongoing commercial discussions with potential licensees.
- Expanded market potential for all internal clinical-stage DEP® candidates by adding new indications and progressing
value-adding combination studies.
- Reported interim findings from the prostate cancer cohort of the Phase 2 clinical trial of DEP® cabazitaxel and undertook
partnering discussions.
- Completed manufacture of clinical product for DEP® gemcitabine and finalised other preclinical work in preparation for
commencement of a Phase 1/2 clinical study.
- Advanced preclinical preparations for DEP® irinotecan + 5-FU + Leucovorin (‘FOLFIRI’) combination arm.
- Commenced DEP® docetaxel + gemcitabine clinical combination study.
- DEP® cabazitaxel and DEP® irinotecan advanced to Phase 2 based on positive Phase 1 results.
- Provided extensive support to AstraZeneca to facilitate AZD0466’s progress into the clinic, including IND preparation,
scale-up and final preclinical work, triggering the receipt of a milestone payment of US$3M following the successful
dosing of the first patient in Phase 1.
- Granted a licence from the TGA allowing in-house manufacture of DEP® products for clinical trials.
- Partnering discussions underway for internal DEP® candidates with licences to be sought at the most appropriate time to
maximise commercial value.
Initiated DEP® radiotheranostic and DEP® ADC commercial discussions following positive preclinical results.
-
- Developed and progressed DEP® radiotheranostic candidates, targeted and untargeted, including DEP® lutetium, DEP®
HER2-lutetium and DEP® zirconium.
- Developed and progressed DEP® Antibody Drug Conjugates (ADCs) candidates.
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 2022. The company’s annualised TSR for this period was (15.6%) compared to the S&P/ASX300 Index annualised TSR of
(0.3%), resulting in (15.3%) underperformance to the index.
The relative TSR is calculated independently by a professional services firm and more information regarding the relative TSR hurdle is
provided on page 28.
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Directors’ Report Remuneration Report
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.
2022
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
121,818
Z Peach
P R Turvey^
D J McIntyre
L Cheng
J R Davies
Executive director
J K Fairley
Other KMP executives
N J Baade
A Eglezos
D J Owen~
J R Paull
Totals
78,182
6,307
81,000
66,374
17,045
–
–
–
–
–
–
–
–
–
–
–
–
12,182
7,818
631
–
6,637
1,705
–
–
–
–
–
–
–
–
–
–
–
–
515,804
179,738
40,928
23,568
14,576
497,470
1,272,084
227,510
75,000
32,976
257,763
73,000
8,288
27,468
23,568
6,952
5,220
192,073
561,979
191,633
559,472
215,430
–
19,459
19,640
(12,962)
(198,339)
43,228
230,858
75,000
40,692
27,468
8,214
214,733
596,965
1,818,091
402,738
142,343
150,685
22,000
897,570
3,433,427
Total
$
134,000
86,000
6,938
81,000
73,011
18,750
† Increases in overall total fixed remuneration packages for KMP executives were 2.90% and below (average 2.70%) in FY22. 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 FY22 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 2021 to 30 June 2022. The actual cash
payment of the bonuses will occur in FY23.
^ P R Turvey resigned from the Board on 29 July 2021.
~ D J Owen resigned 6 May 2022.
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Directors’ Report Remuneration Report
2021
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
117,808
R A Hazleton^
Z Peach
P R Turvey
D J McIntyre
29,944
72,032
78,767
72,833
–
–
–
–
–
–
–
–
–
–
11,192
–
6,843
7,483
–
–
–
–
–
–
–
–
–
–
–
Total
$
129,000
29,944
78,875
86,250
72,833
Executive director
J K Fairley
Other KMP executives
539,985
194,825
2,901
21,695
9,892
782,453
1,551,751
N J Baade
A Eglezos
D J Owen
J R Paull
Totals
222,785
78,000
37,684
21,695
2,232
282,991
645,387
252,789
80,000
8,166
21,695
14,769
277,403
654,822
239,766
70,000
22,119
227,945
80,000
42,159
21,695
21,695
–
272,367
625,947
5,101
313,348
690,248
1,854,654
502,825
113,029
133,993
31,994
1,928,562
4,565,057
† There were no increases in overall total fixed remuneration packages for KMP executives in the FY21 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 FY21 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.
~ Includes the expensing of STI equity awarded in lieu of cash for the FY20 performance period with a vesting date of 30 June 2021.
# 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 2020 to 30 June 2021. The actual cash
payment of the bonuses occurred in FY22.
^ R A Hazleton retired from the Board on 20 November 2020.
Details of executive remuneration mix
The relative proportions of remuneration for FY22 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 Owen1
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%
47%
50%
53%
53%
100%
52%
14%
13%
13%
-
13%
9%
7%
7%
NM
7%
25%
23%
20%
20%
20%
NM
20%
40%
30%
30%
27%
27%
NM
28%
1 D J Owen resigned 6 May 2022. Not Meaningful (NM) are negative amounts for share-based payments expense reversed during the year due
to a failure to satisfy the vesting conditions of performance rights. There was no STI cash awarded to D J Owen for FY22.
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 37
37
Directors’ Report Remuneration Report
6. Details of remuneration (continued)
Non-statutory executive remuneration
The non-statutory executive remuneration is the remuneration earned by KMP executives in FY22 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 FY22. For LTI equity, the reported value
reflects the KMP executive performance over three years including the impact of movement 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.
2022
Name
Fixed
remuneration
(1)
STI cash
paid in FY22
(2)
STI equity
vested in
FY22 based
on face value
(3)
LTI equity
vested in
FY22 based
on face value
(3)
STI equity
vested in
FY22 based
on share
price at
vesting date
(4)
LTI equity
vested in
FY22 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
580,300
194,825
132,561
80,762
1,022,244
472,842
1,929,930
1,328,729
1,272,084
N J Baade
A Eglezos
D J Owen~
J R Paull
287,954
289,619
254,529
299,018
78,000
80,000
70,000
80,000
40,526
42,238
-
24,690
218,879
170,587
625,359
561,231
561,979
25,733
219,449
169,858
631,306
565,210
559,472
-
221,731
165,968
546,260
490,497
43,228
46,182
28,136
274,976
191,549
700,176
598,703
596,965
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 FY22 reflects cash bonuses awarded for FY21 the performance period.
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 FY21 and the LTI equity was granted in FY19.
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 FY21 and the LTI equity was granted in FY19.
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.
~ D J Owen resigned 6 May 2022
Equity awards and share price
The total non-statutory remuneration based on the vesting date share price is lower than the total remuneration per Accounting Standards
(except for D J Owen) and the non-statutory remuneration based on face value. The lower amount is primarily driven by the value attached to
the equity awards that vested in FY22.
38 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
38
Directors’ Report Remuneration Report
Details of remuneration: cash bonuses, shares, and performance rights
For each cash bonus and grant of equity included in the tables on pages 36 to 41, 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 70% of her maximum cash
bonus entitlement of $256,769 in FY22, with the balance of 30% forfeited as described above in the report. 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
20221,2
$
480,505
Name
J K Fairley
N J Baade
152,065
A Eglezos
152,065
D J Owen
(Resigned 6 May 2022)
152,065
J R Paull
166,085
Financial
year
granted
Vested
Forfeited
Performance rights
Maximum
fair value yet to
vest
Financial
years in which
rights may
vest
2022
2022
2021
2021
2020
2019
2022
2022
2021
2021
2020
2019
2022
2022
2021
2021
2020
2019
2022
2022
2021
2021
2020
2019
2022
2022
2021
2021
2020
2019
%
-
-
78%
-
-
65%
-
-
83%
-
-
82%
-
-
86%
-
-
81%
-
-
-
-
-
80%
-
-
86%
-
-
84%
%
30%
-
22%
-
62%
35%
22%
-
17%
-
33%
18%
23%
-
14%
-
34%
19%
100%
100%
100%
100%
100%
20%
22%
-
14%
-
31%
16%
30/06/2023
30/06/2025
30/06/2022
30/06/2024
30/06/2023
30/06/2022
30/06/2023
30/06/2025
30/06/2022
30/06/2024
30/06/2023
30/06/2022
30/06/2023
30/06/2025
30/06/2022
30/06/2024
30/06/2023
30/06/2022
30/06/2023
30/06/2025
30/06/2022
30/06/2024
30/06/2023
30/06/2022
30/06/2023
30/06/2025
30/06/2022
30/06/2024
30/06/2023
30/06/2022
$
37,729
258,115
-
297,766
30,964
-
12,607
83,034
-
100,659
10,527
-
12,381
83,034
-
100,659
10,414
-
-
-
-
-
-
-
13,769
90,690
-
110,061
11,772
-
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.
Details of related party transactions
Services from entities controlled by KMP
Subsidiary, Starpharma Pty Ltd, paid $22,213 for consulting services in FY22 to Centre for Biopharmaceutical Excellence Pty Ltd, which
Starpharma non-executive director Dr Jeff Davies (appointed 1 April 2022), is also a director and shareholder. The consulting services were
provided by principals other than Dr Jeff Davies and were on normal commercial terms.
There are no other related party transactions with KMP that are not otherwise disclosed within this Remuneration Report.
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 39
39
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 2022 of $577,407, to be reviewed annually by the Remuneration and
Nomination Committee.
A cash bonus up to $256,769 for the year to 30 June 2022 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, or other transactions, to the CEO or Other KMP executives.
40 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
40
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.
2022
Name
Directors
R B Thomas
J K Fairley
Z Peach
P R Turvey1
D J McIntyre
L Cheng2
J R Davies3
Other KMP executives
N J Baade
A Eglezos
D J Owen4
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
875,000
3,925,434
48,975
193,155
16,240
–
50,000
354,300
297,542
252,086
41,106
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
998,993
–
25,000
50,000
8,474
–
–
60,000
–
–
(30,000)
–
–
900,000
3,975,434
57,449
N/A
16,240
60,000
50,000
354,300
267,542
N/A
41,106
* Other changes relate to market transactions.
1 Resigned as a non-executive director on 29 July 2021.
2 Appointed as a non-executive director on 1 August 2021.
3 Appointed as a non-executive director on 1 April 2022, opening shareholding prior to appointment.
4 Resigned on 6 May 2022.
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 FY22 or the prior year.
2022
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
(224,712)
5,502,890
3,835,560
1,667,330
J K Fairley
5,234,242
493,360
Other KMP executives
N J Baade
1,420,939
A Eglezos
1,414,343
D J Owen1
1,413,954
141,000
141,000
141,000
-
-
-
(35,874)
(34,810)
1,526,065
1,520,533
1,047,385
1,041,853
998,993
(555,961)
-
-
478,680
478,680
-
J R Paull
# Other changes during the year relate to the forfeiture of rights.
1 Resigned on 6 May 2022.
1,609,855
154,000
-
(33,726)
1,730,129
1,206,929
523,200
The market value at vesting date of performance rights that vested during 2022 was $1,330,125 (2021: $3,503,718). The decrease in market
value reflects a lower share price at date of vesting as well as the vesting in the prior year of STI equity awarded in lieu of cash bonuses for
FY20. No other shares were issued on the vesting of performance rights provided as remuneration to any of the directors or any 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 2022 there were 15,784,044 performance rights on issue, representing 3.9% of the 408,443,407 shares on issue (SOI) at 30 June
2022. There were 10,279,617 rights which were held by KMP, representing 2.5% of SOI, of which 5,502,890 (1.3% of SOI) were approved by
shareholders.
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 41
41
Directors’ Report Remuneration Report
8. Additional disclosures relating to employee equity schemes (continued)
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
Number of rights
granted
Performance measure
Fair value per right at
grant date
% vested
16 August 2018
30 September 2021
537,200
Achievement of KPIs
16 August 2018
30 September 2021
94,800
TSR
29 November 2018
30 September 2021
377,945
Achievement of KPIs
29 November 2018
30 September 2021
161,976
TSR
17 October 2019
30 September 2022
537,200
Achievement of KPIs
17 October 2019
30 September 2022
94,800
TSR
21 November 2019
30 September 2022
375,758
Achievement of KPIs
21 November 2019
30 September 2022
161,039
TSR
30 October 2020
30 June 2022
187,560
Achievement of KPIs
30 October 2020
30 September 2023
637,704
Achievement of KPIs
30 October 2020
30 September 2023
112,536
TSR
20 November 2020
30 June 2022
159,293
Achievement of KPIs
20 November 2020
30 September 2023
446,021
Achievement of KPIs
20 November 2020
30 September 2023
191,152
TSR
25 October 2021
30 June 2023
115,400
Achievement of KPIs
25 October 2021
30 September 2024
392,360
Achievement of KPIs
25 October 2021
30 September 2024
30 November 2021
30 June 2023
69,240
98,672
TSR
Achievement of KPIs
30 November 2021
30 September 2024
276,282
Achievement of KPIs
30 November 2021
30 September 2024
118,406
TSR
$1.26
$0.85
$1.48
$1.13
$1.15
$0.71
$1.29
$0.85
$1.47
$1.47
$1.20
$1.32
$1.32
$0.96
$1.14
$1.14
$0.62
$1.09
$1.09
$0.60
81
86
56
86
Nil
Nil
Nil
Nil
64
Nil
Nil
78
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 -
42 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
42
Directors’ Report
Shares under rights
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
11 Nov 2015 30 Jun 2017
519,200
19 Nov 2015 30 Sep 2018
893,851
19 Nov 2015 30 Jun 2017
219,395
13 Oct 2016 30 Jun 2018
594,450
13 Oct 2016 30 Sep 2019
2,377,800
29 Nov 2016 30 Jun 2018
223,022
29 Nov 2016 30 Sep 2019
876,978
10 Aug 2017 30 Jun 2019
694,120
782,404
185,750
836,260
181,001
211,876
947,975
172,842
846,281
302,268
10 Aug 2017 30 Sep 2020
2,776,480
1,264,737
29 Nov 2017 30 Jun 2019
224,121
29 Nov 2017 30 Sep 2020
895,879
16 Aug 2018 30 Jun 2020
203,500
16 Aug 2018 30 Sep 2021
814,000
2 Nov 2018
30 Jun 2020
259,147
2 Nov 2018
30 Sep 2021
1,036,587
29 Nov 2018 30 Jun 2020
134,980
29 Nov 2018 30 Sep 2021
539,921
17 Oct 2019 30 Jun 2021
459,767
197,226
736,665
116,378
441,012
87,200
395,016
112,708
350,253
212,629
17 Oct 2019 30 Sep 2022
1,839,067
1,339,175
21 Nov 2019 30 Jun 2021
134,199
21 Nov 2019 30 Sep 2022
536,797
30 Oct 2020 30 Jun 2021
567,083
30 Oct 2020 30 Jun 2022
548,270
101,320
536,797
365,085
389,122
30 Oct 2020 30 Sep 2023
2,193,080
1,712,160
20 Nov 2020 30 Jun 2021
176,755
20 Nov 2020 30 Jun 2022
159,293
176,755
124,249
20 Nov 2020 30 Sep 2023
637,173
637,173
25 Oct 2021 30 Jun 2023
373,333
305,673
25 Oct 2021 30 Sep 2024
1,493,334
1,222,694
30 Nov 2021 30 Jun 2023
98,672
98,672
30 Nov 2021 30 Sep 2023
394,688
394,688
Performance rights and the resultant shares are granted for nil
consideration.
Insurance of officers
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 relevant insurance contract.
Shares issued on the exercise of vested rights
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.
Date rights granted
Issue price of shares
(Exercise price of right)
Number of shares
issued
11 Nov 2015
13 Oct 2016
10 Aug 2017
16 Aug 2018
2 Nov 2018
17 Oct 2019
30 Oct 2020
$ -
$ -
$ -
$ -
$ -
$ -
$ -
329,265
438,835
575,122
264,601
346,251
166,405
196,374
Audit & non-audit services
The company may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with the company and/or the group are
important. Details of the 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
2022
$
2021
$
155,250
146,462
Other assurance services of $6,630 (2021: nil) were provided by
the auditor in the current year relating to the audit of an income
and expenditure report for grant funding. No other 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 44.
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.
Auditor
PricewaterhouseCoopers continues in office in accordance with
section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the
Directors.
Robert B Thomas AO
Chairman
Melbourne, 25 August 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 43
Starpharma Holdings Limited Annual Report 2022
43
Auditor’s Independence Declaration
Independent auditor’s report
To the members of Starpharma Holdings Limited
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
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
Auditor’s Independence Declaration
Our opinion
As lead auditor for the audit of Starpharma Holdings Limited for the year ended 30 June 2022, I
In our opinion:
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
The accompanying financial report of Starpharma Holdings Limited (the Company) and its controlled
technology with applications in different stages between development and commercialisation.
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
entities (together the Group) is in accordance with the Corporations Act 2001, including:
relation to the audit; and
(a) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
financial performance for the year then ended
This declaration is in respect of Starpharma Holdings Limited and the entities it controlled during the
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
period.
What we have audited
The Group financial report comprises:
Materiality
Audit scope
Key audit matters
Our audit focused on where the
●
●
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
●
Brad Peake
tax.
●
Partner
PricewaterhouseCoopers
●
the consolidated balance sheet as at 30 June 2021
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 significant accounting policies
events.
and other explanatory information
We applied this threshold, together with
the directors’ declaration.
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 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.
All audit procedures are performed
by PwC Australia, consistent with
the location of Group management
and financial records.
Melbourne
25 August 2022
Amongst other relevant topics, we
communicated the following key
audit matters to the Audit and Risk
Committee:
These are further described in the
Key audit matters section of our
report.
Research and development tax
Basis for opinion
Disposal of Starpharma
Agrochemicals
incentive
We tailored the scope of our audit
taking into account the accounting
processes and controls, and the
industry in which the Group
operates.
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 & 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
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
Liability limited by a scheme approved under Professional Standards Legislation. 44
44 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
44
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 (4th Edition) (“the 4th Edition CGC
Recommendations”).
This Corporate Governance Statement sets out and describes the
company’s current corporate governance principles and practices
which the Board considers to comply with the 4th Edition CGC
Recommendations. This Corporate Governance Statement is
available on the company’s website. The company and its
controlled entity together are referred to as “the group” in this
statement. This report is current as at 25 August 2022 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 long term, and they seek to balance sometimes
competing objectives in the best interests of the group.
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;
Setting 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 / senior management appointment and director
election
Before appointing a director or senior management, and before
putting forward a director 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
(CEO of the group), 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.
The Board considered the tenure of Ms Z Peach as part of its
independence assessment of each and all directors. Despite her
tenure of >10 years, Ms Z Peach has been as ‘independent’. The
combination of Ms Z Peach’s skills and experience, and corporate
memory provided by her long tenure is advantageous and aligns
with the typical longer industry product development cycle.
Director
R B Thomas
Z Peach
J K Fairley
D J McIntyre
L Cheng
J R Davies
Date first elected by shareholders
November 2014
November 2011
N/A, appointed by the Board in 2006
November 2020
November 2021
Appointed by the Board on 1 April
2022 and standing for election at
November 2022 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.
The Board last revised its Diversity Policy in March 2022, which
operates alongside the Code of Conduct (and the Discrimination,
Harassment, Bullying and Workplace Grievances Policy), and it
provides a framework for Starpharma to achieve several 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.
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 45
45
Corporate Governance Statement
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 2022 financial year, and
progress against these objectives is set out below:
Objective
Measurement
FY22 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.
Equal opportunity employer
Remuneration parity
Inclusion of female candidates in
recruitment process for each role with
female applicants, including for Board
appointments.
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.
54% of CEO minus 2 positions are held by females.
Professional development opportunities and options
that are aligned with the group’s needs and the
individual’s role are considered for all employees as
part of the group’s annual performance review process
and as needed during the year. Investments in
formal/external development programs are made
where appropriate and in FY22, 36 professional
development programs including conferences were
attended by female employees across all levels of the
organisation.
This included securing partial scholarships for 4
women to attend a 10-week development program run
by Women & Leadership Australia.
The company also continues to support participation in
a biotech industry networking initiative of all female
staff and senior leaders who are active supporters of
women in the workplace, role models and champions
of gender equity. The networking initiative includes
presentations by industry role models.
Female candidates participated in all recruitment
processes throughout FY22. 60% of the positions were
filled with female candidates.
33% of the internal promotions that occurred in FY22
were female employees.
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).
14% 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.
Support for return to work after
parental leave
Target a return to work following primary
care parental leave of 75%.
Awareness of unconscious bias
Train managers on unconscious bias.
Broadened measurement of
diversity
Define diversity demographics beyond
gender for the purposes of future reporting
Mutually satisfactory flexible work arrangements were
reviewed and agreed between the requesting
employee and the company in 100% of cases during
FY22.
One employee was on primary care parental leave in
FY22 and returned to work by mutual agreement.
The executive group completed this training during
FY22.
The company is gathering wider diversity demographic
information on its employees.
The diversity measurement for future reporting is
intended to cover all of gender, age (generational
groups) and country of birth (cultural).
Slightly 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 group strives to put in place measures, such as flexible
working arrangements, specifically to encourage participation by
46 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
all. The table below sets out the proportion of female employees in
the whole organisation, in leadership/management roles (“CEO
minus 2”), in senior executive positions and on the Board as at 30
June 2022.
46
Corporate Governance Statement
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 group’s performance in respect of the
measurable diversity objectives.
Starpharma is also proud of the ethnic diversity of our employee
population, with 50% of all employees born outside Australia in 18
different countries.
Starpharma continues to improve its range of objectives to support
workplace diversity. For FY22, the group has expanded its
objectives, adding a measurement for awareness of unconscious
bias, and also plans to broaden its measurement of diversity.
% Female (at 30 June)
2022
2021
Whole organisation (staff and Board)
49%
47%
Leadership/management roles
35%
42%
Senior executive (CEO & direct reports)
44%
43%
Board
50%
40%
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 FY22.
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 22 of this report.
As part of the Board discussion on senior 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.
Principle 2: Structure the Board to be effective and 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 2022. 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
For the entire reporting period to 30 June 2022, the Remuneration
and Nomination Committee comprised of at least three
independent non-executive directors. P R Turvey was granted a
special leave of absence during the year before his resignation in
July 2021 for health reasons.
At the date of this report, the Remuneration and Nomination
Committee is comprised of four independent non-executive
directors, consisting of the following:
Ms Z Peach (Chair)
Mr R B Thomas
Ms L Cheng
Dr J R Davies
Details of these directors’ qualifications and attendance at
committee meetings are set out in the directors’ report on pages
13 to 20.
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:
Starpharma Holdings Limited Annual Report 2022
-
-
-
-
-
-
-
-
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;
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
For the entire reporting period to 30 June 2022, the Audit and Risk
Committee comprised of at least three independent non-executive
directors. P R Turvey was granted a special leave of absence
during the year before his resignation in July 2021 for health
reasons.
At the date of this report, the Audit and Risk Committee is
comprised of four independent non-executive directors consisting
of the following:
Mr D McIntyre (Acting Chair)
Mr R B Thomas
Ms Z Peach
Ms L Cheng
Details of these directors’ qualifications and attendance at
committee meetings are set out in the directors’ report on pages
13 to 20.
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
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 47
47
Corporate Governance Statement
mandate effectively. Members have held relevant senior positions
in companies and organisations, including in finance and risk
management and are or have been members of other corporate
audit committees, including ASX-listed companies. Such positions
include chief financial officer, head of risk management and
Chairman of Corporate Risk Management Committee, M&A
director, 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.
Ms Cheng was appointed to the Audit and Risk Committee on
1 August 2021. Ms Cheng has a strong background in finance with
more than 25 years of experience as a finance executive and
having previously served as Chair of an audit and risk committee
for a large organisation.
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;
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 the Board’s 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, legal 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:
Licensing and commercialisation of innovation;
1.
Leadership in healthcare and/or scientific research;
2. Pharmaceutical/product development and supply chain;
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 four or more directors
with intermediate to deep skills and experience in each of the
fourteen areas above. The Board reviews the matrix at least
annually to ensure it covers the skills needed to serve the existing
and emerging areas of Starpharma’s business.
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 group, the
Board considers that collectively it has the appropriate skills and
experience in each area listed above.
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.
The Remuneration and Nomination Committee and Board
assessed the executive and non-executive roles held by David
McIntyre and Lynda Cheng in relation to their time commitment,
and determined they each had adequate time available to serve on
Starpharma’s Board.
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 4th 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. Factors relevant for the assessment of
independence include tenure, business relationships.
Length of tenure
The Board considered the length of tenure of Ms Zita Peach who
has served as a director at the date of this report for approximately
11 years. The Board is satisfied that Ms Peach maintains
appropriate independence from management despite her length of
tenure and therefore this factor is not considered to impact Ms
Peach’s assessed independence.
Business relationships with the company
The Board considered the independence of Dr Jeff Davies who is
also a director and shareholder of Centre for Biopharmaceutical
Excellence Pty Ltd, a life sciences consulting firm. The firm
provides ad hoc consulting services to the company’s subsidiary,
Starpharma Pty Ltd. The Board notes that the value of this
48 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
48
Corporate Governance Statement
consulting arrangement is not material, is typically provided by
principals other than Dr Jeff Davies and on normal commercial
terms. As such, this relationship is not considered to impact Dr
Davies’ assessed independence.
2.4.1 Independence Assessment
The Board has determined that all non-executive directors are
independent at the date of this report. 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 group’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 company’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 makes 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.
Principle 3: Instil a culture of acting lawfully, ethically and responsibly
3.1 Values
Starpharma prides itself on a strong culture based on
accountability, performance, and ethical behaviours. The
company’s core values are disclosed in its code of conduct, anti-
bribery and corruption policy, whistleblower policy, discrimination,
harassment and bullying policy, diversity and other policies, and is
reported in its Environmental, Social and Governance (“ESG”)
Report.
3.2 Code of conduct
The Board is 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
group. The code of conduct is provided to new starters as part of
their induction and behaviour is continually monitored to ensure
compliance.
The code of conduct is reviewed periodically and was last updated
in March 2022. The code of conduct covers employment practices,
equal opportunity, harassment and bullying, conflicts of interest,
use of group assets and disclosure of confidential information.
3.3 Whistleblower policy
Starpharma has a whistleblower policy which sets out the
procedures for reporting of instances of illegal, fraudulent, or
undesirable behaviour to ensure that Starpharma’s Code of
conduct and other policies are promoted and implemented, and
that compliance with the law is maintained.
3.4 Anti-bribery and corruption policy
Starpharma has an anti-bribery and corruption policy which sets
out responsibilities in relation to key areas of fraud, corruption, and
bribery; gifts and entertainment; and political donations. Breaches
of this policy may result in disciplinary action up to and potentially
including dismissal.
The group has not had any material breaches in relation to its code
of conduct, whistleblower policy or anti-bribery and corruption
policy, and if such an event were to occur, Starpharma’s directors
would be appropriately informed. Starpharma’s policies, including
the code of conduct, whistleblower policy and anti-bribery and
corruption policy are available at
www.starpharma.com/corporate_governance.
3.5 Environmental policy and Climate change position
Starpharma has an environmental policy and a statement of its
position on climate change
Information on the company’s environmental policy and its climate
change mitigation activities are detailed in its ESG Report
available on its website at
www.starpharma.com/corporate_governance.
Principle 4: Safeguard the integrity of corporate reports
4.1 Audit and Risk Committee
The company has established an Audit and Risk Committee
consisting of at least three 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.
External auditors
The company’s policy is to appoint an 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.
Starpharma’s audit engagement partner was last appointed in
FY20. An analysis of fees paid to the external auditor is provided in
note 20 to the FY22 financial statements in this annual report.
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
Starpharma Holdings Limited Annual Report 2022
available to answer questions shareholders may have in relation to
the Auditor’s Report and the conduct of the audit
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 the 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 2022 half year financial statements and
the 2022 full year financial statements which are included in this
annual report.
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 49
49
Corporate Governance Statement
4.3 Verification process for unaudited reports
The company has established processes for management to
review, and verify the accuracy of information and ensure the
appropriate balance of information in its corporate reporting. For
example, the group’s management has procedures in place with
relevant staff to allow the CEO and CFO to make appropriate
certifications prior to approval of Starpharma’s quarterly cashflow
and activities report. Where appropriate, the company uses a
documented verification process for the information and data
contained in other reports, such as the ESG report.
Principle 5: Make timely and balanced disclosures
5.1. Continuous disclosure policy
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.
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.
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 group 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 email or post
to their nominated address, annual reports.
ASX announcements are also posted on the OTCQX website
(www.otcmarkets.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.
6.3 Participation at Annual General Meetings
The 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 2001 (Cth).
The AGM provides an opportunity for the Board to communicate
with shareholders through the Chair’s address and the CEO’s
presentation.
Except in exceptional circumstances, all ASX announcements
(other than standard compliance announcements or newsletters
with no new material information) require the approval of the Chair,
or another non-executive director in his absence.
A copy of the policy is available on the company’s website at
www.starpharma.com/corporate_governance
5.2. Board promptly receives material announcements
To ensure directors have visibility of Starpharma’s market
disclosures, the Board receives copies of all ASX announcements
promptly as they are lodged with the ASX.
5.3. Investor presentations
AGM presentations and any investor presentations containing
material new information are disclosed, in accordance with ASX
Listing Rule 3.1. From time to time, the company will participate in
investor, industry and scientific conferences, and for those events
would typically publish an accompanying presentation on its
website, or lodge it on the ASX announcements platform, as
appropriate.
Shareholders are given the opportunity, through the Chair, 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 Chair’s
address, the CEO’s presentation or put to the meeting by the
Chair. For the 2021 AGM, the company used technology to
conduct a virtual AGM, which included the ability for shareholders
to ask questions. 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.
6.4 Voting by poll
All resolutions at Starpharma’s shareholder meetings are voted on
by poll rather than by show of hands.
6.5 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.
50 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
50
Corporate Governance Statement
Principle 7: Recognise and manage risk
7.1. Audit and Risk Committee
The company has established an Audit and Risk Committee
consisting of at least three independent non-executive directors.
Details regarding its composition, meetings and charter are set out
in section 2.1 and 2.1.2 of this Corporate Governance Statement.
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
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
group. 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 group. Other risk areas that are addressed include product
liability, business continuity, cyber-security, reputation, intellectual
property, product development, clinical trials and the
environmental. 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 policies for the oversight of material business risks,
Principle 8: Remunerate fairly and responsibly
8.1 Remuneration and Nomination Committee
The company has established a Remuneration and Nomination
Committee consisting of at least 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 21 to 42.
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 of this Corporate Governance Statement,
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 page 19 of the directors’ report
and the company’s ESG Report available on Starpharma’s
website.
In addition to the risk assessment and management strategies
outlined in section 7.2 of this Corporate Governance Statement
and set out under “Risk Management” on page 19 of the directors’
report, 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 40).
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 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 51
51
Annual Financial Report for the year ended 30 June 2022
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
53
54
55
56
57
58
80
81
These financial statements are the consolidated financial statements for the consolidated entity consisting of Starpharma Holdings Limited and
its subsidiaries (collectively, “the group”). The financial statements are presented in dollars denominated in Australian currency. Starpharma
Holdings Limited is a public company limited by shares, incorporated and domiciled in the State of Victoria, 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 Chief Executive Officer’s Report on pages 3 to
11 and in the operating and financial review in the Directors’ Report on pages 16 to 20, which are not part of this financial report.
The financial statements were authorised for issue by the directors on 25 August 2022. 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 the group’s website (www.starpharma.com), as well as ASX announcements and releases available via
the Australian Securities Exchange (www2.asx.com.au/markets/trade-our-cash-market/historical-announcements).
52 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
52
Consolidated Income Statement for the year ended 30 June 2022
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
26
26
30 June 2022
30 June 2021
$'000
4,899
(2,776)
263
(11,680)
(3,568)
(3,292)
(16,154)
-
$'000
2,151
(791)
1,336
(15,075)
(3,336)
(4,017)
(19,732)
-
(16,154)
(19,732)
$
($0.04)
($0.04)
$
($0.05)
($0.05)
The above consolidated income statement should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 53
53
Consolidated Statement of Comprehensive Income for the year ended 30 June 2022
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
30 June 2022
30 June 2021
$'000
(16,154)
$'000
(19,732)
-
-
-
-
(16,154)
(19,732)
The above statement of consolidated comprehensive income should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2022
54 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
54
Consolidated Balance Sheet as at 30 June 2022
30 June 2022
30 June 2021
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
Borrowings
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
15
13
14
16
17
18
$'000
49,918
7,916
2,824
60,658
1,336
4,181
5,517
66,175
7,731
695
1,339
466
10,231
4,000
3,494
57
7,551
17,782
48,393
$'000
60,500
8,534
1,721
70,755
1,373
1,110
2,483
73,238
7,954
692
1,371
412
10,429
-
475
34
509
10,938
62,300
240,669
26,285
(218,561)
48,393
240,630
24,077
(202,407)
62,300
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 55
55
Consolidated Statement of Changes in Equity for the year ended 30 June 2022
Balance at 1 July 2020
Loss for the year
Other comprehensive income (loss)
Total comprehensive income (loss) for the year
Transactions with owners, recorded directly in equity
Contributions of equity, net of transaction costs
Employee share plans
Employee performance rights plan
Total transactions with owners
Balance at 30 June 2021
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 2022
Contributed
capital
Reserves
Accumulated
losses
Notes
$'000
$'000
$'000
193,661
20,340
(182,675)
Total
equity
$'000
31,326
-
-
-
46,931
38
-
46,969
-
-
-
-
-
3,737
3,737
(19,732)
(19,732)
-
-
(19,732)
(19,732)
-
-
-
-
46,931
38
3,737
50,706
62,300
240,630
24,077
(202,407)
-
-
-
39
-
39
-
-
-
-
2,208
2,208
(16,154)
(16,154)
-
-
(16,154)
(16,154)
-
-
-
39
2,208
2,247
240,669
26,285
(218,561)
48,393
16
17
16
17
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2022
56 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
56
Consolidated Statement of Cash Flows for the year ended 30 June 2022
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
30 June 2022
30 June 2021
Notes
$'000
$'000
4,846
8,165
(26,292)
166
(47)
2,436
7,103
(24,652)
362
(57)
Net cash outflows from operating activities
25
(13,162)
(14,808)
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
Proceeds from issue of shares
Share issue transaction costs
Proceeds from borrowings
Lease repayments
Net cash inflows (outflows) from financing activities
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
(837)
1
(836)
-
-
4,000
(772)
3,228
(10,770)
60,500
188
49,918
(246)
-
(246)
48,862
(1,931)
-
(628)
46,303
31,249
30,054
(803)
60,500
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 57
57
Notes to the Consolidated Financial Statements 30 June 2022
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.
Non-Current Liabilities – Borrowings
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
Contributed Equity
Reserves
Accumulated Losses
Related Party Transactions
Remuneration of Auditors
Events Occurring After the Balance Sheet Date
Commitments
Contingencies
Subsidiaries
Reconciliation of Profit After Income Tax to Net Cash Inflow from Operating Activities
Earnings Per Share
Share-Based Payments
28.
Parent Entity Financial Information
59
63
64
64
64
65
66
67
68
68
69
70
70
70
71
71
72
72
72
73
73
73
73
73
74
74
74
79
58 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
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58
Notes to the Consolidated Financial Statements 30 June 2022
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 (“the
company” or “parent entity”) and its subsidiaries (collectively, “the
group” or “the consolidated entity”).
(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
(vi) Going Concern
For the year ended 30 June 2022, the group has incurred losses
from continuing operations of $16,154,000 (2021: $19,732,000)
and experienced net cash outflows of $13,162,000 from operations
(2021: $14,808,000), as disclosed in the income statement and
statement of cash flows, respectively. The group 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
2023. 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 of the group also comply
with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of the group as at 30 June 2022 and
the results of all subsidiaries for the year then ended.
(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
2021:
AASB 2020-4 Amendments to Australian Accounting
Standards – Covid-19-Related Rent Concessions [AASB 16],
and
AASB 2020-8 Amendments to Australian Accounting
Standards – Interest Rate Benchmark Reform – Phase 2
[AASB 4, AASB 7, AASB 9, AASB 16 & AASB 139].
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or 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 2021.
(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.
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. The group has one subsidiary, Starpharma
Pty Limited.
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 the company’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 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 59
59
Notes to the Consolidated Financial Statements 30 June 2022
(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 Australian 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 relevant conditions.
Government grants relating to costs are deferred and recognised
in the 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 Australian
Government Research & Development 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. The company and its wholly-owned Australian
controlled entity, Starpharma Pty Limited, 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
The group’s leasing policy is described in note 13.
(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 any allowance for expected credit loss. 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 the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis.
The group applies the AASB 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables and contract assets. To
measure the expected credit losses, trade receivables and
contract assets are grouped based on shared credit risk
characteristics and the days past due. An expected credit loss is
recognised when there is objective evidence that the group will not
be able to collect the relevant receivable.
(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
measurement categories:
those to be measured subsequently at fair value, and
those to be measured at amortised cost.
The classification depends on the each entity’s business model for
managing the financial assets and the contractual terms of the
cash flows.
The group reclassifies debt investments when and only when its
business model for managing those assets changes.
(ii) Loans and other receivables
Loans and other 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.
60 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
60
Notes to the Consolidated Financial Statements 30 June 2022
(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 6 months at the reporting 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.
(ii) 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 relevant entities 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.
(iii) 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 27 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 total
shareholder return (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 reporting 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.
(iv) Bonus payments
The group recognises a liability and an expense for employee
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 27 and the remuneration report under the directors’ report.
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 61
61
Notes to the Consolidated Financial Statements 30 June 2022
(w) 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.
(x) 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.
(y) Parent entity financial information
The financial information for the parent entity disclosed in note 28
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 the parent
entity. 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.
(v) 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) Borrowings
Borrowings are initially recognised at fair value, net of transaction
costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the effective
interest method.
Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another party
and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss as
other income or finance costs.
Borrowings are classified as current liabilities unless the group has
an unconditional right to defer settlement of the liability for at least
12 months after the reporting period.
(t) 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.
(u) 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.
(v) 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.
62 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
62
Notes to the Consolidated Financial Statements 30 June 2022
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 financial 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 financial 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
United States dollars (US$) and Great British pounds (£).
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, United
States dollars and Great British pounds. The directors regularly
monitor the potential impact of movements in foreign exchange
exposure.
The exposure to foreign currency risk at the reporting date
calculated using the closing exchange rate as at 30 June 2022 for
US$ of $0.6894 and for £ of $0.5677 was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
30 June 2022
US$
$’000
30 June 2021
US$
$’000
30 June 2022
£
£’000
30 June 2021
£
£’000
1,325
22
867
4,461
255
469
352
56
2,136
955
253
1,678
Group Sensitivity
The group is mainly exposed to US$ and £ 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$ or £. 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 2022
$’000
30 June 2021
$’000
30 June 2022
£’000
30 June 2021
£’000
US$
(63)
77
US$
(514)
£
277
£
79
628
(338)
(96)
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 2022
$’000
45,792
30 June 2021
$’000
57,299
At 30 June 2022, if interest rates changed by 50 basis points (0.50%) either higher or lower from the year end rates with all other variables held
constant, group profit for the year would have been $229,000 higher or lower (2021 - change of 50 bps: $288,000 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 sales and distribution, product
supply, licensing and royalty 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 the National Australia Bank and
Commonwealth Bank of Australia. Other than government grants,
tax incentives and taxes receivable, third party receivables largely
consist of customer receivables from leading, multinational
organisations.
Starpharma Holdings Limited Annual Report 2022
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash reserves and marketable securities. The directors regularly
monitor the cash position of the group, giving consideration to the
level of expenditure and future capital commitments.
(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.
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 63
63
Notes to the Consolidated Financial Statements 30 June 2022
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 sought to be
recouped.
ii) Australian Government Research & Development Tax Incentives
The group’s eligible research and development activities qualify for the Australian Government R&D tax incentive. 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 2022 the
group has recorded a contra research and development expense of $7,261,000 (2021: $7,248,000). The total R&D Tax Incentive receivable
recorded at 30 June 2022 is $6,747,000 (2021: $7,233,000).
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 2022
$’000
30 June 2021
$’000
Revenue from contracts with customers
Interest revenue
Total revenue from continuing operations
Other income
Total revenue and other income from continuing operations
4,682
217
4,899
263
5,162
1,798
353
2,151
1,336
3,487
Disaggregation of revenue from contracts with customers
Revenue from contracts with customers includes products sales, royalties, and research revenue from partners, with VIRALEZE™ sales to
Vietnam a major contributor to revenue for the year.
Total revenue from contracts with customers for the year was $4,682,000 (2021: $1,798,000) which is predominately product sales and royalties
on VIRALEZE™ and VivaGel® products.
64 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
64
Notes to the Consolidated Financial Statements 30 June 2022
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
30 June 2022
$’000
30 June 2021
$’000
519
(466)
488
(1,141)
Customer trade and other receivables as at 30 June 2022 are $519,000.
Contract liabilities include $435,000 for potential VivaGel® BV product discounts, that are dependent on product registrations in certain
countries. The prior year included $729,000 for VIRALEZE™ product sales returns from LloydsPharmacy following the decision to temporarily
pause commercial sales of VIRALEZE™ following the UK Medicines and Healthcare products Regulatory Agency (MHRA) review of the product
promotional claims.
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. Payment is on normal commercial terms, which may include prepayment
and/or payment within 30 to 60 days from delivery. Some contracts provide customers with a right of return for product non-conformance, or
discounts based on product shelf-life, 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 $258,000 (2021: $1,336,000) includes grant funding awarded by the Medical Research Future Fund (MRFF) to expedite
development and commercialisation of VIRALEZE™. There are no unfulfilled conditions or other contingencies attaching to any grants.
6. Expenses
Loss from continuing operations before income tax expense
includes the following items:
30 June 2022
$’000
30 June 2021
$’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 assets
(7,261)
10,427
355
723
(7,248)
11,094
298
636
1 Included within the research and product development expense line item in the consolidated income statement.
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 65
65
Notes to the Consolidated Financial Statements 30 June 2022
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% (2021: 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
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 recovery is currently not probable)
Unrecognised deferred tax relating to the temporary differences
(e) Deferred tax liabilities
Unrecognised deferred tax liabilities relating to the above temporary
differences:
Lease right-of-use assets
Property, plant and equipment
Sundry items
Total deferred tax liabilities
Set-off of deferred tax assets pursuant to set-off provisions
Net deferred tax liabilities
30 June 2022
$’000
30 June 2021
$’000
–
–
–
(16,154)
(4,846)
2,475
674
(122)
1,822
–
131,620
39,486
5,282
1,585
1,254
261
4
1,519
(1,519)
–
–
–
–
(19,732)
(5,920)
2,814
1,133
109
1,864
–
126,175
37,852
5,722
1,717
333
201
4
538
(538)
–
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 relevant tax 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
2022 because the directors do not presently 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 2022 which it believes will be satisfied.
66 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
66
Notes to the Consolidated Financial Statements 30 June 2022
8. Current Assets – Cash and Cash Equivalents
Cash at bank and on hand
Term Deposits and deposits at call
30 June 2022
$’000
4,126
45,792
49,918
30 June 2021
$’000
3,201
57,299
60,500
Cash at bank and on hand
The cash at bank and on hand is non-interest bearing, and
includes foreign currencies held.
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 $1,163,000 (2021: $1,159,000) of term deposits not
available for use due to funds being utilised as security for a bank
guarantee on the company’s property lease, and for a finance
lease facility.
Interest rate risk
Current receivables are non-interest bearing.
30 June 2022
Floating
Interest rate
Fixed interest maturing
Non-interest
bearing
Financial Assets
Cash & deposits
Receivables
Notes
$’000
1 year or less
$’000
1 to 5 years
$’000
More than
5 years
$’000
8
9
6,597
39,195
–
–
6,597
39,195
–
–
–
–
–
–
$’000
4,126
7,916
49,918
7,916
12,042
57,834
Total
$’000
Contractual
cash flows
Weighted average interest rate
1.0%
1.6%
–%
–%
–%
Financial Liabilities
Payables
Lease liabilities
Borrowings
12
13
15
Weighted average interest rate
30 June 2021
–
–
4,000
4,000
1.0%
–
695
–
695
4.1%
–
3,125
–
3,125
4.2%
–
369
–
369
4.4%
Floating
Interest rate
Notes
$’000
Fixed interest maturing
1 year or less
$’000
1 to 5 years
$’000
Financial Assets
Cash & deposits
Receivables
Weighted average interest rate
Financial Liabilities
Payables
Lease liabilities
Weighted average interest rate
8
9
12
13
51,214
–
51,214
0.7%
–
–
–
–%
6,373
–
6,373
0.2%
–
692
692
N/A
7,916
7,916
7,731
4,189
4,000
N/A
8,534
8,534
7,954
1,167
9,121
7,731
–
–
7,731
4,189
4,000
7,731
15,920
15,920
Total
$’000
Contractual
cash flows
60,500
8,534
–%
Non-interest
bearing
$’000
2,913
8,534
–
–
–
11,447
69,034
–%
–%
–
475
475
7,954
–
7,954
7,954
1,167
9,121
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 67
67
4.3%
3.9%
–%
Notes to the Consolidated Financial Statements 30 June 2022
9. Current Assets – Trade and Other Receivables
Trade and grant receivables
Interest receivables
Prepayments
Other receivables
30 June 2022
$’000
30 June 2021
$’000
7,285
53
80
498
7,916
7,905
2
95
532
8,534
Trade and grant receivables
Trade and grant receivables primarily comprise of $6,747,000 (2021: $7,233,000) of expenditure reimbursable under the Australian
Government’s Research & Development tax incentive scheme, with the balance related to customer receivables, and other government grants
receivable. Customer receivables are subject to normal terms of settlement within 30 to 60 days.
Other receivables
Other receivables comprise GST/VAT and other taxes refundable and sundry debtors, 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 companies.
Impaired receivables
As at 30 June 2022, there were no material trade and grant receivables that were past due (2021: nil). The group applies the accounting policy
in note 1(k) to trade receivables. Under the expected credit loss model, no receivables are considered impaired at 30 June 2022 (2021: nil).
10. Inventories
Current Assets
Raw materials
Work in progress
Finished goods
Finished goods – right to recover products
30 June 2022
$’000
30 June 2021
$’000
2,316
249
259
-
2,824
909
68
618
126
1,721
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 2022 amounted to $2,776,000 (2021: $791,000). These were included in
cost of goods sold.
Write-downs of inventories to net realisable value amounted to $Nil (2021: $67,000). These were included in cost of goods sold.
Raw materials
Raw materials consist of the key raw materials and components used in the manufacture of commercial products, including VIRALEZE™ and
VivaGel®.
Finished goods
Finished goods are products that are subject to a customer purchase order, have completed production, or are awaiting delivery to the
customer.
68 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
68
Notes to the Consolidated Financial Statements 30 June 2022
11. Non-Current Assets – Property, Plant and Equipment
Plant and Equipment
$’000
Leasehold
improvements
$’000
At 30 June 2020
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2021
Opening net book amount
Additions
Disposals
Depreciation
Closing net book amount
At 30 June 2021
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2022
Opening net book amount
Additions
Disposals
Reclassify as right-of-use asset
Depreciation
Closing net book amount
At 30 June 2022
Cost
Accumulated depreciation
Net book amount
3,620
(2,864)
756
756
792
-
(249)
1,299
4,412
(3,113)
1,299
1,299
754
(6)
(462)
(288)
1,297
4,623
(3,326)
1,297
656
(535)
121
121
3
-
(50)
74
659
(585)
74
74
32
-
-
(67)
39
691
(652)
39
Total
$’000
4,276
(3,399)
877
877
795
-
(299)
1,373
5,071
(3,698)
1,373
1,373
786
(6)
(462)
(355)
1,336
5,314
(3,978)
1,336
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 69
69
Notes to the Consolidated Financial Statements 30 June 2022
12. Current Liabilities – Trade and Other Payables
Trade payables and accruals
Other payables
30 June 2022
$’000
30 June 2021
$’000
6,762
969
7,731
6,711
1,243
7,954
Trade payables and accruals
The majority of trade payables are related to expenditure associated with the group’s research and product development programs, and
purchases of raw materials for commercial products.
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 2022
$’000
30 June 2021
$’000
3,606
575
4,181
695
3,494
4,189
915
195
1,110
692
475
1,167
The group leases premises (laboratory and offices space) until 19 December 2022, with an extension option until 19 December 2027. At period
end it was reasonably certain that the option would be exercised, therefore the lease assets and liabilities have been remeasured for the further
lease term.
The group also leases scientific equipment generally over a three to five year term.
The consolidated income statement includes 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
30 June 2022
$’000
30 June 2021
$’000
594
129
723
42
4
60
814
610
26
636
57
7
70
685
Expense relating to variable lease payments not included in lease liabilities
Total cash outflow for leases
14. Current and Non-Current Liabilities – Provision for Employee Benefits
Leave obligations
Current
Non-current
30 June 2022
$’000
30 June 2021
$’000
1,339
57
1,396
1,371
34
1,405
The leave obligations represent the group’s liability for employee 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 of the entire amount within 12 months from the reporting date. Current leave obligations expected to be settled after the date
which is 12 months from the reporting date is $979,000 (2021: $1,015,000).
Refer to note 1(r) for further information.
70 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
70
Notes to the Consolidated Financial Statements 30 June 2022
15. Non-Current Liabilities – Borrowings
Borrowings of $4,000,000 (2021: $nil) relate to an Invest Victoria low-interest R&D cash flow loan with Treasury Corporation of Victoria (TCV).
The Invest Victoria R&D Cash Flow Loan initiative supports innovative Victorian entities to invest in research and development activities. The
facility matures in October 2023 and is secured against future refundable R&D tax incentives. The interest rate is a TCV variable rate
determined with reference to the Reserve Bank of Australia’s target cash rate and TCV’s client lending fees. The interest rate was 1.015% per
annum at the reporting date.
16. Contributed Equity
(a) Share capital
Share Capital
2022
Shares
2021
Shares
2022
$’000
2021
$’000
Ordinary shares – fully paid
408,443,407
406,078,026
240,669
240,630
(b) Movements in ordinary share capital
Date
Details
1 Jul 2021
13 Sep 2021 Employee performance rights plan share issue
1 Nov 2021
Employee performance rights plan share issue
1 Feb 2022
Employee share plan ($1,000) issue
1 Feb 2022
Employee performance rights plan share issue
17 Mar 2022 Employee performance rights plan share issue
27 May 2022 Employee performance rights plan share issue
Number of shares
Issue Price
406,078,026
159,857
442,272
37,128
691,850
35,281
998,993
$ –
$ –
$ 1.07
$ –
$ –
$ –
Balance at 30 June 2022
408,443,407
Date
Details
1 Jul 2020
23 Sep 2020 Employee performance rights plan share issue
30 Oct 2020
Employee performance rights plan share issue
6 Oct 2020
Share placement
4 Nov 2020
Share purchase plan
Less transaction costs for share placement and
share purchase plan
27 Jan 2021 Employee share plan ($1,000) issue
9 Apr 2021
Employee performance rights plan share issue
Balance at 30 June 2021
(c) Ordinary shares
As at 30 June 2022 there were 408,443,407 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
duly convened shareholder 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 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 27.
Number of shares
Issue Price
372,562,687
188,281
689,543
30,000,000
2,574,701
24,814
38,000
406,078,026
$ –
$ –
$ 1.50
$ 1.50
$ 1.53
$ –
(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
27.
(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.
$’000
240,630
–
–
39
–
–
–
240,669
$’000
193,661
–
–
45,000
3,862
(1,931)
38
–
240,630
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 71
71
Notes to the Consolidated Financial Statements 30 June 2022
17. 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 2022
$’000
26,285
26,285
30 June 2021
$’000
24,077
24,077
30 June 2022
$’000
30 June 2021
$’000
24,077
2,208
26,285
20,340
3,737
24,077
(c) Nature and purpose of reserves
The share-based payments reserve is used to recognise the fair value of options and performance rights granted.
18. Accumulated Losses
Accumulated losses balance at 1 July
Net loss for the year
Accumulated losses balance at 30 June
19. Related Party Transactions
30 June 2022
$’000
(202,407)
(16,154)
(218,561)
(a) Parent entity and subsidiaries
The parent entity of the group is Starpharma Holdings Limited. Interests in subsidiaries are set out in note 24.
(b) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
30 June 2022
$
2,363,172
150,685
22,000
897,570
3,433,427
30 June 2021
$’000
(182,675)
(19,732)
(202,407)
30 June 2021
$
2,470,508
133,993
31,994
1,928,562
4,565,057
Detailed remuneration disclosures are provided in the remuneration report on pages 21 to 42.
(c) Transactions with group entities
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
(d) Transactions with other related parties
The group paid $22,213 for consulting services to Centre for Biopharmaceutical Excellence Pty Ltd, which Starpharma non-executive director Dr
Jeff Davies (appointed 1 April 2022), is also a director and shareholder. The consulting services were provided by principals other than Dr Jeff
Davies and were on normal commercial terms.
72 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
72
Notes to the Consolidated Financial Statements 30 June 2022
20. Remuneration of Auditors
During the year the following fees were paid or payable for services provided by PricewaterhouseCoopers Australia (PwC) as auditor of the
parent entity, its related practices and non-related audit firms:
Auditors of the group – PwC
Audit and review of financial reports of the entity or any entity in the
consolidated entity
Other assurance services
Total services provided by PwC
30 June 2022
$
30 June 2021
$
155,250
6,630
161,880
146,462
-
146,462
Other assurance services relate to audit of an income and expenditure report for grant funding.
21. Events Occurring After the Balance Sheet Date
No matters or circumstances have arisen since 30 June 2022 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.
22. Commitments
(a) Capital Commitments
There is no material capital expenditure contracted not recognised as liabilities at the reporting date (2021: nil).
(b) 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.
23. 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 (2021: US$1.35M).
Starpharma engaged a number of service providers to develop and assist with the implementation of a full direct to market commercialisation
plan for VIRALEZE™ antiviral nasal spray. In order to preserve capital, Starpharma negotiated to defer a majority of the fee to a service
provider. Pursuant to this arrangement, the maximum remaining amount payable by the group to the service provider is A$1.2M (30 June 2021:
A$1.2M), subject to VIRALEZE™ sales performance and licensing proceeds.
The company has no contingent assets at 30 June 2022 (2021: nil).
24. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(b).
Name of entity
Country of
Incorporation
Class of Shares
Equity Holding
2022
%
2021
%
Starpharma Pty Limited
Australia
Ordinary
100.00%
100.00%
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 73
73
Notes to the Consolidated Financial Statements 30 June 2022
25. Reconciliation of Profit After Income Tax to Net Cash Inflow from Operating Activities
Operating profit/(loss) after tax
Depreciation and amortisation
Foreign exchange (gain)/loss
Non-cash employee benefits: share-based payments
Net gain/(loss) on sale of property, plant and equipment
Change in operating assets and liabilities, net of effects of acquisitions and
disposals of entities:
Decrease/(increase) in receivables and other assets
(Increase)/decrease in inventories
Increase/(decrease) increase in trade creditors
Increase in employee provisions
Increase/(decrease) in deferred income
Net cash outflows from operating activities
26. Earnings Per Share
Basic earnings/(loss) per share / Diluted earnings/(loss) per share
Total earnings/(loss) per share attributable to the ordinary equity holders of the
company ($)
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 2022
$’000
(16,154)
30 June 2021
$’000
(19,732)
1,079
(188)
2,247
(6)
629
(1,103)
289
(9)
54
935
803
3,737
-
(2,369)
(1,227)
2,934
136
(25)
(13,162)
(14,808)
30 June 2022
30 June 2021
(0.04)
(0.05)
(16,154)
(19,732)
406,900,098
396,875,857
As at 30 June 2022 the company had on issue 15,784,044 (30 June 2021: 17,472,497) 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.
27. 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, 2017 and 2020 annual general meetings. All executives and staff, including the Chief Executive Officer, 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 2022 was $1.09 per right
(2021: $1.41). There were 2,360,027 performance rights granted in the current year (2021: 4,281,654).
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.
74 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
74
Notes to the Consolidated Financial Statements 30 June 2022
Set out below are summaries of performance rights:
2022
Grant Date
Vesting Date
Balance at start of
the year
Granted during
the year
Converted during
the year
Forfeited during
the year
Balance at end of
the year
11 Nov 2015
30 Jun 20171
Number
245,625
11 Nov 2015
30 Sep 20181
1,051,794
19 Nov 2015
30 Jun 20171
19 Nov 2015
30 Sep 20181
13 Oct 2016
30 Jun 20181
181,001
836,260
277,314
13 Oct 2016
30 Sep 20191
1,323,372
29 Nov 2016
30 Jun 20181
29 Nov 2016
30 Sep 20191
10 Aug 2017
30 Jun 20191
172,842
846,281
409,980
10 Aug 2017
30 Sep 20201
1,741,547
29 Nov 2017
30 Jun 20191
29 Nov 2017
30 Sep 20201
16 Aug 2018
30 Jun 20201
16 Aug 2018
30 Sep 20211
2 Nov 2018
30 Jun 20201
2 Nov 2018
30 Sep 20211
29 Nov 2018
30 Jun 20201
29 Nov 2018
30 Sep 20211
17 Oct 2019
30 Jun 20211
197,226
736,665
170,356
814,000
97,600
780,609
112,708
539,921
379,034
17 Oct 2019
30 Sep 2022
1,701,175
21 Nov 2019
30 Jun 20211
21 Nov 2019
30 Sep 2022
30 Oct 2020
30 Jun 20211
30 Oct 2020
30 Jun 20221
101,320
536,797
561,459
536,878
30 Oct 2020
30 Sep 2023
2,147,512
20 Nov 2020
30 Jun 20211
20 Nov 2020
30 Jun 20221
20 Nov 2020
30 Sep 2023
25 Oct 2021
30 Jun 2023
25 Oct 2021
30 Sep 2024
30 Nov 2021
30 Jun 2023
30 Nov 2021
30 Sep 2024
176,755
159,293
637,173
–
–
–
–
Number
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
373,333
1,493,334
98,672
394,688
Number
59,875
269,390
–
–
65,438
375,397
–
–
107,712
476,810
–
–
53,978
Number
–
–
–
–
–
–
–
–
–
–
–
–
–
Number
185,750
782,404
181,001
836,260
211,876
947,975
172,842
846,281
302,268
1,264,737
197,226
736,665
116,378
210,623
162,365
441,012
10,400
–
87,200
335,851
49,742
395,016
–
–
–
112,708
189,668
350,253
166,405
–
212,629
–
–
–
196,374
–
–
–
–
–
–
–
–
–
362,000
1,339,175
–
–
–
101,320
536,797
365,085
147,756
389,122
435,352
1,712,160
–
176,755
35,044
124,249
–
637,173
67,660
305,673
270,640
1,222,694
–
–
98,672
394,688
Total
17,472,497
2,360,027
2,328,253
1,720,227
15,784,044
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 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 75
75
Notes to the Consolidated Financial Statements 30 June 2022
27. Share-Based Payments (continued)
2021
Grant Date
Vesting Date
Balance at start of
the year
Granted during
the year
Converted during
the year
Forfeited during
the year
Balance at end of
the year
11 Nov 2015
30 Jun 20171
Number
251,625
11 Nov 2015
30 Sep 20181
1,115,794
19 Nov 2015
30 Jun 20171
19 Nov 2015
30 Sep 20181
13 Oct 2016
30 Jun 20181
181,001
836,260
281,314
13 Oct 2016
30 Sep 20191
1,528,234
29 Nov 2016
30 Jun 20181
29 Nov 2016
30 Sep 20191
10 Aug 2017
30 Jun 20191
172,842
846,281
434,260
10 Aug 2017
30 Sep 20201
2,451,673
29 Nov 2017
30 Jun 20191
29 Nov 2017
30 Sep 20201
16 Aug 2018
30 Jun 20201
16 Aug 2018
30 Sep 2021
2 Nov 2018
30 Jun 20201
2 Nov 2018
30 Sep 2021
29 Nov 2018
30 Jun 20201
29 Nov 2018
30 Sep 2021
17 Oct 2019
30 Jun 20211
197,226
895,879
170,356
814,000
210,827
833,409
112,708
539,921
448,344
17 Oct 2019
30 Sep 2022
1,787,575
21 Nov 2019
30 Jun 20211
21 Nov 2019
30 Sep 2022
30 Oct 2020
30 Jun 20211
30 Oct 2020
30 Jun 2022
30 Oct 2020
30 Sep 2023
20 Nov 2020
30 Jun 20211
20 Nov 2020
30 Jun 2022
20 Nov 2020
30 Sep 2023
134,199
536,797
–
–
–
–
–
–
Number
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
567,083
548,270
2,193,080
176,755
159,293
637,173
Number
6,000
64,000
–
–
4,000
204,862
–
–
24,280
499,455
–
–
–
–
113,227
–
–
–
–
–
–
–
–
–
–
–
–
–
Number
–
–
–
–
–
–
–
–
–
Number
245,625
1,051,794
181,001
836,260
277,314
1,323,372
172,842
846,281
409,980
210,671
1,741,547
–
159,214
–
–
–
197,226
736,665
170,356
814,000
97,600
52,800
780,609
–
–
112,708
539,921
69,310
379,034
86,400
1,701,175
32,879
101,320
–
536,797
5,624
11,392
561,459
536,878
45,568
2,147,512
–
–
–
176,755
159,293
637,173
Total
14,780,525
4,281,654
915,824
673,858
17,472,497
1 The balance of rights at end of the year have vested and remain available for employees to exercise into shares.
76 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
76
Notes to the Consolidated Financial Statements 30 June 2022
Information used in assessing the fair value of performance rights granted during the year ended 30 June 2022 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
25 October 2021
25 October 2021
25 October 2021
373,333
1,401,054
92,280
30 June 2023
30 September 2024
30 September 2024
KPIs
60%
0.26%
–
$1.14
$1.14
KPIs
60%
0.65%
–
$1.14
$1.14
TSR
60%
0.65%
–
$1.14
$0.62
30 November 2021
30 November 2021
30 November 2021
98,672
276,282
118,406
30 June 2023
30 September 2024
30 September 2024
KPIs
60%
0.37%
–
$1.09
$1.09
KPIs
60%
0.83%
–
$1.09
$1.09
TSR
60%
0.83%
–
$1.09
$0.60
Share price volatility and the risk-free interest rate are obtained through an independent valuation.
Information used in assessing the fair value of performance rights granted during the year ended 30 June 2021 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
30 October 2020
30 October 2020
30 October 2020
30 October 2020
567,083
548,270
2,048,142
144,938
30 June 2021
30 June 2022
30 September 2023
30 September 2023
KPIs
60%
0.04%
–
$1.47
$1.47
KPIs
60%
0.04%
–
$1.47
$1.47
KPIs
60%
0.10%
–
$1.47
$1.47
TSR
60%
0.10%
–
$1.47
$1.20
20 November 2020
20 November 2020
20 November 2020
20 November 2020
176,755
159,293
446,021
191,152
30 June 2021
30 June 2022
30 September 2023
30 September 2023
KPIs
60%
0.04%
–
$1.32
$1.32
KPIs
60%
0.04%
–
$1.32
$1.32
KPIs
60%
0.10%
–
$1.32
$1.32
TSR
60%
0.10%
–
$1.32
$0.96
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 77
77
Notes to the Consolidated Financial Statements 30 June 2022
27. Share-Based Payments (continued)
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 2022 was $1.07 per
share (2021: $1.53 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 2022 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 2021 is as follows:
Share grant date
Number of shares granted
Share price at grant date
Assessed fair value
1 February 2022
37,128
$1.07
$1.07
27 January 2021
24,814
$1.53
$1.53
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 2022
$’000
30 June 2021
$’000
39
2,208
2,247
38
3,737
3,775
78 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
78
Notes to the Consolidated Financial Statements 30 June 2022
28. 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 2022 (2021: nil).
30 June 2022
$'000
Parent Entity
30 June 2021
$'000
44,890
44,890
779
779
240,669
25,776
(222,334)
(13,583)
(13,583)
56,244
56,244
797
797
240,630
23,568
(208,751)
(20,481)
(20,481)
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 79
79
Directors’ Declaration for the year ended 30 June 2022
In the directors’ opinion:
(a) the financial statements and notes set out on pages 52 to 79 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 2022 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, 25 August 2022
80 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
Starpharma Holdings Limited Annual Report 2022
80
Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 1]
Independent auditor’s report
Independent auditor’s report
To the members of Starpharma Holdings Limited
To the members of Starpharma Holdings Limited
How our audit addressed the key audit matter
Key audit matter
Report on the audit of the financial report
Report on the audit of the financial report
Research and development tax incentive (Refer
to note 3 critical accounting estimates)
Our opinion
Our opinion
In our opinion:
In our opinion:
The accompanying financial report of Starpharma Holdings Limited (the Company) and its controlled
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:
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 2021 and of its
(a) giving a true and fair view of the Group's financial position as at 30 June 2022 and of its
Compared the estimate recorded in the
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
financial performance for the year then ended
Tax Incentive receivable recorded for the year ended 30
financial performance for the year then ended
June 2017 was $3.5 million.
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:
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
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.
What we have audited
What we have audited
The Group financial report comprises:
The Group financial report comprises:
This is a key audit matter due to the fact that the
amount accrued in the financial statements is material
Compared the nature of the R&D expenditure
and there is a degree of judgement and interpretation of
included in the current year estimate to the
the R&D tax legislation required by management to
the consolidated balance sheet as at 30 June 2021
the consolidated balance sheet as at 30 June 2022
prior year estimate.
assess the eligibility of the R&D expenditure under the
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of comprehensive income for the year then ended
scheme.
the consolidated statement of changes in equity for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated income statement for the year then ended
the consolidated income statement for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
and other explanatory information
the directors’ declaration.
the directors’ declaration.
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.
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Basis for opinion
Basis for opinion
Obtained copies of correspondence with the
ATO related to the claim and agreed the
assessment to management’s estimate.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Obtained copies of correspondence with the
those standards are further described in the Auditor’s responsibilities for the audit of the financial
those standards are further described in the Auditor’s responsibilities for the audit of the financial
company’s external tax specialist and agreed
report section of our report.
report section of our report.
the advice to the current calculation and the
2016 lodgement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
our opinion.
Assessed the classification of the amount in the
Independence
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
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 & Ethical
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
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
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.
fulfilled our other ethical responsibilities in accordance with the Code.
financial statements.
PricewaterhouseCoopers, ABN 52 780 433 757
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
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
T: 61 3 8603 1000, F: 61 3 8603 1999
Page 82 of 88
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation. 81
Starpharma Holdings Limited Annual Report 2022
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 81
81
Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 1]
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
How our audit addressed the key audit matter
Key audit matter
Research and development tax incentive (Refer
to note 3 critical accounting estimates)
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.
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:
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.
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.
Materiality
●
For the purpose of our audit we used overall
Group materiality of $0.808 million, which
represents approximately 5% of the Group’s loss
before income 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 income 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.
Key audit matters
Compared the estimate recorded in the
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 nature of the R&D expenditure
included in the current year estimate to the
prior year estimate.
Audit scope
Assessed the nature of the expenses against the
eligibility criteria of the R&D Tax Incentive
programme.
● Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
Agreed the eligible expenditure in the estimate
to the general ledger.
All audit procedures are performed by PwC
Australia, consistent with the location of Group
management and financial records.
Obtained copies of correspondence with the
ATO related to the claim and agreed the
assessment to management’s estimate.
● We tailored the scope of our audit taking into
account the accounting processes and controls,
and the industry in which the Group operates.
Obtained copies of correspondence with the
company’s external tax specialist and agreed
the advice to the current calculation and the
2016 lodgement.
Assessed the classification of the amount in the
financial statements.
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.
Starpharma Holdings Limited Annual Report 2021
82 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
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82
82
Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 2]
Key audit matter
How our audit addressed the 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)
Key audit matter
Research and development tax incentive (Refer
to note 3 critical accounting estimates)
The Group’s research and development (R&D)
activities are eligible for a refundable tax offset
Starpharma’s research and development (R&D)
under an Australian Government Tax Incentive.
activities are eligible for a refundable tax offset under an
The Group has assessed these activities and related
expenditure to determine their eligibility under the
Australian Government tax incentive. Management has
incentive scheme.
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 R&D Tax Incentive receivable recorded as at 30
June 2022 was $6.75 million and $7.26 million was
recognised as contra R&D expense in the income
statement for the period ended 30 June 2022.
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
the significance of the amount receivable
●
assess the eligibility of the R&D expenditure under the
as at 30 June 2022; and
scheme.
This is a key audit matter due to:
●
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.
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 Group recognises licensing, product sales,
royalty, and research revenues from arrangements
with commercial partners.
The Group has recognised $4.68 million of revenue
from contracts with customers for the period ended
30 June 2022.
This is a key audit matter due to the nature of the
Group’s contractual arrangements and complexity
of applying the accounting standard to those
contractual arrangements
We have performed the following procedures to assess
the Group’s estimate of the R&D Tax Incentive receivable
as at 30 June 2022:
How our audit addressed the key audit matter
●
●
●
●
●
●
●
●
●
compared the estimate recorded in the financial
statements as at 30 June 2021 to the amount of
cash received after lodgement of the R&D Tax
We tested management’s estimate of the R&D Tax
Incentive claim to assess historical accuracy of
Incentive receivable to assess the amount accrued as at
the estimate.
30 June 2017. As part of our procedures we:
compared the nature of the underlying R&D
Compared the estimate recorded in the
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.
assessed the nature of a sample of expenses
against the eligibility criteria of the R&D Tax
Incentive programme.
Compared the nature of the R&D expenditure
agreed a sample of eligible expenditure in the
included in the current year estimate to the
estimate to the general ledger or other
prior year estimate.
underlying accounting records.
Assessed the nature of the expenses against the
eligibility criteria of the R&D Tax Incentive
programme.
obtained copies of correspondence with the
company’s external tax advisor and agreed the
advice to the R&D Tax Incentive calculation for
the current financial year.
Agreed the eligible expenditure in the estimate
to the general ledger.
evaluated the reasonableness of the disclosure
against the requirements of Australian
Accounting Standards.
Obtained copies of correspondence with the
ATO related to the claim and agreed the
We have performed the following procedures to assess
assessment to management’s estimate.
the Group’s revenue recognition for the period ended 30
June 2022:
Obtained copies of correspondence with the
company’s external tax specialist and agreed
the advice to the current calculation and the
2016 lodgement.
obtained an understanding of the Group’s
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, product
sales and product sales returns.
Assessed the classification of the amount in the
financial statements.
tested a sample of transactions to the
underlying supporting documentation.
evaluated the reasonableness of the disclosure
against the requirements of Australian
Accounting Standards.
Starpharma Holdings Limited Annual Report 2021
Page 82 of 88
83
83
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 83
Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 3]
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2022 but does not include the
financial report and our auditor’s report thereon.
How our audit addressed the key audit matter
Key audit matter
Research and development tax incentive (Refer
to note 3 critical accounting estimates)
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
Compared the estimate recorded in the
We tested management’s estimate of the R&D Tax
In connection with our audit of the financial report, our responsibility is to read the other information
Incentive receivable to assess the amount accrued as at
and, in doing so, consider whether the other information is materially inconsistent with the financial
30 June 2017. As part of our procedures we:
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
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.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, 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.
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.
This is a key audit matter due to the fact that the
Responsibilities of the directors for the financial report
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
The directors of the Company are responsible for the preparation of the financial report that gives a
included in the current year estimate to the
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
prior year estimate.
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
Assessed the nature of the expenses against the
eligibility criteria of the R&D Tax Incentive
programme.
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.
Agreed the eligible expenditure in the estimate
to the general ledger.
Auditor’s responsibilities for the audit of the financial report
Obtained copies of correspondence with the
ATO related to the claim and agreed the
assessment to management’s estimate.
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
Obtained copies of correspondence with the
company’s external tax specialist and agreed
the advice to the current calculation and the
2016 lodgement.
Assessed the classification of the amount in the
financial statements.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Starpharma Holdings Limited Annual Report 2021
84 STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022
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84
Independent Audit Report to the Members of Starpharma Holdings Limited
[Page 4]
Report on the remuneration report
Our opinion on the remuneration report
Key audit matter
We have audited the remuneration report included in pages 21 to 42 of the directors’ report for the
year ended 30 June 2022.
How our audit addressed the key audit matter
Research and development tax incentive (Refer
to note 3 critical accounting estimates)
In our opinion, the remuneration report of Starpharma Holdings Limited for the year ended 30 June
2022 complies with section 300A of the Corporations Act 2001.
Responsibilities
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 directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
Compared the estimate recorded in the
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.
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:
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.
PricewaterhouseCoopers
Brad Peake
Partner
Compared the nature of the 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.
Agreed the eligible expenditure in the estimate
to the general ledger.
Obtained copies of correspondence with the
ATO related to the claim and agreed the
assessment to management’s estimate.
Melbourne
25 August 2022
Obtained copies of correspondence with the
company’s external tax specialist and agreed
the advice to the current calculation and the
2016 lodgement.
Assessed the classification of the amount in the
financial statements.
Starpharma Holdings Limited Annual Report 2021
Page 82 of 88
85
85
STARPHARMA HOLDINGS LIMITED | ANNUAL REPORT 2022 85
Shareholder Information
The shareholder information set out below was applicable as at 12 August 2022.
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 1,461 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
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