Announcement PDF ASX Announcement 28 July 2020 ASX Market Announcements ASX Limited Level 4 Stock Exchange Centre 20 Bridge Street Sydney NSW 2000 Avecho Quarterly Activities Report and Appendix 4C Melbourne, Australia, 28 July 2020 - Avecho Biotechnology Limited (ASX: AVE) (“Avecho” or the “Company”), a company that develops and commercialises innovative Human and Animal Health products using its proprietary drug delivery system called TPM®, is pleased to release its Quarterly Activities Report and Appendix 4C for the quarter ended 30 June 2020. Key Highlights • Continued advancement of Avecho’s Human and Animal Health Programs. • Avecho continued initial development of oral cannabinoids combined with TPM® to enhance absorption. • Avecho signed a Term Sheet with Purisys for supply of synthetic cannabinoids. • Avecho signed a supply agreement with Tasmanian Alkaloids for natural cannabis extracts. • Dr Paul Gavin and Dr Roksan Libinaki assumed the roles of CEO and COO respectively. • Cash balance at the close of quarter of A$2.5m and net operating outflows of A$466K, including A$116K invested in R&D activities. Operations Our core injectables program continued to advance. Having passed formal stability, business development materials were finalised for a number of products in the injectable portfolio to support further licensing discussions. In parallel, the Company interviewed a range of international partnering and advisory firms in order to broaden the outreach and increase the likelihood of successful licensing deals. Avecho’s preferred firm was subsequently engaged and has now begun work on the licensing campaign. Our Propofol TPM® formulation, previously partnered with Terumo, was successfully reformulated and has resumed development. It will also form part of the business development campaign. The Company continued to pursue animal health opportunities with third parties. A number of our commercial partners continued to evaluate the utility of TPM® in feed and veterinary products for livestock. Performance and proof-of-concept studies are being undertaken by and with these partners. Avecho is currently working with the European Food and Safety Authority (EFSA) in regards to its application for TPM® to be utilised as a feed additive in the EU. Avecho continued its initial development of an oral cannabinoid product with enhanced solubility and absorption. The Company signed supply partnerships with Purisys and Tasmanian Alkaloids for the provision of both synthetic cannabinoids and natural cannabis extracts to facilitate this early research and development, as well as safeguard future commercial supply. Early work undertaken by Avecho and partners demonstrated that TPM® could increase the solubility of cannabinoids, a limitation that leads to poor oral bioavailability, high variability in absorption, and difficulty in developing aqueous dosage forms. Ongoing research aims to identify optimal formulation compositions that maximise these effects in-vitro and in subsequent animal models in-vivo. These studies will prioritise formulations for testing in upcoming clinical trials. Avecho’s cannabinoid program will aim to develop a pharmaceutical dosage form and will support the benefits of including TPM® in natural medicinal cannabis extracts. This will open additional licensing opportunities for the use of TPM® in third-party medicinal cannabis products, both in Australia and around the world, including the large North American markets. Avecho Biotechnology Limited | ASX: AVE | ACN: 056 482 403 | ABN: 32 056 482 403 Unit 8A, 2A Westall Road, Hallmarc Business Park, Clayton VIC Australia 3168 avecho.com.au During the quarter, Avecho completed a management restructure, with the appointment of Drs Paul Gavin and Roksan Libinaki, as CEO and COO, respectively. Avecho has remained largely unaffected by the current COVID-19 crisis. Strict social distancing guidelines and work from home practices have been implemented, and staff continue to work to advance the ongoing programs. There have been minor delays where research studies relied on partnership or collaboration with third parties around the world, as local shutdowns for specific countries have affected ongoing laboratory practices and the ability to transport material. Corporate During the quarter, Avecho had net operating cash outflows of A$466K with A$116K spent on R&D programs including A$94K internal salary allocation. At the end of the quarter, the Company held A$2.5m in cash. The Company remains committed to its R&D programs, while continuing to demonstrate prudent cash management and adapt its operational policies and procedures in line with COVID-19 mitigation measures. Payments to related parties and their associates during the quarter as outlined in Section 6 of the accompanying Appendix 4C to this quarterly activities report were A$72K. These payments are related to director fees for the quarter. For enquiries, please contact Dr Paul Gavin Avecho Biotechnology Limited +61 3 9002 5000 This announcement has been authorised by the Board of Directors of Avecho Biotechnology Limited. About Avecho Avecho Biotechnology Limited (ASX: AVE) develops and commercialises innovative Human and Animal Health products using its proprietary drug delivery system called TPM® (Tocopherol Phosphate Mixture). TPM® is derived from Vitamin E using unique, proprietary and patented processes and is proven to enhance the solubility and oral, dermal and transdermal absorption of drugs and nutrients. Avecho’s major projects include delivering TPM® enhanced injectable, oral and topical products for the human health market, including the recently announced application of TPM® to cannabinoids. The Company is also developing TPM® to enhance feed efficiency and health of livestock. See more here - avecho.com.au Forward-Looking Statements Certain statements in this announcement are forward looking statements. Forward looking statements can generally be identified by the use of words such as “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, “target”, “may”, “assume” and words of similar import. These forward-looking statements speak only as at the date of this announcement. These statements are based on current expectations and beliefs and, by their nature, are subject to a number of known and unknown risks and uncertainties that could cause the actual results, performances and achievements to differ materially from any expected future results, performance or achievements expressed or implied by such forward looking statements. No representation, warranty or assurance (express or implied) is given or made by AVE that the forwardlooking statements contained in this announcement are accurate, complete, reliable or adequate or that they will be achieved or prove to be correct. Except for any statutory liability which cannot be excluded, AVE and its respective officers, employees and advisers expressly disclaim any responsibility for the accuracy or completeness of the forward looking statements and exclude all liability whatsoever (including negligence) for any direct or indirect loss or damage which may be suffered by any person as a consequence of any information in this announcement or any error or omission therefrom. Avecho Biotechnology Limited | ASX: AVE | ACN: 056 482 403 | ABN: 32 056 482 403 Unit 8A, 2A Westall Road, Hallmarc Business Park, Clayton VIC Australia 3168 avecho.com.au Subject to any continuing obligation under applicable law or relevant listing rules of the ASX, AVE disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in these materials to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any statement is based. Nothing in these materials shall under any circumstances create an implication that there has been no change in the affairs of AVE since the date of the announcement. Avecho Biotechnology Limited | ASX: AVE | ACN: 056 482 403 | ABN: 32 056 482 403 Unit 8A, 2A Westall Road, Hallmarc Business Park, Clayton VIC Australia 3168 avecho.com.au Rule 4.7B Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B Name of entity AVECHO BIOTECHNOLOGY LIMITED ABN Quarter ended (“current quarter”) 32 056 482 403 30 JUNE 2020 Consolidated statement of cash flows Current quarter $A’000 1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for Year to date (6 months) $A’000 2 196 (a) research and development (116) (231) (b) product manufacturing and operating costs (36) (81) - - (4) (22) (e) staff costs (127) (290) (f) (174) (330) (126) (196) (c) advertising and marketing (d) leased assets administration and corporate costs (g) patent portfolio costs 1.3 Dividends received (see note 3) - - 1.4 Interest received 1 1 1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Government grants and tax incentives - - 1.8 Other (EMDG, PAYG subsidy) 114 147 1.9 Net cash from / (used in) operating activities (466) (806) 2. Cash flows from investing activities 2.1 Payments to acquire: (a) entities - - (b) businesses - - (c) property, plant and equipment - - (d) investments - - (e) intellectual property - - ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms. Page 1 Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B Consolidated statement of cash flows (f) 2.2 other non-current assets Current quarter $A’000 Year to date (6 months) $A’000 - - (a) entities - - (b) businesses - - (c) property, plant and equipment - - (d) investments - - (e) intellectual property - - (f) - - Proceeds from disposal of: other non-current assets 2.3 Cash flows from loans to other entities - - 2.4 Dividends received (see note 3) - - 2.5 Other (provide details if material) - - 2.6 Net cash from / (used in) investing activities - - 3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) - - 3.2 Proceeds from issue of convertible debt securities - - 3.3 Proceeds from exercise of options - - 3.4 Transaction costs related to issues of equity securities or convertible debt securities - - 3.5 Proceeds from borrowings - - 3.6 Repayment of borrowings - - 3.7 Transaction costs related to loans and borrowings - - 3.8 Dividends paid - - 3.9 Other - Payment of principal element of lease liabilities (23) (46) 3.10 Net cash from / (used in) financing activities (23) (46) 4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 3,041 3,211 (466) (806) 4.2 Net cash from / (used in) operating activities (item 1.9 above) ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms. Page 2 Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B Consolidated statement of cash flows Current quarter $A’000 Year to date (6 months) $A’000 4.3 Net cash from / (used in) investing activities (item 2.6 above) - - 4.4 Net cash from / (used in) financing activities (item 3.10 above) (23) (46) 4.5 Effect of movement in exchange rates on cash held (4) 189 4.6 Cash and cash equivalents at end of period 2,548 2,548 5. Reconciliation of cash and cash equivalents Current quarter $A’000 Previous quarter $A’000 at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts 5.1 Bank balances 2,462 2,955 5.2 Call deposits 86 86 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 2,548 3,041 6. Payments to related parties of the entity and their associates 6.1 Aggregate amount of payments to related parties and their associates included in item 1 72 6.2 Aggregate amount of payments to related parties and their associates included in item 2 - Current quarter $A'000 Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms. Page 3 Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B 7. Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 7.1 Loan facilities - - 7.2 Credit standby arrangements - - 7.3 Other (please specify) - - 7.4 Total financing facilities - - 7.5 Unused financing facilities available at quarter end 7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well. - N/A $A’000 8. Estimated cash available for future operating activities 8.1 Net cash from / (used in) operating activities (Item 1.9) (466) 8.2 Cash and cash equivalents at quarter end (Item 4.6) 2,548 8.3 Unused finance facilities available at quarter end (Item 7.5) 8.4 Total available funding (Item 8.2 + Item 8.3) 8.5 Estimated quarters of funding available (Item 8.4 divided by Item 8.1) 8.6 If Item 8.5 is less than 2 quarters, please provide answers to the following questions: 1. 2,548 5 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not? Answer: N/A 2. Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful? Answer: N/A 3. Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis? Answer: N/A ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms. Page 4 Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B Compliance statement 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A. 2 This statement gives a true and fair view of the matters disclosed. Date: 28 July 2020 ................................................................................... Authorised by: By the Board Notes 1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so. 2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report. 3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity. 4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [name of board committee – eg Audit and Risk Committee]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”. 5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms. Page 5