Announcement PDF Imagion Biosystems Limited ABN 42 616 305 027 Annual Report For the year ended 31 December 2024 Imagion Biosystems Limited Contents 31 December 2024 Corporate directory Letter from the Chairman Directors' report Auditor's independence declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the financial statements Consolidated Entity disclosure statement Directors' declaration Independent auditor's report to the members of Imagion Biosystems Limite Shareholder Information 1 2 3 18 19 20 21 22 23 49 50 51 54 Imagion Biosystems Limited Corporate directory 31 December 2024 Directors Mr Robert Proulx (Executive Chairman) Mr Brett Mitchell (Non-Executive Director) Ms Melanie Leydin (Non-Executive Director) Company secretary Ms Melanie Leydin Registered office and principal place of business Level 4, 96-100 Albert Road South Melbourne, VIC 3205 Share registry Boardroom Pty Limited Level 12, 225 George Street Sydney, NSW 2000 Auditor RSM Australia Partners Level 27, 120 Collins Street Melbourne, VIC 3000 Australian legal advisor Steinepreis Paganin Level 14, QV1 Building 250 St Georges Terrace Perth, WA 6000 United States legal advisor Law Offices of Gayani R. Weerasinghe 325 W Washington St, Ste 2-3013 San Diego, CA 92103 Stock exchange listing Imagion Biosystems Limited shares are listed on the Australian Securities Exchange (ASX code: IBX) 1 Imagion Biosystems Limited Chairman’s Letter 31 December 2024 Letter from the Chairman Dear Shareholders, There is no hiding that 2024 was a difficult year for the company and our investors. Although we had ended 2023 on a high note by having completed our first clinical Phase 1 study, the challenging capital markets of 2023 for our planned Nasdaq dual listing, forced us to make some difficult decisions early in 2024 to restructure the company. Throughout the first and second quarters of 2024 we reduced staff and reorganized to become a lean “virtual” company. Imagion now operates with a much lower fixed operating cost. In the second half of the year, a new Board and management team was successful in shoring up our financial situation by restructuring the existing Mercer Street Capital convertible note facility and by raising $3,000,000 in new equity through an oversubscribed placement led by CPS Capital. The continued support of Mercer Capital and the funds raised by CPS have provided the Company with the ability to return our focus to developing our MagSense® imaging technology. Already in the first quarter of 2025 we have put the funds to use to advance our lead product towards the next phase of clinical testing. Although 2024 was a tumultuous year of forced change and transition, the difficulties were financially related and not related to our core expertise or to our MagSense® technology. We have retained our intellectual property and product pipeline, and we now intend to resume our work to develop this new class of molecular imaging products aimed to improve the way we diagnose and are able to treat cancer. We made hard decisions in 2024, but always believed we had a path forward that would be best for our shareholders. I am hopeful that you will support us as we endeavor to realize our technology’s potential to change the way we look at cancer. Robert Proulx Executive Chairman Imagion Biosystems Limited 2 Imagion Biosystems Limited Directors' report 31 December 2024 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Consolidated Entity' or the 'Group') consisting of Imagion Biosystems Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 31 December 2024. Directors The following persons were directors of Imagion Biosystems Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Mr Robert Proulx (Executive Chairman) Mr Brett Mitchell (Non-Executive Director) (Appointed on 14 June 2024) Ms Melanie Leydin (Non-Executive Director) (Appointed on 31 July 2024) Mr Michael Harsh (Non-Executive Director) (Resigned on 22 August 2024) Mr David Ludvigson (Non-Executive Director) (Resigned on 22 August 2024) Mr Mark Van Astan (Non-Executive Director) (Resigned on 22 August 2024) Ms Jovanka Naumoska (Non-Executive Director) (Resigned on 3 May 2024) Ms Dianne Angus (Non-Executive Director) (Resigned on 3 May 2024) Dr Isaac Bright (Managing Director and Chief Executive Officer) (Resigned on 15 January 2024) Principal activities During the financial year the principal continuing activities of the Consolidated Entity consisted of: Nanotechnology; Biotechnology; Cancer Diagnostics; and Medical Imaging using Magnetic Resonance. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The loss for the Consolidated Entity after providing for income tax amounted to $2,066,957 (31 December 2023: $12,473,916). The loss was materially lower than prior year due to the retrenchment of the workforce and significant reduction in research and development programs. The Consolidated Entity expects to keep its general and administration costs to a reduced level for the foreseeable future. The Consolidated Entity drew in total $720,000 from the existing Mercer convertible note facility and successfully raised $3 million (before cost) in December 2024, the funds are being used to advance the clinical development of the Company’s MagSense® molecular MRI imaging technology, and for general working capital. Licensing Agreement In September 2024, the Consolidated Entity entered into an Asset Transfer and IP Licensing Agreement with Biosensis, Ltd. (Biosensis), an Australian based life science manufacturer to produce and sell the Company’s PrecisionMRX® nanoparticles, specifically for the biomedical research markets. Under the Agreement, Biosensis licensed to utilize Consolidated Entity’s proprietary methods and know-how to make iron oxide nanoparticles and their derivatives and market them under the Consolidated Entity’s PrecisionMRX® trademarked brand. The Agreement provides for Biosensis to commercialize the nanoparticles and related services to academic and industry researchers and pay the Consolidated Entity milestone fees and royalties on net sales. The Consolidated Entity retains the rights to manufacture and sell in the future into all global commercial markets. PrecisionMRX® superparamagnetic iron oxide nanoparticles were specifically developed by the Consolidated Entity to meet the stringent requirements needed for biomedical applications. The Consolidated Entity’s proprietary methods of synthesis and biofunctionalization achieve uniform attributes, such as size, shape, and magnetic properties, and are robust enough to provide batch to batch consistency and quality, which are important for biomedical research. The Asset Transfer and IP License Agreement with Biosensis will ensure the PrecisionMRX® brand remains the preferred iron oxide nanoparticle in the biomedical research market. 3 Imagion Biosystems Limited Directors' report 31 December 2024 Clinical development MagSense@ HER2 Breast Cancer Program In December 2024 quarter, the Consolidated Entity resumed its clinical development of the MagSense® HER2 imaging agent which was successfully completed Phase 1 study in 2023. The Consolidated Entity established a core team of consultants and advisors, including the appointment of Dr. Susan Harvey for Medical Affairs, and aims to achieve filing an Investigational New Drug (IND) application with the FDA in 2025. The Consolidated Entity also resumed its collaboration with Siemens MRI experts to support the Phase 2 study. A key element of the Phase 2 study is to optimize the imaging protocol, and the collaboration with Siemens is aimed at ensuring the study achieves the best possible imaging results. Outlook The first half of 2025 will be focused on the tasks associated with getting the FDA filing in order, including: · Manufacturing a new lot of the MagSense® HER2 imaging agent; · Identifying Principal Investigators and study sites; and · Finalizing the clinical study protocol. The Consolidated Entity aims to begin the MagSense® HER2 Breast Cancer Phase 2 study in the second half of the year 2025. Advancing the research and development programs for prostate cancer and ovarian cancer will be dependent on the availability of funds. Key risks and uncertainties The Consolidated Entity is subject to risks specific to the Consolidated Entity and the Consolidated Entity’s business activities, as well as general risks. Technical risks The inherent nature of research and development is uncertain. There are substantial risks in drug development including risks that studies fail to achieve an acceptable level of safety and/or efficacy. This would have a material impact on the Consolidated Entity. The Consolidated Entity is mitigating this risk where reasonably possible through diversification of its product pipeline, undertaking rigorous scientific review during the development process, and working with reputable and capable partners and service providers. Future funding risks Whist the Consolidated Entity has a cash balance of $2,670,517 and is able to continue on a going concern basis, there is risk that the Consolidated Entity may require substantial additional financing in the future to sufficiently fund its operations, research and development. The Directors regularly review the spending pattern and ability to raise additional funds to ensure the Consolidated Entity’s ability to generate sufficient cash inflows to settle its creditors and other liabilities. In addition, the Consolidated Entity is eligible for certain government grants and R&D tax incentive which is subject to fulfilling eligibility criteria. The Consolidated Entity reviews the project to ensure they are eligible for R&D tax incentives. Regulatory and licensing risks If the Consolidated Entity does not obtain the necessary regulatory approvals, it may be unable to commercialise its pharmaceutical products. Even if it receives regulatory approval for any product candidates, profitability will depend on its ability to generate revenues from the sale of its products or the licensing of its technology. The Consolidated Entity monitors legislative and regulatory developments and engages proactively with key stakeholders to manage this risk. Reliance on key personnel The Consolidated Entity’s success depends to a significant extent upon its key management personnel, as well as other management and technical personnel including those employed on a contractual basis. The loss of the services of such personnel or the reduced ability to recruit additional personnel could have an adverse effect on the performance of the Consolidated Entity. The Consolidated Entity maintains a mixture of external contractors and consultants to allow the access of multiple sources of resources, and reviews remunerations to human resources regularly. Inability to protect intellectual property The Consolidated Entity’s ability to leverage its innovation and expertise is dependent on its ability to protect its intellectual 4 Imagion Biosystems Limited Directors' report 31 December 2024 property and any improvements to it. A failure or inability to protect the Consolidated Entity’s intellectual property rights could have an adverse impact on operating and financial performance. The Consolidated Entity proactively monitors applications and renewals of patents and licences; and requires relevant stakeholders to comply with the requirements set out in the confidentiality policy. IT system failure and cyber security risks Any information technology system is potentially vulnerable to interruption and/or damage from a number of sources, including but not limited to computer viruses, cyber security attacks and other security breaches, power, systems, internet and data network failures, and natural disasters. The potential financial impacts of cyber security breaches may include: ● Business disruption costs ● Intellectual property or other valuable data being stolen or compromised ● Breaches of confidentiality with external parties that may compromise material commercial agreements ● Costs of remedying breaches and recovering data ● Costs to bolster cyber protection ● Litigation and legal costs ● Reputational damage The Consolidated Entity is committed to preventing and reducing cyber security risks through outsourcing the IT management to a reputable services provider. Significant changes in the state of affairs On 15 January 2024, Mr Isaac Bright resigned as the Managing Director and Chief Executive Officer of the Company. On 12 March 2024, the Consolidated Entity executed a recapture agreement with its landlord, BRE-BMR Oberlin LP to terminate the Consolidated Entity's premises lease. Subsequently on 30 April 2024 the Consolidated Entity vacated its premises in accordance with the Recapture Agreement. On 3 May 2024, Ms Jovanka Naumoska and Ms Dianne Angus resigned as Non-Executive Director of the Company. On 13 May 2024, Mr Geoff Hollis resigned as the Company secretary and chief financial officer of the Company. On the same day, the Company appointed Ms Melanie Leydin as Company secretary. On 29 May 2024, the Company issued 242,000 Convertible Notes ('2024 Note') with a face value of $1.00 per Note at a discounted subscription price of $0.90909 and raised $220,000 before costs. The Company also issued 2,048,122 options with an exercise price of $0.11284 per option to the Note holders, with expiry on 29 May 2027. On 14 June 2024, the Company appointed Mr Brett Mitchell as the Non-Executive Director. On 17 July 2024, the Company executed a deed of variation (Deed) with Mercer Street Global Opportunity Fund, LLC ('Mercer') in respect of convertible securities agreement entered into with Mercer on 7 March 2023 ('Convertible Securities Agreement'), which was subsequently approved by shareholders in a general meeting on 22 August 2024. The below table set out the variations to the Convertible Securities Agreement: 5 Imagion Biosystems Limited Directors' report 31 December 2024 Matter Particulars Floor Price $0.04, subject to adjustment in accordance with the Convertible Securities Agreement. Qualifying Capital If a capital raising occurs which raises $10,000,000 or more ('Qualifying Capital Raising'), the Company Raising must give Mercer written notice of such event. In circumstances where: (a) the Qualifying Capital Raising is between $10 million and $15 million, Mercer may require repayment by the Company of some or all of up to 50% of the Notes; and (b) where the Qualifying Capital Raising is more than $15 million, Mercer may require repayment by the Company of some or all of up to 100% of the Notes, by giving written notice to the Company no later than 20 Business Days after the date of the notice issued by the Company. Repayment of the nominated outstanding Notes must occur 5 Business Days after the date the on which notice is given to Mercer by the Company. Maturity Date (a) In respect of the First and Second tranches, the maturity date is 30 months from the date of issue. (b) In respect of the subsequent tranches, the Maturity Date is 18 months from the expiry date. The Company’s shares were suspended from trading on the Australian Securities Exchange (ASX) from 2 April 2024 to 14 June 2024 ('Suspension'), which constituted an event of default under the Convertible Securities Agreement. Under the terms of Deed, Mercer agreed to waive all rights of redemption of the convertible notes issued under the Convertible Securities Agreement that would otherwise have been triggered by the Suspension. In consideration, the Company agreed to issue Mercer 3,000,000 Shares ('2024 Mercer Shares') as compensation. The first tranche of the 2024 Mercer Shares of 2,350,000 were issued on 16 July 2024. The second tranche of the 2024 Mercer Shares of 650,000 were issued on 22 August 2024 upon shareholder approval in a general meeting. On 1 August 2024, Mr Michael Harsh, Mr David Ludvigson and Mr Mark Van Astan resigned as the Non-Executive Director of the Company, effective on 22 August 2024; and the Company appointed Ms Melanie Leydin as Non-Executive Director, effective on 31 July 2024. On 19 September 2024, the Company issued 550,000 2024 Notes with a face value of $1.00 per 2024 Note at a discounted subscription price of $0.90909 to raise a maximum of approximately $500,000 before costs. The Company also issued 12,254,902 options with an exercise price of $0.04284 per option to the Note holders, expiring on 19 September 2027. On 10 October 2024, the Company announced a Placement to issue 150,000,000 shares at an issue price of $0.02 (2 cents) per share, along with 75,000,000 free attached unlisted options on a 1-for-2 basis, exercisable at $0.04 and expiring on three years from the date of issue and raise $3 million before costs. The first tranche of the placement was completed on 23 October 2024 with 5,346,558 shares were issued. The second tranche of the placement was completed on 9 December 2024 upon shareholders’ approval in a general meeting with 144,653,442 shares and 75,000,000 free attached unlisted options were issued. As part of the Placement, 6,250,000 shares and 3,125,000 free attached unlisted options were issued to related parties of the Company and raised $125,000. There were no other significant changes in the state of affairs of the Consolidated Entity during the financial year. Matters subsequent to the end of the financial year No matter or circumstance has arisen since 31 December 2024 that has significantly affected, or may significantly affect the Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial years. Likely developments and expected results of operations The Consolidated Entity has significantly reduced fixed costs of administration activities including its human resources. However, the Consolidated Entity has resumed research and development of the MagSense® HER2 Breast Cancer Program, with any further development dependent on the availability of funds. The expected results of operations for the Consolidated Entity will depend on the result of these developments and availability of funds. Environmental regulation The Consolidated Entity is not subject to any significant environmental regulation under Australian Commonwealth or State law. 6 Imagion Biosystems Limited Directors' report 31 December 2024 Information on directors Name: Title: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Interests in options: Interests in rights: Name: Title: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Interests in options: Interests in rights: Name: Title: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Interests in options: Interests in rights: Mr Robert Proulx Executive Chairman Mr. Proulx has served as Chairman of the Board at Imagion Biosystems since the Company’s IPO in 2017. As President and CEO of Imagion Biosystems beginning in February 2015 until June 2023, he led the Company in the development of the nanoparticle-based medical imaging technology from early proof of concept through initial clinical development until June 2023. Mr. Proulx’s career spans more than 30 years with experience in the computer, life science and medical diagnostics industries. Mr. Proulx holds an M.A. and B.A. from the State University of New York at Albany and an Executive MBA from the Penn State Smeal College of Business. None None 1,404,082 fully paid ordinary shares 775,000 unlisted options 2,000,000 performance rights Mr Brett Mitchell Non-Executive Director (appointed on 14 June 2024) Mr. Mitchell is an experienced corporate finance executive with more than 15 years of experience in ASX listed companies leading transactions in the biopharmaceutical, mining, energy and tech industries. He has been involved in the founding, financing, and management of both private and publicly-listed companies, including recently as a director of ASX listed lithium developer Delta Lithium Ltd (DLI), the dual ASX-LSE listed medical cannabis Company Argent Biopharma Ltd (RGT), and is currently Executive Chairman of ASX listed Javelin Minerals Ltd (ASX:JAV) and Non-Executive Chairman of Uvre Limited (ASX :UVA). Additionally, Mr Mitchell has founded two financial advisory services businesses and brings a track record of capital raising and corporate strategy to Imagion. Javelin Minerals Ltd (ASX: JAV); and Uvre Limited (ASX: UVA) Delta Lithium Limited (previously Red Dirt Metals) (ASX: DLI); MGC Pharmaceuticals Limited (ASX: RGT); and Mount Ridley Mines Ltd (ASX: MRD) 4,270,908 fully paid ordinary shares 2,500,000 unlisted options 1,250,000 performance rights Ms Melanie Leydin Non- Executive Director (appointed on 31 July 2024) and Company Secretary (appointed on 13 May 2024) Ms Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. Ms Leydin is a member of the Institute of Chartered Accountants, Fellow of the Governance Institute of Australia and is a Registered Company Auditor. Ms Leydin is Managing Director of Vistra Australia. Vistra is a prominent provider of specialised consulting and administrative services to clients in the Fund, Corporate, Capital Markets, and Private Wealth sectors. Ms Leydin has over 25 years’ experience in the accounting profession and has extensive experience holding Board positions including Company Secretary of ASX listed entities. She has extensive experience in relation to public Company responsibilities, including ASX and ASIC compliance, control and implementation of corporate governance, statutory financial reporting, reorganisation of companies, initial public offerings, secondary raisings and shareholder relations. Invion Limited (ASX: IVX); and Unico Silver Limited (ASX: USL) None None None None 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 7 Imagion Biosystems Limited Directors' report 31 December 2024 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Company secretary Ms Melanie Leydin (appointed on 13 May 2024) Ms Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. Ms Leydin is a member of the Institute of Chartered Accountants, Fellow of the Governance Institute of Australia and is a Registered Company Auditor. Ms Leydin is Managing Director of Vistra Australia. Vistra is a prominent provider of specialised consulting and administrative services to clients in the Fund, Corporate, Capital Markets, and Private Wealth sectors. Ms Leydin has over 25 years’ experience in the accounting profession and has extensive experience holding Board positions including Company Secretary of ASX listed entities. She has extensive experience in relation to public Company responsibilities, including ASX and ASIC compliance, control and implementation of corporate governance, statutory financial reporting, reorganisation of companies, initial public offerings, secondary raisings and shareholder relations. Mr Geoff Hollis (resigned on 13 May 2024) Prior to joining Imagion in December 2020, Mr Hollis spent over 10 years in ASX listed companies as CFO and Company Secretary. Mr Hollis commenced his career with almost 10 years at leading Melbourne based accounting and business advisory firm, Pitcher Partners. Mr Hollis is experienced in capital and debt raisings along with ongoing investor relations function in addition to other CFO and Company Secretarial experience required for an ASX listed entity on a growth journey. Mr Hollis is also a member of the Corporate Governance Institute and Chartered Accountants Australia and New Zealand. Meetings of directors The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 31 December 2024, and the number of meetings attended by each director were: Full Board Attended Held Mr Robert Proulx Mr Brett Mitchell (1) Ms Melanie Leydin (2) Mr Michael Harsh (3) Mr David Ludvigson (4) Mr Mark Van Asten (5) Ms Jovanka Naumoska (6) Ms Dianne Angus (7) Dr Isaac Bright (8) (1) (2) (3) (4) (5) (6) (7) (8) 6 5 5 2 2 2 1 1 - 6 5 5 2 2 2 1 1 - Mr Brett Mitchell was appointed as Non-Executive Director on 14 June 2024. Ms Melanie Leydin was appointed as Company Secretary on 13 May 2024 and Non-Executive Director on 31 July 2024. Mr Michael Harsh resigned as Non-Executive Director on 22 August 2024. Mr David Ludvigson resigned as Non-Executive Director on 22 August 2024. Mr Mark Van Astan resigned as Non-Executive Director on 22 August 2024. Ms Jovanka Naumoska resigned as Non-Executive Director on 3 May 2024. Ms Dianne Angus resigned as Non-Executive Director on 3 May 2024. Dr Isaac Bright resigned as Managing Director and Chief Executive Officer on 15 January 2024. Held: represents the number of meetings held during the time the director held office. Remuneration report (audited) The remuneration report details the key management personnel remuneration arrangements for the Consolidated Entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. 8 Imagion Biosystems Limited Directors' report 31 December 2024 The remuneration report is set out under the following main headings: ● Principles used to determine the nature and amount of remuneration ● Details of remuneration ● Service agreements ● Share-based compensation ● Additional information ● Additional disclosures relating to key management personnel Principles used to determine the nature and amount of remuneration Non-executive directors' remuneration Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the Board of Directors. The Board of Directors may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. Executive directors and senior executives' remuneration The chairman's fees are determined independently to the fees of other non-executive directors which are competitively set to attract and retain appropriately qualified directors and senior executives and based on achievement of strategic objectives and the creation of value for shareholders. The Board of Directors ('the Board') ensures that executive and director rewards satisfies the following key criteria for good reward governance practices: ● ● ● ● Having strategic objectives as a core component of the reward framework design; Focusing on sustained growth in shareholder wealth, which may comprise growth in share price, increasing opportunities for the Consolidated Entity as well as focusing the executive on key non-financial drivers of value; Alignment of executive compensation to performance; and Acceptability to shareholders. The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it should seek to enhance shareholders' interests by: ● ● ● ● Rewarding capability and application of relevant experience; Being competitive and providing a reasonable framework with regard to applicable industry standards; Reflecting competitive rewards for contribution to growth in shareholder wealth; and Providing a clear and transparent structure for earning rewards. Remuneration packages include a mix of fixed remuneration and variable remuneration and short and long-term performancebased incentives under the Company’s Employee Incentive Plan. Due to the relatively small size of the Company, the Board is acting in the capacity of a remuneration committee. The Company’s Employee Incentive Plan allows the Board from time to time, in its absolute discretion, make a written offer to any Eligible Participant (as defined in the Plan). The Consolidated Entity aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. The executive remuneration and reward framework has five components: ● ● ● ● ● Base pay and non-monetary benefits; Short-term performance incentives; Share-based payments; Health care benefits (applicable to US based personnel); and Other remuneration such as superannuation and long service leave. The combination of these comprises the executive's total remuneration. The CEO consults with the Board in relation to executive remuneration. Executive fixed remuneration, consisting of base salary and non-monetary benefits, are reviewed annually based on individual and business performance, the overall performance of the Consolidated Entity and comparable market remunerations. Executives may receive fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does not create any additional costs to the Consolidated Entity and provides additional value to the executive. 9 Imag