Announcement PDF IMAGI ON B I OSYSTE MS LI MI T E D A N N UA L R E PO RT 2 0 2 1 IBX ANNUAL REPORT 2021 IBX AN N UAL REPO RT 2021 A N NUAL R E PORT CON TEN TS 2021 H I GH LI GH TS A Breakthrough in Magnetic Molecular Imaging 3 CLINICAL Letter from the Chairman 5 • Multiple patients enrolled and completed the MagSense® HER2 Breast Cancer Phase I Study Directors’ Report 7 Remuneration Report (audited) 14 Auditor’s Independence Declaration 23 • Four clinical sites in VIC, NSW, and QLD are participating in the Phase I Study OPERATIONAL • Secured new premises expanding R&D and manufacturing capabilities Consolidated Statement of Profit and Loss and Other Comprehensive Income 24 Consolidated Statement of Financial Position 25 • CSIRO funds support prostate cancer preclinical research at Monash University’s Biomedicine Discovery Institute Consolidated Statement of Changes in Equity 26 • Collaboration with Patrys Limited looks towards a potential new imaging agent for brain cancer Consolidated Statement of Cash Flows 27 Notes to the Consolidated Financial Statements 28 • Joint Development Agreement with Global Cancer Technology aims to develop nanoparticle technology for treating breast cancer • Revenue from sales of IBX’s super-paramagnetic iron oxide nanoparticles to external parties remains steady Directors’ Declaration 56 Independent Auditor’s Report 57 CORPORATE Shareholder Information 60 • Imagion received $2.6 million in R&D tax incentives Corporate Directory 63 • Cash balance of $13.4 million as of 31 December 2021 • Exercise of listed options delivering over $5.5 million to the Company • Dr Yalia Jayalakshmi joins IBX as Chief Development Officer 1 2 IBX ANNUAL REPORT 2021 A BR EAKTHROUGH I N M AG N ETI C M OL ECULAR IM AG I NG ONE STEP CLOSER TO THE EARLY DETECTION OF CANCER 2021 was a very important year for Imagion as we became a clinical stage company with the commencement of our first-inhuman study of the MagSense® technology for HER2 breast cancer. Imagion’s MagSense® technology has the potential to provide more specific and sensitive detection for cancer than current imaging technologies. By using tiny magnetic nanoparticles to identify tumors, our MagSense® technology does not require use of radioactivity, making it a safer alternative for noninvasive detection. With a safer, more specific, and more sensitive approach the Company hopes to enable a new standard of care in the detection of cancer and other diseases. One that will minimize the need for biopsies and thereby reducing costs while minimizing risks for patients. The current Phase I study of the MagSense® HER2 breast cancer imaging agent is our first clinical investigation. it is an important and valuable step forward serving as a proof-ofprinciple that our magnetic molecular imaging technology has potential to change clinical practices. But it’s just the start. There are many types of cancer and other diseases that can benefit from earlier, better, and safer detection. We’re now one step closer to making a breakthrough in medical imaging. 3 IBX AN N UAL REPO RT 2021 A WORLD OF POSSIBILITY IN NANOPARTICLES Nanoparticles are at the core of our business. We have developed a proprietary method for making magnetic nanoparticles while controlling for key attributes, such as size, dispersity, and magnetic properties. We plan to leverage this capability to supply tailor made nanoparticles to third parties for use in their biomedical applications. Iron oxide nanoparticles are bio-safe with high magnetic susceptibility and can be used as an alternative to radiotracers for: • Diagnostic imaging • Cancer treatments • Monitoring for recurrence • Drug and vaccine delivery Imagion sells PrecisionMRX® nanoparticles to third parties for research and use in their biomedical products. PARTNERING WITH LEADING COMPANIES AND INSTITUTIONS At Imagion, we believe collaborating with world-class researchers is the key to expanding our capabilities. We are currently working with several partners to explore the use of our nanoparticles for diagnosing and treating various forms of cancer. 4 IBX ANNUAL REPORT 2021 IBX AN N UAL REPO RT 2021 LET T ER FRO M T H E CH A I R MAN DEAR SHAREHOLDERS, Firstly, I would like to thank all of our shareholders for their ongoing support in 2021, with particular thanks to those shareholders who demonstrated their commitment through the exercise of their options, which added over $5.5 million to our balance sheet throughout 2021. Combined with the $2.6 million Research and Development tax rebate received earlier in the year, we finished FY2021 with approximately the same amount of cash on hand that we had at the end of FY2020 without requiring a capital raise. FY2021 marked our transition to becoming a clinical stage company with the commencement of our MagSense® HER2 breast cancer study - a first-in-human investigative study of our proprietary molecular magnetic nanoparticle-based imaging technology. This Phase 1 study is our initial clinical investigation into the safety and tolerability of the MagSense® HER2 nanoparticles and their ability to reach tumour cells that may have metastasized to the lymph nodes. The study will also provide initial important information on the potential effectiveness of two imaging modalities to detect the MagSense® imaging agent, before we commit resources to larger studies for regulatory approval. While the pandemic significantly impacted us from achieving our goal of completing the study in 2021, we made significant progress securing four clinical sites across Victoria, New South Wales, and Queensland in Australia and finishing the year with multiple patients having completed the study. With our first imaging agent advancing into the clinic in 2021 we looked to expand our product pipeline and added several research collaborations for other diagnostic imaging applications. An Innovations Connections grant awarded under the Entrepreneurs’ Programme of the Australian Government Department of Industry, Science, Energy and Resources and administrated through Commonwealth Scientific and Industrial Research Organisation, has been put towards a collaboration with Monash University’s Biomedicine Discovery Institute to undertake 5 preclinical research into a MagSense® as a prostate cancer imaging agent. Additionally, we established a collaboration with Patrys Limited, a therapeutic antibody company, to investigate use of a Patrys antibody with our MagSense® nanoparticles with the aim of improving brain tumour imaging and diagnosis. And a Joint Development Agreement with Global Cancer Technology (GCT) provides an opportunity to develop nanoparticle-based solutions for the treatment of breast cancer. These relationships and ongoing projects are a testament to the unique and pioneering capabilities of our nanoparticle technology and lay the foundation for a strong future commercial pipeline of products addressing unmet clinical needs in the earlier diagnosis of cancer and other diseases to help enable improved therapeutic intervention and patient outcomes. As our MagSense® HER2 clinical program began to advance in 2021, we also began to focus on building the organizational capabilities to support our future success. The appointment of Dr Yalia Jayalakshmi as Chief Development Officer with extensive experience in the clinical development of drugs and devices, adds significant depth to our leadership team. Additionally, we completed the fit-out out of our new R&D and manufacturing facility and moved in at the start of the new year. This new facility significantly expands our internal nanoparticle research & development capabilities, provides additional manufacturing capacity to support our clinical programs and can be leveraged to generate revenue through third party commercial relationships. Imagion starts 2022 in a strong financial position with our clinical study well underway and momentum in our research programs. We are looking forward to bringing our Phase I study to conclusion and executing our next phase of development. We are grateful to all our stakeholders - collaborators, patients that participate in the study, employees, and shareholders - for their ongoing commitment and support and we look forward to updating you with progress throughout the year. Robert Proulx Executive Chairman Imagion Biosystems Limited 6 Imagion Biosystems Limited Directors' Report For the year ended 31 December 2021 Directors' Report The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Imagion Biosystems Limited (referred to hereafter as the 'Company' or 'parent entity' or ‘Imagion’) and the entities it controlled at the end of, or during the year ended 31 December 2021. 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 Chair / President Robert has been President of Imagion Biosystems since February 2015. Previous employment experience includes President / General Manager for Silicon Biosystems and a career in marketing and sales management with more than 25 years experience in the computer, life science and medical diagnostics industries. Some of Robert's other relevant experience include: Vice President Marketing and Sales for Nanogen Inc.; Senior Vice President of Marketing and Business Development at Gene Logic; and General Manager, Life Sciences at IGEN International Inc. Robert 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. Mr Michael Harsh Non‐Executive Director Michael is a co‐founder and Chief Product Officer of Terapede Systems, a digital X‐ray startup that focuses on developing an ultra‐high resolution medical flat panel X‐ray detector. Prior to co‐founding Terapede Systems in 2015, Mr. Harsh had a 36‐year long career with General Electric, including serving as Global Technology Leader – Imaging Technologies at the GE Global Research Center and culminating with him serving as Vice President and Chief Technology of GE Healthcare. Additionally, he serves on the boards of directors of Endra Life Sciences (NASDAQ: NDRA), EmOpti and Compute Health Acquisition Corp (NYSE:CPUH) as well as being a member the Radiological Society of North America ("RSNA"), Research & Education Foundation Board of Trustees. He had previously served as a director for FloDesign Sonics until its acquisition by MilliporeSigma, a division of the Merck Group. Mr. Harsh is a graduate of Marquette University, where he earned a bachelor’s degree in Electrical Engineering. He holds numerous U.S. patents in the field of medical imaging and instrumentation. In 2008, Mr. Harsh was elected to the American Institute for Medical and Biological Engineering College of Fellows for his significant contributions to the medical and biological engineering field. Mr David Ludvigson Non‐Executive Director David is currently President & CEO at Nanomix, a point‐of‐care diagnostic medical device company. David is a financial and operating executive with over 35 years of international experience in life sciences and technology companies including Biogen (formerly IDEC Pharmaceuticals), Matrix Pharmaceutical, Nanogen, and MIPS Computer Systems. His experience over 15 years in the diagnostics arena has led numerous new product efforts from concept to market launch. David has conducted many successful strategic transactions including multiple acquisitions, corporate partnerships, technology and intellectual property licensing agreements, and OEM relationships and his financing experience includes venture capital, corporate, mezzanine, lease, bank credit line, LBO, IPO and secondary public sources. 7 Imagion Biosystems Limited Directors' Report For the year ended 31 December 2021 Ms Jovanka Naumoska Non‐Executive Director Jovanka is an Australian‐qualified corporate lawyer with board‐level experience in legal and regulatory issues pertaining to medical imaging technology. Jovanka is currently a non‐executive director of Security Matters Limited (ASX:SMX) and serves Australian scientific development organisations in an expert capacity on matters relating to corporate law, business operations, intellectual property development and regulatory compliance. Mr Mark Van Asten Non‐Executive Director Mark has over 30 years of experience in the medical diagnostics and life sciences industry. Much of this time has been in international business development, strategic planning and introduction of new technology. Through Diagnostic Technology, a company he founded, he has been responsible for the development and introduction of a number of innovative technology platforms and technologies into mainstream healthcare use, including HPV DNA testing for cervical cancer screening and the molecular monitoring for both viral infections and cancer treatments. He holds an Adjunct Senior Lectures position at the School of Biotechnology and Biomolecular Science, University of NSW where he has collaborated on a number of research projects related to biosynthetic pathways in bacteria. Ms Dianne Angus Non‐Executive Director Dianne has worked as a senior executive within the biotechnology, medtech, agritech and healthcare sectors for over twenty years and currently serves as non‐executive director with Neuren Pharmaceuticals Limited (ASX: NEU), Cyclopharm Limited (ASX:CYC) and Bionic Vision Technologies Limited as well as being a member of the Deakin University Council. She has built competitive and differentiated product portfolios, from investment in innovative research and product development to commercialisation and market entry. Dianne has created many global industry partnerships to accelerate asset development, financing and provide reputational validation & endorsement. With twenty years’ experience in ASX and NASDAQ listed companies, Dianne has expertise in corporate governance, capital raising and stakeholder engagement within the listed capital market sector. Dianne holds a B.Sc. (Ed), B.Sc. (Hons), M.(Biotechnology) and is a registered patent & trade mark attorney. Company Secretary Mr Geoff Hollis Company Secretary Prior to joining Imagion in December 2020 Geoff spent over 10 years in ASX listed companies as CFO and Company Secretary. Geoff commenced his career with almost 10 years at leading Melbourne based accounting and business advisory firm, Pitcher Partners. Geoff 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. Geoff is also a member of the Corporate Governance Institute and Chartered Accountants Australia and New Zealand. 8 Imagion Biosystems Limited Directors' Report For the year ended 31 December 2021 Principal activities During the financial year the principal continuing activities of the consolidated entity consisted of: Nanotechnology; Biotechnology; Cancer Diagnostics; and Medical Imaging using Superparamagnetic Relaxometry. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations Operating loss of $6,024,706 (2020: $5,364,007 loss) was materially in line with expectations and increased from 2020 mainly due to increased staffing and administrative expenditure as the consolidated entity expanded organisational capacity. Research and development expenses remained relatively consistent. During 2021 the consolidated entity incurred expenses in relation to its MagSense® HER2 Breast Cancer Phase I Study continuing in Australia. In addition to trial costs, research and development expenses were incurred in relation to other projects and initiatives during the year. Revenue and other income Revenue and Other Income comprised interest income generated through sales of nanoparticles manufactured by the consolidated entity to customers. Total receipts from sales of super‐paramagnetic iron oxide nanoparticles over the year were $232,865 (2020: $205,717). These sales were undertaken directly through IBX and includes sales to New Phase, an Israeli‐based company, for the exploratory use of their SaNP hyperthermia treatment. Liquidity The consolidated entity remains in a positive cash position with $13.4 million in cash at the end of 2021. This position was supported by the inflow of $5.5 million during 2021 due to the exercise of options throughout 2021. The consolidated entity will use the funds to continue to fund clinical development operations, upcoming costs for its MagSense® HER2 Breast Cancer Phase I Study, to explore further research and development pipeline opportunities for its iron‐oxide nanoparticles (including manufacturing), and other operational costs. Clinical development MagSense® HER2 Breast Cancer Phase I Study The consolidated entity commenced its MagSense® HER2 breast cancer Phase 1 study – a milestone achievement marking the transition for the consolidated entity to a clinical stage company. Whilst recruitment into the study was impacted by the pandemic multiple patients completed the study in 2021. The study is currently recruiting through four sites in three states – Monash Health, Austin Health, Royal Brisbane Women’s Hospital and Lake Macquarie Private Hospital. The study is investigating the potential for the MagSense® HER2 targeted imaging agent to aid in nodal staging of HER2 positive breast cancer by identifying if tumour cells have metastasized to the lymph nodes. All enrolled trial patients receive a dose of the MagSense® HER2 targeted imaging agent, followed by exploratory assessment by two forms of imaging modalities: • our proprietary magnetic relaxometry imaging method (MRX); and • a standard magnetic resonance imaging method (MRI). The primary objective of the study is to investigate the safety and tolerability of the MagSense® injectable imaging agent. The secondary objective of the study is to provide a preliminary assessment of the effectiveness of the MagSense® imaging agent in reaching and being detectable in the lymph nodes. Findings from this study will inform future clinical research efforts and commercial viability. 9 Imagion Biosystems Limited Directors' Report For the year ended 31 December 2021 Brain tumour imaging and diagnosis The consolidated entity is collaborating with Patrys Limited to investigate the use of a Patrys’ PAT‐DX1 deoxymabs antibody with the consolidated entity’s MagSense® nanoparticles to improve brain tumour imaging and diagnosis. This collaboration further explores the utility of the consolidated entity’s nanoparticles in other complex indications. Should this collaborative work progress positively, the consolidated entity will have an exclusive option to a future license agreement. Prostate cancer imaging Using funds provided by the CSIRO, the consolidated entity is working with Monash University’s Biomedicine Discovery Institute with the aim of providing early proof of concept demonstration of MagSense® nanoparticles as a potential prostate cancer imaging agent. Joint Development Agreement with Global Cancer Technology The consolidated entity also entered into a joint development agreement with Global Cancer Technology (GCT), to develop GCT’s novel nanoscintillator technology for the treatment of breast cancer. Under the terms of the Agreement, the consolidated entity will be paid for certain R&D services while gaining an ownership interest in the arising GCT nanoscintillator product. The consolidated entity expects these ongoing projects to continue to progress throughout 2022, effectively positioning the Company’s imaging and nanoparticle technology for future commercial and clinical growth in the coming years. New facility The fit‐out of a new San Diego R&D facility was largely completed by the end of 2021 with the consolidated entity taking occupancy early in 2022. This new facility significantly expands the consolidated entity’s internal nanoparticle research & development capabilities, provides additional manufacturing capacity to support clinical programs and can be leveraged to generate revenue through third party commercial relationships. Outlook As the consolidated entity’s MagSense® HER2 breast cancer Phase 1 study progresses and the consolidated entity advances its development pipeline, the consolidated entity is budgeting for research and development expenditures and staffing costs to increase in 2022. The consolidated entity is well positioned to continue the progression of its MagSense® HER2 Breast Cancer Phase 1 Study, as well as other indications and collaborations. Significant changes in state of affairs On 26 November 2021 the IBXO listed options expired. Since the options listed in November 2019 all 96,706,395 options were exercised resulting in cash inflows of $4,835,320 to the consolidated entity. In total the consolidated entity received $5,505,290 (net of costs) from the exercise of options in 2021. Matters subsequent to the end of the financial year On 7 January 2022 the consolidated entity commenced tenancy at its new premises at Suite 100, 5601 Oberlin Drive, San Diego. This lease will be accounted for in the 2022 financial year. The impact of the Coronavirus (COVID‐19) pandemic is ongoing and while it has not had a significant impact on the consolidated entity financially up to 31 December 2021 the pandemic has slowed progress with the pace of its Phase 1 Clinical Study. It is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is constantly evolving and is dependent on measures imposed by the Australian and State‐based Governments. No other matters or circumstances have arisen since the end of the financial period that has significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. 10 Imagion Biosystems Limited Directors' Report For the year ended 31 December 2021 Likely developments and expected results of operations Management expects spending to increase in future periods pending successful results from the consolidated entity's first in‐human‐trial in relation to HER2 breast cancer which continued throughout 2021. The consolidated entity also expects to carry out other research and development projects throughout 2022. Environmental regulation The Consolidated Entity is not subject to any significant environment regulation under Australian Commonwealth or State Law. Information on Directors Name and title: Qualifications: Expertise and experience: Other current directorships: Former directorships (last 3 years): Membership of committees: Interest in shares: Interest in options: Interest in rights: Contractual rights to shares: Name and title: Qualifications: Expertise and experience: Other current directorships: Former directorships (last 3 years): Membership of committees: Interest in shares: Interest in options: Interest in rights: Contractual rights to shares: Mr Robert Proulx (Executive Chair / President) ‐ Master of Arts and Bachelor of Arts, The State University of New York at Albany; ‐ Executive Master of Business Administration, Penn State Smeal College of Business. Robert has over 25 years’ experience bringing life science and medical device products through development and commercialisation and joined the predecessor company, Senior Scientific as President and Chief Operating Officer. None None None 6,163,250 shares 6,282,000 options 5,000,000 performance rights 5,000,000 performance rights are issued under the company's long‐term incentive plan and will vest into one ordinary share each subject to achievement of prescribed performance conditions. Mr Michael Harsh (Non‐Executive Director) ‐ Bachelor’s degree in Electrical Engineering, Marquette University With over 36 years’ service to GE, mostly with GE Healthcare on his résumé, Michael Harsh is extraordinarily fluent in the complex processes of transforming high‐potential platform technologies into successful medical diagnostic products. ENDRA Life Sciences (2016 – present); EmOpti, Inc. (2015 – present); Compute Health Acquisition Corp (2021‐present). FloDesign (2015 ‐ 2019), NociMed (2019‐2020). Audit and Risk Committee, Remuneration and Nomination Committee 260,000 shares 560,000 options Nil Nil 11 Imagion Biosystems Limited Directors' Report For the year ended 31 December 2021 Name and title: Qualifications: Expertise and experience: Other current directorships: Former directorships (last 3 years): Membership of committees: Interest in shares: Interest in options: Interest in rights: Contractual rights to shares: Name and title: Qualifications: Expertise and experience: Other current directorships: Former directorships (last 3 years): Membership of committees: Interest in shares: Interest in options: Interest in rights: Contractual rights to shares: Name and title: Qualifications: Expertise and experience: Other current directorships: Former directorships (last 3 years): Membership of committees: Interest in shares: Interest in options: Interest in rights: Contractual rights to shares: Mr David Ludvigson (Non‐Executive Director) ‐ Bachelor of Science in Accounting, University of Illinois ‐ Masters in Accounting Science, University of Illinois. David is President and CEO of Nanomix, Inc, a mobile diagnostics company. Previously, David held executive leadership positions with Nanogen, Matrix Pharmaceutical, IDEC Pharmaceuticals, MIPS Computer Systems, and other high‐tech companies. He began his career at Price Waterhouse. China Stem Cells Ltd (2010‐present); Nanōmix Inc. (2014‐present); One BioMed PTE Ltd (2021‐present). None Audit and Risk Committee, Disclosure Committee 545,000 shares 620,000 options Nil Nil Ms Jovanka Naumoska (Non‐Executive Director) ‐ Bachelor of Science degree, University of Wollongong; ‐ Bachelor of Law degree and the Graduate Diploma in Legal Practice, University of Wollongong; ‐Graduate Diploma in Applied Corporate Governance, Governance Institute of Australia. Jovanka is an Australian‐qualified corporate lawyer with board‐level experience in legal and regulatory issues pertaining to medical imaging technology. Jovanka serves Australian scientific development organisations in an expert capacity on matters relating to corporate law, business operations, intellectual property development and regulatory compliance. Security Matters Limited; National Accreditation Authority for Translators and Interpreters Limited. None Disclosure Committee 260,000 shares 560,000 options Nil Nil Mr Mark Van Asten (Non‐Executive Director) ‐ Bachelor of Science, University of New South Wales As the Managing Director and founder of Diagnostic Technology Pty Ltd, Mark has been responsible for the development, introduction, and mainstream healthcare adoption of technologies throughout Australia and Asia. Mark has also held several director‐level business development positions with US and Australian diagnostics corporations. None Cimtech Limited Audit and Risk Committee, Remuneration and Nomination Committee 545,000 shares 620,000 options Nil Nil 12 Imagion Biosystems Limited Directors' Report For the year ended 31 December 2021 Name and title: Qualifications: Ms Dianne Angus (Non‐Executive Director) ‐ Bachelor of Science (Hons), University of Melbourne; Masters in Biotechnology, Monash University. Dianne has worked as a senior executive or director within the biotechnology, medtech, agritech and healthcare sectors for over twenty years. With numerous years’ experience in ASX and NASDAQ listed companies, Dianne has expertise in corporate governance, capital raising and stakeholder engagement within the listed capital market sector. Neuren Pharmaceuticals Limited; Cyclopharm Limited. None Remuneration and Nomination Committee, Disclosure Committee Nil 500,000 options Nil Nil Expertise and experience: Other current directorships: Former directorships (last 3 years): Membership of committees: Interest in shares: Interest in options: Interest in rights: Contractual rights to shares: Other current directorships quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 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 Geoff is a member of Chartered Accountant Australia and New Zealand, holds a Graduate Diploma in Applied Corporate Governance from the Governance Institute of Australia and a Bachelor of Commerce from Deakin University. Geoff has 3,000,000 options which are subject to prescribed vesting conditions and 5,000,000 performance rights which are subject to the achievement of prescribed performance conditions. Meetings of directors The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the year ended 31 December 2021, and the number of meetings attended by each director were: Board Mr Robert Proulx Mr Michael Harsh Mr David Ludvigson Ms Jovanka Naumoska Mr Mark Van Asten Ms Dianne Angus No. of meetings eligible to attend 6 6 6 6 6 6 Attended 6 6 6 5 6 6 Audit & Risk Management Remuneration & Nomination Committee Committee Attended Attended No. of No. of meetings meetings eligible to eligible to attend attend ‐ ‐ ‐ ‐ 2 2 5 5 2 2 5 5 ‐ ‐ ‐ ‐ 2 2 5 5 ‐ ‐ ‐ ‐ 13 Imagion Biosystems Limited Directors' Report For the year ended 31 December 2021 Remuneration Report (audited) Th