Announcement PDF Appendix 4D Half-Year Financial Report Name of entity: ACTINOGEN MEDICAL LIMITED ABN or equivalent company reference: 14 086 778 476 Current Period: 1 July 2023 to 31 December 2023 (Previous corresponding period: 1 July 2022 to 31 December 2022) RESULTS FOR ANNOUNCEMENT TO THE MARKET Revenue from ordinary activities Loss from ordinary activities after tax attributable to members Net loss for the period attributable to members Net tangible asset per share 31/12/2023 $ 106,774 31/12/2022 $ 135,912 Change $ -21% Amount change $ (29,138) 11,556,659 7,438,708 55% (4,117,951) 11,556,659 0.004 7,438,708 0.007 55% (4,117,951) BRIEF EXPLANATION OF THE ABOVE FIGURES Revenues from ordinary activities relates to interest revenue from cash held in interest-bearing accounts and short-term deposits. The total net loss after tax increased due primarily to an increase in Research & Development expenditure. Refer to the attached Directors’ Report and financial statements for further information. Details of entities over which control has been gained or lost during the period Not applicable. There has been no entity over which control has been gained or lost during the period. Dividend / Distribution Payments or Reinvestment Plans Not applicable. No dividends have been paid or declared during the half year ended 31 December 2023, in the previous financial year ended 30 June 2023 or in the previous corresponding period. The Company does not propose to pay dividends in the immediate future. Associates / Joint Ventures Not applicable. The Company has not engaged in the acquisition of associates nor has it engaged in any joint ventures in the half year ended 31 December 2023. Foreign Entities Not applicable. Review Conclusion This Report is based on the Interim Financial Report for the half year ended 31 December 2023. The financial report has been subject to a review by an independent auditor and the review is not subject to qualification. Dr Steven Gourlay Managing Director 26 February 2024 Sydney, New South Wales Contents Operating & Financial Review ........................................................................................................................... 3 Directors’ Report .............................................................................................................................................. 9 Auditor’s Independence Declaration .............................................................................................................. 10 Statement of Comprehensive Income ............................................................................................................ 11 Statement of Financial Position ...................................................................................................................... 12 Statement in Changes of Equity...................................................................................................................... 13 Statement of Cash Flows ................................................................................................................................ 14 Notes to the Financial Statements.................................................................................................................. 15 Directors’ Declaration..................................................................................................................................... 22 Independent Auditor’s Report....................................................................................................................... 23 Corporate Directory........................................................................................................................................ 25 Disclaimer This Interim Report may contain certain "forward-looking statements" that are not historical facts; are based on subjective estimates, assumptions and qualifications; and relate to circumstances and events that have not taken place and may not take place. Such forward looking statements should be considered “at-risk statements” - not to be relied upon as they are subject to known and unknown risks, uncertainties and other factors (such as significant business, economic and competitive uncertainties / contingencies and regulatory and clinical development risks, future outcomes and uncertainties) that may lead to actual results being materially different from any forward looking statement or the performance expressed or implied by such forward looking statements. You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Actinogen Medical does not undertake any obligation to revise such statements to reflect events or any change in circumstances arising after the date hereof, or to reflect the occurrence of or nonoccurrence of any future events. Past performance is not a reliable indicator of future performance. Actinogen Medical does not make any guarantee, representation or warranty as to the likelihood of achievement or reasonableness of any forward-looking statements and there can be no assurance or guarantee that any forward-looking statements will be realis Page 2 of 25 Operating & Financial Review 1. PRINCIPAL ACTIVITIES The principal activity of the Company during the half year focused on the ongoing development of Xanamem, ® a unique inhibitor of the 11β- HSD1 enzyme that achieves target engagement in the central nervous system. It is an oral medication for neurological diseases amenable to its mechanism of lowering cortisol in brain cells. Brain cortisol is associated with a number of neurological diseases, including neurodegenerative disease such as Alzheimer’s Disease (AD), neuropsychiatric diseases such as Major Depressive Disorder (MDD or Depression), and Fragile X Syndrome (FXS). 2. OPERATIONS REVIEW Highlights - Continuing to Follow the Science: Received approval of application for a UK Innovation Passport as part of the Innovative Licensing and Access Pathway (ILAP) for Xanamem in the treatment of Alzheimer’s disease Advancing two major Phase 2 clinical trial programs: • • Enrolment continues to track well in the six-week XanaCIDD Phase 2a Depression clinical trial at Australian and UK sites, which now exceeds 75% of the planned 160 trial participants. Results are expected in Q2CY024 Trial site activation and participant screening has commenced in the XanaMIA Phase 2b Alzheimer’s Disease trial. Treatment of the first of 100 participants at Australian sites is expected to begin shortly. Final results are expected in H2CY2025 with an interim analysis due in H1CY2025. Received a $4.8 million 1 Research & Development (R&D) tax incentive rebate Completed the development of an improved synthetic process of Xanamem drug substance and manufacture of a 1kg demonstration batch as a prelude to larger scale manufacture Published Xanamem human brain PET study in peer-reviewed journal, The Journal of Alzheimer’s Disease Initiated strategic changes and additions to the executive and operational teams: • Appointed new full time Chief Financial Officer and conducted limited reorganization of Clinical Operations team to align with upcoming business requirements • Continued to fill strategic operational roles to ensure the success of its clinical development program, including those required for the XanaMIA Phase 2b Alzheimer’s disease trial in Australia. Presented at numerous international and Australian AD, investment and partnering meetings Completed a successful $10 million capital raising in September. The first half of the Company’s 2024 financial year was marked by clinical pipeline progress and several major milestones and events: Approval by the UK Medicines and Healthcare products Regulatory Agency (MHRA) of an application for an Innovation Passport as part of the ILAP for Xanamem in the treatment of Alzheimer’s disease • Represents an independent endorsement by an international regulator of the potential impact of the Xanamem program • Key benefits of this approval include: o o o Entry point to the ILAP which aims to accelerate time to market Linkage to a portfolio of activities through the product-specific creation of the Target Development Profile (TDP) in conjunction with the MHRA Opportunities for enhanced regulatory and other stakeholder input including from partner agencies such as the MHRA and National Institute for Health and Care Excellence (NICE). Advancing Phase 2 trial programs: • XanaCIDD Phase 2a depression clinical trial: o o o Enrolment continues in the XanaCIDD Phase 2a trial in 160 patients with cognitive impairment associated with persistent major depressive disorder (MDD). Treatment is with either 10mg Xanamem or placebo, daily over six weeks The full complement of clinical sites is open in Australia and the UK which are actively recruiting, enrolling and treating patients, with enrolment now exceeds 75% (>120 of 160 planned participants) Results are anticipated in Q2 CY2024. ® Xanamem is a registered trademark of Actinogen Medical Limited 1 All financial data is in Australian dollars unless stated otherwise Page 3 of 25 • XanaMIA Phase 2b Alzheimer’s disease clinical trial: o o o o o The first Australian investigational sites have been activated for the XanaMIA Phase 2b clinical trial of Xanamem enrolling 220 patients with mild to moderate Alzheimer’s disease (AD) Sites have begun to recruit patients for screening with an elevated blood pTau biomarker (the same biomarker used to select patients shown to have a large Xanamem clinical benefit in the previous Phase 2a biomarker trial) Treatment, which is expected to begin imminently, will be with either 10mg Xanamem or placebo daily over 36 weeks Enrolment of the first 100 patients will take place at Australian sites, and an administrative interim analysis will occur when approximately 100 patients reach 24 weeks of treatment (interim results expected H1 CY2025) Final results are anticipated in H2 CY2025. $4.8 million R&D tax incentive rebate: • • In November, the Company announced that it had received an R&D tax incentive rebate of $4.8 million from the Australian Tax Office for the 2023 financial year The R&D tax incentive is an Australian federal government program under which companies receive cash refunds for eligible research and development expenditure. Manufacturing: • The Company’s new contract manufacturer, Asymchem, has completed the development of an improved synthetic process of Xanamem drug substance and completed the manufacture of a 1kg demonstration batch as a prelude to larger scale manufacture. Xanamem human brain PET study published in peer-reviewed journal, The Journal of Alzheimer’s Disease • This study was published on 19 January 2024 and can be accessed by the following link: https://pubmed.ncbi.nlm.nih.gov/38250767/ The study concluded that: 1) Xanamem achieved high target occupancy of 66-85%, which exceeded the 30-60% inhibition required for effectiveness in animal models 2) A dose level of 10 mg daily achieved near saturation of the enzyme target, meaning that higher doses achieved little additional occupancy 3) The study results support exploring doses of ≤10 mg in clinical trials, consistent with the Company’s ongoing phase 2 trials. Executive and clinical operations teams: • • • In November, the Company appointed Mr Will Souter as a new full time Chief Financial Officer. Mr Souter commenced in the role on 5 February 2024 The Company also initiated a limited reorganisation which resulted in the position of Senior Vice President, Product Development being made redundant. Ms Cheryl Townsend, Vice President Clinical Operations, now reports directly to the CEO The Company continues to fill strategic operational roles to ensure the success of its clinical development program, including those required for the XanaMIA Phase 2b Alzheimer’s disease trial in Australia. Neuroscience webinar for investors: • • • • Following the Science is fundamental to all of Actinogen’s activities and is the foundation for the Company’s ongoing Clinical Trials Science Forum (CTSF) series of plain English educational webinars On 31 August, leading neuroscience and cognition expert Professor Paul Maruff joined Actinogen’s Chief Medical Officer Dr Dana Hilt to discuss recent progress in the AD clinical development field and cognitive impairment associated with depressive disorder This highly informative discussion and Q&A session focused on interpreting the various testing methods that have been applied to cognition in AD and cognitive impairment associated with depressive disorder (CIDD) and used to evaluate the efficacy of new drugs such as Xanamem Xanamem works on lowering brain tissue cortisol and is one of only a few development programs that has demonstrated clinical activity on cognition in multiple placebo-controlled trials. CEO and CMO presented at numerous significant international conferences and conducted meetings at industry gatherings to continue evaluating potential value-add regional and global business development opportunities, including: • • • • • • The Alzheimer’s Association International Conference (AAIC) in Amsterdam, The Netherlands on 17-20 July. CMO Dr Dana Hilt presented an academic poster which summarized data from three earlier Phase 1 and 2a Xanamem trials and concluded that Xanamem displays activity in multiple domains of cognition, and that treatment with Xanamem results in clinically meaningful slowing of disease The 2023 Bioshares Biotech Summit in Hobart on 25 July, which brought together biotech companies and investors for company presentations, industry engagement and investor meetings. Dr Gourlay’s presentation summarized the Xanamem story and near-term Phase 2 clinical and regulatory milestones The Dementia Trials Australia Annual Scientific Meeting in Sydney, Australia on 6 October where the theme was: The new era in AD therapies. ACW CEO Dr Steven Gourlay provided a presentation titled Targeted modification of brain cortisol – a novel, nonamyloid approach The 17th international congress of the Asian Society Against Dementia (ASAD) in Bandung, Indonesia on 29 September where ACW Clinical Scientist Dr Jack Taylor presented to an audience comprising neurologists, psychiatrists, geriatricians, and other experts from local, national and world-class institutions focused on accelerating scientific discoveries in cognitive impairment, dementia and Alzheimer’s disease. The Company congratulates Dr Taylor who received the congress prize for Best Young Research Oral Presentation The BIO Investor Forum in San Francisco, USA on 18 October, where CEO Dr Steven Gourlay conducted investor and industry meetings The 16th annual CTAD conference in Boston, USA on 25 October where CMO Dr Dana Hilt presented an academic poster that provided an Page 4 of 25 overview of the Xanamem therapeutic rationale, the positive results of two prior placebo-controlled trials in healthy volunteers demonstrating pro-cognitive effects, and a biomarker trial in patients with mild Alzheimer’s disease that showed cognitive and clinical benefit. CEO Dr Steven Gourlay also attended the conference and was joined by Dr Hilt in key external meetings with other Biotech/Pharma companies and investors Post balance date on 7 January 2024, CMO Dr Dana Hilt presented to the Sachs Associates 7th Annual Neuroscience Innovation Forum in San Francisco, USA. Dr Hilt recapped the strong scientific rationale for modification of brain tissue cortisol levels with Xanamem, presented the clinical benefits seen in multiple trials to date and outlined the design of the two on-going Phase 2 trials, with near-term major results in Depression and Alzheimer's disease in 2024 and 2025 respectively Immediately following the Sachs Forum, CEO Dr Steven Gourlay and CMO Dr Hilt participated in a significant number of partnering, analyst and investor meetings associated with the 42nd Annual J.P. Morgan Healthcare Conference from 8 to 12 January. • • Capital raising: On 7 September, the Company announced the successful completion of a $10 million non-renounceable rights issue offer to existing shareholders. All shares on offer were taken up by existing shareholders and through shortfall commitments from existing and new shareholders Funds raised by the rights issue have been applied to progressing the Company’s Phase 2 clinical trial program including the completion of the XanaCIDD trial in patients with cognitive impairment associated with depression, startup costs associated with the XanaMIA trial in patients with mild to moderate Alzheimer’s disease, and general working capital. • • For further information on all the above events, please refer to the ASX announcements section under the Investor Centre tab on the Actinogen website. 3. FINANCIAL REVIEW (a) Financial Performance The financial performance of the Company during the half year ended 31 December 2023 is as follows: Half year ended Half year ended 31/12/2023 31/12/2022 1,015,804 1,140,013 Net loss after tax ($) (11,556,659) (7,438,708) Loss per share (cents) (0.56) (0.41) - - As at As at 31/12/2023 30/06/2023 $ $ Cash and cash equivalents 11,472,389 8,460,074 Net assets / Total equity 11,978,440 13,407,215 Contributed equity 90,783,121 78,712,128 Accumulated losses (80, 248,212) (68,691,553) Revenue and other income ($) Dividend ($) (b) Financial Position The financial position of the Company as at 31 December 2023 is as follows: Page 5 of 25 4. MATERIAL RISKS In addition to risks associated with any business there are specific, material risks that, either individually or in combination, may materially and adversely affect the future operating and financial performance and prospects of Actinogen and the value of its shares. Some of these risks may be mitigated by Actinogen’s internal controls and processes but some are outside the control of Actinogen, its directors and management. The material risks identified by management are described below: Risk Implication Mitigation Research and Development Activities Actinogen’s future success is dependent on the performance of Actinogen’s lead molecule, Xanamem®, in clinical trials and whether it proves to be a safe and effective treatment. Xanamem is an experimental product in Phase 2 clinical development. Product commercialization resulting in potential product sales revenues are likely to be years away without any guarantee that it will be successful. It requires additional research and development, including ongoing clinical evaluation of safety and efficacy in clinical trials and regulatory approval prior to marketing authorization. Until Actinogen is able to provide further clinical evidence of the ability of Xanamem to improve outcomes in patients, the future success of its technology remains speculative. Research and development risks include uncertainty of the outcome of results, difficulties or delays in development and generally the uncertainty that surrounds the scientific development of pharmaceutical products. Mitigation measures include ‘following the science’ of the data generated for Xanamem to date, hiring expert clinical development professionals to design, oversee and analyse the trial program, engagement of leading contract research organisations to manage components of the trials and drive recruitment as well as engagement of well-qualified clinical sites experienced in clinical trial execution and in the relevant therapeutic areas. Regulatory Approvals Actinogen operates within a highly regulated industry, relating to the manufacture, distribution and supply of pharmaceutical products. There is no guarantee that Actinogen will obtain the required approvals, licenses and registrations from relevant regulatory authorities in jurisdictions in which it operates. The commencement of clinical trials may be delayed and Actinogen may incur further costs if the Food and Drug Administration (FDA) and other regulatory agencies are tardy or observe deficiencies that require resolution or request additional studies be conducted in addition to those that are currently planned. A change in regulation may also adversely affect Actinogen’s ability to commercialize and manufacture its treatments. Mitigation measures include operating under a US FDA Investigational New Drug (IND) process, engagement of suitably qualified and experienced persons with expertise in the regulation of small molecule therapies, establishing relationships with regulators to facilitate feedback and guidance from them, regular review of evolving regulatory requirements and analysis of the Company’s activities and plans against regulatory expectations in key jurisdictions, and ensuring that the expectations and uncertainties related to regulatory approvals, and the timing of such approvals, are included in business plans. Intellectual Property Securing rights in technology and patents is an integral part of securing potential product value in the outcomes of biotechnology research and development. Competition in retaining and sustaining protection of technology and the complex nature of technologies can lead to patent disputes. Actinogen’s success depends, in part, on its ability to obtain patents, maintain trade secret protection and operate without infringing the proprietary rights of third parties. Because the patent position of biotechnology companies can be highly uncertain and frequently involves complex legal and factual questions, neither the breadth of claims allowed in biotechnology patents nor their enforceability can be predicted. There can be no assurance that any patents which Actinogen may own, access or control will afford Actinogen commercially significant protection of its technology or its products or have commercial application or that access to these patents will mean that Actinogen will be free to commercialise its technology. Competitors may file patents which could limit the Company's freedom to operate for its technologies. The granting of a patent does not guarantee that the rights of others are not infringed or that competitors will not develop technology or products to avoid Actinogen's patented Mitigation measures include use of expert patent attorneys, regular review of the relevant patent landscape, filing of additional patents and maintenance of patents in a broad geography covering major pharmaceutical markets. Page 6 of 25 Risk Implication Mitigation technology. Actinogen’s current patenting strategies do not cover all countries which may lead to generic competition arising in those markets. Partnership Model While undertaking its Phase 2 clinical program the Company is actively pursuing value-add partnership(s) to expand the trial program further and secure commercialization pathways in one or more territories. This model, which typically involves entering into commercial arrangements with other companies by which Actinogen would license its Xanamem technology to the partner in one or more indications and/or geographies and the partner assumes some or all responsibility for progressing, and paying for, the clinical trials and eventual commercialization. This strategy involves the risk that the Company will lose some or all control of the development timetable of its products to its commercial partner(s), which may give rise to an unanticipated delay in any commercial returns. Further, the Company may be unable to enter into arrangements with suitable commercial partners in respect of relevant indications. If either of these outcomes occurred, the Company’s business and operations may be adversely affected. Mitigation measures employed by the Company include: using expert business development professionals to build relationships with potential partners, performing rigorous due diligence, ensuring that the commercial terms negotiated are fair and utilising expert legal advice to ensure that appropriate warranties and commitments are included in contracts, and that the contracts reflect the agreed commercial position. The Company seeks to form partnerships with relevant regulatory agencies including the FDA, EMA, and MHRA. This was most recently evidenced by the grant of a UK Innovation Passport. Manufacturing The Company’s products are manufactured using a specialised manufacturing process at an expert third party facility, as is the norm in our industry. An inability of these third party contract manufacturing organisations to continue to manufacture the Company’s products in a timely, economical and/or consistent manner, including any scale up of manufacturing processes, or to maintain legally compliant manufacturing to maintain product supply, could adversely impact on the progress of the Company’s development programs and potentially on the financial performance of the Company. Mitigation measures include performing rigorous due diligence on contract manufacturers, engaging contract manufacturers with strong track records and sufficient capability to meet the Company’s foreseeable needs, employing senior managers responsible for managing and monitoring the performance of contract manufacturers, and maintenance of quality systems and related documentation. Fundraising risk Actinogen is reliant upon fundraising to fund its operations. Funds may be available in the future from grants, development and commercial partnerships, tax incentives and capital markets but are not guaranteed. Capital market volatility has affected many companies since 2020 and future volatility may impact Actinogen’s ability to raise future funds. Mitigation measures include filing of multiple grant applications, key management focus on partnership relationships, use of specialist advisors in tax, business development and investor relations, maintaining high quality analyst coverage, frequent communications to retail and institutional investors and having a presence at many scientific and business conferences. Page 7 of 25 5. BUSINESS STRATEGY AND OUTLOOK Actinogen’s strategic priorities continue to focus on three key elements: • • • Accelerate clinical development in cognitive impairment Forward planning Create value from partnerships. Accelerate clinical development in cognitive impairment The Phase 2a clinical biomarker trial highlighted the benefits of Xanamem in biomarker-positive patients. These results strongly support the feasibility of using both cognitive testing and the CDR-SB endpoint for our Phase 2b trial. Using these data to simulate and design the Phase 2b trial should significantly increase its chances of success. Our key goals under this strategic priority are: • • • • • Build on improved attention and working memory in two independent, placebo-controlled trials Complete Phase 2a trial now underway in patients with Cognitive Impairment and Depressive Disorder (XanaCIDD) Build on the large Xanamem effect seen in patients with mild AD and elevated pTau181 protein in the blood (an indication of progressive AD) Initiate Phase 2b trial in patients with the early stages of Alzheimer’s disease and elevated pTau (XanaMIA Part B) Leverage ‘hands on’ clinical operations and management based in Australia to speed timelines and reduce cost. Forward planning In addition to conducting high quality clinical trials there are numerous other important activities for successful drug development. At Actinogen, we proactively plan and manage all aspects of the Xanamem development plan. Our key goals under this strategic priority are: • Complete additional manufacturing batch for scale-up and supply of future clinical trials • Use to-be-marketed tablet formulation in all future trials • Integrate global regulatory strategic planning to optimize path to marketing approvals • Plan and conduct required regulatory nonclinical studies to the Good Laboratory Practice standard • Plan and conduct ancillary clinical pharmacology studies required for marketing approvals. Create value from partnerships Our active business development plan maintains and develops relationships with all potential drug development partners, both large and small, regional and global. The Company also seeks to form partnerships with relevant regulatory agencies including the FDA, MHRA and EMA, an example of which is the recent grant of a UK Innovation Passport. We continue to see a high level of interest in our programs. Strengthened by the addition of Dr Dana Hilt to the team, we attended in person at an increased number of important international conferences during the year to facilitate relationship building, partner engagement, and Actinogen’s presence as a Phase 2 clinical-stage company. We use our Alzheimer's program as the ‘core’ collaboration with the US FDA covering manufacturing, quality and nonclinical matters. We also aim to build and maintain good working relationships with other global regulators such as the European Medicines Agency (EMEA) and the UK Medicines and Healthcare products Regulatory Agency. Our key goals under this strategic priority are: • Prioritize high value regional partnerships in the near term • Engage with the universe of potential biopharma partners who could create synergy for the Xanamem program • Maintain close working relationships with key regulators such as the US FDA, UK MHRA and the EMA • Partner with leading clinical trial implementation providers • Partner with key community organizations in Australia and globally. Our FY2024 strategic priorities were also summarized in an infographic on page 11 of the 2023 annual report and on the Company’s website www.actinogen.com.au. Outlook The Company remains confident about its prospects in FY2024 and beyond. Actinogen continues with the XanaCIDD trial that will report results in the second quarter of 2024, using a primary endpoint measuring cognition that was validated by demo