Full Press Release Details
2022 BIONOMICS ANNUAL REPORT
| PAGE | ||
| EXECUTIVE CHAIRMAN REPORT | 1 | |
| DIRECTORS' REPORT | 2 | |
| ANNUAL CONSOLIDATED FINANCIAL STATEMENTS | 23 | |
| INDEPENDENT AUDIT REPORT | 71 | |
| SHAREHOLDERS INFORMATION | 76 |
Executive Chairman's Report
This past year has been one of monumental progress for Bionomics against a backdrop that has included a global pandemic and ongoing geopolitical uncertainty. This progress has been a transition from turning the Company around to focusing on once again being a clinical stage company with multiple ongoing Phase 2 efficacy and safety studies, securing funding to execute on these opportunities and beyond, and doing so on an elevated global stage.
Bionomics' strength lies in our stated strategy of executing on a balanced business model between proprietary drug development and external collaborations. With our lead compound having already entered the clinic in a Phase 2b Post-Traumatic Stress Disorder trial (the ATTUNE Study) in July 2021, Bionomics' ability to identify further potential clinical applications for BNC210 and using that to expand the development pipeline in pursuing Social Anxiety Disorder has resulted in greater potential value creation and increased balance and risk mitigation across the business.
The mechanistic rationale, commercial opportunity, and regulatory endorsement behind the acute treatment of Social Anxiety Disorder is well-founded on the breadth of data generated for BNC210 in previous clinical trials in a Panic setting and in Generalised Anxiety Disorder patients, as well as the US Food and Drug Administration granting BNC210 Fast Track designation in November 2021 for this indication. However, the pipeline expansion and starting a second Phase 2 trial in Social Anxiety Disorder (the PREVAIL Study) in January 2022 would not have been possible without successful capital raising efforts and commitment from existing investors. In carrying out this strategy, Bionomics completed its US Initial Public Offering (IPO) and Nasdaq listing in December 2021 to aide in unlocking the full potential value for shareholders over the long-term while boosting our global visibility and strategic positioning.
With the heightened visibility and a strengthened balance sheet resulting from the US IPO, we have focused on increasing awareness of the ongoing studies and important upcoming readouts expected over the next four quarters (topline data for PREVAIL and ATTUNE Studies projected for calendar year end 2022 and mid-2023, respectively) while our strategic collaboration with Merck remains active with two compounds in ongoing clinical trials evaluating potential treatments for cognitive impairment in conditions such as Alzheimer's disease, schizophrenia and attention deficit hyperactivity disorder.
We are excited about the large markets and unmet needs we are pursuing and plan to continue executing to the best of our ability in working to deliver new therapies for these patients. As the focus remains on advancing our studies towards potentially transformational readouts, we are motivated to strengthen our board of directors and building out the management team in order to achieve the full potential of our programs. We are enthusiastic about what the future holds and the opportunity to find therapies for patients who are suffering from debilitating central nervous system disorders while building value for our shareholders along the way.
Executive Chairman's Report
In accordance with the Corporations Act 2001, the directors of Bionomics Limited ( Company ) report on the Company and the consolidated entity, being the Company and its controlled entities ( Group ), for the year ended 30 June 2022 ( the year or the period ).
The following persons were Directors of Bionomics Limited during the period and up to the date of this report:
-Dr Errol De Souza, Executive Chairman
-Mr David Wilson, Non-Executive Director
-Mr Alan Fisher, Non-Executive Director
-Mr Aaron Weaver, Non-Executive Director
-Dr Jane Ryan, Non-Executive Director
-Mr Miles Davies, Non-Executive Director (appointed 1 July 2021)
-Mr Mitchell Kaye, Non-Executive Director (resigned on 31 December 2021)
Except as noted, the above-named Directors held their current positions for the whole of the financial year and since the end of the financial year.
Principal Activities
The principal activities of the Group during the period were the development of novel drug candidates focused on the treatment of central nervous system ( CNS ) disorders.
Financial Performance
The operating loss after tax for the year ended 30 June 2022 increased to $21,759,358 compared to $8,697,037 for the year ended 30 June 2021, an increase of $13,062,321 mainly as a result of:
-Revenue for the year increased by $263,634, compared to $nil for the previous year due to the receipt of a license fee.
-Other income for the year increased by $4,499,888 to $5,808,231, compared to $1,308,343 for the previous year. The increase is as a result of an increase in eligible expenditure that qualified for the Government research and development incentive, offset by a decrease in rent income and Government COVID-19 assistance.
-Other (losses) and gains for the year decreased by $4,854,946 to a net loss of $582,015, compared to a net gain of $4,272,931 for the previous year. The change is due to changes in the fair value of contingent consideration and unrealised and realised foreign exchange gains due to movement in foreign exchange rates over the year ended 30 June 2022.
-Research and development expenses for the year increased by $10,236,696 to $15,998,999, compared to $5,762,303 for the previous year. The increase is as a result of starting the ATTUNE Phase 2b Post-Traumatic Stress Disorder ( PTSD ) clinical trial in the United States ( US ) during July 2021 and the PREVAIL Phase 2 Social Anxiety Disorder ( SAD ) clinical trial in the US during January 2022.
-Administrative expenses for the year increased by $3,025,6534 to $7,398,476, compared to $4,372,823 for the previous year, mainly due to:
oan increase in employee share-based payment expenses due to the issue of share options to the Executive Chairman;
oan increase in staff and consultant expenses;
oan increase in the Executive Chairman consultancy fee due to the new employment contract, and
oone-off expense in the year resulting from fees paid to external consultants for the Contingent Value Rights transaction that did not proceed.
-Occupancy expenses for the year decreased by $1,009,974 to $262,440, compared to $1,272,414 for the previous year as a result of the Company moving to new premises in June 2021.
Executive Chairman's Report
-Compliance expenses for the year increased by $2,122,623 to $3,736,936, compared to $1,614,313 for the previous year, mainly due to:
oan increase in insurance expense as a result of listing on Nasdaq following the US initial public offering ( IPO ), and
oan increase in audit fees due to the US IPO audit under Public Company Accounting Oversight Board (United States) ( PCAOB ) requirements and, PCAOB and Australian statutory audit requirements in the current year compared to only statutory audit requirements for the previous year.
-Finance expenses for the year decreased by $1,399,720 to $44,165 compared to $1,443,885 for the previous year due to the bank and equipment loans being fully repaid during April 2021.
The Group's statement of financial position includes the following key balances:
-Consolidated cash balances as at June 30, 2022 of $33,564,857 (2021: $28,499,449), and
-Research and development incentives receivable of $6,719,761 (2021: $928,073) relating to the Group's expected R&D tax incentives from the Australian Government for research and development expenditure incurred on approved projects.
During the year, the Company completed a US IPO and Nasdaq listing. The net proceeds raised of $26,670,801 was due to participation by US and Europe investors. The Company is now dual listed on the Australian Securities Exchange ( ASX ) and Nasdaq where its American Depositary Shares ( ADSs ) are listed at a ratio of 180 ordinary shares to one ADS.
Review of Operations
Bionomics is a clinical stage biopharmaceutical company developing novel, allosteric ion channel modulators designed to transform the lives of patients suffering from serious CNS disorders with high unmet medical need.
Ion Channel Expertise to Drive Growth
Ion channels serve as important mediators of physiological function in the CNS, and the modulation of ion channels influences neurotransmission that affects downstream signaling in the brain. The a7 nicotinic acetylcholine ( ACh ) receptor ( a7 receptor ) is an ion channel that plays an important role in modulating emotional responses and cognitive performance. Utilising our expertise in ion channel biology and translational medicine, we are developing orally active small molecule negative allosteric modulators ( NAMs ) and positive allosteric modulators ( PAMs ) of the a7 receptor to treat anxiety related disorders and cognitive dysfunction disorders, respectively.
BNC210 Proprietary Pipeline Expansion and Continued Development
Bionomics is advancing its lead product candidate, BNC210, an oral proprietary selective NAM of the a7 receptor, for the acute treatment of SAD and chronic treatment of PTSD.
Bionomics previously announced that as part of its broader pipeline expansion strategy and based on anti-anxiety efficacy signals in Generalised Anxiety Disorder ( GAD ) patients, it would proceed with evaluating BNC210 as an acute treatment in SAD. The decision to pursue this indication was further supported by data for BNC210 in a placebo-controlled Phase 1 study showing anxiety reductions as indicated by lowered number of panic symptoms and panic symptom intensity in a translational model utilising cholecystokinin tetrapeptide ( CCK-4 ) induced panic attacks in healthy volunteers. BNC210's activity in the brain is well supported with various biomarker studies, including an earlier Phase 1b study demonstrating lowering of nicotine-induced electroencephalogram ( EEG ) signals in healthy volunteers as well as in the Phase 2 study in GAD patients demonstrating reductions in hyperactivity in the amygdala, the region of the brain responsible for emotional control, when exposed to fear-inducing triggers.
In November 2021, the Company announced that it had received US Food and Drug Administration ( FDA ) clearance to proceed with evaluating BNC210 for the acute treatment of SAD in a Phase 2 clinical trial named the PREVAIL study. On 1 December 2021, the Company announced that the FDA had granted Fast Track designation to the
Executive Chairman's Report
BNC210 development program for the acute treatment of SAD and other anxiety-related disorders. In January 2022, the Company announced that it had initiated its Phase 2 clinical trial ( the PREVAIL study ) to evaluate BNC210 for the acute treatment of SAD, with topline results expected by the end of 2022. The PREVAIL study is evaluating two doses of the oral tablet formulation of BNC210 compared to placebo as an acute treatment for SAD in approximately 150 patients.
Additionally, Bionomics continued its ongoing development of BNC210 in PTSD with the start of its Phase 2b ATTUNE study, a randomised, double-blinded, placebo-controlled clinical trial evaluating BNC210 oral tablet monotherapy treatment in approximately 200 PTSD patients over a 12-week treatment period ( the ATTUNE study ). The ATTUNE study followed an earlier announcement of positive pharmacokinetic ( PK) results from a 7-day dosing study in healthy volunteers using the newly developed solid dose oral tablet formulation of BNC210. Bionomics initiated the ATTUNE study in July 2021 and expects to have topline data in mid-2023. In November 2019, the FDA granted Fast Track designation to the BNC210 development program for the treatment of PTSD and other trauma-related and stressor-related disorders.
The Company's expertise in ion channels and approach to develop allosteric modulators have been validated through its strategic partnership with Merck Sharpe & Dohme ( MSD , known as Merck in the US and Canada) for our a7 receptor PAM program, which targets a receptor that has garnered significant attention for treating cognitive deficits. This partnership enables Bionomics to maximise the value of its ion channel and chemistry platforms and develop transformative medicines for patients suffering from cognitive disorders such as Alzheimer's disease.
Novel Approach in Large Market with Significant Unmet Need
There remains a significant unmet medical need for over 22 million patients in the US alone suffering from SAD and PTSD. Current pharmacological treatments include certain antidepressants and benzodiazepines, and there have been no new FDA approved therapies in these indications in nearly two decades. These existing treatments have multiple shortcomings, such as a slow onset of action of antidepressants, and significant side effects in both classes of drugs. BNC210 has been observed in clinical trials to have a fast onset of action and has demonstrated anti-anxiety and antidepressant effects but without many of the limiting side effects observed with benzodiazepines, selective serotonin reuptake inhibitors ( SSRIs ) and serotonin and norepinephrine reuptake inhibitors ( SNRIs ).
Strong Ongoing Collaboration with MSD
Bionomics' collaboration with MSD for therapeutic candidates for the treatment of cognitive dysfunction in Alzheimer's disease and other CNS conditions continues to progress through clinical development.
In June 2014, the Company entered into a research collaboration and license agreement with MSD to develop a7 receptor PAMs targeting cognitive impairment in conditions such as Alzheimer's disease, Parkinson's disease, schizophrenia and attention deficit hyperactivity disorder ( ADHD ). Under the 2014 agreement, MSD is funding all research and development activities, including clinical development and worldwide commercialisation of any products developed from the collaboration. The Company received an upfront payment of US$20 million at the inception of the collaboration and another US$10 million in February 2017 when the first compound from the collaboration entered Phase 1 clinical trials and may receive up to an additional US$476 million in development and commercialisation milestone payments (US$506 million in total), in addition to royalties from sales of the product(s).
The MSD collaboration currently includes two candidates that are in early-stage Phase 1 safety and biomarker clinical trials for treating cognitive impairment. The first compound has completed Phase 1 safety clinical trials in healthy subjects and is currently undergoing biomarker studies. In 2020, a second molecule that showed an improved potency profile in preclinical animal models was advanced by Merck under this collaboration into Phase 1 clinical trials.
Leveraging Value of Legacy Oncology Assets
Bionomics continued limited activities to maximise the value of our legacy oncology programs BNC101 and BNC105 through external funding of clinical development and divestment/out-licensing.
Executive Chairman's Report
The Company entered into an exclusive agreement to license its BNC101 oncology drug candidate to Carina Biotech ( Carina ), for the development of Chimeric Antigen Receptor T cell ( CAR-T ) therapy, which harnesses the body's immune system to fight cancer. BNC101 is a humanised monoclonal antibody to LGR5, which is overexpressed in cancer stem cells within solid tumours, including colorectal, breast, pancreatic, ovarian, lung, liver and gastric cancers, and has the potential to guide CAR-T therapeutic development. Under the worldwide, exclusive License Agreement, Carina is obliged to fund all research and development activities. Bionomics is eligible to receive up to $118 million in clinical & development milestones plus royalty payments if Carina fully develops and markets the new therapy. In the event that Carina sub-licenses the CAR-T treatment, Bionomics is eligible to share in the sub-licensing revenues in early clinical development and receive a substantial double-digit portion of the revenues in later stages of clinical development.
In May 2022, Carina announced that it had appointed the Australian-based organisation, Cell Therapies, to undertake Good Manufacturing Processes ( GMP ) manufacture of its LGR5 CAR-T cells for a first-in-human clinical trial. Carina also announced that they had submitted their pre-Investigational New Drug ( IND ) application in March of this year and are on track to file an IND application with the FDA in the second half of 2022.
An experimental Phase 2 clinical trial of Bionomics' cancer drug candidate, BNC105, in combination with Bristol-Myers Squibb's nivolumab (OPDIVO ) was conducted in patients with metastatic colorectal cancer. The trial, MODULATE, was sponsored by the Australasian Gastro-Intestinal Trials Group ( AGITG ) and supported by Bristol-Myers Squibb and was conducted at clinical oncology sites around Australia. Data from the trial, presented at the European Society for Medical Oncology Congress in September 2021 showed that the combination treatment of BNC105 and nivolumab was well-tolerated and demonstrated anti-tumour activity with encouraging increases in Overall Survival ( OS ) but did not meet the high hurdle of Response Rate ( RR ) in this small cohort of patients. Ongoing studies are examining the impact of the treatment combination on the tumour micro-environment.
Financing Activities
With Bionomics' strategy of expanding the profile of the Company globally and more effectively accessing the US capital markets, the Company completed a US IPO of ADSs and Nasdaq listing in December 2021.
The gross proceeds from the capital raising were US$20 million, before deducting underwriting discounts and commissions and other IPO expenses payable by Bionomics. The ADSs began trading on the Nasdaq Global Market on 16 December 2021 under the ticker symbol BNOX . With the underwriters exercising their option on 6 January 2022 to purchase additional ADSs in connection with the IPO, the total gross proceeds were US$23 million, before deducting underwriting discounts and commissions and other offering expenses payable by Bionomics. Bionomics is now dual listed on the ASX and Nasdaq, where its ADSs are listed at a ratio of 180 ordinary shares to one ADS.
Bionomics remains focused on the development of its ongoing clinical programs in BNC210 and is closely managing both of its ongoing PREVAIL and ATTUNE clinical studies with upcoming topline data readouts around the end of 2022 and mid-2023, respectively. The Company is continuing to manage its Chemistry Manufacturing and Controls ( CMC ) and toxicology activities related to non-clinical development of BNC210 for planned future studies. In the ongoing effort to develop a commercial strategy, Bionomics contracted with Bluestar BioAdvisors to gain further insights into the US market potential for BNC210 as a treatment for PTSD and SAD, the results of which the Company plans to share more details of in the coming quarters.
The Directors do not propose to make any recommendation for dividends for the current financial year. There were no dividends declared in respect of the previous financial year.
Significant Changes in the State of Affairs
There have been no significant changes in the state of affairs of the Group during the financial year.
Executive Chairman's Report
On 15 July 2022, the Company issued 7,700,000 share options to subscribe for 7,700,000 shares at $0.0543 per share, under the Employee Equity Plan that was approved by shareholders at the Annual General Meeting held on 2 December 2021, including 7,500,000 share options that were issued to key management personnel (KMP). 25% of the Options vest at the end of 12 months following the Offer Date (8 July 2022), and 75% vest in 12 substantially equal instalments (6.25%) on the last day of each calendar quarter over the 4-year period following the end of the initial 12 months following the Offer Date. The share options expire on the date that is 5 years following each vesting date.
Details of share options that were issued to the KMPs are set out below:
| KMP | Number |
| Mr Adrian Hinton | 2,000,000 |
| Mr Connor Bernstein | 3,500,000 |
| Ms Liz Doolin | 2,000,000 |
On 5 August 2022, the Company received $2,085,453 research and development tax incentive refund relating to the financial year ended June 2021, which as at 30 June 2022 is included as part of the Research and Development Incentives Receivable, in the Consolidated Statement of Financial Position.
There are no other matters or circumstances that have arisen since the end of the financial year which significantly affect or may significantly affect the results of the operations of the Group.
Details about the impact of COVID-19 are disclosed in Note 34 to the Financial Statements.
Likely Developments and Expected Results of Operations
The Group will continue to undertake drug and clinical development and will seek to commercialise the outcomes.
Environmental Regulation
The Group is subject to environmental regulations and other licenses in respect of its facilities in Australia. The Group is subject to regular inspections and audits by responsible State and Federal authorities. The Group was in compliance with all the necessary environmental regulations throughout the year ended 30 June 2022 and no related issues have arisen since the end of the financial year to the date of this report.
Information relating to shares under option or warrants is set out in Note 21 to the financial statements. The total number of shares under option as at 30 June 2022 was 79,056,617 under the Employee Equity Plan ( EEP ), Employee Share Option Plan ( ESOP ) and other offers. The total number of shares under warrants as at 30 June 2022 was 142,000,000.
The holders of these options or warrants do not have the right, by virtue of the option, to participate in any share issue, dividend or voting of members of the Company.
On 2 December 2021 the Company issued 61,216,767 share options to KMPs, details of which are disclosed on page 12 and 15 of this Report.
Since the end of the year and up to the date of this report:
-15,000 share options lapsed and no warrants lapsed.
-On 15 July 2022, the Company issued 7,700,000 share options to subscribe for 7,700,000 shares at $0.0543 per share under the Employee Equity Plan, details are disclosed in Note 33 to the Financial Statements.
Shares Issued on the Exercise of Options and Warrants
During the year ended 30 June 2022 or up to the date of this report, 10,000,000 ordinary shares of Bionomics were issued on the exercise of options granted under the Company's equity incentive plans or on the exercise of warrants.
Executive Chairman's Report
Insurance of Directors and Officers
During the financial year, the Company paid a premium to insure the Directors and Officers ( D&O ) of the Company. Under the terms of this policy, the premium paid by the Company is not permitted to be disclosed.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the D&O in their capacity as D&O of the Company, and any other payments arising from liabilities incurred by the D&O in connection with such proceedings, other than where such liabilities arise out of conduct involving a willful breach of duty by the D&O or the improper use by the D&O of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company.
It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.
The Company may decide to employ the external auditor on assignments additional to their statutory audit duties where the external auditor's expertise and experience with the Group are important. Details of the amounts paid to the external auditor for audit and non-audit services provided during the year are set out in Note 29 to the financial statements. The Board has considered the position and, in accordance with the advice received from the Audit and Risk Management Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for external auditors imposed by the Corporations Act 2001.
Auditor's Independence Declaration