Announcement PDF Invion Limited ABN 76 094 730 417 Annual Report - 30 June 2024 Invion Limited Appendix 4E Preliminary final report 1. Company details Name of entity: ABN: Reporting period: Previous period: Invion Limited 76 094 730 417 For the year ended 30 June 2024 For the year ended 30 June 2023 2. Results for announcement to the market $ Revenues from ordinary activities down 10.0% to 3,694,256 Loss from ordinary activities after tax attributable to the owners of Invion Limited up 248.5% to (5,627,765) Loss for the year attributable to the owners of Invion Limited up 248.5% to (5,627,765) Dividends There were no dividends paid, recommended or declared during the current financial period. Comments The loss for the consolidated entity after providing for income tax amounted to $5,627,765 (30 June 2023: $1,614,823). 3. Net tangible assets Net tangible assets per ordinary security 4. Control gained over entities Not applicable. 5. Loss of control over entities Not applicable. 6. Dividends Current period There were no dividends paid, recommended or declared during the current financial period. Previous period There were no dividends paid, recommended or declared during the previous financial period. 7. Dividend reinvestment plans Not applicable. 1 Reporting period Cent Previous period Cent 0.02 0.08 Invion Limited Appendix 4E Preliminary final report 8. Details of associates and joint venture entities Not applicable. 9. Foreign entities Details of origin of accounting standards used in compiling the report: Not applicable. 10. Audit qualification or review Details of audit/review dispute or qualification (if any): The financial statements have been audited and an unmodified opinion has been issued. 11. Attachments Details of attachments (if any): The Annual Report of Invion Limited for the year ended 30 June 2024 is attached. 12. Signed Signed ___________________________ Date: 30 August 2024 Thian Chew Chairman 2 Invion Limited Contents 30 June 2024 Corporate directory Directors' report Auditor's independence declaration Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Consolidated entity disclosure statement Directors' declaration Independent auditor's report to the members of Invion Limited Shareholder information 4 5 20 21 22 23 24 25 46 47 48 52 3 Invion Limited Corporate directory 30 June 2024 Directors Mr Thian Chew, Chairman (Executive Chairman and CEO) Mr Alan Yamashita, Non-executive Director Mr Rob Merriel, Non-executive Director Mr Alistair Bennallack, Non-executive Director Company secretary Tai Phan (appointed on 31 July 2024) Australia Business Number 76 094 730 417 Registered office Level 4, 100 Albert Road, South Melbourne Vic 3205 Australia P: (03) 9692 7222 E: investor@inviongroup.com W: www.inviongroup.com Share register Link Market Service Limited Locked Bag A14, Sydney South NSW 1235 Australia P: 1300 554 474 F: (02) 9287 0303 W: www.linkmarketservices.com.au Auditor William Buck Level 20, 181 William Street Melbourne VIC 3000 Stock exchange listing Invion Limited shares are listed on the Australian Securities Exchange (ASX code: IVX) 4 Invion Limited Directors' report 30 June 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 Invion Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2024 Directors The following persons were directors of Invion Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Mr Thian Chew, Chairman (appointed Executive Chairman and CEO) Mr Alan Yamashita, Non-executive Director Mr Rob Merriel, Non-executive Director Mr Alistair Bennallack, Non-executive Director Principal activities Invion is a life sciences company that is leading the global research and development of PhotosoftTM technology for the treatment of a range of cancers, atherosclerosis and infectious diseases. The Invion Group consists of Invion Limited and its wholly owned subsidiary, Epitech Dermal Science Pty Ltd. Invion holds the exclusive Australia and New Zealand license rights and exclusive distribution rights to Hong Kong and the rest of Asia Pacific, excluding China, Macau, Taiwan and Japan, to the Photosoft TM technology for all cancer indications. It also holds the exclusive rights to the Photosoft TM technology in Asia and Oceania, excluding China, Hong Kong, Taiwan, Macau, the Middle East and Russia for atherosclerosis and infectious diseases, and subsequently acquired the rights to the United States, Canada and Hong Kong for infectious diseases. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations Invion is a life science company that is leading the global research and development of PhotosoftTM technology for the treatment of a range of cancers, atherosclerosis and infectious diseases. During the year, Invion made significant progress in developing new partnership opportunities to commercialise Photosoft and advancing its clinical trial program. The Company signed a collaboration agreement with major South Korean pharmaceutical group, Hanlim Pharma Co., Ltd. (Hanlim), to develop Invion’s lead drug candidate, INV043, for the treatment of glioblastoma multiforme (GBM), which is a primary brain malignancy with a poor prognosis. Under the agreement, Hanlim will undertake and fund the evaluation including Proof-of-Concept (PoC) preclinical studies, while Invion retains all rights to the technology and to any new intellectual property (IP) resulting from the collaboration. Invion and Hanlim are working with Seoul St. Mary’s Hospital, one of South Korea’s most prestigious hospitals, to design the proposed in vitro and in vivo studies. Invion secured a similar agreement with another South Korean company, Dr. I&B Co., Ltd. (Dr.inB), to develop Photosoft for the treatment of the Human Papilloma Virus (HPV). Dr.inB will undertake and fund the formulation and evaluation of the Photosoft compounds in vitro and/or in vivo as appropriate, to demonstrate efficacy and safety, and conduct PoC clinical trials to test the safety and efficacy of Photosoft in HPV patients at gynaecology clinics in South Korea. Invion retains all benefits and rights to the Photosoft technology, including new IP that may arise out of this collaboration. In another significant development, Invion announced the positive findings from a study by the Peter MaCallum Cancer Centre (Peter Mac) on the effect of Invion’s lead drug candidate, INV043, when used in combination with an immune checkpoint inhibitor (ICI) therapy. 5 Invion Limited Directors' report 30 June 2024 ICIs are a type of immunotherapy and is the standard of care for the treatment of several cancers. The results from the in vivo study using immune competent mouse models with anal squamous cell carcinomas (ASCC) showed that combination therapy using INV043 with ICIs led to ~80% control of ASCC tumours at the study endpoint, compared with ICI therapy alone, which achieved 12% control. Importantly, the mice under combination treatment maintained a healthy weight while under treatment and no negative side effects from the combination therapy were noted. Invion also expanded its existing Photosoft perpetual licence and distribution rights for cancer indications to the territory of South Korea during the financial year. The country represents a new and significant opportunity to Invion with its oncology drugs market forecast to grow at a compound annual growth rate (CAGR) of 12.6% to US$7.4 billion by 20301. Meanwhile, Invion achieved an important milestone in commencing its Phase I/II non-melanoma skin cancer (NMSC) trial with the successful manufacturing of INV043 drug substance under Good Manufacturing Practice (GMP) compliant manufacturing process. Invion is currently awaiting Human Research Ethics Committee (HREC) approval to commence patient recruitment. On the back of these successes, the Company secured a $2.4 million to $6.8 million investment by US institutional investor, Lind Partners. Invion received an upfront investment of $1.54 million in early July and will receive $100,000 a month, which may be increased by mutual agreement up to $500,000 per month, for the following 11-months. As part of the $1.54 million capital raised, the company also granted 120 million free attaching options on 28 June 2024 to Lind Partners under the share subscription agreement. The loss for the consolidated entity after providing for income tax amounted to $5,627,765 (30 June 2023: $1,614,823). The increase in loss compared to previous year is mainly driven by provision for bad and doubtful debts of $3,696,720 taken during the year. The Company held a cash balance of $783,526 as at 30 June 2024 and has further received net proceeds from capital raise of $1.21 million subsequent to the year-end primarily due to significant delays by RMWCG in settling receivable for the current financial year Material Business Risks to Strategy and Financial Performance in Future The Company has identified a number of material risks that may affect the success of the business over the coming periods, including some that are not directly within its control. The Company’s risk management approach involves the ongoing assessment, monitoring and reporting of risks that could impede the Company’s progress in delivering its strategic priorities. These risks are outlined below, although it is important to note that as Invion’s business continues to grow and evolve, these risks and the Company’s risk profile may change. ● Efficacy of the Compound (INV43) is proved to be ineffective or less effective that other cancer treatments: Invion continues to utilise the outsourced product manager to ensure the Compound continues to be effective (Quality) as well as continue to build/test pipeline of additional compounds in portfolio to identify additional candidates for a second cancer API. ● Invion's ability to fund ongoing studies and trials for Photosoft: Invion believes it has reached a point in the development of the technology that will give it the flexibility to be strategic in deploying capital. The company is undertaking a skin cancer trial, which is relatively low cost to complete. It has also signed agreements with collaboration partners who will fund studies using Photosoft for various indications and secured a $2.4 million to $6.8 million institutional placement with New York based fund manager, Lind Partners. ● CEO dependence/single point of dependency There is a risk of over reliance on key personnel and potential departure of those key employee/contractors. This risk is currently mitigated as the CEO is a major shareholder and the external contractors used are through third party companies who would have their own internal risk mitigations for this scenario. ● Over-reliance / knowledge concentration risk on some external service providers (eg, chemistry, manufacturing) The expansion of parties involved in the processes should reduce concentration of knowledge risk, and as availability of capital improves, Invion can actively identify alternatives/backup options ● Market competition – potential of emerging therapies to supersede this technology The healthcare industry can be impacted by technological advances, which may impact on the commercial success of 1https://www.insights10.com/report/south-korea-oncology-drugs-market-analysis/ 6 Invion Limited Directors' report 30 June 2024 Photosoft. However, Invion believes that its patent protected technology and distinctive method of action and applicability to multiple cancers/diseases provides levels of protection ● Security threats via external communication services used Invion has implemented controls to prevent and reduce risk of loss resulting from breach of security from external communication services. Some of the measures taken include cybersecurity training, regular back up of data/disaster recovery practices and ensuring payments for new vendors and any change of bank account details for existing vendors have to be separately approved (with the direct counterpart that is being dealt with). Significant changes in the state of affairs In February 2024, Invion entered into a collaboration Agreement with Dr. I&B Co., Ltd. (Dr.inB), a South Korean Company group, to develop to develop Photosoft™ for the treatment of the Human Papilloma Virus (HPV). Under the agreement, Dr.inB will formulate and evaluate the Photosoft compounds in vitro and/or in vivo as appropriate, to demonstrate efficacy and safety, and conduct Proof-of-Concept (PoC) clinical trials to test safety and efficacy of the Photosoft technology in HPV patients at agreed upon gynaecology clinics in South Korea. Invion will supply Photosoft compounds to Dr.inB. Invion retains all benefits and rights to the Photosoft technology, including new Intellectual Property (IP) that may arise out of this collaboration. In May 2024, Invion entered into a collaboration Agreement with Hanlim Pharma Co., Ltd. (Hanlim), a major South Korean pharmaceutical group, to develop Invion’s lead drug candidate, INV043, for the treatment of glioblastoma multiforme (GBM), which is a primary brain malignancy with a poor prognosis. Under the agreement, Hanlim will undertake and fund the evaluation including Proof-of-Concept (PoC) preclinical studies, while Invion retains all rights to the technology and to any new intellectual property resulting from the collaboration. In June 2024, The Company has secured funding through Share Subscription Agreement and Share Purchase Agreement (together, the “Agreements”) to provide a minimum of $2.4 million and up to $6.8 million in funding to the Company from Lind Global Fund II, LP an entity managed by New York-based The Lind Partners (together, “Lind”). As part of this institutional placement, Invion has issued 180 million shares on 28 June 2024 for a capital raising of $1.54 million. The company received $1.21 million as proceeds, net of capital raising cost, on 5 July 2024. Invion will further receive a monthly investment of $100,000 over next 12 months under the Share Purchase Agreement. The company also granted 120 million free attaching options on 28 June 2024 to Lind Partners under the share subscription agreement. 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 Subsequent to the year end, the company received the following under Share Subscription Agreement and Share Purchase Agreement (together, the “Agreements”), with US institutional investor, Lind Partners: (i) received $1,210,410 net proceeds on 5 July 2024 towards 180 million shares issued on 28 June 24; and (ii) received $96,000 net proceeds on 16 August 2024 towards monthly investment of $100,000 from Lind Partners as agreed under the Agreement. As announced on ASX on 29 August 2024, Ms Melanie Leydin will be appointed as the Non-executive Director effective 31 August 2024 and Mr Rob Merriel will resign as the Non-executive Director effective 31 August 2024. No other matter or circumstance has arisen since 30 June 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 likely developments in the operations of the Group and the expected results from those operations in future financial years will be affected by the success of management in reaching critical development and commercial milestones in its core program if the development of the PhotosoftTM technology. This could include developing and expanding existing and emerging commercial partnerships with leading global healthcare companies and securing one or more commercial transactions for the Group’s drug asset under development. 7 Invion Limited Directors' report 30 June 2024 Environmental regulation Invion is required to carry out its activities in accordance with applicable environment and human safety regulations in each of the jurisdictions in which it undertakes its operations. The Group is not aware of any matter that requires disclosure with respect to any significant regulations in respect of its operating activities, and there have been no issues of non-compliance during the year. Information on directors Name: Title: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Special responsibilities: Interests in shares: Interests in options: Name: Title: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Special responsibilities: Interests in shares: Interests in options: Mr Thian Chew Chairman and CEO Bachelor of Information Systems, MA, MBA and qualified chartered accountant Mr Chew has over 25 years’ experience in investing, finance and transforming business operations. He is Managing Partner at Polar Ventures, a private investment and consulting firm that provides capital, strategic and operating solutions, focusing on small to mid-sized enterprises in Asia. Mr. Chew is also an Advisory Board Member at Stanford Medicine’s Center for Asian Health Research and Education (CARE). Mr Chew was previously an Executive Director at Goldman Sachs (Hong Kong and New York) responsible for the firm’s proprietary investments including growth capital, private equity and special situations in both private and public companies. Prior to this, he was a Consultant Project Manager to Morgan Stanley, New York. Mr Chew also held a number of positions in KPMG across Asia Pacific including Director at KPMG Consulting (Singapore and Sydney) where he led several large-scale operational restructuring, post-merger integration, transformation, and business performance improvement programs. As a Senior Manager at KPMG (Taipei and Melbourne), he led several business process re-engineering initiatives, and also performed financial and information technology audit, risk and assurance engagements across multiple industries. Mr Chew holds an MBA from the Wharton School (Palmer Scholar), MA from the Lauder Institute, University of Pennsylvania, and a Bachelor of Information Systems from Monash University. Mr Chew is an Adjunct Professor at HKUST’s MBA program and previously qualified as a chartered accountant. None None None 546,857,721 178,364,244 Alan Yamashita Non-executive Director MPA, BA Mr Yamashita is a highly experienced corporate consultant and investment professional, with over 40 years' experience in investment management, investment banking and alternative investment throughout the APAC region. From 1999 to 2005, Mr Yamashita was President and CEO of Search Investment Group and founding CEO and CIO of Search Alternative Investment Ltd (SAIL), a major private global hedge fund and private equity investment practice headquartered in Asia. Prior to Search Investments Group, Mr Yamashita was Managing Director and Head of Asia Capital Markets for Merrill Lynch from 1996 to 1998. Mr Yamashita is currently Managing Partner at Polar Ventures and has held numerous positions as a 16-year veteran of Goldman Sachs and an advisor to various companies, including Plantation Timber Partners, Wuhan; Duty Free Shoppers, Asia; TVSN, Shanghai; and Mizuho Alternative Investments LLC. None None Chair of Nomination and Remuneration Committee Member - Audit and Risk Committee Nil 10,864,187 8 Invion Limited Directors' report 30 June 2024 Name: Title: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Special responsibilities: Interests in shares: Interests in options: Name: Title: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Special responsibilities: Interests in shares: Interests in options: Rob Merriel Non-executive Director BA: Grad Dip (Psychology); Grad Dip (Accounting); CPA Rob is a Certified Practicing Accountant (CPA) with over 35 years of experience working in medical research (Hudson Institute of Medical Research and Baker Institute), large public healthcare services (Melbourne Health and Southern Health) and commercial organisations (Pacific Dunlop and Deloitte Consulting). He has been a Director of two Venture Capital Funds and a Director and Company Secretary of several biotechnology focused medical research institute spin-off companies. Mr Merriel was appointed as the Chief Financial Officer, Chief Commercialisation Officer and Company Secretary of the Hudson Institute of Medical Research in May 2014, positions he continues to hold today. None None Member - Audit and Risk Committee Member - Nomination and Remuneration Committee 4,440,125 20,443,211 Alistair Bennallack Non-executive Director CA Mr Bennallack is currently the Group Chief Operating Officer & Chief Financial Officer of Village Roadshow Pty Ltd. He is also the Chief Executive Officer of Village Roadshow Theme Parks Asia, a division of Village Roadshow Theme Parks Pty Ltd. He is the primary executive responsible for conceptualising, executing and delivering Village Roadshow’s expansion into China and Asia. He is a former member of the Village Roadshow Ltd Executive Committee, current member of the Village Roadshow Theme Parks and Village Entertainment Executive Committees and current member of all Village Roadshow Pty Ltd’s Management and Risk Committees. His previous roles have included Chief Financial Officer of Village Roadshow Ltd and General Manager Business Affairs of Village Roadshow Corporation Pty Ltd (controlling shareholder of Village Roadshow Ltd.) None None Chair of Audit and Risk Committee 19,749,987 20,443,211 '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 Ms Claire Newstead-Sinclair resigned as the Company Secretary on 31 July 2024. With over 21 years of professional experience, Ms Newstead-Sinclair is a Chartered Accountant at the Company Secretarial and Accounting firm Vistra Australia with extensive ASX biotechnology experience across statutory reporting, compliance and corporate governance. Mr Tai Phan is appointed as a Company Secretary on 31 July 2024. Mr Phan has over 20 years’ experience as a lawyer, Company Secretary, and corporate governance and compliance professional. He has worked directly with Boards and executive management of several ASX-listed entities and numerous unlisted companies across multiple industries. He has experience in the IPO listing process for the ASX, had been appointed as an external consultant for AUSTRAC and as the Head of Asia‑Pac Compliance (for Travelex and Munich Re). 9 Invion Limited Directors' report 30 June 2024 Meetings of directors The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2024, and the number of meetings attended by each director were: Full Board Attended Held T Chew A Yamashita R Merriel A Bennallack 8 7 8 8 8 8 8 8 Audit and Risk Committee Attended Held 2 2 2 2 2 2 Held: represents the number of meetings held during the time the director held office. There were no Nomination and Remuneration Committee meeting held during the year. 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. 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 The Group’s guiding principle for remuneration is that remuneration should be simple and transparent, should reward achievement, and should facilitate the alignment of shareholder and executive interests. The Company’s philosophy is that shareholder and executive interests are best aligned: ● by providing levels of fixed remuneration and ‘at risk’ pay sufficient to attract and retain individuals with the skills and experience required to build on and execute the Company’s business strategy ● by ensuring ‘at risk’ remuneration is contingent on outcomes that grow and/or protect shareholder value; and, ● by ensuring a suitable proportion of remuneration is received as a share-based payment The Group aims to reward personnel with a level and mix of remuneration commensurate with their position and responsibilities so as to: ● ● ● ● attract and retain appropriately capable and talented individuals to the company; reward personnel for corporate and individual performance; align the interest of personnel with those of shareholders; and build a strong cohesive leadership team which can deliver execution excellence against the strategy Remuneration consists of: ● ● total fixed remuneration: base salary and superannuation; and ‘at risk’ remuneration: short-term incentives (STI) and long-term incentives (LTI). Total fixed remuneration To ensure that the Company continues to attract, retain and motivate talented staff at a competitive cost, the Company will aim to align total fixed remuneration to the median rate paid by others operating in the relevant market, with consideration given to experience, qualifications, performance and other non-financial benefits. Total fixed remuneration will be reviewed using market data to determine what, if any, adjustments may need to be made to individual remuneration. 10 Invion Limited Directors' report 30 June 2024 ‘At risk’ remuneration ‘At risk’ remuneration elements are paid/issued following the performance and remuneration review conducted by executive management; assessment by the Nomination and Remuneration Committee; and approval by the Board. The Nomination and Remuneration Committee The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high-quality personnel. The objective of the Nomination and Remuneration Committee is to assist the Board in fulfilling its duties and responsibilities by reviewing, advising and making recommendations to the Board on: (a) Nomination ● Board composition and succession planning, taking into account diversity objectives and the mix of Director skills and experience; ● induction and continuing education for Directors; ● Board performance evaluation; and ● the performance of the CEO and key management personnel (b) Remuneration ● ● ● ● implementing policies for the purposes of using remuneration to foster long-term growth and success; monitoring the implementation by management of the Board’s strategic objectives and policies; remuneration for Non-Executive Directors; and remuneration and incentive arrangements for the CEO and other key management personnel. In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. 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 by the Nomination and Remuneration Committee. The Nomination and Remuneration Committee 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. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The most recent determination was at the Annual General Meeting held on 15 July 2011, where the shareholders approved a maximum annual aggregate remuneration of $750,000. Executive remuneration 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 four components: ● base pay and non-monetary benefits ● short-term performance incentives ● share-based payments ● other remuneration such as superannuation and long service leave The combination of these comprises the executive's total remuneration. Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Nomination