ABN 90 009 237 889
ASX/Media Release (ASX: IMM)
21 February 2020
Appendix 4D Interim Financial Report
Results for Announcement to the Market
Current Reporting Period – Half-year Ended 31 December 2019
Previous Reporting Period – Half-year Ended 31 December 2018
Revenues | Up | From nil | to | 7,366,493 | ||||||||||||
Loss after tax attributable to members | Down | 31.4 | % | to | (5,950,345 | ) | ||||||||||
Net loss for the period attributable to members | Down | 31.4 | % | to | (5,950,345 | ) | ||||||||||
Dividends (Distribution) | Amount per Security | Franked Amount per Security | ||||||||||||||
Final dividend | n/a | n/a | ||||||||||||||
Previous corresponding period | n/a | n/a | ||||||||||||||
Record date for determining entitlements to the dividend (in the case of a trust, distribution) |
| n/a |
Net Tangible Assets per Share (cents)*
As at 31 December 2019 | 3.15 | |||||||
As at 31 December 2018 (restated) | 4.68 |
* | Due to the impact of the 10 for 1 share consolidation in November 2019, comparative figure has been restated proportionately for a like to like comparison |
Contents
Directors’ Report | 2 | |||
Auditor’s Independence Declaration | 7 | |||
Interim financial report | ||||
Consolidated Statement of Comprehensive Income | 8 | |||
Consolidated Balance Sheet | 9 | |||
Consolidated Statement of Changes in Equity | 10 | |||
Consolidated Statement of Cash Flows | 11 | |||
Notes to the Consolidated Financial Statements | 12 | |||
Directors’ Declaration | 26 | |||
Independent Auditor’s Review Report to the Members | 27 |
Immutep Limited- Appendix 4D | Page 1 |
Directors’ Report
Your directors are pleased to provide the following half-year report on Immutep Limited and its subsidiaries (referred to hereafter as the Group or Immutep or the Company) for the half-year ended 31 December 2019.
Directors
The following persons were directors of Immutep up to the date of this report unless otherwise stated:
Dr Russell Howard Mr Pete Meyers Mr Marc Voigt Mr Grant Chamberlain | (Non-Executive Chairman) (Non-Executive Director & Deputy Chairman) (Executive Director & Chief Executive Officer) (Non-Executive Director) |
Principal Activities
Immutep is a globally active biotechnology company that is a leader in the development ofLAG-3 related immunotherapeutic products for the treatment of cancer and autoimmune disease. It is dedicated to leveraging its technology and expertise to discover and develop novel immunotherapies, and to partner with leading organisations to bring innovative treatment options to market for patients.
Immutep’s lead product candidate is eftilagimod alpha (“efti” or “IMP321”), a solubleLAG-3Ig fusion protein based on theLAG-3 immune control mechanism, which is in clinical development for the treatment of cancer. Immutep has two other clinical candidates (IMP701 and IMP731) that are fully licensed to major pharmaceutical partners, and a fourth candidate (IMP761) which is inpre-clinical development for autoimmune disease.
Immutep is listed on the Australian Securities Exchange (IMM), and on the NASDAQ (IMMP) in the United States.
REVIEW OF OPERATIONS
During the first half of financial year 2020, Immutep continued to report encouraging data from its trials of its lead product candidate, eftilagimod alpha (“efti” or “IMP321”). The Company is advancing its ongoing clinical trials and preparing to report decisive data in the coming months, including the first data from its largest and most advanced clinical trial, AIPAC.
The Company reported first data from itsTACTI-002 Phase II study and itsINSIGHT-004 Phase I trial, along with final efficacy data from its Phase ITACTI-mel trial. These data have built Immutep’s confidence in the strong safety profile of efti and its encouraging efficacy. In addition, data from IMP761 for autoimmune disease was published in January 2020 in the Journal of Immunology, a peer reviewed publication.
Immutep continued its collaborations with five major pharmaceutical companies during the half year: Novartis, GSK, Merck & Co (MSD), Merck (Germany) and Pfizer.
From July to August 2019, the Company completed a capital raise via its ASX listing raising approximately A$10 million, via a Placement and a fully underwritten Entitlement Offer which included participation from directors and the entire executive management team. The proceeds from the financings are being used to continue theLAG-3 related programs, including the ongoing clinical development of efti and the development of IMP761. Importantly, the financing extended Immutep’s cash runway beyond its significant data catalysts.
In November 2019, Immutep also completed a share consolidation, pursuant to which every 10 shares has been consolidated into 1 share. It was important that Immutep consolidate its shares ahead of the multiple potential share price catalysts. By rationalising the shares on issue, investment in Immutep is expected to be more attractive to a broader range of institutional and professional investors and other members of the investing public.
Immutep Limited- Appendix 4D | Page 2 |
Directors’ Report (continued)
Clinical Trials
AIPAC—Phase IIb
AIPAC (Active Immunotherapy PAClitaxel) evaluates efti in combination with paclitaxel, a standard of care chemotherapy, as a chemo-immunotherapy combination. This combination is designed to boost the immune response against tumour cells compared to chemotherapy plus placebo. The trial is a randomised, double blinded, placebo-controlled clinical study with 227 HR+ metastatic breast cancer patients and is taking place across in more than 30 clinical trial sites in Germany, the UK, France, Hungary, Belgium, Poland and the Netherlands.
During the half year, the Company continued to advance the study towards theread-out of first progression-free survival (PFS) and overall response rate (ORR) data, which is expected to be reported in March 2020.
This data will help Immutep to make strategic decisions about efti’s development with regard to partnering and regulatory pathways. AIPAC is potentially pivotal, meaning the final PFS data could serve as a basis to pursue regulatory approval pathways for efti with the European Medicines Agency and the U.S. Food and Drug Administration.
If positive, the results could also help to validate an entirely new class of products in immuno-oncology, antigen presenting cell activators, along with the “pushing the gas” concept. This would be an important medical achievement, with metastatic breast cancer just being the first indication of possibly many others to follow.
TACTI-002—Phase II
TACTI-002 (Two ACTive Immunotherapies) is Immutep’s Phase II study evaluating the combination of efti with KEYTRUDA® (or pembrolizumab, ananti-PD-1 therapy) in up to 109 patients with second line head and neck squamous cell carcinoma (HNSCC) ornon-small cell lung cancer (NSCLC) in first and second line. It is being conducted in collaboration with Merck & Co., Inc., Kenilworth, NJ, USA (known as “MSD” outside the United States and Canada).
Encouragingly, the requisite number of predefined patient responses were observed in stage 1 for Parts A (first line NSCLC) during the period and C (second line HNSCC), post period. The Data Monitoring Committee recommended opening stage 2 recruitment for both these Parts, following its review of the preliminary safety and efficacy data. Accordingly, Immutep is recruiting an additional 19 patients to both Part A and Part C, forming stage 2 of these Parts. Recruitment is ongoing for stage 1 of Part B (second line NSCLC).
In November 2019, Immutep reported the first preliminary safety and efficacy data from itsTACTI-002 study. Patients in stage 1 of Part A reported an encouraging preliminary Overall Response Rate (ORR) of 41%. This positive data was confirmed and even improved following the period end, with more mature data fromTACTI-002 presented at the German Cancer Congress in February 2020. At the Congress, Immutep reported more mature positive interim data including an Overall Response Rate (ORR) of from 47% from stage 1 of Part A and 33% from stage 1 of Part C. In addition, NSCLC responses were seen across all threePD-L1 expression level groups (< 1%,1-49% and³50%). 59% of the NSCLC patients are still under therapy with 7+ months, median PFS not yet reached.
TACTI-mel—Phase I
TACTI-mel (Two ACTive Immunotherapies in melanoma) is Immutep’s Phase I clinical trial evaluating efti with MSD’s KEYTRUDA® in 24 patients with unresectable or metastatic melanoma that have had either a suboptimal response or had disease progression with pembrolizumab monotherapy. This is the same combination treatment that is being tested in Immutep’s Phase II study,TACTI-002, as detailed above.TACTI-mel is a multi-centre, open label clinical trial involving four cohorts of six patients per cohort.
In October 2019, Immutep reported positive final efficacy data for itsTACTI-mel trial. The data confirmed deep durable responses have been observed, with 12 patients (50%) having a decrease of³ 75% in the target lesions and 9 patients (38%) being treated for³ 12 months with pembrolizumab and efti. The results also determined the recommended dosage level for a Phase II trial which is 30mg of efti. This is the dosage level currently used in the ongoingTACTI-002 Phase II trial.
Immutep Limited- Appendix 4D | Page 3 |
Directors’ Report (continued)
The study confirmed that efti continues to have a favourable safety profile in combination with pembrolizumab with no dose-limiting toxicities. Final safety data is expected to be reported in H2 FY20.
INSIGHT-004 – Phase I
INSIGHT-004 is a Phase I study being conducted as an amendment to INSIGHT Phase I clinical trial (as the 4th arm). The Institute of Clinical Cancer Research, Krankenhaus Nordwest GmbH in Frankfurt, Germany (“IKF”) is the sponsor of the clinical trial which is being conducted under the existing protocol of the ongoing INSIGHT. It evaluates the combination of efti with avelumab, a humananti-PD-L1 antibody, in 12 patients with advanced solid malignancies.
In December 2019, IKF completed the recruitment of the first cohort of 6 patients forINSIGHT-004. These patients are receiving a standard dose of avelumab with efti (6 mg).
One patient has experienced a partial response to the combination treatment according to RECIST from the first cohort and another patient has been reported as having stable disease, which is encouraging given the late disease stage and pretreatment of these patients. Importantly, no new safety signals or dose limiting toxicities have been reported from the first cohort of patients.
More data from the study is expected to be reported in H2 FY20. Recruitment is ongoing for the second cohort of 6 patients to receive the standard dose of avelumab, with a higher 30 mg dose of efti.
Efti Manufacturing
The Company is also executing a manufacturing scale up from 200L to 2,000Lsingle-use bioreactors at the WuXi Biologics manufacturing plant (Wuxi, China) in order to be better prepared for potential commercial manufacturing and additional registration trials in multiple indications for its lead product candidate, efti.
IMP761 – preclinical development
IMP761 is an immunosuppressive agonist antibody toLAG-3. It is the first agonist antibody that targets the immune checkpointLAG-3 for the treatment of autoimmune diseases, such as inflammatory bowel diseases, rheumatoid arthritis, and multiple sclerosis.
Throughout the half year, Immutep continued cell line development and the manufacturing steps for its preclinical candidate, IMP761. This follows the encouraging results reported from the Company’s preclinical studies in autoimmune disease studies of IMP761 in early 2019.
Following the end of the period, IMP761 research results were published in the peer reviewed Journal of Immunology.
Clinical Development by Immutep’s Partners
Novartis—IMP701 – Phase II
Novartis is Immutep’s partner for the development of LAG525, which is a humanisedLAG-3 antagonist antibody derived from its IMP701 antibody.
In January 2019, Novartis commenced a fifth study of the product candidate, a Phase Ib clinical trial in triple negative breast cancer. Across the five trials, LAG525 will be evaluated in a total of more than 1,100 patients, significantly enhancing the value of this product candidate.
GlaxoSmithKline (GSK)—IMP731—Phase I
GSK is Immutep’s partner for GSK2831781, which is derived from its IMP731 antibody.
Immutep Limited- Appendix 4D | Page 4 |
Directors’ Report (continued)
GSK commenced its Phase II clinical study evaluating the product candidate in 280 ulcerative colitis patients in May 2019. The first patient being dosed prompted a milestone payment of A$7.4m to be paid to Immutep during the half year. The study is expected to be fully completed in August 2022 with clinical proof of concept expected in the second half of calendar year 2020. In addition, GSK started another Phase I study in healthy volunteers including Japan in June 2019 which was completed in December 2019.
CYTLIMIC – Phase I
During the half year, Immutep continued to collaborate with CYTLIMIC to prepare for clinical trials evaluating efti as part of a cancer peptide vaccine, called CYT001.
CYTLIMIC recently announced a new collaboration with Chiba University in Japan to start a new Phase I trial of CYT001, is called CRESCENT1.
EOC Pharma – IMP321—Phase I
Immutep’s partner and Chinese licensee, EOC Pharma, continued the recruitment of metastatic breast cancer patients for its Phase I clinical trial in China during the half year. The results from the trial are expected to be reported by EOC Pharma in the next 12 months.
EOC Pharma holds the development and commercialisation rights to efti in Greater China.
INSIGHT – Phase I
In December 2019, Immutep completed the recruitment of the first cohort of 6 patients for itsINSIGHT-004 phase 1 study. These patients are receiving a standard dose of avelumab with efti (6 mg). One patient has experienced a partial response according to RECIST 1.1 from this cohort and another patient has been reported as having stable disease, which is encouraging given the late disease stage and pretreatment of these patients. Importantly, no new safety signals or dose limiting toxicities have been reported from the first cohort of patients.
Recruitment is ongoing for the second cohort of 6 patients to receive the standard dose of avelumab, with a higher 30 mg dose of efti.
Intellectual Property
Immutep continued to advance its intellectual property portfolio, receiving three new patents during the half year. The Company has a total of 12 patent families relating to its product candidates and related technologies.
For efti, Immutep was granted a new patent entitled“LAG-3 dosage regime for use in the treatment of cancer” by the European Patent Office in August 2019. This patent provides further intellectual property protection for Immutep’s method of treating cancer by the administration of a plurality of doses of a recombinantLAG-3 protein or a derivative thereof.
Two patents were granted during the half year for its therapeutic antibody, LAG525, which is licensed by Novartis. In September 2019, Immutep announced the grant of a patent for LAG525 by the Japanese Patent Office, entitled “Antibody molecules toLAG-3 and uses thereof.” Similarly, the European Patent Office granted a patent with the same title in November 2019. These patents are directed to LAG525, and to the use of LAG525 in the treatment of cancer and infectious disease.
Outlook
Immutep has continued to report encouraging data from its trials of efti, with first encouraging data fromTACTI-002 andINSIGHT-004, along with final efficacy data from theTACTI-mel trial. The second half of FY20 will be a very important and decisive period for the Company as it plans to report the first PFS data from its late-stage AIPAC study in metastatic breast cancer. This data is expected in March 2020.
Immutep Limited- Appendix 4D | Page 5 |
Directors’ Report (continued)
If the data is positive, AIPAC results could help to validate an entirely new class of products in immuno-oncology: antigen presenting cell activators, along with the “pushing the gas” concept which would be a landmark medical achievement. It will also arm the Company to make strategic decisions about the development pathway for efti and pave the way for the creation of very significant value for Immutep and its shareholders.
Financial
Immutep’s financial position as at 31 December 2019 was strengthened with the Australian capital raise of A$10 million before share transaction costs. Strategically, it provided important financial headroom to fund existing clinical development programs.
In September 2019, the Company earned a milestone payment of £4.0 million (approximately A$7.4 million) from GSK related to the first patient being dosed in GSK’s Phase II clinical trial evaluating GSK2831781 in ulcerative colitis.
In October 2019, Immutep received a €1.57million (approximately A$2.54 million) cash rebate from the French Government for the research and development activities conducted in Europe during the calendar year 2018.
As at 31 December 2019, the consolidated entity had total funds of A$20.5 million comprising cash in hand at bank of A$7.3 million and short-term deposits of A$13.2 million.
Interest income decreased from A$198 thousand in the half year ending with 31 December 2018 to A$137 thousand in the half year ending with 31 December 2019. The decrease was mainly due to a decrease in weighted average interest rates.
Research and development and intellectual property expenses increased by A$4.3 million to A$11.9 million in the half year ending with 31 December 2019. The significant increase was expected and was primarily due to the increased clinical trial activities, especially inTACTI-002 and AIPAC.
Whilst clinical trial costs related to AIPAC andTACTI-mel are expected to decline given both of these trials are fully recruited, costs related toTACTI-002 are expected to rise further if the predefined number of patient responses to the combination treatment are observed in Part B of the study, which would warrant further recruitment of patients for the relevant cohort (as occurred for Parts A and B).
Corporate administrative expenses for the half year ending 31 December 2019 were A$3.1 million compared to A$3.3 million for the half year ending with 31 December 2018 largely due to the lower employee share-based payment expenses.
The loss after tax for the half year ending 31 December 2019 of A$5,950,345 was significantly lower compared to A$8,678,492 for the half year ending 31 December 2018, mainly due to the significant increase of A$7.4m in revenue.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 7. This report is made in accordance with a resolution of directors.
Mr Marc Voigt | ||
CEO and Executive Director | ||
Immutep Limited | ||
Dated: 21st Day of February 2020 |
Immutep Limited- Appendix 4D | Page 6 |
Auditor’s Independence Declaration
As lead auditor for the review of Immutep Limited for the half-year ended 31 December 2019, I declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
(b) no contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of Immutep Limited and the entities it controlled during the period.
Caroline Mara | ||
Partner | Newcastle | |
PricewaterhouseCoopers | 21 February 2020 |
PricewaterhouseCoopers, ABN 52 780 433 757 Level 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW 2300 T +61 2 4925 1100, F +61 2 4925 1199, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation. | Page 7 |
Consolidated Statement of Comprehensive Income
For the Half Year Ended 31 December 2019
Note | 31 December 2019 | 31 December 2018 | ||||||||||
A$ | A$ | |||||||||||
REVENUE | ||||||||||||
License revenue | 7,366,493 | — | ||||||||||
OTHER INCOME | ||||||||||||
Research material sales | 79,417 | 157,393 | ||||||||||
Grant income | 2,152,200 | 2,124,139 | ||||||||||
Net gain on foreign exchange | 224,616 | 390,674 | ||||||||||
Interest income | 137,361 | 198,453 | ||||||||||
Net gain on fair value movement of warrants | 11 | 619,854 | 732,501 | |||||||||
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|
|
| |||||||||
Total revenue and other income | 10,579,941 | 3,603,160 | ||||||||||
EXPENSES | ||||||||||||
Depreciation and amortisation | (965,465 | ) | (943,175 | ) | ||||||||
Research and development and intellectual property | (11,899,055 | ) | (7,582,403 | ) | ||||||||
Corporate administrative expenses | (3,088,460 | ) | (3,254,339 | ) | ||||||||
Interest expense | (5,723 | ) | — | |||||||||
Net change in fair value of convertible note | 10 | (571,546 | ) | (496,996 | ) | |||||||
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|
|
| |||||||||
Loss before income tax | (5,950,308 | ) | (8,673,753 | ) | ||||||||
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|
|
| |||||||||
Income tax expense | (37 | ) | (4,739 | ) | ||||||||
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|
| |||||||||
Loss for the half-year | (5,950,345 | ) | (8,678,492 | ) | ||||||||
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|
|
| |||||||||
Other Comprehensive income/(loss) | ||||||||||||
Exchange differences on the translation of foreign operations | (428,981 | ) | 521,508 | |||||||||
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|
|
| |||||||||
Other comprehensive income/(loss) for the half-year, net of income tax | (428,981 | ) | 521,508 | |||||||||
|
|
|
| |||||||||
Total comprehensive loss for the half-year | (6,379,326 | ) | (8,156,984 | ) | ||||||||
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|
| |||||||||
Loss is attributable to: | ||||||||||||
Owners of Immutep Limited | (5,950,345 | ) | (8,678,492 | ) | ||||||||
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|
| |||||||||
Total comprehensive loss is attributable to: | ||||||||||||
Owners of Immutep Limited | (6,379,326 | ) | (8,156,984 | ) | ||||||||
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|
|
| |||||||||
Loss per share for loss attributable to the ordinary equity holders of the company: | Cents | Cents (restated)* | ||||||||||
Basic and diluted loss per share | (1.57 | ) | (2.81 | ) |
* | The Group updated the December 2018 EPS figure to reflect the impact of both the share consolidation and the bonus shares issue element arising from the capital raising in the half year ending 31 December 2019. |
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Immutep Limited- Appendix 4D | Page 8 |
Consolidated Balance Sheet
As at 31 December 2019
Note | 31 December 2019 | 30 June 2019 | ||||||||||
A$ | A$ | |||||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | 5 | 20,516,150 | 16,567,982 | |||||||||
Current receivables | 6 | 4,745,298 | 5,194,126 | |||||||||
Other current assets | 7 | 1,596,281 | 1,779,716 | |||||||||
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|
|
| |||||||||
Total current assets | 26,857,729 | 23,541,824 | ||||||||||
Non-current assets | ||||||||||||
Plant and equipment | 8 | 56,528 | 52,950 | |||||||||
Intangibles | 9 | 15,781,574 | 16,946,725 | |||||||||
Right of use assets | 1 | 259,660 | — | |||||||||
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| |||||||||
Totalnon-current assets | 16,097,762 | 16,999,675 | ||||||||||
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|
| |||||||||
Total assets | 42,955,491 | 40,541,499 | ||||||||||
LIABILITIES | ||||||||||||
Current liabilities | ||||||||||||
Trade and other payables | 3,615,006 | 5,060,368 | ||||||||||
Lease liability | 126,048 | — | ||||||||||
Employee benefits | 224,850 | 238,570 | ||||||||||
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|
| |||||||||
Total current liabilities | 3,965,904 | 5,298,938 | ||||||||||
Non-current liabilities | ||||||||||||
Convertible note liability | 10 | 8,214,253 | 7,642,707 | |||||||||
Warrant liability | 11 | 2,544,559 | 3,164,413 | |||||||||
Lease liability | 144,284 | — | ||||||||||
Employee benefits | 54,571 | 47,725 | ||||||||||
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| |||||||||
Totalnon-current liabilities | 10,957,667 | 10,854,845 | ||||||||||
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| |||||||||
Total liabilities | 14,923,571 | 16,153,783 | ||||||||||
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| |||||||||
Net assets | 28,031,920 | 24,387,716 | ||||||||||
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EQUITY | ||||||||||||
Contributed equity | 12 | 231,006,115 | 221,091,591 | |||||||||
Reserves | 13 | 65,213,979 | 65,533,954 | |||||||||
Accumulated losses | (268,188,174 | ) | (262,237,829 | ) | ||||||||
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| |||||||||
Equity attributable to the owners of Immutep Limited | 28,031,920 | 24,387,716 | ||||||||||
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| |||||||||
Total equity | 28,031,920 | 24,387,716 | ||||||||||
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|
|
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Immutep Limited- Appendix 4D | Page 9 |
Consolidated Statement of Changes in Equity
For the Half Year Ended 31 December 2019
Note | Issued Capital A$ | Reserves A$ | Accumulated Losses A$ | Total A$ | ||||||||||||||
Balance at 1 July 2018 | 213,232,719 | 64,874,040 | (244,584,832 | ) | 33,521,927 | |||||||||||||
Loss for the half-year | — | — | (8,678,492 | ) | (8,678,492 | ) | ||||||||||||
Other comprehensive income | — | 521,508 | — | 521,508 | ||||||||||||||
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|
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| |||||||||||
Total comprehensive income/(loss) for the half-year | — | 521,508 | (8,678,492 | ) | (8,156,984 | ) | ||||||||||||
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| |||||||||||
Transactions with owners in their capacity as owners: |
| |||||||||||||||||
Contribution of equity, net of transaction costs | 4,369,059 | — | — | 4,369,059 | ||||||||||||||
Exercise of warrants | 2,043,359 | 690,986 | 2,734,345 | |||||||||||||||
Employee Share based payments | — | 1,061,549 | — | 1,061,549 | ||||||||||||||
Exercise of vested performance rights | 407,988 | (407,988 | ) | — | — | |||||||||||||
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|
|
|
|
|
|
| |||||||||||
Balance at 31 December 2018 | 220,053,125 | 66,049,109 | (252,572,338 | ) | 33,529,896 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Balance at 1 July 2019 | 221,091,591 | 65,533,954 | (262,237,829 | ) | 24,387,716 | |||||||||||||
Loss for the half-year | — | — | (5,950,345 | ) | (5,950,345 | ) | ||||||||||||
Other comprehensive income | — | (428,981 | ) | — | (428,981 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total comprehensive income/(loss) for the half-year | — | (428,981 | ) | (5,950,345 | ) | (6,379,326 | ) | |||||||||||
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| |||||||||||
Transactions with owners in their capacity as owners: |
| |||||||||||||||||
Contribution of equity, net of transaction costs | 9,239,563 | — | — | 9,239,563 | ||||||||||||||
Employee Share based payments | — | 783,967 | — | 783,967 | ||||||||||||||
Exercise of vested performance rights | 674,961 | (674,961 | ) | — | — | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Balance at 31 December 2019 | 231,006,115 | 65,213,979 | (268,188,174 | ) | 28,031,920 | |||||||||||||
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|
|
|
|
|
|
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Immutep Limited- Appendix 4D | Page 10 |
Consolidated Statement of Cash Flows
For the Half Year Ended 31 December 2019
31 December 2019 | 31 December 2018 | |||||||
A$ | A$ | |||||||
CASH FLOWS RELATED TO OPERATING ACTIVITIES | ||||||||
Payments to suppliers and employees (inclusive of Goods and Service Tax) | (15,414,841 | ) | (8,558,958 | ) | ||||
License revenue received | 7,315,305 | — | ||||||
Grant income received | 2,542,800 | 1,943,201 | ||||||
Research material sales received | 180,480 | 163,414 | ||||||
Interest received | 159,789 | 216,238 | ||||||
Payment for interest on leases | (5,723 | ) | — | |||||
Refund of security deposit | 16,633 | 6,057 | ||||||
Tax paid | (37 | ) | — | |||||
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| |||||
NET CASH OUTFLOWS FROM OPERATING ACTIVITIES | (5,205,594 | ) | (6,230,048 | ) | ||||
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CASH FLOWS RELATED TO INVESTING ACTIVITIES | ||||||||
Payments for plant and equipment | (15,165 | ) | (17,279 | ) | ||||
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| |||||
NET CASH OUTFLOWS IN INVESTING ACTIVITIES | (15,165 | ) | (17,279 | ) | ||||
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CASH FLOWS RELATED TO FINANCING ACTIVITIES | ||||||||
Principal elements of lease payments (2018: Principal elements of finance lease payments) | (61,303 | ) | — | |||||
Proceeds from issues of shares | 10,030,556 | 4,871,250 | ||||||
Proceeds from issue of warrants | — | 2,457,259 | ||||||
Proceeds from exercising of warrants | — | 1,457,318 | ||||||
Share issue transaction costs | (790,993 | ) | (248,978 | ) | ||||
Issue of warrants transaction costs | — | (118,103 | ) | |||||
NET CASH INFLOWS FROM FINANCING ACTIVITIES | 9,178,260 | 8,418,746 | ||||||
|
|
|
| |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 3,957,501 | 2,171,419 | ||||||
Effect on exchange rate on cash and cash equivalents | (9,333 | ) | 355,129 | |||||
Cash and cash equivalents at the beginning of the half year | 16,567,982 | 23,475,521 | ||||||
|
|
|
| |||||
CASH AND CASH EQUIVALENTS AT THE END OF THE HALF YEAR | 20,516,150 | 26,002,069 | ||||||
|
|
|
|
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Immutep Limited- Appendix 4D | Page 11 |
Notes to the Consolidated Financial Statements
1. Summary of Significant Accounting Policies
a) Basis of Preparation
The half-year consolidated financial statements is a general purpose financial report prepared in accordance with the requirements of theCorporations Act 2001, Australian Accounting Standard AASB 134: Interim Financial Reporting, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board.
The half-year report does not include full disclosures of the type normally included in an annual report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of Immutep as the annual report.
It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2019 and any public announcements made by Immutep Limited and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under theCorporations Act 2001.
International Financial Reporting Standards form the basis of Australian Accounting Standards adopted by the AASB. The half-year financial report complies with International Accounting Standards (“IAS”) 34Interim Financial Reportingas issued by the International Accounting Standards Board (“IASB”).
The accounting policies adopted are consistent with those of the previous financial year and corresponding half year reporting period, except for the adoption of new and amended standards as set out below.
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current reporting period and the Group had to change its accounting policies and make retrospective adjustments as a result of adopting AASB 16 Leases.
The impact of the adoption of the leasing standard and the new accounting policies are disclosed below. The other standards did not have any impact on the Group’s accounting policies and did not require retrospective adjustments.
AASB 16 Leases
The Group has adopted AASB 16 from July 2019 using the modified retrospective method of the new accounting standard and has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 July 2019.
(a) Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of AASB117 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 July 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 3.75%.
The Group did not have leases previously classified as a finance lease.
Theright-of-use (ROU) assets have been measured at the amount of the lease liabilities calculated on adoption less lease incentives as at 1 July 2019. The lease liabilities have been measured at the present value of the remaining lease payments that are unpaid as at 1 July 2019. There were no onerous lease contracts that would have required an adjustment to theright-of-use assets at the date of initial application.
The adoption of AASB 16 did not have any impact to retained earnings and also did not have a material impact to earnings per share, segment assets and segment liabilities. Adjusted EBITDA increased by approximately A$66 thousand for the half year ending 31 December 2019.
Immutep Limited- Appendix 4D | Page 12 |
Notes to the Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
a) Basis of Preparation (continued)
Reconciliation of lease commitments as at 30 June 2019 to lease liabilities recognised as at 1 July 2019 is as follows:
2019 | ||||
A$ | ||||
Operating lease commitments disclosed as at 30 June 2019 | 263,565 | |||
Less: Effect of discounting using the lessee’s incremental borrowing rate of at the date of initial application | (10,359 | ) | ||
Less: Short-term leases recognised on a straight-line basis as expense | (43,698 | ) | ||
Add: New lease agreements agreed with third parties as at 1 July 2019 and discounted under AASB 16 | 126,582 | |||
|
| |||
Lease liability recognised under AASB 16 as at 1 July 2019 | 336,090 | |||
|
| |||
Of which are: | ||||
Current lease liabilities | 125,408 | |||
Non-current lease liabilities | 210,682 | |||
|
| |||
336,090 | ||||
|
|
For the half year ending 31 December 2019, the Group had the following transactions on lease liabilities:
• | Principal payments amounting to approximately A$61 thousand |
• | Interest accretion amounting to approximately A$6 thousand |
• | Foreign currency translation loss amounting to approximately A$4 thousand |
The recognised ROU assets are comprised solely of property leases in Germany and France. Movements during the half year ended 31 December 2019 are as follows:
2019 | ||||
A$ | ||||
Initial value of ROU asset recognised as at 1 July 2019 | 336,090 | |||
Less: lease incentives | (12,215 | ) | ||
|
| |||
Net ROU asset recognised under AASB 16 as at 1 July 2019 | 323,875 | |||
|
| |||
Depreciation for the half year ending 31 December 2019 | (60,757 | ) | ||
Foreign exchange differences | (3,458 | ) | ||
|
| |||
Carrying value of ROU asset as at 31 December 2019 | 259,660 | |||
|
|
(b) Practical expedients applied
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
• | Reliance on previous assessments on whether leases are onerous |
• | The accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term leases |
• | The exclusion of initial direct costs for the measurement of the ROU asset at the date of initial application, and |
• | The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease. |
The group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the group relied on its assessment made applying AASB 117 and Interpretation 4 Determining whether an Arrangement contains a Lease.
Immutep Limited- Appendix 4D | Page 13 |
Notes to the Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
a) Basis of Preparation (continued)
(c) The Group’s leasing activities and how these are accounted for
The Group leases various offices and printer equipment. Rental contracts are typically made for fixed periods of 1 to 3 years and typically have extension options of 3 months to 1 year minimum at the discretion of either the Lessor or the Lessee. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Until the 2020 financial year, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
From 1 July 2019, leases are recognised as aright-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and interest expense. The interest expense is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The ROU asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
• | fixed payments (includingin-substance fixed payments), less any lease incentives receivable |
• | variable lease payment that are based on an index or a rate |
• | amounts expected to be payable by the lessee under residual value guarantees |
• | the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and |
• | payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option |
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. ;’
Right-of-use assets are measured at cost comprising the following:
• | the amount of the initial measurement of lease liability |
• | any lease payments made at or before the commencement date less any lease incentives received |
• | any initial direct costs, and |
• | restoration costs |
Payments associated with short-term leases and leases oflow-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.Low-value assets comprise printer equipment.
None of the leases currently held by the Group have variable lease elements or residual value guarantees.
Apart from those cited, the accounting policies adopted are consistent with those of the previous financial year and corresponding half-year reporting period.
Immutep Limited- Appendix 4D | Page 14 |
Notes to the Consolidated Financial Statements (continued)
2. Liquidity
The Group has experienced significant recurring operating losses and negative cash flows from operating activities since its inception. As at 31 December 2019, the Group holds cash and cash equivalents of $20,516,150 (30 June 2019: $16,567,982).
In line with the Group’s financial risk management, the directors have carefully assessed the financial and operating implications of the above matters, including the expected cash outflows of ongoing research and development activities of the Group over the next 12 months. Based on this consideration, the directors are of the view there is no material uncertainty and the Group will be able to pay its debts as and when they fall due for at least 12 months following the date of these financial statements and that it is appropriate for the financial statements to be prepared on a going concern basis.
Monitoring and addressing the ongoing cash requirements of the Group is a key focus of the directors. This involves consideration of future funding initiatives such as potential business development opportunities, for example an out licensing transaction, capital raising initiatives, and the control of variable spending on research and development activities of the Group.
3. Dividends
The Group resolved not to declare any dividends in the half-year ended 31 December 2019.
4. Segment Reporting
Identification of reportable operating segments
Operating segments are reported in a manner consistent with internal reports which are reviewed and used by Management and the Board of Directors (who are identified as the Chief Operating Decision Makers (‘CODM’)). The Group operates in one operating segment, being Cancer Immunotherapy.
Timing of revenue recognition continues to be for license revenue and other income at point in time except for interest income which is recognized over time.
Operating segment information
31 December 2019 | Cancer Immunotherapy A$ | Unallocated A$ | Consolidated A$ | |||||||||
Revenue | ||||||||||||
License revenue | 7,366,493 | — | 7,366,493 | |||||||||
Other Income | ||||||||||||
Grant income | 2,152,200 | — | 2,152,200 | |||||||||
Interest income | — | 137,361 | 137,361 | |||||||||
Research material sales | 79,417 | — | 79,417 | |||||||||
Net gain on foreign exchange | — | 224,616 | 224,616 | |||||||||
Net gain on fair value movement of warrants | — | 619,854 | 619,854 | |||||||||
|
|
|
|
|
| |||||||
Total revenue and other income | 9,598,110 | 981,831 | 10,579,941 | |||||||||
|
|
|
|
|
| |||||||
Result | ||||||||||||
Segment result | (6,932,139 | ) | 981,831 | (5,950,308 | ) | |||||||
|
|
|
|
|
| |||||||
Loss before income tax expense | (6,932,139 | ) | 981,831 | (5,950,308 | ) | |||||||
|
|
|
|
|
| |||||||
Income tax expense | (37 | ) | ||||||||||
Loss after income tax expense | (5,950,345 | ) | ||||||||||
|
|
|
|
|
| |||||||
Total segment assets | 42,955,491 | — | 42,955,491 | |||||||||
|
|
|
|
|
| |||||||
Total segment liabilities | 14,923,571 | — | 14,923,571 | |||||||||
|
|
|
|
|
|
Immutep Limited- Appendix 4D | Page 15 |
Notes to the Consolidated Financial Statements (continued)
4. Segment Reporting (continued)
31 December 2018 | Cancer Immunotherapy A$ | Unallocated A$ | Consolidated A$ | |||||||||
Revenue | ||||||||||||
License revenue | — | — | — | |||||||||
Other Income | ||||||||||||
Grant income | 2,124,139 | — | 2,124,139 | |||||||||
Interest income | — | 198,453 | 198,453 | |||||||||
Research material sales | 157,393 | — | 157,393 | |||||||||
Net gain on foreign exchange | — | 390,674 | 390,674 | |||||||||
Net gain on fair value movement of warrants | — | 732,501 | 732,501 | |||||||||
|
|
|
|
|
| |||||||
Total revenue and other income | 2,281,532 | 1,321,628 | 3,603,160 | |||||||||
|
|
|
|
|
| |||||||
Result | ||||||||||||
Segment result | (9,995,381 | ) | 1,321,628 | (8,673,753 | ) | |||||||
Loss before income tax expense | (9,995,381 | ) | 1,321,628 | (8,673,753 | ) | |||||||
Income tax expense | (4,739 | ) | ||||||||||
Loss after income tax expense | (8,678,492 | ) | ||||||||||
|
|
|
|
|
| |||||||
Total segment assets | 48,238,550 | — | 48,238,550 | |||||||||
|
|
|
|
|
| |||||||
Total segment liabilities | 14,708,654 | — | 14,708,654 | |||||||||
|
|
|
|
|
|
5. Cash and cash equivalents
31 December 2019 | 30 June 2019 | |||||||
A$ | A$ | |||||||
Cash on hand | 5 | 360 | ||||||
Cash in bank | 7,337,601 | 3,735,995 | ||||||
Cash on short term deposit | 13,178,544 | 12,831,627 | ||||||
|
|
|
| |||||
20,516,150 | 16,567,982 | |||||||
|
|
|
|
The above cash and cash equivalents are held in AUD, USD, and Euro. The interest rates on these deposits range from 0.2% to 1.76% (30 June 2019 - 0% to 2.44%).
6. Current Receivables
31 December 2019 | 30 June 2019 | |||||||
A$ | A$ | |||||||
Accounts receivable and R&D grants receivable | 4,586,435 | 4,926,423 | ||||||
GST receivable | 158,863 | 267,703 | ||||||
|
|
|
| |||||
4,745,298 | 5,194,126 | |||||||
|
|
|
|
Due to the short-term nature of these receivables, the carrying value is assumed to be their fair value as at 31 December 2019.
Immutep Limited- Appendix 4D | Page 16 |
Notes to the Consolidated Financial Statements (continued)
7. Other current assets
31 December 2019 | 30 June 2019 | |||||||
A$ | A$ | |||||||
Prepayments* | 1,541,284 | 1,685,659 | ||||||
Security deposits | 40,531 | 57,164 | ||||||
Accrued interest | 14,466 | 36,893 | ||||||
|
|
|
| |||||
1,596,281 | 1,779,716 | |||||||
|
|
|
|
* | Prepayments are largely in relation to prepaid insurance and deposits paid to organisations involved in the clinical trials |
8. Plant and Equipment
Plant and Equipment | Computer | Furniture and fittings | Total | |||||||||||||
A$ | A$ | A$ | A$ | |||||||||||||
At 1 July 2018 | ||||||||||||||||
Cost or fair value | 524,746 | 61,585 | 8,475 | 594,806 | ||||||||||||
Accumulated depreciation | (513,473 | ) | (46,752 | ) | (8,132 | ) | (568,357 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net book amount | 11,273 | 14,833 | 343 | 26,449 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Year ended 30 June 2019 | ||||||||||||||||
Opening net book amount | 11,273 | 14,833 | 343 | 26,449 | ||||||||||||
Exchange differences | 353 | 226 | (13 | ) | 566 | |||||||||||
Additions | 17,027 | 11,051 | 13,356 | 41,434 | ||||||||||||
Disposal | — | — | — | — | ||||||||||||
Depreciation charge | (4,024 | ) | (10,206 | ) | (1,269 | ) | (15,499 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Closing net book amount | 24,629 | 15,904 | 12,417 | 52,950 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
At 1 July 2019 | ||||||||||||||||
Cost or fair value | 548,380 | 73,966 | 22,049 | 644,395 | ||||||||||||
Accumulated depreciation | (523,751 | ) | (58,062 | ) | (9,632 | ) | (591,445 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net book amount | 24,629 | 15,904 | 12,417 | 52,950 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Half Year ended 31 December 2019 | ||||||||||||||||
Opening net book amount | 24,629 | 15,904 | 12,417 | 52,950 | ||||||||||||
Exchange differences | 201 | (103 | ) | (452 | ) | (354 | ) | |||||||||
Additions | 4,781 | 10,384 | — | 15,165 | ||||||||||||
Disposal | — | (493 | ) | — | (493 | ) | ||||||||||
Depreciation charge | (3,262 | ) | (5,448 | ) | (2,030 | ) | (10,740 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Closing net book amount | 26,349 | 20,244 | 9,935 | 56,528 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
At 31 December 2019 | ||||||||||||||||
Cost or fair value | 550,248 | 82,431 | 21,766 | 654,445 | ||||||||||||
Accumulated depreciation | (523,899 | ) | (62,187 | ) | (11,831 | ) | (597,917 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net book amount | 26,349 | 20,244 | 9,935 | 56,528 | ||||||||||||
|
|
|
|
|
|
|
|
Immutep Limited- Appendix 4D | Page 17 |
Notes to the Consolidated Financial Statements (continued)
9.Non-current assets – intangibles
Patents | Intellectual Property | Goodwill | Total | |||||||||||||
A$ | A$ | A$ | A$ | |||||||||||||
At 1 July 2018 | ||||||||||||||||
Cost | 1,915,671 | 24,786,169 | 109,962 | 26,811,802 | ||||||||||||
Accumulated amortisation | (1,915,671 | ) | (6,566,976 | ) | — | (8,482,647 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net book amount | — | 18,219,193 | 109,962 | 18,329,155 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Year ended 30 June 2019 | ||||||||||||||||
Opening net book amount | — | 18,219,193 | 109,962 | 18,329,155 | ||||||||||||
Exchange differences | — | 481,222 | — | 481,222 | ||||||||||||
Amortisation charge | — | (1,863,652 | ) | — | (1,863,652 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Closing net book amount | — | 16,836,763 | 109,962 | 16,946,725 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
At 1 July 2019 | ||||||||||||||||
Cost or fair value | 1,915,671 | 25,480,452 | 109,962 | 27,506,085 | ||||||||||||
Accumulated amortisation | (1,915,671 | ) | (8,643,689 | ) | — | (10,559,360 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net book amount | — | 16,836,763 | 109,962 | 16,946,725 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Half Year ended 31 December 2019 | ||||||||||||||||
Opening net book amount | — | 16,836,763 | 109,962 | 16,946,725 | ||||||||||||
Exchange differences | — | (210,425 | ) | — | (210,425 | ) | ||||||||||
Amortisation charge | — | (954,726 | ) | — | (954,726 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Closing net book amount | — | 15,671,612 | 109,962 | 15,781,574 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
At 31 December 2019 | ||||||||||||||||
Cost or fair value | 1,915,671 | 25,142,390 | 109,962 | 27,168,023 | ||||||||||||
Accumulated amortisation | (1,915,671 | ) | (9,470,778 | ) | — | (11,386,449 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net book amount | — | 15,671,612 | 109,962 | 15,781,574 | ||||||||||||
|
|
|
|
|
|
|
|
Amortisation methods and useful lives
The Group amortises intangible assets with a limited useful life using the straight-line method over the following periods:
• | Patents, trademark and licenses 13-21 years |
• | Intellectual property assets 13-14 years |
10.Non-Current liabilities – convertible note
31 December 2019 | 30 June 2019 | |||||||
A$ | A$ | |||||||
Convertible note at fair value at beginning of reporting period | 7,642,707 | 6,645,832 | ||||||
Net change in fair value | 571,546 | 996,875 | ||||||
|
|
|
| |||||
Convertible note at fair value at end of reporting period | 8,214,253 | 7,642,707 | ||||||
|
|
|
|
On 11 May 2015 the Group entered into a subscription agreement with Ridgeback Capital Investments (Ridgeback) to invest in Convertible Notes and Warrants of the Group for cash consideration totaling A$13,750,828, which was subject to shareholder approval at an Extraordinary General Meeting. Shareholder approval was received on 31 July 2015.
Immutep Limited- Appendix 4D | Page 18 |
Notes to the Consolidated Financial Statements (continued)
10.Non-Current liabilities - convertible note (continued)
The 13,750,828 Convertible Notes issued have a face value of $1.00 per note, mature on 4 August 2025 and accrue interest at a rate of 3% per annum which may also be converted into shares. Conversions may occur during the period (i) at least 3 months after the Issue Date and (ii) at least 15 business days prior to the maturity date into 50 ordinary shares of the Company per note (subject to customary adjustments for rights or bonus issues, off market buybacks, issues at less than current market price, share purchase plan, dividend reinvestment plan at a discount, return of capital or dividend or other adjustment). If a change of control event, delisting event or event of default has occurred, Ridgeback may elect to convert the notes into shares or repayment of principal and interest. The Convertible Notes rank at least equal with all present and future unsubordinated and unsecured debt obligations of the Company and contain customary negative pledges regarding financial indebtedness, dividend payments, related party transaction and others.
Details of the warrants granted together with the convertible note at initial recognition date were as follows:
• | 8,475,995 warrants were granted with an exercise price of A$0.025 per share exercisable on or before 4 August 2025 |
• | 371,445,231 warrants were granted with an exercise price of A$0.0237 per share exercisable on or before 4 August 2020 |
All warrants may be settled on a gross or net basis and the number of warrants or exercise price may be adjusted for a pro rata issue of shares, a bonus issue or capitalre-organisation. The Warrants do not confer any rights to dividends or a right to participate in a new issue without exercising the warrant.
As a result of the 10 for 1 share consolidation in November 2019, the above cited warrants have been restated in accordance with the subscription agreement. The warrant expiry dates remain unchanged. The restated terms are as follows:
• | 847,600 warrants with an exercise price of A$0.25 per share |
• | 37,144,524 warrants with an exercise price of A$0.24 per share |
None of the warrants specified above have been exercised since initial recognition up to 31 December 2019.
Fair value of convertible notes
The following assumptions were used to determine the initial fair value of the debt component of the convertible note which were based on market conditions that existed at the grant date:
Assumption | Convertible notes | Rationale | ||||
Historic volatility | 85.0 | % | Based on the Company’s historical volatility data | |||
Share price | A$ | 0.051 | Closing market share price on 31 July 2015 | |||
Risk free interest rate | 2.734 | % | Based on Australian Government securities yields which match the term of the convertible note | |||
Risk adjusted interest rate | 15.0 | % | An estimate of the expected interest rate of a similarnon-convertible note issued by the company | |||
Dividend yield | 0.0 | % | Based on the Company’s nil dividend history |
The fair value of the convertible note is allocated between a financial liability for the traditional note component of the convertible note and into equity which represents the conversion feature. The traditional note component of the convertible note was initially recorded at fair value of $4.4 million, based on the present value of the contractual cash flows of the note discounted at 15%. The remaining value of the convertible note was allocated to the conversion feature and recognised as equity.
After initial recognition, the liability component of the convertible note has been measured at fair value as required by AASB 2.
Immutep Limited- Appendix 4D | Page 19 |
Notes to the Consolidated Financial Statements (continued)
10.Non-Current liabilities - convertible note (continued)
Convertible Note – Liability | Conversion Feature - Equity | |||||||
A$ | A$ | |||||||
Fair value at issuance | 4,419,531 | 41,431,774 | ||||||
Accumulated fair value movements | 3,794,722 | — | ||||||
|
|
|
| |||||
Balance at 31 December 2019 | 8,214,253 | 41,431,774 | ||||||
|
|
|
|
11.Non-Current liabilities – US warrants
31 December 2019 | 30 June 2019 | |||||||
A$ | A$ | |||||||
Opening balance | 3,164,413 | 2,945,358 | ||||||
Exercising of warrants* | — | (1,277,028 | ) | |||||
December 2018 warrants fair value at issue date | — | 2,457,259 | ||||||
Fair value movements | (619,854 | ) | (961,176 | ) | ||||
|
|
|
| |||||
Closing Balance | 2,544,559 | 3,164,413 | ||||||
|
|
|
|
* | In September and October 2018, US investors exercised 419,733 warrants at exercising price of US$ 2.50 each. Immutep received US$1.05 million (A$1.46 million) cash payment in total. |
In July 2017, the Group completed its first US capital raise after it entered into a securities purchase agreement with certain accredited investors for the Group to issue American Depositary Shares (ADSs) and Warrants of Immutep for cash consideration totaling A$6,561,765. In this private placement, the Company agreed to issue unregistered warrants to purchase up to 1,973,451 of its ADSs. The warrants have an exercise price of US$2.50 per ADS, are exercisable immediately and will expire on 5 January 2023. The warrants do not confer any rights to dividends or a right to participate in a new issue without exercising the warrant.
In December 2018, the Group completed its second US capital raise after it entered into a securities purchase agreement with certain accredited investors to purchase American Depositary Shares (ADSs) and Warrants of Immutep for cash consideration totaling A$7,328,509. In this private placement, the Group agreed to issue unregistered warrants to purchase up to 2,080,000 of its ADSs. The warrants have an exercise price of US$2.50 per ADS. The Warrant may be exercised in whole or in part at any time or times up until the Warrant Expiry Date of 12 February 2022. The warrants do not confer any rights to dividends or a right to participate in a new issue without exercising the warrant.
Both US warrant issues represent a written option to exchange a fixed number of the Group’s own equity instruments for a fixed amount of cash that is denominated in a foreign currency (US dollars) and is thus classified as a derivative financial liability in accordance with AASB 132. The US warrants liability is initially recorded at fair value at issue date and subsequently measured at fair value through profit and loss at each reporting date. Capital raising costs have been allocated proportionately between issued capital and the US warrant issues in accordance with their relative fair values.
The 10 for 1 share consolidation in November 2019 did not change the number of US warrants nor the exercise price of those warrants as the American Depository Receipt (ADR) ratio was also changed from 1 ADS representing 100 shares to 1 ADS representing 10 shares. The effective date of the change was 7 November 2019.
However under the anti-dilution clause of share purchase agreements, the exercise price was adjusted due to the entitlement offer the Group conducted in August 2019. As a result, the exercise price is now US$2.49.
Immutep Limited- Appendix 4D | Page 20 |
Notes to the Consolidated Financial Statements (continued)
11.Non-Current liabilities – US warrants (continued)
Fair value of warrants
The warrants granted are not traded in an active market and the fair value has thus been estimated by using the Black-Scholes pricing model based on the following assumptions. Key terms of the warrants are included above. The following assumptions were based on observable market conditions that existed at the issue date and at 31 December 2019:
December 2018 warrants
Assumption | At issue date | At 31 December 2019 | Rationale | |||
Historic volatility | 59.95% | 59.89% | Based on12-month historical volatility data for the Company | |||
Exercise price | US$2.50 | US$2.49* | As per subscription agreement | |||
Share price | US$2.21 | US$1.79 | Closing share price on valuation date from external market source | |||
Risk-free interest rate | 2.68% | 1.62% | Based on the US Government securities yields which match the term of the warrant | |||
Dividend yield | 0.0% | 0.0% | Based on the Company’s nil dividend history | |||
Fair value per warrant | US$0.8474 A$1.1814 | US$0.4369 A$0.6236 | Determined using Black-Scholes models with the inputs above | |||
Fair value | A$2,457,259 | A$1,297,105 | Fair value of 2,080,000 warrants |
July 2017 warrants
Assumption | At issue date | At 31 December 2019 | Rationale | |||
Historic volatility | 58.0% | 59.89% | Based on12-month historical volatility data for the Company | |||
Exercise price | US$2.50 | US$2.49* | As per subscription agreement | |||
Share price | US$2.17 | US$1.79 | Closing share price on valuation date from external market source | |||
Risk-free interest rate | 1.93% | 1.62% | Based on the US Government securities yields which match the term of the warrant | |||
Dividend yield | 0.0% | 0.0% | Based on the Company’s nil dividend history | |||
Fair value per warrant | US$1.0716 A$1.3962 | US$0.5625 A$0.8029 | Determined using Black-Scholes models with the inputs above | |||
Fair value | A$2,755,375 | A$1,247,454 | Fair value of 1,973,451 warrants as at issue date and air value of 1,553,718 warrants as at 31 December 2019 |
* | Exercising price has been adjusted as per anti-dilution clause in the share purchase agreement |
Immutep Limited- Appendix 4D | Page 21 |
Notes to the Consolidated Financial Statements (continued)
12. Equity – Issued Capital
31 December 2019 | 30 June 2019 | |||||||||||
Note | A$ | A$ | ||||||||||
Issued and Paid Up Capital | ||||||||||||
Fully paid ordinary shares | 12(a | ) | 221,344,161 | 211,429,637 | ||||||||
Options over fully paid ordinary shares | 9,661,954 | 9,661,954 | ||||||||||
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|
| |||||||||
Total Issued Capital | 231,006,115 | 221,091,591 | ||||||||||
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| |||||||||
In November 2019, the shareholders approved a 10 for 1 share consolidation during the FY2019 Annual General Meeting. Refer to notes 10 and 11 for impact of the 10 for 1 share consolidation to convertible notes and US warrants, respectively.
(a) Ordinary shares
Note | 31 December 2019 | 30 June 2019 | ||||||||||||||||||
No. | A$ | No. | A$ | |||||||||||||||||
At the beginning of reporting period | 3,388,598,296 | 211,429,637 | 3,026,082,669 | 203,570,765 | ||||||||||||||||
Shares issued during year | 10(b | ) | 477,645,539 | 10,030,556 | 260,000,000 | 4,871,250 | ||||||||||||||
Exercise of performance rightspre-share consolidation (shares issued during the period) | 10(b | ) | 10,878,476 | 385,794 | 60,542,327 | 1,480,488 | ||||||||||||||
Share consolidation | (3,489,408,041 | ) | — | — | — | |||||||||||||||
Exercise of performance rights post-share consolidation (shares issued during the period) | 10(b | ) | 1,083,334 | 289,167 | — | — | ||||||||||||||
Exercise of warrants (shares issued during the period) | 10(b | ) | — | — | 41,973,300 | 2,043,359 | ||||||||||||||
Transaction costs relating to share issues | — | (790,993 | ) | — | (536,225 | ) | ||||||||||||||
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| |||||||||||||
At reporting date | 388,797,604 | 221,344,161 | 3,388,598,296 | 211,429,637 | ||||||||||||||||
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(b) Shares issued
31 December 2019 details | Number of shares | Issue price A$ | Total A$ | |||||||||
Shares issued under Securities Purchase Agreement | 477,645,539 | 0.021 | 10,030,556 | |||||||||
Exercise of performance rightspre-share consolidation (shares issued during the period) | 10,878,476 | 0.035 | 385,794 | |||||||||
Share consolidation | (3,489,408,041 | ) | — | — | ||||||||
Exercise of performance rights (shares issued during the period) | 1,083,334 | 0.267 | 289,167 | |||||||||
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| |||||||||
(2,999,800,692 | ) | 10,705,517 | ||||||||||
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| |||||||||
31 June 2019 details | Number of shares | Issue price A$ | Total A$ | |||||||||
Shares issued under Securities Purchase Agreement | 260,000,000 | 0.019 | 4,871,250 | |||||||||
Performance rights exercised (transfer from share-based payment reserve) | 60,542,327 | 0.024 | 1,480,488 | |||||||||
Exercise of warrants | 41,973,300 | 0.049 | 2,043,359 | |||||||||
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|
| |||||||||
362,515,627 | 8,395,097 | |||||||||||
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|
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Immutep Limited- Appendix 4D | Page 22 |
Notes to the Consolidated Financial Statements (continued)
13. Equity – Reserves and accumulated losses
31 December 2019 | 30 June 2019 | |||||||
$ | $ | |||||||
(a) Reserves | ||||||||
Options issued reserve | 19,116,205 | 19,116,205 | ||||||
Conversion feature of convertible note reserve | 41,431,774 | 41,431,774 | ||||||
Foreign currency translation reserve | 1,225,802 | 1,654,783 | ||||||
Share-based payments reserve | 3,440,198 | 3,331,192 | ||||||
|
|
|
| |||||
65,213,979 | 65,533,954 | |||||||
|
| |||||||
Movements in options issued reserve were as follows: | ||||||||
Opening balance and closing balance | 19,116,205 | 19,116,205 | ||||||
Movements in conversion feature of convertible note reserve | ||||||||
Opening balance and closing balance | 41,431,774 | 41,431,774 | ||||||
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|
|
| |||||
Movements in foreign currency translation reserve were as follows: | ||||||||
Opening balance | 1,654,783 | 1,096,368 | ||||||
Currency translation differences arising during the year | (428,981 | ) | 558,415 | |||||
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|
|
| |||||
Ending balance | 1,225,802 | 1,654,783 | ||||||
|
|
|
| |||||
Movements in share-based payments reserve were as follows: | ||||||||
Opening balance | 3,331,192 | 3,229,693 | ||||||
Options and performance rights expensed during the year | 783,967 | 1,581,987 | ||||||
Exercise of vested performance rights transferred to contributed equity | (674,961 | ) | (1,480,488 | ) | ||||
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|
| |||||
Ending balance | 3,440,198 | 3,331,192 | ||||||
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|
| |||||
(b) Accumulated losses | ||||||||
Movements in accumulated losses were as follows: | ||||||||
Opening balance | (262,237,829 | ) | (244,584,832 | ) | ||||
Net loss for the year | (5,950,345 | ) | (18,343,984 | ) | ||||
Exercise of warrants | — | 690,987 | ||||||
|
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|
| |||||
Ending balance | (268,188,174 | ) | (262,237,829 | ) | ||||
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14. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Name of entity | Country of incorporation | Class of shares | 31 December 2019 % | 31 December 2018 % | ||||||||||||
Immutep Australia Pty Ltd | Australia | Ordinary | 100 | % | 100 | % | ||||||||||
Immutep IP Pty Ltd | Australia | Ordinary | 100 | % | 100 | % | ||||||||||
Immutep GmbH | Germany | Ordinary | 100 | % | 100 | % | ||||||||||
Immutep USA Inc | USA | Ordinary | 100 | % | 100 | % | ||||||||||
PRR Middle East FZLLC | UAE | Ordinary | 100 | % | 100 | % | ||||||||||
Immutep S.A.S | France | Ordinary | 100 | % | 100 | % |
15. Contingent Liabilities
There were no material contingent liabilities at 31 December 2019.
Immutep Limited- Appendix 4D | Page 23 |
Notes to the Consolidated Financial Statements (continued)
16. Events Occurring After the Balance Sheet Date
In early January 2020, Immutep reported that the requisite number of predefined patient responses was observed in stage1 of Part C (Second line Head and Neck Squamous Cell Carcinoma (HNSCC)) of itsTACTI-002 study. Accordingly, Part C was expanded to include an additional 19 HNSCC patients, creating stage 2 of Part C.
On 19 February 2020, the Company announced more mature positive interim data from its ongoing Phase IITACTI-002 study. It reported an encouraging Overall Response Rate (ORR) of from 47% from stage 1 of Part A (First lineNon-Small Cell Lung Cancer (NSCLC)) and 33% from stage 1 of Part C. In addition, NSCLC responses have been seen across all threePD-L1 expression level groups (< 1%,1-49% and³50%). 59% of the NSCLC patients are still under therapy with 7+ months, median PFS not yet reached.
No other matters or circumstance has arisen since 31 December 2019 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations or the Group’s state of affairs in future financial years.
17. Fair value measurement of financial instruments
This note provides an update on the judgements and estimates made by the Group in determining the fair values of the financial instruments since the last annual financial report.
(i) Fair value hierarchy
To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level follows underneath the table.
The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at 31 December 2019 and 30 June 2019 on a recurring basis:
At 31 December 2019 | Level 1 A$ | Level 2 A$ | Level 3 A$ | Total A$ | ||||||||||||
Liabilities | ||||||||||||||||
Convertible note liability | — | — | 8,214,253 | 8,214,253 | ||||||||||||
Warrant liability | — | 2,544,559 | — | 2,544,559 | ||||||||||||
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| |||||||||
Total liabilities | — | 2,544,559 | 8,214,253 | 10,758,812 | ||||||||||||
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| |||||||||
At 30 June 2019 | Level 1 A$ | Level 2 A$ | Level 3 A$ | Total A$ | ||||||||||||
Liabilities | ||||||||||||||||
Convertible note liability | — | — | 7,642,707 | 7,642,707 | ||||||||||||
Warrant liability | 3,164,413 | — | 3,164,413 | |||||||||||||
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|
|
|
|
|
|
| |||||||||
Total liabilities | — | 3,164,413 | 7,642,707 | 10,807,120 | ||||||||||||
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|
|
(ii) Valuation techniques used to determine fair values
Level 1: | The fair value of financial instruments trade in active markets (such as publicly traded derivatives, and trading andavailable-for-sale securities) is based on quoted (unadjusted) market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. |
Immutep Limited- Appendix 4D | Page 24 |
Notes to the Consolidated Financial Statements (continued)
17. Fair value measurement of financial instruments (continued)
Level 2: | The fair value of financial instruments that are not traded in an active market (for exampleover-the-counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. |
Level 3: | If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities. |
Specific valuation techniques used to value financial instruments include:
• | The use of quoted market prices or dealer quotes for similar instruments |
• | The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves |
• | The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date |
• | The fair value of the remaining financial instruments is determined using discounted cash flow analysis |
(iii) Fair value measurements using valuation techniques
• | There are no financial instruments as at 31 December 2019 and 30 June 2019 under Level 1. |
• | Level 2 financial instruments consist of warrant liabilities. Refer to Note 11 for details of fair value measurement. |
• | Level 3 financial instruments consist of convertible notes. Refer to Note 10 for details of fair value measurement |
(iv) Valuation inputs and relationships to fair value
For US warrant valuation inputs under Level 2, please refer to Note 11.
The following table summarises the quantitative information about the significant inputs used in level 3 fair value measurements:
Description | Fair value at 31 December 2019 A$ | Unobservable inputs | Range of inputs | |||||||
Convertible note | 8,214,253 | Face value Interest rate of note Risk adjusted interest rate | | 13,750,828 3 15 | % % |
(v) Valuation inputs and relationships to fair value
The convertible note was valued using a discounted cashflow model.
Immutep Limited- Appendix 4D | Page 25 |
Directors’ Declaration
The Directors of the company declare that:
a) | The financial statements and notes, as set out on pages 8 to 25 are in accordance with theCorporations Act 2001, including: |
(i) | complying with Accounting Standards, theCorporations Regulations 2001 and other mandatory professional reporting requirements; and |
(ii) | giving a true and fair view of the consolidated entity’s financial position as at 31 December 2019 and of its performance for the half-year ended on that date. |
b) | there are reasonable grounds to believe that Immutep Limited will be able to pay its debts as and when they become due and payable. |
This declaration is made in accordance with a resolution of the Board of Directors.
Mr Marc Voigt |
CEO and Executive Director |
Immutep Limited |
Dated: 21st Day of February 2020 |
Immutep Limited- Appendix 4D | Page 26 |
Independent auditor’s review report to the members of Immutep Limited
Report on the half-year financial report
We have reviewed the accompanying half-year financial report of Immutep Limited (the Company) and the entities it controlled during the half-year (together the Group), which comprises the consolidated balance sheet as at 31 December 2019, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, selected other explanatory notes and the directors’ declaration.
Directors’ responsibility for the half-year financial report
The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and theCorporations Act 2001and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Australian Auditing Standard on Review Engagements ASRE 2410Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with theCorporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2019 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134Interim Financial Reporting and theCorporations Regulations 2001. As the auditor of Immutep Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of theCorporations Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757 Level 3, 45 Watt Street, PO Box 798, NEWCASTLENSW 2300 T +61 2 4925 1100, F +61 2 4925 1199, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation. | Page 27 |
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Immutep Limited is not in accordance with theCorporations Act 2001 including:
1. | giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its performance for the half-year ended on that date; |
2. | complying with Accounting Standard AASB 134Interim Financial Reporting and the Corporations Regulations 2001. |
PricewaterhouseCoopers
Caroline Mara Partner | Newcastle 21 February 2020 |