☒ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
☐ | Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 84-462-0206 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3940 Trust Way Hayward, California | 94545 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $0.0001 | BNTC | The Nasdaq Stock Market LLC |
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |||
Non-Accelerated Filer | ☒ | Smaller Reporting Company | ☒ | |||
Emerging Growth Company |
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2022.
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PART I | ||||||
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Item 1A. | ||||||
Item 1B. | ||||||
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PART II | ||||||
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Item 8. | F-1 | |||||
Item 9. | ||||||
Item 9A. | ||||||
Item 9B. | ||||||
Item 9C. | 97 | |||||
PART III | ||||||
Item 10. | III-1 | |||||
Item 11. | III-5 | |||||
Item 12. | ||||||
Item 13. | ||||||
Item 14. | ||||||
PART IV | ||||||
Item 15. | IV-1 | |||||
Item 16. | IV-3 | |||||
IV-4 |
On August 14, 2020, BBL reorganized as a Proprietary Limited company and changed its name to Benitec Biopharma Proprietary Limited.
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including the potential duration of treatment effects and the potential for a “one shot” cure;
Item 1. | Business. |
a chronic, life-threatening genetic disorder.
Through the combination of the
points and to continue to execute on our business plan. See “Risk Factors—Our auditors’ report expresses doubt about our ability to continue as a going concern.”
potentially permanent, silencing of the expression of the disease-causing gene. The silence and replace approach further bolsters the biological benefits of long-term silencing of disease-causing genes by incorporating multifunctional genetic constructs within the modified AAV vectors to create an AAV-based gene therapy agent that is designed to both silence the expression of mutated, disease-causing genes (to slow, or halt, the underlying mechanism of disease progression) and, simultaneously, replace the mutant genes with normal, “wild type” genes (to drive restoration of function in diseased cells). This fundamentally distinct therapeutic approach to disease management offers the potential to restore the underlying physiology of the treated tissues and, in the process, improve treatment outcomes for patients suffering from the chronic and, potentially, fatal effects of diseases like Oculopharyngeal Muscular Dystrophy (OPMD).
Re-domiciliation
On April 15, 2020, or the Implementation Date, the re-domiciliation, or the Re-domiciliation, of Benitec Biopharma Limited, a public company incorporated under the laws of the State of Western Australia, or Benitec Limited, was completed in accordance with the Scheme Implementation Agreement, as amended and restated as of January 30, 2020, between Benitec Limited and us. As a result of the Re-domiciliation, our jurisdiction of incorporation was changed from Australia to Delaware, and Benitec Limited became our wholly owned subsidiary.
The Re-domiciliation was effected pursuant to a statutory scheme of arrangement under Australian law, or the Scheme, whereby on the Implementation Date, all of the issued and outstanding ordinary shares of Benitec Limited were exchanged for newly issued shares of our common stock, on the basis of one share of our common stock, par value $0.0001 per share, for every 300 ordinary shares of Benitec Limited issued and outstanding. Holders of Benitec Limited’s American Depository Shares, or ADSs (each of which represented 200 ordinary shares), received two shares of our common stock for every three ADSs held.
Our common stock began trading on The Nasdaq Capital Market, or Nasdaq, at the start of trading on the Implementation Date under the symbol “BNTC.”
efficacy has been demonstrated in several clinical indications through the use of this approach, siRNA-based approaches maintain a number of limitations, including:
wildtypewild type gene replacement to drive sustained silencing of disease-causing genes and concomitant restoration of functional wildtypewild type genes following a single administration of the therapeutic agent. Benitec employs ddRNAi in combination with classical gene therapy (i.e., transgene delivery via viral vectors) to overcome several of the fundamental limitations of RNAi.wildtypewild type protein of interest);
growth opportunities.
(dysphagia)
Prior to such termination, the Benitec team endeavored to conduct several additional exploratory nonclinical analyses in order to potentially improve the biological efficacy of BB-301 via further optimization of the route of administration employed to dose the target muscle tissues.
Hepatitis B
The Company is developing BB-103 for the treatment of HBV. Results of in vivo and in vitro studies, from December 2016, March 2016 and December 2015, demonstrated the potential utility of an approach that combines RNAi with gene therapy to treat HBV. In April 2017, the Company completed a pre-IND submission with the FDA in which the feedback provided by the agency included details regarding steps required to initiate a clinical trial for BB-103. As noted, due to our current liquidity and funding, the Company is seeking strategic partnerships to complete the IND enabling studies for BB-103.
A first mover advantage for ddRNAi-based therapeutics;
A proprietary ddRNAi-based silence and replace technology platform that may potentially enable the serial development of single-administration therapeutics capable of facilitating sustained, long-term silencing of disease-causing genes and concomitant replacement of wildtypewild type gene function;
BB-103 has demonstrated robust nonclinical activity during the evaluation of this agent
In-House Programs
BB-301 for Treatment of Oculopharyngeal Muscular Dystrophy
OurAgent—Agent
BB-301 is composed of a modified AAV serotype 9 (AAV9) capsid that expresses a bifunctional construct under the control of a single muscle specific Spc5-12 promoter to achieve co-expression of both the codon-optimized PABPN1 mRNA and two shmiR molecules directed against wild type and mutant PABPN1, and the agentPABPN1. BB-301 isdesigned to correct the genetic defect underlying OPMD following a single localized administration.
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BB-301 was injected into the Tibialis Anterior (TA) muscle of 10 week old-to-12 week old animals and, 14- weeks14-weeks post administration, each A17 cohort was anesthetized and the contractile properties of the injected TA muscles were analyzed via in-situ muscle electrophysiology
BB-103 for2021:
We are seeking strategic partners to continueBB-301 via the developmentuse of BB-103 fora proprietary dosing device in an open surgical procedure could safely achieve the treatmentfollowing goals:
The human hepatitis B virus is a small DNA virus that, accordingBeagle dogs corresponds to the World Health Organization, infects upMiddle Pharyngeal Constrictor muscle in human subjects, and the TP muscle in Beagle dogs corresponds to 240 million people worldwide, resultingthe Inferior Pharyngeal Constrictor muscle in up to 780,000 deaths per year. HBV infection can lead to differential outcomes, ranging from a silent, acute phase infection that can be resolved via the inherent action of the immune system, to a chronic infection requiring life-long therapy. In the case of a chronic HBV infection,human subjects. Atrophy, fibrosis, and the presence of viral proteins, particularlyintranuclear inclusions characterize the hepatitis B surface antigen, causes hepatic inflammation, liver dysfunction, acute hepatic failure, cirrhosis and/or hepatocellular carcinoma.
Current Hepatitis B Treatments
HBV predominantly exists as eight genotypes, designated A through H,Middle Pharyngeal Constrictor muscles and the Inferior Pharyngeal Constrictor muscles of human subjects diagnosed with distinct geographic distribution.
According to GlobalData,OPMD. BB-301 was injected into the pharyngeal muscles of the Beagle dog subjects only on Day 1 of the Pilot Dosing Study, and the corresponding canine pharyngeal muscles were harvested for analysis after 8 weeks of observation post-dosing. BB-301 dosing was carried out independently by both a market research firm,veterinary surgeon and a practicing Otolaryngologist who has extensive experience with the global hepatitis B therapeutics market was worth $2.4 billion in 2014 and is expected to reach a total valueprovision of $3.0 billion by 2024 at a Compound Annual Growth Rate of 2.4%. The current standards ofpalliative surgical care for HBV consistOPMD patients.
Mostinhibiting (i.e., “silencing”) the expression of the currently employed anti-HBV therapies can provide long-term viral load suppression, however, these therapeutic agents have modest cure ratesmutant form of the PABPN1 protein and possess the additional riskwild type (i.e., endogenous) form of drivingthe PABPN1 protein (importantly, the mutant form of the PABPN1 protein underlies the development and progression of drug-resistant mutations. The long-term useOPMD).
Our ddRNAi-based Hepatitis B Therapeutic-BB-103
BB-103 is
BB-103-DesignPABPN1 silencing levels of 31% inhibition or higher led to resolution of OPMD disease symptoms and Mechanism of Action
The designcorrection of the BB-103 DNA construct takes advantagehistological hallmarks of OPMD.
In Vitro Development Highlights
Our bioinformatics analysis of the major HBV genotypes, A through H, has identified several well-conserved regions of the genome for targeting with ddRNAi therapeutics, and we have designed and evaluated numerous shRNAs to target these regions. The most advanced nonclinical construct is illustrated in Figure 7A.
Figure 7
Figure 8
Regarding the mechanism of action of BB-103, the DNA construct is delivered to the nucleus of hepatocytes via an AAV8 vector. Upon reaching the nucleus the construct expresses three distinct shmiRs that are processed intracellularly to produce siRNAs that cleave the HBV mRNA and, thus, prevent the virus from replicating and producing viral proteins.
Intellectual Property
ddRNAi-based treatment of Hepatitis B
The Benitec patent portfolio includes four patent families relevant to Benitec’s ddRNAi-based candidate for treatment of hepatitis B virus (HBV) infection (BB-103). This includes three patent families directed to RNAi agents targeting HBV and Benitec’s AAV patent family which covers the delivery system for BB-103.
The first patent family directed to RNAi agents targeting HBV, entitled “HBV Treatment (HBV family #1)”, relates to single-stranded RNA and shRNA sequences to a range of target regions of the hepatitis B viral genome. Although drafted to explicitly cover shRNAs (as this was the RNAi format under development at the time), the claims encompass shRNAs comprised within a microRNA backbone (i.e., short hairpin microRNA (shmiR)) which is the format of RNAi currently in use within Benitec’s HBV program.
A further patent family relating to shRNA sequences to a range of additional target regions of the hepatitis B viral genome was filed. This patent family is entitled “Reagents for treatment of hepatitis B virus (HBV) infection
and use thereof (HBV family #2)” and, although drafted to cover shRNAs (as this was the RNAi format under development at the time), the claims encompass shRNA and shmiR.
The third patent family relevant to HBV relates to the development of constructs. This patent family, entitled “Reagents for treatment of hepatitis B virus (HBV) infection and use thereof (HBV family #3)”, was filed to cover single and triple shmiR constructs currently under development at Benitec.
| Application or | ||||||||||||
Country or Territory | Trademark (program) | Registration number | Status | ||||||||||
USA | BENITEC | 86190065 | Registered | ||||||||||
USA | SILENCING GENES FOR LIFE | 86488147 | Registered | ||||||||||
Australia | SILENCING GENES FOR LIFE | 1448041 | Registered | ||||||||||
Australia | BENITEC BIOPHARMA | 1448046 | Registered | ||||||||||
Australia | BENITEC—logo | 1448052 | Registered | ||||||||||
Australia | Nervarna | 1526478 | Registered | ||||||||||
Australia | TRIBETARNA | 1526479 | Registered | ||||||||||
Australia | HEPBARNA | 1526483 | Registered | ||||||||||
International Bureau (WIPO) – designating EU; UK and US | GIVING DISEASE THE SILENT TREATMENT | 1389399 | Registered | ||||||||||
USA | BENITEC | 86795296 | Registered | ||||||||||
USA | GIVING DISEASE THE SILENT TREATMENT | 79226988 | Registered | ||||||||||
European Union | BENITEC | 14680003 | Registered | ||||||||||
Australia | BENITEC | 1728797 | Registered | ||||||||||
Australia | BENITEC | 1103049 | Registered | ||||||||||
Australia | |||||||||||||
BENITEC | 1103300 | Registered | |||||||||||
| Australia | ||||||||||||
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GIVING DISEASE THE SILENT TREATMENT | 1851660 | Registered | |||||||||||
3238275 | Registered | ||||||||||||
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technology and scientific expertise in gene silencing using ddRNAi provide us with competitive advantages, we face potential competition from many different sources, including larger and better-funded pharmaceutical, specialty pharmaceutical and biotechnology companies, as well as from academic institutions and governmental agencies and public and private research institutions that may develop potentially competitive products or technologies. We are aware of several companies focused on developing gene therapy or gene silencing product candidates, including Alnylam, Arbutus and Arrowhead-developing siRNA-based therapeutics for hepatitis B.
Arrowhead.
post-approval
the pathway enabled by RMAT designation. RMAT designation enables gene therapy products to access the FDA’s existing expedited programs to help foster the development and approval of gene therapy products. Our product candidates may not be eligible for RMAT designation now or in the future.
in an IND, which is a request for authorization from the FDA to administer an investigational product to humans. Some nonclinical testing may continue even after the IND application is submitted. IND authorization is required before interstate shipping and administration of any new product to humans that is not the subject of an approved
adverse events; any findings from other studies, tests in laboratory animals or
effective for its intended use, and whether the product is being manufactured in accordance with cGMP, to assure and preserve the product’s identity, safety, strength, quality, potency and purity, and in accordance with biological product standards. The FDA will inspect the facilities at which the product is manufactured to ensure the manufacturing processes and facilities are in compliance with cGMP
comply with these requirements, the FDA may halt our clinical trials, refuse to approve any BLA, force us to recall a product from distribution, shut down manufacturing operations or withdraw approval of the applicable BLA. Noncompliance with cGMP or other requirements can result in issuance of warning or untitled letters, civil and criminal penalties, seizures, and injunctive action.
be similar to, or interchangeable with, an FDA-licensed reference biological product, and grants a reference biologic twelve
Nant Capital, LLC is
Nant Capital, LLC, or Nant Capital, holds 26.4%recurring net losses, which have resulted in an accumulated deficit of our outstanding common stock$148.3 million as of September 15, 2020. Nant Capital appointed Dr. Jerel BanksJune 30, 2022 and $130.1 million as of June 30, 2021. We have incurred a net loss of $18.2 million for the fiscal year ended June 30, 2022 and $13.9 million for the fiscal year ended June 30, 2021. At June 30, 2022 and June 30, 2021, we had cash and cash equivalents of $4.1 million and $19.8 million, respectively. The Company does not have adequate liquidity to fund its operations for the boardnext 12 months without raising additional funds and the success of directors of Benitec Limited, and Dr. Banks remains on our Board of Directors (the “Board”) andraising such additional capital is Chief Executive Officernot solely within the control of the Company. PriorThese factors raise substantial doubt about our ability to joining the Company, Dr. Banks was the Chief Investment Officercontinue as a going concern.
We also entered into an exclusive sublicense agreement with an affiliate of Nant Capitaloperations, and a research collaboration agreement with Nant Capital pursuant to which we agreed to develop and commercialize an epidermal growth factor receptor, or EGFR, antisense RNA product candidate for head and neck squamous cell carcinoma (HNSCC), which we call BB-401. We terminated the exclusive sublicense agreement for convenience, with the termination effective as of June 2020, because the BB-401 program has been terminated. Prior to termination of the exclusive sublicense agreement, we were required to make periodic payments to Nant Capital’s affiliate for so long as the agreement remained in effect, as well as contingent milestone and royalty payments in connection with the development and sale of the licensed technology. The Company accrued a milestone payment in December of 2018 of $300,000 (AUD 425,411), which was anticipated to be paid to NantWorks, LLC under the sublicense agreement; however it was later determined that this milestone was not required to be paid and the accrual was reversed.
As a result of its ownership of our common stock and its nomination of a director to our Board, Nant Capital may exert influence over us, including election of our Board, corporate transactions and strategic decisions. The interests of Nant Capital may differ from or conflict with the interests of our other shareholders. In the future, if Nant Capital does not support a merger, tender offer, sale of assets or other business combination because it judges that transaction to be inconsistent with Nant Capital’s investment strategy, we may be unable to enter intocontinue as a going concern. Future reports from our independent registered public accounting firm may also contain statements expressing substantial doubt about our ability to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or consummate a transaction that would enable other shareholders to realize a premium over the then-prevailing market prices for our common stock. Furthermore, if Nant Capital sells substantial amounts of our common stock to enhance its liquidity position, fund alternative investments or for other reasons, the trading price of our common stock could decline significantly, and other shareholdersfinancing sources may be unableunwilling to sell their shares of our common stockprovide additional funding to us on commercially reasonable terms, if at favorable prices. We cannot predict or control how Nant Capital may use the influence it has as a result of its common stock holdings.
all.
We have sufficient funds at this time to complete the pre-clinical studies for BB-301 however, we expect that we will need to raise additional funds to initiate and complete the clinical studies for BB-301.
OPMD.
manufacturing capacity or transferring our manufacturing process to commercial partners, any of which may prevent us from completing our preclinical trials, initiating clinical trials or commercializing our products on a timely or profitable basis, if at all.
or safety or efficacy observations made in clinical trials, including adverse events. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or other regulatory authority approval. If we fail to produce positive results in our clinical trials of our product candidates, the development timeline and regulatory approval and commercialization prospects for our product candidates, and, correspondingly, our business and financial prospects, would be negatively impacted.
all. A
suspend or withdraw regulatory approval;
development efforts. All of our product candidates are in preclinical development. Our product candidates derived from our
discontinued or otherwise be unsuccessful. Conflicts between us and our collaborators may arise. In the event of discontinuation of one or more of our collaboration agreements, it may become necessary for us to assume the responsibility for any such product candidates at our own expense or seek new collaborators. In that event, we likely would be required to limit the size and scope of one or more of our independent programs or increase our expenditures and seek additional funding, which may not be available on acceptable terms or at all, and our business may be harmed.
The manufacturing process for a product candidate is subject to FDA and foreign regulatory authority review. Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities in order to comply with regulatory standards, such as cGMP. In the event that any of our suppliers or manufacturers fails to comply with such requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves or enter into an agreement with another third party, which would be costly and delay any future clinical trials.
rights to publish data, provided that we are notified in advance and may delay publication for a specified time in order to secure our intellectual property rights arising from the collaboration. In other cases, publication rights are controlled exclusively by us or we may share these rights with other parties. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of these agreements, independent development or publication of information including our trade secrets in cases where we do not have proprietary or otherwise protected rights at the time of publication.
Moreover, increasing efforts by governmental and other third-party payers, in the United States and abroad, to cap or reduce healthcare costs, have resulted in legislation and reforms such as, in
Since January 2017, President Trump has signed Executive Orders and other directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. While Congress has not passed comprehensive repeal legislation, several bills affecting the implementation of certain taxes under the ACA have passed. On December 22, 2017, President Trump signed into law federal tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act), which includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” The 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax. The Bipartisan Budget Act of 2018, among other things, amended the ACA, effective January 1, 2019, to close the coverage gap in most Medicare Part D drug plans. In December 2018, the Centers for Medicare & Medicaid Services (CMS) published a final rule permitting further collections and payments to and from certain ACA-qualified health plans and health insurance issuers under the ACA risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment.
The CARES Act modifies certain provisions of the Tax Act, including increasing the amount of interest expense that may be deducted.
The Tax Act as modified by the CARES Act is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and IRS, any of which could lessen or increase certain adverse impacts of the legislation. In addition, it is unclear how these U.S. federal income tax changes will affect state, and local income taxation which often uses federal taxable income as a starting point for computing stateare constantly under review by persons involved in the legislative process and local tax liabilities. Our analysis and interpretation of this legislation is preliminary and ongoing. Some of the changes made by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax legislationlaws (which changes may have retroactive application) could adversely affect us. Weus or holders of our common stock, warrants and pre-funded warrants. In recent years, many such changes have been made and changes are likely to continue to work withoccur in the future. Future changes in U.S. tax laws could have a material adverse effect on our tax advisors and auditors to determine the full impact that the recent tax legislation as a whole will have on us.business, cash flow, financial condition or results of operations. We urge our investors to consult with their legal and tax advisors with respect to such legislation and itsregarding the implications of potential effectchanges in U.S. tax laws on an investment in our common stock, warrants and pre-funded warrants.
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require biopharmaceutical or biotechnology manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. |
hazardous waste products. National, state and local laws and regulations in the United States and other countries govern the use, generation, manufacture, storage, handling and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair our product development and commercialization efforts. In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or wastes. We do not carry specific biological or hazardous waste insurance coverage, and our property, casualty and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury, we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and any future clinical trials, regulatory approvals or product commercialization progress could be suspended.
individuals, the U.S. Secretary of the Department of Health and Human Services, or HHS, and for extensive breaches, notice may need to be made to the media or U.S. state attorneys general. Such a notice could harm our reputation and our ability to compete. HHS has the discretion to impose penalties without attempting to resolve violations through informal means. In addition, U.S. state attorneys general are authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy of state residents. There can be no assurance that we, our collaborators, CROs, vendors, and any other business counterparties will be successful in efforts to detect, prevent, protect against or fully recover systems or data from all break-downs,breakdowns, service interruptions, attacks or breaches of systems. In addition, we do not maintain standalone cyber-security insurance and have limited insurance coverage in the event of any breach or disruption of our or our collaborators’, CROs’, or vendors’ systems, including any unauthorized access or loss of any personal data that we may collect, store or otherwise process. The costs related to significant security breaches or disruptions could be material and exceed the limits of any insurance coverage we may have. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential or proprietary information, including data related to our personnel, we could incur liability and the further development and commercialization of our product candidates could be delayed and our business and operations could be adversely affected and/or could result in the loss or disclosure of critical or sensitive data, which could result in financial, legal, business or reputational harm to us.
patent applications before March 16, 2013, an interference proceeding in the United States can be initiated by such third parties to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. If third parties have filed such applications on or after March 16, 2013, a derivation proceeding in the United States can be initiated by such third parties to determine whether our invention was derived from theirs. Even where we have a valid and enforceable patent, we may not be able to exclude others from practicing our invention where the other party can show that they used the invention in commerce before our filing date or the other party benefits from a compulsory license. In addition, patents have a limited lifespan. In the United States, and in most other jurisdictions with a patent system, the natural expiration of a patent is generally 20 years after its filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from competitive medications, including biosimilar or generic medications. This risk is material in light of the length of the development process of our products and lifespan of our current patent portfolio.
from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing products using the intellectual property. In some cases, we control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners and the value of the licensed patents may be adversely affected.
that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.
property rights. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, enforcement of a favorable decision by a court can depend on cooperation of a governmental authority which may or may not be available in every jurisdiction. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.
defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
changes in market valuations of similar companies;
controls over financial reporting, we rely on the exemption provided in the JOBS Act,for non-accelerated filers, and consequently will not be required to comply with SEC rules that implement Section 404(b) of the Sarbanes-Oxley Act until such time as we are no longer an emerging growth company and are an accelerated or large accelerated filer.
We are an emerging growth company as defined in the JOBS Act and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors and, as a result, adversely affect the price of our common stock and result in a less active trading market for our common stock.
We are an emerging growth company as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not
emerging growth companies. For example, we have elected to rely on an exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act relating to internal control over financial reporting, and we will not provide such an attestation from our auditors for so long as we qualify as an emerging growth company.
We may avail ourselves of these disclosure exemptions until we are no longer an emerging growth company. We cannot predict whether investors will find our common stock less attractive because of our reliance on some or all of these exemptions. If investors find our common stock less attractive, it may cause the trading price of our common stock to decline and there may be a less active trading market for our common stock.
We will cease to be an emerging growth company upon the earliest of:
the end of the fiscal year in which the fifth anniversary of the completion of our initial public offering occurs;
the end of the first fiscal year in which the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the end of the second quarter of such fiscal year;
the end of the first fiscal year in which we have total annual gross revenues of at least $1.07 billion; and
the date on which we have issued more than $1 billion in non-convertible debt securities in any rolling three-year period.
Our corporate governance structure may prevent our acquisition by another company at a premium over the public trading price of our shares.
As
As a result of the Re-domiciliation,seek equity financing we no longer qualify as a “foreign private issuer” under the rules and regulations of the SEC. While we were a foreign private issuer, we were exempt from compliance with certain laws and regulations of the SEC, including the proxy rules, the short-swing profits recapture rules and certain governance requirements, such as independent director oversight of the nomination of directors and executive compensation. In addition, we were not required to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. companies registered under the Exchange Act. As a result of becoming a U.S. domestic company, we are no longer entitled to “foreign private issuer” exemptions and must report as a domestic U.S. filer, including filing quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements under Section 14 of the Exchange Act. In addition, our “insiders” are now subject to the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act and we are no longer exempt from the requirements of Regulation FD promulgated by the SEC under the Exchange Act. Moreover, as a domestic filer, we are required to comply with the corporate governance obligations imposed by Nasdaq and no longer have the option to follow our home country rules in lieu of such obligations.
The regulatory and compliance costs associated with the reporting and governance requirements applicable to U.S. domestic issuers may be significantly higher than the costs we previously incurred as a foreign private issuer. As a result, we expect that the loss of foreign private issuer status will increase our legal and financial compliance costs and will make some activities highly time-consuming and costly. In addition, we need to develop our reporting and compliance infrastructure and may face challenges in complying with the new requirements applicable to us.
The market price and trading volumeuse a significant percentage of our common stock may be volatile and may be affected by economic conditions beyond our control.
The market price of our common stock may be highly volatile and subject to wide fluctuations. In addition, the trading volume of our common stock may fluctuate and cause significant price variations to occur. If the market price of our common stock declines significantly, you may be unable to resell yourunreserved authorized shares of common stock at or above your purchase price, if at all. We cannot assure you that the market pricein such an offering, and would therefore need stockholder approval to implement an increase in our authorized shares of our common stock will not fluctuate or significantly decline in the future.
Some specific factors that could negatively affect the price of our common stock or resulta reverse stock split in fluctuationsorder to issue additional shares of common stock in their pricethe future. Our certificate of incorporation and trading volume include:
actualthe Delaware General Corporation Law, or expected fluctuationsthe DGCL, currently require the approval of stockholders holding not less than a majority of all outstanding shares of capital stock entitled to vote in order to approve an increase in our operating results;
changesauthorized shares of common stock or a reverse stock split. There are no assurances that stockholder approval will be obtained, in market valuations of similar companies;
changes in our key personnel;
changes in financial estimates or recommendations by securities analysts;
changes in trading volumewhich event we will be unable to raise additional capital through the issuance of shares of our common stock on Nasdaq;
sales of shares ofto fund our common stock by us, our executive officers or our shareholders in the future; and
conditions in the financial markets or changes in general economic conditions.
2025.
On June 4, 2018, Benitec Limited issued 36,442,672 ordinary shares (which were converted to 121,475 shares of common stock as part of the Re-domiciliation) to existing shareholders. The shares were priced at A$0.17 per share. This issuance was exempt from registration under the Securities Act in reliance on Regulation S.
On September 30, 2019, Benitec Limited entered into a securities purchase agreement (“SPA”) with certain sophisticated and professional investors in the United States to issue 2,800,000 American Depositary Shares (“ADSs”), with each ADS representing 20 fully paid ordinary shares (which were converted to 186,666 shares of common stock as part of the Re-domiciliation), at a purchase price of US$0.70 per ADS, in a registered direct offering. The Investors were also issued warrants to purchase up to 412,890 ADSs (representing 27,526 shares of common stock after the Re-domiciliation) in aggregate, at a purchase price per warrant equal to US$0.6999 per ADS to be issued on exercise of the warrant (“Pre-Funded Warrants”). The Pre-Funded Warrants were exercisable at any time from issue, in whole or in part, at an exercise price of US$0.0001 per ADS issued on exercise (subject to certain adjustments), provided that the beneficial ownership of the relevant Investor in the total number of ADSs on issue not exceed 9.99%. The Pre-Funded Warrants have all been exercised. This issuance was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on Section 4(a)(2).
On April 15, 2020, the Company completed the Re-domiciliation. In connection with the Re-domiciliation, Benitec issued 1,070,957 shares of common stock, on the basis of one share of common stock for every 300 ordinary shares of Benitec Limited issued and outstanding prior to the Re-domiciliation. The Re-domiciliation was effected pursuant to a statutory scheme of arrangement under Australian law (the “Scheme”). The issuance of Benitec’s shares of common stock in the Scheme was exempt from registration under the Securities Act in reliance on Section 3(a)(10).
On April 22, 2020, Benitec issued 37,417 shares of common stock in connection with a cashless exercise of warrants exercisable for 107,095 shares of common stock. The issuance was exempt from registration under the Securities Act in reliance on Section 3(a)(9).
We are a smaller reporting company and not required to provide this information.
.
Unless otherwise indicated, all dollar amounts in this section are provided in thousands.
In December 2019, an outbreak of a novel strain of coronavirus was identified in Wuhan, China. This virus continues to spread globally,
Axovant Termination
Benitec’s License and Collaboration Agreement, dated July 9, 2018, with Axovant Sciences GmbH, or Axovant, was terminated as of September 3, 2019. As a result, all rights and licenses which Benitec had granted to Axovant to develop and commercialize BB-301 and related gene therapy product candidates terminated.
Prior to such termination, the Benitec team endeavored to conduct several additional exploratory nonclinical analyses in order to potentially improve the biological efficacy of BB-301 via further optimization of the route of administration employed to dose the target muscle tissues.
Nonclinical data derived from in vivo evaluations of BB-301 in two distinct large animal species suggested the existence of an opportunity to further improve the biological efficacy of the compound via additional optimization of the proprietary delivery method employed to dose key target tissues that underlie the morbidity and mortality associated with the natural history of OPMD. The initial biological efficacy profile observed for BB-301 following in vivo testing in the A17 mouse model of OPMD, including full correction of the disease phenotype, remained unchanged. However, the Benitec management team desired to complete a series of exploratory analyses prior to the formal IND filing and the subsequent initiation of clinical testing.
Completion of the experimental work noted above would have delayed the initiation of the BB-301 clinical study beyond the timelines that were initially outlined by Axovant following the execution of the License and Collaboration Agreement between Benitec and Axovant. As such, Axovant elected to terminate the License and Collaboration Agreement between Benitec and Axovant, and all rights and licenses granted to Axovant terminated, including the rights to BB-301, which was in preclinical development for the treatment of OPMD, and all other early stage research collaboration programs that were governed by the agreement.
Nonclinical Programs
Nonclinical research efforts supporting the development of ddRNAi-based therapeutic agents and silence and replace-based therapeutic agents targeting the treatment of Chronic Hepatitis B Virus Infection (“HBV”) and Age-Related Macular Degeneration (“AMD”) have concluded and are no longer being continued by the Company.
Workforce Reduction
On July 31, 2019, Benitec announced the completion of a workforce reduction of approximately 50%. Through this streamlining of operations, the Company retained staff members who are key to the achievement of the core research and development goals. The rationalization of resources was deemed to be supportive of an extended financial runway for the Company while allowing Benitec to continue to advance the BB-301 program.
In December 2016, we entered into an exclusive sublicense agreement with NantWorks, LLC, pursuant to which we agreed to make certain milestone and royalty payments, as well as periodic payments for so long as the agreement remained in effect. In December of 2018, the Company accrued a milestone payment of USD 300,000 (AUD 425,411), which was anticipated to be paid to NantWorks, LLC under the sublicense agreement. It was later determined that the milestone was not required to be paid and, therefore, the accrual was reversed in December of 2019. We terminated the exclusive sublicense agreement for convenience, with the termination effective as of June 2020.
balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Equity transactions are translated at each historical transaction date spot rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income (loss).” Gains and losses resulting from foreign currency transactions are included in the statements of operations and comprehensive income (loss) as other comprehensive income (loss).
In the past Benitec Limited has generated revenue from its operations through two activities: revenue from customers and revenue from government research and development grants.
Our licensing fees have been generated through the licensing of our ddRNAi technology to biopharmaceutical companies, and in the fiscal year-ended June 30, 2019, revenue was generated through a License and Collaboration Agreement with Axovant Sciences (the “Axovant Agreement”).
companies.
Year Ended June 30, | ||||||||
2020 | 2019 | |||||||
(US$’000) | ||||||||
Revenues: | ||||||||
Revenues from customers | $ | 97 | $ | 11,551 | ||||
Government research and development grants | 5 | 648 | ||||||
|
|
|
| |||||
Total revenues | $ | 102 | $ | 12,199 | ||||
|
|
|
|
Revenues from customers
On July 9, 2018, the Company entered into the Axovant Agreement. The Axovant Agreement granted Axovant Sciences an exclusive worldwide license to develop, manufacture, and commercialize products containing the Company’s product known as BB-301, which was designed for the potential treatment of Oculopharyngeal Muscular Dystrophy. Service revenue consists of payments for services provided to Axovant Sciences pursuant to the Axovant Agreement. On June 6, 2019, the termination of the Axovant Agreement was announced. The termination of the Axovant Agreement was effective as of September 3, 2019. The termination discharges all future performance obligations under the contract at the termination date.
Year Ended June 30, | ||||||||
2022 | 2021 | |||||||
(US$’000) | ||||||||
Revenues from customers | $ | 73 | $ | 59 | ||||
Total revenues | $ | 73 | $ | 59 |
Government researchamount, if any, of royalties we will owe in the future, and development grants
The Company has historically received, but is currently not receiving, grants through the Australian federal government’s Research and Development Tax Incentive program, underif our calculations of royalty payments are incorrect, we may owe additional royalties, which the government provides a cash refund for the 43.5%could negatively affect our results of eligible research and development expenditures by small Australian entities, which are definedoperations. As our product sales increase, we may, from time to time, disagree with our third-party collaborators as Australian entities with less than A$20 million in revenue, having a tax loss. The Research and Development Tax Incentive grant is made by the Australian federal government for eligible research and development purposes based on the filing of an annual application. Prior to the Re-domiciliation, this grant was available forappropriate royalties owed, and the resolution of such disputes may be costly, may consume management’s time, and may damage our research and development activities in Australia, as well as activitiesrelationship with our collaborators. Furthermore, we may enter into additional license agreements in the United States to the extent such U.S.-based expenses relate to our activities in Australia, did not exceed half the expenses for the relevant activitiesfuture, which may also include royalty, milestone and were approved by the Australian government. Grants are recorded when a reliable estimate can be made.
During the year ended June 30, 2020, we recognized $5 in government research and development grants, as compared $648 for the comparable year ended June 30, 2019. The decrease in grant revenue is due to excluding the OPMD program from the R&D claim of the grant from the Australian government. Further, the Company no longer continued the nonclinical research efforts targeting the treatment of Chronic Hepatitis B Virus Infection (HBV) and AMD in the fiscal year ended June 30, 2020. The decrease in grant revenue is a result of Benitec no longer claiming the grant from the Australian government due to the Re-domiciliation of Benitec to the United States of America.
other payments.
costs incurred.
Year Ended June 30, | ||||||||
2020 | 2019 | |||||||
(US$’000) | ||||||||
Expenses: | ||||||||
Royalties and license fees | $ | (185 | ) | $ | 435 | |||
Research and development | 3,001 | 4,567 | ||||||
General and Administrative | 5,567 | 4,614 | ||||||
|
|
|
| |||||
Total expenses | 8,383 | 9,616 | ||||||
|
|
|
|
Year Ended June 30, | ||||||||
2022 | 2021 | |||||||
(US$’000) | ||||||||
Expenses: | ||||||||
Royalties and license fees | $ | 9 | $ | 123 | ||||
Research and Development | 11,272 | 7,020 | ||||||
General and Administrative | 6,646 | 6,512 | ||||||
Total expenses | 17,927 | 13.655 | ||||||
decrease in license fees.
GMP Manufacturing project.
share-based compensation expense.
Year Ended June 30, | ||||||||
2020 | 2019 | |||||||
(US$’000) | ||||||||
Other Income (Loss): | ||||||||
Foreign currency transaction loss | (88 | ) | (75 | ) | ||||
Interest income, net | 62 | 122 | ||||||
Other income, net | 34 | — | ||||||
Unrealized loss on investment | (1 | ) | (21 | ) | ||||
|
|
|
| |||||
Total other income (expense) | 7 | 26 | ||||||
|
|
|
|
Year Ended June 30, | ||||||||
2022 | 2021 | |||||||
(US$’000) | ||||||||
Other Income (Loss): | ||||||||
Foreign currency transaction loss | (232 | ) | (333 | ) | ||||
Interest expense, net | (32 | ) | (6 | ) | ||||
Other income (expense), net | (79 | ) | 37 | |||||
Unrealized gain (loss) on investment | (11 | ) | 16 | |||||
Total other loss, net | (354 | ) | (286 | ) | ||||
and administrative expenses due to the obligations of being a domestic public company in the United States as a result of the Re-domiciliation and no longer a “foreign private issuer” under SEC Rules.
Year Ended June 30, | ||||||||
2020 | 2019 | |||||||
(US$’000) | ||||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | (7,535 | ) | $ | 4,790 | |||
Investing activities | (94 | ) | (400 | ) | ||||
Financing activities | 1,770 | — | ||||||
|
|
|
| |||||
Net increase (decrease) in cash | $ | (5,859 | ) | $ | 4,390 | |||
|
|
|
|
Year Ended June 30, | ||||||||
2022 | 2021 | |||||||
(US$’000) | ||||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | (15,899 | ) | $ | (12,832 | ) | ||
Investing activities | (13 | ) | (221 | ) | ||||
Financing activities | — | 22,522 | ||||||
Effects of exchange rate changes on cash, cash equivalents, and restricted cash | 204 | 499 | ||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | (15,708 | ) | $ | 9,968 | |||
primarily the result of our net loss, and change in working capital, partially offset by equity-baseddepreciation and amortization, and share-based compensation expense and the lease liability.
expense.
equipment.
We estimate that our cash and cash equivalents together with the net proceeds of a planned public offering of common stock will be sufficient The Company does not have adequate liquidity to fund the Company’sits operations at least for the next twelve months. In connection withmonths without raising additional funds and the Company’s planned public offering, on August 14, 2020,success of raising such additional capital is not solely within the Company filed a registration statement on Form S-1 withcontrol of the SEC.
Company.
Off-Balance Sheet Arrangements
office space in Hayward, California that originally expired in April 2018. The Company had no material off-balance sheet arrangements ashas entered into lease amendments that extend the lease commitment through June 2025.
Upon implementation of ASC 606, the Company recognizes revenue in accordance with that core principle by applying the following steps:
Step 3: Determine the transaction price.
occur.
The Company adopted ASU 2018-07 and accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 718 and recognizes the fair value of such awards over the service period. There was no cumulative effect of adoption on July 1, 2019.
ASU 2016-02—In February 2016, the FASB issued ASU No. 2016-02: “Leases (Topic 842)” whereby lessees will need to recognize most leases on their balance sheet as a right of use asset and a lease liability. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company adopted this ASU effective July 1, 2019.
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
The Company has undertaken a detailed review and has concluded that it will have a material impact on its financial position on the transactions and balances recognized in the consolidated financial statements when it is first adopted for the year ending June 30, 2020 due to the material size of lease entered into by the Company. The Company’s only lease is the lease on its research and development facilities.
ASU 2018-07—In June 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2018-07 “Compensation—Stock Compensation (Topic 718)”. This update is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to non-employees (for example, service providers, external legal counsel, suppliers, etc.). The ASU expands the scope of Topic 718, Compensation—Stock Compensation, which currently only includes share-based payments issued to employees, to also include share-based payments issued to non-employees for goods and services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. The Company adopted this ASU, effective July 1, 2019.
F-2 | ||||
| ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 |
Basis for Opinion
These
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditNote 3 to obtain reasonable assurance about whether the financial statements, are freethe Company incurred a net loss of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit$18.2 million and $13.9 million, and used cash of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for$15.9 million and $12.8 million in operating activities during the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ SQUAR MILNER LLP
We have served as the Company’s auditor since 2020.
Campbell, California
September 23, 2020
Report of independent registered public accounting firm
Board of Directors and Shareholders
Benitec Biopharma Limited
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Benitec Biopharma Limited and subsidiaries (the “Company”) as of June 30, 2019, the related consolidated statement of comprehensive income, changes in shareholders’ equity, and cash flow for the yearyears ended June 30, 2019,2022 and 2021, respectively. These matters raise substantial doubt about the related notes (collectively referredCompany’s ability to continue as a going concern. Management’s evaluation of the “financial statements”). In our opinion, theevents and conditions and management’s plans regarding these matters are also described in Note 3. The financial statements present fairly, in all material respects,do not include any adjustments that might result from the financial positionoutcome of the Company as of June 30, 2019, and the results of its operations and its cash flow for the year ended June 30, 2019, in conformity with accounting principles generally accepted in the United States of America.
this uncertainty.
Opinion
BAKER TILLY US, LLP
Sydney, Australia
August 14, 2020
Campbell, California
June 30, 2020 | June 30, 2019 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 9,801 | $ | 15,718 | ||||
Trade and other receivables | 59 | 2,536 | ||||||
Other assets | 949 | 502 | ||||||
|
|
|
| |||||
Total current assets | 10,809 | 18,756 | ||||||
Property and equipment, net | 374 | 470 | ||||||
Deposits | 9 | 9 | ||||||
Right-of-use assets | 395 | — | ||||||
|
|
|
| |||||
Total assets | $ | 11,587 | $ | 19,235 | ||||
|
|
|
| |||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Trade and other payables | $ | 741 | $ | 2,494 | ||||
Accrued employee benefits | 203 | 147 | ||||||
Lease liabilities, current portion | 192 | — | ||||||
|
|
|
| |||||
Total current liabilities | 1,136 | 2,641 | ||||||
Lease liabilities, less current portion | 213 | — | ||||||
|
|
|
| |||||
Total liabilities | 1,349 | 2,641 | ||||||
Commitments and contingencies (Note 13) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.0001 par value—10,000,000 shares authorized; 1,108,374 and 856,765 shares issued and outstanding at June 30, 2020 and 2019, respectively | 1 | 1 | ||||||
Additional paid-in capital | 128,826 | 127,327 | ||||||
Accumulated deficit | (116,636 | ) | (108,870 | ) | ||||
Accumulated other comprehensive loss | (1,953 | ) | (1,864 | ) | ||||
|
|
|
| |||||
Total stockholders’ equity | 10,238 | 16,594 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 11,587 | $ | 19,235 | ||||
|
|
|
|
June 30, 2022 | June 30, 2021 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,062 | $ | 19,769 | ||||
Restricted Cash | 14 | 15 | ||||||
Trade and other receivables | 3 | 25 | ||||||
Prepaid and other assets | 741 | 799 | ||||||
Total current assets | 4,820 | 20,608 | ||||||
Property and equipment, net | 222 | 375 | ||||||
Deposits | 25 | 9 | ||||||
Other assets | 135 | 185 | ||||||
Right-of-use assets | 771 | 202 | ||||||
Total assets | $ | 5,973 | $ | 21,379 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Trade and other payables | $ | 1,880 | $ | 880 | ||||
Accrued employee benefits | 400 | 276 | ||||||
Lease liabilities, current portion | 252 | 213 | ||||||
Total current liabilities | 2,532 | 1,369 | ||||||
Lease liabilities, less current portion | 559 | — | ||||||
Total liabilities | 3,091 | 1,369 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.0001 par value—40,000,000 shares authorized; 8,171,690 shares issued and outstanding at June 30, 2022 and 2021 | 1 | 1 | ||||||
Additional paid-in capital | 152,453 | 151,583 | ||||||
Accumulated deficit | (148,327 | ) | (130,119 | ) | ||||
Accumulated other comprehensive loss | (1,245 | ) | (1,455 | ) | ||||
Total stockholders’ equity | 2,882 | 20,010 | ||||||
Total liabilities and stockholders’ equity | $ | 5,973 | $ | 21,379 | ||||
Loss
Year Ended June 30, | ||||||||
2020 | 2019 | |||||||
Revenue: | ||||||||
Revenues from customers | $ | 97 | $ | 11,551 | ||||
Government research and development grants | 5 | 648 | ||||||
|
|
|
| |||||
Total revenues | 102 | 12,199 | ||||||
Operating expenses | ||||||||
Royalties and license fees | (185 | ) | 435 | |||||
Research and development | �� | 3,001 | 4,567 | |||||
General and administrative | 5,567 | 4,614 | ||||||
|
|
|
| |||||
Total operating expenses | 8,383 | 9,616 | ||||||
|
|
|
| |||||
Income (loss) from operations | (8,281 | ) | 2,583 | |||||
Other income (loss): | ||||||||
Foreign currency transaction loss | (88 | ) | (75 | ) | ||||
Interest income, net | 62 | 122 | ||||||
Other income, net | 34 | — | ||||||
Unrealized loss on investment | (1 | ) | (21 | ) | ||||
|
|
|
| |||||
Total other income, net | 7 | 26 | ||||||
|
|
|
| |||||
Net income (loss) | $ | (8,274 | ) | $ | 2,609 | |||
|
|
|
| |||||
Other comprehensive loss: | ||||||||
Unrealized foreign currency translation loss | (89 | ) | (531 | ) | ||||
|
|
|
| |||||
Total other comprehensive loss | (89 | ) | (531 | ) | ||||
|
|
|
| |||||
Total comprehensive income (loss) | $ | (8,363 | ) | $ | 2,078 | |||
|
|
|
| |||||
Net income (loss) | $ | (8,274 | ) | $ | 2,609 | |||
|
|
|
| |||||
Net income (loss) per share: | ||||||||
Basic and diluted | $ | (8.10 | ) | $ | 3.05 | |||
|
|
|
| |||||
Weighted-average shares outstanding: | ||||||||
Basic and diluted | 1,021,193 | 856,765 | ||||||
|
|
|
|
Year Ended June 30, | ||||||||
2022 | 2021 | |||||||
Revenue: | ||||||||
Revenues from customers | $ | 73 | $ | 59 | ||||
Operating expenses | ||||||||
Royalties and license fees | 9 | 123 | ||||||
Research and development | 11,272 | 7,020 | ||||||
General and administrative | 6,646 | 6,512 | ||||||
Total operating expenses | 17,927 | 13,655 | ||||||
Loss from operations | (17,854 | ) | (13,596 | ) | ||||
Other income (loss): | ||||||||
Foreign currency transaction loss | (232 | ) | (333 | ) | ||||
Interest expense, net | (32 | ) | (6 | ) | ||||
Other income (expense), net | (79 | ) | 37 | |||||
Unrealized gain (loss) on investment | (11 | ) | 16 | |||||
Total other loss, net | (354 | ) | (286 | ) | ||||
Net loss | $ | (18,208 | ) | $ | (13,882 | ) | ||
Other comprehensive income (loss): | ||||||||
Unrealized foreign currency translation gain | 210 | 498 | ||||||
Total other comprehensive income | 210 | 498 | ||||||
Total comprehensive loss | $ | (17,998 | ) | $ | (13,384 | ) | ||
Net loss | $ | (18,208 | ) | $ | (13,882 | ) | ||
Net loss per share: | ||||||||
Basic and diluted | $ | (2.23 | ) | $ | (3.23 | ) | ||
Weighted-average shares outstanding: | ||||||||
Basic and diluted | 8,171,690 | 4,295,416 | ||||||
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Balance at June 30, 2018 | 856,765 | $ | 1 | $ | 127,715 | $ | (112,539 | ) | $ | (1,333 | ) | $ | 13,844 | |||||||||||
Share-based compensation | — | — | 672 | — | 672 | |||||||||||||||||||
Forfeiture of share-based payments | — | — | (1,060 | ) | 1,060 | — | ||||||||||||||||||
Foreign currency translation loss | — | — | — | — | (531 | ) | (531 | ) | ||||||||||||||||
Net income | — | — | — | 2,609 | 2,609 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance at June 30, 2019 | 856,765 | 1 | 127,327 | (108,870 | ) | (1,864 | ) | 16,594 | ||||||||||||||||
Common stock sold for cash, net of offering costs of $240 | 186,666 | — | 1,720 | — | — | 1,720 | ||||||||||||||||||
Issuance and exercise of pre-funded warrants, net of transaction costs of $240 | 27,526 | — | 50 | — | — | 50 | ||||||||||||||||||
Cashless exercise of purchase warrants | 37,417 | — | — | — | — | — | ||||||||||||||||||
Share-based compensation | — | — | 237 | — | — | 237 | ||||||||||||||||||
Forfeitures of share-based payments | — | — | (508 | ) | 508 | — | — | |||||||||||||||||
Foreign currency translation loss | — | — | — | — | (89 | ) | (89 | ) | ||||||||||||||||
Net loss | — | — | — | (8,274 | ) | — | (8,274 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance at June 30, 2020 | 1,108,374 | $ | 1 | $ | 128,826 | $ | (116,636 | ) | $ | (1,953 | ) | $ | 10,238 | |||||||||||
|
|
|
|
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|
|
|
|
|
|
|
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Balance at June 30, 2020 | 1,108,374 | $ | — | $ | 128,827 | $ | (116,636 | ) | $ | (1,953 | ) | $ | 10,238 | |||||||||||
Issuance of common stock and pre-funded warrants sold for cash, net of offering costs of $3,228 | 6,504,154 | 1 | 22,518 | — | — | 22,519 | ||||||||||||||||||
Exercise of pre-funded warrants | 559,162 | — | 3 | — | — | 3 | ||||||||||||||||||
Share-based compensation | — | — | 634 | — | — | 634 | ||||||||||||||||||
Forfeitures of share-based payments | — | — | (399 | ) | 399 | — | — | |||||||||||||||||
Foreign currency translation gain | — | — | — | — | 498 | 498 | ||||||||||||||||||
Net loss | — | — | — | (13,882 | ) | — | (13,882 | ) | ||||||||||||||||
Balance at June 30, 2021 | 8,171,690 | $ | 1 | $ | 151,583 | $ | (130,119 | ) | $ | (1,455 | ) | $ | 20,010 | |||||||||||
Share-based compensation | — | — | 870 | — | — | 870 | ||||||||||||||||||
Foreign currency translation gain | — | — | — | — | 210 | 210 | ||||||||||||||||||
Net loss | — | — | — | (18,208 | ) | — | (18,208 | ) | ||||||||||||||||
Balance at June 30, 2022 | 8,171,690 | $ | 1 | $ | 152,453 | $ | (148,327 | ) | $ | (1,245 | ) | $ | 2,882 | |||||||||||
Fiscal Year Ended June 30, | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (8,274 | ) | $ | 2,609 | |||
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||||||||
Depreciation and amortization | 190 | 158 | ||||||
Amortization of right-of-use assets | 184 | — | ||||||
Loss on disposal of fixed assets | 1 | 7 | ||||||
Unrealized loss on investment | 1 | 21 | ||||||
Share-based compensation expense | 237 | 672 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade and other receivables | 2,396 | 607 | ||||||
Other assets | (457 | ) | (9 | ) | ||||
Trade and other payables | (1,696 | ) | 740 | |||||
Accrued employee benefit payable | 57 | (15 | ) | |||||
Lease liability | (174 | ) | — | |||||
|
|
|
| |||||
Net cash provided by (used in) operating activities | (7,535 | ) | 4,790 | |||||
|
|
|
| |||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (95 | ) | (404 | ) | ||||
Proceeds from disposal of property and equipment | 1 | 4 | ||||||
|
|
|
| |||||
Net cash used in investing activities | (94 | ) | (400 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities: | ||||||||
Proceeds from issues of shares | 2,250 | — | ||||||
Share issue transaction costs | (480 | ) | — | |||||
|
|
|
| |||||
Net cash provided by financing activities | 1,770 | — | ||||||
|
|
|
| |||||
Net increase (decrease) in cash and cash equivalents | (5,859 | ) | 4,390 | |||||
Cash and cash equivalents, beginning of year | 15,718 | 11,879 | ||||||
Effects of exchange rate changes on cash and cash equivalents | (58 | ) | (551 | ) | ||||
|
|
|
| |||||
Cash and cash equivalents, end of year | $ | 9,801 | $ | 15,718 | ||||
|
|
|
| |||||
Supplemental disclosure of cash flow information: | ||||||||
Initial measurement of operating lease right-of-use assets and liabilities | $ | (579 | ) | $ | — | |||
|
|
|
|
Year Ended June 30, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (18,208 | ) | $ | (13,882 | ) | ||
Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
Depreciation and amortization | 167 | 231 | ||||||
Amortization of right-of-use assets | 225 | 193 | ||||||
Unrealized (gain) loss on investment | 10 | (16 | ) | |||||
Share-based compensation expense | 870 | 634 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade and other receivables | 1 | 28 | ||||||
Prepaid and other assets | 62 | (4 | ) | |||||
Trade and other payables | 1,090 | 55 | ||||||
Accrued employee benefit payable | 80 | 121 | ||||||
Lease liability | (196 | ) | (192 | ) | ||||
Net cash used in operating activities | (15,899 | ) | (12,832 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (13 | ) | (221 | ) | ||||
Net cash used in investing activities | (13 | ) | (221 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issues of shares and pre-funded warrants | — | 25,750 | ||||||
Share issue transaction costs | — | (3,228 | ) | |||||
Net cash provided by financing activities | — | 22,522 | ||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 204 | 499 | ||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (15,708 | ) | 9,968 | |||||
Cash, cash equivalents, and restricted cash at beginning of year | 19,784 | 9,816 | ||||||
Cash, cash equivalents, and restricted cash at end of year | $ | 4,076 | $ | 19,784 | ||||
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets: | ||||||||
Cash and cash equivalents | $ | 4,062 | $ | 19,769 | ||||
Restricted cash | 14 | 15 | ||||||
Total cash, cash equivalents, and restricted cash | $ | 4,076 | $ | 19,784 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Re-measurement of operating lease right-of-use assets and liabilities | $ | 794 | $ | — | ||||
BBL announced that2019.
The term the “Company” refers tosimilar terms used herein refer (i), prior to the Re-domiciliationre-domiciliation to BBL, an Australian corporation, and its subsidiaries, and (ii), following the Re-domiciliation,re-domiciliation, to Benitec Biopharma Inc., a Delaware corporation, and its subsidiaries (including BBL).“
The shares of Benitec Biopharma Inc. common stock issued in connection with the Re-domiciliation trade on The Nasdaq Capital Market LLC (“Nasdaq”) under the symbol “BNTC”, and Benitec Biopharma Inc. continues to be subject to the reporting requirements of the SEC and applicable corporate governance rules of Nasdaq.
As a result of the Re-domiciliation, BBL became a wholly owned subsidiary of Benitec Biopharma Inc. and delisted from the ASX on April 15, 2020. On August 14, 2020, BBL had a change of company status and becamereorganized as a Proprietary Limited company.
company and changed its name to Benitec Biopharma Proprietary Limited.
Principal place of business/country of incorporation | 2020 | 2019 | ||||||||
Benitec Biopharma Proprietary Limited (“BBL”) | Australia | 100 | % | — | ||||||
Benitec Australia Proprietary Limited | Australia | 100 | % | 100 | % | |||||
Benitec Limited | United Kingdom | 100 | % | 100 | % | |||||
Benitec, Inc. | USA | 100 | % | 100 | % | |||||
Benitec LLC | USA | 100 | % | 100 | % | |||||
RNAi Therapeutics, Inc. | USA | 100 | % | 100 | % | |||||
Tacere Therapeutics, Inc. | USA | 100 | % | 100 | % | |||||
Benitec Biopharma Proprietary Limited | Australia | 100 | % | — |
Principal place of business/country of incorporation | ||
Benitec Biopharma Proprietary Limited (“BBL”) | Australia | |
Benitec Australia Proprietary Limited | Australia | |
Benitec Limited | United Kingdom | |
Benitec, Inc. | USA | |
Benitec LLC | USA | |
RNAi Therapeutics, Inc. | USA | |
Tacere Therapeutics, Inc. | USA | |
Benitec IP Holdings, Inc. | USA |
key personnel, reliance on single-source vendors and collaborators, availability of raw materials, patentability of the Company’s products and processes and clinical efficacy and safety of the Company’s products under development, compliance with government regulations and the need to obtain additional financing to fund operations.
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Equity transactions are translated at each historical transaction date spot rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income (loss).loss.” Gains and losses resulting from foreign currency transactionstranslation are included in the consolidated statements of operations and comprehensive income (loss)loss as other comprehensive income (loss).
June 30, 2020 | June 30, 2019 | |||||||
Exchange rate on balance sheet dates | ||||||||
USD: AUD Exchange Rate | 0.6877 | 0.7014 | ||||||
Average exchange rate for the period | ||||||||
USD: AUD Exchange Rate | 0.6711 | 0.7149 |
The exchange rate used to translate amounts in AUD into USD for the year ended June 30, 2018 is 0.7385 as of the balance sheet date.
June 30, 2022 | June 30, 2021 | |||||||
Exchange rate on balance sheet dates | ||||||||
USD: AUD Exchange Rate | 0.6891 | 0.7506 | ||||||
Average exchange rate for the period | ||||||||
USD: AUD Exchange Rate | 0.7254 | 0.7470 |
Level 1: | Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
Level 2: | Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
Level 3: | Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. |
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
The carrying amounts of the Company’s cash and cash equivalents, trade and other receivables, and trade and other payables are considered to be representative of their respective fair values because of the short-term nature of those instruments. As of June 30, 2020,2022, and 2019,2021, the Company had no financial assets or liabilities measured at fair value on a recurring basis.
Software | ||
Lab equipment | ||
Computer hardware | ||
Leasehold improvements | shorter of the lease term or estimated useful lives |
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.
Australian Goods and Services Tax (“GST”) and other similar taxes
Revenues, expenses, and balance sheet items are recognized net of the amount of GST, except payable and receivable balances which are shown inclusive of GST. The GST incurred is payable on revenues to, and recoverable on purchases from, the Australian Taxation Office.
Cash flows are presented in the statements of cash flow on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
Upon adoption of ASC 606, the Company recognizes revenue in accordance with that core principle by applying the following steps:
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
Government Research and Development Grants
Government grants are recognized at fair value where there is reasonable assurance that the grant will be received, and all grant conditions will be met. Grants relating to expense items are recognized as income over the periods necessary to match the grant costs they are compensating.
Grant income is generated through the Australian federal government’s Research and Development Tax Incentive program, under which the government provides a cash refund for the 43.5% (2019: 43.5%) of eligible research and development expenditures. This grant is available for our research and development activities in Australia, as well as activities in the United States to the extent such U.S.-based expenses relate to our activities in Australia, do not exceed half the expenses for the relevant activities and are approved by the Australian government. Grants are recorded when a reliable estimate can be made.
The Company will not be claiming the Australian Government research and development grants going forward due to the Re-domiciliation of the Company to the United States.
Research and development costs are expensed when incurred. These costs have been recognized as an expense when incurred.
costs incurred.
The Company adopted FASB Accounting Standard Update (“ASU”) 2018-07 and accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 718 and recognizes the fair value of such awards over the service period.
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
ASC 740
income (loss).
In February 2016, the FASB issued ASU No. 2016-02:Leases (Topic 842) whereby lessees will need to recognize most leases on their balance sheet as a right of use asset and a lease liability. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company adopted this ASU effective July 1, 2019.
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
The Company’s only lease is the lease on its research and development facilities. The Company’s existing lease commitments are set out in Note 10.
In June 2018, the FASB issued ASU 2018-07,Compensation – Stock Compensation (Topic 718). This update is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to non-employees (for example, service providers, external legal counsel, suppliers, etc.). The ASU expands the scope of Topic 718, Compensation – Stock Compensation, which currently only includes share-based payments issued to employees, to also include share-based payments issued to non-employees for goods and services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. This standard is effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2018. The Company adopted this ASU on July 1, 2019. There was no effect on the financial statements on adoption.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Pronouncements
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
periods beginning after December 15, 2019.incurred. The Company has determined that it has met the criteria of a smaller reporting company (“SRC”) as of November 15, 2019. As such, ASU 2019-10:
Liquidity
Management having performed a review of the cash flow forecasts, considering the cash flow needs of the Company, believehas concluded that current funding and the proceeds of the upcoming capital raise will be sufficient for a period of at least twelve months from the date of this report.
Although management believes that the additional required funding will be obtained, there is no guarantee the Company will be able to obtain the additional required funds on a timely basis or that funds will be available on acceptable terms. If such funds are not available when required, management will be required to curtail its expenditures, which may have a material adverse effect on its future cash flows and results of operations, andsubstantial doubt exists about its ability to continue operating as a going concern.
concern due to unsuccessful product development or commercialization, or the inability to obtain adequate financing in the future.
Revenues from customers | June 30, 2020 | June 30, 2019 | ||||||
Licensing revenue* | $ | — | $ | 10,273 | ||||
Royalty revenue | 93 | 183 | ||||||
Service revenue* | 4 | 1,095 | ||||||
|
|
|
| |||||
Total | $ | 97 | $ | 11,551 | ||||
|
|
|
|
|
Revenues from customers (US$’000) | Year ended June 30, 2022 | Year ended June 30, 2021 | ||||||
Licensing revenue | $ | 73 | $ | 59 | ||||
Total | $ | 73 | $ | 59 | ||||
Other revenues (US$’000) | June 30, 2020 | June 30, 2019 | ||||||
Government research and development grants | $ | 5 | $ | 648 | ||||
|
|
|
| |||||
Total | $ | 5 | $ | 648 | ||||
|
|
|
|
Disaggregated revenue (US$’000) | Fiscal year ended June 30, 2020 | |||||||||||||||
Licensing | Royalties | Development activities | Total | |||||||||||||
Services transferred at a point in time | $ | — | $ | — | $ | 4 | $ | $4 | ||||||||
Services transferred over time | — | 93 | — | 93 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | — | $ | 93 | $ | 4 | $ | $97 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Disaggregated revenue (US$’000) | Fiscal year ended June 30, 2019 | |||||||||||||||
Licensing | Royalties | Development activities | Total | |||||||||||||
Services transferred at a point in time | $ | 10,136 | $ | — | $ | — | $ | 10,136 | ||||||||
Services transferred over time | 137 | 183 | 1,095 | 1,415 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 10,273 | $ | 183 | $ | 1,095 | $ | 11,551 | ||||||||
|
|
|
|
|
|
|
|
(US$’000) | June 30, 2020 | June 30, 2019 | ||||||
Cash at Bank | $ | 5,231 | $ | 10,779 | ||||
Term Deposit | 4,570 | 4,939 | ||||||
|
|
|
| |||||
Total | $ | 9,801 | $ | 15,718 | ||||
|
|
|
|
restricted cash
(US$’000) | June 30, 2022 | June 30, 2021 | ||||||
Cash at b ank | $ | 4,062 | $ | 19,769 | ||||
Restricted cash | 14 | 15 | ||||||
Total | $ | 4,076 | $ | 19,784 | ||||
(US$’000) | June 30, 2022 | June 30, 2021 | ||||||
Prepaid expenses | $ | 871 | $ | 967 | ||||
Market value of listed shares | 5 | 17 | ||||||
Total other assets | 876 | 984 | ||||||
Less: non-current portion | (135 | ) | (185 | ) | ||||
Current portion | $ | 741 | $ | 799 | ||||
(US$’000) | June 30, 2022 | June 30, 2021 | ||||||
Software | $ | 6 | $ | 14 | ||||
Lab equipment | 1,343 | 1,329 | ||||||
Computer hardware | 31 | 26 | ||||||
Leasehold improvements | 24 | 24 | ||||||
Total property and equipment, gross | 1,404 | 1,393 | ||||||
Accumulated depreciation and amortization | (1,182 | ) | (1,018 | ) | ||||
Total property and equipment, net | $ | 222 | $ | 375 | ||||
(US$’000) | June 30, 2020 | June 30, 2019 | ||||||
Research & development grants | $ | — | $ | 636 | ||||
Other receivables* | 59 | 1,900 | ||||||
|
|
|
| |||||
Total | $ | 59 | $ | 2,536 | ||||
|
|
|
|
|
(US$’000) | June 30, 2022 | June 30, 2021 | ||||||
Trade payable | $ | 422 | $ | 274 | ||||
Accrued License Fees | 120 | 140 | ||||||
Accrued professional fees | 131 | 36 | ||||||
Accrued OPMD project costs | 1,089 | 279 | ||||||
Accrued consultant fees | 47 | 36 | ||||||
Other payables | 71 | 115 | ||||||
Total | $ | 1,880 | $ | 880 | ||||
7. Other assets
(US$’000) | June 30, 2020 | June 30, 2019 | ||||||
Prepaid expenses | $ | 861 | $ | 375 | ||||
Security deposit | 69 | 103 | ||||||
Other deposit | 18 | 23 | ||||||
Market value of listed shares | 1 | 1 | ||||||
|
|
|
| |||||
Total | $ | 949 | $ | 502 | ||||
|
|
|
|
8. Property and equipment, net
(US$’000) | June 30, 2020 | June 30, 2019 | ||||||
Software | $ | 11 | $ | 11 | ||||
Lab equipment | 1,109 | 1,014 | ||||||
Furniture and fixtures | — | 6 | ||||||
Computer hardware | 26 | 32 | ||||||
Leasehold improvements | 24 | 77 | ||||||
| �� |
|
| |||||
Total property and equipment, gross | 1,170 | 1,140 | ||||||
Accumulated depreciation and amortization | (796 | ) | (670 | ) | ||||
|
|
|
| |||||
Total property and equipment, net | $ | 374 | $ | 470 | ||||
|
|
|
|
Depreciation expense was $190,000 and $158,000 for the fiscal years ended
2021
(US$’000) | June 30, 2020 | June 30, 2019 | ||||||
Trade payable | $ | 282 | $ | 1,474 | ||||
Accrued license fees | 54 | 385 | ||||||
Accrued research and development fees | — | 498 | ||||||
Accrued professional fees | 155 | 61 | ||||||
Other payables | 250 | 76 | ||||||
|
|
|
| |||||
Total | $ | 741 | $ | 2,494 | ||||
|
|
|
|
10. Leases
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
effect adjustment to the opening balance of retained earnings in the period of adoption. The Company elected to use the cumulative-effect transition method upon adoption.
ASC 842 also allows lessees and lessors to elect certain practical expedients. The Company elected the following practical expedients:
Transitional practical expedients:
The Company need not reassess whether any expired or existing contracts are or contain leases.
The Company need not reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with the previous guidance will be classified as operating leases, and all existing leases that were classified as capital leases in accordance with the previous guidance will be classified as finance leases).
The Company need not reassess initial direct costs for any existing leases.
Hindsight practical expedient:
The Company elected the hindsight practical expedient in determining the lease term (that is, when considering lessee options to extend or terminate the lease and to purchase the underlying asset) and in assessing impairment of the Company’s right-of-use assets.
The Company has entered into an operating lease for office space under an agreement that expires in 2022.2025. The lease requires the Company to pay utilities, insurance, taxes, and other operating expenses. The Company’s lease does not contain any residual value guarantees or material restrictive covenants.
Upon adoption
2021
(US$’000) | Operating lease right-of-use assets | |||
Initial measurement at July 1, 2019 | $ | 579 | ||
Amortization of right of use asset | (184 | ) | ||
|
| |||
Operating lease right-of-use asset at June 30, 2020 | $ | 395 | ||
|
|
(US$’000) | Operating lease liabilities | |||
Initial measurement at July 1, 2019 | $ | 579 | ||
Principal payments on operating lease liabilities | (174 | ) | ||
Operating lease liabilities at June 30, 2020 | 405 | |||
Less: non-current portion | 213 | |||
|
| |||
Current portion at June 30, 2020 | $ | 192 | ||
|
|
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
(US$’000) | Operating lease right-of- use assets | |||
Initial measurement at July 1, 2020 | $ | 395 | ||
Amortization of right of use asset | (193 | ) | ||
Balance at June 30, 2021 | 202 | |||
Re-measurement during the period | 794 | |||
Amortization of right of use asset | (225 | ) | ||
Operating lease right-of-use asset at June 30, 2022 | $ | 771 | ||
(US$’000) | Operating lease liabilities | |||
Initial measurement at July 1, 2020 | $ | 405 | ||
Principal payments on operating lease liabilities | (192 | ) | ||
Operating lease liabilities at June 30, 2021 | 213 | |||
Re-measurement during the period | 794 | |||
Principal payments on operating lease liabilities | (196 | ) | ||
Operating lease liabilities at June 30, 2022 | 811 | |||
Less: non-current portion | 559 | |||
Current portion at June 30, 202 2 | $ | 252 | ||
(US$’000) | June 30, 2020 | |||
2021 | $ | 207 | ||
2022 | 218 | |||
|
| |||
Total operating lease payments | 425 | |||
Less imputed interest | (20 | ) | ||
|
| |||
Present value of operating lease liabilities | $ | 405 | ||
|
|
(US$’000) | June 30, 2022 | |||
2023 | 285 | |||
2024 | 295 | |||
2025 | 291 | |||
Total operating lease payments | 871 | |||
Less imputed interest | (60 | ) | ||
Present value of operating lease liabilities | $ | 811 | ||
11.
Warrants
share.
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
On October 6, 2020, the Company announced the closing of an underwritten public offering of 559,162 shares of common stock underlying pre-funded warrants initially purchased for $3.09 per share and immediately exercisable at $0.01 per share (“Pre-Funded Warrants”). All 559,162 Pre-Funded Warrants issued had been exercised as of June 30, 2021.
Common Stock from Warrants | Weighted- average Exercise Price (per share) | |||||||
Outstanding at July 1, 2018 | 38,326 | $ | 82.50 | |||||
Granted | — | — | ||||||
Exercised | — | — | ||||||
Forfeited | — | — | ||||||
|
| |||||||
Outstanding and exercisable at June 30, 2019 | 38,326 | 82.50 | ||||||
|
| |||||||
Granted | 241,716 | 10.50 | ||||||
Exercised | (27,526 | ) | 10.50 | |||||
Cashless exercise | (107,095 | ) | 10.50 | |||||
Forfeited | — | |||||||
|
| |||||||
Outstanding and exercisable at June 30, 2020 | 145,421 | $ | 29.48 | |||||
|
|
Common Stock from Warrants | Weighted- average Exercise Price (per share) | |||||||
Outstanding and exercisable at July 1, 2020 | 145,424 | 29.48 | ||||||
Granted | 559,162 | 3.09 | ||||||
Exercised | (559,162 | ) | 3.10 | |||||
Forfeited | (38,329 | ) | 82.50 | |||||
Outstanding and exercisable at June 30, 2021 | 107,095 | $ | 10.50 | |||||
Outstanding and exercisable at June 30, 2022 | 107,095 | $ | 10.50 |
Stock Options | Weighted-average Exercise Price | Weighted-average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding at July 1, 2018 | 81,591 | $ | 92.10 | 3.83 years | $ | — | ||||||||||
Granted | 27,333 | 43.20 | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited | (22,457 | ) | 125.40 | |||||||||||||
|
| |||||||||||||||
Outstanding at June 30, 2019 | 86,467 | 64.20 | 3.58 years | — | ||||||||||||
Exercisable at June 30, 2019 | 27,022 | 64.20 | — | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited | (16,306 | ) | 102.66 | |||||||||||||
|
| |||||||||||||||
Outstanding at June 30, 2020 | 70,161 | 60.42 | 2.89 years | — | ||||||||||||
|
| |||||||||||||||
Exercisable at June 30, 2020 | 41,829 | $ | 69.81 | 2.59 years | $ | — | ||||||||||
|
|
|
|
|
|
|
|
Stock Options | Weighted- average Exercise Price | Weighted- average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
Outstanding at July 1, 2020 | 70,154 | 60.42 | 2.89 years | — | ||||||||||||
Exercisable at July 1, 2020 | 41,829 | 69.81 | 2.59 years | — | ||||||||||||
Granted | 640,320 | 3.29 | ||||||||||||||
Forfeited | (8,410 | ) | 153.79 | |||||||||||||
Outstanding at June 30, 2021 | 702,064 | 7.16 | 8.07 years | — | ||||||||||||
Exercisable at June 30, 2021 | 54,158 | $ | 47.90 | 2.09 years | $ | — | ||||||||||
Granted | 36,000 | 2.99 | 9.45 years | $ | — | |||||||||||
Outstanding at June 30, 2022 | 738,064 | 6.95 | 7.18 years | $ | — | |||||||||||
Exercisable at June 30, 2022 | 275,174 | 13.16 | 6.19 years | $ | — | |||||||||||
Fiscal Year Ended June 30, | ||||||||
2020 | 2019 | |||||||
Expected volatility | 102.9-104.1 | % | 102.9-104.1 | % | ||||
Expected life | 5 years | 5 years | ||||||
Risk-free interest rate | 1.28-1.67 | % | 1.28-1.67 | % | ||||
Expected dividend yield | — | % | — | % | ||||
|
|
|
|
Fiscal Year Ended June 30, | ||||||||
2022 | 2021 | |||||||
Expected volatility | 122.1 | % | 112.0-127.4 | % | ||||
Expected term | 6 years | 3.5-6 years | ||||||
Risk-free interest rate | 1.36 | % | 0.44-0.55 | % | ||||
Expected dividend yield | — | % | — | % |
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
(US$’000) | Fiscal Year Ended June 30, | |||||||
2020 | 2019 | |||||||
Research and development | $ | 16 | $ | 87 | ||||
General and administrative | 221 | 585 | ||||||
|
|
|
| |||||
Total share-based compensation expense | $ | 237 | $ | 672 | ||||
|
|
|
|
(US$’000) | June 30, | |||||||
2022 | 2021 | |||||||
Research and development | $ | 257 | $ | 212 | ||||
General and administrative | 613 | 422 | ||||||
Total share-based compensation expense | $ | 870 | $ | 634 | ||||
12.
Income (loss)
(US$’000) | Fiscal Year Ended June 30, | |||||||
2020 | 2019 | |||||||
United States | $ | (299 | ) | $ | 169 | |||
International | (7,975 | ) | 2,440 | |||||
|
|
|
| |||||
Total | $ | (8,274 | ) | $ | 2,609 | |||
|
|
|
|
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
(US$’000) | Year Ended June 30, | |||||||
2022 | 2021 | |||||||
United States | $ | (17,369 | ) | $ | 7,911 | |||
International | (839 | ) | (5,971 | ) | ||||
Total | $ | (18,208 | ) | $ | (13,882 | ) | ||
(US$’000) | Fiscal Year Ended June 30, | |||||||
2020 | 2019 | |||||||
Deferred tax assets: | ||||||||
Net operating losses | $ | 13,153 | $ | 10,632 | ||||
Capital losses | — | 250 | ||||||
Other | 209 | 193 | ||||||
Lease liability | 85 | — | ||||||
|
|
|
| |||||
Gross deferred tax assets | 13,447 | 11,075 | ||||||
Less valuation allowance | (13,290 | ) | (11,075 | ) | ||||
Deferred tax liabilities: | ||||||||
Right-of-use assets | (83 | ) | — | |||||
Fixed assets | (74 | ) | — | |||||
|
|
|
| |||||
Total deferred tax liabilities | (157 | ) | — | |||||
|
|
|
| |||||
Net deferred taxes | $ | — | $ | — | ||||
|
|
|
|
(US$’000) | June 30, | |||||||
2022 | 2021 | |||||||
Deferred tax assets: | ||||||||
Net operating losses | $ | 17,348 | $ | 15,902 | ||||
Other | 348 | 230 | ||||||
Lease liability | 170 | 45 | ||||||
Share-based compensation | 205 | 88 | ||||||
Intangible assets | 250 | 212 | ||||||
Gross deferred tax assets | 18,321 | 16,477 | ||||||
Less valuation allowance | (17,965 | ) | (16,223 | ) | ||||
Deferred tax liabilities: | ||||||||
Right-of-use assets | (162 | ) | (42 | ) | ||||
Fixed assets | (43 | ) | (76 | ) | ||||
Prepaid expenses | (151 | ) | (136 | ) | ||||
Total deferred tax liabilities | (356 | ) | (254 | ) | ||||
Net deferred taxes | $ | — | $ | — | ||||
(US$’000) | Amount | Expiration Years | ||||||
Net operating losses, federal (post-December 31, 2017) | $ | 629 | Do not expire | |||||
Net operating losses, federal (pre-January 1, 2018) | 192 | 2034-2036 | ||||||
Net operating losses, state | 5,314 | 2031-2034 | ||||||
Net operating losses, foreign | 45,847 | Do not expire | ||||||
Tax credits, foreign | — |
(US$’000) | Amount | Expiration Years | ||||||
Net operating losses, federal (post-December 31, 2017) | $ | 25,597 | Do not expire | |||||
Net operating losses, state | 4,632 | 2031-2034 | ||||||
Net operating losses, Australia | 46,596 | Do not expire |
Fiscal Year Ended June 30, | ||||||||
2020 | 2019 | |||||||
Statutory rate | 21.00 | % | 27.50 | % | ||||
Permanent differences | (2.4 | %) | 6.18 | % | ||||
Research and development expenditures | — | 15.73 | % | |||||
Research and development incentive | — | (6.87 | %) | |||||
Share-based payments | (0.74 | %) | 7.06 | % | ||||
Net operating losses | — | (42.3 | %) | |||||
Change in valuation allowance | (24.12 | %) | (7.3 | %) | ||||
Foreign tax rate differential | 6.26 | % | — | |||||
|
|
|
| |||||
Total | (0.00 | %) | 0.00 | % | ||||
|
|
|
|
Year Ended June 30, | ||||||||
2022 | 2021 | |||||||
Statutory rate | 21.00 | % | 21.00 | % | ||||
Permanent differences | (0.22 | %) | (8.9 | %) | ||||
Share-based payments | (0.36 | %) | (0.32 | %) | ||||
Change in valuation allowance | (20.55 | %) | (13.9 | %) | ||||
Foreign tax rate differential | 0.13 | % | 2.12 | % | ||||
Total | (0.00 | %) | (0.00 | %) | ||||
In the fiscal year ended June 30, 2019, the Company was domiciled in Australia where the statutory rate was 27.5%. As a result, the presentation of the tax disclosures, including effective tax rate, were based on Australian statutory rules. In the fiscal year ended June 30, 2019, the net operating losses presented in the effective tax rate could also be viewed as a chance in valuation allowance.
BENITEC BIOPHARMA INC.
Notes to Consolidated Financial Statements
SBT requires a company to demonstrate that a “similar business” has been maintained from the time when the COT is failed and throughout the period until the end of the income year that the losses are being recouped.
2022.
13.30, 2022.
On December 18, 2012, the Company announced the appointment of Synteract, Inc. as its Clinical Research Organization responsible for the progression of TT-034 into Phase I/IIa clinical trials in the U.S. The Company has negotiated a contract for Synteract to continue to manage the Phase I/IIa clinical trial and the long-term patient follow up through 2016 and beyond. The Company announced on February 20, 2016 that it was terminating the HCV program, and at the end of the 2018 financial year had assumed all patients would remain in the study and the follow up would continue to 2021 at a maximum cost of $462,000. However, in July 2018, the Company applied to the FDA for, and the FDA approved, the discontinuation of the study which will result in minimal costs being incurred in the future.
There are no contingent liabilities as of June 30, 2020 and 2019, respectively. See Note 10 above for lease commitments.
There are no contingent liabilities as of June 30, 2022 and 2021, respectively. See Note 9 above for lease commitments.
The following transactions occurred with related parties:
(US$’000) | June 30, | |||||||
2020 | 2019 | |||||||
Legal services paid/payable to a law firm in which a director of the Company is a partner and has a beneficial interest. | $ | — | $ | 1 | ||||
|
|
|
|
All transactions were made on normal commercial termsLoss per share
Year Ended June 30, | ||||||||
2022 | 2021 | |||||||
Net loss attributable to common stockholders (US$’000) | ($ | 18,208 | ) | ($ | 13,882 | ) | ||
Weighted average number of shares used in calculating basic and diluted earnings per share | 8,171,690 | 4,295,416 | ||||||
Basic and diluted loss per share | ($ | 2.23 | ) | ($ | 3.23 | ) | ||
In December 2018, the Company accrued a milestone payment of $300,000 (AUD 425,411) payable809,159 to NantWorks, LLC pursuant to a sublicense agreement. It was later determined that the milestone was not required to be paid and therefore the accrual was reversed in December 2019. NantWorks, LLC is an affiliate of Nant Capital which owns 26.44% of the issued and outstandingacquire common stock of the Company as of June 30, 2020.
15. Earnings (Loss) per share
(US$’000) | Fiscal Year Ended June 30, | |||||||
2020 | 2019 | |||||||
Net Income (Loss) attributable to common stockholders | ($ | 8,274 | ) | $ | 2,609 | |||
Weighted average number of shares used in calculating basic and diluted earnings per share | 1,021,193 | 856,765 | ||||||
|
|
|
| |||||
Basic and diluted earnings (loss) per share | ($ | 8.10 | ) | $ | 3.05 | |||
|
|
|
|
Outstanding options to acquire ordinary shares are not considered dilutiveanti-dilutive for the fiscal years ended June 30, 20202022 and June 30, 2019, because they are anti-dilutive, as the strike price was higher than the share price.
16. Subsequent events
The Company is closely monitoring the impact2021.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
The information required by this Item 9 was previously reported in the Company’s Current Report on Form 8-K that was filed with the SEC on June 5, 2020, and amended on August 19, 2020.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as of June 30, 2020. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2020, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
Our management, including our principal executive and principal financial officer, has evaluated any changes in our internal control over financial reporting that occurred during the three months ended June 30, 2020, and has concluded that there was no change that occurred during the three months ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our management, with the participation of our principal executive and principal financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of June 30, 2020.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
We are an emerging growth company and a smaller reporting company, and therefore our independent registered public accounting firm has not and is not required to issue issued a report on the effectiveness of internal control over financial reporting.
None.
Name | Age | Position | ||||
Jerel Banks | 47 | Chief Executive Officer, Director | ||||
Megan Boston | 50 | Executive Director, Director | ||||
J. Kevin Buchi(1)(2)(3) | 67 | Director | ||||
Peter Francis(1)(2)(3) | 66 | Director | ||||
Edward Smith (1)(2)(3) | 51 | Director |
(1) | Member of the audit committee. |
(2) | Member of the compensation committee. |
(3) | Member of the nominating and corporate governance committee. |
our deemed affiliate.. Prior to joining Nant Capital, LLC, Dr. Banks served as vice president, portfolio manager and research analyst for the Franklin Biotechnology Discovery Fund at Franklin Templeton Investments from 2012 to 2015. Prior to his tenure at Franklin Templeton Investments, he worked as a biotechnology senior equity research analyst at Sectoral Asset Management from 2011 to 2012. From 2008 to 2011, Dr. Banks worked as a biotechnology equity research analyst at Apothecary Capital, the healthcare investment management team for the family investment office of the Bass Family of Fort Worth, Texas. Dr. Banks began his career in investment management as a healthcare equity research associate at Capital Research Company where he was a member of the equity research team from 2006 to 2008. Dr. Banks earned an M.D. from the Brown University School of Medicine and a Ph.D. in Organic Chemistry from Brown University, and he holds an A.B. in Chemistry from Princeton University.III-1
President, Global Branded Products of Teva Pharmaceuticals Industries Ltd. Mr. Buchi joined Cephalon in 1991
and held various positions in public accounting, most recently in the audit practice of Deloitte.
Nominating and Corporate Governance
III-3
whether incumbent directors should be nominated for re-election upon the expiration of their terms, recommending corporate governance guidelines applicable to the Board and to the Company’s employees, overseeing the evaluation of the Board and its committees, and assessing and recommending Board members to the Board for committee membership.
Compensation Committee Interlocks and InsiderParticipation
2022.
Named Executive Officer and | Fiscal Year | Salary ($)(1) | Bonus ($)(2) | Option Awards ($) | All Other Compensation ($) | Total ($)(7) | ||||||||||||||||||
Dr. Jerel A. Banks, M.D. Ph.D. | 2020 | 400,000 | — | (2) | — | 31,704 | (5) | 431,704 | ||||||||||||||||
Executive Chairman and Chief Executive | 2019 | 400,000 | 200,000 | — | 15,296 | (5) | 615,296 | |||||||||||||||||
Megan Boston | 2020 | 221,430 | — | (2) | — | 16,775 | (6) | 238,205 | ||||||||||||||||
Executive Director | 2019 | 185,543 | 117,975 | (4) | 74,737 | (3) | 16,463 | (6) | 394,718 |
Named Executive Officer and Principal Position | Fiscal Year | Salary ($)(1) | Bonus ($)(2) | Option Awards ($)(3) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
Dr. Jerel A. Banks, M.D. Ph.D. | 2022 | 505,682 | 34,282 | (5) | 539,964 | |||||||||||||||||||
Executive Chairman and Chief Executive Officer | 2021 | 439,583 | 225,000 | 705,375 | 33,105 | (5) | 1,403,063 | |||||||||||||||||
Megan Boston | 2022 | 309,382 | 20,074 | (6) | 329,456 | |||||||||||||||||||
Executive Director | 2021 | 269,837 | 111,340 | (4) | 352,686 | 17,928 | (6) | 751,791 |
(1) | Ms. Boston’s salary was paid in Australian dollars and has been converted to U.S. dollars using a conversion rate of A$1.00 to |
(2) |
In respect of the |
(3) |
The NEOs were not awarded any option awards |
(4) | Ms. Boston’s performance-based cash bonus in |
|
(5) | Amounts reflect company-paid health and life insurance premiums. |
(6) | Amounts reflect the Company’s compulsory contributions to Ms. Boston’s superannuation account. The superannuation contributions were paid in Australian dollars and were converted to U.S. dollars using a conversion rate of A$1.00 to |
|
On September 15, 2021, the Board, as part of its annual base salary review process, approved annual base salary increases for the NEOs. Base salaries were increased with the intention to bring salaries further in line with what the Board considered to be competitive compensation for similarly situated executives of comparable companies. Effective September 16, 2021, Dr. Banks’s and Ms. Boston’s annual base salaries were increased to $520,000 and $A435,000 ($317,550) (Ms. Boston’s salary has been converted using a conversion rate of A$1.00 to $0.73), respectively.
were not granted any equity incentive awards.
III-6
Option Awards(1) | ||||||||||||||||||||
Named Executive Officer | Grant Date | Number of Securities Underlying Unexercised Options (#)—Exercisable | Number of Securities Underlying Unexercised Options (#)—Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||||||||||||
Dr. Jerel A. Banks, M.D. Ph.D. | 6/26/2018 | (2) | 22,222 | 11,111 | 50.73 | 6/26/2023 | ||||||||||||||
Executive Chairman and Chief Executive Officer | ||||||||||||||||||||
Megan Boston | 3/12/2019 | (2) | 5,555 | 11,111 | 42.33 | 3/12/2024 | ||||||||||||||
Executive Director |
Named Executive Officer | Grant Date | Number of Securities Underlying Unexercised Options (#)— Exercisable | Option Awards Number of Securities Underlying Unexercised Options (#)—Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||||||||||||
Dr. Jerel A. Banks, M.D. Ph.D. | 12/9/2020(1)(2) | 94,781 | 189,564 | 2.98 | 12/9/2030 | |||||||||||||||
Executive Chairman and Chief Executive Officer | 6/26/2018(2)(3) | 33,333 | — | 50.56 | 6/25/2023 | |||||||||||||||
Megan Boston | 12/9/2020(1)(2) | 47,390 | 94,782 | 2.98 | 12/9/2030 | |||||||||||||||
Executive Director | 3/12/2019(2)(3) | 16,666 | — | 42.47 | 3/11/2024 |
(1) |
The option awards |
III-7
(2) | The shares subject to each of the option awards vest in substantially equal installments on each of the first, second and third anniversaries of the grant date, generally subject to continued employment through the applicable vesting date. |
(3) | The option awards were granted under the Benitec Officers’ and Employees’ Share Option Plan prior to the Re-domiciliation. The share amounts and exercise prices of the awards shown in this table have been adjusted to reflect the terms of the Re-domiciliation. |
Equity Incentive Compensation Plan
Benitec Officers’ and Employees’ Share Option Plan (“Share Option Plan”)
On the Implementation Date, the Re-domiciliation of Benitec Limited was completed, resulting in the Company becoming the ultimate parent company of the Benitec group of companies (the “Scheme”). Pursuant to the Scheme, the Company assumed Benitec Limited’s obligations with respect to the settlement of options (the “Options”) that were issued by Benitec Limited prior to the Implementation Date pursuant to the Share Option Plan. This includes the Company’s assumption of the Share Option Plan and all award agreements pursuant to which each of the Options were granted. Accordingly, any exercise of the Options (subject to vesting conditions being met) entitles the holder to one share of the Company’s Common Stock for every 300 ordinary shares of Benitec Limited the holder of the Option would have been entitled to receive upon exercise of such Option. The exercise price of the Options was also adjusted in connection with the Scheme. Other than as described above, the terms of the Share Option Plan and the Options remained unchanged following the Implementation Date.
Following the Implementation Date, no new options or other equity awards will be issued under the Share Option Plan. The Company intends to present a new equity incentive plan for approval by the Company’s stockholders at the Company’s next annual meeting of stockholders.
III-8
The following summarizes the material terms of the Share Option Plan.
Administration. Our Board, or duly authorized persons, administers the Share Option Plan. Under the Share Option Plan, the Board has power to determine appropriate procedures for administration consistent with the Share Option Plan.
Eligibility. The Share Option Plan provides for an employee (including any director, a part-time employee or consultant) of the Company and its subsidiaries to be deemed an eligible employee by the Board (“Eligible Employee”).
Application for Options. The Board may from time to time, in its absolute discretion, issue written invitations to Eligible Employees to apply for up to a specified number of Options. The invitation will include: (i) the method of calculation of the exercise price, (ii) the period or periods during which all or any of the Options may be exercised, (iii) the number of shares over which the Option may be granted, (iv) the dates and times when the Options expire, (v) any Exercise Conditions (as defined in the Share Option Plan) that apply to the Options, and (vi) the date and time by which the application for Options must be received by the Company. Upon receipt of the invitation the Eligible Employee must send the person identified by the Company to receive the application, the Eligible Employee’s completed application. The application must be received from the Eligible Employee within a specified period listed in the invitation. The Eligible Employee may apply for the number of Options specified in the invitation or part thereof (but the application must be made in multiples of 1,000 Options).
Authorized Shares. The maximum number of shares that may be issued pursuant to awards under Share Option Plan, subject to certain adjustments is 5% of the current number the Company’s ordinary shares.
Grant. Once the Company has received and accepted the Eligible Employee’s application for Options, the Company may: (i) grant the Options to the Eligible Employee or (ii) procure the grant of the Options by a third party. The grant will be based on the terms set out in the Share Option Plan and upon such additional terms and conditions as the Board determines. Options will have a maximum exercise period of seven years. Notwithstanding the above, following the Implementation Date, no new options or other equity awards will be issued under the Share Option Plan.
Transferability. The invitation to receive Options is not transferable and an Eligible Employee may only apply for the Options on his or her behalf and not on behalf of another person or entity unless that other person or entity is controlled by or otherwise associated with the Eligible Employee, agrees to be bound by the Share Option Plan and the terms of issue of the Options as if it were an Eligible Employee, and is approved by the Board. The Option may be transferred or encumbered: (i) by force of law upon death to the Participant’s legal personal representative, (ii) upon bankruptcy to the Participant’s trustee in bankruptcy, or (iii) with the prior written approval of the Board.
Termination of Employment. If a Participant (as defined in the Share Option Plan), who was an employee of the Company or one of its subsidiaries, dies prior to exercising the Option or the Participant terminates employment by reason of Retirement (as defined in the Share Option Plan), the Board may exercise discretion to allow the Options to be exercised by the Participant for a period of up to six months following the Participant’s termination due to death or retirement, even if certain Exercise Conditions had not been met. If a Participant, who was an employee of the Company or one of its subsidiaries, terminates employment for any other reason, the Board may exercise discretion to allow the Options to be exercised by the Participant for a period of up to three months following the Participant’s termination of employment, even if certain Exercise Conditions had not been met. If a Participant, who was an employee of the Company or one of its subsidiaries, dies prior to exercising the Option, the Participant terminates employment by reason of Retirement or terminates employment for any other reason, and the Exercise Conditions have been met, the Participant may exercise the Options for a period up to 12 months following termination, with such period to be determined by the Board.
III-9
Notwithstanding any of the foregoing, if, in the opinion of the Board, a Participant acts fraudulently or dishonestly or is in breach of his or her obligations to the Company or any of its subsidiaries, then the Board of Directors may deem any unexercised Options held by the Participant to have lapsed.
Transactions. If a Takeover Bid (as defined in the Share Option Plan) is made or a Change in Control (as defined in the Share Option Plan) occurs, the Board may (unless, in the opinion of the Board, an intention to make an equivalent offer to the Participants to acquire all or substantial portion of their Options is given) give written notice to each Participant of the Takeover Bid or Change in Control. If a Takeover Bid is made or a Change in Control occurs after the Exercise Condition has been met, but before an Option has been exercised, the Option will be exercisable for a period of 30 days from the date of the notice. If a Takeover Bid is made or a Change in Control occurs before an Exercise Condition has been met, the Board may determine that all or part of those Options will be exercisable for a period of 30 days from the date of the notice. The Board may also exercise its discretion to permit the exercise of the Options upon certain other corporate transactions, including but not limited to the voluntary winding up of the Company, where an order is made for the compulsory winding up of the Company. If an Acquiring Company (as defined in the Share Option Plan) obtains control of the Company as a result of a Takeover Bid, a Change in Control or a proposed scheme or arrangement between the Company and its shareholders, and both the Company and the Acquiring Company agree, a Participant may upon the exercise of the Participant’s Options, the Participant may elect to acquire shares in the Acquiring Company or its parent, on substantially the same terms and subject to substantially the same conditions as the Participant may exercise Options to acquire shares, but with appropriate adjustments to the number and kind of shares subject to the Options, as well as to the exercise price.
If the Company issues shares pro rata to the Company’s shareholders by way of bonus issue, Participants will be entitled to exercise Participant’s Options, to receive in addition to the shares in respect of which the Options are exercised and without the payment of any further consideration, an allotment of as many additional shares as would have been issues to a shareholder who, on the date for determining entitlements under the bonus issue, held shares equal in number to the shares in respect of which the Options are exercised.
In the event of certain other transactions, including if shares are offered pro rata for subscription by the Company’s shareholders or upon the reorganization of the Company, the number of Options to which each Participant is entitled to or the exercise price of the Options or both as appropriate will be adjusted.
Plan Amendment. Our Board may amend the Share Option Plan at any time. However, no amendment to the Share Option Plan or the Options may be made which reduces the rights of Participants in respect of Options granted to them prior to the date of the amendment, other than in certain limited situations.
III-10
DIRECTOR COMPENSATION
Name | Fees Earned or Paid in Cash ($)(2) | All Other Compensation ($)(3) | Total ($) | |||||||||
J. Kevin Buchi | 51,432 | — | 51,432 | |||||||||
Peter Francis | 46,970 | 4,462 | 51,432 | |||||||||
Edward F. Smith(4) | 10,417 | — | 10,417 |
Name | Fees Earned or Paid in Cash ($)(2) | Option Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||
J. Kevin Buchi | 64,000 | 31,200 | — | 95,200 | ||||||||||||
Peter Francis | 59,078 | 31,200 | 5,922 | 96,200 | ||||||||||||
Edward F. Smith | 56,500 | 31,200 | — | 87,700 |
(1) | For information regarding the compensation of Dr. Banks and Ms. Boston, see “Summary Compensation Table.” |
(2) | Fees paid to Mr. |
(3) |
Amount represents the |
(4) |
For information regarding other compensation of all directors, see “Narrative Disclosure to |
Name | Option Awards (#) | |||
J. Kevin Buchi | ||||
Peter Francis | ||||
Edward F. Smith | 35,601 |
Each of our non-employee directors is paid an annual fee in respect of their service on the Board. Mr. Buchi’s annual fee is $51,432. Mr. Francis is paid a base fee of $46,970. In addition, the Company makes a superannuation contribution on Mr. Francis’ behalf in the amount of $4,462. Fees paid to Mr. Buchi and Francis were paid in Australian dollars and have been converted to U.S. dollars using a conversion rate of A$1.00 to $0.671. In accordance with Mr. Smith’s Director Appointment Letter, he will be entitled to earn an annual fee of $50,000 in respect of his service on the Board.
III-11
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | ||||||
5% or Greater Stockholders: | ||||||||
Nant Capital, LLC(1) | 293,058 | 26.4% | ||||||
Directors and Named Executive Officers: | ||||||||
Jerel A. Banks(2) | 22,222 | 2.0% | ||||||
Megan Boston(3) | 5,888 | * | ||||||
J. Kevin Buchi(4) | 7,627 | * | ||||||
Peter Francis(5) | 9,704 | * | ||||||
Edward Smith | — | * | ||||||
All Executive Officers and Directors As a Group (5 persons)(6) | 45,441 | 4.1% |
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | ||||||||||
5% or Greater Stockholders: | ||||||||||||
Steven Michael Oliveira(1) | 1,000,000 | 12.2 | % | |||||||||
Entities affiliated with Suvretta Capital Management, LLC(2) | 769,000 | 9.4 | % | |||||||||
Entities affiliated with SilverArc Capital Management, LLC(3) | 587,499 | 7.2 | % | |||||||||
Entities affiliated with Lincoln Park Capital, LLC(4) | 423,529 | 5.2 | % | |||||||||
Directors and Named Executive Officers: | ||||||||||||
Jerel A. Banks(5) | 128,114 | 1.6 | % | |||||||||
Megan Boston(6) | 64,389 | * | ||||||||||
J. Kevin Buchi(7) | 12,693 | * | ||||||||||
Peter Francis(8) | 12,903 | * | ||||||||||
Edward Smith(9) | 7,866 | * | ||||||||||
All Executive Officers and Directors As a Group (5 persons)(10) | 225,965 | 2.8 | % |
* | Represents beneficial ownership of less than one percent of the Company’s outstanding common stock. |
(1) | Based on the information included in the Form |
(2) | Based on the information included in the Schedule 13G filed by |
(3) | Based on information included in the Schedule 13G filed by SilverArc Capital Management, LLC (“ SilverArc ”) and Devesh Gandhi (“Gandhi ”) on February 9, 2022. Gandhi is the Sole Member of SilverArc and as such is deemed to be the beneficial owner of these 587,499 shares. SilverArc Capital Alpha Fund I, L.P., a Delaware limited partnership for which SilverArc acts as an investment adviser, may be deemed to beneficially own 33,017 of these 587,499 shares. SilverArc Capital Alpha Fund II, L.P., a Delaware limited partnership for which SilverArc acts as an investment adviser, may be deemed to beneficially own 384,277 of these 587,499 shares. Squarepoint Diversified Partners Fund Limited, a Cayman Island exempted company for which SilverArc acts as investment adviser, may be deemed to beneficially own 96,918 of these 587,499 shares. Atom Master Fund L.P., a Cayman Islands exempted limited partnership for which SilverArc acts as investment adviser, may be deemed to beneficially own 73,287 of these 587,499 shares. The address of the principal business office of SilverArc and Gandhi is 20 Park Plaza, 4th Floor, Boston, Massachusetts 02116. |
(4) | Based on information included in the Schedule 13G filed by Lincoln Park Capital, LLC and its affiliates on April 28, 2021. Represents 423,529 shares held directly by Lincoln Park Capital Fund, LLC (“LPC Fund”). Alex Noah and Joshua B. Scheinfeld have shared voting and shared investment power over the shares held by LPC Fund. The address of the principal business office of Lincoln Park Capital, LLC and its affiliates is |
Represents stock options to acquire |
Includes 333 shares of common stock held by Boston Super Invest Pty A/C Boston Family Super that Megan Boston has sole voting power over and stock options to acquire |
Includes 4,827 shares of common stock held directly by Mr. Buchi and stock options to acquire |
Includes |
Represents stock options to acquire |
(10) | Includes 10,197 shares of common stock and stock options to acquire 215,768 shares of common stock that have vested or will vest within 60 days of August 15, 2022. |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans | |||||||||
Equity compensation plans approved by security holders | 70,161 | $ | 60.42 | — | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
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Total | 70,161 | $ | 60.42 | — | ||||||||
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III-13
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans | |||||||||
Equity compensation plans approved by security holders | 738,064 | $ | 6.95 | 1,173,680 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 738,064 | $ | 6.95 | 1,173,680 | ||||||||
Nant Capital, LLC
In October 2016, Benitec Limited entered into a strategic relationship with Nant Capital. As part of that strategic relationship, Benitec Limited initially issued Nant Capital ordinary shares which became an aggregate of 195,372 shares of common stock following the Re-domiciliation for a combined total consideration of $6.1 million. Jerel Banks, our Chairman and Chief Executive Officer, was initially appointed to the board of directors of Benitec Limited by Nant Capital. In connection with his separation from Nant Capital, Nant Capital agreed to pay Dr. Banks an annual separation payment (starting with calendar year 2018), in cash not later than March 15th of each year, equal to a fixed percentage of the amount by which the net increase in the fair market value of the 293,058 shares of Company common stock that Nant Capital owns (the “Nant Shares”) exceeds a 10% hurdle with respect to each calendar year. Dr. Banks does not own (beneficially or of record) any of the Nant Shares, nor does he have any right to vote, sell or dispose of the Nant Shares (or cause them to be voted, sold or disposed of), but for purposes of calculating his separation payment he can require Nant Capital to treat some or all of them as having effectively been sold prior to the end of a calendar year performance period. Dr. Banks has no obligation or responsibility to manage the Nant Shares. The arrangement is in effect and Dr. Banks has not accrued any payments thereunder. The Company is not a party to this arrangement.
In December 2016, Benitec Limited entered into an exclusive sublicense agreement with NantWorks, LLC, an affiliate of Nant Capital, pursuant to which we obtained a sublicense to intellectual property relating to our product candidates for the treatment of HNSCC, including BB-401. We terminated the exclusive sublicense agreement for convenience, with the termination effective as of June 2020, because the BB-401 program has been terminated. Prior to termination of the agreement, we were required to make periodic payments to NantWorks, LLC for so long as the agreement remained in effect, as well as contingent milestone and royalty payments in connection with the development and sale of the licensed technology. In fiscal year 2017, we made license payments to NantWorks, LLC of $30,000, and reimbursed patent expense of $35,014. In fiscal year 2018, we paid (i) $4,125, as reimbursement in patent application extension, (ii) $30,000 in annual maintenance fee and (iii) $30,000 in annual maintenance fee.
In January 2017, Benitec Limited entered into a research collaboration agreement with Nant Capital pursuant to which we agreed to advance the clinical development of BB-401, a recombinant DNA construct that produces an antisense RNA with specificity against EGFR for the treatment of HNSCC. The research collaboration agreement with Nant Capital allocates the $4.1 million received from Nant Capital in the March 2017 private placement first to the development of BB-401 and BB-501. Nant Capital will have a controlling vote on the joint steering committee that directs and oversees such development of BB-401 and BB-501 until those funds have been expended. The BB-401 and BB-501 programs have been terminated and, as a result, this collaboration is no longer active.
In December 2018, the Company accrued a milestone payment of $300,000 (AUD 425,411). It was later determined that the milestone was no longer required to be paid and therefore the accrual was reversed in December 2019. Further, the Company accrued a License fee payable in December 2018 of $40,000 (AUD 56,721) which was reversed in January 2019, when the Company received the invoice from NantWorks LLC.
III-14
Other Related Parties
Legal services at normal commercial rates totaling A$726, or $509, for fiscal 2019, A$8,212, or $6,079, for fiscal 2018 and A$191,050, or $146,841 for fiscal 2017 were provided by Francis Abourizk Lightowlers, a law firm in which Mr. Peter Francis is a partner and has a beneficial interest.
Annabel West, the wife of Greg West, our former Chief Executive Officer, was employed by us as a part-time clerical and administrative assistant. Annabel West was paid wages of A$42,278, or $31,298, and A$36,248, or $27,860, respectively, for fiscal 2018 and fiscal 2017.
Review and approval of related party transactions
Agreements
III-15
Fee Category | 2020 | 2019 | ||||||
Audit Fees(1) | $ | 183,600 | $ | — | ||||
Audit Related Fees(2) | $ | 16,200 | $ | — | ||||
Tax Fees(3) | $ | 7,000 | $ | — | ||||
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Total | $ | 206,800 | $ | — | ||||
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Fee Category | 2022 | 2021 | ||||||
Audit Fees(1) | $ | 222,696 | $ | 256,500 | ||||
Audit Related Fees(2) | $ | 16,200 | $ | 56,500 | ||||
Tax Fees(3) | $ | 65,735 | $ | 46,465 | ||||
Total | $ | 304,631 | $ | 359,465 | ||||
(1) | Audit Fees consist of fees billed for professional services rendered for the audit of the Company’s consolidated annual financial statements included in the Company’s Annual Report on Form 10-K and review of the interim consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q, and services that are normally provided by independent registered public accounting firms in connection with statutory and regulatory filings or engagements. |
(2) | Audit-Related Fees consist of fees billed for assurance and related services rendered that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” |
(3) | Tax Fees were billed for professional services including assistance with tax compliance and the preparation of tax returns, tax consultation services, assistance in connection with tax audits and tax advice related to mergers, acquisitions and dispositions. |
III-16
Exhibit Number | Exhibit | |
10.7† | Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on April 15, 2020) |
IV-1
† | Indicates a management contract or compensatory plan. |
* | Filed or furnished herewith |
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BENITEC BIOPHARMA INC. | ||
By: | /s/ Dr. Jerel Banks | |
Dr. Jerel Banks | ||
Chief Executive Officer |
Signature | Title | Date | ||
/s/ Dr. Jerel Banks Dr. Jerel Banks | Chief Executive Officer, Director (principal executive officer) | September | ||
/s/ Megan Boston Megan Boston | Executive Director, Director (principal accounting and financial officer) | September | ||
/s/ J. Kevin Buchi J. Kevin Buchi | Director | September | ||
/s/ Peter Francis Peter Francis | Director | September | ||
/s/ Edward Smith Edward Smith | Director | September |