Form 6-K ALTERITY THERAPEUTICS For: Dec 31

February 25, 2021 6:17 AM EST

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

 

For the month of February 2021

Commission File Number 000-49843

 

ALTERITY THERAPEUTICS LIMITED

(Name of Registrant)

 

LEVEL 3, 460 BOURKE STREET, MELBOURNE, VIC 3000, AUSTRALIA

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒             Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): __

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): __

 

This Form 6-K is not being incorporated by reference into the Registrant’s Registration Statements on Form S-8 (Files No. 333-251073, 333-248980 and 333-228671) and our Registration Statements on Form F-3 (Files No. 333-251647, 333-249311, 333-231417 and 333-250076).

 

 

 

 

 

 

ALTERITY THERAPEUTICS LIMITED

(a development stage enterprise)

 

The following exhibits are submitted:

 

99.1Appendix 4D Interim Financial Report for the half-year ended 31 December 2020
  
99.2Operating and Financial Review and Prospects for the Six Months ended December 31, 2020

 

1

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Alterity Therapeutics Limited
   
  /s/ Geoffrey P. Kempler
  By: Geoffrey P. Kempler
  Chairman
         

Date: February 25, 2021

 

2

 

Exhibit 99.1

 

Alterity Therapeutics Limited Appendix 4D

Half year ended 31 December 2020

 

Name of entity: Alterity Therapeutics Limited
ABN: 37 080 699 065
Half-year ended: 31 December 2020
Previous period: 31 December 2019

 

Results for announcement to the market

 

      A$  
Revenue from ordinary activities  Down  53.6% to 6,553  
Net loss after tax (from ordinary activities) for the period attributable to members  Up  51.8% to 8,561,862  
Net loss after tax for the period attributable to members  Up  51.8% to 8,561,862  

 

Net tangible assets per security

 

   31 December   31 December 
   2020   2019 
    cents    cents 
           
Net tangible asset backing (cents per share)   1.69    1.27 

 

Explanation of results

 

Alterity Therapeutics Limited recorded income of $6,553 for the half year ended 31 December 2020 (2019:$14,133) which is interest received on the Group's bank accounts. Alterity Therapeutics Limited has incurred a loss of $8,561,862 for the half year ended 31 December 2020 (2019: $5,640,258).

 

An explanation of the key financial elements contributing to the revenue and result above can be found in the review of operations included within the directors' report.

 

Distributions

 

No dividends have been paid or declared by the Group for the current financial period. No dividends were paid for the previous financial period.

 

Changes in controlled entities

 

There have been no changes in controlled entities during the period ended 31 December 2020.

 

Other information required by Listing Rule 4.2A

 

N/A

 

Interim review

 

The interim financial statements have been reviewed by the Group's independent auditor without any modified opinion, disclaimer or emphasis of matters.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alterity Therapeutics Limited

 

Interim financial report for the
half-year ended 31 December 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contents

 

   Page
Corporate directory  1
Directors’ report  2
Consolidated statement of profit or loss and other comprehensive income  8
Consolidated statement of financial position  9
Consolidated statement of changes in equity  10
Consolidated statement of cash flows  11
Notes to the consolidated financial statements  12
Directors’ declaration  22
Independent auditor’s report to the members  23

 

 

 

 

Alterity Therapeutics Limited

Corporate directory

 

Directors  Mr. Geoffrey Kempler
   Non-Executive Chairman
    
   Mr. Brian Meltzer
   Independent Non-Executive Director
    
   Mr. Peter Marks
   Independent Non-Executive Director
    
   Mr. Lawrence Gozlan
   Non-Executive Director
    
   Dr. David Sinclair
   Non-Executive Director
    
   Mr. Tristan Edwards
   Non-Executive Director
    
Secretary  Mr. Phillip Hains
    
Principal registered office in Australia  Level 3, 62 Lygon Street
   Carlton Victoria 3053
   Australia
   +61 3 9824 5254
    
Share register  Computershare Investor Services Pty Ltd
   Yarra Falls, 452 Johnston Street
   Abbotsford Victoria 3067
   1300 85 05 05 (within Australia) & +61 3 9414 4000 (overseas)
    
Auditor  PricewaterhouseCoopers
   2 Riverside Quay
   Southbank Victoria 3006
    
Solicitors  Quinert Rodda & Associates Pty Ltd
   Level 6/400 Collins St
   Melbourne Victoria 3000
    
Website  www.alteritytherapeutics.com

 

1

 

 

Alterity Therapeutics Limited

Directors’ report

31 December 2020

 

Your directors present their report on the Consolidated Entity (referred to hereafter as the group) consisting of Alterity Therapeutics Limited and the entities it controlled at the end of, or during, the half-year ended 31 December 2020.

 

Directors

 

The following persons were directors of Alterity Therapeutics Limited during the whole of the half-year and up to the date of this report:

 

Mr. Geoffrey Kempler

Mr. Brian Meltzer

Mr. Peter Marks

Mr. Lawrence Gozlan

Dr. David Sinclair

Mr. Tristan Edwards

 

Review of operations - 31 December 2020

 

Operations

 

Detailed below is an update on the status of the Group’s research and development projects and overall operations for the half-year ended 31 December 2020 .

 

The Group’s 30 June 2020 Annual Report contains detailed background information relating to its operations including its research and development projects and collaboration partners and should be read in conjunction with this report.

 

Product Development

 

Alterity Therapeutics’ lead compound ATH434 is an orally bioavailable, brain penetrant, small molecule inhibitor of α-synuclein aggregation, which is being developed for Multiple System Atrophy (MSA). Alpha-synuclein aggregation is implicated in the pathology of MSA and Parkinson’s disease.

 

MSA is a rare and rapidly progressive Parkinsonian disorder. It is a neurodegenerative disease with major sources of disability resulting from motor symptoms characteristic of Parkinson’s disease and impaired ability to maintain normal blood pressure, bowel function and bladder control. Current treatment includes medications and lifestyle changes to help manage symptoms, but there is no treatment to address the underlying cause and no cure.

 

The Company’s Phase 1 Clinical trial reported in 2019 found ATH434 was considered safe and well-tolerated in adult and older adult (≥ 65 years) human subjects, with an adverse event profile comparable to placebo. The safety profile was similar for adult and older adult volunteers. The results also indicated that ATH434 crosses the blood brain barrier in humans and that well-tolerated doses achieved concentrations in the brain that exceed those associated with robust efficacy in animal models.

 

ATH434 has Orphan drug designation both with the US FDA and European Commission for the treatment of MSA.

 

Several significant advancements were achieved during the reporting period, as well as the continued strengthening of the safety profile of ATH434.

 

In addition, the company continued to explore opportunities for PBT2 and identify potential expansion of its therapeutic portfolio.

 

2

 

 

Alterity Therapeutics Limited

Directors’ report

31 December 2020

(continued)

 

Review of operations - 31 December 2020 (continued)

 

bioMUSE natural history study for MSA patients

 

Patients with MSA are being enrolled in Alterity’s bioMUSE Study in the United States.

 

BioMUSE is a natural history study that intends to track the progression of patients with early MSA. The study is being conducted in collaboration with Vanderbilt University Medical Center in the US under the direction of Daniel Claassen, MD, Associate Professor of Neurology and Principal Investigator. Natural history studies are important for characterizing disease progression in selected patient populations.

 

The study will provide vital information on early stage MSA patients to optimize the design of Alterity’s Phase 2 study in MSA. The study will also inform the selection of biomarkers suitable to evaluate target engagement and preliminary efficacy of ATH434.

 

The study is enrolling early stage MSA patients and will track changes in clinical measures and biomarkers for up to one year. Over the course of the study, patients will undergo comprehensive evaluation with detailed neurological examination and clinical rating scales of motor, autonomic and activities-of-daily-living symptoms along with specialized neuroimaging and assessment of protein biomarkers in diverse biological specimens.

 

Data from bioMUSE will also be used to inform patient selection in the Phase 2 clinical trial of ATH434. The US FDA has encouraged Alterity to utilize data from the bioMUSE study to aid in the development of efficacy endpoints for the Phase 2 study.

 

Vanderbilt University Medical Centre is one of the largest academic medical centres in the southeast US managing more than 2 million patients each year. The School of Medicine’s biomedical research program is among the nation’s top 10 in terms of National Institutes of Health peer review funding.

 

Next generation compounds to treat neurodegenerative diseases

 

In November, the US Patent and Trademark Office (USPTO) advised allowance of a new composition of matter patent. The new patent is the product of in-house discovery research and is central to Alterity’s next generation drug development portfolio focussed on neurodegenerative diseases.

 

The patent, entitled “Compounds for and Methods of Treating Diseases” (Application No. 16/818,641), covers more than 150 novel pharmaceutical compositions that are designed to redistribute the labile iron implicated in Parkinson’s disease, Alzheimer’s disease and other neurodegenerative conditions.

 

Alterity’s strategy is based on the hypothesis that its therapeutics can disrupt the underlying pathology of neurodegenerative conditions in which labile iron is implicated in disease pathology.

 

This includes Parkinsonian disorders such as Parkinson’s disease and Multiple System Atrophy, as well as Alzheimer’s disease. The patent confers on Alterity 20 years of exclusivity, providing a strong basis for continued drug development and commercialization and new compound identification within its extensive drug discovery library to target important neurodegenerative diseases.

 

This new patent will support the expansion of Alterity’s drug development portfolio.

 

3

 

 

Alterity Therapeutics Limited

Directors’ report

31 December 2020

(continued)

 

Review of operations - 31 December 2020 (continued)

 

New data independently confirms and extends laboratory findings and expands safety profile of ATH434

 

New animal data for ATH434 from the laboratory of Dr Nadia Stefanova, Professor of Translational Neurodegenerative Research at the Medical University of Innsbruck was presented at the American Neurological Association’s 2020 Annual meeting in August. The new data from an experiment testing ATH434 in an animal model of MSA independently confirmed and extended previous findings demonstrating that ATH434 reduces α-synuclein pathology, preserves neurons, and improves motor performance.

 

Cardiac data strengthens safety profile of ATH434

 

Alterity presented cardiac safety data from its Phase 1 study of ATH434, marking the first time such findings were shared with an international group of clinicians and researchers in the field of neurological disorders. The new cardiac safety data, which focuses on evaluating electrical activity in the heart as measured by the QT interval, reinforced previous safety findings from the Phase 1 clinical study that ATH434 was safe and well-tolerated at all doses and had an adverse event profile comparable to placebo in adult and older adult volunteers. The new data presented indicated that there was no evidence of cardiac liability at clinically tested doses.

 

PBT2 - new opportunity to reverse bacterial resistance to antibiotics

 

In December, Alterity was granted a license by UniQuest, the commercialisation company of The University of Queensland (UQ), to novel zinc ionophore technology to combat antimicrobial resistance in superbugs.

 

Under the license, Alterity secured the worldwide exclusive right to patented technology to develop and commercialise therapies that re-sensitise bacteria to antibiotics. The licensed technology combines Alterity’s PBT2 and other zinc ionophores with commonly used antibiotics to treat infections caused by multidrug resistant bacteria. This is an opportunity for Alterity to further leverage its investment in PBT2.

 

PBT2, Alterity’s most advanced zinc ionophore, breaks the resistance of many important superbugs to available antibiotics, and is covered for this use by patents until 2038.

 

Importantly, PBT2 has previously completed long term preclinical safety studies and phase 2 clinical trial testing in other indications and has demonstrated a favourable safety profile in those trials.

 

In exchange for the grant of exclusive worldwide rights, once Alterity generates commercialization revenue, UniQuest is entitled to receive certain payments commensurate with academic licensing agreements.

 

4

 

 

Alterity Therapeutics Limited

Directors’ report

31 December 2020

(continued)

 

Review of operations - 31 December 2020 (continued)

 

A recently published article in the high-impact journal Science Translational Medicine showed that PBT2 could reverse antibiotic resistance to critical superbugs and demonstrate efficacy in an animal model of sepsis.

 

The authors also noted that superbugs exposed to a combination of PBT2 and antibiotics had a very low propensity to develop further resistance, making the emergence of cross-resistance to the novel treatment unlikely. Thus, PBT2 may help address the issue of antimicrobial resistance without becoming part of the problem.

 

Michael J. Fox Foundation for Parkinson’s Research provides funding for ATH434 Dose Optimization for Parkinson’s disease clinical trials

 

In February Alterity announced the award of a grant from The Michael J. Fox Foundation to determine optimal dosing of its lead drug candidate ATH434 for patients with Parkinson’s disease based on imaging of brain iron.

 

The funding for US$495,000 will be used to evaluate the pharmacologic profile of ATH434 in a primate model to determine the optimal dose of ATH434 in future Parkinson’s disease clinical trials. This is the second grant that Alterity has received from Michael J. Fox Foundation to support the development of ATH434 in Parkinson’s disease.

 

While available therapies can treat some symptoms, people with Parkinson’s urgently need new treatments to slow or stop disease progression and improve quality of life.

 

The project will be led by Margaret Bradbury, PhD, Vice President, Nonclinical Development, in collaboration with Daniel Claassen, MD, Associate Professor of Neurology at Vanderbilt University Medical Center and David Finkelstein, PhD, who heads the PD Research Laboratory at the Florey Institute of Neuroscience and Mental Health.

 

Significant changes in the state of affairs

 

In October 2020, Alterity received commitments for a capital raising of A$35 million via a two tranche placement to Australian and international institutions and other unrelated sophisticated, professional or exempt investors. The Placement was fully subscribed and was conducted at $0.037, representing a discount of 25.7% to the 30-day VWAP and 24.8% discount to the 15-day VWAP prior to the trading halt. For every share allocated in tranche two of the placement, one option was issued. The option has an exercise price of A$0.07 and an expiry date of three years post allotment. The first tranche was completed on 23 October 2020 with A$10 million received by the Company. The second tranche was completed on 24 November 2020 following approval by shareholders at the Annual General Meeting held on 18 November 2020. The remaining A$25 million was received by the Company at the same time. A total of 945,945,946 shares and 674,694,939 free-attaching options were issued across both tranches.

 

The proceeds from the Placement are being used to progress Alterity’s clinical development program for ATH434 including the bioMUSE Natural History study and a Phase 2 trial, both in MSA patients, ongoing research and discovery, and working capital.

 

There have been no other significant changes in the state of affairs of the Company during the period.

 

5

 

 

Alterity Therapeutics Limited

Directors’ report

31 December 2020

(continued)

 

Events since the end of the financial year

 

Appointment of CEO

 

Alterity appointed Dr. David Stamler to the role of Chief Executive Officer. Dr Stamler joined the Company in June 2017 as Chief Medical Officer and Senior Vice President Clinical Development.

 

Mr Geoffrey Kempler, who founded the company in November 1997, stepped down from the role of CEO and continues as Non-Executive Chairman. Mr Kempler will be engaged in a consulting capacity in addition to his Non-Executive Chairman role.

 

Dr Stamler has significant pharmaceutical development and commercialisation experience including three New Drug Application approvals with the US FDA for drugs in the neurological space. His succession aligns with the next phase of Alterity’s commercial strategy and comes at a time when the company is preparing to advance its lead compound ATH434 to Phase 2 Clinical trials.

 

Share Placement

 

The Group issued 53,066,700 shares at A$0.0504 per share through the use of its “at market” (ATM) facility to fund working capital and progress its research and development activities.

 

No other matters or circumstances have arisen since 31 December 2020 that have significantly affected the Group’s operations, results or state of affairs, or may do so in future periods.

 

Auditor’s independence declaration

 

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 7.

 

Rounding of amounts

 

The company is of a kind referred to ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the directors’ report and financial report. Amounts in the directors’ report and financial report have been rounded off to the nearest dollar in accordance with the instrument.

 

This report is made in accordance with a resolution of directors.

 

/s/ Mr. Geoffrey Kempler  
Mr. Geoffrey Kempler  
Non-Executive Chairman  
   
Melbourne  
25 February 2021  

 

6

 

 

Alterity Therapeutics Limited

Directors’ report

31 December 2020

(continued)

 

 

 

Auditor’s Independence Declaration

 

As lead auditor for the review of Alterity Therapeutics Limited for the half-year ended 31 December 2020, I declare that to the best of my knowledge and belief, there have been:

 

(a)no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

 

(b)no contraventions of any applicable code of professional conduct in relation to the review.

 

This declaration is in respect of Alterity Therapeutics Limited and the entities it controlled during the period.

 

/s/ Jon Roberts  
Jon Roberts Melbourne
Partner 25 February 2021
PricewaterhouseCoopers  

 

 

 

PricewaterhouseCoopers, ABN 52 780 433 757

2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001

T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

 

Liability limited by a scheme approved under Professional Standards Legislation. 

 

7

 

 

Alterity Therapeutics Limited

Consolidated statement of profit or loss and other comprehensive income

(Unaudited)

For the half-year ended 31 December 2020

 

   Notes  31 December
2020
A$
   31 December
2019
A$
 
Income           
Interest income  6   6,553    14,133 
Other income  6   1,924,389    1,855,172 
              
Expenses             
Intellectual property expenses      (160,304)   (102,232)
General and administration expenses  7   (3,673,407)   (1,747,986)
Research and development expenses  7   (5,806,841)   (5,747,034)
Other operating expenses      (20)   (40,136)
Other (losses)/gains  7   (852,232)   127,825 
Loss for the period      (8,561,862)   (5,640,258)
              
Loss before income tax      (8,561,862)   (5,640,258)
              
Income tax expense      -    - 
              
Other comprehensive loss             
Other comprehensive income for the period, net of tax      -    - 
              
Total comprehensive loss for the period      (8,561,862)   (5,640,258)
              
       Cents    Cents 
Loss per share for profit attributable to the ordinary equity holders of the Group:             
Basic loss per share  5   (0.65)   (0.65)
Diluted loss per share  5   (0.65)   (0.65)

 

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

 

8

 

 

Alterity Therapeutics Limited

Consolidated statement of financial position

(Unaudited)

As at 31 December 2020

 

   Notes  31 December
2020
A$
   30 June
2020
A$
 
ASSETS
Current assets             
Cash and cash equivalents      35,042,178    9,196,892 
Trade and other receivables  8(a)   1,977,441    61,321 
Other current assets      348,691    578,136 
Total current assets      37,368,310    9,836,349 
              
Non-current assets             
Property, plant and equipment      29,580    39,503 
Right-of-use assets      8,650    31,866 
Total non-current assets      38,230    71,369 
              
Total assets      37,406,540    9,907,718 
              
LIABILITIES
Current liabilities             
Trade and other payables      2,325,108    2,069,604 
Provisions      708,011    612,039 
Other current liabilities      9,110    32,879 
Total current liabilities      3,042,229    2,714,522 
              
Non-current liabilities             
Provisions      8,089    41,514 
Other non-current liabilities      -    868 
Total non-current liabilities      8,089    42,382 
              
Total liabilities      3,050,318    2,756,904 
              
Net assets      34,356,222    7,150,814 
              
EQUITY
Contributed equity  9(a)   194,893,304    160,703,754 
Reserves  9(c)   2,443,841    866,121 
Accumulated losses  9(b)   (162,980,923)   (154,419,061)
              
Total equity      34,356,222    7,150,814 

 

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

 

9

 

 

Alterity Therapeutics Limited

Consolidated statement of changes in equity

(Unaudited)

For the half-year ended 31 December 2020

 

   Attributable to owners of
Alterity Therapeutics Limited
 
   Contributed equity
A$
   Reserves
A$
   Accumulated losses
A$
   Total
A$
 
Balance at 1 July 2019      156,632,636    1,158,975    (141,236,838)   16,554,773 
                        
Initial adoption of AASB 16      -    -    (6,261)   (6,261)
Restated total equity at the beginning of the financial period      156,632,636    1,158,975    (141,243,099)   16,548,512 
                        
Loss for the period      -    -    (5,640,258)   (5,640,258)
Total comprehensive income for the period      -    -    (5,640,258)   (5,640,258)
                        
Transactions with owners in their capacity as owners:                       
Issue of ordinary shares      372,506    -    -    372,506 
Transaction costs      (83,090)   -    -    (83,090)
       289,416    -    -    289,416 
                        
Balance at 31 December 2019      156,922,052    1,158,975    (146,883,357)   11,197,670 
                        
Balance at 1 July 2020      160,703,754    866,121    (154,419,061)   7,150,814 
                        
Loss for the period      -    -    (8,561,862)   (8,561,862)
Total comprehensive income for the period      -    -    (8,561,862)   (8,561,862)
                        
Transactions with owners in their capacity as owners:                       
Issue of ordinary shares  9(a)   36,562,055    -    -    36,562,055 
Share-based payment expenses  9(c)(i)   -    1,577,720    -    1,577,720 
Transaction costs  9(a)   (2,372,505)   -    -    (2,372,505)
       34,189,550    1,577,720    -    35,767,270 
                        
Balance at 31 December 2020      194,893,304    2,443,841    (162,980,923)   34,356,222 

 

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

 

10

 

 

Alterity Therapeutics Limited

Consolidated statement of cash flows

(Unaudited)

For the half-year ended 31 December 2020

 

   Notes  31 December
2020
A$
   31 December
2019
A$
 
Cash flows from operating activities           
Payments to suppliers and employees      (7,385,267)   (7,424,156)
R&D tax incentive refund      -    4,824,880 
Interest paid      -    (2,474)
COVID-19 government relief      53,564    - 
Interest received      1,397    16,124 
Net cash (outflow) from operating activities  10   (7,330,306)   (2,585,626)
              
Cash flows from investing activities             
Payments for property, plant and equipment      (2,494)   (7,499)
Net cash (outflow) from investing activities      (2,494)   (7,499)
              
Cash flows from financing activities             
Proceeds from issues of shares and other equity securities      36,562,055    372,506 
Transaction costs relating to issue of equity      (2,372,505)   (83,090)
Principle elements of lease payments      (24,249)   (45,325)
Net cash inflow from financing activities      34,165,301    244,091 
              
Net increase (decrease) in cash and cash equivalents      26,832,501    (2,349,034)
Cash and cash equivalents at the beginning of the financial year      9,196,892    14,399,904 
Effects of exchange rate changes on cash and cash equivalents      (987,215)   127,825 
Cash and cash equivalents at end of period      35,042,178    12,178,695 

 

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

  

11

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

 

1Basis of preparation of half-year report

 

This condensed consolidated interim report for the half-year reporting period ended 31 December 2020 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. These financial statements also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), as applicable to interim financial reporting.

 

This condensed consolidated interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2020 and any public announcements made by Alterity Therapeutics Limited (“the “Group”) during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

 

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period except as discussed below.

 

Preparation of interim financial statements for users in multiple jurisdictions

 

The Group has prepared the interim financial statements to conform to the requirements and needs of users of the financial statements located in both Australia and the U.S.

 

For U.S users, the Group has prepared the interim financial statements to conform to the requirements of IAS 34 Interim Financial Reporting. Consistent with U.S. domestic registrants, the Group has labelled the interim financial information “unaudited” because the interim financial information is not subject to an audit by our independent registered public accounting firm. The auditor’s independence declaration and independent auditor’s review report are included within this filing to meet the requirements of Australian laws and regulations and are furnished, not filed, for the purposes of incorporation of the related financial statements in any U.S. registration document.

 

For Australian users, the Group has prepared the interim financial statements to conform to the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting. A review of the interim financial information has been performed by the Group’s independent auditors to meet the requirements of Australian Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity and users should refer to the auditor’s independence declaration and independent auditor’s review report included within this filing.

 

(a)New and amended standards adopted by the Group

 

The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ‘AASB’ that are mandatory for the current reporting period.

 

The adoption of these standards has not had any impact on the disclosures or amounts reported in these financial statements.

 

2Significant changes in the current reporting period

 

In October 2020, Alterity received commitments for a capital raising of A$35 million via a two tranche placement to Australian and international institutions and other unrelated sophisticated, professional or exempt investors. The Placement was fully subscribed and was conducted at $0.037, representing a discount of 25.7% to the 30-day VWAP and 24.8% discount to the 15-day VWAP prior to the trading halt. For every share allocated in tranche two of the placement, one option was issued. The option has an exercise price of A$0.07 and an expiry date of three years post allotment. The first tranche was completed on 23 October 2020 with A$10 million received by the Company. The second tranche was completed on 24 November 2020 following approval by shareholders at the Annual General Meeting held on 18 November 2020. The remaining A$25 million was received by the Company at the same time. A total of 945,945,946 shares and 674,694,939 free-attaching options were issued across both tranches.

  

12

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

(continued)

 

2Significant changes in the current reporting period (continued)

 

The proceeds from the Placement are being used to progress Alterity’s clinical development program for ATH434 including the bioMUSE Natural History study and a Phase 2 trial, both in MSA patients, ongoing research and discovery, and working capital.

 

There have been no other significant changes in the state of affairs of the Group during the period.

 

3Segment information

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer of Alterity Therapeutics Limited. For the current and previous reporting periods, the Group operated in one segment, being research and development in the field of Parkinsonian and other neurodegenerative disorders.

 

4Dividends

 

The Group has not declared any dividends in the period ended 31 December 2020 (2019 : nil)

 

5Loss per share

 

(a)Basic and diluted loss per share

 

   31 December
2020
Cents
   31 December
2019
Cents
 
Loss per share for profit attributable to the ordinary equity holders of the Group:        
Basic loss per share   (0.65)   (0.65)
Diluted loss per share   (0.65)   (0.65)

 

(b)Reconciliation of loss used in calculating loss per share

 

   31 December
2020
A$
   31 December
2019
A$
 
Basic loss per share
Loss attributable to the ordinary equity holders of the company used in calculating basic loss per share:   (8,561,862)   (5,640,258)
           
Diluted loss per share          
Loss attributable to the ordinary equity holders of the company used in calculating diluted loss per share:   (8,561,862)   (5,640,258)

  

13

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

(continued)

 

5Loss per share (continued)

 

(c)Weighted average number of shares used as the denominator

 

   31 December
2020
Number
   31 December
2019
Number
 
         
Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share   1,323,432,372    868,327,981 

 

Options that are considered to be potential ordinary shares are excluded from the weighted average number of ordinary shares used in the calculation of basic loss per share. Where dilutive, potential ordinary shares are included in the calculation of diluted loss per share. All the options on issue do not have the effect to dilute the loss per share. Therefore, they have been excluded from the calculation of diluted loss per share.

 

6Interest and other income

 

   31 December
2020
A$
   31 December
2019
A$
 
Interest and other income
Interest income   6,553    14,133 
    6,553    14,133 
           
Other Income          
R&D tax incentive   1,883,325    1,855,172 
COVID-19 relief   41,064    - 
    1,924,389    1,855,172 

  

14

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

(continued)

 

7Loss for the period

 

   31 December
2020
A$
   31 December
2019
A$
 
Loss before income tax has been determined after:
 
General and administration expenses        
Depreciation on fixed assets   12,417    14,390 
Depreciation on leased assets   23,215    42,827 
Employee expenses (non R&D related)   376,220    286,064 
Consultant and director expenses   537,310    371,559 
Audit, internal control and other assurance expenses   115,798    120,604 
Corporate compliance expenses   372,697    194,569 
Office rental   66,664    30,317 
Other administrative and office expenses   332,784    358,599 
Insurance expenses   258,582    329,057 
Share-based payment expenses   1,577,720    - 
    3,673,407    1,747,986 
           
Research and development expenses          
Employee expenses   1,072,468    1,356,509 
Other research and development expenses1   4,734,373    4,390,525 
    5,806,841    5,747,034 
           
Other losses and gains          
Foreign exchange loss / (gain)   852,232    (127,825)
    852,232    (127,825)

 

(1)Other research and development expenses mainly consist of expenses paid for contracted research and development activities conducted by third parties on behalf of the Company.

 

8Financial assets and financial liabilities

 

(a)Trade and other receivables

 

   31 December
2020
   30 June
2020
 
   Current
A$
   Non-
current
A$
   Total
A$
   Current
A$
   Non-
current
A$
   Total
A$
 
                         
R&D tax incentive receivable   1,883,325             -    1,883,325    -             -    - 
Accrued interest income   5,240    -    5,240    12,584    -    12,584 
Goods and services tax receivable   88,876    -    88,876    48,737    -    48,737 
    1,977,441    -    1,977,441    61,321    -    61,321 

  

15

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

(continued)

 

8Financial assets and financial liabilities (continued)

 

(a)Trade and other receivables (continued)

 

R&D tax incentive receivable represents the amount of R&D tax incentive the Group expects to recover. For further details, see note 13(a).

 

For the R&D tax incentive claim relating to the year ended 30 June 2020, the Group is yet to receive the final ATO commissioner discretion pursuant to subsection 328-126(6) of the Income Tax Assessment Act 1997 which enables the Group to recognise A$3,396,726 as eligible expenditure to receive as a refundable cash offset. No R&D tax receivable or income has been recognised with respect to the 2020 year thus far.

 

(i)Classification as trade and other receivables

 

Trade receivables and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection of the amounts is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets. Trade and other receivables are generally due for settlement within one year and therefore are all classified as current.

 

(b)Recognised fair value measurements

 

The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements.

 

The fair value hierarchy consists of the following levels:

 

quoted prices in active markets for identical assets or liabilities (Level 1);

 

inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and

 

inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level3).

 

During the period, none of the Group’s assets and liabilities had their fair value determined using the fair value hierarchy. No transfers between the levels of the fair value hierarchy occurred during the current or previous periods.

  

16

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

(continued)

 

9Equity

 

(a)Contributed equity

 

   31 December
2020
Shares
   30 June
2020
Shares
   31 December
2020
A$
   30 June
2020
A$
 
                 
Ordinary shares - fully paid   2,030,949,978    1,037,358,032    194,893,304    160,703,754 

 

Movements in ordinary share:

 

Details  Number of shares   A$ 
Opening balance 1 July 2020   1,037,358,032    160,703,754 
Shares issued during the year   993,591,946    36,562,055 
Transaction costs   -    (2,372,505)
Balance 31 December 2020   2,030,949,978    194,893,304 

 

Details of shares issued during the current period:

 

          Issue price (1)   Amount 
2020  Details  Number   A$   A$ 
                
2-Jul-2020  Issue of shares under ATM facility   47,646,000    0.033    1,562,055 
23-Oct-2020  Issue of shares under private placement   271,251,007    0.037    10,036,287 
24-Nov-2020  Issue of shares under private placement   674,694,939    0.037    24,963,713 
       993,591,946                36,562,055 

 

(1)Reflects the issue price rounded to the nearest three decimal places

 

(b)Accumulated losses

 

Movements in accumulated losses were as follows:

 

   31 December
2020
A$
   31 December
2019
A$
 
         
Balance at the beginning of the period   154,419,061    141,236,838 
Net loss for the year   8,561,862    5,640,258 
Impact of initial adoption of AASB 16   -    6,261 
Balance at the end of the period   162,980,923    146,883,357 

  

17

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

(continued)

 

9Equity (continued)

 

(c)Reserves

 

(i)Options

 

   31 December
2020
Options
   30 June
2020
Options
   31 December
2020
A$
   30 June
2020
A$
 
                 
Options over fully paid ordinary shares   70,550,000    21,550,000    2,443,841    866,121 

 

The table below presents the movements in options during the half-year ended 31 December 2020.

 

2020  Details  Number   Amount
A$
 
            
18-Sep-2020  Unlisted options issued to directors (ATHAAB)   49,000,000    1,577,720 
       49,000,000    1,577,720 

 

Date Issued  Quantity   Grant Date  Expiry Date  Exercise price ($)   Fair value at grant date per option ($)* 
    .                 
18-Sep-2020   49,000,000   18-Sep-2020  17-Sep-2025   0.09    0.0322 
    49,000,000                 

 

*Rounded to the nearest four decimal points.

 

(ii)Free-attaching options

 

   31 December
2020
Options
   30 June
2020
Options
   31 December
2020
A$
   30 June
2020
A$
 
                 
Free-attaching options   674,694,939    -    -    - 

 

The table below presents the movements in free-attaching options during the half-year ended 31 December 2020.

 

2020  Details  Number   Amount
A$
 
            
24-Nov-2020  Unlisted free-attaching options issued to Tranche 2 investors   674,694,939           - 
       674,694,939    - 

 

Date Issued  Quantity   Grant Date  Expiry Date  Exercise price ($)   Fair value at grant date per option ($) 
   .               
24-Nov-2020   674,694,939   24-Nov-2020  23-Nov-2023   0.07         - 
    674,694,939                 

  

18

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

(continued)

 

9Equity (continued)

 

(c)Reserves (continued)

 

(ii)Free-attaching options (continued)

 

There have been no other options over fully paid ordinary shares issued, exercised or forfeited during the current period.

 

(iii)Nature and purpose of reserves

 

The share based payments reserve is used to recognise the fair value of options issued to employees and consultants but not exercised.

 

10Reconciliation of profit after income tax to net cash flow from operating activities

 

   31 December
2020
A$
   31 December
2019
A$
 
Loss for the period   8,561,862    5,640,258 
Depreciation on fixed assets   (12,417)   (57,217)
Depreciaton on leased assets   (23,215)   - 
Other   -    6,261 
Non-cash employee benefits expense - share-based payments   (1,577,720)   - 
Net foreign exchange differences   (987,215)   127,825 
(Increase)/decrease in provisions   (62,547)   54,447 
Increase/(decrease) in trade and other receivables   1,916,120    (2,949,539)
Increase/(decrease) in other current assets   (229,445)   (322,036)
Increase/(decrease) in other non-current assets   -    72,979 
(Increase)/decrease in trade and other payables   (255,505)   93,776 
(Increase)/decrease in other current liabilities   388    (70,344)
(Increase)/decrease in other non-current liabilities   -    (10,784)
    7,330,306    2,585,626 

 

11Related party transactions

 

During the period from 1 July 2020 to 31 December 2020, the Group paid a total of A$150,000 (excl. GST) in advisory fees to Montoya Pty Ltd, an associated entity of Mr Lawrence Gozlan, a director of the Group.

 

There were no other related party transactions other than those related to director and key management personnel remuneration and equity and transactions by the Group and its subsidiaries.

  

19

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

(continued)

 

12Events occurring after the reporting period

 

Appointment of CEO

 

Alterity appointed Dr. David Stamler to the role of Chief Executive Officer. Dr Stamler joined the Company in June 2017 as Chief Medical Officer and Senior Vice President Clinical Development.

 

Mr Geoffrey Kempler, who founded the company in November 1997, stepped down from the role of CEO and continues as Non-Executive Chairman. Mr Kempler will be engaged in a consulting capacity in addition to his Non-Executive Chairman role.

 

Dr Stamler has significant pharmaceutical development and commercialisation experience including three New Drug Application approvals with the US FDA for drugs in the neurological space. His succession aligns with the next phase of Alterity’s commercial strategy and comes at a time when the company is preparing to advance its lead compound ATH434 to Phase 2 Clinical trials.

 

Share Placement

 

The Group issued 53,066,700 shares at A$0.0504 per share through the use of its “at market” (ATM) facility to fund working capital and progress its research and development activities.

 

No other matter or circumstance has occurred subsequent to period end that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group or economic entity in subsequent financial periods.

 

13Significant estimates and assumptions

 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

 

The Company and its two wholly-owned subsidiaries (the “Group”) makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

 

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

 

(a)R&D tax incentives

 

A refundable research and development tax incentive offset of 43.5%, equivalent to a deduction of 150%, will be available to eligible small companies with an annual aggregate turnover of less than A$20 million. Eligible companies can receive a refundable research and development tax incentive offset of 43.5% of their research and development spending.

 

The Group’s research and development activities are eligible under an Australian Government tax incentive for eligible expenditure from 1 July 2011. Management has assessed these activities and expenditure to determine which are likely to be eligible under the incentive scheme. For the period to 31 December 2020 the Group has recorded an item in other income of A$1,883,325 to recognise this amount which relates to this period.

  

20

 

 

Alterity Therapeutics Limited

Notes to the consolidated financial statements

(Unaudited)

31 December 2020

(continued)

 

14COVID-19 impact on business

 

The COVID-19 pandemic has caused uncertainty in global markets and its impact is unable to be reliably measured. However, COVID-19 has had limited effect thus far on the Group’s operation. Development activities have continued with minimal disruption. Slowdown in collaborative research activities do not have a material impact on the Group’s operations.

  

21

 

 

Alterity Therapeutics Limited

Directors’ declaration

31 December 2020

 

In the directors’ opinion:

 

(a)the interim financial statements and notes set out on pages 2 to 21 are in accordance with the Corporations Act 2001, including:

 

(i)complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

 

(ii)giving a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and of its performance for the half-year ended on that date, and

 

(b)there are reasonable grounds to believe that the Alterity Therapeutics Limited will be able to pay its debts as and when they become due and payable.

 

This declaration is made in accordance with a resolution of directors.

 

/s/ Mr. Geoffrey Kempler  
Mr. Geoffrey Kempler  
Non-Executive Chairman  
   
Melbourne  
25 February 2021  

  

22

 

 

Alterity Therapeutics Limited

Independent auditor’s report to the members

31 December 2020

 

 

 

Independent auditor's review report to the members of Alterity Therapeutics Limited

 

Report on the half-year financial report

 

Conclusion

 

We have reviewed the half-year financial report of Alterity Therapeutics Limited (the Company) and the entities it controlled during the half-year (together the Group), which comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of changes in equity, consolidated statement of cash flows and consolidated statement of profit or loss and other comprehensive income for the half-year ended on that date, significant accounting policies and explanatory notes and the directors’ declaration.

 

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of Alterity Therapeutics Limited does not comply with the Corporations Act 2001 including:

 

1.giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its performance for the half-year ended on that date

 

2.complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

 

Basis for conclusion

 

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity (ASRE 2410). Our responsibilities are further described in the Auditor’s responsibilities for the review of the half-year financial report section of our report.

 

We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

 

 

 

PricewaterhouseCoopers, ABN 52 780 433 757

2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001

T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

 

Liability limited by a scheme approved under Professional Standards Legislation.

 

23

 

 

Alterity Therapeutics Limited

Independent auditor’s report to the members

31 December 2020

(continued)

 

 

 

Responsibility of the directors for the half-year financial report

 

The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement whether due to fraud or error.

 

Auditor's responsibility for the review of the half-year financial report

 

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group's financial position as at 31 December 2020 and of its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

 

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

PricewaterhouseCoopers

 

/s/ Jon Roberts  
Jon Roberts Melbourne
Partner 25 February 2021

 

 

24

 

 

Exhibit 99.2

 

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

 

The following discussion and analysis includes certain forward-looking statements with respect to the business, financial condition and results of operations of our company. The words "estimate," "project," “potential”, “plan”, “should”, "expect", variations of such words and similar expressions are intended to identify forward-looking statements within the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by such forward-looking statements. Factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are discussed in filings we make with the United States Securities and Exchange Commission, or the SEC, including our Annual Report on Form 20-F. This discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included in Exhibit 99.1.

 

Background

 

Alterity Therapeutics Limited, or the Company (or together with its subsidiaries, the Group), is a development stage enterprise incorporated under the laws of the Commonwealth of Australia on November 11, 1997. Our mission is to develop therapeutic drugs designed to treat the underlying cause of degeneration of the brain as the aging process progresses. The principal listing of our ordinary shares and listed options to purchase our ordinary shares is on the Australian Securities Exchange, or ASX. Since September 5, 2002, our American Depository Shares, or ADSs, have traded on the NASDAQ Capital Market under the symbol “PRAN.” On April 8, 2019, we changed our name to Alterity Therapeutics Limited and our ADSs have traded under the symbol “ATHE” since that date. The Bank of New York, acting as depositary, issues American Depository Receipts, or ADRs, each of which evidences an ADS, which in turn represents sixty of our ordinary shares. As used in this annual report, the terms “we,” “us,” “our” and “Alterity” mean Alterity Therapeutics Limited (formerly Prana Biotechnology Limited) and its subsidiaries, unless otherwise indicated.

 

Our interim consolidated financial statements appearing in Exhibit 99.1 are prepared in Australian dollars and in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, and comply with both IFRS as issued by the IASB and Australian equivalents to International Financial Reporting Standards, or A-IFRS. In this report, all references to “U.S. dollars” or “US$” are to the currency of the United States of America, and all references to “Australian dollars” or “A$” are to the currency of Australia.

 

All of our current revenues are generated in Australian dollars, except for interest earned on foreign currency bank accounts, and the majority of our expenses are incurred in Australian dollars.

 

Overview

 

We are a development stage enterprise at an early stage in the development of our pharmaceutical products that are designed to treat the underlying causes of neurodegeneration. We have incurred net losses since inception and expect to incur substantial and increasing losses for the next several years as we expand our research and development activities and move our product candidates into later stages of development. Our product candidates are in early to midstage development and we face the risks of failure inherent in developing drugs based on new technologies. The process of carrying out the development of our products to later stages of development may require significant additional research and development expenditures, including pre-clinical testing, manufacturing and clinical trials, as well as for obtaining regulatory approval. For additional details about our risks see Item 3.D., “Key Information – Risk Factors,” of our Form 20-F for the year ended June 30, 2020.

 

To date, we have funded our operations primarily through the sale of equity securities, proceeds from the exercise of options, government grants, tax incentive payments, licensing and research collaborations and interest income.

 

Since completing our initial public offering and listing process on the ASX on March 28, 2000, we have concentrated our resources toward the pursuit of our disease targets. We have developed a diversified library of chemical compounds, which may yield future product candidates across various neurodegenerative indications. For additional details regarding our clinical trials see Item 4.A., “Information on the Company - History and Development of the Company,” of our Form 20-F for the year ended June 30, 2020.

 

 

 

 

Highlights For The Six Months Ended December 31, 2020

 

Operations

 

Detailed below is an update on the status of the Group’s research and development projects and overall operations for the half-year ended 31 December 2020.

 

The Group’s 30 June 2020 Annual Report contains detailed background information relating to its operations including its research and development projects and collaboration partners and should be read in conjunction with this report.

 

Product Development

 

Alterity Therapeutics’ lead compound ATH434 is an orally bioavailable, brain penetrant, small molecule inhibitor of α-synuclein aggregation, which is being developed for Multiple System Atrophy (MSA). Alpha-synuclein aggregation is implicated in the pathology of MSA and Parkinson’s disease.

 

MSA is a rare and rapidly progressive Parkinsonian disorder. It is a neurodegenerative disease with major sources of disability resulting from motor symptoms characteristic of Parkinson’s disease and impaired ability to maintain normal blood pressure, bowel function and bladder control. Current treatment includes medications and lifestyle changes to help manage symptoms, but there is no treatment to address the underlying cause and no cure.

 

The Company’s Phase 1 Clinical trial reported in 2019 found ATH434 was considered safe and well-tolerated in adult and older adult (≥ 65 years) human subjects, with an adverse event profile comparable to placebo. The safety profile was similar for adult and older adult volunteers. The results also indicated that ATH434 crosses the blood brain barrier in humans and that well-tolerated doses achieved concentrations in the brain that exceed those associated with robust efficacy in animal models.

 

ATH434 has Orphan drug designation both with the US FDA and European Commission for the treatment of MSA.

 

Several significant advancements were achieved during the reporting period, as well as the continued strengthening of the safety profile of ATH434.

 

In addition, the company continued to explore opportunities for PBT2 and identify potential expansion of its therapeutic portfolio.

 

bioMUSE natural history study for MSA patients

 

Patients with MSA are being enrolled in Alterity’s bioMUSE Study in the United States.

 

BioMUSE is a natural history study that intends to track the progression of patients with early MSA. The study is being conducted in collaboration with Vanderbilt University Medical Center in the US under the direction of Daniel Claassen, MD, Associate Professor of Neurology and Principal Investigator. Natural history studies are important for characterizing disease progression in selected patient populations.

 

The study will provide vital information on early stage MSA patients to optimize the design of Alterity’s Phase 2 study in MSA. The study will also inform the selection of biomarkers suitable to evaluate target engagement and preliminary efficacy of ATH434.

 

The study is enrolling early stage MSA patients and will track changes in clinical measures and biomarkers for up to one year. Over the course of the study, patients will undergo comprehensive evaluation with detailed neurological examination and clinical rating scales of motor, autonomic and activities-of-daily-living symptoms along with specialized neuroimaging and assessment of protein biomarkers in diverse biological specimens.

 

Data from bioMUSE will also be used to inform patient selection in the Phase 2 clinical trial of ATH434. The US FDA has encouraged Alterity to utilize data from the bioMUSE study to aid in the development of efficacy endpoints for the Phase 2 study.

 

Vanderbilt University Medical Centre is one of the largest academic medical centres in the southeast US managing more than 2 million patients each year. The School of Medicine’s biomedical research program is among the nation’s top 10 in terms of National Institutes of Health peer review funding.

 

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Next generation compounds to treat neurodegenerative diseases

 

In November, the US Patent and Trademark Office (USPTO) advised allowance of a new composition of matter patent. The new patent is the product of in-house discovery research and is central to Alterity’s next generation drug development portfolio focused on neurodegenerative diseases.

 

The patent, entitled “Compounds for and Methods of Treating Diseases” (Application No. 16/818,641), covers more than 150 novel pharmaceutical compositions that are designed to redistribute the labile iron implicated in Parkinson’s disease, Alzheimer’s disease and other neurodegenerative conditions.

 

Alterity’s strategy is based on the hypothesis that its therapeutics can disrupt the underlying pathology of neurodegenerative conditions in which labile iron is implicated in disease pathology.

 

This includes Parkinsonian disorders such as Parkinson’s disease and Multiple System Atrophy, as well as Alzheimer’s disease. The patent confers on Alterity 20 years of exclusivity, providing a strong basis for continued drug development and commercialization and new compound identification within its extensive drug discovery library to target important neurodegenerative diseases.

 

This new patent will support the expansion of Alterity’s drug development portfolio.

 

New data independently confirms and extends laboratory findings and expands safety profile of ATH434

 

New animal data for ATH434 from the laboratory of Dr Nadia Stefanova, Professor of Translational Neurodegenerative Research at the Medical University of Innsbruck was presented at the American Neurological Association’s 2020 Annual meeting in August. The new data from an experiment testing ATH434 in an animal model of MSA independently confirmed and extended previous findings demonstrating that ATH434 reduces α-synuclein pathology, preserves neurons, and improves motor performance.

 

Cardiac data strengthens safety profile of ATH434

 

Alterity presented cardiac safety data from its Phase 1 study of ATH434, marking the first time such findings were shared with an international group of clinicians and researchers in the field of neurological disorders. The new cardiac safety data, which focuses on evaluating electrical activity in the heart as measured by the QT interval, reinforced previous safety findings from the Phase 1 clinical study that ATH434 was safe and well-tolerated at all doses and had an adverse event profile comparable to placebo in adult and older adult volunteers. The new data presented indicated that there was no evidence of cardiac liability at clinically tested doses.

 

PBT2 - new opportunity to reverse bacterial resistance to antibiotics

 

In December, Alterity was granted a license by UniQuest, the commercialisation company of The University of Queensland (UQ), to novel zinc ionophore technology to combat antimicrobial resistance in superbugs.

 

Under the license, Alterity secured the worldwide exclusive right to patented technology to develop and commercialise therapies that re-sensitise bacteria to antibiotics. The licensed technology combines Alterity’s PBT2 and other zinc ionophores with commonly used antibiotics to treat infections caused by multidrug resistant bacteria. This is an opportunity for Alterity to further leverage its investment in PBT2.

 

PBT2, Alterity’s most advanced zinc ionophore, breaks the resistance of many important superbugs to available antibiotics, and is covered for this use by patents until 2038.

 

Importantly, PBT2 has previously completed long term preclinical safety studies and phase 2 clinical trial testing in other indications and has demonstrated a favourable safety profile in those trials.

 

In exchange for the grant of exclusive worldwide rights, once Alterity generates commercialization revenue, UniQuest is entitled to receive certain payments commensurate with academic licensing agreements.

 

A recently published article in the high-impact journal Science Translational Medicine showed that PBT2 could reverse antibiotic resistance to critical superbugs and demonstrate efficacy in an animal model of sepsis.

 

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The authors also noted that superbugs exposed to a combination of PBT2 and antibiotics had a very low propensity to develop further resistance, making the emergence of cross-resistance to the novel treatment unlikely. Thus, PBT2 may help address the issue of antimicrobial resistance without becoming part of the problem.

 

Michael J. Fox Foundation for Parkinson’s Research provides funding for ATH434 Dose Optimization for Parkinson’s disease clinical trials

 

In February Alterity announced the award of a grant from The Michael J. Fox Foundation to determine optimal dosing of its lead drug candidate ATH434 for patients with Parkinson’s disease based on imaging of brain iron.

 

The funding for US$495,000 will be used to evaluate the pharmacologic profile of ATH434 in a primate model to determine the optimal dose of ATH434 in future Parkinson’s disease clinical trials. This is the second grant that Alterity has received from Michael J. Fox Foundation to support the development of ATH434 in Parkinson’s disease.

 

While available therapies can treat some symptoms, people with Parkinson's urgently need new treatments to slow or stop disease progression and improve quality of life.

 

The project will be led by Margaret Bradbury, PhD, Vice President, Nonclinical Development, in collaboration with Daniel Claassen, MD, Associate Professor of Neurology at Vanderbilt University Medical Center and David Finkelstein, PhD, who heads the PD Research Laboratory at the Florey Institute of Neuroscience and Mental Health.

 

Cash

 

The Group’s cash on hand as at December 31, 2020 totaled A$35.04 million. In addition, the Group has recorded a trade receivable at December 31, 2020 of A$1.83 million from the Australian Tax Office. This amount is in respect of the 2021 R&D tax incentive claim.

 

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Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

 

Income from ordinary activities

 

Income from ordinary activities, consisting of interest income, decreased to A$6,553 for the six months ended December 31, 2020 from A$14,133 for the six months ended December 31, 2019, a decrease of A$7,580, or 53.6%. The decrease in interest income is primarily attributable to the lower interest rates, lower Australian dollar cash balances and lower utilization of longer-term interest-bearing deposits during the period.

 

Other income

 

Other income of A$1,924,389 for the six months ended December 31, 2020 consists of the Group’s estimate of R&D tax incentive claimable from the Australian Tax Office. This amount was calculated based on the tax incentive policy introduced by the Australian Government on July 1, 2011. The Group is entitled to 43.5% of tax incentives based on the total eligible research and development expenditure incurred during the period. This amount increased by A$69,217, or 3.73% from A$1,855,172 for the six months ended December 31, 2019. This increase in total R&D expenditures is primarily caused by the increase in the period attributable to preparation for the Phase II study of the Group’s lead product candidate ATH434.

 

General and administration expenses

 

General and administration expenses increased to A$3,673,407 for the six months ended December 31, 2020 from A$1,747,986 for the six months ended December 31, 2019, which represented an increase of A$1,925,421, or 110.15%. The increase in general and administration expenses was mainly due to equity-based expenses from the issuance of options to Directors.

 

Research and development expenses

 

Research and development expenses increased to A$5,806,841 for the six months ended December 31, 2020 from A$5,747,034 for the six months ended December 31, 2019, which represented an increase of A$59,807, or 1.04%. The increase in research and development expenses in the six months ending December 31, 2020 was primarily due to the increased research and development activities attributable to preparation for the Phase II study of the Group’s lead product candidate ATH434.

 

Other gains and losses

 

Other gains and losses consist of gains from foreign exchange for the periods. Gains from foreign exchange decreased to a loss of A$852,232 for the six months ended December 31, 2019 from a gain of A$127,825 for the six months ended December 31, 2019, a decrease of A$980,057, or 766.7%. In the 6 months ended December 31 2020, the Australian dollar appreciated against the US dollar by 10.37%, while in the 2019 period the Australian dollar appreciated by 0.41%.

 

Inflation and Seasonality

 

Management believes that inflation has had no material impact on the Group’s operations or financial condition and that our operations are not currently subject to seasonal influences.

 

Liquidity and Capital Resources

 

We are a development stage company and have had no sales income to date, and as of December 31, 2020 our accumulated deficit totaled A$162,980,923. From inception until our initial public offering in March 2000 we financed our operations primarily through borrowings from two of our then directors, which were repaid from the proceeds of such offering. Since our initial public offering, we have financed our operations primarily through sales of equity securities, proceeds from the exercise of options, government grants, tax incentive payments, licensing and research collaborations and interest earned on investments. Please see our Annual Report on Form 20-F for the year ended June 30, 2020 for a discussion of our financing efforts prior to June 30, 2020.

 

We had A$35,042,178 of cash and cash equivalents at December 31, 2020 compared to A$9,196,892 at June 30, 2020.

 

Capital expenditures for the six months ended December 31, 2020 were A$2,494 and capital expenditures for the six months ended December 31, 2019 were A$7,499. These expenditures were principally for computer equipment. We currently do not have significant capital spending or purchase commitments, but we expect to continue to engage in capital spending consistent with the level of our operations.

 

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We believe that the Australian Government tax incentive scheme relating to eligible research and development activities, introduced on July 1, 2011, will provide us with significant benefits in future years. Such eligible R&D activities include but are not limited to:

 

Core activities, which are experimental activities whose outcome cannot be known or determined in advance, but can only be determined by applying a systematic progression of work;
Core activities conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved processes and materials); or
Supporting activities that are directly related and designed to support the above.

 

Under the research and development incentive scheme, entities with an aggregated turnover for the income year of less than A$20 million will be entitled to a 43.5% refundable tax offset. In the half-year ended December 31, 2020, we recorded A$1,883,325 in other income with respect to funds we will receive in relation to the 2021 financial year under the research and development incentive scheme.

 

Cash Flows

 

Net cash used in operating activities increased to A$7,330,306 for the six months ended December 31, 2020 from A$2,585,626 for the six months ended December 31, 2019. Net cash used in operating activities consists of payments to suppliers and employees and the R&D Tax Incentive cash refund. The increase in net cash used in the 2020 period was due to the R&D tax incentive refund for the 2020 financial year not being received within the current period.

 

Net cash used by investing activities decreased to A$2,494 for the six months ended December 31, 2020 from A$7,499 for the six months ended December 31, 2019. Cash flows used for investing activities was primarily attributable to payments for the purchase of computer and office equipment in both periods.

 

Net cash generated from financing activities increased to A$34,165,301 for the six months ended December 31, 2020 from A$244,091 used for the six months ended December 31, 2019. The increase is attributable to the issue of shares under our At-the- Market facility and the A$35 million private placement in the current period.

 

We have an unrealized foreign exchange loss of A$987,215 for the six months ended December 31, 2020 compared to a gain of A$127,825 for the six months ended December 31, 2019. In the 6 months ended December 31, 2020, the Australian dollar appreciated against the US dollar by 10.37%, while in the 2019 period the Australian dollar appreciated by 0.41%. The current period loss is primarily attributable to a larger US dollar cash balance which was adversely impacted by this appreciation in AUD.

 

Off-Balance Sheet Arrangements

 

We are not a party to any material off-balance sheet arrangements. In addition, we have no unconsolidated special purpose financing or partnership entities that are likely to create material contingent obligations.

 

Conditions in Australia

 

We are incorporated under the laws of, and our principal offices and research and development facilities are located in, the Commonwealth of Australia. Therefore, we are directly affected by political and economic conditions in Australia.

 

Risk Factors

 

There have been no material changes in our risk factors reported in our Annual Report on Form 20-F for the year ended June 30, 2020.

 

 

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