UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
20-F
|
[ ]
|
REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b)
|
|
OR
(g) OF THE SECURITIES EXCHANGE ACT OF
1934
|
OR
[X] ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year
ended June 30, 2009
OR
[ ] TRANSITION
REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] SHELL
COMPANY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of event
requiring this shell company report…………….
For the transition
period from................... to...................
Commission
file number 0-29962
Novogen
Limited
ACN 063
259 754
(Exact
name of Registrant as specified in its charter)
Not
Applicable
(Translation
of Registrant’s name into English)
New
South Wales, Australia
(Jurisdiction
of incorporation or organization)
140
Wicks Road, North Ryde, New South Wales 2113, Australia
(Address
of principal executive offices)
Securities
registered or to be registered pursuant to Section 12(b) of the
Act.
None
Securities
registered or to be registered pursuant to Section 12(g) of the
Act.
Ordinary
Shares*
American
Depositary Shares, each representing five Ordinary Shares
_______________________________________
*
|
Not
for trading, but only in connection with the registration of American
Depositary Shares.
|
________________________________
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act.
Not
Applicable
The
number of outstanding Ordinary Shares of the issuer as at June 30, 2009 was
102,125,894.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes
[ ]
No
[X ]
If this
report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
Yes
[ ]
No
[X]
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes
[X]
No
[ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes
[ ]
No
[ ]
Indicate
by check mark if the registrant is a large accelerated filer, an accelerated
filer or non-accelerated filer.
Large
accelerated filer
[ ]
Accelerated
filer
[X]
Non-accelerated
filer
[ ]
Indicate
by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing
U.S. GAAP
[ ]
International Financial Reporting Standards as
issued
by the
International Accounting Standards Board
[X]
Other
[ ]
If
‘Other” has been checked in response to the previous question, indicate by check
mark which financial statement item the registrant has elected to
follow.
Item 17
[
]
Item
18
[ ]
If this
is an annual report, indicate by a check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
Yes
[ ]
No
[X]
TABLE
OF CONTENTS
Forward
Looking Statements
|
1
|
|
|
PART
I
|
|
|
|
ITEM
1. Identity
of Directors, Senior Management and Advisors
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3
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ITEM
2. Offer
Statistics and Expected Timetable
|
3
|
ITEM
3. Key
Information
|
3
|
ITEM
4. Information
on the Company
|
15
|
ITEM
4A Unresolved
Staff Comments
|
32
|
ITEM
5. Operating
and Financial Review and Prospects
|
33
|
ITEM
6. Directors,
Senior Management and Employees
|
42
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ITEM
7. Major
Shareholders and Related Party Transactions
|
58
|
ITEM
8. Financial
Information
|
60
|
ITEM
9. Offer
and Listing Details
|
61
|
ITEM
10. Additional
Information
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63
|
ITEM
11. Quantitative
and Qualitative Disclosures about Market Risk
|
68
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ITEM
12. Description
of Securities other than Equity Securities
|
69
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|
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PART
II
|
|
ITEM
13. Defaults,
Dividend Arrearages and Delinquencies
|
70
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ITEM
14.
Material Modifications to
the Rights of Security Holders and the Use of Proceeds
|
70
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ITEM
15. Controls
and Procedures
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70
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ITEM
16. Reserved
|
71
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ITEM
16A. Audit
Committee Financial Expert
|
71
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ITEM
16B Code
of Ethics
|
71
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ITEM
16C Principal
Accountant Fees and Services
|
72
|
ITEM
16D Exemptions
from the Listing Standards for Audit Committees
|
73
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ITEM
16E
Purchases of Equity
Securities by the Issuer and Affiliated Purchases
|
73
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ITEM
16G Corporate
Governance
|
73
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|
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PART
III
|
|
ITEM
17. Financial
Statements – Not Applicable
|
75
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ITEM
18. Financial
Statements
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75
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ITEM
19. Exhibits
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75
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FORWARD-LOOKING
STATEMENTS
This
Annual Report on Form 20-F includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). All statements other than statements of historical
facts contained in this Annual Report, including statements regarding the future
financial position, business strategy and plans and objectives of management for
future operations, are forward-looking statements. The words “believe”, “may”,
“will”, “estimate”, “continue”, “anticipate”, “intend”, “should”, “plan”,
“expect”, and similar expressions, as they relate to Novogen Limited (“Novogen”,
the “Company” or the “Group”), are intended to identify forward-looking
statements. The Company has based these forward-looking statements largely on
current expectations and projections about future events and financial trends
that it believes may affect its financial condition, results of operations,
business strategy and financial needs. These forward-looking statements are
subject to a number of risks, uncertainties and assumptions, including, without
limitation, those described in “Risk Factors” and elsewhere in this Annual
Report on Form 20-F (the “Annual Report”), including, among other
things:
·
|
the
inability of the Company to obtain any additional required financing or
financing available to it on acceptable terms, particularly in the context
of the current global financial
crisis;
|
·
|
the
failure of the Company’s majority owned subsidiary Marshall Edwards, Inc.
(“MEI” or “Marshall Edwards”) to achieve satisfactory clinical outcomes
from the OVATURE clinical trial of
phenoxodiol;
|
·
|
the
ability of MEI to continue its development of triphendiol, NV-128 and
NV-143;
|
·
|
the
ability of the Company’s majority owned subsidiary Glycotex,
Inc. (“Glycotex”) to continue its clinical development of
GLYC-101;
|
·
|
the
failure to locate, hire, assimilate and retain qualified
personnel;
|
·
|
the
failure of the Company to successfully commercialize its
products;
|
·
|
costs
and delays in the development and/or receipt of U.S. Food and Drug
Administration (“FDA”) or other required governmental approvals, or the
failure to obtain such approvals, for the Company’s
products;
|
·
|
uncertainties
in clinical trial results;
|
·
|
the
inability to maintain or enter into, and the risks resulting from
dependence upon, collaboration or contractual arrangements necessary for
the development, manufacture, commercialization, marketing, sales and
distribution of any products;
|
·
|
competition
and competitive factors;
|
·
|
the
inability to enforce the Company’s patents or proprietary rights and
obtain necessary rights to third party patents and intellectual property
to operate the business;
|
·
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the
inability to operate the business without infringing upon the patents and
proprietary rights of others;
|
·
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the
failure of any product candidate to gain market
acceptance;
|
·
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general
economic conditions;
|
·
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government
regulation generally and the receipt of regulatory
approvals;
|
·
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changes
in industry practice; and
|
These
risks are not exhaustive. Other sections of the Annual Report may include
additional factors which could adversely impact the Company’s business and
financial performance. Moreover, the Company operates in a very competitive and
rapidly changing environment. New risk factors emerge from time to time and it
is not possible for the Company to predict all risk factors, nor can the Company
assess the impact of all factors on the business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
You
should not rely upon forward looking statements as predictions of future events.
The Company cannot assure you that the events and circumstances reflected in the
forward looking statements will be achieved or occur. Although the Company
believes that the expectations reflected in the forward looking statements are
reasonable, it cannot guarantee future results, levels of activity, performance
or achievements.
PART
I
Item
1. Identity
of Directors, Senior Management and Advisors
Item 1
details are not required to be disclosed as part of the Annual
Report.
Item
2. Offer
Statistics and Expected Timetable
Item 2
details are not required to be disclosed as part of the Annual
Report.
Item
3. Key
Information
Selected
Financial Data
The
selected financial data at June 30, 2009 and 2008 and for the years ended June
30, 2009, 2008 and 2007 have been derived from the Consolidated Financial
Statements of the Company included in this Annual Report and should be read in
conjunction with, and are qualified in their entirety by, reference to those
statements and the notes thereto.
This
financial report complies with International Financial Reporting Standards
(IFRS) as adopted by the International Accounting Standards Board
(IASB).
References
in this financial report to Australian Accounting Standards refer to the
Australian equivalents to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the financial report, comprising the
financial statements and notes thereto, complies with IFRS as adopted by the
IASB.
Selected
financial data has been presented for the five most recent fiscal years which
have been prepared in compliance with AIFRS.
The
Consolidated Financial Statements have been audited in accordance with generally
accepted auditing standards in the United States by the Company’s independent
registered public accountants.
The
Company’s fiscal year ends on June 30. As used throughout this Annual Report,
the word “fiscal” followed by a year refers to the 12 month period ending on
June 30 of that year. For example, the term “fiscal 2009” refers to the 12
months ended June 30, 2009. Except as otherwise indicated, all dollar amounts
referred to in this Annual Report are at the consolidated level and exclude
inter-company amounts.
Summary
of Consolidated Income Statements
|
|
(AIFRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
Continuing
operations
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(US$'000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
from sale of goods
|
|
|
13,404
|
|
|
|
13,500
|
|
|
|
10,709
|
|
|
|
9,400
|
|
|
|
8,333
|
|
|
|
6,712
|
|
Other
revenue
|
|
|
3,985
|
|
|
|
3,945
|
|
|
|
6,586
|
|
|
|
3,883
|
|
|
|
2,814
|
|
|
|
2,267
|
|
Total
revenue
|
|
|
17,389
|
|
|
|
17,445
|
|
|
|
17,295
|
|
|
|
13,283
|
|
|
|
11,147
|
|
|
|
8,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before income tax
|
|
|
(12,682
|
)
|
|
|
(17,912
|
)
|
|
|
(24,295
|
)
|
|
|
(24,773
|
)
|
|
|
(23,786
|
)
|
|
|
(19,160
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to members of Novogen Limited
|
|
|
(11,532
|
)
|
|
|
(16,220
|
)
|
|
|
(19,981
|
)
|
|
|
(20,264
|
)
|
|
|
(18,928
|
)
|
|
|
(15,247
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted earnings/(loss) per share (cents per share)
|
|
|
(11.9
|
)
|
|
|
(16.7
|
)
|
|
|
(20.5
|
)
|
|
|
(20.8
|
)
|
|
|
(18.6
|
)
|
|
|
(15.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of Ordinary Shares used to calculate earnings per
share
|
|
|
96,839,570
|
|
|
|
97,207,053
|
|
|
|
97,567,399
|
|
|
|
97,594,261
|
|
|
|
101,741,016
|
|
|
|
101,741,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of outstanding Ordinary Shares at year end
|
|
|
97,045,662
|
|
|
|
97,294,054
|
|
|
|
97,594,261
|
|
|
|
97,594,261
|
|
|
|
102,125,894
|
|
|
|
102,125,894
|
|
Summary
of Consolidated Balance Sheets
|
|
(AIFRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(US$'000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equivalents
|
|
|
47,260
|
|
|
|
33,513
|
|
|
|
39,511
|
|
|
|
35,386
|
|
|
|
33,338
|
|
|
|
26,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
67,485
|
|
|
|
51,098
|
|
|
|
51,357
|
|
|
|
43,401
|
|
|
|
37,842
|
|
|
|
30,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Assets
|
|
|
60,492
|
|
|
|
44,578
|
|
|
|
44,626
|
|
|
|
35,637
|
|
|
|
28,773
|
|
|
|
23,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Stock
|
|
|
176,235
|
|
|
|
176,989
|
|
|
|
191,876
|
|
|
|
200,432
|
|
|
|
206,419
|
|
|
|
166,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No
dividends have been declared by the Company in the fiscal years included in this
Annual Report.
The
Company publishes its Consolidated Financial Statements expressed in Australian
dollars. In this Annual Report, references to “U.S. dollars” or “US$” are to the
currency of the United States of America (“U.S.”) and references to “Australian
dollars” or “A$” are to the currency of Australia. For the convenience of the
reader, this Annual Report contains translations of certain Australian dollar
amounts into U.S. dollars at specified rates. These translations should not be
construed as representations that the Australian dollar amounts actually
represent such U.S. dollar amounts or could be converted into U.S. dollars at
the rate indicated. Unless otherwise stated, the translations of Australian
dollars into U.S. dollars have been made at the rate of US$0.8055 =
A$1.00, the noon market buying rate in New York City for cable transfers in
Australian Dollars as certified for customs purposes by the Federal Reserve Bank
of New York (the noon buying rate) on June 30, 2009.
The noon
buying rate on November 30, 2009 was US$0.9143 = A$1.00
Exchange
Rates for the six months to November 2009
|
A$
versus US$
|
|
|
|
|
|
|
Month
|
High
|
Low
|
|
June
|
$0.8195
|
$0.7851
|
|
July
|
$0.8339
|
$0.7751
|
|
August
|
$0.8439
|
$0.8201
|
|
September
|
$0.8824
|
$0.8306
|
|
October
|
$0.9275
|
$0.8656
|
|
November
|
$0.9369
|
$0.8985
|
|
Fiscal
Year
|
Average
|
|
Ended
June 30
|
Rate
|
|
2005
|
|
$0.7529
|
|
2006
|
|
$0.7472
|
|
2007
|
|
$0.7862
|
|
2008
|
|
$0.8968
|
|
2009
|
|
$0.7455
|
|
Risk
Factors
The
following risk factors, in addition to the other information and financial data
contained in this Annual Report, should be considered carefully in evaluating
the Company and its business. The risks described below and elsewhere in this
Annual Report are not intended to be an exhaustive list of the general or
specific risks involved, but merely identify certain risks that are now foreseen
by the Company. It must be recognized that other risks, not now foreseen, might
become significant in the future and that the risks which are now foreseen might
affect the Company to a greater extent than is now foreseen or in a manner not
now contemplated.
The
Company will need additional funds in order to finance its future operations and
its clinical development programs. The actual amount of funds that the Company
will need will be determined by a number of factors, some of which are beyond
its control.
The
Company’s funding requirements have been, and will continue to be, significant.
The Company anticipates that its existing cash resources will be adequate to
fund the Company's operating requirements through the next 12 months based upon
the Company's current business plan.
The
Company’s 71.3% owned U.S. subsidiary company MEI will need additional funds to
progress the development program for the drug candidates triphendiol,
NV-128 and NV-143.
The
Company’s 80.7% owned U.S. subsidiary company Glycotex will also need additional
funds to further the clinical development of its investigational wound healing
compound GLYC-101.
The
Company's operating cash requirements may vary materially from those now planned
due to a number of factors. These factors include the success of the Company's
research and development efforts, the ability of the Company to satisfy
applicable regulatory requirements, the extent of the Company's ability to
produce its products in a cost-effective manner, the rate at which the Company
can introduce its products into new markets and the market acceptance and
competitive position of the Company's products.
There can
be no assurance that additional financing will be available when needed on terms
acceptable to the Company, or at all. If additional funds are raised by issuing
equity securities, further dilution to existing shareholders will result and
future investors may be granted rights superior to those of existing
shareholders. Insufficient funds may prevent the Company from implementing its
business strategy or may require the Company to limit its operations
significantly.
The
recent global financial crisis may negatively impact the Company’s liquidity and
clinical trials, as well as the liquidity and clinical trials of the Company’s
subsidiaries, by precluding the Company and its subsidiaries from raising funds
through equity and/or debt investments or third party loans on favorable terms
or at all.
The
Company and its subsidiaries have traditionally raised capital through the sale
of equity securities to investors. Recently, the financial services
industry and credit market have experienced a period of unprecedented turmoil
characterized by bankruptcy, failure and collapse or sale of various financial
institutions. Although the ultimate outcome of these events cannot be
predicted, they may preclude the Company and its subsidiaries from raising the
capital necessary to finance their business operations. In
particular, MEI may not be able to raise the capital necessary to progress the
clinical program for phenoxodiol, triphendiol, NV-128 and NV-143 and Glycotex
may not be able to raise the capital necessary to progress the clinical program
for GLYC-101. The Company and its subsidiaries may need to rely upon
collaboration and/or licensing opportunities with third parties to obtain the
funding necessary to conduct their business operations.
The
Company cannot assure you that it or its subsidiaries will be able to raise the
funds necessary to complete their clinical trials and research programs or find
appropriate collaboration and/or licensing opportunities.
The
Company has incurred operating losses since its inception, and is likely to
incur operating losses for the foreseeable future.
The
Company has incurred net losses of A$204,584,000 since its inception, including
net losses of A$23,787,000, A$24,777,000, and A$24,296,000 for the years ended
June 30, 2009, 2008, and 2007, respectively. The Company anticipates that it
will incur operating losses and negative cash flow for the foreseeable
future.
MEI
has terminated new enrollment into the OVATURE Phase III clinical trial and may
not be able to pursue commercialization of phenoxodiol at this
time.
MEI has
terminated new enrollment into the OVATURE Phase III clinical trial, in part,
because the global financial downturn makes it unlikely that MEI will be able to
raise the necessary capital through debt or equity issuances in the near future
to fund the trial to completion as originally planned. MEI has ceased recruiting
the necessary number of additional patients to complete the trial as originally
planned. As a result of the termination of new enrollment into the OVATURE Phase
III clinical trial, MEI may not be able to pursue commercialization of
phenoxodiol at this time.
If
the un-blinded data analysis of the patient data from the OVATURE Phase III
clinical trial does not demonstrate the safety and efficacy of phenoxodiol for
the treatment of platinum-resistant late-stage ovarian cancer, MEI may be unable
to out-license phenoxodiol to third parties for this purpose.
MEI has
decided to undertake an un-blinded analysis of the available data from the 142
completed or current patients in the OVATURE Phase III clinical trial to assess
the
safety
and efficacy of phenoxodiol for the treatment of platinum-resistant late-stage
ovarian cancer. If the analysis demonstrates the safety and efficacy of
phenoxodiol, MEI may be able to out-license phenoxodiol to third parties and
receive licensing revenues. If, however, the analysis shows that phenoxodiol is
not safe and/or not effective, MEI may not be able to out-license phenoxodiol to
third parties.
If
the data from the Company’s clinical trial program do not demonstrate the safety
and efficacy of the phenolic drug candidates to the satisfaction of the FDA and
other regulatory authorities, the Company will not receive approval to market
its drug candidates in the U.S. or other jurisdictions.
Phenolic
drug development is an entirely novel and unproven field of pharmaceutical drug
development and there is limited scientific understanding of phenolic technology
on which the Company’s drug program is based. There can be no assurance that any
of the compounds under development by the Company will prove to be sufficiently
efficacious, safe and cost-effective to be commercially viable. The
commercialization process of the products currently in clinical development
includes the anti-cancer drug candidates phenoxodiol and triphendiol being
developed by the Company’s subsidiary
MEI. The
commercialization process of the foregoing drug candidates may be delayed if the
FDA or another regulatory authority requires the expansion in the size and scope
of any clinical trial or if MEI fails to achieve satisfactory clinical outcomes
from the OVATURE clinical trial of phenoxodiol. It may take many years to
complete the testing and failure can occur at any stage in the process. Negative
or inconclusive results or adverse medical events during a clinical trial could
cause the Company to delay or terminate development efforts.
Any
failure in the clinical trial program could impair the commercial prospects of
the Company’s entire phenolic drug program.
Clinical
trials have a high risk of failure. A number of companies have suffered
significant setbacks in advanced clinical trials even after achieving promising
results in earlier trials. If the Company experiences delays in the testing or
approval process or if further clinical trials or clinical trials involving a
larger number of patients are required, the commercial prospects of the drugs
under development could be impaired.
If
the Company does not receive marketing approval for its phenolic drug
candidates, or regulatory approval is withdrawn for the Company’s dietary
supplements, the Company will not be able to commercialize its products and
product candidates.
Marketing
approval is needed in order to commercialize the Company’s phenolic drug
candidates. The Company may never receive marketing approval for any of its
phenolic drug candidates. If the Company does receive marketing approval, such
approval will be limited to those disease states and conditions for which
phenolic drug candidates have been proven to be safe and effective.
In order
for the Company to market its products, the Company must obtain required
marketing approvals or clearances and otherwise comply with extensive
regulations regarding safety, manufacturing processes and quality. There can be
no assurance that the Company will be able to obtain or maintain regulatory
approvals or clearances or that it will not be required to incur significant
costs in obtaining or maintaining its foreign regulatory approvals or
clearances.
The FDA
and other governmental approvals that may be granted to the Company will be
subject to continual review, and later discovery of previously unknown problems
may result in withdrawal of products from the market.
Moreover,
if and when any FDA or other governmental approval is obtained, the marketing
and manufacture of the Company’s products will remain subject to extensive
regulatory requirements administered by the FDA and other regulatory bodies.
Failure to comply with these regulatory requirements may, among other things,
result in fines, suspensions or withdrawal of marketing approvals, operating
restrictions and criminal prosecution.
The
Company has no direct control over the cost of the pharmaceutical drug
manufacturing costs and the Company will be relying on third parties to
manufacture commercial quantities of pharmaceutical drug candidates as well as
drug supplies for larger scale clinical trials.
The
Company will rely on third parties to manufacture commercial quantities of its
pharmaceutical drug candidates as well as drug supplies for larger scale
clinical trials. There can be no assurance that third party manufacturers will
devote the resources necessary to meet demand for the Company’s products. Also,
if the costs of manufacturing increases, or the costs of materials used in
manufacturing increases, these costs will be passed onto the Company making the
cost of conducting clinical trials more expensive. In addition, increases in
manufacturing costs could adversely affect the Company’s future profitability if
it is unable to pass on the increased costs to its customers.
The
Company has no direct control over the cost of red clover isoflavone extract or
the formulation and packaging of its dietary supplement products.
The
Company relies on third parties to (i) supply its active raw materials
(isoflavones), (ii) manufacture and package its dietary supplement products to
satisfy performance and quality standards and (iii) dedicate sufficient
production capacity to meet demand and delivery times.
In
addition, the facilities where the Company’s products are manufactured are
subject to periodic inspection by regulatory authorities for compliance with the
Current Good Manufacturing Practice (cGMP) regulations. There can be no
assurance that these authorities will not, during the course of an inspection of
existing or future facilities, identify what they consider to be deficiencies in
cGMP or other requirements and
request,
or seek, remedial action. Failure to comply with such regulations or delay in
attaining compliance may adversely affect the Company’s manufacturing activities
and could result in, among other actions, warning letters, injunctions, civil
penalties, refusal to grant approvals or clearances of future or pending product
submissions, fines, recalls or seizure of products, total or partial suspensions
of production and criminal prosecution. If any of the foregoing events occur,
the Company’s products may not be available to supply the market demand and the
Company’s sales revenues may be adversely affected.
The
Company’s success is largely dependent on its ability to obtain patent
protection and preserve trade secrets, which cannot be guaranteed.
The
Company’s success is dependent to a significant degree on whether it can obtain
patents, maintain trade secret protection and operate without infringing on the
proprietary rights of third parties. If it were determined that the Company was
infringing upon any third party patent, the Company could be required to pay
damages, alter its products or processes, obtain licenses or to cease certain
operations. If the Company is required to obtain any licenses, there can be no
assurance that the Company will be able to do so on commercially favorable
terms, if at all. The Company’s failure to obtain a license for any technology
that it may require to commercialize its products could have a material adverse
effect on the Company’s business, financial condition and results of
operations.
Litigation
relating to patent infringement could result in substantial costs to, and
diversion of effort by, the Company, and may also be necessary to enforce any
patents issued or licensed to the Company or to determine the scope and validity
of third party proprietary rights. The Company is currently involved in a number
of litigation proceedings against companies which it believes were infringing
certain of the Company’s patents related to dietary supplements.
If
competitors, claim technology also claimed by the Company, prepare and file
patent applications in the U.S., the Company may have to participate in
interference proceedings in the U.S. Patent and Trademark office to determine
priority of invention, which could result in substantial cost to, and diversion
of effort by, the Company, even if the eventual outcome is favorable to the
Company.
Any such
litigation or interference proceedings, regardless of outcome, could be
expensive and time consuming. Litigation could subject the Company to
significant liabilities to third parties, requiring disputed rights to be
licensed from third parties to the Company or requiring the Company to cease
using certain technologies and, consequently, could have a material adverse
effect on the Company’s business, financial condition and results of
operations.
In
addition to patent protection, the Company relies on trade secrets and
proprietary technological expertise. There can be no assurance that others will
not independently develop or acquire substantially equivalent technologies, or
otherwise gain access to the
Company’s
trade secrets or technological expertise or disclose such trade secrets. There
can be no assurance that the Company can ultimately protect its right to such
un-patented trade secrets and technological expertise. The Company relies, in
part, on confidentiality agreements with its marketing partners, employees,
advisors, vendors and consultants to protect its trade secrets and proprietary
technological expertise. There can be no assurance that these agreements will
not be breached, that the Company will have adequate remedies for any breach or
that the Company’s un-patented trade secrets and proprietary technological
expertise will not otherwise become known or independently discovered by
competitors.
The
Company’s commercial opportunity will be reduced or eliminated if competitors
develop and market products that are more effective or less expensive than the
Company’s products.
In
developing its technology and products, the Company competes with many domestic
and foreign competitors in various rapidly evolving and technologically advanced
fields, including pharmaceutical, biotechnology and biopharmaceutical
companies.
Many of
the Company’s competitors and potential competitors have substantially greater
financial, technological, research and development, marketing and personnel
resources than the Company. There can be no assurance that the Company’s
competitors will not succeed in developing alternate technologies and products
that are more effective, easier to use or more economical than those which have
been developed by the Company or that would render the Company’s technologies
and products obsolete and non-competitive in these fields. These competitors may
also have greater experience in developing products, conducting clinical trials,
obtaining regulatory approvals or clearances and manufacturing and marketing
such products or technologies. These competitors may obtain patent protection,
approval or clearance earlier than the Company, which could adversely affect the
Company’s business, financial condition and results of operations. Furthermore,
the Company will also be competing with respect to manufacturing efficiency and
marketing capabilities, areas in which it currently has limited
experience.
The
Company’s commercial opportunities will be reduced or eliminated if competitors
develop and market products that are more effective, have fewer side effects or
are less expensive.
The
Company may not be able to establish the strategic licensing partnerships
necessary to develop, market and distribute its pharmaceutical product
candidates.
A key
part of the Company’s business plan is to out license its pharmaceutical product
candidates to strategic business partners. The Company has not yet established
any strategic licensing partnerships. The relative attractiveness to potential
licensing partners and, consequently, the ability to negotiate acceptable terms
in any partnership agreement, will be affected by the results of the clinical
programs. Successful clinical
outcomes
may generate greater interest from potential partners than if the Company’s
product candidates are demonstrated to be less effective. There is no assurance
that the Company will be able to negotiate commercially acceptable licensing or
other agreements for the future exploitation of its product candidates. If the
Company is unable to successfully enter into licensing arrangements it may have
to delay the commercialization program for its product candidates which will
adversely affect its ability to generate operating revenues.
The
Company may not be able to establish or maintain the strategic partnerships
necessary to market and distribute its dietary supplement products.
The
Company relies on its own marketing staff for the marketing and sale of its
current and proposed dietary supplement products in Australia, Canada, and the
U.K. The Company presently has limited marketing and sales staff. Achieving
market acceptance for the Company’s products will require extensive and
substantial efforts by experienced personnel as well as expenditure of
significant funds. There can be no assurance that the Company will be able to
establish sufficient marketing, distribution and sales capabilities necessary to
achieve market penetration in these geographical areas.
In other
markets, the Company intends to appoint licensees and/or marketing partners who
will be responsible in large part for sales, marketing and distribution. While
the Company will endeavor to appoint licensees and/or marketing partners with
proven abilities in these areas, the amount and timing of resources, which may
be devoted to the performance of their contractual responsibilities by these
partners, are not within the control of the Company. There can be no assurance
that such marketing partners will perform their obligations as expected, pay any
additional option or license fees to the Company or market any products under
any agreement. There can be no assurance that the Company will derive any
revenue from such arrangements. Moreover, the other contracting parties may have
rights of termination under these agreements. Exercise of such termination
rights by such other parties may have an adverse effect on the Company’s
business, financial condition and results of operations. There can be no
assurance that the interests of the Company will continue to coincide with those
of its partners or that such partners will not develop independently, or with
third parties, products or technologies which could compete with the Company’s
products, or that disagreements over rights, technologies or other proprietary
interests will not occur. To the extent that the Company chooses not to, or is
unable to, enter into future agreements, the Company will experience increased
capital requirements to undertake the marketing or sale of its current or future
products. There can be no assurance that the Company will be able to market or
sell its technology or its current or future products independently in the
absence of such agreements.
The
Company faces the risk of product liability claims and may not be able to obtain
adequate insurance.
The
Company’s business exposes it to the risk of product liability claims. This risk
is inherent in the manufacturing, testing and marketing of human pharmaceutical
products.
The
Company has product liability insurance coverage of up to approximately A$20
million. Although the Company believes that this amount of insurance coverage is
appropriate for its business at this time, the insurance coverage is subject to
deductibles and coverage limitations, and the market for such insurance is
becoming more restrictive. The Company may not be able to obtain or maintain
adequate protection against potential liabilities. If the Company is unable to
sufficiently insure against potential product liability claims, it will be
exposed to significant liabilities, which may materially and adversely affect
the business development and commercialization efforts.
Enforceability
of civil liabilities under the federal securities laws against the Company’s
officers and directors may be difficult.
The
Company is a public company limited by shares and is registered and operates
under the Australian Corporations Act 2001. Five out of the Company's six
directors and all of the officers named in this Annual Report reside outside the
U.S. Substantially all of the assets of those persons are located outside the
U.S. As a result, it may not be possible to affect service on such persons in
the U.S. or to enforce, in foreign courts, judgments against such persons
obtained in U.S. courts and predicated on the civil liability provisions of the
federal securities laws of the U.S. Furthermore, substantially all of the
directly owned assets of the Company are outside the U.S., and, as such, any
judgment obtained in the U.S. against the Company may not be collectible within
the U.S. There is doubt as to the enforceability in the Commonwealth of
Australia, in original actions or in actions for enforcement of judgments of
U.S. courts, of civil liabilities predicated solely upon federal or state
securities laws of the U.S., especially in the case of enforcement of judgments
of U.S. courts where the defendant has not been properly served in
Australia.
The
trading price of the Company’s ordinary shares and American Depository Receipts
(“ADRs”) could decline in value if the trading price of the shares of common
stock of its listed subsidiary company, Marshall Edwards, declines.
Novogen
currently owns 71.3% of its subsidiary Marshall Edwards, whose shares are traded
on the Nasdaq Global Market. If the trading price of MEI’s shares declines or
its business does not achieve its objectives or its product development program
is delayed, it could have an adverse affect on Novogen’s share
price.
The
trading price of the Company’s ordinary shares and ADRs is highly volatile. Your
investment could decline in value and the Company may incur significant costs
from class action litigation.
The
trading price of the Company’s ordinary shares and ADRs is highly volatile in
response to various factors, many of which are beyond the Company’s control,
including:
·
|
announcements
of technological innovations by the Company and its
competitors;
|
·
|
new
products introduced or announced by the Company or its
competitors;
|
·
|
changes
in financial estimates by securities
analysts;
|
·
|
actual
or anticipated variations in operating
results;
|
·
|
expiration
or termination of licenses, research contracts or other collaboration
agreements;
|
·
|
conditions
or trends in the regulatory climate in the biotechnology, pharmaceutical
and genomics industries;
|
·
|
changes
in the market values of similar
companies;
|
·
|
the
liquidity of any market for the Company’s securities;
and
|
·
|
additional
sales by the Company of its shares.
|
In
addition, equity markets in general and the market for biotechnology and life
sciences companies in particular, have experienced substantial price and volume
fluctuations that have often been unrelated or disproportionate to the operating
performance of the companies traded in those markets. Further changes in
economic conditions in Australia, the United States, Europe, or globally, could
impact the Company’s ability to grow profitably. Adverse economic changes are
outside the Company’s control and may result in material adverse effects on the
Company’s business or results of operations. These broad market and industry
factors may materially affect the market price of the Company’s ordinary shares
and ADRs regardless of its development and operating performance. In the past,
following periods of volatility in the market price of a company’s securities,
securities class action litigation has often been instituted against that
company. Such litigation, if instituted against the Company, could cause it to
incur substantial costs and divert management’s attention and
resources.
If the
market price of the Company’s ADRs remains below $5.00 per share, under stock
exchange rules, the Company’s stockholders will not be able to use such ADRs as
collateral for borrowing in margin accounts. This inability to use ADRs as
collateral may depress demand as certain institutional investors are restricted
from investing in securities priced below $5.00 and may lead to sales of such
ADRs creating downward pressure on and increased volatility in the market price
of the Company’s ordinary shares and ADRs.
In
addition, under the rules of The Nasdaq Stock Market, listed companies are
required to maintain a share price of at least $1.00 per share and if the share
price declines below $1.00 for a period of 30 consecutive business days, then
the listed company would have 180 days to regain compliance with the $1.00 per
share minimum. In the event that the Company’s share price declines below $1.00,
it may be required to take action, such as a reverse stock split, in order to
comply with the Nasdaq Stock Market rules that may be in effect at the time in
order to avoid delisting of the Company’s common stock and the associated
decrease in liquidity in the market for the Company’s common stock.
Item
4. Information
on the Company
History
and development of the Company
Novogen
Limited, a public company limited by shares, was incorporated in March 1994
under the jurisdiction of the laws of New South Wales, Australia. Novogen is
registered and operates under the Australian Corporations Act. Novogen has its
registered office at 140 Wicks Rd, North Ryde, New South Wales 2113. Its
telephone number and other contact details are: Phone 61-2-9878-0088; Fax
61-2-9878-0055; and website,
www.novogen.com
(the
information contained in the website does not form part of the Annual Report).
The Company’s Ordinary Shares are listed on the Australian Stock Exchange
(“ASX”) under the symbol “NRT” and its ADRs, each representing five ordinary
shares, trade on the Nasdaq Global Market under the symbol “NVGN”. The Company’s
agent in the U.S. for ADR’s is the Bank of New York, 101 Barclay Street 22W New
York, N.Y. 10286.
Capital
expenditures
The
Company made no major investments of a capital nature during fiscal 2009. Future
facilities will be developed where appropriate. Current capacity at the pilot
plant at North Ryde NSW is sufficient to meet demand for the short to medium
term.
Business
overview
Nature
of the Business
The
Company is a pharmaceutical company involved in the discovery, development,
manufacture and marketing of products based on the emerging field of
isoflavonoid technology. The Company’s product development program embraces both
a novel range of pharmaceuticals based on a range of phenolic compounds and a
range of consumer health care products based on plant compounds known as
isoflavones. A key element of the Company’s strategy is to continue to advance
its research and development in more advanced pharmaceuticals in the area of
human phenolic compound technology. With the current economic climate making
capital raising for extended clinical development programs difficult, the
Company is relying on its internal resources to concentrate on the expanding
oncology portfolio, particularly, the triphendiol human clinical development
program and the pre-clinical development program for NV-128 that is currently
underway.
Clinical
development
Anti-Cancer
Phenoxodiol
Phenoxodiol
is being developed by the Company’s subsidiary MEI as a chemosensitising agent
in combination with platinum drugs for late stage, chemoresistant ovarian cancer
and as a monotherapy for prostate and cervical cancers. Phenoxodiol is an
investigational novel-acting drug that inhibits key pro-survival signalling
pathways operating within cancer cells causing selective cancer cell death and
increased susceptibility to drugs like platinum and taxane, to which most
ovarian cancer patients become resistant in late stage disease.
OVATURE
Phase III Clinical Trial
The
OVATURE trial is a major multi-centre international Phase III clinical trial of
orally-administered phenoxodiol in combination with carboplatin in women with
advanced ovarian cancer resistant or refractory to platinum-based drugs to
determine its safety and effectiveness when used in combination with
carboplatin.
In April
2009, MEI announced the termination of enrollment into the OVATURE Phase III
trial and its intention to undertake an un-blinded analysis of the available
data from the trial. The patients currently enrolled in the trial
have continued their treatment according to the study
protocol. However, MEI has ceased recruiting new patients to
participate in the OVATURE trial and the available data from the 142 completed
and current patients will be analysed for safety and efficacy
outcomes.
MEI
decided to terminate new enrollment into the OVATURE Phase III trial and assess
the available patient data, in part, because the global financial downturn makes
it unlikely that MEI will be able to raise the necessary capital through debt or
equity issuances in the near future to fund the trial to completion as
originally planned. Additionally, changes in the standard of care
over the period that the OVATURE trial has been in operation has resulted in
fewer women meeting the inclusion criteria of the OVATURE protocol, which slowed
patient recruitment rates.
The
termination of patient enrollment into the OVATURE study and unblinded analysis
of the available data from the trial have been discussed with FDA, because the
analysis will not be performed as described in the approved Special Protocol
Assessment (“SPA”) agreement.
Prostate
Phase II Clinical Trial
MEI has
completed a Phase II prostate cancer study in advanced hormone refractory
disease in Australia, and in October 2007, MEI announced that it is conducting
another Phase II prostate cancer clinical trial using phenoxodiol as first line
treatment in men with early stage disease (35 patients with androgen dependent
disease but rising PSA) compared to patients with late stage hormone refractory
disease (25 patients with chemotherapy naïve androgen independent disease). The
study is being conducted at Yale Cancer Center and the West Haven Veterans
Administration Hospital Connecticut in the US. Both of these patient groups
represent areas of unmet medical need in this common cancer.
Triphendiol
Triphendiol
is a synthetic investigational anti-cancer compound based on an isoflavan ring
structure and is being developed by MEI. Similar to phenoxodiol, triphendiol is
a signal transduction inhibitor. Preliminary screening studies have identified
triphendiol as a candidate for product development showing a favorable
in vitro
toxicity profile
against normal cells and broad activity against cancer cells. Triphendiol is
being developed initially in oral form for the treatment of pancreatic and bile
duct cancers.
Triphendiol
has completed two Phase I human trials in Australia which have demonstrated an
acceptable safety profile and acceptable pharmacokinetics when administered by
the oral route.
Triphendiol
had been granted Orphan Drug status by the FDA for the treatment of pancreatic
cancer and for the treatment of cholangiocarcinoma, or bile duct cancer, as well
as for the treatment of Stage IIB through Stage IV malignant
melanoma.
An Orphan
Drug refers to a product that is intended for use in a disease or condition that
affects fewer than 200,000 individuals in the US. A grant of Orphan Drug status
provides seven years of market exclusivity for the orphan indication after
approval by the FDA, as well as study design assistance from the FDA during its
development. Triphendiol is in the early stages of clinical development and it
is anticipated that significant clinical testing will be required to prove
safety and efficacy before marketing applications may be filed with the
FDA.
In
January 2009, MEI announced that triphendiol had been granted an Investigational
New Drug (IND) status by the FDA to undertake clinical studies in the U.S. with
triphendiol as a chemosensitizing agent in combination with gemcitabine in
patients with unresectable locally advanced or metastatic pancreatic and bile
duct cancers.
NV-128
NV-128 is
a cancer compound which has been shown in pre-clinical studies to promote cancer
cell death in multi–drug resistant ovarian cancer cells by targeting the
AKT-mTOR pathway. Structurally, NV-128 is an analog of phenoxodiol and
triphendiol but in contrast to phenoxodiol, which induces caspase mediated
apoptosis, NV-128 has been shown to induce caspase-independent DNA degradation
and cancer cell death via the AKT-mTOR pathway.
Additionally,
NV-128, through its capacity to dephosphorylate mTOR appears to inhibit both
mTORC1 and mTORC2 activity showing an advantage over existing rapamycin analog
mTOR inhibitors which appear to target only mTORC1 making them less effective in
those cancer cells that have developed rapalog-resistance and which have a
dysfunctional apoptotic cascade.
GLYC-101
In April,
2009, Glycotex, Inc. announced the completion of a scheduled interim analysis in
a Phase II study evaluating the effect of investigational GLYC-101 gel on
complete wound closure and cosmetic outcomes in cosmetic surgery patients
undergoing carbon dioxide laser skin resurfacing on the lower eyelid
area.
The
interim analysis was conducted after 26 subjects completed the study. The
comparison of each active arm to placebo with respect to the primary endpoint
(time to complete wound closure) shows positive results when considering the
full dataset of patient data from all treatment combinations.
GLYC-101
is intended to stimulate and modulate the natural cascade of wound healing
activities in several cell populations. The product candidate is a topical gel
formulation to be applied directly on the wound surface. The strategic
priorities for GLYC-101 include wound healing following laser ablation, burn
wounds, surgical wounds, venous ulcers and diabetic ulcers.
Consumer
health care
The
Company launched its first dietary supplement product, Promensil, in September
1997 in Australia.
Promensil
and Trinovin are “dietary supplements” that deliver standardized levels of all
four isoflavones — daidzein, genistein, formononetin and biochanin. In addition,
the Company has introduced dietary supplement line extensions including
Promensil Vitality and Promensil Double Strength.
The
Company has established 100% owned subsidiary companies in Canada, and the U.K.
to market and distribute its range of dietary supplements. The Company has also
entered into agency agreements to distribute its dietary supplements in
Singapore, China, Malaysia, Indonesia, Taiwan, South Africa, Ireland, Austria,
Netherlands, Switzerland, Belgium, Portugal, Italy, Malta, Korea, Brazil and
UAE. In 2006, the Company licensed the U.S. rights to market Promensil and
Trinovin brands to Natrol, Inc.
The
following table is an analysis of revenue from sales and other sources during
the past three fiscal years by categories of activity and by geographical
market. Other revenue consists principally of interest income, grants received
and royalty receipts. See Note 2 to the Consolidated Financial
Statements.
Category
of Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from sale of
goods
|
|
|
10,709
|
|
|
|
9,400
|
|
|
|
8,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
revenue
|
|
|
6,586
|
|
|
|
3,883
|
|
|
|
2,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
|
|
17,295
|
|
|
|
13,283
|
|
|
|
11,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographical
Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
2008
|
|
|
|
2009
|
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
(A$'000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
from sale of goods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia/NZ
|
|
|
4,453
|
|
|
|
4,755
|
|
|
|
4,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
3,104
|
|
|
|
2,217
|
|
|
|
1,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
|
3,152
|
|
|
|
2,428
|
|
|
|
2,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,709
|
|
|
|
9,400
|
|
|
|
8,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia/NZ
|
|
|
5,751
|
|
|
|
3,145
|
|
|
|
2,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
7
|
|
|
|
5
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
|
828
|
|
|
|
733
|
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,586
|
|
|
|
3,883
|
|
|
|
2,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
|
|
17,295
|
|
|
|
13,283
|
|
|
|
11,147
|
|
Source
and Availability of Raw Materials
Phenolic
Pharmaceutical Compounds
Small
quantities of the synthetic phenolic compounds used in the Company’s
pre-clinical studies and clinical trials are currently being manufactured at the
Company’s pilot facility located at North Ryde, Australia, and through
contracted third party manufacturers. The pilot plant facility has the
capability to provide sufficient product for pre-clinical and initial clinical
trial purposes. The Company has taken the strategic decision not to manufacture
compounds for larger clinical trials or commercial scale Active Pharmaceutical
Ingredients (API) for its drug candidates, including phenoxodiol and triphendiol
as these can be more economically supplied by third parties with particular
expertise in this area.
Isoflavones
Isoflavones
for use in consumer health care products are supplied under contract entered
into with a third party supplier. The Company also uses contract formulators and
packers in Australia to tablet and pack the final product for supply to world
markets.
Marketing
Channels
The
Company’s marketing strategy is to continue to be responsible for the direct
marketing of its consumer health care products in Australia, Canada and the U.K.
The Company has entered into third party distribution arrangements for other
international territories.
Patent
Protection
The most
important area of the intellectual property (“IP”) of the Company is the
Company’s discovery that isoflavonoid-derived phenolic compounds have biological
activity. This is the basis of the Company’s drug discovery and development
program. A number of these phenolic compounds have been identified by the
Company as offering significant commercial potential as new pharmaceuticals and
these are currently under development. The Company has multiple PCT (Patent
Cooperation Treaty) applications pending relating to these compounds and a wide
range of therapeutic indications.
The
Company pursues a broad patent application filing strategy, and filing PCT
patent applications can be used to pursue patent protection in member countries
with significant markets for the Company’s products. All current patent
applications are filed in the name of, or assigned to either Novogen Inc.,
Novogen’s wholly-owned U.S. subsidiary, or Novogen Research Pty Ltd, one of
Novogen’s wholly-owned Australian subsidiaries.
The areas
with expanding patent cover include novel dimeric and novel aminated
isoflavones, isoflavone formulations and various uses, combined
isoflavone/chemotherapy and isoflavone/ radiotherapy treatments and glucan
preparation and uses.
During
the year 18 patents, and one reissue patent were granted as
follows:
AUSTRALIA
Patent
# 2004202747
|
Compositions
and Therapeutic Methods Involving Isoflavones and Analogues
Thereof
|
|
Patent
# 2003264176
|
Skin
Photoageing and Actinic Damage
Treatment
|
|
Patent
# 2003265737
|
Combination
Chemotherapy Compositions and
Methods
|
|
Patent
# 2007201390
|
Combination
Chemotherapy Compositions and
Methods
|
|
Patent
# 2562918
|
Process
for Glucan Preparation and Therapeutic Uses of
Glucan
|
|
Patent
# 261510
|
Preparation
of Isoflavones from Legumes
|
|
Patent
# 258618
|
Dimeric
Isoflavones
|
|
Patent
# 262896
|
Aminated
Isoflavonoid Derivatives and Uses
Thereof
|
|
Patent
# 252511
|
Skin
Photoageing and Actinic Damage
Treatment
|
|
Patent
# 254945
|
Compositions
and Therapeutic Methods Involving Isoflavones and Analogues
Thereof
|
|
Patent
# 539034
|
Aminated
Isoflavonoid Derivatives and Uses
Thereof
|
|
Patent
# 538583
|
Combination
Chemotherapy Compositions and
Methods
|
|
Patent
# 325681
|
Therapeutic
Methods and Compositions Involving
Isoflavones
|
|
Patent
# 7419998
|
Therapeutic
Methods and Compositions Involving
Isoflavones
|
|
Patent
# 7488494
|
Compositions
and Therapeutic Methods Involving Isoflavones and Analogues
Thereof
|
|
Patent
# RE40,792
|
Health
Supplements Containing Phyto-Oestrogens, Analogues of Metabolites Thereof
(Re-issue of
Patent # 5830887)
|
|
Patent
# 4197736
|
Process
for Glucan Preparation and Therapeutic Uses of
Glucan
|
|
Patent
# 4256679
|
Treatment
of Restenosis
|
Patent
# ZL02809019.5
|
Dimeric
Isoflavones
|
These
grants bring the number of patents issued to 108.
Trademark
Protection
The
Company also seeks IP protection through trademark registration of product names
and corporate logos. The Company has an active program of registering all
product trademarks in significant markets.
Licensing
Arrangements
In 1997,
the Company granted an exclusive royalty-bearing license, with the right to
grant sublicenses, to Protein Technologies International, then a subsidiary of
Ralston Purina Company (“PTI”), covering three of the Company’s patent
applications (and U.S. patents arising from such applications) for the
development and commercialization of prescription and non-prescription drug
products and dietary health supplements in which the biologically active
component is derived from soy and consists of at least one isoflavone covered by
one of the licensed patent applications (or U.S. patents arising from such
applications). Subsequent to the Company’s grant of the license, U.S. patents
were issued for all three patent applications. The geographical territory of the
license is worldwide, with the exception of Australia and New Zealand. In 1997,
Dupont acquired PTI and PTI subsequently changed its name to Solae LLC (“Solae”)
in connection with a joint venture that it entered into with Bunge Ltd. In 2004,
the parties amended the license to revise the schedule of minimum annual
payments and to provide for payment to be made by Solae to the Company in the
event that Solae sells its isoflavone drug program. The license was transferred
to Archer Daniels Midland Company (“ADM”) in 2005.
Under the
terms of the transfer, ADM assumed the rights and obligations formally held by
Solae, including the obligation to make minimum annual payments and royalty
payments to the Company. Notwithstanding the transfer of the license agreement,
Solae remains obligated to make payment to the Company in the event that Solae
sells its isoflavone drug program. The license agreement will terminate upon the
expiration or invalidation of the last of the patent applications and/or patent
rights that it covers.
The
Company received minimum annual payments from ADM of U.S. $1,250,000 and U.S.
$1,320,000 in the calendar years 2007 and 2008, respectively. ADM is also
required to make the following future minimum annual payments to the
Company:
|
(i)
|
U.S.
$1,430,000 due by December 31,
2009;
|
|
(ii)
|
U.S.
$1,540,000 due by December 31,
2010;
|
|
(iii)
|
U.S.
$1,670,000 due by December 31, 2011;
and
|
|
(iv)
|
U.S.
$2,000,000 by December 31, 2012 and annually thereafter for so long as the
agreement is in effect.
|
The
annual royalties payable under the terms of the agreement are computed at
various percentages of ADM’s cumulative net sales of prescription and
non-prescription drug products and dietary health supplements covered by the
licensed patents. ADM must pay the Company a certain percentage of
its cumulative net sales of the covered
products
as annual royalties until the cumulative net sales reach a certain dollar
amount. Thereafter, as the cumulative net sales increase to certain
specified dollar amount tiers, the percentage payable as royalties decreases
with each tier. In connection with agreement, the Company received royalty
income from ADM of A$1.6 million and A$1.4 million in fiscal years 2009 and
2008, respectively.
Australian
Government
The
activities of the Company are subject to numerous Australian laws and
regulations, including those described below.
The
Australian Corporations Law is the main body of law governing companies
incorporated in Australia, such as Novogen and its Australian subsidiaries. The
Australian Securities and Investments Commission is an Australian Government
organization which administratively enforces legislation covering matters such
as directors’ duties and responsibilities, preparation of accounts, auditor
control, issue and transfer of shares, control of shareholders’ meetings, rights
of minority interests, amendments to capital structure, preparation and filing
of public documents such as annual reports, changes in directors and changes to
capital.
The ASX
imposes listing rules on all listed companies, such as Novogen. The rules cover
issues such as continuous and immediate disclosure to the market of relevant
information, periodic financial reporting and the prior approval of reports to
shareholders.
The
Company believes that it materially complies with the foregoing Australian laws
and regulations pertaining to public and private companies.
The
Company’s products and manufacturing facilities also are regulated by various
Australian federal and state authorities. The Company’s manufacturing facilities
hold the appropriate licenses concerning the manufacture of health
products.
Regulatory
Requirements
Australian
Regulatory Requirements
The
Therapeutic Goods
Act 1989,
or 1989 Act, sets
out the legal requirements for the import, export, manufacture and supply of
pharmaceutical products in Australia. The 1989 Act requires that all
pharmaceutical products to be imported into, supplied in, manufactured in or
exported from Australia be included in the Australian Register of Therapeutic
Goods, or ARTG, unless specifically exempted under the Act.
Medicines
with a higher level of risk (prescription medicines, some non-prescription
medicines) are evaluated for quality, safety and efficacy and are registered on
the ARTG. Medicines with a lower risk (over the counter medicines including
vitamins) are assessed only for quality and safety. Medicines included in the
ARTG can be identified by the AUST R number (for registered medicines) or an
AUST L number (listed medicines) that appears on the packaging of the
medicine.
In order
to ensure that a product can be included in the ARTG, a sponsoring company must
make an application to the Therapeutic Goods Administration, or TGA. The
application usually consists of a form accompanied by data (based on the
European Union requirements) to support the quality, safety and efficacy of the
product for its intended use and payment of a fee. Application details are
available on the TGA website http://www.tga.gov.au.
The TGA
requires a 26B certificate from Applicants who are required to submit safety and
efficacy data when making their application, and who, when making their
application, rely on data previously submitted to the TGA by another person in
relation to an approved product. This certificate states that the applicants
will not enter the market with a product that would infringe a patent on the
product; or, that they have notified the patent owner of their intention to
enter the market before the expiry of any applicable patent. All other
applicants may provide notice that such a certificate is not
required.
The first
phase of evaluation, known as the Application Entry Process, is usually a short
period during which an application is assessed on an administrative level to
ensure that it complies with the basic guidelines. The TGA may request further
details from the applicant, and may agree with sponsors that additional data
(which while not actually required by the application, could enhance the
assessment outcome) may be submitted later at an agreed time. The TGA must
decide within at least 40 working days whether it will accept the application
for evaluation.
Once an
application is accepted for evaluation, aspects of the data provided are
allocated to evaluators within the different relevant sections, who prepare
clinical evaluation reports. Following evaluation, the chemistry and quality
control aspects of a product may be referred to a Pharmaceutical Sub-Committee
(PSC), which is a sub-committee of the TGA prescription medicine expert advisory
committee, the Australian Drug and Evaluation Committee (ADEC) to review the
relevant clinical evaluation reports.
The
clinical evaluation reports (along with any resolutions of the ADEC
sub-committee) are then sent to the sponsoring company who then has the
opportunity to comment on the views expressed within the evaluation report,
provide corrections and to submit supplementary data to address any issues
raised in the evaluation reports.
Once the
evaluations are complete, the TGA prepares a summary document on the key issues
on which advice will be sought from the either the ADEC (for new medicines) or
from the Peer Review Committee (PRC) for existing or generic products. This
summary is sent to the sponsoring company which is able to submit a response to
the ADEC or PRC dealing with issues raised in the summary and those not
previously addressed in the evaluation report. The ADEC/PRC provide independent
advice on the quality, risk-benefit, effectiveness and access of the product and
conduct medical and scientific evaluations of the application.
The ADEC
meets every 2 months to examine the applications referred by the TGA and its
resolutions are provided to the sponsoring company after 5 working days after
the ADEC meeting.
The TGA
takes into account the advice of the ADEC or PRC in reaching a decision to
approve or reject a product. Any approval for registration on the ARTG may have
conditions associated with it.
From the
time that the TGA accepts the initial application for evaluation, the TGA must
complete the evaluation and make a decision on the registration of the product
within at least 255 working days. If not completed within 255 working days, the
TGA forfeits 25% of the evaluation fee otherwise payable by the sponsor, but any
time spent waiting for a response from the sponsor is not included in the 255
working days. The TGA also has a system of priority evaluation for products that
meet certain criteria, including where the product is a new chemical entity that
it is not otherwise available on the market as an approved product, and is for
the treatment of a serious, life-threatening illness for which other therapies
are either ineffective or not available.
U.S.
Regulatory Requirements
The FDA,
and comparable regulatory agencies in other countries, regulate and impose
substantial requirements upon the research, development, pre-clinical and
clinical testing, labeling, manufacture, quality control, storage, approval,
advertising, promotion, marketing, distribution and export of pharmaceutical
products including biologics, as well as significant reporting and
record-keeping obligations. State governments may also impose obligations in
these areas.
In the
U.S., pharmaceutical products are regulated by the FDA under the Federal Food,
Drug, and Cosmetic Act or FDCA and other laws including in the case of
biologics, the Public Health Service Act. The Company believes, but cannot be
certain, that its products will be regulated as drugs by the FDA. The process
required by the FDA before drugs may be marketed in the U.S. generally involves
the following:
·
|
pre-clinical
laboratory evaluations, including formulation and stability testing, and
animal tests performed under the FDA’s Good Laboratory Practices
regulations to assess potential safety and
effectiveness;
|
·
|
submission
and approval of an Investigational New Drug Application, or IND, including
results of pre-clinical tests, manufacturing information and protocols for
clinical studies, which must become effective before clinical trials may
begin in the U.S.;
|
·
|
obtaining
approval of Institutional Review Boards, or IRB’s, to administer the
products to human subjects in clinical
trials;
|
·
|
adequate
and well-controlled human clinical trials to establish the safety and
efficacy of the product for the product’s intended
use;
|
·
|
development
of manufacturing processes which conform to FDA current Good Manufacturing
Practices, or cGMPs, as confirmed by FDA
inspection;
|
·
|
submission
of pre-clinical and clinical studies results, and chemistry, manufacturing
and controls, or CMC, information on the product to the FDA in a New
Drug Application, or NDA;
and
|
·
|
FDA
review and
approval of a NDA, prior to any commercial sale or shipment of a
product.
|
The
testing and approval process requires substantial time, effort, and financial
resources, and the Company cannot be certain that any approval will be granted
on a timely basis, if at all.
Pre-clinical
tests and studies can take several years to complete, and there is no guarantee
that an IND the Company or its subsidiaries submit based on such tests and
studies will become effective within any specific time period, if
at all.
Human
clinical trials are typically conducted in three sequential phases that may
overlap.
•
Phase I:
The
drug is initially introduced into healthy human subjects or patients and tested
for safety and dosage tolerance. Absorption, metabolism, distribution, and
excretion testing is generally performed at this stage.
•
Phase II:
The
drug is studied in controlled, exploratory therapeutic trials in a limited
number of subjects with the disease or medical condition for which the new drug
is intended to be used in order to identify possible adverse effects and safety
risks, to determine the preliminary or potential efficacy of the product for
specific targeted diseases or medical conditions, and to determine dosage
tolerance and the optimal effective dose.
•
Phase III:
When
Phase II studies demonstrate that a specific dosage range of the drug is likely
to be effective and the drug has an acceptable safety profile, controlled,
large-scale therapeutic Phase III trials are undertaken at multiple study sites
to demonstrate clinical efficacy and to further test for safety in an expanded
patient population.
The
Company cannot be certain that it will successfully complete Phase I, Phase II,
or Phase III testing of its products within any specific time period, if
at all. Furthermore, the
FDA, the IRB or the Company may suspend or terminate clinical trials at any time
on various grounds, including a finding that the subjects or patients are being
exposed to an unacceptable health risk.
Results
of pre-clinical studies and clinical trials, as well as detailed information
about the manufacturing process, quality control methods, and product
composition, among other things, are submitted to the FDA as part of a NDA
seeking approval to market and commercially distribute the product on the basis
of a determination that the product is safe and effective for its intended use.
Before approving a NDA, the FDA will inspect the facilities at which the product
is manufactured and will not approve the product unless cGMP compliance is
satisfactory. If applicable regulatory criteria are not satisfied, the FDA may
deny the NDA or require additional testing or information. As a condition of
approval, the FDA also may require post-marketing testing or surveillance to
monitor the product’s safety or efficacy. Even after a NDA is approved, the FDA
may impose additional obligations or restrictions (such as labeling changes), or
even suspend or withdraw a product approval on the basis of data that arise
after the product reaches the market, or if compliance with regulatory standards
is not maintained. The Company cannot be certain that any NDA the Company or its
subsidiaries submit will be approved by the FDA on a timely basis, if at all.
Also, any such approval may limit the indicated uses for which the product may
be marketed. Any refusal to approve, delay in approval, suspension or withdrawal
of approval, or restrictions on indicated uses could have a material adverse
impact on the Company’s business prospects.
Each NDA
must be accompanied by a user fee, pursuant to the requirements of the
Prescription Drug User Fee Act, or PDUFA, and its amendments. According to the
FDA’s fee schedule, effective on October 1, 2008 for the fiscal year 2009,
the user fee for an application requiring clinical data, such as a NDA, is
$1,247,200. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA also
imposes an annual product fee for prescription drugs and biologics ($71,520),
and an annual establishment fee ($425,600) on facilities used to manufacture
prescription drugs and biologics. A written request can be submitted for a
waiver for the application fee for the first human drug application that is
filed by a small business, but there are no waivers for product or establishment
fees. The Company is not at the stage of development of its products where the
Company is subject to these fees, but they are significant expenditures that may
be incurred in the future and must be paid at the time of application
submissions to FDA.
Satisfaction
of FDA requirements typically takes several years. The actual time required
varies substantially, based upon the type, complexity, and novelty of the
pharmaceutical product, among other things. Government regulation imposes costly
and time-consuming requirements and restrictions throughout the product life
cycle and may delay product marketing for a considerable period of time, limit
product marketing, or prevent marketing altogether. Success in pre-clinical or
early stage clinical trials does not ensure success in later stage clinical
trials. Data obtained from pre-clinical and clinical activities are not always
conclusive and may be susceptible to varying interpretations that could delay,
limit, or prevent marketing approval. Even if a product receives marketing
approval, the approval is limited to specific clinical indications. Further,
even after marketing approval is obtained, the discovery of previously unknown
problems with a product may result in restrictions on the product or even
complete withdrawal of the product from the market.
After
product approval, there are continuing significant regulatory requirements
imposed by the FDA, including record-keeping requirements, obligations to report
adverse side effects in patients using the products, and restrictions on
advertising and promotional activities. Quality control and manufacturing
procedures must continue to conform to cGMPs, and the FDA periodically inspects
facilities to assess cGMP compliance. Additionally, post-approval changes in
ingredient composition, manufacturing processes or facilities, product labeling,
or other areas may require submission of a NDA Supplement to the FDA for review
and approval. New indications will require additional clinical studies and
submission of a NDA Supplement. Failure to comply with FDA regulatory
requirements may result in an enforcement action by the FDA, including warning
letters, product recalls, suspension or revocation of product approval, seizure
of product to prevent distribution, impositions of injunctions prohibiting
product manufacture or distribution, and civil and criminal penalties.
Maintaining compliance is costly and time-consuming. The Company cannot be
certain that the Company, or its present or future suppliers or third-party
manufacturers, will be able to comply with all FDA regulatory requirements, and
potential consequences of noncompliance could have a material adverse impact on
the Company’s business prospects.
The FDA’s
policies may change, and additional governmental regulations may be enacted that
could delay, limit, or prevent regulatory approval of the Company’s products or
affect the Company’s ability to manufacture, market, or distribute its products
after approval. Moreover, increased attention to the containment of healthcare
costs in the U.S. and in foreign markets could result in new government
regulations that could have a material adverse effect on the Company’s business.
The Company’s failure to obtain coverage, an adequate level of reimbursement, or
acceptable prices for its future products could diminish any revenues the
Company may be able to generate. The Company’s ability to commercialize future
products will depend in part on the extent to which coverage and reimbursement
for the products will be available from government and health administration
authorities, private health insurers, and other third-party payers. European
Union member states and U.S. Government and other third-party payers
increasingly are attempting to contain healthcare costs by consideration of new
laws and regulations limiting both coverage and the level of reimbursement for
new drugs. The Company cannot predict the likelihood, nature or extent of
adverse governmental regulation that might arise from future legislative or
administrative action, either in the U.S. or abroad.
The
Company’s activities also may be subject to state laws and regulations that
affect the Company’s ability to develop and sell its products. The Company is
also subject to numerous federal, state, and local laws relating to such matters
as safe working conditions, clinical, laboratory, and manufacturing practices,
environmental protection, fire hazard control, and disposal of hazardous or
potentially hazardous substances. The Company may incur significant costs to
comply with such laws and regulations now or in the future, and the failure to
comply may have a material adverse impact on its business
prospects.
The FDCA
includes provisions designed to facilitate and expedite the development and
review of drugs and biological products intended for treatment of serious or
life-threatening conditions that demonstrate the potential to address unmet
medical needs for such conditions. These provisions set forth a procedure for
designation of a drug as a “fast track product.” The fast track designation
applies to the combination of the product and specific indication for which it
is being studied. A product designated as fast track is ordinarily eligible for
additional programs for expediting development and review, but products that are
not in fast track drug development programs may also be able to take advantage
of these programs. These programs include priority review of NDAs and
accelerated approval. Drug approval under the accelerated approval regulations
may be based on evidence of clinical effect on a surrogate endpoint that is
reasonably likely to predict clinical benefit. A postmarketing clinical study
will be required to verify clinical benefit, and other restrictions to assure
safe use may be imposed.
Under the
Drug Price Competition and Patent Term Restoration Act of 1984 a sponsor may
obtain marketing exclusivity for a period of time following FDA approval of
certain drug applications, regardless of patent status, if the drug is a new
chemical entity or if new clinical studies were required to support the
marketing application for the drug. This marketing exclusivity prevents a third
party from obtaining FDA approval for an identical or nearly identical drug
under an Abbreviated New Drug Application or a “505(b)(2) New Drug Application.”
The statute also allows a patent owner to obtain an extension of applicable
patent terms for a period equal to one-half the period of time elapsed between
the filing of an IND and the filing of the corresponding NDA plus the period of
time between the filing of the NDA and FDA approval, with a five year maximum
patent extension. The Company cannot be certain that it will be able to take
advantage of either the patent term extension or marketing exclusivity
provisions of these laws.
The Best
Pharmaceuticals for Children Act, or BPCA, signed into law on January 4, 2002,
was reauthorized and amended by the FDA Amendments Act of 2007 or
FDAAA. The reauthorization of BPCA provides an additional six months
of patent protection to NDA applicants that conduct acceptable pediatric studies
of new and currently-marketed drug products for which pediatric information
would be beneficial, as identified by FDA in a Pediatric Written Request. The
Pediatric Research Equity Act, or PREA, signed into law on December 3, 2003,
also was reauthorized and amended by FDAAA. The reauthorization of
PREA requires that most applications for drugs and biologics include a pediatric
assessment (unless waived or deferred) to ensure the drugs' and biologics'
safety and effectiveness in children. Such pediatric assessment must
contain data, gathered using appropriate formulations for each age group for
which the assessment is required, that are adequate to assess the safety and
effectiveness of the drug or the biological product for the claimed indications
in all relevant pediatric subpopulations, and to support dosing and
administration for each pediatric subpopulation for which the drug or the
biological product is safe and effective. The pediatric assessments
can only be deferred provided there is a timeline for the completion of such
studies. The FDA may waive (partially or fully) the pediatric
assessment requirement for several reasons, including if the applicant can
demonstrate that reasonable attempts to produce a pediatric formulation
necessary for that age group have failed.
European
Union Regulatory Requirements
Outside
the U.S., the Company’s ability to market products will also be contingent upon
receiving marketing authorizations from the appropriate regulatory authorities
and compliance with applicable post-approval regulatory requirements. Although
the specific requirements and restrictions vary from country to country, as a
general matter, foreign regulatory systems include risks similar to those
associated with FDA regulation, described above. Under EU regulatory systems,
marketing authorizations may be submitted either under a centralized or a
national procedure. Under the centralized procedure, a single application to the
European Medicines Agency (EMEA) leads to an approval granted by the European
Commission which permits the marketing of the product throughout the EU. The
centralized procedure is mandatory for certain classes of medicinal products,
but optional for others. For example, all medicinal products developed by
certain biotechnological means, and those developed for cancer and other
specified diseases and disorders, must be authorized via the centralized
procedure. The Company assumes that the centralized procedure will apply to its
products that are developed by means of a biotechnology process. The national
procedure is used for products that are not required to be authorized by the
centralized procedure. Under the national procedure, an application for a
marketing authorization is submitted to the competent authority of one member
state of the EU. The holders of a national marketing authorization may submit
further applications to the competent authorities of the remaining member states
via either the decentralized or mutual recognition procedure. The decentralized
procedure enables applicants to submit an identical application to the competent
authorities of all member states where approval is sought at the same time as
the first application, while under the mutual recognition procedure, products
are authorized initially in one member state, and other member states where
approval is sought are then requested to recognize the original authorization
based upon an assessment report prepared by the original authorizing competent
authority. Both the decentralized and mutual recognition procedures should take
no longer than 90 days, but if one member state makes an objection, which under
the legislation can only be based on a possible risk to human health, the
application will be automatically referred to the Committee for Medicinal
Products for Human Use (CHMP) of the EMEA. If a referral for arbitration is
made, the procedure is suspended. However, member states that have already
approved the application may, at the request of the applicant, authorize the
product in question without waiting for the result of the arbitration. Such
authorizations will be without prejudice to the outcome of the arbitration. For
all other concerned member states, the opinion of the CHMP, which is binding,
could support or reject the objection or alternatively could reach a compromise
position acceptable to all EU countries concerned. The arbitration procedure may
take an additional year before a final decision is reached and may require the
delivery of additional data.
As with
FDA approval the Company may not be able to secure regulatory approvals in
Europe in a timely manner, if at all. Additionally, as in the U.S.,
post-approval regulatory requirements, such as those regarding product
manufacture, marketing, or distribution, would apply to any product that is
approved in Europe, and failure to comply with such obligations could have a
material adverse effect on the Company’s ability to successfully commercialize
any product.
The
conduct of clinical trials in the European Union is governed by the European
Clinical Trials Directive (2001/20/EC), which was implemented in May 2004. This
Directive governs how regulatory bodies in member states control clinical
trials. No clinical trial may be started without a clinical trial authorization
granted by the national competent authority and favorable ethics
approval.
Accordingly,
there is a marked degree of change and uncertainty both in the regulation of
clinical trials and in respect of marketing authorizations which face the
Company for its products in Europe.
Organizational
Structure
Corporate
Structure
Novogen
Limited is a company limited by shares and is incorporated and domiciled in
Australia. Novogen Limited and its controlled entities “Novogen” or the “Group”
have prepared a consolidated financial report incorporating the entities that
Novogen Limited controlled during fiscal 2009, which included the following
controlled entities:
Name of Entity
|
Country of Incorporation
|
Ownership %
+
|
Novogen
Laboratories Pty Ltd
|
Australia
|
100
|
Novogen
Research Pty Ltd
|
Australia
|
100
|
Novogen
Inc
|
U.S.A.
|
100
|
Glycotex,
Inc
|
U.S.A.
|
80.7
|
Novogen
Limited
(U.K.)
|
U.K.
|
100
|
Promensil
Limited
|
U.K.
|
100
|
Novogen
BV
|
Netherlands
|
100
|
Novogen
New Zealand Limited
|
New
Zealand
|
100
|
Novogen
Canada Limited
|
Canada
|
100
|
Marshall
Edwards, Inc.
|
U.S.A.
|
71.3
|
Marshall
Edwards Pty Limited
|
Australia
|
71.3
|
*
Indirect ownership through Marshall Edwards, Inc.
+
Ownership % at June 30, 2009.
Property,
Plant and Equipment
The pilot
plant used for the manufacture of the small scale synthetic drug
compounds is located in the Company’s leased premises in North Ryde,
Sydney. The North Ryde premises occupies 1,088 square meters. These premises are
also used
as
Novogen’s corporate headquarters. The Company owns the equipment used in the
pilot plant. The plant has enough capacity to produce clinical trial quantities
up to Phase II of the Company’s product candidates.
The
Company’s major isoflavone extraction manufacturing plant was located in Wyong
in New South Wales. This plant was used to manufacture the active raw material
used in the Company’s dietary supplement products. The Company owned the land
and buildings at Wyong site which covers an area of approximately 3.37 hectares.
The Company also owned the equipment used in the extraction process and
laboratories. In May 2007 the Company announced that it had entered
into new arrangements for the worldwide supply of isoflavones used in its
consumer dietary supplement products. As a result, the extraction facility
located at Wyong NSW was decommissioned and the property sold. The
sale of the Wyong facility was concluded on October 10, 2007. The
Company received gross proceeds of A$4.0 million from the sale.
Item
4A. Unresolved
Staff Comments
None
Item
5. Operating
and Financial Review and Prospects
The
following discussion and analysis should be read in conjunction with “Item 18.
Financial Statements” included below. Operating results are not necessarily
indicative of results that may occur in future periods. This discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. The actual results may differ materially from those anticipated
in the forward-looking statements as a result of many factors including, but not
limited to, those set forth under “Forward-Looking Statements” and “Risk
Factors” in Item 3. “Key Information” included above in this Annual Report. All
forward-looking statements included in this document are based on the
information available to the Company on the date of this document and the
Company assumes no obligation to update any forward-looking statements contained
in this Annual Report.
Application
of Critical Accounting Policies
The
significant accounting policies are summarized in Note 1 to the Consolidated
Financial Statements under Item 18 of this Annual Report.
Revenue
Recognition
Revenue
is recognised to the extent that it is probable that the economic benefits will
flow to the Group and the revenue can be reliably measured. In
determining the economic benefits, provisions are made for certain trade
discounts and returned goods.
Returns
Over the
last three years, returns and estimates of return liability were not considered
material and are detailed below.
|
Balance at Beginning
of year
|
Charged to Cost and
Expense
|
Actual
Returns
|
Balance at End of
Year
|
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
Allowance for Sales
returns:
|
|
|
|
|
Year ended June 30,
2007
|
96
|
380
|
351
|
125
|
Year ended June 30,
2008
|
125
|
145
|
223
|
47
|
Year ended June 30,
2009
|
47
|
277
|
288
|
36
|
Discounts
Discounts
are generally calculated as deductions off the Company’s invoice price and as
such do not require significant judgment in determining accrual
amounts. Over the last three years, the discounts and estimate of
claims were not considered material and are detailed below:
|
|
|
|
|
|
Balance at Beginning
of year
|
Charged to Cost and
Expense
|
Actual
Discounts
|
Balance
at End of Year
|
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
Allowance for Sales
discounts:
|
|
|
|
|
Year ended June 30,
2007
|
137
|
688
|
708
|
117
|
Year ended June 30,
2008
|
117
|
554
|
592
|
79
|
Year ended June 30,
2009
|
79
|
647
|
584
|
142
|
Inventory
Adjustments
Inventories
are measured at the lower of cost or net realizable value. The Company reviews
the components of inventory on a regular basis for excess, obsolete and impaired
inventory based on estimated future usage and sales. The likelihood of any
material inventory write-downs is dependent on rapid changes in customer demand
or new product introductions by competitors.
For
additional information on significant accounting policies refer to Item 18
“Financial Statements” - Note 1 – “Summary of Significant Accounting
Policies”.
Results
of Operations
The
following table provides a summary of revenues and expenses to supplement the
more detailed discussions below:
INCOME
STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
for
the year ended June 30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
|
US$'000
|
|
Continuing
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
11,147
|
|
|
|
13,283
|
|
|
|
17,295
|
|
|
|
8,979
|
|
Cost
of sales
|
|
|
(2,523
|
)
|
|
|
(4,090
|
)
|
|
|
(6,945
|
)
|
|
|
(2,032
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
8,624
|
|
|
|
9,193
|
|
|
|
10,350
|
|
|
|
6,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
-
|
|
|
|
1,623
|
|
|
|
2,710
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
& development expenses
|
|
|
(18,788
|
)
|
|
|
(18,811
|
)
|
|
|
(16,134
|
)
|
|
|
(15,134
|
)
|
Selling
& promotional expenses
|
|
|
(6,572
|
)
|
|
|
(6,134
|
)
|
|
|
(7,908
|
)
|
|
|
(5,294
|
)
|
Shipping
and handling expenses
|
|
|
(341
|
)
|
|
|
(300
|
)
|
|
|
(392
|
)
|
|
|
(275
|
)
|
General
and administrative expenses
|
|
|
(6,671
|
)
|
|
|
(9,792
|
)
|
|
|
(12,902
|
)
|
|
|
(5,373
|
)
|
Other
expenses
|
|
|
(27
|
)
|
|
|
(528
|
)
|
|
|
(17
|
)
|
|
|
(21
|
)
|
Finance
costs
|
|
|
(11
|
)
|
|
|
(24
|
)
|
|
|
(2
|
)
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income tax
|
|
|
(23,786
|
)
|
|
|
(24,773
|
)
|
|
|
(24,295
|
)
|
|
|
(19,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the period
|
|
|
(23,787
|
)
|
|
|
(24,777
|
)
|
|
|
(24,296
|
)
|
|
|
(19,160
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
attributable to minority interest
|
|
|
4,859
|
|
|
|
4,513
|
|
|
|
4,315
|
|
|
|
3,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
attributable to members of Novogen Limited
|
|
|
(18,928
|
)
|
|
|
(20,264
|
)
|
|
|
(19,981
|
)
|
|
|
(15,246
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted earnings/(loss) per share (cents)
|
|
|
(18.6
|
)
|
|
|
(20.8
|
)
|
|
|
(20.5
|
)
|
|
|
(15.0
|
)
|
Operating
Results – Fiscal 2009 compared to Fiscal 2008
Revenue
The Group
earned gross revenues for the year ended June 30, 2009 of A$11.1 million versus
A$13.3 million in the previous corresponding period, a reduction of A$2.2
million. The reduction in revenue was due to decreased sales of the Group’s
consumer health care products of A$1.1 million or 12%. Other revenue also
reduced by A$1.1 million to A$2.8 million verses A$3.9 million for the previous
corresponding period. The decrease in other revenue was mainly due to the
reduced interest received on cash balances reflecting lower global interest
rates.
Consumer
product sales
Sales of
consumer health care products decreased by A$1.1 million to A$8.3 million for
the twelve months ended June 30, 2009 from A$9.4 million for the twelve months
ended June 30, 2008.
Sales in
Australasia (including sales to export markets) for the year ended June 30, 2009
were A$4.9 million, an increase of A$0.1 million or 2% from A$4.8 million for
the previous year. Canadian sales for the year ended June 30, 2009 reduced by
A$0.2 million to A$2.1 million from A$2.3 million for the previous 12 month
period. The reduction was due to difficult market conditions and a significant
downturn in the consumer market for menopause products. Sales revenue in the UK
decreased by A$0.3 million to A$1.4 million for the twelve month period to June
30, 2009 compared to A$1.7 million for the same period last year. The UK sales
decline was caused by the economic downturn with consumers turning away from
premium brands and a reduction in the supplement market for
menopause.
Costs
and expenses
Total
expenses before interest and tax decreased by A$4.8 million to A$34.9 for the
year ended June 30, 2009 compared to A$39.7 million for the year ended June
2008. Cost of sales decreased A$1.6 million corresponding with reduced sales
from Europe and Canada. General and Administrative Expenses were favourably
impacted by A$3.1 million due primarily to favourable currency movements. These
savings were partially offset by an increase in selling and promotional expense
of A$0.4 million. This increase was due to expenses associated with a decision
to discontinue the weight loss product Aliten following disappointing consumer
uptake post launch.
Net
loss
The
operating loss attributable to Novogen shareholders for the financial year,
after allowing for losses attributable to minority interests of A$4.9 million,
reduced by A$1.4 million to A$18.9 million from a loss of A$20.3 million for the
previous year.
The net
loss from ordinary activities after income tax for the consolidated Group for
the year ended June 30, 2009 reduced by A$1.0 million to $23.8 million from
A$24.8 million for the previous year. The reduction in the Group’s net loss for
the year ended June 30, 2009 was due to reduced revenues and other incomes being
offset by reduced expenditures.
Operating
Results – Fiscal 2008 compared to Fiscal 2007
Revenue
The Group
earned gross revenues for the year ended June 30, 2008 of A$13.3 million versus
A$17.3 million in the previous corresponding period, a reduction of A$4.0
million. The reduction in revenue was due to decreased sales of the Group’s
consumer health care products of A$1.3 million or 12%. The decrease in sales in
fiscal 2007 to fiscal 2008 was mainly due to the Company’s licensing of its U.S.
consumer health care products to Natrol, Inc. in 2007. Other revenue for the
fiscal year ended June 30, 2008 was A$3.9 million, which represented a decrease
of A$2.7 million from A$6.6 million for the fiscal year ended June 30,
2007. Other revenue was higher in fiscal 2007 than fiscal 2008 due to
the Company’s receipt of one time license fees from Natrol Inc. and litigation
settlement amounts from Sante Naturelle and Chattem Inc. in connection with
license and patent infringement in the U.S. and Canada.
Consumer
product sales
Sales of
consumer health care products decreased by A$1.3 million to A$9.4 million for
the twelve months ended June 30, 2008 from A$10.7 million for the twelve months
ended June 30, 2007.
Sales in
Australasia (including sales to export markets) for the year ended June 30, 2008
were A$4.8 million, an increase of A$0.3 million or 7% from A$4.5 million for
the previous year. The increase was due to
the launch of Promensil
Double Strength formulation and Promensil Vitality products. There was no sales
revenue from the U.S. as consumer products were licensed to Natrol, Inc. from
the end of October 2006 and this represents a reduction of A$1.4 million for the
twelve month period to June 30 last year. Canadian sales for the year ended June
30 2008 increased by A$0.6 million to A$2.3 million up from A$1.7 million for
the previous 12 month period, due to the launch of Promensil Double Strength
formulation and increased volume sales as a result of promotional programs.
Sales revenue in Europe decreased by A$0.9 million to A$2.2 million for the
twelve month period to June 30, 2008 compared to A$3.1 million for the same
period last year. The European sales decline was caused by a reduction in the
supplement market for menopause.
During
the year ended June 30, 2008 the Group expanded its consumer health care
business with the introduction of Promensil into Belgium. The Company also
entered into a third party distribution agreement in the Netherlands in an
effort to maximise the contribution from the territory.
Costs
and expenses
Total
expenses before interest and tax decreased by A$4.6 million to A$39.7 for the
year ended June 30, 2008 compared to A$44.3 million for the year ended June 30,
2007. Cost of sales decreased A$2.9 million corresponding with reduced sales
from the licence of the U.S. health products.
Savings
were also achieved as a result of disposing of the Wyong production facility.
Selling and promotional expenses decreased by A$1.8 million to A$6.1 million
which was also related to the licence of the U.S. health products in the prior
year with U.S. expenses not recurring in fiscal 2008. Research and development
expenses increased by A$2.7 million compared to the corresponding period last
year. The increase was primarily due to expenses associated with the Phase III
OVATURE clinical trial being conducted by MEI. Research and development expenses
also reflected an increase in costs associated with the development of
glucoprime the Company’s glucan based product being developed by Novogen’s
subsidiary Glycotex. General and administration expenses were reduced by A$3.1
million due to one-off amounts of A$2.1 million representing non-cash, share
based payments incurred by MEI in establishing the
Standby Equity
Distribution Agreement (“SEDA”) and a A$1.4 million employee termination payment
which were incurred in the financial year ended June 30, 2007 and which were not
incurred in the June 30, 2008 year.
Net
loss
The
operating loss attributable to Novogen shareholders for the financial year,
after allowing for losses attributable to minority interests of A$4.5 million,
increased by A$0.3 million to A$20.3 million from a loss of A$20.0 million for
the previous year.
The net
loss from ordinary activities after income tax for the consolidated group for
the year ended June 30, 2008 increased by A$0.5 million to A$24.8 million from
A$24.3 million for the previous year. The increase in the Group’s net loss for
the year ended June 30, 2008 was due to reduced revenues and other incomes being
largely offset by reduced expenditures.
Liquidity
and capital resources
The
Company has continued to finance its operations primarily from equity
capital.
Cash
resources
At June
30, 2009 the Group had total funds of A$33.3 million a reduction of A$4.1
million from the previous year’s balance of A$37.4 million.
During
fiscal 2009, the Company had net cash outflows from operating activities of
A$20.6 million compared to cash outflows of A$20.1 million in fiscal 2008. Cash
was used to fund the Group’s operations including the OVATURE clinical trial
program for the investigational anti-cancer drug phenoxodiol being undertaken by
MEI and the clinical development of the investigational wound healing compound
GLYC-101 by Glycotex. Cash resources were also used to fund the ongoing programs
in the areas of cardiovascular and anti-inflammatory research and
development.
On July
28, 2008 MEI entered into a securities subscription agreement with Oppenheimer
Funds, Inc. and Novogen Limited pursuant to which MEI sold 1,700,000 and
2,908,295 shares of common stock to Oppenheimer and Novogen respectively, at a
purchase price of US$2.17 per share.
The
aggregate proceeds to MEI from the sale of shares was US$10,000,000. The shares
are registered under the U.S. Securities Act of 1933, as amended, pursuant to an
effective shelf registration statement. On July 30, 2008 MEI filed a
Prospectus Supplement to the registration statement covering the sale of shares
to Oppenheimer and Novogen.
On July
29, 2008 the Company entered into a Share Subscription Agreement with El
Coronado Holdings LLC for the placement of 4,531,633 ordinary shares at a
purchase price of A$1.2215 per share raising gross proceeds of A$5,535,390.
Following the placement El Coronado Holdings LLC holds 19.9% of the Company’s
issued and outstanding shares.
In
February 2009, the Company announced that it would focus its activities on its
oncology program.
With the
current economic climate making capital raising for extended programs difficult,
the Company is relying on its internal resources to concentrate on the expanding
oncology portfolio.
Along
with this decision, the Company has taken several steps to reduce costs so that
existing cash reserves are devoted to maintaining the significant potential of
the oncology program.
Among
cost reduction measures are:
·
|
outsourcing
of the scale-up manufacturing of clinical stage
compounds;
|
·
|
putting
on hold the cardiovascular and anti-inflammatory
programs;
|
·
|
reducing
world wide staff numbers from 62 to
48;
|
·
|
fee
and income reductions of 20 per cent for the Board and executive
management.
|
The
Company invests its cash and cash equivalents in interest bearing facilities
with various maturity dates. At the end of fiscal 2009, deposits amounting to
A$5.5 million had a weighted average interest rate of 3.62% and cash deposits of
A$27.8 million had a weighted average interest rate of 0.58%.
The
Company has arranged a multi option facility with St George Bank Limited, an
Australian commercial bank, of A$1.0 million, A$0.5 million of which was unused
at the end of fiscal 2009.
As of
June 30, 2009, the Group did not hold derivative financial instruments in
managing its foreign currency, however, the Company may from time to time enter
into hedging arrangements where circumstances are deemed
appropriate.
The
Company believes that the proceeds from the July 2008 share
placement and savings generated by MEI ceasing new enrolment into the
OVATURE Phase III clinical trial will provide sufficient cash resources to fund
operations over the next twelve months.
The
Company will require additional funds in order complete the planned clinical
development programs beyond the current objectives. As a result of the
uncertainty in the financial markets, the Company does not anticipate being able
to raise additional funds through the equity markets in the short term. In order
to obtain the additional funding necessary to conduct the business, the Company
may need to rely on collaboration and /or licensing opportunities.
The
Company cannot assure you that it will be able to raise the funds necessary to
complete the OVATURE clinical trial and other research programs, or find
appropriate collaboration or licensing opportunities.
There are
no commitments for capital expenditure outstanding at the end of the financial
year.
See Note
18 to the Financial Statements “Financial Instruments” for disclosures about
financial risk management including interest rate risk, foreign currency risk
and liquidity risk.
Research
and Development
Research
and development policy
Expenditure
during the research phase of a project is recognised as an expense when
incurred. Development costs are capitalised only when technical feasibility
studies identify that the project will deliver future economic benefits and
these benefits can be measured reliably.
Development
costs have a finite life and are amortised on a systematic basis matched to the
future economic benefits over the useful life of the project.
The
Company spent A$18.8 million, A$18.8 million and A$16.1 million on gross
research and development expenditure during fiscal 2009, 2008 and 2007
respectively.
Due to
the nature and uncertainty of the research and development projects being
undertaken by the Company, it is not possible to reasonably estimate the cost
and timing of project completion. The costs of research and development projects
are not estimated on a project by project basis. An analysis of costs between
projects may only be performed on an arbitrary and subjective
basis.
The
progress on research and development projects and expenses is monitored and
controlled in a number of ways:
·
|
All
third party research and development, including the conduct of clinical
trials, are carried out under contract. The contract details include
project milestones and expenditure budgets. Senior Novogen research and
development staff monitor the projects to ensure that milestones are
achieved in a timely manner.
|
·
|
In-house
research and development is managed by the Research and Development
Director and senior research and development staff. Budgets are prepared
annually and agreed upon by the Novogen Board. Expenses are monitored
monthly, actual versus budget by expense line and in
total.
|
Trend
Information
The
Company expects to consume cash and incur operating losses for the foreseeable
future. The Company also expects to continue its expenditure on advancing its
research initiatives in discovering new and more advanced pharmaceutical
compounds in the area of phenolic compound technology.
With the
current economic climate making capital raising for extended clinical
development programs difficult, the Company is relying on its internal resources
to concentrate on the expanding oncology portfolio particularly the triphendiol
human clinical development program and the pre-clinical development program for
NV-128 that is currently underway.
The
impact on cash resources and results from operations will vary with the extent
and timing of the future clinical trial program. It is not possible to make
accurate predictions of future operating results.
Off-Balance
Sheet Arrangements
The
Company does not have any off-balance sheet arrangements.
Table
of Contractual Obligations
The
following table summarizes the Company’s future payment obligations and
commitments as at June 30, 2009.
|
|
|
|
|
Payments
due by period
|
|
In
A$000's
|
|
Total
|
|
|
Less
than 1 year
|
|
|
1-3
years
|
|
|
4-5
years
|
|
|
After
5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Leases
|
|
|
574
|
|
|
|
490
|
|
|
|
84
|
|
|
|
|
|
|
-
|
|
Other
Expenditure Commitments *
|
|
|
2,639
|
|
|
|
1,797
|
|
|
|
842
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Contractual Cash Obligations
|
|
|
3,213
|
|
|
|
2,287
|
|
|
|
926
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
represents research and development contracts for services to be
rendered.
|
|
|
|
|
|
|
|
|
|
Item
6. Directors,
Senior Management and Employees.
DIRECTORS
The names
and details of the Company’s Directors during the financial year and up to the
date of this report are as follows:
Mr.
Philip A. Johnston (Chairman)
Mr.
Christopher Naughton (Managing Director) – employment ceased December 1,
2009
Professor
Alan J. Husband (Executive Director)
Mr.
Geoffrey M. Leppinus
Professor
Paul J. Nestel AO
Mr. Peter
B. Simpson – Retired July 28, 2009
Mr
William D Rueckert – Appointed March 20, 2009
Directors
were in office for the entire period unless otherwise stated.
Names,
qualifications, experience and special responsibilities
Philip A Johnston
Non-executive
Chairman
Dip Eng
(Production)
Non-executive
Director since 1997, Mr Johnston was elected Chairman of Novogen Limited with
effect from January 2001. Mr Johnston has extensive experience in the
pharmaceutical industry including 9 years as an Executive Director of Wellcome
Australia Limited. He was previously a Director of two subsidiary Companies of
GlaxoWellcome. He has had responsibility for production, distribution, quality
assurance and consumer product development and has been directly involved in the
establishment of strategic alliances and joint ventures. He has completed a
number of executive development programs including the University of NSW and the
London Business School.
Other
current and former directorships held in the last three years
During
the last three years Mr Johnston has served as a Director of the ASX listed
company, Lipa Pharmaceuticals Limited and is currently a Director of NASDAQ
listed, Novogen subsidiary, Marshall Edwards, Inc. Mr Johnston’s directorship of
Lipa ceased in November 2007 following a scheme of arrangement which saw Lipa
ceasing as a public company at that time.
Special
responsibilities
Chairman
of the Board
Chairman
of the Remuneration Committee
Member of
the Audit Committee
Christopher Naughton
Managing
Director
BEc,
LLB
Managing
Director from March, 1997 until December 2009, Mr Naughton joined Novogen in
1996 as Commercial Director. Mr Naughton has degrees in Economics from the
ANU and in Law from the UNSW.
He has
completed the Program for Management Development at the Harvard Business School,
and is an Attorney in New South Wales. After working in merchant banking, he has
over 20 years experience in the pharmaceutical industry, including appointments
as a Director of Wellcome Australia Limited and in worldwide business
development with The Wellcome Foundation Limited in the UK.
Other
current and former directorships held in the last three years
During
the last three years Mr Naughton has served as CEO and Director and is currently
Director of the NASDAQ listed, Novogen subsidiary, Marshall Edwards,
Inc.
Special
responsibilities
Chief
Executive Officer
Professor Alan J Husband
Executive
Director
PhD, DSc,
FASM
Professor
Husband was appointed as a Director of Novogen Limited in May, 2006. Professor
Husband has over 30 years experience in basic and applied scientific research
and research management. His academic research interests in immunology and
pathology have been reflected in the publication of over 200 scientific papers
and several books. He currently holds a professorial appointment at the
University of Sydney. These activities in basic and applied research, coupled
with experience in the biotechnology industry, provided the foundations for his
current appointment as Group Director of Research for the Novogen Group of
companies. In this position Professor Husband is responsible for the development
of the Group’s flavonoid drug technology platform. Professor Husband commenced
working with the Company in 1996 and has managed the scientific discovery and
clinical trial programs, including development of novel oncology, cardiovascular
and anti-inflammatory therapeutics as well as wound healing
technologies.
Special
responsibilities
Group
Director of Research
Geoffrey M Leppinus
Non-executive
Director
BEc,
FCA
Non-executive
Director since February 2005, Mr Leppinus was, until July 2002, a Senior Audit
and Advisory partner of KPMG with over 30 years experience in professional
accounting and auditing. At KPMG he was responsible for the audit of a number of
large public companies and the Australian subsidiaries of U.S. listed public
corporations. Mr Leppinus has experience in the assessment of systems of
internal control over financial reporting and the financial reporting
requirements applicable to listed public companies. He has also had a wide range
of experience in conducting due diligence for business acquisitions. Mr Leppinus
has served as a member of the Australian Auditing Standards Board and member of
the State Council of the Institute of Chartered Accountants in
Australia.
Special
responsibilities
Chairman
of the Audit Committee
Member of
the Remuneration Committee
Professor Paul J Nestel
Non-executive
Director
AO, MD,
FTSE, FRACP, FAHA, FCSANZ
Professor
Nestel is currently on the Senior Faculty at the Baker Heart Research &
Diabetes Institute, Melbourne. Professor Nestel is also a Consultant Physician
at the Alfred Hospital, Melbourne. He is Honorary Professor of Medicine at
Deakin University, Melbourne. He was formerly Clinical Professor in Medicine,
The Flinders University of South Australia. Professor Nestel has been closely
involved in national and international pharmaceutical trials of cardiovascular
drugs. He has been and remains a member of national and international committees
for research and policy on cardiovascular disease. He has published over 420
scientific and medical papers and is a Fellow of the Australian Academy of
Technological Sciences and Engineering, the Royal Australasian College of
Physicians, a Fellow of the American Heart Association and a Fellow of the
Cardiac Society of Australia and New Zealand. Professor Nestel is an Officer of
the Order of Australia and recipient of the Centenary Medal.
Other
current and former directorships held in the last three years
During
the last three years Professor Nestel has served as a Director and is currently
a Director for the NASDAQ listed, Novogen subsidiary, Marshall Edwards,
Inc.
Special
responsibilities
Member of
the Remuneration Committee
Member of
the Audit Committee
Peter B Simpson
Non-executive
Director
MPharm,
PhC
Non-executive
Director since 1994, Mr Simpson has extensive experience in the development of
pharmaceutical products for international markets. He was Research and
Development Manager with David Bull Laboratories for 8 years prior to being
appointed Chief Executive Officer of Biota Holdings Limited in 1987. At Biota he
oversaw the research and development of an effective cure for influenza and the
licensing of that discovery to Glaxo Limited. Mr Simpson is currently associated
with a wide range of biotechnology and pharmaceutical interests, predominately
associated with the conduct of late stage clinical studies and the
commercialisation of Australian biomedical discoveries. Mr Simpson is also the
Chairman of Biogenerics Australia Pty Ltd.
Special
responsibilities
Member of
the Remuneration Committee
Member of
the Audit Committee
William D. Rueckert
Non-executive
Director
Mr
Rueckert has been director of the Company since March, 2009 and has been a
Director of Marshall Edwards, Inc. between March, 2007 and March, 2009. Mr
Rueckert is the Managing Member of Oyster Management Group LLC an investment
fund specialising in community banks. Mr Rueckert was appointed a Director of
Chelsea Therapeutics International, Ltd. in July of 2009. From 1991 to 2006 he
was President and Director of Rosow & Company, a private investment firm
based in Connecticut. Mr Rueckert has been President and Director of Eastern
Capital Development, LLC from 1999 to 2005, treasurer of Moore & Munger,
Inc., a company with interests in the petroleum and resort development
industries, from 1988 until 1990, and was President of United States Oil
Company, a publicly traded oil exploration business, from 1981 to 1988. Among
his many civic associations, Mr Rueckert is Director and President of the
Cleveland H. Dodge Foundation, a private philanthropic organisation in New York
City and Chairman of the Board of the Trustees of Teachers College, Columbia
University.
Other
current and former directorships held in the last three years
During
the last three years Mr Rueckert has served as a Director for Emergency
Filtration Products, Inc., Chelsea Therapeutics International, Ltd. and the
NASDAQ listed, Novogen subsidiary, Marshall Edwards, Inc.
Executive
Officers’ profiles
David
R. Seaton – Chief Financial Officer
B Bus, M
Com, CPA
Mr.
Seaton has been the Chief Financial Officer of Novogen Limited since 1999.
Mr. Seaton is a graduate in Business Studies and holds a Master of Commerce
degree from the University of New South Wales. He has completed Management
Development programs at Northwestern University in Chicago, Illinois, Duke
University in Durham, North Carolina and the London Business School. He has had
over 20 years experience in the pharmaceutical industry. Prior to joining
Novogen Limited he was the Finance Director of GlaxoWellcome Australia Ltd. Mr.
Seaton was also Finance Director of Wellcome Australia Limited prior to its
merger with Glaxo in 1995.
Mr.
Seaton has been the Chief Financial Officer and Secretary of Marshall Edwards
since 2000. He has been a Director and the Secretary of Glycotex, Inc
since September 2005. Mr. Seaton was appointed Chief Financial
Officer of Glycotex, Inc. in November 2006. Mr. Seaton was appointed acting CEO
of Novogen Limited and Marshall Edwards, Inc. on December 1, 2009.
Warren
Lancaster – Vice President Commercial and Corporate Development
BSc,
MBA
Mr.
Lancaster is a graduate in Physics and holds a Masters Degree in Business
Administration from the Australian Graduate School of Management (Sydney). Mr.
Lancaster worked as a business strategy and management consultant with an
Australian consulting firm before joining Novogen Limited in March
1997
Bryan
Palmer – Operations General Manager
Mr.
Palmer joined Novogen in 1993. Since that time he has held a number of senior
management positions within the Company. He completed the Program for Management
Development at the Harvard Business School in 2001.
Craig
Kearney – General Manager Consumer Business
BMS
Waikato.
Mr.
Kearney joined Novogen Limited in December 2001 as the General Manager of the
Consumer Business. He has a Bachelor of Management Studies from Waikato
University in New Zealand and has subsequently completed managerial development
programmes at London School of Business and Duke University in Durham, North
Carolina. He has worked 18 years in the Over The Counter (OTC) consumer
pharmaceutical category, including 10 years for Wellcome New Zealand and
Wellcome Australia, and 6 years for Parke Davis/Warner Lambert Australia. Prior
to joining Novogen Limited, Mr. Kearney worked for Pfizer Australia. He held
senior sales, marketing and business management roles for all three
companies.
Ronald
L Erratt
FINA
Mr.
Erratt has been the Company Secretary of Novogen Limited since it floated on the
ASX in 1994. He is also the Company Secretary for all of the wholly owned
subsidiaries of Novogen. Mr Erratt has over 30 years experience in accounting
and commercial roles. Prior to joining Novogen, he was the Director of
Superannuation Fund Administration at Towers Perrin, an international firm of
Actuaries and Management Consultants.
Compensation
Principles
used to determine the nature and amount of remuneration
Remuneration
philosophy
Remuneration
is assessed for Directors
and senior executives
with the overall objective of ensuring maximum stakeholder benefit from the
retention of a high quality executive team. The appropriateness and nature of
remuneration is assessed by reference to employment market conditions.
The
financial and non-financial objectives of the Company are also considered when
assessing the remuneration of Directors and other key management personnel,
however, Directors and other key management personnel’s annual remuneration has
no variable performance bonus elements that are directly linked to Company
financial performance with the exception of the CEO of Glycotex, Inc. Refer to
“Employment Agreements” for details of performance bonus.
The Board
has established a Remuneration Committee which is responsible for determining
and reviewing compensation arrangements for the Managing Director, Executive
Director and other key management personnel.
Director’s
fees
The
Constitution of the Company and the ASX Listing Rules specify that the aggregate
remuneration of Non-executive Directors shall be determined from time to time by
General Meeting. The latest determination for Novogen Limited was at the Annual
General Meeting held on October 28, 2005 when the shareholders approved an
aggregate remuneration of A$560,000. The total Non-executive Director
remuneration of Novogen Limited for the year ended June 30, 2009 utilised
A$260,000, (2008: A$274,000) of this authorised amount.
The
amount of aggregate remuneration sought to be approved by shareholders and the
manner in which it is apportioned amongst Directors is reviewed
periodically.
Non-executive
Director remuneration
Fees to
Non-executive Directors reflect the demands which are made on, and the
responsibilities of the Directors. Non-executive Directors’ fees are reviewed
periodically by the Board. In conducting these reviews the Board considers
independent remuneration surveys to ensure Non-executive Directors’ fees are
appropriate and in line with the market.
Each
Non-executive Director receives a fee for being a Director of the Company. An
additional fee is also paid for each Board committee on which a Director sits.
The payment of additional fees for serving on a committee recognises the
additional time commitment required by Non-executive Directors who serve on one
or more committees.
Due to
the impact of the global financial crisis and the need for the Company to
conserve cash, the Company’s Non-executive Directors voluntarily reduced
Director’s fees by 20% with effect from February 1, 2009.
Executive
Directors and other key management personnel remuneration
The
Remuneration Committee of the Board of Directors is responsible for determining
and reviewing compensation arrangements for the Managing Director, Executive
Director and other key management personnel. The Remuneration Committee assesses
the appropriateness of the nature and amount of remuneration of such Officers on
a periodic basis by reference to relevant employment market conditions with the
overall objective of ensuring maximum stakeholder benefit from the retention of
a high quality executive team. Such officers are given the opportunity to
receive their base remuneration, which is structured as a total employment cost
package, in a variety of forms including cash and prescribed non-financial
benefits. It is intended that the manner of payment chosen will be optimal for
the recipient without creating undue cost for the Group.
Due to
the impact of the global financial crisis and the need for the Company to
conserve cash, effective from February 1, 2009, the Company’s Executive
Directors and key management personnel entered into an agreement to voluntarily
reduce their working hours effecting a corresponding reduction of 20% in paid
remuneration.
Long-term
incentives.
All
Executive Directors and executives have the opportunity to qualify for
participation in the Employee Share Option Plan, described below, after
achieving a qualifying service period.
Employment
Agreements
Novogen
Executive Directors and key management executives (standard
contracts)
It is the
Remuneration Committee policy that employment contracts are entered into with
the Chief Executive Officer, the Research Director, and each of the executives
who are considered key management personnel. These contracts for service
commenced in June, 2006 and were for terms of three years with a notice period
of six months. The initial three year term expired in June, 2009 and the
contracts continue until terminated by either party under the terms of the
contract. Under the terms of the contracts, the amount of remuneration may be
reviewed from time to time at the discretion of the Remuneration Committee. Key
management executives are given the opportunity to receive their base
remuneration, which is structured as a total employment cost package, in a
variety of forms including cash and prescribed non financial
benefits.
In the
event of the Company terminating the employment without cause under the terms of
the contract the minimum payable on termination by the Company will be eighteen
months remuneration. The Company may terminate the contracts at anytime without
notice if serious misconduct has occurred. Where such termination “with cause”
occurs, there is no entitlement to termination payments under the contract. On
termination, any unvested options issued under the Employee Option scheme are
immediately forfeited.
Effective
from February 1, 2009, the Company’s Executive Directors and key management
personnel entered into an agreement to voluntarily reduce their working hours
effecting a corresponding reduction of 20% in paid remuneration. This agreement
will remain in effect until terminated by the employee. The agreement will also
terminate in the event of a merger and/or acquisition event, an insolvency event
or termination by the Company.
Each of
the foregoing employment contracts, other than the employment contract with
Warren Lancaster, were filed as exhibits to the Company’s Annual Report on Form
20-F for the fiscal year ended June 30, 2006 filed with the U.S. Securities and
Exchange Commission (the “SEC”) on November 29, 2006. The employment
contract with Warren Lancaster was filed as an exhibit to the Company’s Annual
Report on Form 20-F for the fiscal year ended June 30, 2007 filed with the SEC
on December 14, 2007.
Details
of Remuneration
Details
of the remuneration of the Directors of Novogen Limited, other key management
personnel and group executives of the Novogen Group are set out in the following
table. Unless otherwise stated all Directors, other key management and Group
executives were in office for the whole of the financial year ended June 30,
2009.
Remuneration
of key management personnel and other Group Executives
(includes
movements in executive leave provisions for untaken annual and long service
leave).
|
|
Short
term benefits
|
|
|
Post
employment
|
|
|
Long
term benefits
|
|
|
Share
based payments
|
|
|
Total
|
|
2009
|
|
Salary
& fees
|
|
|
Cash
bonus
|
|
|
Non-monetary
benefits
|
|
|
Superan-nuation
|
|
|
Long
Service Leave
|
|
|
Options
|
|
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
%
|
|
|
$
|
Key
management personnel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-executive
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA
Johnston (i)
|
|
|
105,319
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,458
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
195,777
|
|
GM
Leppinus
|
|
|
50,457
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,543
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,000
|
|
PJ
Nestel AO (ii)
|
|
|
94,791
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
94,791
|
|
WD
Rueckert (i)
|
|
|
111,294
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
111,294
|
|
PB
Simpson
|
|
|
48,774
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,392
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C
Naughton (iii)
|
|
|
709,761
|
|
|
|
-
|
|
|
|
51,594
|
|
|
|
100,000
|
|
|
|
(55,755
|
)
|
|
|
73,708
|
|
|
|
8.4
|
%
|
|
|
879,308
|
|
AJ
Husband
|
|
|
270,113
|
|
|
|
-
|
|
|
|
50,420
|
|
|
|
100,000
|
|
|
|
4,562
|
|
|
|
53,449
|
|
|
|
11.2
|
%
|
|
|
478,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR
Seaton (iii)
|
|
|
366,937
|
|
|
|
-
|
|
|
|
47,677
|
|
|
|
100,000
|
|
|
|
4,635
|
|
|
|
71,911
|
|
|
|
12.2
|
%
|
|
|
591,160
|
|
WJ
Lancaster (US)
|
|
|
234,068
|
|
|
|
-
|
|
|
|
23,127
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,350
|
|
|
|
11.2
|
%
|
|
|
289,545
|
|
BM
Palmer
|
|
|
179,720
|
|
|
|
-
|
|
|
|
39,500
|
|
|
|
15,540
|
|
|
|
(9,614
|
)
|
|
|
39,074
|
|
|
|
14.8
|
%
|
|
|
264,220
|
|
CD
Kearney
|
|
|
194,898
|
|
|
|
-
|
|
|
|
21,532
|
|
|
|
17,357
|
|
|
|
2,746
|
|
|
|
40,277
|
|
|
|
14.6
|
%
|
|
|
276,810
|
|
RL
Erratt
|
|
|
72,633
|
|
|
|
-
|
|
|
|
32,416
|
|
|
|
100,000
|
|
|
|
1,198
|
|
|
|
37,152
|
|
|
|
15.3
|
%
|
|
|
243,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Group executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R
Koenig (US) (iv)
|
|
|
413,798
|
|
|
|
67,069
|
|
|
|
26,244
|
|
|
|
15,678
|
|
|
|
-
|
|
|
|
527,775
|
|
|
|
50.2
|
%
|
|
|
1,050,564
|
|
|
|
|
2,852,563
|
|
|
|
67,069
|
|
|
|
292,510
|
|
|
|
547,968
|
|
|
|
(52,228
|
)
|
|
|
875,696
|
|
|
|
19.1
|
%
|
|
|
4,583,578
|
|
(i)
Remuneration includes Marshall Edwards and Glycotex Director’s fees of
A$108,694.
(ii)
Remuneration includes Marshall Edwards Director’s fees of A$41,625.
(iii)
Remuneration includes Glycotex Director’s fees of A$67,069.
|
(iv)
Remuneration includes performance milestone bonus of US$50,000 or 6.4% of
total remuneration.
|
The
elements of remuneration have been determined on the basis of the cost to the
Company and the consolidated entity.
Share
Based Compensation
Employee
share option plan
All
Executive Directors, Executives and other staff have the opportunity to qualify
for participation in the Employee Share Option Plan after achieving a qualifying
service period. The qualifying service period is determined from time to time by
the Board under the terms of the Employee Share Option Plan and employees are
currently required to have completed one year service before they are eligible
for a grant of options. The amount and timing of options issued under the terms
of the Employee Share Option Plan is entirely at the discretion of the
Board.
Each
option issued under the Employee Share Option Plan entitles its holder to
acquire one fully paid ordinary share and is exercisable at a price equal to the
weighted average price of such shares at the close of trading on the ASX for the
five days prior to the date of issue. Options vest equally over a four year
period from date of grant and expire five years after grant date. No performance
conditions apply to the options granted, however, the unvested option lapses if
the employee ceases to be an employee during the vesting period. Options are not
transferable and can not be settled by the Company in cash. The Employee Share
Option Plan provides that in the event of a change of control of the Company or
in the event that the Company is taken over, outstanding options become
exercisable regardless of vesting status.
There are
no performance criteria relating to employee share options because the
philosophy behind the Employee Share Option Plan is to encourage a general
level of ownership in the Company by employees and align their interests
with those of shareholders. The Employee Share Option Plan is modest in scale
and is principally designed to foster teamwork and the benefits of pursuing
shared goals.
Options
granted as part of Director and Executive emoluments have been valued using the
binomial option pricing model, which takes account of factors such as the option
exercise price, the volatility of the underlying share price, the risk free
interest rate, expected dividends, the current market price of the underlying
share and the expected life of the option.
The fair
value of such grants amortised are disclosed as part of Director and Executive
emoluments on a straight-line basis over the vesting period. No adjustments have
been made or will be made to reverse amounts in relation to options that never
vest (i.e. forfeitures).
Fair
values of options:
The fair
value of each option is estimated on the date of grant using a binomial
option-pricing model with the following assumptions used for grants made
on:
|
|
6
March,
|
|
|
31
October,
|
|
|
1
March,
|
|
|
26
October,
|
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
Exercise
price
|
|
|
0.5256
|
|
|
|
1.06
|
|
|
|
1.06
|
|
|
|
2.41
|
|
Share
price at grant date
|
|
|
0.51
|
|
|
|
0.95
|
|
|
|
1.07
|
|
|
|
1.62
|
|
Dividend
yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected
volatility
|
|
|
73
|
%
|
|
|
66
|
%
|
|
|
57
|
%
|
|
|
55
|
%
|
Historical
volatility
|
|
|
73
|
%
|
|
|
66
|
%
|
|
|
57
|
%
|
|
|
55
|
%
|
Risk-free
interest rate
|
|
|
3.61
|
%
|
|
|
4.76
|
%
|
|
|
6.35
|
%
|
|
|
6.41
|
%
|
Expected
life of option
|
|
5
years
|
|
|
4.3
years
|
|
|
5
years
|
|
|
4.4
years
|
|
Option
fair value
|
|
|
0.31
|
|
|
|
0.51
|
|
|
|
0.60
|
|
|
|
0.66
|
|
The
dividend yield reflects the assumption that the current dividend payout, which
is zero, will continue with no anticipated increases. The expected life of the
options is based on historical data and is not necessarily indicative of
exercise patterns that may occur. The expected volatility reflects the
assumption that the historical volatility is indicative of future trends, which
may also not necessarily be the actual outcome.
Further
detail on the remuneration of Directors and Executives are also provided in
Note 19 to the financial statements.
Arrangements
and Relationships
There are
no arrangements (other than standard employment remuneration arrangements) by
which any Director or Executive Officer was appointed to his position. There are
no family relationships between any of the Directors or Executive
Officers.
No
Director has received or has become entitled to receive, during or since the end
of the fiscal year ended 2009, a benefit because of a contract made by Novogen
Limited, a controlled entity, or a related body corporate with a Director, a
firm of which a Director is a member or an entity in which a Director has a
substantial financial interest.
Pension
Benefits
The
Company has paid A$1,139,000 during fiscal 2009 for employee superannuation
benefits and pension benefits.
Board
Practices
Novogen Board of
Directors
|
|
|
|
|
Name
|
Postion Held
|
Year First
Appointed
|
Current Term
Expires
|
|
|
|
|
|
|
|
|
P.
A. Johnston
|
Chairman
|
1997
|
October-2012
|
C.
Naughton
|
Managing
Director
|
1997
|
Employment
ceased December 1, 2009
|
P.
B. Simpson
|
Director
|
1994
|
Retired
July ,2009
|
P.
J. Nestel
|
Director
|
2001
|
October-2012
|
G.
M. Leppinus
|
Director
|
2005
|
October-2010
|
A.
J. Husband
|
Executive
Director
|
2006
|
October-2011
|
W.D.
Rueckert
|
Director
|
2009
|
October-2012
|
Term
of Directors
The term
for each Director (excluding the Managing Director) is three years at which time
that Director retires from office and offers himself/herself for re-election at
the next Annual General Meeting. For more information about the term and details
of the Managing Director’s term refer to the employment contract attached filed
as Exhibit 4.1 to the Company’s Annual Report on Form 20-F for fiscal year ended
June 30, 2007 filed with the SEC on November 29, 2007.
The Board
of Directors has the power to appoint any person to be a director either to fill
a casual vacancy or as an additional Director (up to a maximum of 10). Any
Director so appointed may hold office only until the next Annual General Meeting
when he or she shall be eligible for election by the Company
shareholders.
Board
of Directors
The Board
of Directors of Novogen Limited is elected by and accountable to shareholders.
The Board monitors and directs the business and is responsible for the corporate
governance of the Company. The Managing Director, who is accountable to the
Board, is responsible for managing the development of the Company consistent
with the objective of enhancing long term shareholder value.
The Board
is comprised of six Directors four of whom are non-Executive Directors. In
addition, the Board has established an Audit Committee and a Remuneration
Committee.
There are
also Scientific Advisory Boards whose membership includes the Executive Director
which advises on clinical and scientific strategy and direction.
Structure
of the Board of Directors
The
skills, expertise and experience relevant to the position of Director held by
each Director in office at the date of this Annual Report is included in Item 6
beginning on page 42. Directors are considered to be independent when they are
independent of management and free from any business or other relationship that
could materially interfere with, or could reasonably be perceived to materially
interfere with, the exercise of their unfettered and independent
judgement.
In the
context of Director independence, “materiality” is considered from both the
Company and individual Director perspective. In determining whether a
non-Executive Director is independent, he or she must not hold more than 5% of
the Company’s outstanding shares.
Also,
the following qualitative factors, among others, are considered:
·
|
whether
the director has been a principal of a material professional advisor or
consultant of the Company;
|
·
|
whether
the director has a material contractual relationship with the
Company;
|
·
|
whether
the director has served on the Board of Directors for a period which could
be perceived to interfere with his or her ability to act in the best
interests of the Company; and
|
·
|
whether
the director has any business interests which could be perceived to
interfere with his or her ability to act in the best interests of the
Company.
|
In
accordance with the definition of independence above, and the materiality
thresholds set, the following Directors of Novogen Limited are considered to be
independent:
Name
Position
Philip A.
Johnston
Non-Executive
Chairman
Professor
Paul J. Nestel
AO
Non-Executive Director
Peter B.
Simpson
Non-Executive Director –
retired July, 2009
Geoffrey
M.
Leppinus
Non-Executive
Director
William
D.
Rueckert
Non-Executive
Director – appointed March, 2009
There are
procedures in place, agreed upon by the Board of Directors, to enable Directors
in the furtherance of their duties, to seek independent professional advice at
the Company’s expense.
For
additional details regarding appointments to the Board of Directors please refer
to the Company’s web site.
Audit
Committee
The Board
of Directors has an Audit Committee, which operates under a charter approved by
the Board. It is the Board’s responsibility to ensure that an effective internal
control framework exists within the Group. This includes internal controls to
deal with both the effectiveness and efficiency of significant business
processes, the safeguarding of assets, the maintenance of proper accounting
records and the reliability of financial information as well as non-financial
considerations such as bench marking of operational key performance indicators.
The Board of Directors has delegated the responsibility for the establishment
and maintenance of a framework of internal control and ethical standards for the
management of the consolidated entity to the Audit Committee. The Audit
Committee is responsible for the hiring, termination and compensation of the
independent auditors and approving any non-audit work performed by the
auditors.
The Audit
Committee also provides the Board with additional assurance regarding the
reliability of financial information for inclusion in the financial reports. All
members of the Audit Committee are independent Non-Executive
Directors. The members of the Audit Committee during the fiscal year
2009 were Mr. Geoffrey Leppinus (Chairman), Professor Paul J. Nestel, Mr. Philip
A. Johnston and Mr. Peter B. Simpson.
Performance
The
performance of the Board of Directors and the key Executives is reviewed
regularly against both measurable and qualitative indicators. During the
reporting period the Board of Directors conducted a performance evaluation which
involved the assessment of each Board member’s and key Executive’s performance.
The performance criteria against which Directors and Executives are assessed
have regard to the financial and non-financial objectives of Novogen
Limited.
Remuneration
Committee
The
Remuneration Committee of the Board of Directors is responsible for determining
and reviewing compensation arrangements for the Directors, the Managing
Director, Executive Director and senior Executives.
The
Remuneration Committee assesses the appropriateness of the nature and amount of
emoluments of such officers on a periodic basis by reference to relevant
employment market conditions with the overall objective of ensuring maximum
shareholder benefit from the retention of a high quality executive
team.
The
members of the Remuneration Committee during the fiscal year 2009 were Mr.
Philip A. Johnston (Chairman), Mr. Geoffrey Leppinus, Professor Paul J. Nestel,
and Mr. Peter B. Simpson.
Employees
The
Company employed 48 people at June 30, 2009, 68 people at June 30, 2008 and 66
people at June 30, 2007 as follows
Category
of Activity
|
|
Number of People
|
|
|
|
2009
|
2008
|
2007
|
|
Research
and development
|
17
|
30
|
27
|
|
Production
|
|
|
9
|
14
|
14
|
|
Sales
and marketing
|
|
11
|
12
|
13
|
|
Finance
and administration
|
11
|
12
|
12
|
|
Total
|
|
|
48
|
68
|
66
|
|
Geographic
Location
|
|
Number of People
|
|
|
2009
|
2008
|
2007
|
|
Australasia
|
|
43
|
63
|
63
|
|
North
America
|
|
3
|
3
|
2
|
|
Europe
|
|
2
|
2
|
1
|
|
Total
|
|
48
|
68
|
66
|
|
Share
Ownership
Directors'
holdings of shares and options in the Company
The table
below shows the number of ordinary shares and options to purchase Ordinary
Shares held directly or indirectly by the Directors of the Company as of
November 30, 2009. The ordinary shares held by Directors do not entitle them to
voting rights different from those of the Company’s shareholders.
|
|
|
|
|
|
|
|
Ordinary
shares
fully
paid
|
Options
*
|
|
|
|
Number
outstanding
|
|
Exercise
price
|
Expiry
date
|
|
|
|
|
|
|
|
PA
Johnston
|
73,594
|
|
-
|
|
-
|
-
|
C
Naughton
|
633,511
|
|
91,196
|
**
|
2.41
|
30/03/2012
|
|
|
|
218,664
|
**
|
1.06
|
1/03/2013
|
AJ
Husband
|
102,920
|
|
22,592
|
|
4.90
|
16/03/2010
|
|
|
|
30,436
|
|
3.64
|
21/04/2011
|
|
|
|
50,472
|
|
2.41
|
30/03/2012
|
|
|
|
126,928
|
|
1.06
|
1/03/2013
|
|
|
|
|
|
|
|
PJ
Nestel AO
|
32,000
|
|
-
|
|
-
|
-
|
GM
Leppinus
|
11,883
|
|
-
|
|
-
|
-
|
WD
Rueckert
|
5,000
|
|
|
|
|
|
|
858,908
|
|
540,288
|
|
|
|
* Each
option represents the right to purchase one ordinary share.
**
Options forfeited December 1, 2009.
The
tables below shows the number of ordinary shares and options to purchase
ordinary shares held directly or indirectly by the named Executives of the
Company as of November 30, 2009. The ordinary shares held by the named
Executives do not entitle them to voting rights different from those of the
Company’s shareholders.
Shares
held
|
|
|
|
|
|
|
Ordinary
shares fully paid
|
% Total
shares
on
issue
|
|
D.R.
Seaton
|
37,378
|
-
|
|
B.M.
Palmer
|
205,636
|
0.2
|
|
C.D.
Kearney
|
8,850
|
-
|
|
R.L.
Erratt
|
|
271,368
|
0.3
|
|
Options
granted to and held by named Executives
Total
options
|
Eligible
executives
participating
|
Exercise
price
|
Grant
date
|
Expiry
date
|
|
|
|
(A$)
|
|
|
|
|
|
|
|
|
|
69,560
|
5
|
4.90
|
16/03/2005
|
16/03/2010
|
|
93,632
|
5
|
3.64
|
21/04/2006
|
21/04/2011
|
|
157,728
|
5
|
2.41
|
30/03/2007
|
30/03/2012
|
|
379,772
|
5
|
1.06
|
1/03/2008
|
1/03/2013
|
|
659,552
|
5
|
0.53
|
6/03/2009
|
6/03/2014
|
|
Each
option represents the right to purchase one ordinary share.
Exemptions
from Certain Corporate Governance Rules of the NASDAQ Stock Market,
LLC
Exemptions
from the corporate governance standards of the NASDAQ Stock Market, LLC
(“Nasdaq”) are available to foreign private issuers such as Novogen when those
standards are contrary to a law, rule or regulation of any public authority
exercising jurisdiction over such issuer or contrary to generally accepted
business practices in the issuer's country of domicile. In connection with
Novogen's National Market Listing Application, Nasdaq granted Novogen exemptions
from certain corporate governance standards that were contrary to the laws,
rules, regulations or generally accepted business practices of Australia. These
exemptions and the practices followed by Novogen are described
below:
·
|
Novogen
is exempt from Nasdaq's quorum requirements applicable to meetings of
ordinary shareholders. In keeping with the law of Australia and generally
accepted business practices in Australia, Novogen's Constitution requires
a quorum of three shareholders for a shareholders'
meeting.
|
·
|
Novogen
is exempt from Nasdaq's requirement that each Nasdaq issuer shall require
shareholder approval of a plan or arrangement in connection with the
acquisition of the stock or assets of another company if "any director,
officer or substantial shareholder of the issuer has a 5 percent or
greater interest (or such persons collectively have a 10 percent or
greater interest), directly or indirectly, in the Company or assets to be
acquired or in the consideration to be paid in the transaction or series
of related transactions and the present or potential issuance of common
stock, or securities convertible into or exercisable for common stock,
could result in an increase in outstanding common shares or voting power
of 5 percent or more".
|
Novogen
is listed on the ASX and subject to Chapter 10 of the ASX listing rules which
requires shareholder approval for an acquisition from or disposal to a "related
party" (including a director) or "substantial shareholder" (who is entitled to
at least 10% of the voting securities) of "substantial assets". The Australian
Corporations Act to which Novogen is also subject generally requires shareholder
approval for a transaction with a director or director-controlled entity unless
on arm's length terms.
Item
7. Major
Shareholders and Related Party Transactions
Major
Shareholders
Josiah T.
Austin and El Coronado Holdings, LLC (beneficially owned by Mr. Austin) – hold
20,318,053 Ordinary Shares representing 19.9% of the outstanding Ordinary
Shares.
Oppenheimer
holds 12,744,689 ordinary shares representing 12.5% of the outstanding ordinary
shares.
The major
shareholders do not have voting rights that differ from those other shareholders
of the Company.
At
November 30, 2009 there were 10,013,650 of the Company’s ADRs outstanding,
representing 50,068,250 Ordinary Shares (or 49.0% of the then outstanding
Ordinary Shares). At November 30, 2009 there were 40 registered holders of the
Company’s ADRs.
On July
29, 2008 the Company entered into a share subscription agreement with El
Coronado holdings LLC for the placement of 4,531,633 ordinary shares at a
purchase price of A$1.2215 per share raising gross proceeds of A$5,535,390.
Following the placement El Coronado LLC holds 19.9% of the Company’s issued and
outstanding ordinary shares.
On August
1, 2007, El Coronado and certain other accredited investors entered into a
securities subscription agreement with Marshall Edwards pursuant to which El
Coronado purchased 700,000 shares of Marshall Edwards’ common stock at a
purchase price of US$3.00 per share for an aggregate purchase price of
US$2,100,000. El Coronado also received a warrant to purchase an
additional 4 shares of common stock for every block of 10 shares of common stock
purchased. As a result, El Coronado received a warrant to purchase
70,000 shares of common stock. All of the warrants have an exercise
price of US$3.60 per share. The exercise price and number of shares
issuable upon exercise of the warrants are subject to adjustment in the event of
stock dividends, stock splits and other similar events. The warrants may be
exercised beginning February 6, 2008 and will expire five years from the date of
issuance, or August 6, 2012.
On August
1, 2007, Oppenheimer and certain other accredited investors entered into a
securities subscription agreement with Marshall Edwards pursuant to which
Oppenheimer purchased 764,000 shares of Marshall Edwards common stock at a
purchase price of US$3.00 per share for an aggregate purchase price of
US$2,292,000. Oppenheimer also received a warrant to purchase an
additional 4 shares of common stock for every block of 10 shares of common stock
purchased. As a result, Oppenheimer received warrants to purchase
305,600 shares of common stock. All of the warrants have an exercise
price of US$3.60 per share.
The
exercise price and the number of shares issuable upon exercise of the warrants
are subject to adjustment in the event of stock dividends, stock splits and
other similar events. The warrants may be exercised beginning
February 6, 2008, and will expire five years from the date of issuance, or
August 6, 2012.
On July
28, 2008, Oppenheimer entered into a securities subscription agreement with
Marshall Edwards pursuant to which Oppenheimer purchased 1,700,000 shares of
Marshall Edwards common stock at a purchase price of US$2.17 per share for an
aggregate purchase price of US$3,698,000. The shares are registered under the
Securities Act pursuant to an effective shelf registration
statement. On July 30, 2008, Marshall Edwards filed a prospectus
supplement to the shelf registration statement covering the sale of the shares
to Oppenheimer.
There
have been no other significant changes to the shareholdings of the known major
shareholders over the last three years.
Item
8. Financial
Information
Consolidated
financial statements are included in “Item 18 – Financial Statements” on pages
81 through 132.
Export
Sales
Export
sales to third parties from Australia were $1.2 million which represents 14.4%
of total sales. The details of sales by geographic region are contained in “Item
4 – “Information on the Company”.
Legal
Proceedings
There
are no pending legal proceedings which either individually or in the
aggregate will have a significant effect on the Company’s financial
position or loss, nor have any such proceedings had any impact in the
recent past, except that the Company is continuing to prosecute its IP
rights and in June 2007 announced that the Vienna Commercial Court had
upheld a provisional injunction against an Austrian company, APOtrend. The
Company has provided a guarantee to the value of €250,000 with the court
to confirm its commitment to the ongoing enforcement
process.
|
Dividends
The
Company has incurred losses since its inception and as a result has not declared
any dividends. Any dividends declared in the future will be paid in Australian
dollars.
Significant
Changes After Balance Sheet Date
In
August, 2009 the Company entered into a licence agreement with Marshall Edwards
Pty Ltd (“MEPL”) granting an exclusive world-wide, non-transferable licence,
under the Novogen patent rights, to conduct clinical trials and commercialise
and distribute all forms of administering NV-128, except topical applications.
The agreement covers uses of NV-128 in the field of prevention, treatment or
cure of cancer in humans. NV-128 is currently in pre-clinical development
stage.
In
consideration of the license granted, MEPL paid Novogen a licence fee of
US$1,500,000 on August 7, 2009.
In
November 2009, MEPL finalised negotiations and signed a Deed of Release in
relation to claims received in connection with the termination of enrolment into
the OVATURE Phase III clinical trial. As a result of receiving the Deed of
Release, the final amount agreed to be paid in connection with the claims was
$477,000 less than management’s estimates which were accrued in the accounts at
June 30, 2009. Management does not believe this amount has a material impact on
the financial statements.
On
December 1, 2009, Novogen’s Managing Director Christopher Naughton ceased his
employment with the Company. The termination payment of approximately $1.7
million was made in accordance with Mr. Naughton’s employment
contract.
There
have been no other significant events occurring after balance sheet date which
have had a material impact on the business.
Item
9. Offer
and Listing Details
Trading
Markets
Novogen’s
principal listing exchange and the exchange upon which its Ordinary Shares are
quoted is the ASX. The trading symbol on ASX is “NRT”.
American
Depositary Receipts
Novogen’s
Ordinary Shares trade in the U.S. in the form of ADRs on the Nasdaq Global
Market. Each ADR represents five Ordinary Shares of Novogen. The trading symbol
on the Nasdaq Global Market is "NVGN”. Novogen has entered into a Deposit
Agreement with the Bank of New York under which the Bank of New York, acting as
depositary, issues the ADRs.
The
following table sets forth, for the calendar periods indicated, the high and low
market quotations for Novogen’s Ordinary Shares, as quoted on the ASX, and
Novogen's ADRs, as quoted on the Nasdaq Global Market.
NOVOGEN
LIMITED SHARE PRICE HISTORY
|
|
|
|
|
|
|
Period
|
|
Per
Ordinary Share (A$)
|
|
Per
ADR (US$)
|
|
|
High
|
Low
|
|
High
|
Low
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
2005
|
|
6.25
|
4.15
|
|
24.35
|
14.85
|
June
2006
|
|
6.00
|
2.14
|
|
22.08
|
8.03
|
June
2007
|
|
3.80
|
1.81
|
|
13.25
|
8.14
|
June
2008
|
|
2.14
|
0.83
|
|
10.13
|
3.89
|
June
2009
|
|
1.70
|
0.37
|
|
7.45
|
1.23
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
|
|
September
2007
|
|
2.14
|
1.70
|
|
8.97
|
6.82
|
December
2007
|
|
1.88
|
1.10
|
|
8.53
|
4.57
|
March
2008
|
|
1.32
|
0.83
|
|
6.75
|
3.89
|
June
2008
|
|
1.84
|
1.01
|
|
10.13
|
4.88
|
|
|
|
|
|
|
|
September
2008
|
|
1.70
|
0.98
|
|
7.45
|
4.19
|
December
2008
|
|
1.15
|
0.66
|
|
5.07
|
1.86
|
March
2009
|
|
1.01
|
0.37
|
|
3.27
|
1.23
|
June
2009
|
|
1.26
|
0.44
|
|
7.00
|
1.38
|
|
|
|
|
|
|
|
September
2009
|
|
0.89
|
0.52
|
|
5.24
|
2.02
|
|
|
|
|
|
|
|
Month
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
2009
|
|
0.87
|
0.52
|
|
3.43
|
2.05
|
July
2009
|
|
0.89
|
0.52
|
|
5.24
|
2.02
|
August
2009
|
|
0.82
|
0.65
|
|
3.40
|
2.81
|
September
2009
|
|
0.75
|
0.63
|
|
4.00
|
2.40
|
October
2009
|
|
0.72
|
0.59
|
|
3.21
|
2.65
|
November
2009
|
|
0.60
|
0.47
|
|
2.87
|
2.07
|
Item
10. Additional
Information
Constitution
The
Company’s Constitution is incorporated by reference to the Registration
Statement on Form 20-F filed with the SEC on December 24, 1998 (File No.
0-29962).
Material
Contracts
There have been no material contracts
entered into in the last two years by the Company or any of its subsidiaries
other than in the normal course of business
.
See “Item
4. Information on the Company – Patent Protection – Licensing Arrangements” for
a description of the Company’s Patent License Agreement with Solae LLC (formally
Protein Technologies International Inc.)
Exchange
Controls
Australia
has largely abolished exchange controls on investment transactions. The
Australian dollar is freely convertible into U.S. dollars. In addition, (other
than as specified under “taxation” below and certain restrictions imposed under
Australian law in relation to dealings with the assets of and transactions with,
designated countries, entities and persons specified by the Reserve Bank of
Australia from time to time, including, persons connected with terrorism) there
are currently no specific rules or limitations regarding the export from
Australia of profits, dividends, capital, or similar funds belonging to foreign
investors, except that certain payments to non-residents must be reported to the
Australian Transaction Reports and Analysis Centre, which monitors such
transactions. However, as mentioned above, the Reserve Bank of Australia does
retain discretion to prevent foreign exchange dealings in certain circumstances
under the Australian Banking (Foreign Exchange) Regulations 1959.
Under
Australian law, foreign persons are prohibited from acquiring more than a
limited percentage of the interests in an Australian company without approval
from the Australian Treasurer or in certain other limited circumstances. These
limitations are set forth in the Australian Foreign Acquisitions and Takeovers
Act 1975 (the “Foreign Takeovers Act”).
Under the
Foreign Takeovers Act, as currently in effect, any foreign person, together with
associates, is prohibited from acquiring, without prior approval from the
Australian Treasurer, 15% or more of the voting power (including potential
voting power) or issued shares (including rights to issued shares) ("Substantial
interest") of an entity such as Novogen, whose total share value or gross assets
exceed A$219 million, unless the person is a U.S. investor, in which case a
threshold of A$953 million rather than A$219 million threshold
applies. Where an acquisition is made in breach of these
requirements, the Australian Treasurer may make an order requiring the acquirer
to dispose of its Substantial Interest within a specified period of time. In
addition, if a foreign person acquires a Substantial Interest in Novogen in
circumstances where the above thresholds would be exceeded and as a result the
total holdings of all foreign persons and their associates exceeds 40% in
aggregate without the approval of the Australian Treasurer, then the Australian
Treasurer may make an order requiring the acquirer to dispose of its Substantial
Interest within a specified time.
The same
rule applies if the total holdings of all foreign persons and their associates
already exceeds 40% and a foreign person (or its associate) acquires any further
interests, including in the course of trading in the secondary market of the
ADRs.
Under the
current Australian foreign investment policy, it is unlikely that the Australian
Treasurer would make such an order in relation to an acquisition that
contravenes the Foreign Takeovers Act where the level of foreign ownership
exceeds 40% in the ordinary course of trading, unless the Australian Treasurer
is satisfied that the acquisition is contrary to the national interest. The
Foreign Takeovers Act allows foreign persons to seek prior approval of
acquisitions of Novogen interests which could otherwise result in the Australian
Treasurer making an order requiring the foreign person to dispose of any
Substantial Interest.
If a
foreign person holds more than 15% of the interests of Novogen or if the level
of aggregate foreign ownership of Novogen exceeds 40% at any time, Novogen would
be considered a foreign person under the Foreign Takeovers Act. In such event,
Novogen would be required to obtain the approval of the Australian Treasurer for
Novogen, together with its associates, to acquire: (i) more than 15% of an
Australian company or business with a share value or gross assets totaling over
A$219 million; or (ii) any direct or indirect ownership interest in Australian
urban land. However, as mentioned above, proposals by U.S. investors
for investment in non-sensitive sectors do not require notification to the
Australian Treasurer or the Australian Treasurer's approval unless the amount to
be invested or the value of the target Australian company or business exceeds
A$953 million.
The
percentage of foreign ownership of Novogen would also be included in determining
the foreign ownership of any Australian company or business in which it may
choose to invest. Novogen has no current plans for any such acquisitions. The
Company’s Constitution does not contain any additional limitations on a
non-resident’s right to hold or vote the Company’s securities.
Taxation
The
following discussion is a summary of the Australian taxes generally applicable
to U.S. Holders of ADRs. For the purposes of this discussion, “U.S. Holder”
means a beneficial owner of ADRs who:
(a) for
U.S. federal income tax purposes is a U.S. resident, a U.S. citizen, a domestic
corporation, a domestic partnership, or a non-foreign estate or
trust;
(b) are
not residents of Australia for Australian income tax purposes; and
(c) has
not owned, at any time directly, indirectly or constructively, 10% or more of
the voting stock of the Company.
Prospective
investors are urged to consult their own tax advisers regarding the U.S. and
Australian tax consequences of owning and disposing of Ordinary Shares and ADRs,
including in relation to state and local tax laws. Further, prospective
investors who are residents of jurisdictions other than the U.S. should consult
their tax advisers as to the tax consequences of investing in the ADRs or shares
under the laws of their jurisdictions of residence.
This
taxation discussion is intended only as a descriptive summary and does not
purport to be a complete technical analysis or listing of all potential tax
effects to U.S. Holders, and does not address the Australian taxes applicable to
special classes of U.S. Holders. Except as otherwise noted, the statements of
Australian tax laws set out below are based on the laws as of the date of this
Annual Report, including the bilateral taxation convention between Australia and
the U.S. (the “Treaty”) and are subject to any changes in law occurring after
that date.
Distributions
Under
Australian law, non-residents of Australia may be subject to withholding tax of
up to 30% in respect of dividends received on shares in Australian
companies.
In
accordance with the Treaty, dividends derived by a non-resident of Australia who
is a resident of the U.S. for the purposes of Treaty (which may not include all
U.S. Holders) may be taxed on those dividends in Australia, but such withholding
tax is limited to 15% of the gross amount of dividends unless the dividend is
derived by a non-resident of Australia who has or is deemed to have a permanent
establishment in Australia. In this case, the non-resident may be taxed at the
rate applicable to them. Some U.S. resident companies may be entitled
to a withholding rate of 5% if they hold at least 10% of the voting power of the
Australian company.
In some
instances withholding tax may not apply. Under the Australian dividend
imputation system, dividends that are paid out of income on which Australian
income tax has been levied may be wholly or partly "franked". No withholding tax
is payable in respect of any franked portion of a dividend.
Under the
conduit foreign income rules, the unfranked portion of a dividend paid to a
non-resident of Australia is not subject to withholding tax to the extent that
the amount is declared to be conduit foreign income ie an amount calculated by
reference to certain foreign source income earned by the Australian company on
which no Australian tax is payable.
Dispositions
Upon
disposal of shares or ADRs, a capital gain or a capital loss may be made. A
capital gain is calculated as the difference between the disposal proceeds and
the cost base of the shares or ADRs. Broadly, the cost base is the total of the
amount paid for the shares or ADRs plus acquisition and/or disposal costs (such
as brokerage or stamp duty).
Capital
gains made by non-residents of Australia are only subject to Australian tax if
they are in respect of the disposal of assets which are taxable Australian
property. Very broadly, a share or ADR will be taxable Australian
property if the share or ADR is in a company that principally owns (directly or
indirectly) Australian real property and the share is part of a shareholding
that represents at least 10% of all of the shares or ADRs in the company (when
taking into account shares or ADRs owned by the participant or
associates). Any non-resident shareholder who held at least 10% of
shares or ADRs (when taking into account shares or ADRs owned by the participant
or associates) at any time during the 2 years prior to disposing of the shares
or ADRs in the company should consult their own tax advisers.
However,
shares or ADRs will be taxable Australian property and any capital gain made on
the disposal of such shares or ADRs will be subject to Australian tax if the
share or ADRs have at any time been held by a taxpayer in carrying on a business
through a permanent establishment in Australia.
If the
shares or ADRs were acquired before 11:45 am on September 21, 1999 the cost base
may be indexed for inflation up to September 30, 1999. For a Holder to whom the
CGT discount applies (see below), indexation will only apply if the Holder
elects to use indexation instead of the discount. Indexation will not be
available if the shares or ADRs were acquired after 11:45 am on September 21,
1999 and will effectively only be relevant if the shares were acquired before
July 1, 1999.
Holders
who are individuals or who hold shares or ADRs directly through trusts and are
subject to Australian tax may be eligible to have their capital gain (after
applying any capital losses against it) discounted if they have held their
shares or ADRs for at least 12 months. The CGT discount is 50%. If the shares or
ADRs were acquired before 11:45 am on September 21, 1999, such Holders may
choose whether to calculate their capital gain using indexation frozen at
September 21, 1999 or by applying the CGT discount without indexation. If the
shares or ADRs were acquired after 11:45 am on September 21, 1999, it will not
be possible to elect to apply indexation and such Holders will be entitled to
the CGT discount if they have held the shares or ADRs for at least 12 months.
Companies are not entitled to the CGT discount.
A capital
loss will be made if the disposal proceeds are less than the reduced cost base.
Broadly, the reduced cost base will be calculated in a similar way to the cost
base, however, the reduced cost base is calculated without indexation. Capital
losses can only be offset against capital gains realised in the same year or in
later years.
Non-residents
of Australia who are subject to Australian tax on capital gains made on the
disposal of shares or ADRs are required to file an Australian income tax return
for the year in which the disposal occurs.
Non-residents
of Australia who are securities dealers or in whose hands a profit on disposal
of ADRs or shares is regarded as ordinary income and not as a capital gain (such
shares and ADRs are referred to as "revenue assets") will be subject to
Australian income tax on Australian source profits arising on the disposal of
the ADRs or shares, without indexation or discount, unless such profits are
exempt from Australian tax under the Treaty. Under the Business Profits Article
of the Treaty, the profits of a person that is a resident of the U.S. for the
purposes of the Treaty (which may not include all U.S. Holders) will not be
subject to tax in Australia unless the profits are attributable to the carrying
on of a business by that person through a permanent establishment of that person
in Australia. Prospective investors should consult their own tax advisers as to
whether the shares or ADRs are revenue assets as such a conclusion depends on
the particular facts and circumstances of the individual investor
concerned.
Non-residents
of Australia with no taxable capital gains or income from sources in Australia
other than dividends with respect to the shares or ADRs are not required to file
an Australian income tax return.
Estate
and Gift Tax
Australia
does not impose any estate, inheritance or gift taxes. Therefore, no Australian
estate tax, inheritance tax or gift tax will be imposed on the death of, or upon
a lifetime gift by, a U.S. Holder. However, the transfer by a U.S. Holder of
ordinary shares or ADRs by way of gift or upon death may have Australian income
tax and stamp duty implications.
Documents
on Display
The
Company is subject to the reporting requirements of the Exchange Act that are
applicable to a foreign private issuer. Under the Exchange Act, the Company is
required to file periodic reports and other information with the SEC. These
materials, including this Annual Report and the exhibits hereto, may be
inspected without charge and copied at established rates at the public reference
facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C.,
20549. Please call the SEC at 1-800-SEC-0330 to obtain
information on the operation of the public reference room. Such
materials can also be obtained at the SEC’s website at www.sec.gov.
Item
11. Quantitative
and Qualitative Disclosures about Market Risk.
Interest
Rate Risk
The
Company has cash reserves and places funds on deposit with financial
institutions for periods generally not exceeding three months.
The
Company does not use derivative financial instruments. The Company places its
deposits with high credit quality financial institutions, and, by policy, limits
the amount of credit exposure to any single counter-party. The Company is averse
to principal loss and ensures the safety and preservation of its invested funds
by limiting default risk, market risk and reinvestment risk.
The
Company mitigates default risk by depositing funds with only the safest and
highest credit quality financial institutions and by constantly positioning its
portfolio to respond appropriately to a significant reduction in a credit rating
of any financial institution.
The
Company has no interest rate exposure due to rate changes for long-term debt
obligations. The Company primarily enters into debt obligations to support
general corporate purposes, including capital expenditures and working capital
needs.
The
Company does not consider the effects of interest rate movements to be a
material risk to its financial condition.
For
additional disclosure regarding interest rate risk see Item 18 – Note
15.
Foreign
Currency Risk
The
Company operates internationally and is exposed to foreign exchange risk arising
from various currency exposures, primarily with respect to the U.S. dollar
(USD), the British pound (GBP), the Euro, the Swiss Franc (CHF) and the Canadian
dollar (CAD). Foreign exchange risk arises from future transactions and
recognised assets and liabilities denominated in a currency that is not the
entity’s functional currency and net investments in foreign
operations.
As of
June 30, 2009, the Group did not hold derivative financial instruments in
managing its foreign currency, however, the Company may from time to time enter
into hedging arrangements where circumstances are deemed appropriate. Foreign
subsidiaries with a functional currency of AUD have exposure to the local
currency of these subsidiaries and any other currency these subsidiaries trade
in. The functional currency of Marshall Edwards, Inc. and Glycotex, Inc. is USD
and these subsidiaries have exposure to AUD and any other currency these
subsidiaries trade in.
The
Company has mitigated and will continue to mitigate a portion of its currency
exposure through international sales, marketing and support operations in which
all costs are local currency based. Net foreign currency gain in fiscal year
2009 was A$920,000 compared with net foreign currency loss of A$937,000 in
fiscal year 2008.
For
additional disclosure regarding market risk see Item 18 – Note 15.
Item
12. Description
of Securities Other than Equity Securities
Item 12
details are not required to be disclosed as part of the Annual
Report.
PART II
Item
13. Defaults,
Dividend Arrearages and Delinquencies
This item
is not applicable.
Item
14.
|
Material
Modifications to the Rights of Security Holders and the Use of
Proceeds
|
This item
is not applicable.
Item
15. Controls
and Procedures
(a)
Disclosure Controls and Procedures
At the
end of the period covered by this Annual Report, the Company’s management, with
the participation of the Company’s Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of the Company’s disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).
Based on that evaluation, the Company’s Chief Executive Officer and Chief
Financial Officer have concluded that the Company’s disclosure controls and
procedures are effective to ensure that the information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act were
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms.
(b)
Management’s Annual Report on Internal Controls Over Financial
Reporting
The
management of Novogen Limited is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a -
15(f) under the Exchange Act. Novogen Limited’s internal control was designed to
provide reasonable assurance to the Company’s management and Board of Directors
regarding the preparation and fair presentation of published financial
statements. All internal control systems, no matter how well
designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
Management
maintains a comprehensive system of controls intended to ensure that
transactions are executed in accordance with management’s authorization, assets
are safeguarded, and financial records are reliable. Management also
takes steps to ensure that information and communication flows are effective and
monitor performance, including performance of internal control
procedures.
Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of June 30, 2009 based on the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission in Internal
Control-Integrated Framework. Based on this assessment, management believes that
the Company’s internal control over financial reporting is effective as of June
30, 2009.
(c)
Attestation Report
The
attestation report of the Company’s independent registered public accounting
firm regarding the Company’s internal control over financial reporting appears
in the independent public account firm’s report on page 79.
(d)
Changes in Internal
Controls
During
the fiscal year ended June 30, 2009, there has been no change in internal
control over reporting that has materially affected or is reasonably likely to
materially affect the Company’s internal control over financial
reporting.
Item
16. Reserved
Item
16A. Audit
Committee Financial Expert
The Board
of Directors has determined that Mr. Geoffrey Leppinus, qualifies as an “audit
committee financial expert” as that term is defined in Item 16A of Form 20-F.
Mr. Leppinus meets the independence requirements of the Nasdaq Global
Market and SEC’s rules and regulations.
Item
16B. Code
of Ethics
The
Company has adopted a Code of Ethics that applies to all its employees,
Executive Officers and Directors, including its Chief Executive Officer, Chief
Financial Officer and persons performing similar functions. A copy of the Code
of Ethics is posted in the “About Novogen – Corporate Governance” section of
Novogen Limited’s website, and may be viewed at
http://www.novogen.com
.
If the Company makes any substantive amendment, to the Code of Ethics or grants
any waiver, including an implicit waiver, from a provision of the Code of Ethics
to Directors or Executive Officers, it will disclose the nature of such
amendment or waiver on the Company’s website.
Item
16C. Principal
Accounting Fees and Services
BDO
Kendalls Audit Assurance (NSW-VIC) Pty Ltd (“BDO”) has audited the Company’s
annual financial statements acting as the independent registered public
accountant for the fiscal years ended June 30, 2009 and 2008.
The
charts below set forth the total fees for services performed by BDO in 2009 and
2008 and summarizes these amounts by the category of service.
|
2009
|
2008
|
|
|
A$’000
|
A$’000
|
|
|
|
|
|
|
|
|
|
Audit
fees
|
329
|
334
|
|
Audit
related fees
|
3
|
29
|
|
Tax
fees
|
51
|
26
|
|
Other
Fees
|
6
|
8
|
|
Total
fees
|
389
|
397
|
|
Audit
fees
The audit
fees include the aggregate fees incurred in fiscal years 2009 and 2008 for
professional services rendered in connection with the audit of the Company’s
annual financial statements and for related services that are reasonably related
to the performance of the audit (including audit in respect of the
Sarbanes-Oxley Section 404) or services that are normally provided by the
auditor in connection with regulatory filings of engagements for those financial
years (including review of the Company’s Annual Report on Form 20-F, consents
and other services related to SEC matters).
Audit
Related Services
Fees for
audit related services billed in each of the fiscal years 2009 and 2008 include
audit related services provided in connection with the filing of a registration
statement for Marshall Edwards and the requirements of the provisions of
government grant agreements pursuant to which the Company receives reimbursement
of certain expenses incurred in research and development including START grants
and Pharmaceutical Partnership Program.
Tax
Fees
Tax fees
billed in each of the fiscal years 2009 and 2008 were for the preparation of tax
returns and related advice.
All
Other Fees
Other
fees incurred by the Company in fiscal years 2009 and 2008 relate to the costs
associated with regulatory compliance and other general matters.
Pre-approval
Policies and Procedures
The Audit
Committee Charter sets forth the Company’s policy regarding the appointment of
independent auditors. The Audit Committee Charter also requires the Audit
Committee to review and approve in advance the appointment of the independent
auditors for the performance of 100% of all audit services and, after taking
into account the opinion of management, 100% of lawfully permitted non audit
services. The Audit Committee may delegate authority to one or more members of
the Audit Committee where appropriate, but no such delegation is permitted if
the authority is required by law, regulation or listing standard to be exercised
by the Audit Committee as a whole.
Item
16D. Exemptions
from the Listing Standards for Audit Committees.
This item
is not applicable.
Item
16E. Purchases
of Equity Securities by the Issuer and Affiliated Purchasers.
This item
is not applicable.
Item
16G. Corporate
Governance
Exemptions
from Certain Corporate Governance Rules of the NASDAQ Stock Market,
LLC
Exemptions
from the corporate governance standards of the NASDAQ Stock Market, LLC
(“Nasdaq”) are available to foreign private issuers such as Novogen when those
standards are contrary to a law, rule or regulation of any public authority
exercising jurisdiction over such issuer or contrary to generally accepted
business practices in the issuer's country of domicile. In connection with
Novogen's National Market Listing Application, Nasdaq granted Novogen exemptions
from certain corporate governance standards that were contrary to the laws,
rules, regulations or generally accepted business practices of Australia. These
exemptions and the practices followed by Novogen are described
below:
·
|
Novogen
is exempt from Nasdaq's quorum requirements applicable to meetings of
ordinary shareholders. In keeping with the law of Australia and generally
accepted business practices in Australia, Novogen's Constitution requires
a quorum of three shareholders for a shareholders'
meeting.
|
·
|
Novogen
is exempt from Nasdaq's requirement that each Nasdaq issuer shall require
shareholder approval of a plan or arrangement in connection with the
acquisition of the stock or assets of another company if "any director,
officer or substantial shareholder of the issuer has a 5 percent or
greater interest (or such persons collectively have a 10 percent or
greater interest), directly or indirectly, in the Company or assets to be
acquired or in the consideration to be paid in the transaction or series
of related transactions and the present or potential issuance of common
stock, or securities convertible into or exercisable for common stock,
could result in an increase in outstanding common shares or voting power
of 5 percent or more".
|
Novogen
is listed on the ASX and subject to Chapter 10 of the ASX listing rules which
requires shareholder approval for an acquisition from or disposal to a "related
party" (including a director) or "substantial shareholder" (who is entitled to
at least 10% of the voting securities) of "substantial assets". The Australian
Corporations Act to which Novogen is also subject generally requires shareholder
approval for a transaction with a director or director-controlled entity unless
on arm's length terms.
PART
III
Item
17. Financial
Statements
Not
Applicable
Item
18. Financial
Statements
The
financial statements filed as part of this Annual Report are included on pages
81 through 132 hereof.
Item
19. Exhibits
Exhibit
No.
|
Exhibit
Description
|
1.1
|
Constitution
of Novogen Limited (formerly known as the Memorandum of Association and
Articles of Association). (1)
|
2.1
|
Deposit
Agreement as further amended and restated, dated as of September 29, 2005,
among Novogen Limited, the Bank of New York, as Depositary, and owners and
holders from time to time of ADRs issued thereunder. (2)
|
4.1
|
Employment
Contract between the Company and Mr. C. Naughton dated June 21, 2006.
(4)
|
4.2
|
Employment
Contract between the Company and Professor Alan Husband dated June 21,
2006. (4)
|
4.4
|
Lease
between Kendall Glen Pty Limited (Lessor) and Novogen Laboratories Pty Ltd
for the Company's corporate headquarters at 140 Wicks Road, North Ryde,
New South Wales. (3)
|
4.5
|
Employment
Contract between the Company and Bryan Palmer dated June 21, 2006.
(4)
|
4.6
|
Employment
Contract between the Company and Craig Kearney dated June 21, 2006.
(4)
|
4.7
|
Employment
Contract between the Company and David Seaton dated June 21, 2006.
(4)
|
4.8
|
Employment
Contract between the Company and Ronald Erratt dated June 21, 2006.
(4)
|
4.9
|
Employment
Contract between the Company and Warren Lancaster dated June 21, 2006.
(5)
|
4.10
|
Patent
License Agreement, dated as of November 13, 1997, by and among
Novogen Limited, Novogen Research Pty Limited, Novogen Inc. and Protein
Technologies International Inc.** (6)
|
4.11
|
Amendment
to the Patent License Agreement, dated as of June 21, 2004 by and
among Novogen Limited, Novogen Research Pty Limited, Novogen Inc. and
Solae LLC (formerly known as Protein Technologies International Inc.)**
(7)
|
8.1
|
Company
Subsidiaries. (*)
|
12.1
|
Certification
of the Acting Chief Executive Office pursuant to Rule 13a – 14(a) of the
Securities Exchange Act of 1934, as amended. (*)
|
12.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a – 14(a) of the Securities
Exchange Act of 1934, as amended. (*)
|
13.1
|
Certification
by the Acting Chief Executive Officer and Chief Financial Officer pursuant
to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes – Oxley
Act of 2002. (*)
|
|
**
|
Portions
of these documents have been omitted pursuant to a request for
confidential treatment. Such omitted portions have been filed separately
with the SEC.
|
|
(1)
|
Incorporated
by reference to the Registration Statement on Form 20-F filed with the
Securities and Exchange Commission on December 24, 1998 (File No.
0-29962)
|
(2)
|
Incorporated
by reference to the Registration Statement on Form F-6 filed with the
Securities and Exchange Commission on September 29, 2005 (File No.
333-128681)
|
(3)
|
Incorporated
by reference to the Annual Report on Form 20-F filed with the Securities
and Exchange Commission on November 27, 2000 (File No.
0-29962)
|
(4)
|
Incorporated
by reference to the Annual Report on Form 20-F filed with the Securities
and Exchange Commission on November 29, 2006 (File No.
0-29962)
|
(5)
|
Incorporated
by reference to the Annual Report on Form 20-F filed with the Securities
and Exchange Commission on December 14, 2007 (File No.
0-29962)
|
|
(6)
|
Incorporated
by reference to the Annual Report on Form 20-F/A filed with the Securities
and Exchange Commission on March 20, 2009 (File No.
0-29962).
|
|
(7)
|
Incorporated
by reference to the Annual Report on Form 20-F/A filed with the Securities
and Exchange Commission on May 5, 2009 (File No.
0-29962).
|
Report
of Independent Registered Public Accounting Firm
Board of
Directors
Novogen
Limited
We have
audited the accompanying consolidated balance sheets of Novogen Limited as of
June 30, 2009 and 2008 and the related consolidated statements of income,
consolidated statements of changes in equity, and consolidated statements of
cash flows for each of the three years in the period ended June 30,
2009. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.
We
believe that our audits provide a reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Novogen Limited at June 30,
2009 and 2008, and the results of its operations and its cash flows for each of
the three years in the period ended June 30, 2009
,
in conformity with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Novogen Limited’s internal control over
financial reporting as of June 30, 2009, based on criteria established in
Internal
Control – Integrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and our report dated December 9,
2009 expressed an unqualified opinion thereon.
BDO
Kendalls Audit & Assurance (NSW-VIC) Pty Ltd
Sydney,
NSW Australia
December
9, 2009
Report
of Independent Registered Public Accounting Firm
Board of
Directors
Novogen
Limited
We have
audited Novogen Limited’s internal control over financial reporting as of June
30, 2009, based on criteria established in
Internal
Control – Integrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Novogen Limited’s
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Item 15(b),
Management’s Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the company’s internal control over
financial reporting based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
A
company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the company’s assets that could have a material effect on the financial
statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our opinion, Novogen
Limited maintained, in all material respects, effective internal control over
financial reporting as of June 30, 2009, based on the COSO criteria
.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the accompanying consolidated balance sheets of
Novogen Limited as of June 30, 2009 and June 30, 2008, and the related
consolidated income statements, consolidated statements of changes in equity and
consolidated statements of cash flows for each of the three years in the period
ended June 30, 2009 and our report dated December 9, 2009 expressed an
unqualified opinion.
BDO
Kendalls Audit & Assurance (NSW-VIC) Pty Ltd
Sydney,
NSW, Australia
December
9, 2009
Directors’
Declaration
In
accordance with a resolution of the Directors of Novogen Limited, I state
that:
1.
|
In
the opinion of the Directors:
|
a)
|
the
financial statements and notes of the Company are in accordance with the
Corporations Act 2001, including:
|
i)
|
giving
a true and fair view of the Company’s financial position as at June 30,
2009 and of their performance for the year ended on that date;
and
|
ii)
|
complying
with Accounting Standards and Corporations Regulations 2001;
and
|
b)
|
there
are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and
payable.
|
2.
|
This
declaration has been made after receiving the declarations required to be
made to the directors in accordance with section 295A of the Corporations
Act 2001 for the financial period ending June 30,
2009.
|
3.
|
In
the opinion of the Directors, as at the date of this declaration, there
are reasonable grounds to believe that the members of the Closed Group
identified in Note 17, will be able to meet any obligations or liabilities
to which they are or may become subject to, by virtue of the Deed of Cross
Guarantee.
|
On behalf
of the Board,
/s/ Philip
Johnston
Philip
Johnston
Non-executive
Chairman
Sydney,
December 9, 2009
INCOME
STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for
the year ended 30 June, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
Consolidated
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
|
US$'000
|
|
Continuing
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
2
|
|
|
|
11,147
|
|
|
|
13,283
|
|
|
|
17,295
|
|
|
|
8,979
|
|
Cost
of sales
|
|
|
|
|
|
|
(2,523
|
)
|
|
|
(4,090
|
)
|
|
|
(6,945
|
)
|
|
|
(2,032
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
|
|
|
8,624
|
|
|
|
9,193
|
|
|
|
10,350
|
|
|
|
6,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
2
|
|
|
|
-
|
|
|
|
1,623
|
|
|
|
2,710
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
& development expenses
|
|
|
|
|
|
|
(18,788
|
)
|
|
|
(18,811
|
)
|
|
|
(16,134
|
)
|
|
|
(15,134
|
)
|
Selling
& promotional expenses
|
|
|
|
|
|
|
(6,572
|
)
|
|
|
(6,134
|
)
|
|
|
(7,908
|
)
|
|
|
(5,294
|
)
|
Shipping
and handling expenses
|
|
|
|
|
|
|
(341
|
)
|
|
|
(300
|
)
|
|
|
(392
|
)
|
|
|
(275
|
)
|
General
and administrative expenses
|
|
|
|
|
|
|
(6,671
|
)
|
|
|
(9,792
|
)
|
|
|
(12,902
|
)
|
|
|
(5,373
|
)
|
Other
expenses
|
|
|
|
|
|
|
(27
|
)
|
|
|
(528
|
)
|
|
|
(17
|
)
|
|
|
(21
|
)
|
Finance
costs
|
|
|
|
|
|
|
(11
|
)
|
|
|
(24
|
)
|
|
|
(2
|
)
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income tax
|
|
|
2
|
|
|
|
(23,786
|
)
|
|
|
(24,773
|
)
|
|
|
(24,295
|
)
|
|
|
(19,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense
|
|
|
3
|
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the period
|
|
|
|
|
|
|
(23,787
|
)
|
|
|
(24,777
|
)
|
|
|
(24,296
|
)
|
|
|
(19,160
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
attributable to minority interest
|
|
|
|
|
|
|
4,859
|
|
|
|
4,513
|
|
|
|
4,315
|
|
|
|
3,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
attributable to members of Novogen Limited
|
|
|
12
|
(c)
|
|
|
(18,928
|
)
|
|
|
(20,264
|
)
|
|
|
(19,981
|
)
|
|
|
(15,246
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted earnings/(loss) per share (cents)
|
|
|
4
|
|
|
|
(18.6
|
)
|
|
|
(20.8
|
)
|
|
|
(20.5
|
)
|
|
|
(15.0
|
)
|
The above
Income Statements should be read in conjunction with the accompanying
notes.
BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
as
at 30 June, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
Consolidated
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
US$'000
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
5
|
|
|
|
33,338
|
|
|
|
35,386
|
|
|
|
26,854
|
|
Trade
and other receivables
|
|
|
6
|
|
|
|
2,252
|
|
|
|
4,969
|
|
|
|
1,814
|
|
Inventories
|
|
|
7
|
|
|
|
1,334
|
|
|
|
1,929
|
|
|
|
1,075
|
|
Other
current assets
|
|
|
8
|
|
|
|
565
|
|
|
|
542
|
|
|
|
455
|
|
Total
current assets
|
|
|
|
|
|
|
37,489
|
|
|
|
42,826
|
|
|
|
30,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
9
|
|
|
|
353
|
|
|
|
575
|
|
|
|
284
|
|
Total
non-current assets
|
|
|
|
|
|
|
353
|
|
|
|
575
|
|
|
|
284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
|
|
|
|
37,842
|
|
|
|
43,401
|
|
|
|
30,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
and other payables
|
|
|
10
|
|
|
|
8,059
|
|
|
|
6,671
|
|
|
|
6,492
|
|
Provisions
|
|
|
11
|
|
|
|
774
|
|
|
|
708
|
|
|
|
623
|
|
Total
current liabilities
|
|
|
|
|
|
|
8,833
|
|
|
|
7,379
|
|
|
|
7,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
11
|
|
|
|
236
|
|
|
|
385
|
|
|
|
190
|
|
Total
non-current liabilities
|
|
|
|
|
|
|
236
|
|
|
|
385
|
|
|
|
190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
|
|
|
|
9,069
|
|
|
|
7,764
|
|
|
|
7,305
|
|
NET
ASSETS
|
|
|
|
|
|
|
28,773
|
|
|
|
35,637
|
|
|
|
23,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed
equity
|
|
|
12(a)
|
|
|
|
206,419
|
|
|
|
200,432
|
|
|
|
166,271
|
|
Reserves
|
|
|
12(b)
|
|
|
|
(3,010
|
)
|
|
|
(7,491
|
)
|
|
|
(2,425
|
)
|
Accumulated
losses
|
|
|
12(c)
|
|
|
|
(179,730
|
)
|
|
|
(162,251
|
)
|
|
|
(144,772
|
)
|
Parent
interest
|
|
|
|
|
|
|
23,679
|
|
|
|
30,690
|
|
|
|
19,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
Interest
|
|
|
12(d)
|
|
|
|
5,094
|
|
|
|
4,947
|
|
|
|
4,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
EQUITY
|
|
|
|
|
|
|
28,773
|
|
|
|
35,637
|
|
|
|
23,177
|
|
The above
Balance Sheets should be read in conjunction with the accompanying
notes.
STATEMENTS
OF CHANGES IN EQUITY
|
|
for
the year ended 30 June, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
Contributed
equity
|
|
|
Accumulated
losses
|
|
|
Reserves
|
|
|
Total
|
|
|
Minority
interest
|
|
|
Total
equity
|
|
|
Total
equity
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
1 July, 2006
|
|
|
176,989
|
|
|
|
(131,700
|
)
|
|
|
(2,847
|
)
|
|
|
42,442
|
|
|
|
2,136
|
|
|
|
44,578
|
|
|
|
35,908
|
|
Exchange
differences on translation of foreign operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,607
|
)
|
|
|
(2,607
|
)
|
|
|
(1,312
|
)
|
|
|
(3,919
|
)
|
|
|
(3,157
|
)
|
Share-based
payments
|
|
|
-
|
|
|
|
2,303
|
|
|
|
-
|
|
|
|
2,303
|
|
|
|
478
|
|
|
|
2,781
|
|
|
|
2,240
|
|
Net
income recognised directly in equity
|
|
|
176,989
|
|
|
|
(129,397
|
)
|
|
|
(5,454
|
)
|
|
|
42,138
|
|
|
|
1,302
|
|
|
|
43,440
|
|
|
|
34,991
|
|
Issue
of share capital by subsidiary
|
|
|
24,371
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,371
|
|
|
|
-
|
|
|
|
24,371
|
|
|
|
19,631
|
|
less
minority interest
|
|
|
(5,277
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,277
|
)
|
|
|
5,277
|
|
|
|
-
|
|
|
|
-
|
|
Options
exercised (1)
|
|
|
513
|
|
|
|
-
|
|
|
|
-
|
|
|
|
513
|
|
|
|
-
|
|
|
|
513
|
|
|
|
413
|
|
Loss
for the period
|
|
|
-
|
|
|
|
(19,981
|
)
|
|
|
-
|
|
|
|
(19,981
|
)
|
|
|
(4,315
|
)
|
|
|
(24,296
|
)
|
|
|
(19,570
|
)
|
Share
of opening equity transferred to minority interest due to issuance of
shares by subsidiary
|
|
|
(4,720
|
)
|
|
|
3,231
|
|
|
|
299
|
|
|
|
(1,190
|
)
|
|
|
1,788
|
|
|
|
598
|
|
|
|
482
|
|
At
30 June, 2007
|
|
|
191,876
|
|
|
|
(146,147
|
)
|
|
|
(5,155
|
)
|
|
|
40,574
|
|
|
|
4,052
|
|
|
|
44,626
|
|
|
|
35,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
1 July, 2007
|
|
|
191,876
|
|
|
|
(146,147
|
)
|
|
|
(5,155
|
)
|
|
|
40,574
|
|
|
|
4,052
|
|
|
|
44,626
|
|
|
|
35,947
|
|
Exchange
differences on translation of foreign operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,729
|
)
|
|
|
(2,729
|
)
|
|
|
(1,046
|
)
|
|
|
(3,775
|
)
|
|
|
(3,041
|
)
|
Share-based
payments
|
|
|
-
|
|
|
|
850
|
|
|
|
-
|
|
|
|
850
|
|
|
|
284
|
|
|
|
1,134
|
|
|
|
913
|
|
Net
income recognised directly in equity
|
|
|
191,876
|
|
|
|
(145,297
|
)
|
|
|
(7,884
|
)
|
|
|
38,695
|
|
|
|
3,290
|
|
|
|
41,985
|
|
|
|
33,819
|
|
Issue
of share capital by subsidiary
|
|
|
18,429
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,429
|
|
|
|
-
|
|
|
|
18,429
|
|
|
|
14,845
|
|
less
minority interest
|
|
|
(5,334
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,334
|
)
|
|
|
5,334
|
|
|
|
-
|
|
|
|
-
|
|
Loss
for the period
|
|
|
-
|
|
|
|
(20,264
|
)
|
|
|
-
|
|
|
|
(20,264
|
)
|
|
|
(4,513
|
)
|
|
|
(24,777
|
)
|
|
|
(19,958
|
)
|
Share
of opening equity transferred to minority interest due to issuance of
shares by subsidiary
|
|
|
(4,539
|
)
|
|
|
3,310
|
|
|
|
393
|
|
|
|
(836
|
)
|
|
|
836
|
|
|
|
-
|
|
|
|
-
|
|
At
30 June, 2008
|
|
|
200,432
|
|
|
|
(162,251
|
)
|
|
|
(7,491
|
)
|
|
|
30,690
|
|
|
|
4,947
|
|
|
|
35,637
|
|
|
|
28,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
1 July, 2008
|
|
|
200,432
|
|
|
|
(162,251
|
)
|
|
|
(7,491
|
)
|
|
|
30,690
|
|
|
|
4,947
|
|
|
|
35,637
|
|
|
|
28,706
|
|
Exchange
differences on translation of foreign operations
|
|
|
-
|
|
|
|
-
|
|
|
|
4,425
|
|
|
|
4,425
|
|
|
|
1,738
|
|
|
|
6,163
|
|
|
|
4,964
|
|
Share-based
payments
|
|
|
-
|
|
|
|
1,060
|
|
|
|
-
|
|
|
|
1,060
|
|
|
|
140
|
|
|
|
1,200
|
|
|
|
967
|
|
Net
income recognised directly in equity
|
|
|
200,432
|
|
|
|
(161,191
|
)
|
|
|
(3,066
|
)
|
|
|
36,175
|
|
|
|
6,825
|
|
|
|
43,000
|
|
|
|
34,637
|
|
Issue
of share capital by subsidiary
|
|
|
4,033
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,033
|
|
|
|
-
|
|
|
|
4,033
|
|
|
|
3,248
|
|
less
minority interest
|
|
|
(3,047
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,047
|
)
|
|
|
3,047
|
|
|
|
-
|
|
|
|
-
|
|
New
shares issued
|
|
|
5,527
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,527
|
|
|
|
-
|
|
|
|
5,527
|
|
|
|
4,452
|
|
Loss
for the period
|
|
|
-
|
|
|
|
(18,928
|
)
|
|
|
-
|
|
|
|
(18,928
|
)
|
|
|
(4,859
|
)
|
|
|
(23,787
|
)
|
|
|
(19,160
|
)
|
Share
of opening equity transferred to minority interest due to issuance of
shares by subsidiary
|
|
|
(526
|
)
|
|
|
389
|
|
|
|
56
|
|
|
|
(81
|
)
|
|
|
81
|
|
|
|
-
|
|
|
|
-
|
|
At
30 June, 2009
|
|
|
206,419
|
|
|
|
(179,730
|
)
|
|
|
(3,010
|
)
|
|
|
23,679
|
|
|
|
5,094
|
|
|
|
28,773
|
|
|
|
23,177
|
|
(1)
|
During
the period 300,207 Novogen Limited shares were issued following the
exercise of options.
|
The above
Statements of Changes in Equity should be read in conjunction with the
accompanying notes.
STATEMENTS
OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for
the year ended 30 June, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
Consolidated
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before tax
|
|
|
|
(23,786
|
)
|
|
|
(24,773
|
)
|
|
|
(24,295
|
)
|
|
|
(19,160
|
)
|
Income
tax paid
|
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortisation
|
|
|
|
282
|
|
|
|
353
|
|
|
|
976
|
|
|
|
227
|
|
Net
(gain)/loss on disposal of property, plant and equipment
|
|
|
29
|
|
|
|
(1,623
|
)
|
|
|
17
|
|
|
|
23
|
|
Share-based
payments
|
|
|
|
1,200
|
|
|
|
602
|
|
|
|
2,686
|
|
|
|
967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(increase)/decrease
in trade receivables
|
|
|
|
527
|
|
|
|
300
|
|
|
|
388
|
|
|
|
424
|
|
(increase)/decrease
in other receivables
|
|
|
|
190
|
|
|
|
1,007
|
|
|
|
(128
|
)
|
|
|
153
|
|
(increase)/decrease
in inventories
|
|
|
|
595
|
|
|
|
1,970
|
|
|
|
4,487
|
|
|
|
479
|
|
(increase)/decrease
in prepayments
|
|
|
|
(23
|
)
|
|
|
88
|
|
|
|
55
|
|
|
|
(19
|
)
|
increase/(decrease)
in trade and other payables
|
|
|
|
1,388
|
|
|
|
751
|
|
|
|
274
|
|
|
|
1,118
|
|
increase/(decrease)
in provisions
|
|
|
|
(83
|
)
|
|
|
282
|
|
|
|
(48
|
)
|
|
|
(67
|
)
|
exchange
rate change on opening cash
|
|
|
|
(920
|
)
|
|
|
937
|
|
|
|
981
|
|
|
|
(741
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash flows used in operating activities
|
|
|
|
(20,602
|
)
|
|
|
(20,110
|
)
|
|
|
(14,608
|
)
|
|
|
(16,597
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of property, plant and equipment
|
|
|
|
(94
|
)
|
|
|
(95
|
)
|
|
|
(299
|
)
|
|
|
(76
|
)
|
Proceeds
from sale of plant and equipment
|
|
|
|
5
|
|
|
|
3,831
|
|
|
|
262
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash flows from/(used in) investing activities
|
|
|
|
(89
|
)
|
|
|
3,736
|
|
|
|
(37
|
)
|
|
|
(72
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from the issue of ordinary shares
|
|
|
|
5,527
|
|
|
|
-
|
|
|
|
513
|
|
|
|
4,452
|
|
Proceeds
from the issue of shares by subsidiary
|
|
|
|
4,033
|
|
|
|
18,961
|
|
|
|
24,371
|
|
|
|
3,249
|
|
Repayment
of borrowings
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15
|
)
|
|
|
-
|
|
Withdrawal
of/(investment in) short-term deposits
|
|
|
|
2,000
|
|
|
|
(2,000
|
)
|
|
|
-
|
|
|
|
1,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash flows from/(used in) financing activities
|
|
|
|
11,560
|
|
|
|
16,961
|
|
|
|
24,869
|
|
|
|
9,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease)/increase in cash and cash equivalents
|
|
|
|
(9,131
|
)
|
|
|
587
|
|
|
|
10,224
|
|
|
|
(7,357
|
)
|
Cash
and cash equivalents at beginning of period
|
|
|
|
34,386
|
|
|
|
38,511
|
|
|
|
30,513
|
|
|
|
27,698
|
|
Effect
of exchange rates on cash holdings in foreign currencies
|
|
|
7,083
|
|
|
|
(4,712
|
)
|
|
|
(4,226
|
)
|
|
|
5,705
|
|
Movements
in secured facility
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
5
|
|
|
32,338
|
|
|
|
34,386
|
|
|
|
38,511
|
|
|
|
26,046
|
|
The above
Statements of Cash Flows should be read in conjunction with the accompanying
notes.
NOTES
TO THE FINANCIAL STATEMENTS
The
financial report of Novogen Limited for the year ended 30 June, 2009 was
authorised for issue in accordance with a resolution of the Board of Directors
on 26 August, 2009.
Note
1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
The
significant accounting policies which have been adopted in the preparation of
the financial report are:
Basis
of preparation
The
financial report is a general-purpose financial report, which has been prepared
in accordance with the requirements of the Corporations Act 2001, Australian
Accounting Standards and other authorative pronouncements of the AASB. The
financial report has also been prepared on a historical cost basis with all
amounts presented in Australian dollars, rounded to the nearest thousand dollars
($’000), unless otherwise stated.
Statement
of compliance
The
financial report complies with Australian Accounting Standards, being Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance
with AIFRS ensures that the financial report, comprising the financial
statements and notes thereto, complies with International Financial Reporting
Standards (IFRS).
Basis
of consolidation
The
consolidated financial statements comprise the financial statements of Novogen
Limited and its subsidiaries (the “Group”) as at 30 June each year.
The
financial statements of the subsidiaries are prepared for the same reporting
period as the parent company, using consistent accounting policies.
In
preparing the consolidated financial statements, all inter-company balances and
transactions, income and expenses and profit and losses resulting from
intra-group transactions have been eliminated in full.
Subsidiaries
are fully consolidated from the date on which control is transferred to the
Group and cease to be consolidated from the date on which control is transferred
out of the Group.
Minority
interests represent the portion of profit or loss and net assets in Marshall
Edwards, Inc. and Glycotex, Inc. not held by the Group and are presented
separately in the Income Statement and within equity in the consolidated Balance
Sheet.
Interest
in controlled entities are recorded at cost less impairment write downs, in the
parent entity’s financial statements.
Significant
accounting judgements, estimates and assumptions
(i)
Significant accounting judgements
In the
process of applying the Group’s accounting policies, management has made the
following judgement, apart from those involving estimations.
Research
and development expenses
The
Directors do not consider the development programs to be sufficiently advanced
to reliably determine the economic benefits and technical feasibility to justify
capitalisation of development costs. These costs have been recognised as an
expense when incurred.
Research
and development expenses relate primarily to the cost of conducting human
clinical and pre-clinical trials. Clinical development costs are a significant
component of research and development expenses. Estimates have been used in
determining the expense liability under certain clinical trial contracts where
services have been performed but not yet invoiced. The actual costs of those
services could differ in amount and timing from the estimates used in completing
the financial statements.
Generally
the costs, and therefore estimates, associated with clinical trial contracts are
based on the number of patients, drug administration cycles, the type of
treatment and the outcome being measured. The length of time before actual
amounts can be determined will vary depending on length of the patient cycles
and the timing of the invoices by the clinical trial partners.
Clinical
trial expenses of $3,912,000 has been accrued at June 30, 2009. These estimates
are based on the number of patients in each trial and the drug administration
cycle.
Following
the termination of enrollment into the OVATURE Phase III clinical trial, claims
for clinical trial expenses were received totaling $2,741,000. Approximately
$1,456,000 was accrued and was subject to continued negotiation and represented
management’s best estimate of amounts that may be payable. The remaining balance
of $1,285,000 was disputed as management believed the costs were outside the
scope of the contracts and did not believe that these amounts were due and
owing. In November 2009, MEI finalized negotiations and signed a Deed of Release
in relation to these claims. As a result of receiving the of Deed of Release,
the final amount agreed to be paid in connection with the claims was $477,000
less than management’s estimates which were accrued in the accounts at June 30,
2009. Management does not believe this amount has a material impact on the
financial statements. The disputed claim amount of $1,285,000 has been
withdrawn.
(ii)
Significant accounting estimates and assumptions
The
carrying amounts of certain assets and liabilities are often determined based on
estimates and assumptions of future events. The key estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying
amounts of certain assets and liabilities within the next annual reporting
period are:
Share-based
payment transactions
The Group
measures the cost of equity-settled transactions with employees by reference to
the fair value of equity instruments at the date at which they are granted. The
fair value is determined using a binomial model, using the assumptions detailed
in Note 13.
Impairments
The Group
assesses impairment at each reporting date by evaluating conditions specific to
the Group that may lead to impairment of assets. Where an impairment trigger
exists, the recoverable amount of the asset is determined. Value-in-use
calculations performed in assessing recoverable amounts incorporate a number of
key estimates.
Clinical
Trial Expenses
Estimates
have been used in determining the expense liability under certain clinical trial
contracts where services have been performed but not yet invoiced. The actual
costs of those services could differ in amount and timing from the estimates
used in completing the financial results.
Revenue
recognition
Revenue
is recognised to the extent that it is probable that the economic benefits will
flow to the Group and the revenue can be reliably measured. In determining the
economic benefits, provisions are made for certain trade discounts and returned
goods. The following specific recognition criteria must also be
met:
Sale
of goods
Revenue
from sale of goods is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer and can be measured reliably.
Risks and rewards are considered passed to the buyer when the goods have been
dispatched to a customer pursuant to a sales order and invoice. Net sales
represent product shipped less actual and estimated future returns, and slotting
fees, rebates and other trade discounts accounted for as reductions of
revenue.
Estimates
and allowances are based upon known claims and an estimate of additional
returns. In order to calculate estimates, management regularly monitor
historical patterns of returns from, and discounts to, individual
customers.
Interest
Interest
revenue is recognised as interest accrues using the effective interest method.
The effective interest method uses the effective interest rate which is the rate
that exactly discounts the estimated future cash receipts over the expected life
of the financial asset.
Dividends
Dividend
revenue is recognised when the right to receive the payment is
established.
Government
grants
Grant
income is recognised when there is reasonable assurance that the grant will be
received and all attaching conditions will be complied with. Grant income is
recognised in the Income Statement over the periods necessary to match the grant
on a systematic basis to the costs that it is intended to
compensate.
Royalties
Royalty
revenue is recognised on an accruals basis in accordance with the substance of
the relevant agreements.
Litigation
Settlement
Revenue
is recognised when the risks and rewards have been transferred, which is
considered to occur on settlement.
Borrowing
costs
Borrowing
costs are recognised as an expense when incurred. Novogen Limited does not
currently hold any qualifying assets but if it did, the borrowing costs directly
associated with this asset would be capitalised (including any other costs
directly attributable to the borrowing and temporary investment income earned on
the borrowing).
Leases
The
determination of whether an arrangement is or contains a lease is based on the
substance of the arrangement and requires 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.
Finance
leases, which transfer to the Group substantially all the risks and benefits
incidental to ownership of the leased item, are capitalised at the inception of
the lease at the fair value of the leased property or, if lower, at the present
value of the minimum lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are
recognised as an expense in profit or loss.
Capitalised
leased assets are depreciated over the shorter of the estimated useful life of
the asset and the lease term if there is no reasonable certainty that the Group
will obtain ownership by the end of the lease term.
Operating
lease payments are recognised as an expense in the Income Statement on a
straight-line basis over the lease term. Lease incentives are recognised in the
Income Statement as an integral part of the total lease expense.
The cost
of improvements to or on leasehold property is capitalised, disclosed as
leasehold improvements, and amortised over the unexpired period of the lease or
the estimated useful lives of the improvements, whichever is the
shorter.
Cash
and cash equivalents
Cash and
short term deposits in the Balance Sheet comprise cash at bank and in hand and
short-term deposits with an original maturity of three months or less that are
readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
For the
purposes of the Statements of Cash Flows, cash and cash equivalents consist of
cash and cash equivalents as defined above, net of outstanding bank overdrafts
and secured cash.
Trade
and other receivables
Trade
receivables, which generally have 30-60 day terms, are recognised initially at
fair value and subsequently measured at amortised cost using the effective
interest method less an allowance for any uncollectible amounts.
An
allowance for doubtful debts is made when there is objective evidence that the
Group will not be able to collect the debts. Objective evidence of impairment
includes: financial difficulties of debtors; default payments; or debts more
than 120 days overdue. Bad debts are written off when identified.
Cash
flows relating to short term receivables are not discounted if the effect of
discounting is immaterial.
Inventories
Inventories
are measured at the lower of cost and net realisable value.
Costs
incurred for finished goods and work-in-progress in bringing each product to its
present location and condition are accounted for as cost of direct material,
direct labour and a proportion of manufacturing overheads based on normal
operating capacity but excluding borrowing costs and assigned on a standard
costing basis.
Net
realisable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and the estimated costs necessary
to make the sale.
Foreign
currency translation
Functional
currency
Both the
functional and presentation currency of Novogen Limited and its subsidiaries is
Australian dollars ($A) except for Marshall Edwards, Inc., Marshall Edwards Pty
Limited and Glycotex, Inc., where the functional currency is U.S.
dollars.
Translation
of foreign currency transactions
Transactions
in foreign currencies are initially recorded in the functional currency at the
exchange rates ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the rate of the
exchange ruling at the balance sheet date.
Non-monetary
items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial
transaction.
Translation
of financial reports of overseas operations
As at the
reporting date the assets and liabilities of overseas subsidiaries are
translated into the presentation currency of the Group at the rate of exchange
ruling at the balance sheet date and the Income Statements are translated at the
weighted average exchange rates for the period.
The
exchange differences arising on the translation of overseas operations which
have a functional currency of $A are taken directly to the Income Statement. The
exchange differences arising on the retranslation of overseas operations which
have a functional currency that is not $A are taken directly to a separate
component of equity (foreign currency translation reserve).
Taxes
Income
tax
Current
tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are those that are enacted or
substantially enacted by the balance sheet date.
Deferred
income tax is provided on all temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
The
carrying amount of deferred income tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred income tax
asset to be utilised.
Deferred
income tax assets and liabilities are measured at the tax rates that are
expected to apply to the year when the asset is realised or the liability is
settled, based on the tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Unrecognised
deferred income tax assets are reassessed at each balance sheet date and
recognised to the extent that it has become probable that future taxable profit
will allow the deferred tax asset to be recovered.
Income
taxes relating to items recognised directly in equity are recognised in equity
and not in the Income Statement.
Other
taxes
|
Revenues,
expenses and assets are recognised net of the amount of GST receipt
except:
|
·
|
when
the GST incurred on a purchase of goods or services is not recoverable
from the taxation authority, in which case the GST is recognised as part
of the cost of acquisition of the asset or as part of the expense item as
applicable; and
|
·
|
receivables
and payables, which are stated with the amounts of GST
included.
|
The net
amount of GST recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the Balance Sheet.
Commitments
and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the taxation authority.
Property,
plant and equipment
Cost
and valuation
Each
class of property, plant and equipment is carried at cost or fair value less,
where applicable, any accumulated depreciation and impairment
losses.
Depreciation
Depreciation
is calculated on a straight-line basis to write off the depreciable amount of
each item of property, plant and equipment over its expected useful life to the
Group.
Major
depreciation periods are:
Plant and
equipment
2.5-10 years
Leasehold
improvements the
lease term
Impairment
of assets
At each
reporting date, the Group assesses whether there is any indication that an asset
may be impaired. Where an indicator of impairment exists, the Group makes a
formal estimate of recoverable amount. Where the carrying amount of an asset
exceeds its recoverable amount the asset is considered impaired and is written
down to its recoverable amount.
Recoverable
amount is the greater of fair value less costs to sell and value in use. It is
determined for an individual asset, unless the asset’s value in use cannot be
estimated to be close to its fair value less costs to sell and it does not
generate cash inflows that are largely independent of those from other assets or
groups of assets, in which case, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
In
assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the
asset.
Derecognition
and disposal
An item
of property, plant and equipment is derecognised upon disposal or when no
further future economic benefits are expected from its use or
disposal.
Any gain
or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is
included in profit or loss in the year the asset is derecognised.
Research
and development
Expenditure
during the research phase of a project is recognised as an expense when
incurred. Development costs are capitalised only when technical feasibility
studies identify that the project will deliver future economic benefits and
these benefits can be measured reliably.
Capitalised
development costs have a finite life and are amortised on a systematic basis
matched to the future economic benefits over the useful life of the
project.
Trade
and other payables
Trade and
other payables are carried at amortised cost and represent liabilities for goods
and services provided to the Group prior to the end of the financial year that
are unpaid and arise when the Group becomes obliged to make future payments in
respect of the purchases of these goods and services.
Interest
bearing loans and borrowings
All loans
and borrowings are initially recognised at the fair value of the consideration
received less directly attributable transaction costs.
Gains and
losses are recognised in profit or loss when the liabilities are
derecognised.
Provisions
Provisions
are recognised when the Group has a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
Employee
benefits
Wages,
salaries, annual leave
Liabilities
for wages and salaries, including non-monetary benefits, are recognised in other
payables in respect of employees’ services up to the reporting date. Liabilities
for annual leave are recognised in current provisions in respect of employees’
services up to the reporting date. They are measured at the amounts expected to
be paid when the liabilities are settled.
Long
service leave
The
liability for long service leave is recognised in the provision for employee
benefits and measured as the present value of expected future payments to be
made in respect of services provided by employees up to the reporting date using
the projected unit credit method. Consideration is given to expected future wage
and salary levels, experience of employee departures, and periods of service.
Expected future payments are discounted using market yields at the reporting
date on national government bonds with terms to maturity and currencies that
match, as closely as possible, the estimated future cash outflows.
Defined
contribution plan
Defined
superannuation contributions are recognised as an expense in the period they are
incurred.
Share-based
payment transactions
The Group
provides benefits to employees of the Group in the form of share-based payments,
whereby employees render services in exchange for shares or rights over shares
(equity-settled transactions) under the terms of the Employee Share Option Plan
(ESOP).
The cost
of these equity-settled transactions with employees is measured by reference to
the fair value of the equity instruments at the date at which they are granted.
The fair value is determined using a binomial model. Further details are given
in Note 13.
In
valuing equity-settled transactions, no account is taken of any performance
conditions.
The cost
of equity-settled transactions is recognised, together with a corresponding
increase in equity, over the vesting period of the instrument. The cumulative
expense recognised for equity-settled transactions at each reporting date until
vesting date reflects (i) the extent to which the vesting period has expired and
(ii) the Group’s best estimate of the number of equity instruments that will
ultimately vest. The income statement charge or credit for a period represents
the movement in cumulative expense recognised as at the beginning and end of
that period.
Termination
benefits
Termination
benefits are payable when employment is terminated before the normal retirement
date, or when an employee accepts voluntary redundancy in exchange for these
benefits. The Group recognises termination benefits when they are demonstrably
committed to either terminating the employment of current employees according to
a detailed formal plan without the possibility of withdrawing or providing
termination benefits as a result of an offer made to encourage voluntary
redundancy.
Contributed
equity
Ordinary
shares are classified as equity. Incremental costs directly attributable to the
issue of new shares or options are shown as a deduction, net of tax, from the
proceeds.
Subsidiary
equity issues
Where a
subsidiary makes a new issue of capital subscribed by minority interests, the
parent company may make a gain or loss due to dilution of minority interests.
These gains or losses are recognised in equity attributable to the parent
company.
Earnings
per share (EPS)
Basic EPS
is calculated as net profit/(loss) attributable to members of the parent,
adjusted to exclude costs of servicing equity (other than dividends) and
preference share dividends, divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted
EPS is calculated as net profit/(loss) attributable to members of the parent,
adjusted for:
·
|
costs
of servicing equity (other than dividends) and preference share
dividends;
|
·
|
the
after tax effect of dividends and interest associated with dilutive
potential ordinary shares that have been recognised as expenses;
and
|
·
|
other
non-discretionary changes in revenues or expenses during the period that
would result from the dilution of potential ordinary
shares,
|
divided
by the weighted average number of ordinary shares and dilutive potential
ordinary shares adjusted for any bonus element.
Deferred
offering costs
Where
costs associated with a capital raising have been incurred at balance date and
it is probable that the capital raising will be successfully completed after
balance date, such costs are deferred and offset against the proceeds
subsequently received from the capital raising.
Financial
instruments
Recognition
Financial
instruments are initially measured at cost on trade date, which includes
transaction costs, when the related contractual rights or obligations exist.
Subsequent to initial recognition these instruments are measured as set out
below.
Loans
and receivables
Loans and
receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and are stated at amortised
cost using the effective interest rate method.
Financial
liabilities
Non-derivative
financial liabilities are recognised at amortised cost, comprising original debt
less principal payments and amortisation.
New
accounting standards and interpretations
Certain
new accounting standards and interpretations have been published that are not
mandatory for 30 June, 2009 reporting periods. The Group’s and the parent
entity’s assessment of the impact of these new standards and interpretations is
set out below.
(i) AASB
8
Operating Segments
and AASB 2007-3
Amendments to Australian Accounting
Standards arising from AASB 8
(effective from 1 January,
2009)
AASB 8
will result in a significant change in the approach to segment reporting, as it
requires adoption of a 'management approach' to reporting on financial
performance. The information being reported will be based on what the key
decision makers use internally for evaluating segment performance and deciding
how to allocate resources to operating segments. The Group will adopt AASB 8
from 1 July, 2009. It is likely to result in an increase in the number of
reportable segments presented. In addition, the segments will be reported in a
manner that is more consistent with the internal reporting provided to the chief
operating decision-maker.
(ii)
Revised AASB 123
Borrowing
Costs
and AASB 2007-6
Amendments to Australian Accounting
Standards arising from AASB 123
(effective from 1 January,
2009)
The
revised AASB 123 has removed the option to expense all borrowing costs and -
when adopted – will require the capitalisation of all borrowing costs directly
attributable to the acquisition, construction or production of a qualifying
asset. There will be no impact on the financial report of the
Group.
(iii)
Revised AASB 101
Presentation
of Financial Statements
and AASB 2007-8
Amendments to Australian Accounting
Standards arising from AASB 101
(effective from 1 January,
2009)
The
September 2007 revised AASB 101 requires the presentation of a statement of
comprehensive income and makes changes to the statement of changes in equity,
but will not affect any of the amounts recognised in the financial statements.
If an entity has made a prior period adjustment or has reclassified items in the
financial statements, it will need to disclose a third Balance Sheet (Statement
of Financial Position), this one being as at the beginning of the comparative
period. The Group will apply the revised standard from 1 July,
2009.
(iv) AASB
2008-1
Amendments to
Australian Accounting Standard – Share-based Payments: Vesting Conditions and
Cancellations
(effective from 1 January, 2009)
AASB
2008-1 clarifies that vesting conditions are service conditions and performance
conditions only and that other features of a share-based payment are not vesting
conditions. It also specifies that all cancellations, whether by the entity or
by other parties, should receive the same accounting treatment. The Group will
apply the revised standard from 1 July, 2009, but it is not expected to affect
the accounting for the Group's share-based payments.
(v)
Revised AASB 3
Business
Combinations,
AASB 127
Consolidated and Separate Financial
Statements
and AASB 2008-3
Amendments to Australian Accounting
Standards arising from AASB 3 and AASB 127
(effective 1 July,
2009)
The
revised AASB 3 continues to apply the acquisition method to business
combinations, but with some significant changes. For example, all payments to
purchase a business are to be recorded at fair value at the acquisition date,
with contingent payments classified as debt subsequently remeasured through the
Income Statement. There is a choice on an acquisition-by-acquisition basis to
measure the non-controlling interest in the acquiree either at fair value or at
the non-controlling interest’s proportionate share of the acquiree’s net assets.
All acquisition-related costs must be expensed.
The
revised AASB 127 requires the effects of all transactions with non-controlling
interests to be recorded in equity if there is no change in control and these
transactions will no longer result in goodwill or gains and losses. The standard
also specifies the accounting when control is lost. Any remaining interest in
the entity is remeasured to fair value, and a gain or loss is recognised in
profit or loss. The Group will apply the revised standards prospectively to all
business combinations and transactions with non-controlling interests from 1
July, 2009
(vi)
AASB 2008-7
Amendments to
Australian Accounting Standards - Cost of an Investment in a Subsidiary, Jointly
Controlled Entity or Associate
(effective 1 July, 2009)
In July
2008, the AASB approved amendments to AASB 1
First-time Adoption of International
Financial Reporting Standards
and AABS 127
Consolidated and Separate Financial
Statements.
The Group will apply the revised rules prospectively from 1
July, 2009. After that date, all dividends received from investments in
subsidiaries, jointly controlled entities or associates will be recognised as
revenue, even if they are paid out of pre-acquisition profits, but the
investments may need to be tested for impairment as a result of the dividend
payment.
(vii)
AASB Interpretation 16
Hedges
of a Net Investment in a Foreign Operation
(effective 1 October,
2008)
AASB-I 16
clarifies which foreign currency risks qualify as hedged risk in the hedge of a
net investment in a foreign operation and that hedging instruments may be held
by any entity or entities within the group. It also provides guidance on how an
entity should determine the amounts to be reclassified from equity to profit or
loss for both the hedging instrument and the hedged item. The Group will apply
the interpretation prospectively from 1 July, 2009. It is not expected to have a
material impact on the Group’s financial statements.
(viii)
AASB 2008-8 Amendment to IAS 39
Financial Instruments: Recognition
and Measurement
(effective 1 July, 2009)
AASB
2008-8 amends AASB 139
Financial Instruments: Recognition
and Measurement
and must be applied retrospectively in accordance with
AASB 108
Accounting Policies,
Changes in Accounting Estimates and Errors.
The amendment makes two
significant changes. It prohibits designating inflation as a hedgeable component
of a fixed rate debt. It also prohibits including time value in the one-sided
hedged risk when designating options as hedges. The Group will apply the amended
standard from 1 July, 2009. It is not expected to have a material impact on the
Group’s financial statements.
(ix) AASB
Interpretation 17
Distribution
of Non-cash Assets to Owners
and AASB 2008-13
Amendments to Australian Accounting
Standards arising from AASB Interpretation 17
AASB-I 17
applies to situations where an entity pays dividends by distributing non-cash
assets to its shareholders. These distributions will need to be measured at fair
value and the entity will need to recognise the difference between the fair
value and the carrying amount of the distributed assets in the Income Statement
on distribution.
The
interpretation further clarifies when a liability for the dividend must be
recognised and that it is also measured at fair value. The Group will apply the
interpretation prospectively from 1 July, 2009. It is not expected to have a
material impact on the Group’s financial statements.
Note
2 (LOSS)
BEFORE INCOME TAX
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
and expenses from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Revenue
|
|
|
|
|
|
|
|
|
|
Sale
of goods
|
|
|
8,333
|
|
|
|
9,400
|
|
|
|
10,709
|
|
|
|
|
8,333
|
|
|
|
9,400
|
|
|
|
10,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
interest
|
|
|
888
|
|
|
|
1,773
|
|
|
|
1,912
|
|
Royalties
|
|
|
1,923
|
|
|
|
1,749
|
|
|
|
1,746
|
|
Licence
fees
|
|
|
-
|
|
|
|
224
|
|
|
|
1,122
|
|
Dividends
|
|
|
-
|
|
|
|
-
|
|
|
|
1,026
|
|
Other
|
|
|
3
|
|
|
|
137
|
|
|
|
780
|
|
|
|
|
2,814
|
|
|
|
3,883
|
|
|
|
6,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
11,147
|
|
|
|
13,283
|
|
|
|
17,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government
grants - research and development
|
|
|
-
|
|
|
|
-
|
|
|
|
2,710
|
|
Net
gains on disposal of property, plant
and . equipment
|
|
|
-
|
|
|
|
1,623
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
1,623
|
|
|
|
2,710
|
|
(c)
Other expenses
|
|
|
|
|
|
|
|
|
|
Loss
on disposal of plant and equipment
|
|
|
29
|
|
|
|
-
|
|
|
|
17
|
|
Reassessment
of expected grant income
|
|
|
-
|
|
|
|
915
|
|
|
|
-
|
|
Inventory
impairment provision
|
|
|
1,087
|
|
|
|
(387
|
)
|
|
|
933
|
|
Impairment
loss - financial assets
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Trade
receivables
|
|
|
23
|
|
|
|
(29
|
)
|
|
|
29
|
|
Other
debtors
|
|
|
-
|
|
|
|
62
|
|
|
|
-
|
|
|
|
|
1,139
|
|
|
|
561
|
|
|
|
979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
Depreciation included in the income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in cost of sales
|
|
|
-
|
|
|
|
2
|
|
|
|
367
|
|
Included
in administrative expenses
|
|
|
282
|
|
|
|
351
|
|
|
|
609
|
|
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
(e)
Lease payments and other expenses included in the income
statement
|
|
|
|
|
Included
in administrative expenses:
|
|
|
|
|
|
|
|
|
|
Minimum
lease payments - operating leases
|
|
|
775
|
|
|
|
663
|
|
|
|
668
|
|
Net
foreign exchange differences
|
|
|
(920
|
)
|
|
|
937
|
|
|
|
893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
Employee benefit expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages
and salaries
|
|
|
6,884
|
|
|
|
7,248
|
|
|
|
8,163
|
|
Workers'
compensation costs
|
|
|
51
|
|
|
|
61
|
|
|
|
67
|
|
Defined
contribution plan expense
|
|
|
1,139
|
|
|
|
1,147
|
|
|
|
1,022
|
|
Share-based
payments expense
|
|
|
1,065
|
|
|
|
576
|
|
|
|
549
|
|
|
|
|
9,139
|
|
|
|
9,032
|
|
|
|
9,801
|
|
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
A
reconciliation between tax expense and the product of accounting
(loss)/profit
before income tax multiplied by the Group's applicable
tax
rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Accounting
(loss)/profit before tax from operations
|
|
|
(23,786
|
)
|
|
|
(24,773
|
)
|
|
|
(24,295
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
the Group's statutory income tax rate of 30% (2008 and 2007:
30%)
|
|
|
(7,136
|
)
|
|
|
(7,432
|
)
|
|
|
(7,289
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
tax rate differentials
|
|
|
(727
|
)
|
|
|
619
|
|
|
|
(250
|
)
|
Non
deductible expenses
|
|
|
310
|
|
|
|
307
|
|
|
|
975
|
|
Deductible
balancing adjustments
|
|
|
-
|
|
|
|
3
|
|
|
|
-
|
|
Research
and development allowance
|
|
|
(1,403
|
)
|
|
|
(1,165
|
)
|
|
|
(143
|
)
|
Sub-total
|
|
|
(8,956
|
)
|
|
|
(7,668
|
)
|
|
|
(6,707
|
)
|
Tax
losses and timing differences not recognised
|
|
|
8,957
|
|
|
|
7,672
|
|
|
|
6,708
|
|
Previously
unrecognised tax losses used to reduce tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Tax
expense
|
|
|
1
|
|
|
|
4
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components
of income tax expense/(benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
tax
|
|
|
(8,956
|
)
|
|
|
(7,668
|
)
|
|
|
(6,707
|
)
|
Deferred
tax
|
|
|
8,957
|
|
|
|
7,672
|
|
|
|
6,708
|
|
Income
tax expense
|
|
|
1
|
|
|
|
4
|
|
|
|
1
|
|
Deferred
income tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
income tax at 30 June relates to the following:
|
|
|
|
|
|
|
|
Deferred
tax assets
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
340
|
|
|
|
761
|
|
|
|
733
|
|
Provisions
and accruals
|
|
|
1,875
|
|
|
|
1,025
|
|
|
|
1,042
|
|
Exchange
losses
|
|
|
121
|
|
|
|
78
|
|
|
|
549
|
|
Share
based payments by USA subsidiaries
|
|
|
203
|
|
|
|
-
|
|
|
|
-
|
|
Other
|
|
|
60
|
|
|
|
6
|
|
|
|
113
|
|
Losses
carried forward
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Australia
|
|
|
35,177
|
|
|
|
33,238
|
|
|
|
24,157
|
|
-
US
|
|
|
16,990
|
|
|
|
11,876
|
|
|
|
14,729
|
|
-
Other countries
|
|
|
2,368
|
|
|
|
3,653
|
|
|
|
5,139
|
|
Total
deferred tax assets not recognised
|
|
|
57,134
|
|
|
|
50,637
|
|
|
|
46,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
tax liability
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
gains
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other
|
|
|
(76
|
)
|
|
|
(117
|
)
|
|
|
(304
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
deferred tax liability not recognised
|
|
|
(76
|
)
|
|
|
(117
|
)
|
|
|
(304
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
deferred tax asset not recognised
|
|
|
57,058
|
|
|
|
50,520
|
|
|
|
46,158
|
|
Tax
consolidation
Novogen
Limited and its 100% owned Australian subsidiaries elected to form a tax
consolidation group for income tax purposes with effect from July 1, 2003. The
Australian Tax Office has been formally notified of this decision. Novogen
Limited as the head entity discloses all of the deferred tax assets of the tax
consolidated group in relation to tax losses carried forward (after elimination
of inter-group transactions).
As the
tax consolidation group continues to generate tax losses there has been no
reason for the Company to enter a tax funding agreement with members of the tax
consolidation group.
Note
4 EARNINGS
PER SHARE
Basic
earnings per share amounts are calculated by dividing net loss for the year
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year.
Diluted
earnings per share amounts are calculated by dividing the net loss attributable
to ordinary equity holders of the parent by the weighted average number of
ordinary shares outstanding during the year plus the weighted average number of
ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares. The notional issue of potential
ordinary shares resulting from the exercise of options detailed in Note 13 does
not result in diluted earnings per share that shows a different view of the
earnings performance of the Company, therefore the information has not been
disclosed.
Potential
ordinary shares (non-dilutive) and not included in determining earnings per
share: 4,213,416 options (refer Note 13).
There
have been no conversions to, calls of, or subscriptions for ordinary shares or
issues of potential ordinary shares since the reporting date and before the
completion of this financial report.
The
following reflects the income and share data used in the basic and diluted
earnings per share computations:
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
$'000
|
|
|
$'000
|
|
|
$'000
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to ordinary equity holders of the parent
|
|
|
(18,928
|
)
|
|
|
(20,264
|
)
|
|
|
(19,981
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
Thousands
|
|
|
2008
Thousands
|
|
|
2007
Thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of ordinary shares used in calculating basic and diluted
earnings per share
|
|
|
101,741
|
|
|
|
97,594
|
|
|
|
97,567
|
|
Note
5 CASH
AND CASH EQUIVALENTS
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
$'000
|
|
|
$'000
|
|
|
$'000
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at bank and in hand
|
|
|
27,848
|
|
|
|
27,930
|
|
|
|
30,059
|
|
Short-term
deposits
|
|
|
4,490
|
|
|
|
6,456
|
|
|
|
8,452
|
|
|
|
|
32,338
|
|
|
|
34,386
|
|
|
|
38,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
cash (Refer Note 15)
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
33,338
|
|
|
|
35,386
|
|
|
|
39,511
|
|
Cash
at bank earns interest at floating rates based on daily bank deposit
rates.
|
Short-term
deposits are made for varying periods of between one day and three months,
depending on the immediate cash requirements of the Group, and earn
interest at the respective short-term deposit
rates.
|
Note
6 TRADE
AND OTHER RECEIVABLES
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
$'000
|
|
|
$'000
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
|
|
1,531
|
|
|
|
2,042
|
|
Allowance
for doubtful debts
|
|
|
(36
|
)
|
|
|
(20
|
)
|
|
|
|
1,495
|
|
|
|
2,022
|
|
|
|
|
|
|
|
|
|
|
Deposits
held
|
|
|
454
|
|
|
|
427
|
|
Term
deposits with greater than three months to maturity
|
|
|
-
|
|
|
|
2,000
|
|
Deferred
offering costs
|
|
|
-
|
|
|
|
114
|
|
Other
debtors
|
|
|
303
|
|
|
|
468
|
|
Allowance
for doubtful debts - other
|
|
|
-
|
|
|
|
(62
|
)
|
|
|
|
2,252
|
|
|
|
4,969
|
|
Provision
for doubtful debts
Trade
receivables are non-interest bearing and are generally on 30-60 day terms. An
allowance for doubtful debts is made when there is objective evidence that the
Group will not be able to collect the debts.
At 30
June, 2009 trade receivables of $36,000 (2008: $20,000) were considered
doubtful. These amounts have been included in selling and promotional
expenses.
Movements
in the allowance for doubtful debts were as follows:
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
Balance
at 1 July
|
|
|
(20
|
)
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
Change
in allowance for the year
|
|
|
(23
|
)
|
|
|
29
|
|
Amounts
(recovered)/written off during the year
|
|
|
7
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Balance
at 30 June
|
|
|
(36
|
)
|
|
|
(20
|
)
|
Past
due but not considered doubtful
At 30
June, 2009 trade receivables of $280,000 (2008: $645,000) were past due but were
not considered to be doubtful. These relate to a number of independent customers
for whom there is no recent history of default. The ageing analysis of these
trade receivables is as follows:
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
1 -
30 days overdue
|
|
|
250
|
|
|
|
447
|
|
31
- 60 days overdue
|
|
|
15
|
|
|
|
196
|
|
61
- 90 days overdue
|
|
|
3
|
|
|
|
2
|
|
91
+ days overdue
|
|
|
12
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280
|
|
|
|
645
|
|
Receivable
balances which are neither overdue nor impaired are expected to be received when
due.
Other
receivables
Other
debtors, generally arising from transactions outside usual operating activities
of the Group, are non-interest bearing and have repayment terms between 7 and 30
days.
At 30
June, 2009 no other receivables (2008: $86,000) were past due but
were not considered to be doubtful.
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
1 -
30 days overdue
|
|
|
-
|
|
|
|
9
|
|
31
- 60 days overdue
|
|
|
-
|
|
|
|
28
|
|
61
- 90 days overdue
|
|
|
-
|
|
|
|
-
|
|
91
+ days overdue
|
|
|
-
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
86
|
|
Other
receivable balances which are neither overdue nor impaired are expected to be
received when due.
Related
party receivables
Related
party receivables – see Note 17 for terms and conditions.
Fair
value and credit risk
Due to
the short term nature of these receivables, their carrying value is assumed to
approximate their fair value.
The
maximum exposure to credit risk is the fair value of receivables. Collateral is
not held against these receivables.
Foreign
exchange and interest rate risk
Details
regarding foreign exchange and interest rate risk exposure are disclosed in
Note 15.
Note
7 INVENTORIES
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Work
in progress (at cost)
|
|
|
573
|
|
|
|
536
|
|
Finished
goods (at cost)
|
|
|
761
|
|
|
|
1,393
|
|
|
|
|
1,334
|
|
|
|
1,929
|
|
|
|
|
|
|
|
|
|
|
Note
8 OTHER
CURRENT ASSETS
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
Prepayments
|
|
|
565
|
|
|
|
542
|
|
Note
9 PROPERTY,
PLANT AND EQUIPMENT
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
Plant
and equipment - at cost
|
|
|
2,697
|
|
|
|
2,753
|
|
Accumulated
depreciation
|
|
|
(2,395
|
)
|
|
|
(2,236
|
)
|
|
|
|
302
|
|
|
|
517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold
improvements - at cost
|
|
|
107
|
|
|
|
112
|
|
Accumulated
depreciation
|
|
|
(56
|
)
|
|
|
(54
|
)
|
|
|
|
51
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
Total
property, plant and equipment - at cost
|
|
|
2,804
|
|
|
|
2,865
|
|
Accumulated
amortisation and depreciation
|
|
|
(2,451
|
)
|
|
|
(2,290
|
)
|
|
|
|
|
|
|
|
|
|
Total
property, plant and equipment
|
|
|
353
|
|
|
|
575
|
|
Reconciliations
Reconciliations
of the carrying amount of plant, property and equipment at the beginning and at
the end of the current financial year:
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
Plant
and equipment
|
|
|
|
|
|
|
Carrying
amount at beginning of financial year
|
|
|
517
|
|
|
|
758
|
|
Additions
|
|
|
63
|
|
|
|
95
|
|
Disposals
|
|
|
(21
|
)
|
|
|
(5
|
)
|
Depreciation
expense
|
|
|
(257
|
)
|
|
|
(331
|
)
|
Carrying
amount at end of financial year
|
|
|
302
|
|
|
|
517
|
|
|
|
|
|
|
|
|
|
|
Leasehold
improvements
|
|
|
|
|
|
|
|
|
Carrying
amount at beginning of financial year
|
|
|
58
|
|
|
|
80
|
|
Additions
|
|
|
32
|
|
|
|
-
|
|
Disposals
|
|
|
(14
|
)
|
|
|
-
|
|
Depreciation
expense
|
|
|
(25
|
)
|
|
|
(22
|
)
|
Carrying
amount at end of financial year
|
|
|
51
|
|
|
|
58
|
|
Note
10 TRADE
AND OTHER PAYABLES
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
2,837
|
|
|
|
3,427
|
|
Accrued
trade payables
|
|
|
1,261
|
|
|
|
1,239
|
|
Accrued
clinical trial payments
|
|
|
3,961
|
|
|
|
2,005
|
|
Intercompany
payable
|
|
|
-
|
|
|
|
-
|
|
|
|
|
8,059
|
|
|
|
6,671
|
|
Terms and
conditions relating to the above payables:
·
trade
payables are non-interest bearing and normally settled on 30 day terms;
and
·
clinical
trial payables are non-interest bearing and normally settled on 30 day
terms.
Risk
exposure
Information
about the Group’s and the parent entity’s exposure to foreign exchange risk and
liquidity risk is provided in Note 15.
Fair
value
Due to
the short term nature of these payables, their carrying value is assumed to
approximate their fair value.
Note
11 PROVISIONS
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
Employee
benefit provision
|
|
|
|
|
|
|
Current
|
|
|
774
|
|
|
|
708
|
|
Non-current
|
|
|
190
|
|
|
|
339
|
|
|
|
|
964
|
|
|
|
1,047
|
|
|
|
|
|
|
|
|
|
|
Make
good provision
|
|
|
|
|
|
|
|
|
Opening
balance at beginning of the year
|
|
|
46
|
|
|
|
46
|
|
Additional
provision made in the period
|
|
|
-
|
|
|
|
-
|
|
Closing
balance at the end of the year
|
|
|
46
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
-
|
|
|
|
-
|
|
Non-current
|
|
|
46
|
|
|
|
46
|
|
|
|
|
46
|
|
|
|
46
|
|
In
accordance with its Sydney premises lease, the Group must restore the leased
premises to agreed condition at the end of the lease term. A provision of
A$46,000 was made in respect of the Group’s expected obligation.
Note
12 CONTRIBUTED
EQUITY AND RESERVES
(a)
Issued and paid up capital
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
Fully
Paid Ordinary Shares
|
|
|
|
|
|
|
Novogen
Limited
|
|
|
|
|
|
|
102,125,894
(2008: 97,594,261) ordinary shares
|
|
|
133,100
|
|
|
|
127,573
|
|
|
|
|
133,100
|
|
|
|
127,573
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Gain
arising on issue of shares by subsidiaries to outside
shareholders:
|
|
|
|
|
|
Marshall
Edwards, Inc.
|
|
|
65,855
|
|
|
|
65,654
|
|
Glycotex,
Inc.
|
|
|
7,464
|
|
|
|
7,205
|
|
|
|
|
73,319
|
|
|
|
72,859
|
|
|
|
|
|
|
|
|
|
|
Contributed
Equity
|
|
|
206,419
|
|
|
|
200,432
|
|
Ordinary
shares have the right to receive dividends as declared and, in the event of
winding up the Company, to participate in the proceeds from the sale of all
surplus assets in proportion to the number of and amounts paid up on shares
held.
Ordinary
shares entitle their holder to one vote, either in person or by proxy, at a
meeting of the Company.
Movements
in issued and paid up ordinary share capital of Novogen Limited are as
follows:
|
|
Number
of
shares
|
|
|
Issue
price
|
|
|
A$'000
|
|
|
|
|
|
|
|
$A
|
|
|
|
|
On
issue 1 July, 2007
|
|
|
97,594,261
|
|
|
|
|
|
|
|
127,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
issue 30 June, 2008
|
|
|
97,594,261
|
|
|
|
|
|
|
|
127,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
issue 1 July, 2008
|
|
|
97,594,261
|
|
|
|
|
|
|
|
127,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
Share Issue
|
|
|
4,531,633
|
|
|
|
1.22
|
|
|
|
5,527
|
|
Total
shares issued during the period
|
|
|
4,531,633
|
|
|
|
|
|
|
|
5,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
issue 30 June, 2009
|
|
|
102,125,894
|
|
|
|
|
|
|
|
133,100
|
|
Share
options
The
Company has an employee share option plan under which options to subscribe for
the Company’s shares have been granted to certain executive and other employees
(refer Note 13).
(b)
Reserves
The
foreign currency translation reserve is used to record exchange differences
arising from the translation of the financial statements of foreign
subsidiaries.
Movements
in the currency translation reserve were as follows:
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
Balance
at the beginning of the year
|
|
|
(7,491
|
)
|
|
|
(5,155
|
)
|
Share
of opening reserve transferred to minority interest due to issuance of
shares by subsidiary
|
|
|
56
|
|
|
|
393
|
|
Exchange
differences on translation of foreign operations
|
|
|
4,425
|
|
|
|
(2,729
|
)
|
Balance
at the end of the year
|
|
|
(3,010
|
)
|
|
|
(7,491
|
)
|
(c)
Accumulated losses
Movements
in accumulated losses were as follows:
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
Balance
at the beginning of the year
|
|
|
(162,251
|
)
|
|
|
(146,147
|
)
|
|
|
|
|
|
|
|
|
|
Adjustment
to opening retained earnings attributed to minority interest
holders
|
|
|
389
|
|
|
|
3,310
|
|
Equity
attributable to share based payments
|
|
|
1,060
|
|
|
|
850
|
|
Current
year (loss)/profit
|
|
|
(18,928
|
)
|
|
|
(20,264
|
)
|
|
|
|
|
|
|
|
|
|
Balance
at the end of the year
|
|
|
(179,730
|
)
|
|
|
(162,251
|
)
|
(d)
Minority interests
The
minority interests are detailed as follows:
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
Ordinary
shares
|
|
|
31,141
|
|
|
|
27,567
|
|
Foreign
currency translation reserve
|
|
|
(1,193
|
)
|
|
|
(2,875
|
)
|
Accumulated
losses
|
|
|
(24,854
|
)
|
|
|
(19,745
|
)
|
|
|
|
5,094
|
|
|
|
4,947
|
|
Note
13 SHARE
BASED PAYMENT PLANS
Employee
Share Option Plan
The
Employee Share Option Plan provides for the issue of options to eligible
employees being an employee or Director of the Company or related company. Each
option entitles its holder to acquire one fully paid ordinary share and is
exercisable at a price equal to the weighted average price of such shares at the
close of trading on the Australian Stock Exchange Limited for the five days
prior to the date of issue. Options issued under the Employee Share Option Plan
vest in four equal annual instalments over the vesting period. Options are not
transferable and cannot be settled by the Company in cash. The option lapses if
the employee ceases to be an employee during the vesting period. There are
currently 38 employees eligible to receive option grants under the Employee
Share Option Plan. (2008: 45)
The
expense recognised in the income statement in relation to employee share-based
payments is disclosed in Note 2(f).
Consultant
options
The
Company has also granted options by way of compensation to consultants who
perform services for Novogen and its controlled entities. Options issued to
consultants generally vest in four equal annual instalments over the vesting
period. The expense recognised in the income statement relation to consultant
options is $134,901 (2008:$26,216).
The
contractual life of all options granted is five years. There are no cash
settlement alternatives.
The
following table illustrates the number (No.) and weighted average exercise price
(WAEP) of, and movements in, share options issued to employees during the
year:
|
|
2009
|
|
|
2008
|
|
|
|
No.
|
|
|
WAEP
|
|
|
No.
|
|
|
WAEP
|
|
Outstanding
at the beginning of the year
|
|
|
2,327,976
|
|
|
$
|
2.28
|
|
|
|
1,446,054
|
|
|
$
|
3.37
|
|
Granted
|
|
|
2,441,712
|
|
|
$
|
0.60
|
|
|
|
1,326,552
|
|
|
$
|
1.20
|
|
Forfeited
|
|
|
(586,996
|
)
|
|
$
|
1.53
|
|
|
|
(184,114
|
)
|
|
$
|
3.27
|
|
Exercised
(i)
|
|
|
-
|
|
|
|
N/A
|
|
|
|
-
|
|
|
|
N/A
|
|
Expired
|
|
|
(111,280
|
)
|
|
$
|
6.76
|
|
|
|
(260,516
|
)
|
|
$
|
2.10
|
|
Outstanding
at the end of the year
|
|
|
4,071,412
|
|
|
$
|
1.26
|
|
|
|
2,327,976
|
|
|
$
|
2.28
|
|
Exercisable
at the end of the year
|
|
|
886,110
|
|
|
$
|
2.63
|
|
|
|
534,192
|
|
|
$
|
4.33
|
|
(i) There
were no options exercised during the year ended 30 June, 2009 and 30 June,
2008.
The
following table details the exercise price, expiry date and number of options
issued to employees that were outstanding as at the end of the
year:
|
Exercise
Price
|
Expiry
Date
|
No.
outstanding
30
June, 2009
|
No.
outstanding
30
June, 2008
|
|
|
$6.76
|
27/02/09
|
-
|
118,468
|
|
|
$4.90
|
16/03/10
|
160,340
|
182,868
|
|
|
$3.64
|
16/04/11
|
228,964
|
272,536
|
|
|
$2.41
|
30/03/12
|
346,172
|
427,552
|
|
|
$2.41
|
30/03/12
|
141,668
|
141,668
|
|
|
$1.06
|
1/03/13
|
894,916
|
1,184,884
|
|
|
$1.06
|
1/03/13
|
345,592
|
-
|
|
|
$0.53
|
6/03/14
|
1,953,760
|
-
|
|
|
|
|
|
|
|
|
|
|
4,071,412
|
2,327,976
|
|
The
following table illustrates the number (No.) and weighted average exercise price
(WAEP) of, and movements in, share options issued to consultants during the
year;
|
|
2009
|
|
|
2008
|
|
|
|
No.
|
|
|
WAEP
|
|
|
No.
|
|
|
WAEP
|
|
Outstanding
at the beginning of the year
|
|
|
103,020
|
|
|
$
|
2.69
|
|
|
|
130,012
|
|
|
$
|
3.08
|
|
Granted
|
|
|
45,644
|
|
|
$
|
0.53
|
|
|
|
35,460
|
|
|
$
|
1.06
|
|
Forfeited
|
|
|
-
|
|
|
|
N/A
|
|
|
|
(25,252
|
)
|
|
$
|
3.24
|
|
Expired
|
|
|
(6,660
|
)
|
|
$
|
6.76
|
|
|
|
(37,200
|
)
|
|
$
|
2.10
|
|
Outstanding
at the end of the year
|
|
|
142,004
|
|
|
$
|
1.81
|
|
|
|
103,020
|
|
|
$
|
2.69
|
|
Exercisable
at the end of the year
|
|
|
49,063
|
|
|
$
|
3.02
|
|
|
|
31,633
|
|
|
$
|
4.27
|
|
The
following table details the exercise price, expiry date and number of options
issued to consultants that were outstanding as at the end of the
year:
|
Exercise
Price
|
Expiry
Date
|
No.
outstanding
30
June, 2009
|
No.
outstanding
30
June, 2008
|
|
|
$6.76
|
27/02/09
|
-
|
6,660
|
|
|
$4.90
|
16/03/10
|
9,184
|
9,184
|
|
|
$3.64
|
16/04/11
|
20,624
|
20,624
|
|
|
$2.41
|
30/03/12
|
31,092
|
31,092
|
|
|
$1.06
|
1/03/13
|
35,460
|
35,460
|
|
|
$0.53
|
6/03/14
|
45,644
|
-
|
|
|
|
|
|
|
|
|
|
|
142,004
|
103,020
|
|
The
weighted average remaining contractual life for the share options outstanding as
at 30 June, 2009 is between 1 and 5 years. (2008: 1 and 5 years)
The
weighted average fair value of options granted during the year was A$0.34.
(2008: A$0.61)
The fair
value of the equity-settled share options granted to both employees and
consultants is estimated as at the date of grant using a binomial model taking
into account the terms and conditions upon which the options were
granted.
The
following table lists the inputs to the model used to calculate the fair value
of the options.
|
|
6
March,
|
|
|
31
October,
|
|
|
1
March,
|
|
|
26
October,
|
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
Exercise
price
|
|
|
0.5256
|
|
|
|
1.06
|
|
|
|
1.06
|
|
|
|
2.41
|
|
Share
price at grant date
|
|
|
0.51
|
|
|
|
0.95
|
|
|
|
1.07
|
|
|
|
1.62
|
|
Dividend
yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected
volatility
|
|
|
73
|
%
|
|
|
66
|
%
|
|
|
57
|
%
|
|
|
55
|
%
|
Historical
volatility
|
|
|
73
|
%
|
|
|
66
|
%
|
|
|
57
|
%
|
|
|
55
|
%
|
Risk-free
interest rate
|
|
|
3.61
|
%
|
|
|
4.76
|
%
|
|
|
6.35
|
%
|
|
|
6.41
|
%
|
Expected
life of option
|
|
5
years
|
|
|
4.3
years
|
|
|
5
years
|
|
|
4.4
years
|
|
Option
fair value
|
|
|
0.31
|
|
|
|
0.51
|
|
|
|
0.60
|
|
|
|
0.66
|
|
The
dividend yield reflects the assumption that the current dividend payout, which
is zero, will continue with no anticipated increases. The expected life of the
options is based on historical data and is not necessarily indicative of
exercise patterns that may occur. The expected volatility reflects the
assumption that the historical volatility is indicative of future trends, which
may also not necessarily be the actual outcome.
Marshall
Edwards, Inc.
Share
based payment plans
On
December 9, 2008, MEI adopted the Marshall Edwards, Inc. 2008 Stock Omnibus
Equity Compensation Plan (the “Equity Compensation Plan”) and cancelled the
Marshall Edwards, Inc. Share Option Plan (the “Share Option
Plan”). No options were issued under the Share Option Plan. The
Equity Compensation Plan provides for the issuance of a maximum of 7,000,000
shares of common stock in connection with the grant of options and/or other
stock-based or stock-denominated awards to non-employee directors, officers,
employees and advisors. On 28 January, 2009, options exercisable for 50,000
shares of common stock were granted to a consultant for services to the company
under the Equity Compensation Plan.
The
options have an exercise price of US$0.63 and are fully exercisable at date of
grant. The options have a term of 5 years and expire on 28 January, 2014. At 30
June, 2009 no options had expired, been forfeited or exercised and all 50,000
were outstanding at that date.
Other
share based payments.
On 30
July, 2008 MEI granted a warrant to a consultant, to purchase up to 46,083
shares of common stock at an exercise price of US$2.17 per share for services
provided to the company. The shares are fully vested from grant date and expire
five years from grant date on 30 July, 2013. At 30 June, 2009 no shares had been
issued as a result of exercise of the warrant.
The fair
value of the equity settled transactions with consultants are estimated as at
the date of grant using a binomial model taking into account the terms and
conditions upon which the options and warrant were granted.
The
following table lists the inputs to the model used to calculate fair
value:
|
|
28
January, 2009
|
30
July, 2008
|
|
Exercise
price
|
|
0.63
|
2.17
|
|
Share
price at grant date
|
|
0.63
|
2.13
|
|
Dividend
yield
|
|
0%
|
0%
|
|
Expected
volatility
|
|
111%
|
81%
|
|
Historical
volatility
|
|
111%
|
81%
|
|
Risk-free
interest rate
|
|
1.70%
|
3.36%
|
|
Expected
life of warrant
|
|
5
years
|
5
years
|
|
Warrant
fair value
|
|
US$0.50
|
US$1.41
|
|
Glycotex,
Inc. Share based payment plans
The
Glycotex, Inc, 2007 stock option plan provides for the issuance of a maximum of
357,000 shares of common stock in connection with the grant of options and/or
other stock-based or stock-denominated awards to non-employee directors,
officers, employees and advisors. On 29 May, 2009, options exercisable for
125,573 shares of common stock were granted under the Stock Option
Plan.
A total
of 50,229 options vest and become exercisable on the grant date, 37,672 options
vest on 29 May, 2010 and 37,672 options vest on 29 May, 2011. The options have
an exercise price of US$15.13. The options have a term of 5 years and expire on
29 May, 2014. At 30 June, 2009, 50,229 options were exercisable, no options had
expired, been forfeited or exercised and all 125,573 were outstanding at that
date.
The fair
value of the equity settled transactions with consultants are estimated as at
the date of grant using a binomial model taking into account the terms and
conditions upon which the options and warrant were granted.
The
following table lists the inputs to the model used to calculate fair
value:
|
|
29
May, 2009
|
|
Exercise
price
|
|
15.13
|
|
Share
price at grant date
|
|
15.13
|
|
Dividend
yield
|
|
0%
|
|
Expected
volatility
|
|
52%
|
|
Historical
volatility
|
|
52%
|
|
Risk-free
interest rate
|
|
2.34%
|
|
Expected
life of warrant
|
|
5
years
|
|
Warrant
fair value
|
|
US$7.13
|
|
Note
14 SEGMENT
INFORMATION
The Group
generally accounts for intercompany sales and transfers as if the sales or
transfers were to third parties. Revenues are attributed to geographic areas
based on the location of the assets producing the revenues.
The
Novogen Group operates subsidiary companies in 3 major geographical areas being
Australia, North America and Europe. The subsidiaries are involved in the
selling and marketing of Novogen's consumer healthcare products.
Segment
accounting policies are the same as the Group’s policies described in Note 1.
During the financial year there were no changes in the segment accounting
policies that had a material effect on the segment information.
Geographic
Segments
The
following table presents revenue and profit information and certain asset and
liability information regarding business segments for the years ended June 30,
2009, June 30, 2008, and June 30, 2007.
|
Australia
|
North
America
|
Europe
|
Elimination
|
Consolidated
|
|
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
|
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
to external customers
|
4,902
|
4,755
|
4,453
|
2,068
|
2,428
|
3,152
|
1,363
|
2,217
|
3,104
|
-
|
-
|
-
|
8,333
|
9,400
|
10,709
|
|
Other
revenues from external . customers
|
2,059
|
2,171
|
4,691
|
-
|
5
|
54
|
-
|
13
|
-
|
(133)
|
(79)
|
(71)
|
1,926
|
2,110
|
4,674
|
|
Inter-segment
revenues
|
1,077
|
1,206
|
3,543
|
-
|
-
|
-
|
4,050
|
-
|
-
|
(5,127)
|
(1,206)
|
(3,543)
|
-
|
-
|
-
|
|
Total
segment revenue
|
8,038
|
8,132
|
12,687
|
2,068
|
2,433
|
3,206
|
5,413
|
2,230
|
3,104
|
(5,260)
|
(1,285)
|
(3,614)
|
10,259
|
11,510
|
15,383
|
|
Unallocated
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
888
|
1,773
|
1,912
|
|
Total
consolidated revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
11,147
|
13,283
|
17,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result
(from continuing operations)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
result (loss)/profit
|
(25,340)
|
(27,435)
|
(18,684)
|
(10,055)
|
997
|
(1,493)
|
3,786
|
139
|
105
|
7,834
|
1,550
|
(4,221)
|
(23,775)
|
(24,749)
|
(24,293)
|
|
Unallocated
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
(24)
|
(2)
|
|
Consolidated
entity (loss) before income tax
|
|
|
|
|
|
|
|
|
|
|
(23,786)
|
(24,773)
|
(24,295)
|
|
Income
tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
(4)
|
(1)
|
|
Net
(loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
(23,787)
|
(24,777)
|
(24,296)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
assets
|
62,344
|
61,667
|
71,533
|
98,248
|
82,874
|
70,414
|
811
|
1,026
|
1,722
|
(123,561)
|
(102,166)
|
(92,312)
|
37,842
|
43,401
|
51,357
|
|
Segment
liabilities
|
8,609
|
7,272
|
6,471
|
47,105
|
39,572
|
44,107
|
6,495
|
10,495
|
11,331
|
(53,140)
|
(49,575)
|
(55,178)
|
9,069
|
7,764
|
6,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
segment information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditure
|
81
|
88
|
269
|
13
|
4
|
27
|
-
|
3
|
3
|
-
|
-
|
-
|
94
|
95
|
299
|
|
Depreciation
|
270
|
341
|
954
|
11
|
7
|
15
|
1
|
5
|
7
|
-
|
-
|
-
|
282
|
353
|
976
|
|
Other
non-cash expenses
|
5,409
|
514
|
1,395
|
799
|
31
|
2,208
|
66
|
(18)
|
35
|
(4,029)
|
-
|
-
|
2,245
|
527
|
3,638
|
|
Segment
net gain/(loss) on foreign currency
|
6,990
|
(6,466)
|
(7,031)
|
(5,782)
|
4,767
|
5,573
|
(289)
|
764
|
581
|
1
|
(2)
|
(16)
|
920
|
(937)
|
(893)
|
|
Inventory
impairment provision
|
894
|
(364)
|
845
|
123
|
-
|
89
|
70
|
6
|
(1)
|
-
|
-
|
-
|
1,087
|
(358)
|
933
|
|
The
following table presents revenue, expenditure and certain asset information
regarding business segments for the years ended June 30, 2009, June 30, 2008 and
June 30, 2007.
|
Consumer
healthcare
|
Pharmaceutical
research and development
|
Elimination
|
Consolidated
|
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
revenue
|
8,907
|
10,507
|
12,450
|
2,240
|
2,776
|
4,845
|
-
|
-
|
-
|
11,147
|
13,283
|
17,295
|
Segment
assets
|
20,707
|
21,469
|
28,461
|
24,787
|
22,717
|
23,790
|
(7,652)
|
(785)
|
(894)
|
37,842
|
43,401
|
51,357
|
Note
15 FINANCIAL
INSTRUMENTS
Capital
Risk Management
The Group
manages its capital to ensure that the entities in the Group will be able to
continue as a going concern while maximising shareholder value.
The
capital structure of the Group consists of cash and cash equivalents and equity
attributable to equity holders. The Group operates globally, primarily through
subsidiary companies established in the markets in which the Group trades, or
through subsidiary companies established to facilitate the development of
specialty pharmaceutical products including oncology drug development through
Marshall Edwards, Inc. and wound healing through Glycotex, Inc.
The
Group’s overall strategy remains unchanged from 2008, whereby future operating
cash flows generated by a profitable Consumer Health business will supplement
the funds raised in equity markets by the Group’s listed subsidiary companies.
Also the Group intends to fund its operations through licence opportunities for
its pharmaceutical product candidates.
Financial
Risk Management
The
Group’s principal financial instruments comprise cash and short term deposits,
receivables and payables. The Group is not exposed to significant debt or
borrowings.
The
Group’s activities expose it to a variety of financial risks. The main risks
arising from the Group’s financial instruments are market risk (including
currency risk and interest rate risk), credit risk and liquidity risk. The Group
uses different methods to measure and manage the different types of risks to
which it is exposed. These methods include monitoring the levels of exposure to
interest rates and foreign exchange, ageing analysis and monitoring of specific
credit allowances to manage credit risk, and, rolling cash flow forecasts to
manage liquidity risk.
Market
Risk
Interest
rate risk
The
Group’s exposure to market interest rates relate primarily to the investments of
cash balances.
The Group
has cash reserves held primarily in US$ and A$ and places funds on deposit with
financial institutions for periods generally not exceeding three
months.
At
balance date the Group had the following exposure to variable interest rate
risk:
|
|
Consolidated
|
|
|
|
2009
|
2008
|
|
|
|
A$'000
|
A$'000
|
|
Financial
assets
|
|
|
|
|
|
|
|
|
|
Cash
at bank and in hand
|
|
27,848
|
27,930
|
|
Short
term deposits
|
|
4,490
|
6,456
|
|
|
|
32,338
|
34,386
|
|
|
|
|
|
|
Secured
cash
|
|
1,000
|
1,000
|
|
|
|
|
|
|
Net
exposure
|
|
33,338
|
35,386
|
|
At 30
June, 2009, if interest rates had moved as illustrated in the table below, with
all other variables held constant, post tax profit would have been affected as
follows:
Judgements
of reasonably possible
movements:
|
Post
tax profit
|
|
|
|
Higher/(Lower)
|
|
|
|
2009
|
2008
|
|
|
|
A$'000
|
A$'000
|
|
Consolidated
|
|
|
|
|
+1%
(100 basis points)
|
|
333
|
354
|
|
-1%
(100 basis points)
|
|
(333)
|
(354)
|
|
The
Group's exposure to interest rate risk and the effective weighted average
interest rate for each class of financial assets and liabilities is set out
below.
Consolidated
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating
Interest
Rate
|
Fixed
1
year or less
|
Fixed
O
ver
1 to 5 years
|
Non-interest
bearing
|
Total
|
|
Weighted
average rate of interest
|
|
Note
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
A$'000
|
|
|
Financial
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
5
|
18,835
|
25,049
|
-
|
-
|
-
|
-
|
9,013
|
2,881
|
27,848
|
27,930
|
0.58%
|
2.02%
|
Deposits
|
5
|
-
|
-
|
5,490
|
7,456
|
-
|
-
|
-
|
-
|
5,490
|
7,456
|
3.62%
|
7.75%
|
Trade
and other receivables
|
6
|
-
|
-
|
-
|
2,000
|
-
|
-
|
2,252
|
2,969
|
2,252
|
4,969
|
N/A
|
8.50%
|
Loans
and receivables
|
|
-
|
-
|
5,490
|
9,456
|
-
|
-
|
2,252
|
2,969
|
7,742
|
12,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,835
|
25,049
|
5,490
|
9,456
|
-
|
-
|
11,265
|
5,850
|
35,590
|
40,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
and other payables
|
10
|
-
|
-
|
-
|
-
|
-
|
-
|
8,059
|
6,671
|
8,059
|
6,671
|
N/A
|
N/A
|
Financial
liabilities at amortised cost
|
-
|
-
|
-
|
-
|
-
|
-
|
8,059
|
6,671
|
8,059
|
6,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
financial assets/(liabilities)
|
18,835
|
25,049
|
5,490
|
9,456
|
-
|
-
|
3,206
|
(821)
|
27,531
|
33,684
|
|
|
Foreign
currency risk
The Group
operates internationally and is exposed to foreign exchange risk arising from
various currency exposures, primarily with respect to the U.S. dollar (USD), the
British pound (GBP), the Euro, the Swiss Franc (CHF) and the Canadian dollar
(CAD). Foreign exchange risk arises from future transactions and recognised
assets and liabilities denominated in a currency that is not the entity’s
functional currency and net investments in foreign operations.
As of 30
June, 2009, the Group did not hold derivative financial instruments in managing
its foreign currency, however, the Company may from time to time enter into
hedging arrangements where circumstances are deemed appropriate. Foreign
subsidiaries with a functional currency of AUD have exposure to the local
currency of these subsidiaries and any other currency these subsidiaries trade
in. The functional currency of Marshall Edwards, Inc. and Glycotex, Inc. is USD
and these subsidiaries have exposure to AUD and any other currency these
subsidiaries trade in.
The
Group’s exposure to foreign currency risk at 30 June, 2009 was as
follows:
|
Consolidated
|
|
|
2009
|
2008
|
|
|
A$'000
|
A$'000
|
|
USD denominated
|
|
|
|
|
|
|
|
Financial
assets
|
|
|
|
Cash
and cash equivalents
|
467
|
3,524
|
|
Trade
and other receivables
|
243
|
268
|
|
|
710
|
3,792
|
|
Financial
liablities
|
|
|
|
Trade
and other payables
|
155
|
110
|
|
Net
exposure
|
555
|
3,682
|
|
|
|
|
|
GBP
denominated
|
|
|
|
|
|
|
|
Financial
assets
|
|
|
|
Cash
and cash equivalents
|
126
|
18
|
|
Trade
and other receivables
|
340
|
474
|
|
|
466
|
492
|
|
Financial
liablities
|
|
|
|
Trade
and other payables
|
337
|
319
|
|
Net
exposure
|
129
|
173
|
|
|
|
|
|
CAD denominated
|
|
|
|
|
|
|
|
Financial
assets
|
|
|
|
Cash
and cash equivalents
|
150
|
138
|
|
Trade
and other receivables
|
121
|
200
|
|
|
271
|
338
|
|
Financial
liablities
|
|
|
|
Trade
and other payables
|
145
|
79
|
|
Net
exposure
|
126
|
259
|
|
|
|
|
|
EURO denominated
|
|
|
|
|
|
|
|
Financial
assets
|
|
|
|
Cash
and cash equivalents
|
12
|
49
|
|
Trade
and other receivables
|
491
|
660
|
|
|
503
|
709
|
|
Financial
liablities
|
|
|
|
Trade
and other payables
|
339
|
779
|
|
Net
exposure
|
164
|
(70)
|
|
CHF denominated
|
|
|
|
|
|
|
|
Financial
assets
|
|
|
|
Cash
and cash equivalents
|
-
|
-
|
|
Trade
and other receivables
|
-
|
-
|
|
|
-
|
-
|
|
Financial
liablities
|
|
|
|
Trade
and other payables
|
218
|
-
|
|
Net
exposure
|
(218)
|
-
|
|
|
|
|
|
AUD denominated
|
|
|
|
|
|
|
|
Financial
assets
|
|
|
|
Cash
and cash equivalents
|
738
|
441
|
|
Trade
and other receivables
|
293
|
-
|
|
|
1,031
|
441
|
|
Financial
liablities
|
|
|
|
Trade
and other payables
|
4,085
|
1,695
|
|
Net
exposure
|
(3,054)
|
(1,254)
|
|
The
following sensitivity is based on the foreign currency risk exposures in
existence at the balance sheet date:
Judgements
of reasonably possible movements:
|
Post
tax profit
|
|
|
Higher/(Lower)
|
|
|
2009
|
2008
|
|
|
A$'000
|
A$'000
|
|
USD denominated
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
AUD/USD
+10%
|
(50)
|
(335)
|
|
AUD/USD
-10%
|
62
|
409
|
|
|
|
|
|
GBP denominated
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
AUD/GBP
+10%
|
(12)
|
(16)
|
|
AUD/GBP
-10%
|
14
|
9
|
|
|
|
|
|
CAD denominated
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
AUD/CAD
+10%
|
(11)
|
(24)
|
|
AUD/CAD
-10%
|
14
|
29
|
|
|
|
|
|
EURO denominated
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
AUD/EURO
+10%
|
(15)
|
6
|
|
AUD/EURO
-10%
|
18
|
(8)
|
|
|
|
|
|
CHF denominated
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
AUD/EURO
+10%
|
20
|
-
|
|
AUD/EURO
-10%
|
(24)
|
-
|
|
|
|
|
|
AUD denominated
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
AUD/USD
+10%
|
278
|
114
|
|
AUD/USD
-10%
|
(339)
|
(139)
|
|
|
|
|
|
Credit
risk
The Group
trades only with recognised, creditworthy third parties.
It is the
Group’s policy that all customers who wish to trade on credit terms are subject
to credit application procedures. In addition, receivable balances are monitored
on an ongoing basis with the result that the Group’s exposure to bad debts is
not significant.
As of 30
June, 2009 the Group did not hold derivative financial instruments. The Group
places its cash deposits with high credit quality financial institutions and by
policy, limits the amount of credit exposure to any single counter-party. The
Group is averse to principal loss and ensures the safety and preservation of its
invested funds by limiting default risk, market risk, and reinvestment
risk.
The Group
mitigates default risk by depositing funds with high credit quality financial
institutions and by constantly positioning its portfolio to respond
appropriately to a significant reduction in a credit rating of any financial
institution.
The
Group’s maximum exposures to credit risk at balance date in relation to each
class of recognised financial assets is the carrying amount of those assets as
indicated in the Balance Sheet. Trade and other receivables by geographical
segment are as follows:
|
Consolidated
|
|
|
2009
|
2008
|
|
|
A$'000
|
A$'000
|
|
Australia
|
1,724
|
4,089
|
|
North
America
|
182
|
338
|
|
Europe
|
346
|
542
|
|
|
2,252
|
4,969
|
|
Concentration
of credit risk
There are
no significant concentrations of credit risk within the Group. The Group
minimises concentration of credit risk in relation to trade receivables by
undertaking transactions with a large number of customers. The credit risk on
liquid funds is limited as the counterparties are banks with high credit
ratings.
Credit
risk is managed in the following way:
(i)
|
customer
payment terms are 30 days except for some customers who have 60 day
terms;
|
(ii)
|
credit
limits are applied to customers to limit the credit risk exposure;
and
|
(iii)
|
by
limiting the amount of credit exposure to any single counter-party for
cash deposits
.
|
Liquidity
risk
The Group
manages liquidity risks by maintaining adequate cash reserves and by
continuously monitoring cash forecasts and actual cash flows.
Maturity
analysis of financial liabilities based on management’s expectation
Trade
payables and other financial liabilities mainly arise from the financing of
assets used in the Company’s ongoing operations such as plant and equipment and
investments in working capital. These assets are considered in the Group’s
overall liquidity risk.
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended 30 June, 2009
|
|
<
6 months
|
|
|
6-12
months
|
|
|
1-5
Years
|
|
|
>
5 years
|
|
|
Total
|
|
|
|
$'000
|
|
|
$'000
|
|
|
$'000
|
|
|
$'000
|
|
|
$'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
and other payables
|
|
|
8,059
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8,059
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended 30 June, 2008
|
|
<
6 months
|
|
|
6-12
months
|
|
|
1-5
Years
|
|
|
>
5 years
|
|
|
Total
|
|
|
|
$'000
|
|
|
$'000
|
|
|
$'000
|
|
|
$'000
|
|
|
$'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
and other payables
|
|
|
6,671
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,671
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,671
|
|
Financing
facilities available
At
reporting date, the following financing facilities had been negotiated and were
available:
|
|
Consolidated
|
|
|
|
2009
|
2008
|
|
|
|
A$'000
|
A$'000
|
|
|
|
|
|
|
Multi
option facility
|
|
1,000
|
1,000
|
|
|
|
1,000
|
1,000
|
|
|
|
|
|
|
Used
at balance date
|
|
526
|
526
|
|
Unused
at balance date
|
|
474
|
474
|
|
|
|
1,000
|
1,000
|
|
Novogen
Limited has entered into a Deed of Set-off where it has agreed to hold a
deposited sum with the bank of at least $1 million at all times as additional
security for the multi-option facility.
Note
16 COMMITMENTS
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
(a)
Lease commitments *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
in relation to operating leases
|
|
|
|
|
|
|
contracted
for at the reporting date but not
|
|
|
|
|
|
|
recognised
as liabilities payable:
|
|
|
|
|
|
|
Not
later than 1 year
|
|
|
490
|
|
|
|
466
|
|
Later
than 1 year but not later than 2 years
|
|
|
84
|
|
|
|
431
|
|
Later
than 2 years but not later than 3 years
|
|
|
-
|
|
|
|
58
|
|
|
|
|
574
|
|
|
|
955
|
|
|
|
|
|
|
|
|
|
|
(b)
Other expenditure commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development contracts for
|
|
|
|
|
|
|
|
|
service
to be rendered:
|
|
|
|
|
|
|
|
|
Not
later than 1 year
|
|
|
1,797
|
|
|
|
10,493
|
|
Later
than 1 year but not later than 2 years
|
|
|
518
|
|
|
|
6,328
|
|
Later
than 2 years but not later than 3 years
|
|
|
324
|
|
|
|
2,225
|
|
|
|
|
2,639
|
|
|
|
19,046
|
|
*
Operating leases represent payments for property and equipment rental. Leases
for property include an annual review for Consumer Price Index
increases.
There are
no commitments for capital expenditure outstanding at the end of the financial
year.
Note
17 RELATED
PARTY DISCLOSURES
Interests
in controlled entities
The
consolidated financial statements include the financial statements of Novogen
Limited and the subsidiaries listed in the following table.
Name
of Entity
|
Country
of Incorporation
|
|
%
Equity interest *
|
|
|
Investment
(A$'000)
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Novogen
Laboratories Pty Ltd ^
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
2,154
|
|
|
|
1,551
|
|
Novogen
Research Pty Ltd ^
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
7,000
|
|
|
|
7,000
|
|
Phytosearch
Pty Ltd #
|
Australia
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Phytogen
Pty Ltd #
|
Australia
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
20
|
|
Glycotex
Pty Ltd #
|
Australia
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Norvogen
Pty Ltd #
|
Australia
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Central
Coast Properties Pty Ltd #
|
Australia
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Novogen
Inc
|
US
|
|
|
100
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Glycotex,
Inc.
|
US
|
|
|
80.7
|
|
|
|
81.0
|
|
|
|
857
|
|
|
|
857
|
|
Novogen
Limited (UK)
|
UK
|
|
|
100
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Promensil
Limited
|
UK
|
|
|
100
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Novogen
BV
|
Netherlands
|
|
|
100
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Novogen
Canada Limited
|
Canada
|
|
|
100
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Marshall
Edwards, Inc.
|
US
|
|
|
71.3
|
|
|
|
71.9
|
|
|
|
6,712
|
|
|
|
-
|
|
Marshall
Edwards Pty Limited #
|
Australia
|
|
|
71.3
|
|
|
|
71.9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,723
|
|
|
|
9,428
|
|
Novogen
Limited, a company incorporated in Australia, is the ultimate parent
entity.
^
Entities subject to class
order relief
Pursuant
to Class Order 98/1418 (as amended) issued by the Australian Securities and
Investment Commission, relief has been granted to these companies from the
Corporations Act 2001 requirements for preparation, audit and lodgement of their
financial reports.
As a
condition of the Class Order, Novogen Limited and the controlled entities
subject to the Class Order (the “Closed Group”), entered into a Deed of Cross
Guarantee on 28 May, 1999. The effect of the deed is that Novogen Limited has
guaranteed to pay any deficiency in the event of winding up of the controlled
entities. The controlled entities have also given a similar guarantee in the
event that Novogen Limited is wound up.
#
Entities that meet the requirements of small proprietary limited
corporations.
* The
proportion of ownership interest is equal to the proportion of voting power
held.
The
consolidated income statement and balance sheet of the entities that are members
of the “Closed Group” are as follows:
Consolidated
Income Statement
|
|
CLOSED
GROUP
|
|
|
|
2009
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
|
|
|
|
Loss
from continuing operations before income tax
|
|
|
(6,395
|
)
|
|
|
(8,143
|
)
|
Income
tax expense
|
|
|
-
|
|
|
|
-
|
|
Loss
after tax from continuing operations
|
|
|
(6,395
|
)
|
|
|
(8,143
|
)
|
Accumulated
losses at the beginning of the period
|
|
|
(111,224
|
)
|
|
|
(103,683
|
)
|
Net
income recognised directly in equity
|
|
|
604
|
|
|
|
602
|
|
Accumulated
losses at the end of the period
|
|
|
(117,015
|
)
|
|
|
(111,224
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheet
|
|
CLOSED
GROUP
|
|
|
|
|
2009
|
|
|
|
2008
|
|
|
|
A$'000
|
|
|
A$'000
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
9,164
|
|
|
|
13,718
|
|
Trade
and other receivables
|
|
|
2,161
|
|
|
|
4,506
|
|
Inventories
|
|
|
827
|
|
|
|
1,162
|
|
Other
current assets
|
|
|
489
|
|
|
|
433
|
|
Total
current assets
|
|
|
12,641
|
|
|
|
19,819
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
329
|
|
|
|
549
|
|
Other
financial assets
|
|
|
6,712
|
|
|
|
-
|
|
Total
non-current assets
|
|
|
7,041
|
|
|
|
549
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
19,682
|
|
|
|
20,368
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Trade
and other payables
|
|
|
2,653
|
|
|
|
2,958
|
|
Provisions
|
|
|
708
|
|
|
|
676
|
|
Total
current liabilities
|
|
|
3,361
|
|
|
|
3,634
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
236
|
|
|
|
385
|
|
Total
non-current liabilities
|
|
|
236
|
|
|
|
385
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
3,597
|
|
|
|
4,019
|
|
|
|
|
|
|
|
|
|
|
NET
ASSETS
|
|
|
16,085
|
|
|
|
16,349
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Contributed
equity
|
|
|
133,100
|
|
|
|
127,573
|
|
Accumulated
losses
|
|
|
(117,015
|
)
|
|
|
(111,224
|
)
|
TOTAL
EQUITY
|
|
|
16,085
|
|
|
|
16,349
|
|
Note
18 REMUNERATION
OF AUDITORS
|
|
Consolidated
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
A$
|
|
|
|
A$
|
|
|
|
|
|
|
|
|
|
|
Amounts
received or due and receivable by BDO for:
|
|
|
|
|
|
|
|
|
(a)
an audit or review of the financial report of the entity and any other
entity in the consolidated group;
|
|
|
328,726
|
|
|
|
333,718
|
|
(b)
other services in relation to the entity and any other entity in the
consolidated entity.
|
|
-
Tax compliance services
|
|
|
50,650
|
|
|
|
26,109
|
|
-
MEI S3/S8 audit and review services
|
|
|
3,381
|
|
|
|
25,726
|
|
-
Review of government grants
|
|
|
-
|
|
|
|
2,980
|
|
-
Other
|
|
|
6,240
|
|
|
|
8,007
|
|
|
|
|
388,997
|
|
|
|
396,540
|
|
|
|
|
|
|
|
|
|
|
Amounts
received or due and receivable by other entities in the BDO network for
other services
in
relation to the entity and any other entity in the consolidated
entity.
|
|
-
Tax compliance services
|
|
|
4,359
|
|
|
|
-
|
|
-
Administrative matters
|
|
|
30,456
|
|
|
|
-
|
|
|
|
|
34,816
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Amounts
received or due and receivable by non BDO audit firms for:
|
|
|
|
|
|
-
an audit or review of the financial report of the entity and any other
entity in the consolidated group, for local statutory
purposes
|
|
|
22,229
|
|
|
|
21,600
|
|
-
other non-audit services - local statutory auditors
|
|
|
46,705
|
|
|
|
33,662
|
|
|
|
|
68,934
|
|
|
|
55,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
492,746
|
|
|
|
451,802
|
|
Note
19 DIRECTOR
AND EXECUTIVE DISCLOSURES
a)
Compensation of key management personnel
|
Consolidated
|
|
|
2009
|
2008
|
|
|
A$
|
A$
|
|
|
|
|
|
Short
term employee benefits
|
2,705,031
|
2,686,531
|
|
Post
employment benefits
|
532,290
|
570,947
|
|
Long
term employee benefits
|
(52,228)
|
103,008
|
|
Share-based
payment
|
347,921
|
290,682
|
|
Total
Compensation
|
3,533,014
|
3,651,168
|
|
Further
information regarding key management personnel and their compensation can be
found in Item 6 Directors, Senior Management and Employees commencing on
page 42.
b
) Option holding of key
management personnel
|
|
Balance
at beginning of period
|
|
|
Granted
as remuneration
|
|
|
Options
exercised
|
|
|
Net
change other
|
|
|
Balance
at end of period
|
|
|
Vested
and exercisable
|
|
|
Not
exercisable
|
|
|
|
1 July, 2008
|
|
|
|
|
|
30
June, 2009
|
|
|
30
June, 2009
|
|
|
30
June, 2009
|
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
Executive
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C
Naughton
|
|
|
91,196
|
|
|
|
218,664
|
|
|
|
-
|
|
|
|
-
|
|
|
|
309,860
|
|
|
|
100,264
|
|
|
|
209,596
|
|
AJ
Husband
|
|
|
118,392
|
|
|
|
126,928
|
|
|
|
-
|
|
|
|
(14,892
|
)
|
|
|
230,428
|
|
|
|
102,387
|
|
|
|
128,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR
Seaton
|
|
|
243,884
|
|
|
|
212,108
|
|
|
|
-
|
|
|
|
(14,892
|
)
|
|
|
441,100
|
|
|
|
102,028
|
|
|
|
339,072
|
|
WJ
Lancaster (US)
|
|
|
107,736
|
|
|
|
109,400
|
|
|
|
-
|
|
|
|
(7,848
|
)
|
|
|
209,288
|
|
|
|
44,859
|
|
|
|
164,429
|
|
BM
Palmer
|
|
|
132,868
|
|
|
|
114,160
|
|
|
|
-
|
|
|
|
(8,244
|
)
|
|
|
238,784
|
|
|
|
55,715
|
|
|
|
183,069
|
|
CD
Kearney
|
|
|
136,360
|
|
|
|
117,004
|
|
|
|
-
|
|
|
|
(8,192
|
)
|
|
|
245,172
|
|
|
|
57,176
|
|
|
|
187,996
|
|
RL
Erratt
|
|
|
127,176
|
|
|
|
106,880
|
|
|
|
-
|
|
|
|
(8,156
|
)
|
|
|
225,900
|
|
|
|
53,813
|
|
|
|
172,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
957,612
|
|
|
|
1,005,144
|
|
|
|
-
|
|
|
|
(62,224
|
)
|
|
|
1,900,532
|
|
|
|
516,242
|
|
|
|
1,384,290
|
|
|
|
Balance
at beginning of period
|
|
|
Granted
as remuneration
|
|
|
Options
exercised
|
|
|
Net
change other
|
|
|
Balance
at end of period
|
|
|
Vested
and exercisable
|
|
|
Not
exercisable
|
|
|
|
1
July, 2007
|
|
|
|
|
|
|
|
|
|
|
|
30
June, 2008
|
|
|
30
June, 2008
|
|
|
30
June, 2008
|
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
Executive
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C
Naughton
|
|
|
-
|
|
|
|
91,196
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,196
|
|
|
|
-
|
|
|
|
91,196
|
|
AJ
Husband
|
|
|
106,176
|
|
|
|
50,472
|
|
|
|
-
|
|
|
|
(38,256
|
)
|
|
|
118,392
|
|
|
|
59,672
|
|
|
|
58,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR
Seaton
|
|
|
156,860
|
|
|
|
125,492
|
|
|
|
-
|
|
|
|
(38,468
|
)
|
|
|
243,884
|
|
|
|
59,672
|
|
|
|
184,212
|
|
WJ
Lancaster (US)
|
|
|
60,090
|
|
|
|
53,020
|
|
|
|
-
|
|
|
|
(5,374
|
)
|
|
|
107,736
|
|
|
|
27,735
|
|
|
|
80,001
|
|
BM
Palmer
|
|
|
89,112
|
|
|
|
67,864
|
|
|
|
-
|
|
|
|
(24,108
|
)
|
|
|
132,868
|
|
|
|
32,803
|
|
|
|
100,065
|
|
CD
Kearney
|
|
|
90,612
|
|
|
|
69,560
|
|
|
|
-
|
|
|
|
(23,812
|
)
|
|
|
136,360
|
|
|
|
33,326
|
|
|
|
103,034
|
|
RL
Erratt
|
|
|
87,864
|
|
|
|
63,836
|
|
|
|
-
|
|
|
|
(24,524
|
)
|
|
|
127,176
|
|
|
|
32,214
|
|
|
|
94,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
590,714
|
|
|
|
521,440
|
|
|
|
-
|
|
|
|
(154,542
|
)
|
|
|
957,612
|
|
|
|
245,422
|
|
|
|
712,190
|
|
c)
Shareholdings of key management personnel and their related parties
|
|
Balance
1
July, 2008
|
|
|
Granted
as remuneration
|
|
|
On
exercise of options
|
|
|
Net
change other
|
|
|
Balance
30
June, 2009
|
|
|
|
Number
Ord
|
|
|
Number
Ord
|
|
|
Number
Ord
|
|
|
Number
Ord
|
|
|
Number
Ord
|
|
Executive
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA
Johnston
|
|
|
73,594
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73,594
|
|
C
Naughton
|
|
|
633,511
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
633,511
|
|
AJ
Husband
|
|
|
102,920
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
102,920
|
|
GM
Leppinus
|
|
|
3,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,883
|
|
|
|
11,883
|
|
PJ
Nestel AO
|
|
|
32,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,000
|
|
WD
Rueckert *
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
5,000
|
|
PB
Simpson
|
|
|
5,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR
Seaton
|
|
|
37,378
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,378
|
|
BM
Palmer
|
|
|
205,636
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
205,636
|
|
CD
Kearney
|
|
|
8,850
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,850
|
|
RL
Erratt
|
|
|
231,368
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,000
|
|
|
|
271,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,333,757
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,883
|
|
|
|
1,387,640
|
|
* Shares
held as sponsored ADR’s
|
|
Balance
1
July, 2007
|
|
|
Granted
as remuneration
|
|
|
On
exercise of options
|
|
|
Net
change other
|
|
|
Balance
30
June, 2008
|
|
|
|
Number
Ord
|
|
|
Number
Ord
|
|
|
Number
Ord
|
|
|
Number
Ord
|
|
|
Number
Ord
|
|
Executive
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA
Johnston
|
|
|
58,594
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,000
|
|
|
|
73,594
|
|
C
Naughton
|
|
|
633,511
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
633,511
|
|
AJ
Husband
|
|
|
102,920
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
102,920
|
|
GM
Leppinus
|
|
|
3,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000
|
|
PJ
Nestel AO
|
|
|
32,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,000
|
|
PB
Simpson
|
|
|
500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
5,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR
Seaton
|
|
|
37,378
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,378
|
|
BM
Palmer
|
|
|
134,023
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71,613
|
|
|
|
205,636
|
|
CD
Kearney
|
|
|
8,850
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,850
|
|
RL
Erratt
|
|
|
232,368
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,000
|
)
|
|
|
231,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,243,144
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,613
|
|
|
|
1,333,757
|
|
All
equity transactions with Executive Directors and executives, other than those
arising from the exercise of remuneration options, have been entered into under
terms and conditions no more favourable than those the entity would have adopted
if dealing at arm’s length.
Note
20 EVENTS
AFTER THE BALANCE SHEET DATE
In August
2009 the Company entered into a licence agreement with MEPL granting an
exclusive world-wide, non-transferable licence, under the Novogen patent rights,
to conduct clinical trials and commercialise and distribute all forms of
administering NV-128, except topical applications. The agreement covers uses of
NV-128 in the field of prevention, treatment or cure of cancer in humans. NV-128
is currently in pre-clinical development stage.
In
consideration of the license granted MEPL paid Novogen a licence fee of
US$1,500,000 on 7 August, 2009.
In
November 2009, MEPL finalised negotiations and signed a Deed of Release in
relation to claims received in connection with the termination of enrolment into
the OVATURE Phase III clinical trial. As a result of receiving the Deed of
Release, the final amount agreed to be paid in connection with the claims was
$477,000 less than management’s estimates which were accrued in the accounts at
June 30, 2009. Management does not believe this amount has a material impact on
the financial statements.
On
December 1, 2009, Novogen’s Managing Director Christopher Naughton ceased his
employment with the Company. The termination payment of approximately $1.7
million was made in accordance with Mr. Naughton’s employment
contract.
There
have been no other significant events occurring after balance date which have
had a material impact on the business.
Note
21 DIVIDENDS
The
Company has incurred losses since its inception and, as a result, has not
declared any dividends. Any dividends in future periods will be declared in
Australian dollars.
Note
22 CONTINGENT
ASSETS AND CONTINGENT LIABILITIES
The
Company is continuing to prosecute its IP rights and in June 2007 announced that
the Vienna Commercial Court had upheld a provisional injunction against an
Austrian company, APOtrend. The Company has provided a guarantee to the value of
€250,000 with the court to confirm its commitment to the ongoing enforcement
process.
SIGNATURES
The
registrant hereby certifies that it meets all the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to sign
this Annual Report on its behalf.
NOVOGEN
LIMITED
/s/ David
Seaton
Mr. David
Seaton
Acting
Chief Executive Officer and Chief Financial Officer
Date:
December 9, 2009
Exhibit
Index
Exhibit
No.
|
Exhibit
Description
|
1.1
|
Constitution
of Novogen Limited (formerly known as the Memorandum of Association and
Articles of Association). (1)
|
2.1
|
Deposit
Agreement as further amended and restated, dated as of September 29, 2005,
among Novogen Limited, the Bank of New York, as Depositary, and owners and
holders from time to time of ADRs issued thereunder. (2)
|
4.1
|
Employment
Contract between the Company and Mr. C. Naughton dated June 21, 2006.
(4)
|
4.2
|
Employment
Contract between the Company and Professor Alan Husband dated June 21,
2006. (4)
|
4.4
|
Lease
between Kendall Glen Pty Limited (Lessor) and Novogen Laboratories Pty Ltd
for the Company's corporate headquarters at 140 Wicks Road, North Ryde,
New South Wales. (3)
|
4.5
|
Employment
Contract between the Company and Bryan Palmer dated June 21, 2006.
(4)
|
4.6
|
Employment
Contract between the Company and Craig Kearney dated June 21, 2006.
(4)
|
4.7
|
Employment
Contract between the Company and David Seaton dated June 21, 2006.
(4)
|
4.8
|
Employment
Contract between the Company and Ronald Erratt dated June 21 30, 2006.
(4)
|
4.9
|
Employment
Contract between the Company and Warren Lancaster dated June 21, 2006.
(*)
|
4.10
|
Patent
License Agreement, dated as of November 13, 1997, by and among
Novogen Limited, Novogen Research Pty Limited, Novogen Inc. and Protein
Technologies International Inc.** (6)
|
4.11
|
Amendment
to the Patent License Agreement, dated as of June 21, 2004 by and
among Novogen Limited, Novogen Research Pty Limited, Novogen Inc. and
Solae LLC (formerly known as Protein Technologies International Inc.)**
(7)
|
8.1
|
Company
Subsidiaries. (*)
|
12.1
|
Certification
of Acting Chief Executive Officer pursuant to Rule 13a – 14(a) of the
Securities Exchange Act of 1934, as amended. (*)
|
12.2
|
Certification
of Chief Financial Officer a pursuant to Rule 13a – 14(a) of the
Securities Exchange Act of 1934, as amended. (*)
|
13.1
|
Certification
by the Acting Chief Executive Officer and Chief Financial Officer pursuant
to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes – Oxley
Act of 2002. (*)
|
|
**
|
Portions
of these documents have been omitted pursuant to a request for
confidential treatment. Such omitted portions have been filed separately
with the SEC.
|
|
(1)
|
Incorporated
by reference to the Registration Statement on Form 20-F filed with the
Securities and Exchange Commission on December 24, 1998 (File No.
0-29962)
|
(2)
|
Incorporated
by reference to the Registration Statement on Form F-6 filed with the
Securities and Exchange Commission on September 29, 2005 (File No.
333-128681)
|
(3)
|
Incorporated
by reference to the Annual Report on Form 20-F filed with the Securities
and Exchange Commission on November 27, 2000 (File No.
0-29962)
|
(4)
|
Incorporated
by reference to the Annual Report on Form 20-F filed with the Securities
and Exchange Commission on November 29, 2006 (File No.
0-29962)
|
(5)
|
Incorporated
by reference to the Annual Report on Form 20-F filed with the Securities
and Exchange Commission on December 14, 2007 (File No.
0-29962)
|
|
(6)
|
Incorporated
by reference to the Annual Report on Form 20-F/A filed with the Securities
and Exchange Commission on March 20, 2009 (File No.
0-29962).
|
|
(7)
|
Incorporated
by reference to the Annual Report on Form 20-F/A filed with the Securities
and Exchange Commission on May 5, 2009 (File No.
0-29962).
|
Exhibit
8.1
Company
Subsidiaries
Novogen
Limited is a company limited by shares and is incorporated and domiciled in
Australia. Novogen Limited has prepared a consolidated financial report
incorporating the entities that it controlled during the financial year ended
June 30, 2009, which included the following:
Name of Entity
|
Country of Incorporation
|
Ownership %
|
Novogen
Laboratories Pty Ltd
|
Australia
|
100
|
Novogen
Research Pty Ltd
|
Australia
|
100
|
Novogen
Inc
|
U.S.A.
|
100
|
Glycotex,
Inc
|
U.S.A.
|
80.7
|
Novogen
Limited
(U.K.)
|
U.K.
|
100
|
Promensil
Limited
|
U.K.
|
100
|
Novogen
BV
|
Netherlands
|
100
|
Novogen
New Zealand Limited
|
New
Zealand
|
100
|
Novogen
Canada Limited
|
Canada
|
100
|
Marshall
Edwards, Inc.
|
U.S.A.
|
71.3
|
Marshall
Edwards Pty Limited
|
Australia
|
71.3
|
* Owned
indirectly through Marshall Edwards, Inc.
Exhibit
12.1
Certification
Pursuant
to Section 302
The
Sarbanes-Oxley Act of 2002
I, David
Ross Seaton, certify that:
1.
|
I
have reviewed this Annual Report on Form 20-F for the fiscal year ended
June 30, 2009 (“Annual Report”) of Novogen Limited (the
“Company”);
|
2.
|
Based
on my knowledge, this Annual Report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
Annual Report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this Annual Report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this Annual
Report.
|
4.
|
The
Company’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) ) and internal
control over financial reporting (as defined in the Exchange Act Rules
13a-15(f) and 15d-15(f) for the Company and
have:
|
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared:
|
|
b.
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c.
|
Evaluated
the effectiveness of the Company’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation;
and
|
|
d.
|
Disclosed
in this report any change in the Company’s internal control over financial
reporting that occurred during the period covered by the annual report
that has materially affected, or is reasonably likely to materially affect
the Company’s internal control over financial reporting;
and
|
5.
|
The
Company’s other certifying officer(s) and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the Company’s auditors and the audit committee of the Company’s board of
directors (or persons performing the equivalent
functions).
|
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information;
and
|
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal control
over financial reporting.
|
/s/ David
Seaton
David
Seaton
Acting
Chief Executive Officer
Date:
December 9, 2009
Exhibit
12.2
Certification
Pursuant
to Section 302
The
Sarbanes-Oxley Act of 2002
I, David
Ross Seaton, certify that:
|
1. I
have reviewed this Annual Report on Form 20-F (“Annual Report”) of Novogen
Limited (the”Company”);
|
|
2. Based
on my knowledge, this Annual Report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
Annual Report;
|
|
3. Based
on my knowledge, the financial statements, and other financial information
included in this Annual Report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this Annual
Report;
|
|
4. The
company’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) ) and internal
control over financial reporting (as defined in the Exchange Act Rules
13a-15(f) and 15d-15(f)) for the Company and
have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared:
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the Company’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the Company’s internal control over financial
reporting that occurred during the period covered by the annual report
that has materially affected, or is reasonably likely to materially affect
the Company’s internal control over financial reporting;
and
|
5. The
Company’s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the Company’s
auditors and the audit committee of the Company’s board of directors (or persons
performing the equivalent functions).
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal control
over financial reporting.
|
/s/ David
Seaton
David
Seaton
Chief
Financial Officer
Date:
December 9, 2009
Exhibit
13.1
Certification
Pursuant
to Section 302
The
Sarbanes-Oxley Act of 2002
David
Ross Seaton, Acting Chief Executive Officer and Chief Financial Officer of
Novogen Limited, a New South Wales corporation (the “Company”), hereby certifies
that:
(1)
|
The
Company’s periodic report on form 20-F for the period ended June 30, 2009
(the “Form 20-F”) fully complies with the requirements of section 13(a) of
the Securities Exchange Act of 1934 as amended;
and
|
(2)
|
The
information contained in the Form 20-F fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
* * *
Acting
Chief Executive Officer and Chief Financial Officer
/s/ David
Seaton
David
Seaton
Date:
December 9, 2009