Home' Acrux Annual Report : Acrux Annual Report 2016 Contents DIRECTORS’ REPORT CONTINUED
There were no changes to contributed equity during the financial year.
The number of outstanding employee share options on issue at the date of this report was 4,794,000 (30 June 2015: 3,380,000),
representing 3.1% of the Company’s issued share capital. Further details of share-based payments are provided in Note 16 of the
Financial Report which follows the Directors’ Report.
Key events during the year
• Formulation development completed for our first three generic products.
• Further generic pipeline product opportunities identified and assessed for future development.
• Lenzetto® launched in Europe by our licensee (Gedeon Richter).
• Net sales of Axiron® for the 2015/16 financial year totalled US$149.3 million (2014/15: US$155.4 million).
• 2014/15 final dividend paid (6 cents per share).
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the consolidated entity during the year.
After balance date events
The Board resolved to issue 1,000,000 options to the Chief Executive Officer (Mr Michael Kotsanis) on 22 July 2016 at an exercise price
of $0.96 per share. The options comprise the long term incentive component of the CEO’s remuneration package and were issued
pursuant to the terms of the Chief Executive Officer Share Option Plan, which was approved at the Acrux Limited Extraordinary
General Meeting held on 3 February 2015. Shares allocated on the exercise of these options will rank equally with the issued capital
of the Company from their date of exercise.
Formal trial proceedings concluded in July 2016 in the US District Court for the Southern District of Indiana against (1) Perrigo Israel
Pharmaceuticals Limited (Perrigo), (2) Watson Laboratories Inc. (Actavis), (3) Amneal Pharmaceuticals LLC (Amneal) and (4) Lupin
Pharmaceuticals Inc. (Lupin) (collectively, the ‘Defendants’), respectively for infringement of issued patents covering Axiron®. In each
instance, the patents are owned by Acrux DDS Pty Ltd, a wholly-owned subsidiary of Acrux Limited and exclusively licensed to Eli
Lilly and Company, our licensee for Axiron®. On 22 August 2016, the US District Court for the Southern District of Indiana ruled the
formulation and axilla application patents granted by the US Patent Office for Axiron® have been invalidated and therefore would not
be infringed by the commercialisation of generic versions of Axiron® by the generic companies that have challenged these patents.
The applicator patent is valid but not infringed by the majority of parties. The decision allows FDA-approved generic versions of
Axiron® to enter the US marketplace, pending an appeal. On 23 August 2016, in the US, Eli Lilly and Company and Acrux announced
that they will appeal the Court’s decision. In the event that the decision is overturned during the appeal, and the courts determine
that the patents are valid and infringed, the generics can be withdrawn from the market and the brand company can seek monetary
damages. Appeal proceedings are ongoing at the time of writing this report.
No other matters or circumstances have arisen since the end of the financial year that have significantly affected or may significantly
affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in
future financial years.
For the foreseeable future, the consolidated entity’s financial results will be materially influenced by the sales performance of
Axiron® in the US and the development of the consolidated entity’s product pipeline, involving transition of pipeline products from
preclinical activities to clinical trial initiation. Under a licence agreement with Eli Lilly and Company, the consolidated entity receives
royalties on worldwide sales of Axiron® by Lilly.
The consolidated entity’s operations are subject to certain environmental regulations under the laws of the Commonwealth and of
the state. Details of the consolidated entity’s performance in relation to such environmental regulations are as follows:
20 ACRUX ANNUAL REPORT 2016
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