Acrux : Appendix 4D, Half Year Accounts as at 31 December 2021

only	Appendix 4D -Half year report
Results for announcement to the market
	Name of Entity	Acrux Limited
	ABN	72 082 001 152
	Half Year Ended	31 December 2021
	Previous Corresponding Reporting Period	31 December 2020
use
	Results for announcement to the market					$A'000
	Revenues from ordinary activities	Up	80%		to	2,097
	(Loss) from ordinary activities after tax attributable to members	Down	30%		to	(5,473)
	Net (loss) for the period attributable to members	Down	30%		to	(5,473)
personalFor	No Interim or Final dividends have been declared or paid during the period year ended 31 December 2021
	nor in the previous corresponding period.
		Current period		Previous
	NTA Backing				corresponding
				period
	Net tangible asset backing per ordinary security	$0.04				$0.04
	Please refer to attached Half Year Financial Report for commentary on the results.

For personal use only

ACRUX LIMITED AND CONTROLLED ENTITIES

ABN: 72 082 001 152

FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2021

This half-year financial report is to be read in conjunction with the Annual Report 2021

ACRUX LIMITED AND CONTROLLED ENTITIES (ABN: 72 082 001 152)

For personal use only

FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2021 TABLE OF CONTENTS

	Page
Directors' Report	3
Auditor's Independence Declaration	6
Financial Report for the half-year ended 31 December 2021
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive	7
I
Condensed Consolidated Statement of Financial Position	8
Condensed Consolidated Statement of Changes in Equity	9
Condensed Consolidated Statement of Cash Flows	10
Notes to the Condensed Consolidated Financial Statements	11
Directors' Declaration	14
Independent Auditor's Review Report	15

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ACRUX LIMITED AND CONTROLLED ENTITIES (ABN: 72 082 001 152)

For personal use only

DIRECTORS' REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2021

The Directors of the consolidated entity consisting of Acrux Limited ('Acrux') and its controlled entities (collectively 'the Group') have pleasure in presenting their financial report for the half-year ended 31 December 2021. To comply with the provisions of the Corporations Act 2001, the Directors report as follows:

DIRECTORS' NAMES

The names of the Directors in office during and since the end of the half-year ended 31 December 2021 are:

Ross Dobinson	Non-executive Chairman
Michael Kotsanis	Managing Director & Chief Executive Officer
Geoffrey Brooke	Non-executive Director
Don Brumley	Non-executive Director
Timothy Oldham	Non-executive Director

The Directors have been in office since the start of the financial period to the date of this report.

REVIEW OF OPERATIONS

A review of the operations of the Group during the half-year and the results of these operations are as follows:

Principal Activities

Acrux is a pharmaceutical company dedicated to the development and commercialisation of a portfolio of generic topical prescription pharmaceutical products which use dermal and transdermal drug delivery technology. There has been no significant change in the nature of these activities during the reporting period.

Business Strategy

Acrux currently has 15 products in its portfolio. The Company has 3 commercialised products which includes 2 brands of Estradiol spray currently sold as Evamist® and Lenzetto® in over 30 countries, including the United States, the European Union, the Commonwealth of Independent States and Latin America. Testosterone Topical Solution USP, 30mg, was also recently launched by our licensee, Dash Pharmaceuticals Inc.

Two additional products were approved by the FDA in 2021. Launch plans for Lidocaine 2.5% / Prilocaine 2.5% cream will commence following finalisation of a Commercialisation Agreement with a US pharmaceutical company. A generic version of Jublia® (Efinaconazole) topical solution, 10% will be launched when the Company is able to do so within the terms of the Settlement Agreement that was concluded following the Paragraph IV litigation related to this product.

At the date of this report, Acrux has 10 further generic topical products in various stages of development, including Abbreviated New Drug Applications (ANDA) for Dapsone gel, 5% and Dapsone gel, 7.5% which have been accepted for review by the FDA during 2021. The addressable market value for the total pipeline of products under development in the United States is over US$930 million, based on IQVIA reported annual sales data at December 2021.

Further to those products which have been submitted for review by the FDA and those which are currently under development for the US market, Acrux continues to review and add additional topical products to its development pipeline. Several exciting new products are under active consideration and subject to further commercial and technical screening these projects are expected to be added to the development portfolio in coming months. For each development project Acrux uses its on-site laboratories, GMP suite, clinical and commercial experience to develop and commercialise the product.

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ACRUX LIMITED AND CONTROLLED ENTITIES (ABN: 72 082 001 152)

For personal use only

Key Events During Half Year:

• In July 2021, the ANDA for Lidocaine 2.5%/Prilocaine 2.5% cream received FDA approval for the US market, being Acrux's third ANDA product to be approved. This is a topical anesthetic cream with a USD29 million annual addressable market, as measured by IQVIA as at December 2021. The Distribution Agreement for this product with Harris Pharmaceuticals Inc was entered in August 2020 and mutually terminated in October 2021 after Harris filed for Chapter 11 bankruptcy. Acrux is in advanced discussions with a well credentialed partner to be appointed to distribute this product in the US market.
• Through our licensee, Dash Pharmaceuticals Inc, Testosterone Topical Solution USP, 30mg was launched into the US market. Initial sales revenues have been impacted by COVID-19 related supply chain issues which delayed delivery of inventory to our licensee as well as to their customers. This is a competitive market with a USD15 million annual addressable market, as measured by IQVIA as at December 2021.
• In April 2021 Dapsone gel, 7.5% was reported as Acrux's fourth product to be accepted for FDA review and this strength has an annual addressable market of USD124 million, as measured by IQVIA as at December 2021. In September, 2021 the FDA accepted Acrux's Dapsone gel, 5% for review. The ANDA was Acrux's fifth ANDA dossier to be accepted for review. The 5% strength has a USD25 million annual addressable market, as measured by IQVIA, as at December 2021.
• Estradiol spray sales and revenue share income received by Acrux continues to grow strongly increasing by 29% relative to the prior corresponding reporting period.
• Acrux has received R&D Tax Incentive Rebates from the Australian Taxation Office in relation to the year ended 30 June 2021 totaling $3.073 million. This was an increase of $0.745 million over the prior year and is $0.290 million higher than the estimate reported in the 2021 Annual Report.
• The Covid-19 pandemic continues to cause operational challenges with non-laboratory Australian staff being required to work from home periodically as well as a number of cases or close contact exposures that have required staff to isolate at home for mandatory periods of time.

Operating Results

The consolidated loss after tax was $5.473 million (2020 loss: $7.786 million) and is attributable to expenses incurred to progress the Group's generic development pipeline towards commercialisation.

Revenue

Relative to the prior comparable period, total reported Revenue for the half-year increased by $0.933 million (80%) to $2.097 million (2020: $1.164 million) and is summarised in the table below.

	December	December
	2021	2020
	$'000	$'000
Product licensing income - commercialised products	702	543
Contractual milestones received - development products	-	245
R&D Incentive Rebate	1,382	-
Interest and other Government support	13	376
Total Revenue	2,097	1,164

Product licensing income from commercialised products (Estradiol in Europe, Commonwealth of Independent States, Latin America and the United States as well as Testosterone in the United States) totalled $0.702 million, driven by an increase of 29% on $0.543 million recorded in the prior corresponding period for Estradiol revenue. No project milestones were receivable from our development partner in the current reporting period (2021: $0.245 million).

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