Annual Report 2023
1 Our Mission 2 Chairman and CEO Letter 5 Review of Operations 22 Directors’ Report 35 Auditor’s Independence Declaration 36 Consolidated Statement of Comprehensive Income 37 Consolidated Statement of Financial Position 38 Consolidated Statement of Changes in Equity 39 Consolidated Statement of Cash Flows 40 Notes to the Financial Statements 68 Directors’ Declaration 69 Corporate Governance Statement 70 Independent Auditor’s Report 74 Shareholder Information 76 Corporate Directory Contents
Our Mission INOVIQ Ltd (ASX:IIQ) (INOVIQ®) is developing and commercialising next-generation exosome capture tools and precision diagnostics to improve the diagnosis and treatment of cancer and other diseases. 1 Annual Report 2023
We are delighted to present INOVIQ’s Annual Report for the financial year ended 30 June 2023. During this time, the Company made significant advances in its strategic initiatives and delivered key technical, development and commercial milestones. STRATEGIC FOCUS INOVIQ remained focused on advancing the development and commercialisation of its SubB2M cancer detection and EXO-NET exosome isolation platforms during FY23. This focused approach sought to validate our core technologies and establish a broad multi-product cancer diagnostic pipeline with multiple partnering prospects. These strategic initiatives achieved clinical validation of the SubB2M/CA15-3 test for breast cancer detection and a commercial partnership with Promega Corporation for our EXO-NET exosome capture technology. These milestones significantly de-risked INOVIQ’s core technologies, drove early EXO-NET revenues, advanced our SubB2M diagnostics pipeline toward commercial viability, and expanded our future partnering opportunities. SUBB2M TECHNOLOGY CLINICALLY VALIDATED The SubB2M technology was analytically and clinically validated by contract research organisation ResearchDx, demonstrating that the SubB2M/ CA15-3 test accurately detects breast cancer and outperforms a leading approved CA15-3 test. The test has excellent performance with 81% sensitivity and 93% specificity for detection of breast cancer across all stages. The next steps for the SubB2M/CA15-3 test are completing a cross-sectional breast cancer monitoring study and securing a CLIA-accredited laboratory partner in the US for commercialisation of the test as a Laboratory Developed Test in 2024. EXO-NET TECHNOLOGY IN-MARKET AND COMMERCIAL DEAL EXECUTED The introduction of INOVIQ’s EXO-NET pan-exosome capture tool to the US market in October 2022 with contract sales organisation Percorso Life Sciences was important to our commercialisation strategy. Dear INOVIQ Shareholders We are delighted to present INOVIQ’s Annual Report for the financial year ended 30 June 2023. Chairman and CEO Letter INOVIQ’s mission is to develop next-generation precision diagnostics and exosome solutions that transform the diagnosis and treatment of cancer and other diseases to improve patient outcomes and save lives PRECISION FOCUS Precision diagnostic and exosome solutions to improve patients lives DISRUPTIVE TECHNOLOGY Proprietary technology platforms driving future products for cancer and other diseases DEEP PIPELINE Multi-stage pipeline including SubB2M diagnostics, exosome research tools and exosome diagnostics COMPELLING DATA Industry leading data for exosome isolation tools, and diagnostics for breast and ovarian cancers COMMERCIAL PRODUCTS Commercial exosome isolation tools and bladder cancer detection test PARTNERING FOR GROWTH Partnering with KOLs and Industry to deliver clinical and commercial outcomes 2 INOVIQ Limited
This marked the commencement of an extensive campaign to gain leading academic and research institutions to evaluate the efficacy of EXO-NET for exosome isolation and biomarker discovery across potential applications in cancer, neurology, inflammation and other conditions. Key data from both internal research and external evaluations were presented at the world-leading International Society of Extracellular Vesicles (ISEV) meeting in May 2023 demonstrating the effectiveness of the EXO-NET technology in the isolation of exosomes from plasma, urine, saliva, and cellconditioned media. Additionally, INOVIQ developed a High-Throughput (HT) EXO-NET isolation system in collaboration with Promega Corporation that can process up to 200,000 samples per year in a clinical laboratory. This led to the signing of a global joint marketing agreement with Promega that offers world-class solutions for manual and high throughput exosome isolation and nucleic acid extraction to researchers and industry for exosomebased biomarker discovery and diagnostics development in a market expected to reach US$8.7b by 2029. EXOSOME DIAGNOSTICS PIPELINE ADVANCED Collaboration with the University of Queensland (UQ) has paved the way for the development of an innovative exosome-based ovarian cancer screening test utilising EXO-NET. Studies confirmed the utility of EXO-NET for fast and efficient exosome isolation and biomarker discovery, and the promise of the EXO-OC test as a highly sensitive and specific test for early detection of ovarian cancer. The next steps for the EXO-OC Test are to undertake further development and validation studies in suitable samples. CONTINUED EXPANSION OF OUR R&D AND EXECUTIVE TEAM During the year, INOVIQ continued to expand its R&D and Executive teams with several key appointments to accelerate its product development, commercialisation and corporate strategies. This included expanding its R&D team with cell therapy and exosome-based therapeutic scientists, and appointment of Mark Edwards as Chief Financial Officer and Company Secretary in November 2022, who brings significant biotechnology M&A and corporate experience. FINANCIAL PERFORMANCE INOVIQ ended FY23 with a robust cash balance of $7.8m, a testament to our prudent financial management. Funds were primarily employed in advancing our SubB2M and EXO-NET programs. The Company reported a net loss from operating activities (after income tax) for the year of $9.0 million. Dr Geoff Cumming Chairman Dr Leearne Hinch CEO LEGAL PROCEEDING SETTLED The resolution of the Walker and Irminger legal proceeding marked a significant milestone. The settlement, devoid of any admission of liability, preserves our future interests by securing a royalty over potential sales of the BARD1 Lung Cancer Test and rights to utilise the intellectual property in other cancer types. As part of the settlement BARD1AG SA is required to invest A$0.3m in further research on the Lung Cancer Test. INOVIQ’S PIPELINE IS DE-RISKED AND OUR FUTURE MILESTONES ARE TRANSFORMATIONAL INOVIQ made significant progress during the year, including the clinical validation of its SubB2M technology and the signing of a commercial partnership for its EXONET technology. These milestones have significantly de-risked INOVIQ’s core technologies and positioned the company to advance its multi-product exosome capture tool and precision diagnostics pipeline towards key development and commercial milestones in FY24. OUTLOOK We are confident that INOVIQ’s disruptive SubB2M and EXO-NET technologies, multi-stage pipeline, and highcalibre team will enable us to achieve our ambitious goals and make a significant impact on the lives of patients with cancer. During the coming year, we expect our SubB2M tests for breast and ovarian cancer to deliver key data by December 2023 and be launch-ready for a clinical laboratory partner to supply as laboratory developed tests in calendar year 2024. We anticipate offering new EXO-NET exosome isolation products that will expand collaborations for development of novel exosome-based diagnostics for cancer, neurodegeneration and other diseases. THANK YOU We thank the INOVIQ team for their dedication and passion to driving the Company’s success. We also thank shareholders for their support in the Company as we continue to advance our innovative pipeline towards solving unmet needs for cancer and other diseases. 3 Annual Report 2023
SubB2M technology clinically validated in FY23 4 INOVIQ Limited
Review of Operations We are pleased to present the Group’s Annual Report for the financial year ended 30 June 2023 and provide an update on further strategic and operational progress since year end. BUSINESS OVERVIEW INOVIQ Ltd (ASX:IIQ) (INOVIQ®) is developing and commercialising next-generation exosome solutions and precision diagnostics to improve the diagnosis and treatment of cancer and other diseases. The Company has commercialised the EXO‐NET pan-exosome capture tool for research purposes and the hTERT test as an adjunct to urine cytology testing for bladder cancer. Our cancer diagnostic pipeline includes blood tests in development for earlier detection and monitoring of ovarian, breast and other cancers. Exosome diagnostic pipeline building EXO-NET commercial partnerships advancing 5 Annual Report 2023
HIGHLIGHTS INOVIQ focused on advancing its SubB2M and EXO-NET programs during the year with these efforts culminating in clinical validation of its SubB2M technology platform and a commercial deal for its EXO-NET exosome capture technology. These important milestones and other development and commercial progress are highlighted below. Research & Development – Completed analytical validation of SubB2M-CA15-3 test evidencing assay reproducibility and providing initial data showing discrimination of both early and late-stage breast cancer from healthy controls – Successful clinical validation of SubB2M/ CA15-3 test demonstrating detection of all stages of breast cancer with excellent accuracy (87%), sensitivity (81%) and specificity (93%) – Contract Research Agreement signed with Nicoya to develop SubB2M-based Surface Plasmon Resonance (SPR) test on the Alto™ Digital SPR instrument – High-Throughput (HT) EXO-NET exosome capture system completed – EXO-NET® feasibility study by University of Queensland confirmed utility of EXONET for isolating Extracellular Vesicle (EV) biomarkers and development of an EV-based ovarian cancer screening test – Post year-end, serum equivalence study reported EXO-NET successfully captured EVs in plasma and serum, but long-stored biobank unsuitable for EV biomarker discovery and validation Commercial – Percorso Life Sciences engaged to provide US-based contract sales and logistics services for INOVIQ products – EXO-NET sales campaign implemented in the USA targeting academic researchers to gain scientific support – New EXO-NET data presented at the International Society for Extracellular Vesicles (ISEV) Annual Meeting 2023 in Seattle, USA confirming its effectiveness and broad utility across multiple biofluids – Post year-end, INOVIQ and Promega Corporation signed a global joint marketing agreement for INOVIQ’s EXO-NET exosome capture technology and Promega Nucleic Acid purification systems – Direct sales model established for hTERT in the USA – US patents granted for SubB2M and hTERT technologies Review of Operations 6 INOVIQ Limited
$7.8m Cash Balance Financial – Cash of $7.8 million at 30 June 2023 to fund operations and pipeline development – Net loss of $9.0 million for the year ended 30 June 2023 (increased operating loss in the current period driven by legal fees and subsequent legal settlement costs as outlined in the Operating Results commentary below) – Research and Development Tax Refund of $0.95m recognised for the 2023 financial year Corporate – Settled legal proceeding related to BARD1 performance shares – EXO-NET R&D and manufacturing centralised to upgraded Melbourne laboratory, streamlining R&D activities and enabling expanded production capacity – Mr Mark Edwards appointed as CFO & Company Secretary, bringing substantial financial, governance and corporate expertise – Professor Greg Rice, Chief Scientific Officer, awarded the prestigious Joan Hunt IFPA Senior Award in Placentology for 2023 – Vale Professor Emeritus Allan Cripps AO, who made a valuable contribution to INOVIQ during his time as NonExecutive Director from January 2020 to December 2022 7 Annual Report 2023
Review of Operations DELIVERING VALUE INOVIQ’s vision is to be a leading exosome and precision diagnostics company delivering next-generation products to improve patient health outcomes and help save lives. Currently, the Company has multiple proprietary technologies, inmarket products and a strong development pipeline of exosome research tools and precision diagnostics. INOVIQ is leveraging its core technology platforms to drive intelligent innovation in the diagnostic and exosome markets to develop a portfolio of best-in-class products that deliver value to patients, clinicians, the health system and investors. The Company has 3 key business pillars built around our disruptive technologies that underpin its short and longer-term product development and revenue generating opportunities: 1. Research tools and services: The EXO-NET technology is a source of multiple current and future revenue streams including EXO-NET research tools sold for research purposes, custom EXO-NET products and EXO-NET services to develop exosome-based diagnostics for contract research fees and future licensing revenue; 2. Precision diagnostics: INOVIQ’s diagnostic pipeline includes our current and future focus on both internal and partnered diagnostic tests developed using our SubB2M and EXO-NET technologies for improved screening, diagnosis, treatment selection and monitoring of cancer and other diseases; and 3. Therapeutics: The longer-term plan focuses on developing high-value exosome-based therapeutics for cancer, enabled by our EXO-ACE technology for therapeutic exosome isolation, purification and production. The Company’s strategic focus and three business pillars supporting our current and future initiatives are outlined below: INOVIQ’s three business pillars focus on growing long-term shareholder value through commercialisation of the Company’s lead diagnostics, building a multi-product pipeline, diversifying risk across multiple applications and creating a sustainable revenue generating business. STRATEGIC FOCUS Leading exosome solutions and precision diagnostics company focused on improving patient outcomes for cancer RESEARCH TOOLS & SERVICES DIAGNOSTICS THERAPEUTICS Exosome therapeutics SubB2M diagnostics Exosome diagnostics hTERT test EXO-NET products EXO-NET services DISRUPTIVE TECHNOLOGY SubB2M technology for enhanced cancer detection EXO-NET immunoaffinity magnetic bead-based exosome isolation EXO-ACE ion exchange chromatography for therapeutic exosome production 8 INOVIQ Limited
CANCER DIAGNOSTICS MARKET The global cancer burden is significant with an estimated 50.6 million people living with cancer, 19.3 million new cases and 10.0 million deaths in 20201. The incidence of cancer is expected to rise to 28.4 million new cases by 2040 due to population aging and growth. Cancer is a leading cause of premature death with the highest burdens in China, Europe and North America. The cancer burden can be reduced by improved prevention, early detection, availability of cancer screening programs and effective treatment to improve patient outcomes and reduce mortality. Cancer is often detected at late-stage (stages III and IV) after symptoms have appeared, resulting in a poor prognosis for patients. Unfortunately, many existing diagnostic tests have high false-positives and/or insufficient sensitivity for early-stage cancer (stages I and II) and screening programs have poor participation rates due to the invasiveness, inconvenience, inaccessibility and cost of these tests. Earlier, more accurate and cost-effective diagnostics could improve treatment options, patient outcomes and survival for this expanding public health crisis2. INOVIQ is using its proprietary technologies to develop non-invasive blood tests to solve these problems for the screening, diagnosis, treatment selection and monitoring of cancer, including: – Screening tests for earlier detection of cancer – Predictive tests to guide therapeutic selection – Monitoring tests for treatment response and/or disease recurrence INOVIQ is targeting some of the world’s most common and deadliest cancers including breast and ovarian cancers. Breast cancer is the most common cancer with 2.3 million cases and 685 million deaths worldwide1, and a global diagnostics market valued at US$4.2 billion in 20213. Ovarian cancer is the world’s deadliest gynaecological cancer with 314,000 cases and 207,000 deaths worldwide1, and a global diagnostic market expected to reach over US$1.8 billion by 20264. EXOSOMES HAVE COMMERCIAL POTENTIAL FOR MULTIPLE DIAGNOSTIC AND THERAPEUTIC APPLICATIONS Exosomes are small extracellular vesicles (EVs) released by cells. They are nano-sized lipid membrane packages that encapsulate and protect DNA, RNAs and proteins. Exosomes and the messages they carry form part of the cell-to-cell communication system and play an important role in health and disease. Clinical interest in exosomes has grown exponentially due to their commercial potential in biomarker discovery, diagnosis and treatment of cancer, neurodegenerative, cardiology, immunology and other diseases. However, the exosome promise been limited by time-consuming and inefficient exosome isolation methods that are not suitable for commercial applications. This has created a need for improved exosome isolation methods that deliver speed, purity and yield for research and commercial applications. 1 Sung H et al. Global Cancer Statistics 2020: GLOBOCAN Estimates of Incidence and Mortality Worldwide for 36 Cancers in 185 Countries. CA Cancer J Clin. 2021. https://doi.org/10.3322/caac.21660 2 SEER18 2010-2016 3 2 020. Breast Cancer Diagnostics Market, 2021-2028: https://www.grandviewresearch.com/industry-analysis/breast-cancerdiagnostics-market 4 2019. Ovarian Cancer Diagnostics Market. https://www.globenewswire.com/news-release/2019/08/07/1898453/0/en/OvarianCancer-Diagnostics-Market-Size-Worth-US-1-8-Bn-by-2026.htmlmarket-report/exosomes-market/189733/ 0 20 40 60 80 100 Late Average Early Bladder 6 6 3 10 39 28 21 59 49 93 30 30 90 99 100 77 96 98 Breast Lung Ovarian Pancreatic Prostate 5 year survival rates by stage at diagnosis (%) 9 Annual Report 2023
INOVIQ has developed and commercialised EXO-NET to enable fast, efficient and scalable exosome isolation from biofluids to intercept and decode the messages they contain. This information can be used for assessing patient well-being or disease risk, diagnosis of disease, selecting the best treatment option, or monitoring a patient’s response to treatment. The global exosome research market was valued at US$144 million in 2021 and is expected to reach US$661 million by 2026, growing at a CAGR of 35.6%5. North America was the largest geographic segment representing 41.5% of the market followed by Europe at 20%. The Kits and Reagents product segment in which INOVIQ’s EXO-NET research tools fit, was valued at US$71 million in 2021 and is forecast to reach US$311 million by 2026. The global exosomes market for research, diagnostics and therapeutics was valued at US$1.8 billion in 2022 and is forecast to reach US$8.7 billion by 2029, growing at 25% CAGR6. Market growth is driven by increased investment in exosome research, the rising prevalence of chronic diseases, increased demand for non-invasive diagnostics and targeted therapies, and technological advancements in exosome isolation and purification. Review of Operations 5 2022. Exosome Research Market - Global Forecast to 2026. Markets&Markets 6 2023. Exosomes Market: Global Industry Analysis and Forecast for the Period 2023-2029. MMR: www.maximizemarketresearch.com/ market-report/exosomes-market/189733/ Extracellular Vesicle (EV) 10 INOVIQ Limited
PRODUCT PORTFOLIO INOVIQ’s product portfolio currently includes an in-market exosome research tool and adjunctive diagnostic test for bladder cancer detection, and a deep pipeline of SubB2M and exosome diagnostic tests in development for the earlier detection and monitoring of breast and ovarian cancers. 7 Food and Drug Administration (FDA) 8 PreMarket Notification (510k) 9 PreMarket Approval (PMA) COMMERCIAL PROGRESS EXO-NET® pan-exosome capture EXO-NET pan-exosome capture is a research use only (RUO) tool for the isolation of exosomes from plasma, serum, urine, saliva and cell-conditioned media. EXO-NET delivers fast, efficient and scalable exosome isolation compared to traditional exosome isolation methods. It is suitable for exosome-based biomarker discovery and diagnostics development. EXO-NET is initially being commercialised as an exosome isolation tool for use in the rapidly growing exosome research market with the goal of embedding the technology into research applications that may underpin future licensing of EXO-NET for use in the development and commercialisation of exosome-based diagnostics for cancer, neuro-degenerative, cardiac, inflammatory and other applications. The product is manufactured by INOVIQ in 1mL, 0.5mL and 0.25mL pack sizes containing EXO-NET coated magnetic beads for processing up to 60, 30 or 15 samples. The commercialisation strategy for INOVIQ’s diagnostics is to first launch its tests as laboratory developed tests (LDTs) in the USA, followed by FDA7 In Vitro Diagnostic (IVD) submissions and clinical studies to support 510k clearance8, de novo or PMA9 registrations, depending on the indication for use. Product Indication Use Research Assay Development Clinical Development Market Market hTERT* Bladder Cancer Adjunct to cytology SubB2M-BC Breast Cancer Monitoring SubB2M-OC Ovarian Cancer Monitoring SubB2M-SPR Multi Cancer Prescreening EXO-OC** Ovarian Cancer Screening EXO-NET RUO pan-EV capture Research tool TEXO-NET RUO tumour derivedEV capture Research tool NEURO-NET RUO brain derived-EV captured Research tool EXO tools/Dx SubB2M Dx IVD-Class 1 USA LDT RUO RUO RUO LDT LDT LDT * Adjunct to urine cytology to assist the detection of bladder cancer ** Umbrella Research and Option Agreement with the University of Queensland 11 Annual Report 2023
On 21 July 2022, INOVIQ announced that it had engaged Percorso Life Sciences to provide US-based contract sales and logistics services for its products. The first EXO-NET sales campaign was implemented in the USA in the December quarter, targeting academic scientists involved in extracellular vesicle (EV) research. The campaign generated strong interest from academic researchers, multiple evaluations and initial collaborations using EXO-NET for multiple EV-based applications. During the year, INOVIQ engaged with researchers in Academia and Industry to promote awareness about EXO-NET, its benefits and applications for exosome isolation, biomarker discovery and diagnostic development. INOVIQ attended multiple scientific conferences and trade events to showcase the speed, efficiency and reproducibility of using EXO-NET for exosome isolation from various biofluids including plasma, saliva and cell culture media. Samples of EXONET were provided to various researchers for evaluation in their research projects. INOVIQ received its first orders for EXO-NET and established its first contract research agreement during the financial year. The Company also progressed discussions with industry participants regarding use of EXO-NET for enabling clinical trial assay and companion diagnostic applications for treatment selection and monitoring treatment response. On 19 April 2023, INOVIQ announced that it would present new data, further confirming the effectiveness of its proprietary exosome isolation technology, EXO-NET, at the Annual Meeting of the International Society for Extracellular Vesicles (ISEV) in Seattle, USA from 17-21 May 2023. ISEV’s Annual Meeting is the leading global exosome scientific conference providing a key forum for INOVIQ to showcase these important advances to key opinion leaders in the extracellular vesicle field worldwide. The new data, released on 19 May 2023, further support application of INOVIQ’s EXO-NET technology in the isolation of exosome-based biomarkers for use in development of earlier and more accurate diagnostic tests for oncology and other diseases. The oral presentation and five poster presentations were delivered by INOVIQ and its collaborators, including the University of Queensland and Johns Hopkins University, and highlighted the broad utility of EXO-NET for fast and efficient exosome isolation and biomarker discovery across multiple biofluids including plasma, serum, saliva and cell culture media. Post year end (6 July 2023), INOVIQ announced that it had signed a global joint marketing agreement with Promega Corporation, a global leader in innovative technologies, tools and technical support to the life sciences industry. The agreement to co-market INOVIQ’s EXO-NET exosome capture technology and Promega Nucleic Acid purification systems worldwide will offer world-class exosome solutions for manual and high throughput exosome isolation and nucleic acid extraction to researchers and industry for exosome-based biomarker discovery and diagnostics development. Under the agreement, global customers will be offered a wide range of Promega manual and automated nucleic acid extraction reagents and instruments combined with INOVIQ’s EXO-NET exosome capture tools to enable their exosome isolation, biomarker discovery and diagnostics research. Furthermore, INOVIQ and Promega anticipate expanding the agreement to cover a range of exosome solutions for exosome isolation, characterisation and analysis kits, and instruments. hTERT ICC test The hTERT test is an immunocytochemistry (ICC) assay registered for the detection of human telomerase reverse transcriptase (hTERT) in cytopathology samples. It is used as an adjunct to urine cytology to help resolve indeterminate cytology results and identify patients with increased risk of bladder cancer. Review of Operations 12 INOVIQ Limited
The hTERT test is registered as an IVD medical device in the United States (Class I IVD), Europe (CE-IVD marking), Australia (Class I IVD) and South Korea (Class II IVD) for use as a clinical diagnostic by pathology laboratories for the detection of hTERT in cytopathology samples. It is used by pathologists as an adjunct to urine cytology to help resolve indeterminate cytology results and identify patients with increased risk of bladder cancer10. On 23 November 2022, INOVIQ announced that it would revert to a direct distribution model for its hTERT test in the US from January 2023, selling hTERT directly to laboratory customers. There was a smooth transition of customers, with INOVIQ expected to benefit from improved product revenues and gross margins. The agreement between INOVIQ and US-based contract sales organisation, Percorso Life Sciences, was extended to provide warehousing and logistics services to deliver hTERT direct to INOVIQ’s US customers. Revenues from hTERT sales grew during the year, with the Group’s hTERT test achieving revenues of $363,209 (2022: $276,745). This growth was attributed to maintaining the current customer base and benefiting from the direct customer sales model, with further upside anticipated in FY24. RESEARCH & DEVELOPMENT PROGRESS Our technologies have the potential to deliver significant commercial and clinical benefits to patients, the healthcare system and our shareholders. R&D activities during FY23 focused on validation of our SubB2M tests, expanding the EXO-NET data package, developing new EXO-NET products (TEXO-NET, NEURO-NET, HT EXO-NET) and progressing its exosome-based ovarian cancer test with the University of Queensland. SUBB2M PROGRAM SubB2M is an engineered protein that specifically detects the pan-cancer biomarker Neu5Gc that is found in multiple human cancers. INOVIQ is developing SubB2M immunoassays for improved monitoring of breast and ovarian cancers, and is evaluating a SubB2M SPR test for detection of Neu5Gc in a general health panel. The SubB2M program focused on completing analytical and clinical validation of our SubB2M/CA15-3 test for breast cancer, planning for its SubB2M/CA125 for ovarian cancer, and evaluation of a potential SubB2M-SPR multicancer test on the Nicoya platform. 10 Allison et al. Evaluation of Sienna Cancer Diagnostics hTERT Antibody on 500 Consecutive Urinary Tract Specimens. Acta Cytologica 2018. DOI: 10.1159/000489181 13 Annual Report 2023
Review of Operations SubB2M immunoassays INOVIQ’s SubB2M/CA15-3 and SubB2M/CA125 immunoassays are being developed to improve the sensitivity and specificity of existing standard of care cancer biomarker tests for monitoring of breast and ovarian cancer, respectively. The CA15-3 test is a blood test commonly used to monitor breast cancer treatment response and disease recurrence. On 8 February 2023, INOVIQ announced positive results from an analytical validation study of its SubB2M/CA15-3 test for breast cancer. In a 94-serum sample, retrospective case-control study, INOVIQ’s SubB2M/CA15-3 test outperformed a leading commercially available CA15-3 tumour marker test for detection of breast cancer. INOVIQ’s SubB2M/CA15-3 test clearly discriminated between breast cancer and healthy controls across all cancer stages, correctly identifying 73% (69/94) of all samples tested, with AUC=0.81, overall sensitivity of 69% and specificity of 78%. Following further optimisation of the SubB2M/ CA15-3 test, on 27 June 2023, INOVIQ announced excellent results from a clinical validation study of its SubB2M/CA15-3 test for breast cancer detection. An independent, 483-sample case-control clinical validation study of the SubB2M test demonstrated high area under the curve (AUC) of 0.93, 81% sensitivity and 93% specificity for detection of breast cancer, significantly outperforming the comparator (AUC of 0.70, 37% sensitivity and 88% specificity). These positive results represent a major clinical validation milestone and support the commercial potential of the SubB2M program for detection and monitoring of cancer. The next step is to conduct a cross-sectional monitoring study to demonstrate the superior performance of the SubB2M/CA15.3 test for treatment response and/or disease recurrence over approved CA15-3 tests. This clinical study is expected to complete by the end of H2 CY23, with the test then expected to be market-ready for partnering. INOVIQ is also progressing its development plans for the SubB2M/CA125 test for ovarian cancer. Samples have been sourced and assay development and analytical validation studies are expected to commence in H2 CY23 and complete within 6 months. Clinical validation of this test is expected to complete in H1 CY24. SubB2M SPR test The SubB2M‐based SPR test measures Neu5Gc. Increased Neu5Gc concentrations in the blood may provide an early warning that an individual requires follow‐up investigation for the presence of cancer such as breast, ovarian, prostate, melanoma and others. A research-stage SubB2M multi-cancer test (MCT) is being evaluated on the Nicoya ALTO™ SPR instrument as a potential cancer risk assessment tool for inclusion in a general health panel. On 13 October 2022, INOVIQ announced it had signed a contract research agreement with Canadian biotechnology company, Nicoya Lifesciences Inc, to transfer, develop and evaluate a SubB2M-based Surface Plasmon Resonance (SPR) test on Nicoya’s Alto™ Digital SPR instrument. Alto is the world’s first digital, high‐ throughput, benchtop SPR instrument. It has revolutionised SPR sample analysis by using digital microfluidics and nanotechnology biosensors that are integrated into a disposable microwell plate, making it compatible for high throughput diagnostics in a clinical laboratory. The initial work program under the agreement to demonstrate effective discrimination between cancer and cancer ‐free blood samples on the Alto instrument progressed during the year, with data expected to report in H2 CY23. EXO-NET PROGRAM EXO-NET is an immunoaffinity magnetic-bead capture technology that uses a proprietary multiantibody matrix coated on nanobeads to isolate exosomes based on their surface markers. The DNA, RNA, protein and lipid biomolecules found in exosomes have important applications in the research, diagnosis and treatment of cancer, inflammatory, metabolic and neurodegenerative diseases. EXO-NET enables the rapid isolation of purified exosomes and development of more effective diagnostics. EXO-NET can be customized to capture specific types of EVs and can be fullyautomated for high throughput sample analysis for large scale clinical trials or routine pathology or CLIA laboratory applications. 14 INOVIQ Limited
INOVIQ’s goal is to develop a portfolio of EXO-NET capture tools and EXO-NET powered exosome-based diagnostics for detection of cancer and other diseases. INOVIQ is engaging with key opinion leaders focused on exosome research to establish research collaborations for the development of more accurate and reliable exosome-based diagnostics. The Company expects to advance new EXO-NET collaborations with key opinion leaders for exosome-based diagnostics for other cancers and diseases over the next 12-months. EXO-NET portfolio expansion INOVIQ progressed its research programs to develop new EXO-NET products including: 1) TEXO-NET for isolation of tumour-derived exosomes, and 2) NEURO-NET for isolation of brain-derived exosomes. A patent application for TEXO-NET has been lodged, and NEURO-NET data is being finalised for submission of a new patent application before publication of data to the scientific community. These products are expected to underpin future partnering opportunities for clinical diagnostics, clinical trial assays and companion diagnostics for Oncology and Neurology indications. EXO-NET services Development of a High-Throughput (HT) EXO-NET isolation system to process up to 200,000 samples per year in a clinical laboratory was successfully completed in collaboration with Promega Corporation. INOVIQ now has the capability to offer HT exosome isolation, biomarker discovery and diagnostics development services to Academic and Industry customers from its Australian laboratory. This is expected to provide potential EXO-NET service revenue to the Company, and potentially lead to future partnering agreements for exosome diagnostics. Exosome diagnostics The EXO-Ovarian Cancer test is an exosome-based multi-marker test in development for early detection of ovarian cancer in asymptomatic women. EXO-NET is being used to enable exosome isolation, biomarker discovery and translation of this novel exosomal test from bench-to-clinic to help save women’s lives. Previous proof-of-concept case-control studies performed by The University of Queensland (UQ) demonstrated its exosome-based ovarian cancer test (EXO-OC test) was over 90% accurate for the detection of early-stage ovarian cancer in 450 plasma samples (ASX: 28 July 2021). INOVIQ has secured the option for an exclusive worldwide license to develop and commercialise UQ’s intellectual property in the EXO-OC test (ASX: 1 April 2022). Additionally, UQ has been awarded a $2.7m Medical Research Future Fund (MRFF) grant for development of the EXO-OC test due to the significant unmet need for earlier detection of ovarian cancer. EXOSOME ISOLATION EV isolation using our EXONET powered, fully-automated, high throughout platform1 BIOMARKER DISCOVERY Biomarker discovery services to identify, evaluate and validate EVbased RNA and Protein biomarkers DIAGNOSTIC DEVELOPMENT EV-based clinical diagnostic, clinical trial assay and companion diagnostic development CUSTOMISED EXO-NET TOOLS Design custom EXO-NET tools using ligands for specific EV populations 15 Annual Report 2023
On 13 December 2022, INOVIQ announced that UQ had completed a 97-sample feasibility study confirming the utility of EXO-NET for exosome isolation, biomarker discovery and development of the EXO-OC test. A multivariate algorithm using selected EV biomarkers achieved 92% accuracy for detection of early-stage ovarian cancer (Stage I and II) in an independent sample set. This was the first milestone achieved under the collaboration with UQ to develop an exosomebased ovarian cancer screening test. The next step was an equivalence study to determine if the exosomal biomarkers discovered in plasma were also present in serum from the same patients. Substantial equivalence would facilitate access to a large ovarian cancer serum biobank for future studies. Post year-end (ASX: 9 August 2023), UQ completed a 250 paired-sample equivalence study to evaluate performance of the exosome-based biomarkers in plasma and serum samples from the same patients. The study demonstrated that whilst EXO-NET captured EVs from both plasma and serum, the samples from this long-term stored biobank (14-17 years) were not suitable for exosomal biomarker discovery and validation. INOVIQ plans to work with its collaborator UQ to source alternative samples for the further development and validation of the EXO-OC Test. Review of Operations BARD1 PROGRAM The BARD1 technology is a biomarker platform that includes potential BARD1 DNA, RNA, protein and autoantibody markers that have potential application in the earlier detection of breast, ovarian and lung cancers. Splice variants of BARD1 have been associated with cancer formation, progression, and poor prognosis. The BARD1 diagnostic program remains on hold as INOVIQ focuses its resources on advancing development of its promising SubB2M diagnostic and exosome diagnostic programs towards key milestones. BARD1 biomarkers may be included in biomarker panels of future pipeline products where they are shown to be informative of breast and ovarian cancer. INTELLECTUAL PROPERTY PORTFOLIO The Group owns or exclusively licenses a broad intellectual property (IP) portfolio of granted patents, patent applications, trade secrets and trademarks protecting INOVIQ’s technologies, products, processes and brands. The Group had 21 granted patents, 9 patents pending and 2 international provisional patent applications as at 30 June 2023, covering its SubB2M, Molecular NET, BARD1, and hTERT technologies and products across key jurisdictions including the United States, Europe, Asia, and Australia. Additionally, it owns registered trademarks for INOVIQ®, EXO-NET® and Acuris®. 16 INOVIQ Limited
INOVIQ announced the grant of two US patents during the reporting period, one for the SubB2M technology and the other for hTERT. – Patent no. 11371033 entitled ‘Subtilase cytotoxin B subunit mutant’ was issued by the United States Patent and Trademark Office, enforcing intellectual property protection in the USA for the SubB2M technology until the date of expiry in 2038. This patent provides intellectual property protection in the key US market where the SubB2M tests are planned to be first commercialised. – Patent no. 11391738 entitled ‘Method of detecting cancer’, a continuation of US patent 10,338,072, was issued by the United States Patent and Trademark Office, providing additional coverage for our hTERT assay for telomerase‐based detection of cancers other than bladder cancer (such as thyroid and breast cancer) until 2035. Patent Family Title Granted Pending Expiry SubB2M PCT/AU2017/051230 (WO2018/085888) Subtilase cytotoxin B subunit mutant AU, JP, US BR, CA, CN, EP, IN, KR, US(cont) 2037 PCT/AU2022/050470 (WO2022/236383) Methods of analysing a sample 2042 Molecular NETs PCT/US2010/058086 (WO2011/066449) Devices for detection of analytes CN, US(cont1), US(cont2), US(cont3) US(cont5) 2030 PCT/US2013/049779 (WO2014/011673) Molecular Nets EP 2033 PCT/AU2022/050428 (WO2022/232886) Methods relating to tumour-derived extracellular vesicles 2042 BARD1 PCT/FR01/02731 (WO/2002/018536) Truncated BARD1 protein, and its diagnostic and therapeutic uses US 2024 PCT/IB2011/054194 (WO/2012/038932) Kits for detecting breast or ovarian cancer in a body fluid sample and use thereof EP, US, US(cont) 2031 EP14002398.7 Non-coding RNA as diagnostic marker and treatment target US 2035 hTERT PCT/AU2015/050060 (WO2015/120523) Method of resolving inconclusive cytology to detect cancer AU, CN, EP, IL, JP, US, US(cont) 2035 PCT/AU2016/050764 (WO2017/027928) Method of detecting cancer in morphologically normal cells JP US 2036 CORPORATE UPDATE INOVIQ continued to drive awareness of its enhanced investment proposition, multi-product pipeline, progress and plans with investors and media through the period. INOVIQ presented at multiple investor conferences and numerous media outlets reported on INOVIQ news, see Presentation tab www.inoviq.com/site/investors/presentations and Media tab www.inoviq.com/site/media/inoviq-in-the-news. 17 Annual Report 2023
Legal proceeding settled The Walker and Irminger legal proceeding against the Company was finally settled on 28 November 2022, with no admission of liability. Under the terms of the settlement the plaintiffs received the BARD1 Lung Cancer Test (LCT) intellectual property (IP) and a lump-sum payment of A$1 million (inclusive of GST) that included an obligation to commit $300,000 to the development of the LCT. INOVIQ has retained the Breast and Ovarian Cancer IP and will receive 10% of future sales of any BARD1 LCT until the expiry of relevant patents, and 5% thereafter. The settlement avoided the costs, inconvenience and uncertainty of litigation, and allowed the proceeding to be dismissed with no costs ordered. The Intellectual Property associated with the BARD1 Lung Cancer Test was housed within the Group’s wholly owned Swiss subsidiary, BARD1AG SA, the control of which was given up when the shares were transferred to the plaintiffs as part of the settlement. Appointment of new CFO On 6 October 2022, it was announced that Mark Edwards would join INOVIQ as Chief Financial Officer and Company Secretary, effective 2 November 2022. Mark Edwards B.Acc., CA is an experienced CFO and Company Secretary with expertise in financial leadership and management, corporate governance, investor relations and corporate transactions. His previous role was CFO and Company Secretary at Medical Developments International Ltd (ASX: MVP) for 8 years, where he managed over $60 million in capital raisings, relocated the head office and manufacturing facility, established global infrastructure and operations and oversaw multiple new product launches. Previously he was Head of Finance and Company Secretary at Cogstate Ltd (ASX: CGS) and an Audit Senior Manager at Ernst & Young (EY) for 14 years, leading and managing professional staff in all aspects of audit, financial reporting, analysis and internal control across Manufacturing, Retail and Consumer Goods sectors, which included ASX listed clients. Scientific Awards On 13 April 2023, INOVIQ was pleased to advise that Chief Scientific Officer, Professor Greg Rice, has been awarded the prestigious Joan Hunt IFPA Senior Award in Placentology for 2023. This award represents the highest distinction of the international placental research community, and recognises the work of established senior scientists, Principal Investigators and clinicians who have made a significant contribution to the understanding of placental and reproductive functions in general. Vale – Prof Allan Cripps With profound sorrow, INOVIQ reflects on the passing of respected colleague and former Director, Professor Emeritus Allan Cripps AO on 21 December 2022. Prof Cripps served on the INOVIQ board as a Non-Executive Director from 23 January 2020 until 13 December 2022, when he retired due to ill health. Prof Cripps had a distinguished career as a clinical scientist and INOVIQ benefited immensely from his deep experience during his time on the Board. Investment in our future During the year, INOVIQ invested in its people across exosome science, product development and commercial, as well as in state-of-the art equipment to support its in-house and partnered exosome-based product development for research, diagnostic and therapeutic applications. INOVIQ’s Melbourne laboratory was upgraded to an exosome core facility to enable high throughput sample processing, exosome isolation, characterisation and downstream analysis to provide a turn-key biomarker discovery-to-diagnostic solution for INOVIQ’s internal and partnered EV-based R&D programs. Additionally, EXO-NET research, development and manufacturing was centralised from INOVIQ’s US site to its upgraded Melbourne laboratory to streamline R&D activities, expand production capacity and increase access to the Australian Government’s Research and Development Tax Incentive scheme. Review of Operations 18 INOVIQ Limited
OUTLOOK AND PLANS INOVIQ is focused on its vison to be a leading exosome and precision diagnostics company delivering next-generation products to improve patient health outcomes and help save lives. The Company’s key commercial objectives to drive shareholder value over the next 12-months are to advance its lead SubB2M diagnostics towards commercialisation, expand its EXO-NET exosome isolation tools, accelerate development of its exosome diagnostic pipeline, and generate revenues through product sales and partnering of its exosome technologies. The Company expects to report key data readouts for its SubB2M and exosome diagnostic programs, as well as commercial progress, and looks forward to updating shareholders on these milestones and catalysts over the next 12 months. The Company is strongly positioned with differentiated technology, a multi-product pipeline, growing partnering interest and an experienced team to execute on strategy, deliver key development / commercial milestones, and grow shareholder value over the next 12 months. H2 CY 2023 H1 CY 2024 • EXO-NET co-marketing agreement with Promega • Results of EXO-OC equivalence study in plasma and serum (n=250) • Results SubB2M SPR feasibility study • Results SubB2M/CA125 OC analytical valdation study • Results of SubB2M/CA15-3 BC monitoring study • Progress SubB2M partnering • TEXO-NET data @ ANZSEV23 meeting • Commercial progress SubB2M/CA15-3 test • Results SubB2M/CA125 clinical validation studies • NEURO-NET data • New EXO-NET collaborations/partnering • Progress EXO-OC clinical study 19 Annual Report 2023
Review of Operations FINANCIAL RESULTS The Group recorded a net loss from operating activities after income tax of $8,969,241 (2022: $18,195,977) and ended the financial year with a cash balance of $7,812,511 (2022: $15,394,847). Product revenues for the hTERT test totalled $363,209 (2022: $273,897). Income from other sources was $1,506,730 (2022: $1,786,130) including an accrual of $949,501 for the Research and Development Tax Incentive Refund for the 2023 financial year (2022: $1,316,437 accrual for the 2021 and 2022 Research and Development Tax Incentive claims). The refund for 2023 is expected to be received in the coming months. Grant income contributed $58,130 (2022: $404,025), comprising a final amount of $8,930 from the BTB Grant supporting the SubB2M breast cancer program and $49,200 from the Export Market Development Grant. Interest and miscellaneous income added $353,721 (2022: $65,668). General and administration costs were $6,832,901 (2022: $5,855,103) with the following significant contributors: – employee expenditure $1,914,513 (2022: $1,770,247) including non-cash share options expense of $285,111 (2022: $239,651); – consulting and legal fees $2,147,043 (2022: $1,514,422) the majority of these costs relating to fees paid to defend the Supreme Court Writ and achieve the settlement outcome; – amortisation of intangible assets $944,933 (2022: $1,677,408) for the hTERT and Nets intangible assets; and – ASX listing and share registry fees of $132,421 (2022: $213,426). Research and Development expenditure was $3,224,469 (2022: $3,035,963). The majority of expenditure was incurred on the SubB2M and Molecular Nets programs. Included in this figure was employee related expenditure of $1,334,274 (2022: $1,255,196) and $1,649,970 (2022: $1,573,161) paid to external contractors and suppliers. Sales and Marketing expenditure was $772,312 (2022: $548,451) of which employee related expenditure contributed $620,321 (2022: $437,766). Non-cash expenditures recorded (within the three categories of expenditure – General and Administration, Research and Development, and Sales and Marketing) for the reporting period included: – amortisation of intangible assets $944,933 (2021: $1,677,408) for the hTERT and Molecular Nets intangible assets and $20,030 (2022: $34,354) related to granted patents; – depreciation of right-of-use assets (required by accounting standard AASB16 – Leases) $274,998 (2022: $274,998); – depreciation of building improvements $33,154 (2022: $32,247) and depreciation of plant and equipment $120,617 (2022: $82,584); – share based payments expense of $285,111 (2022: $239,651); – intangible asset and goodwill impairment of $nil (2022: $12,821,402); and – lease liability interest expense, as required by AASB16, $59,524 (2022: $81,963). The loss recorded in the prior reporting period was reduced by the recognition of a $2,058,513 credit resulting from the recognition of the deferred tax asset associated with INOVIQ’s carried forward tax losses and the reduction in the carrying values of the Group’s intangible assets. 20 INOVIQ Limited
Financial Report For the year ended 30 June 2023 22 Directors’ Report 35 Auditor’s Independence Declaration 36 Consolidated Statement of Comprehensive Income 37 Consolidated Statement of Financial Position 38 Consolidated Statement of Changes in Equity 39 Consolidated Statement of Cash Flows 40 Notes to the Financial Statements 68 Directors’ Declaration 69 Corporate Governance Statement 70 Independent Auditor’s Report Contents 21 Annual Report 2023
Directors’ Report 22 INOVIQ Limited The directors present their report together with the financial report of INOVIQ Limited (INOVIQ or the Company) and its controlled entities (collectively referred to as the Group) for the financial year ended 30 June 2023 and the independent auditor’s report thereon. PRINCIPAL ACTIVITIES The principal activities of the Group are the development and commercialisation of an innovative portfolio of diagnostic and exosome‐ based products to improve the diagnosis and treatment of cancer and other diseases. The Group has commercialised the EXO‐NET® pan‐-exosome capture tool for research purposes and the hTERT test as an adjunct to urine cytology testing for bladder cancer. INOVIQ’s cancer diagnostic pipeline includes blood tests in development for earlier detection and monitoring of ovarian, breast and other cancers. CORPORATE INFORMATION INOVIQ Limited is a Company limited by shares and is incorporated and domiciled in Australia. It is the ultimate legal parent entity of the INOVIQ Group. As at 30 June 2023 it had one wholly owned subsidiary, Sienna Cancer Diagnostics Ltd (an Australian public company). A former wholly owned subsidiary, BARD1AG SA (a company domiciled in Switzerland) was deconsolidated during the year. INOVIQ Inc (a US entity) forms part of the group, being a 100% owned subsidiary of Sienna Cancer Diagnostics Ltd. DIRECTORS The names and details of the directors of the Company in office during the year ended 30 June 2023 and until the date of this report are as follows (Directors were in office for this entire period unless otherwise stated): Dr Geoffrey Cumming BSc (Hons) BAppSc PhD MBA MAICD Non-Executive Chairman (appointed 28 July 2020) Dr Cumming has held senior roles in the global healthcare and biotechnology sector for more than 20 years. As Managing Director, Roche Diagnostic Systems (Oceania), Dr Cumming transformed the loss-making entity the Swiss parent was intending to divest, into the fastest growing and most profitable affiliate in the Roche group. In his role as Managing Director/CEO of Biosceptre International Ltd, Dr Cumming was successful in designing and securing key funding arrangements through a skilful range of capital raising initiatives, including large government grants, partnering and co-development deals. His most recent executive role was as Managing Director / CEO of Anteo Diagnostics Ltd (ASX: ADO). He is currently a Non-executive Director of Anteo Diagnostics Ltd and was previously Chairman of Sienna Cancer Diagnostics Ltd and a Non-executive Director of Medical Australia Ltd (ASX: MLA). Dr Cumming is the Chair of the Remuneration Committee and a member of the Audit & Risk Committee. Dr Cumming has not been a director of any listed companies in the last three years other than those listed above. Mr Robert (Max) Johnston Non-Executive Director (appointed 17 June 2019) Mr Johnston held the position of President and Chief Executive Officer of Johnson & Johnson Pacific, a division of the world’s largest medical, pharmaceutical and consumer healthcare company for 11 years. Prior to joining Johnson & Johnson, Mr Johnston’s career also included senior roles with Diageo and Unilever in Australia, Africa, and Europe. Mr Johnston has also held several prominent industry roles as a past President of ACCORD Australasia Limited, a former Vice Chairman of the Australian Food and Grocery Council and a former member of the board of the Australian Self Medication Industry (ASMI). Mr Johnston has had extensive overseas experience during his career in leading businesses in both Western and Central-Eastern Europe and Africa as well as the Asia-Pacific region. Mr Johnston is a former Non-Executive Director of Medical Developments International Ltd (ASX: MVP), Tissue Repair Ltd (ASX: TRP), Enero Group Limited (ASX: EGG) and PolyNovo Ltd (ASX: PNV), and a former Non-Executive Chairman of Probiotec Ltd (ASX: PBP) and AusCann Group Holdings Ltd (ASX: AC8). Mr Johnston is a member of the Company’s Remuneration and Audit & Risk Committees. Mr Johnston has not been a director of any listed companies in the last three years other than those listed above.
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