For personal use only · Appendix 4E – Preliminary Final Report (ASX Listing rule 4.2A) ... including autoimmune, inflammatory, ocular, metabolic and cardiovascular diseases as

Appendix 4E – Preliminary Final Report

(ASX Listing rule 4.2A) Company Name: Antisense Therapeutics Limited (the ‘Company’)

ABN: 41 095 060 745

Reporting Period: Financial year ended 30 June 2011

Previous Reporting Period: Financial year ended 30 June 2010

Result for Announcement to the Market The results of Antisense Therapeutics Limited for the year ended 30 June 2011 are as follows:

Revenues down 11.20% to $91,106

Loss after tax attributable to members down 47.05% to ($1,813,550)

Net loss for the period attributable to members down 47.05% to ($1,813,550)

Brief explanation of figures reported above

The loss for the Company after income tax for the reporting period was $1,813,550 (2010: $3,424,875) and before income tax the loss for the reporting period was $1,813,550 (2010: $3,446,239). There is no tax payable or refund due during the current reporting period, (2010 refund: $21,364). This result has been achieved after fully expensing all research and development costs, in the current reporting period of $829,972 (2010: $1,996,636). For further details relating to the current period’s results, refer to the Operations Report contained within this document.

Dividends

No dividends have been paid or declared by the Company since the beginning of the current reporting period. No dividends were paid for the previous reporting period.

Net Tangible Assets

30 June 2011 30 June 2010 Net Tangible Assets $2,018,122 $1,344,099 Shares (No.) 951,078,812 590,327,999

Net Tangible Assets (Cents) 0.21 0.23 Loss Per Share

30 June 2011 30 June 2010

Basic loss per share (cents) (0.24) (0.59)

Diluted loss per share (cents) (0.24) (0.59) Status of Audit of Accounts

This Appendix 4E is based on accounts which have been audited. The audit report is included within the financial report which accompanies this Appendix 4E.

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LIMITED

Annual Financial Report

For the Year Ended 30 June 2011

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Contents

Operations Report ........................................................................................................... 1

Directors’ Report ........................................................................................................... 11

Corporate Governance Statement ................................................................................ 28

Auditors’ Independence Declaration ............................................................................ 33

Annual Financial Report ................................................................................................ 34 Statement of Comprehensive Income .............................................................................. 35 Statement of Financial Position ........................................................................................ 36 Statement of Changes in Equity ........................................................................................ 37 Cash Flow Statement ........................................................................................................ 38 Notes to the Financial Statements .................................................................................... 39

Directors’ Declaration ................................................................................................... 70

Independent Audit Report ............................................................................................ 71

Company Directory ...................................................................................................... 73

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Operations Report

Page 1

Overview of Company’s Activities

In the period, Antisense Therapeutics Limited (“the Company” or Antisense Therapeutics”) continued its focus on progressing its product pipeline. The following report on operations details the research and development activities. During the period under review, the following key events were announced by the Company.

ATL1103: ‐ The Company received approval to commence its Phase I randomized, placebo controlled, double blind

study of single ascending doses and multiple doses of ATL1103 to assess its safety, tolerability, pharmacokinetics and pharmacodynamics in healthy subjects and commenced the dosing of subjects in the trial.

ATL1101:

- The Company executed an agreement with privately‐owned Australian biotechnology firm, Afandin Pty Ltd (Afandin) granting Afandin an exclusive Option to License the Company’s second generation antisense compound ATL1101.

Capital Raising:

- The Company raised approximately $2.9 million during the year via the successful completion of a Rights Issue ($2.4M) in December 2010 and a private placement to Tempo Capital Pty Ltd, an Australian based boutique investment fund ($500,000) in June 2011.

Antisense Therapeutics’ Mission

Antisense Therapeutics’ mission is to create, develop and commercialise novel antisense therapeutics. The Company’s Research and Development activities are focused on developing 2nd generation antisense drugs for diseases where there is a significant and acknowledged unmet medical need and where the antisense technology has the potential to provide compounds with clear competitive advantages over existing therapies or drugs in development for those diseases.

Antisense Technology

Proteins play a central role in virtually every aspect of human biology. Each of our genes is a set of instructions for the manufacture inside the cell of a particular unique protein. Certain proteins in the body, when overproduced or of the wrong type, can cause disease. Conventional pharmaceutical drugs typically bring about their desired therapeutic effect by binding to a target protein directly, to interfere with the action of the disease causing protein.

Antisense drugs are small (12‐21 nucleotides) pieces of DNA or RNA that are chemically modified to engineer good drug properties. Unlike conventional medicines, antisense drugs are rationally designed to bind to a specific messenger RNA sequence with extraordinary precision and thereby block or stop the production of the disease causing protein in the first instance.

The antisense drugs in our pipeline incorporate Isis’ second‐generation chemistry. Second‐generation drugs are composed of both RNA‐like and DNA‐like nucleotides, while first‐generation drugs are entirely DNA‐like. Because RNA hybridizes more tightly to RNA than to DNA, the second‐generation drugs have a greater affinity for their RNA targets and, therefore, greater potency. With increased potency, second‐generation drugs are active at lower doses, which decreases the overall cost of therapy. Second generation antisense drugs are more stable, allowing more convenient dosing regimens, better tolerated, and have broad disease application, including autoimmune, inflammatory, ocular, metabolic and cardiovascular diseases as well as cancer.

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Operations Report continued…

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Overall Operating Strategy

Antisense Therapeutics’ strategy is: • to create candidate antisense drugs for diseases where there are large and/or poorly met markets;

• to test the candidate drugs in pre‐clinical and clinical studies via outsourcing arrangements with expert contractors, and

• to commercialise the drugs that are shown to be successful through licensing deals or other partnerships with major pharmaceutical companies.

The Company’s business model of outsourcing pre‐clinical and clinical testing minimises infrastructure and overhead costs. The Company works with contractors and consultants on a worldwide basis in order to gain access to the best possible expertise. These outsourcing activities are overseen by the Company’s management, which has extensive experience in the research and clinical development of pharmaceutical products. In this way we are able to maintain a relatively small but highly focused organisational structure. The model is facilitated by the Company’s technology collaboration with Isis Pharmaceuticals Inc. (‘Isis’) the world leader in antisense drug discovery and development. Antisense Therapeutics is able to draw on Isis’ drug development resources and expertise to produce its own high quality drug development programs; expert support that would otherwise either be inaccessible or prohibitively expensive.

Isis Strategic Partnership

A fundamental element of the Antisense Therapeutics strategy is its strategic partnership with Isis, a relationship that has been successfully operating for over 9 years. Isis has successfully commercialized the world's first antisense drug and has 24 drugs in development (either alone or in partnership with other pharmaceutical companies). As an innovator in RNA‐based drug discovery and development, Isis is the owner or exclusive licensee of over 1,000 issued patents worldwide. Isis has several partnerships with major pharmaceutical companies, including drug development collaborations with Genzyme, Eli Lilly & Co, and Bristol‐Myers Squibb.

The collaboration with Isis provides Antisense Therapeutics with access to Isis’ antisense intellectual property, development expertise, and drug manufacturing capabilities to enable the Company to develop and commercialise its pipeline of antisense drugs.

Projects Update

ATL1103 for Growth and Sight Disorders

ATL1103 is a second generation antisense drug designed to block growth hormone receptor (GHr) expression thereby reducing levels of the hormone insulin‐like growth factor‐I (IGF‐I) in the blood and is a potential treatment for diseases associated with excessive growth hormone action. By inhibiting GHr production predominantly in the liver, ATL1103 in turn reduces levels of the IGF‐I in the blood (serum). There are a number of diseases that are associated with excess GH and IGF‐I including certain growth disorders, some forms of cancer, and diseases associated with inadequately controlled diabetes. ATL1103 is an exciting clinical development opportunity that has successfully passed through the research and pre‐clinical stages of development. The therapeutic activity of ATL1103 was confirmed in animal pharmacology studies, where ATL1103 demonstrated the successful suppression of serum IGF‐I levels in both normal mice and primates. Normalizing serum IGF‐I levels is the therapeutic goal in the treatment of the growth disorder acromegaly and reducing the effects of IGF‐I has a potential role in the treatment of diabetic retinopathy, nephropathy and certain forms of cancer. Supporting its potential as a future treatment for diabetic retinopathy, antisense to the GHr has also shown in animal studies to significantly inhibit retinal neovascularisation (new blood vessel formation) in the eye.

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In October 2010 the Company announced that its US patent No. 7803781 for ATL1103 had been granted with an extended period of patent protection to early 2025. A corresponding Australian patent No. 2004217508 had been allowed and was subsequently granted in December 2010. On 8 December 2010 the Company announced the granting of US patent No. 7,846,906 covering ATL1103 entitled “Modulation of growth hormone receptor expression and insulin‐like growth factor expression.“ this patent adds to the extensive patent position on ATL1103 and broader applications of antisense technology targeting human GHr. These patents provide strong commercial underpinning for the Company’s development of ATL1103 as a potential treatment for growth and sight disorders. In June 2011 the dosing of human subjects commenced in the Phase I trial of ATL1103. The Phase I trial is being run by Nucleus Network (a leading Australian Clinical Research Organization) at their dedicated clinical trial unit co‐located at the Austin Hospital, Heidelberg, Victoria. The trial is a randomized, placebo controlled, double blind study of single ascending doses and multiple doses of ATL1103 in healthy adult male subjects aged between 18 and 45 years. The primary objective of the study is to assess the safety, tolerability and pharmacokinetics of ATL1103 administered by subcutaneous (under the skin) injection. A secondary, but important objective of this study, is to obtain key data on the effect of ATL1103 on IGF‐I levels in the blood of the trial subjects. Reducing elevated levels of serum IGF‐I to normal is the therapeutic endpoint in the treatment of acromegaly, and reducing the effects of IGF‐I has a potential role in the treatment of diabetic retinopathy, nephropathy and certain forms of cancer. Approximately 36 subjects will be enrolled to participate in the Phase I clinical trial (24 in the single ascending dose stage and 12 in the multiple dose stage). In the single ascending dose stage of the trial, up to four dose levels starting at 25mg, and escalating to 75, 250 and 400 mg will be administered as a subcutaneous injection. Based on a review of the safety data from the single ascending dose stage, one dose level will be selected for the multiple dose component of the study. Multiple dosing will consist of six once – daily subcutaneous doses over 21 days on Days 1, 3, 5, 7, 14 and 21). Subjects will be monitored out to Day 35. Dosing in both the single ascending and multiple dose stages of the Phase I trial is expected to be completed before the end of the year with the database lock occurring in Q1 2012.

ATL1103 Cancer Experimental Program

The Company will also be undertaking its ATL1103 cancer experimental program as part of the Phase I clinical trial outlined above. The ATL1103 cancer experimental program has been established with leading expert Dr Pinchas Cohen M.D., Professor and Chief of Diabetes and Endocrinology, Mattel Children’s Hospital at UCLA. Professor Cohen co‐authored a study that found that patients with Laron syndrome who carry a genetic mutation that silences their GHr thereby having depressed levels of GHr and IGF‐I, were protected from developing cancer. The authors of the study tested serum samples from this population and found that these samples induced higher levels of cellular protection and resulted in decreased proliferation and reduced expression of specific pro‐growth signaling genes, which regulate growth, promote ageing and lead to activation of processes that may lead to cancer progression.

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Professor Cohen’s laboratory team will investigate ATL1103’s effect on exploratory markers of cellular activity relevant to cancer in the serum of the subjects from the Phase I trial of ATL1103 who have received multiple doses of ATL1103. This data will assist in determining the potential of ATL1103 in the new application of preventing certain forms of cancer in high risk individuals.

Patent Status

ATL1103 patents and patent applications

Antisense Therapeutics and Isis lodged International patent application PCT/US2004/005896 covering ATL1103 and methods of reducing serum IGF‐1 and GHr expression and methods of treatment of diseases including acromegaly and retinopathy using antisense to GHr. The International application entitled, “Modulation of Growth Hormone Receptor Expression & Insulin Like Growth Factor Expression” filed 27 February 2004 claims priority from US60/451,455 and 60/490,230 filed 28 February 2003 and 25 July 2003 respectively. Two further US patent applications US2004/253723 and US2005/282761 were also lodged in 2004 to facilitate simultaneous examination of both the ATL1103 drug product claims and methods of modulation of serum IGF‐1 and treatment claims in the US. US 2004/253723 directed to ATL1103 has been granted as US 7,803,781 and US2005/287761 is at an advanced stage of examination. Another US patent application US2006/0178325 derived from the PCT application covering variants of ATL1103 has been granted as US 7,846,906 and a continuation filed directed at methods of modulation of GHr. National Phase applications derived from the PCT in Canada, Europe and Japan are under examination and Australian patent 2004217508 and New Zealand patent 542595 was granted in 2010.

Country Patent application or Patent No.

Current Status Expiry

US 7,803,781 Patent Granted 2025*

US US 10/927,466 US2005/282761

Under Examination 2024*

International PCT/US2004/005896 National Phase applications

Australia 2004217508 Patent Granted 2024*

Canada 2,517,101 Awaiting Examination 2024

Europe** 04715642.7 Under Examination 2024*

Japan 100089705 2006‐508878


New Zealand 542595 Patent Granted 2024

USA 7,846,906 Patent Granted 2024*

USA 12/953105 Continuation of US10/547,239

7,846,906


* ATL1103 is protected by the above patent applications to 2024 with potential for up to 5 years extensions to the patent term to 2029.

** Designates all member states of European patent countries including all extension states.

ATL1103 is protected internationally by other Isis proprietary antisense technology patents and applications, to which Antisense Therapeutics has world‐wide license.

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What are Acromegaly and Diabetic Retinopathy?

Acromegaly is a serious chronic life threatening disease triggered by excess secretion of growth hormone (GH) by benign tumours of the pituitary gland. Oversupply of GH over stimulates liver, fat and kidney cells, through their GH receptors, to produce excess levels of Insulin‐Like Growth Factor‐I (IGF‐I) in the blood causing abnormal growth of the face, hands and feet, and enlargement of body organs including liver, kidney and heart. The primary treatments for acromegaly are to surgically remove the pituitary tumour and/or drug therapy to normalize GH and serum IGF‐I levels. In North America, Europe and Japan there are approximately 840,000 diagnosed acromegaly patients with about half requiring drug therapy.

Diabetic retinopathy is one of the leading causes of vision loss. Over 5 million Americans aged 18 and older are affected by diabetic retinopathy. Around 12,000‐24,000 patients with diabetic retinopathy lose their eyesight each year in the US alone. This condition is caused by abnormal new blood vessel formation in the retina or macula (the central part of the retina) of the eye. In diabetes, high blood glucose can cause oxygen deprivation in certain tissues, which can stimulate factors that induce additional blood vessels in the retina. These new blood vessels may break and bleed into the eye leading to scarring within the eye. Surgical ablative treatments such as photocoagulation (laser therapy) are available but are not completely effective, may cause partial vision loss, and can only be used a limited number of times. There is presently no pharmaceutical therapeutic approved for the treatment of the advanced form of diabetic retinopathy.

ATL1101 for Prostate Cancer

ATL1101 is an antisense inhibitor of insulin like growth factor 1 receptor (IGF‐Ir) which has shown potent activity in laboratory studies, including in human cancer cells. IGF‐Ir is one of the best known of a family of cell signaling molecules that are referred to as “anti‐apoptotic”. These molecules prolong cell survival by inhibiting programmed cell death (apoptosis). The connection between IGF‐Ir activity and prostate cell tumourigenicity has been studied for many years in vitro. Inhibition of cell survival molecules like IGF‐Ir can render tumour cells more susceptible to cell death with cytotoxic (cell death inducing) drugs. Similar “chemosensitiser” therapeutic approaches targeting the IGF‐Ir are under investigation in several large pharmaceutical companies, lending support to ATL’s antisense‐based strategy against the same target. The Company had previously announced that it had conducted a collaborative research programme with one of the world’s leading researchers in the field of prostate cancer, Professor Martin Gleave, Distinguished Professor, Department of Urological Sciences, University of British Columbia and Director of The Prostate Centre at Vancouver General Hospital. This research programme examined the potential of ATL1101 in mouse models of human prostate cancer. In the animal studies conducted in collaboration with Professor Gleave, ATL1101 demonstrated its effectiveness in suppressing human prostate cancer tumour growth. Of significance, ATL1101 is the only gene‐silencing or RNA‐targeting drug to this target known by the Company to be in development. As part of the strategy to partner the further development of ATL1101, the Company supplied ATL1101 drug product to a specialist oncology company for the purpose of evaluating the compound in their animal models of cancer. In the period Antisense Therapeutics advised that the specialist oncology company had evaluated ATL1101 in a non prostate tumour system and determined not to proceed with further experimental work on ATL1101. F

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Consistent with its intentions to partner the further development of ATL1101, in July 2011 Antisense Therapeutics announced that it had executed an agreement for an exclusive Option to License ATL1101 with privately‐owned Australian biotechnology firm, Afandin Pty. Ltd. (Afandin), founded by Dr Ian Nisbet, PhD, MAICD and Dr Anthony Filippis, PhD, MBA, both highly experienced biotechnology business executives with a strong track record in cancer drug development and commercialisation. Under the terms of the Agreement, Afandin has been granted an option to license ATL1101 to further develop and commercialise the compound for cancer applications subject to Afandin securing an agreed amount of development funding which it is to source over the next 6 months. This funding will be applied to moving ATL1101 into a Phase I/II clinical trial in prostate cancer patients. Based on successfully raising the required funds and exercising its Option to License ATL1101, a new corporate entity will be created that will be co‐owned and managed by Afandin. Upon execution of a License Agreement, the new entity will hold the license to develop and commercialise ATL1101. In return for the license to ATL1101, ANP will receive a significant equity stake in the new entity and will also receive a significant percentage of the commercialisation benefits including a percentage of any future licensing income received and a percentage of the royalties on ATL1101 sales. Importantly for Antisense Therapeutics, this arrangement allows for the further development of ATL1101 by a team experienced in oncology clinical drug development while providing non‐dilutive funding for the project. On 12 July 2011 Antisense Therapeutics reported the granting of Japanese patent No. 4753863 which covers ATL1101 and has potential applications in the treatment of cancer. The Company also advised that it had received a Notice of Allowance on ATL1101 Canadian patent application 2515484 which will proceed to grant in the coming months. Both the Japanese and Canadian patents are entitled “Modulation of Insulin Like Growth Factor I Receptor Expression” and protect the use of ATL1101 until 2024. The Intellectual Property that is in place to support the successful development and commercialisation of ATL1101 is an integral part of the value created by the Company. The granting of the Japanese and Canadian patents together with other patents provide comprehensive intellectual property protection for ATL1101 on a global basis.


Antisense Therapeutics has lodged an International patent application PCT/AU2004/000160 covering ATL1101 and its uses. The International application entitled, “Modulation of Insulin Like Growth Factor I Receptor Expression” filed 11 February 2004 claims priority from Au 2003900609 and Au 2003902610 filed 11 February 2003 and 27 May 2003 respectively. Patents have been granted in the US and NZ in 2008, in Australia in 2010, and in Japan in 2011. A patent application in Canada has been allowed and is due to be granted. Patent applications in Europe and the US are under examination or awaiting examination. US continuation applications US12/342,025 is in advanced stages of examination. In 2008 and 2009, the Company lodged three new US provisional patent applications and US patent application 12/578,471 directed to ATL1101 and methods of treatment of prostate and other cancers, based on our prostate cancer animal studies. The US application entitled, “Modulation of IGF1R expression in cancer” filed 13 September 2009, claims priority from US 61/105,367, US 61/187,510, and US 61/233,772 filed 14 October, 2008, 16 June 2009 and 20 August 2009.

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The new US patent application was filed in order to extend protection for ATL1101 and other antisense inhibitors to IGF1R in prostate cancer and ATL1101 in other cancers by 5 years in the US to 2029.

Country Patent application or Patent

No. Current Status Expiry

International PCT/AU2004/00160 National Phase applications

Australia 2004210882 Patent Granted 2024 *

Canada 2515484 Allowed 2024

Europe*** 04709958.5 Under Examination 2024*

Japan 4753863 Patent Granted 2024*

New Zealand 541637 Patent Granted 2024

USA US7468356 Patent Granted 2024**

USA US12/342,025 Continuation of 10/545354 2006/0234239

Under examination 2024

US US12/578,471 Awaiting examination 2029

* ATL1101 is protected by the above patent applications to 2024 with potential for up to 5 year extensions to

the patent term to 2029.

** The expiry date on the US patent is 17 December 2024, extended 309 days from 11 February 2024 under US law 35U.S.C. 154(b). There is potential for up to 5 year extensions to the patent term from the December 2004 date.

*** Designates all member states of European patent countries including all extension states.

ATL1101 is protected internationally by other Isis proprietary antisense technology patents and applications, to which Antisense Therapeutics has world‐wide license

What is Prostate Cancer?

Prostate cancer is the second most frequently diagnosed cancer in men after skin cancer. Metastatic disease invariably progresses to hormone refractory or castrate‐resistant prostate cancer (CRPC) if given enough time. Prostate tumours are initially androgen (male sex hormone) dependent, and can be treated with androgen ablation therapy (the term “castration” can be used to describe removal of the source of androgen), however once the disease progresses to its most dangerous and aggressive form, CRPC, treatment options are limited and prognosis is poor. Treatment options depend on disease severity and include radiation and chemotherapy, which are designed to induce programmed cell death (apoptosis) of tumour cells. There is a pressing need for the development of new treatment options.

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ATL1102 for Multiple Sclerosis

ATL1102 is a second generation antisense inhibitor of CD49d, a subunit of VLA‐4 (Very Late Antigen‐4). In inflammation, white blood cells (leukocytes) move out of the bloodstream into the inflamed tissue, for example, the Central Nervous System (CNS) in Multiple Sclerosis (MS), and the lung airways in asthma. The inhibition of VLA‐4 may prevent white blood cells from entering sites of inflammation, thereby halting progression of the disease. VLA‐4 is a clinically validated target in the treatment of MS. ATL1102 was previously shown by Antisense Therapeutics to be highly effective in reducing MS lesions in a Phase 2 clinical trial in MS patients. The Company is seeking a partner to continue the development for the MS indication.

What is Multiple Sclerosis?

Multiple Sclerosis (MS) is a life‐long, chronic disease that progressively destroys the central nervous system (CNS). It affects approximately 400,000 people in North America and the current market for MS drugs is estimated at more than USD$6 billion. It is a disease that affects more women than men, with onset typically occurring between 20 and 40 years of age. Symptoms of MS may include vision problems, loss of balance, numbness, difficulty walking and paralysis. In Australia MS affects over 15,000 people and worldwide MS may affect more than one million people.


The Isis Patent Family, International application PCT/US99/18796, and related patents and applications below covering ATL1102 are assigned to the Company. The International application entitled “Antisense Modulation of Integrin Alpha 4 Expression” filed on 19 August 1999 claims priority from US application 09/166 203 filed 5 October 1998.

Patents have been granted in the US, Japan, Australia, United Kingdom, Germany, France, Italy, Spain, Denmark, Finland, and Sweden. A patent application is under examination in Canada.

The Antisense Therapeutics ATL1102 Phase II studies in MS led to the filing of International application PCT/US09/003760 and US 2010/0119480 covering the method of treatment of MS using ATL1102. The International and US applications entitled “Methods for Treating Multiple Sclerosis using Antisense Oligonucleotides”, filed 23 June 2009 claim priority from US application 61/132,973 filed 23 June 2008. The PCT/US09/003760 application entered the national phase in Australia, Canada, Europe and Japan in 2009, and US 2010/0119480 is under examination.

These granted patents and applications and Isis antisense technology patents to which the Company has a world‐wide license, form part of the extensive portfolio of intellectual property protecting ATL1102, and its applications in the treatment of MS, asthma and other diseases.



USA US 5968 826 Patent granted 2018 **

USA US 6258 790 Patent granted 2018*/**


Australia AU 759938 Patent granted 2019 *

Canada 2,345,209 Under examination 2019

Japan 2000‐574727 Patent granted 2019*

Japan 2006‐000258 Patent granted 2019*

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Denmark 1123414 Patent granted 2019*

Finland 1123414 Patent granted 2019*

France 1123414 Patent granted 2019*

Germany DE69934998.2‐08 Patent granted 2019*

Italy 40051BE2007 Patent granted 2019*

Spain ES 2279632 Patent granted 2019*

Sweden 99942290.0 Patent granted 2019*

United Kingdom 1123414 Patent granted 2019*


Australia AU 2009271678 Awaiting Examination 2029*

Canada 2,728562 Awaiting Examination 2029

Japan 2011‐516297 Awaiting Examination 2029*

Europe 09798248.2 Awaiting Examination 2029*

USA US2010/0119480 Under Examination 2029*

* ATL1102 is protected by the above patents with potential for up to 5 year extensions to the patent term to 2023 in the US and 2024 in other countries once ATL1102 is a registered drug.

** ATL1102 is also protected internationally by other Isis proprietary antisense technology patents and applications, to which Antisense Therapeutics has world‐wide license including US7015315 to 2023. Antisense technology patents are potentially extendible for up to 5 years to 2028 in the US.

ATL1102 for Asthma

The Company has previously reported encouraging results achieved in an animal model of asthma with the inhaled form of an antisense compound targeting the VLA‐4 molecule. Experimental studies showed that the delivery of an antisense drug against VLA‐4 via inhalation to the lung significantly suppressed the key asthma indicators in allergen sensitized mice at very low inhaled doses, pointing to the potential new indication for ATL1102 as an inhaled treatment for asthma. The Company has conducted successful animal studies on this application of ATL1102 and is looking for a partner to continue the drug’s development in the asthma indication. In October 2010 the Company announced that Australian patent No. 2005327506 was granted on inhaled ATL1102 for asthma with a corresponding New Zealand patent No. 554277 allowed. The New Zealand patent was subsequently granted in January 2011. Both these patents provide protection on the inhaled use of ATL1102 until 2025 in these markets.

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Patent Status

ATL1102 inhaled patent applications

Antisense Therapeutics have lodged International patent application PCT AU 2005/001634 for low dose inhaled ATL1102 for use in asthma and other respiratory conditions.

The international application entitled “Topical administrations of antisense compounds to VLA‐4 for the Treatment of Respiratory Conditions” filed on 20 October 2005 claims priority from two US applications US 60/620,792 and US 60/648,820 filed 20 October 2004 and 31 January 2005 respectively.

We have entered this application into the National Phase in the United States, Japan, Europe, Canada, New Zealand and Australia. Australian patent 2005327506 and New Zealand patent 554277 were granted in the period. Patent applications are under examination in the US and Europe.

This patent family is owned by the Company. These patent applications are important for the development and commercialisation of an inhaled ATL1102 product, as a distinct product to ATL1102 in MS.



International PCT AU 2005/001634 National Phase applications

USA US 11/666,001 Under examination 2025*

Japan JP 2007‐535071 Awaiting examination 2025

Europe*** EP 05857292.6 Under examination 2025*

Canada CA 2,584,614 Awaiting examination 2025

New Zealand NZ 554277 Patent Granted 2025**

Australia AU 2005327506 Patent Granted 2025**

* There is potential for up to 5 year extensions to the patent term to 2030 once an inhaled ATL1102 is a registered drug.

** The Company has protection for ATL1102 low dose inhaled applications to 2025 for use in asthma and other respiratory conditions.

*** Designates all member states of European patent countries including all extension states.

Capital Raising

In December 2010 the Company announced the successful completion of a pro‐rata Rights Issue in which the Company raised approximately $2.4 million with the net proceeds to be applied to the clinical development of ATL1103 and to implement the Company’s strategy to realise value from its other project assets in the form of licensing or partnering arrangements. In June 2011 the Company reported that it had completed a private placement to Tempo Capital Pty Ltd, an Australian based boutique investment fund. The Company raised A$500,000 less related expenses which will enable it to complete additional key studies in association with the first human trial of ATL1103.

Financial Position

As stated in the Balance Sheet the Company’s cash reserves as at 30 June 2011 were $2,338,356.

Auditor’s Independence Declaration

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.

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Directors’ Report

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The Board of Directors of Antisense Therapeutics Limited (‘the Company’) present their report for the year ended 30 June 2011.

Directors The names of the Directors in office at any time during, or since the end of the year are as follows:

Mr Robert W Moses Independent Non‐Executive Chairman Appointed to the Board 23 October 2001

Last elected by shareholders 9 November 2010

Qualifications BA, MBA, FAICD, FAIM

Experience Robert (Bob) Moses was formerly Corporate Vice President of CSL Limited. Mr Moses draws on more than 40 years experience in the pharmaceutical/biotechnology industry. During the period 1993‐2001, Mr Moses played a central role in CSL's development internationally. Prior to joining CSL, Mr Moses was Managing Director of commercial law firm Freehills, Chairman and CEO of a NASDAQ listed medical service company, and Corporate Manager of New Business Development at ICI (now Orica). Mr Moses is also the former Non‐Executive Chairman of TGR Biosciences Pty Ltd. Mr Moses also spent 17 years in various management roles at the multinational pharmaceutical company Eli Lilly.

Interest in shares and options 5,515,839 ordinary shares and 1,984,370 options over ordinary shares.

Committees Chairman of the Remuneration Committee and member of the Audit Committee.

Directorships held in other entities Mr Moses is currently Non‐Executive Chairman of Sylvan Scientific Limited and a director of the CRC for Polymers.

Mr Mark Diamond Managing Director Appointed to the Board 31 October 2001

Qualifications BSc, MBA, MAICD

Experience Mark Diamond has over 20 years experience in the pharmaceutical and biotechnology industry. Before joining Antisense Therapeutics Limited as MD and CEO in 2001, Mr Diamond was employed in the US as Director, Project Planning/Business Development at Faulding Pharmaceuticals. Prior to this he held the positions of Senior Manager, Business Development and In‐licensing within Faulding's European operation based in the UK and International Business Development Manager with Faulding in Australia.

Interest in shares and options 1,862,041 ordinary shares and 5,812,460 options over ordinary shares.

Committees Nil

Directorships held in other entities Nil

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Dr Chris Belyea Independent Non‐Executive Director Appointed to the Board 13 November 2000


Qualifications BSc(Hons), PhD, FIPAA

Experience Chris Belyea has a PhD in physics from the University of Melbourne and is a registered patent attorney. He became the founding CEO of Antisense Therapeutics Limited in November 2000 and remained in this role until January 2002 (shortly after Antisense Therapeutics Limited was listed on the Australian Stock Exchange). He worked for the Australian patent firm Griffith Hack & Co for 5 years before joining Circadian Technologies Limited as its Licensing and Projects Manager in 1996. In 1998 Dr Belyea became founding CEO and member of the board of biotechnology company, Metabolic Pharmaceuticals Ltd. He served with Metabolic as an executive until mid 2008, and now runs his own patent attorney practice.

Interest in shares and options 750,000 ordinary shares and 290,000 options over ordinary shares.

Committees Chairman of the Audit Committee and member of the Remuneration Committee.

Directorships held in other entities Until 30 August 2008 Dr Belyea served as a Director of Metabolic Pharmaceuticals Limited.

Dr Graham Mitchell Independent Non‐Executive Director Appointed to the Board 24 October 2001

Last elected by shareholders 31 October 2008

Qualifications AO, RDA, BVSc, FACVSc, PhD, FTSE, FAA

Experience Graham Mitchell is an advisor in Innovation to the Victorian, Tasmanian and Northern Territory Governments. Dr Mitchell through Foursight Associates Pty Ltd, acts as joint Chief Scientist for the Victorian Departments of Primary Industries and Sustainability and Environment. Prof. Mitchell is a Non‐Executive Director of Compumedics Limited, Avipep Pty Ltd, AgVic Services Pty Ltd, Adelaide Research and Innovation Pty Ltd and is a principal of Foursight. Dr Mitchell has held the position of Director of Research in the R&D Division of CSL Limited, Non‐Executive director of the Geoffrey Gardiner Dairy Foundation and for many years was a research scientist at The Walter & Eliza Hall Institute.

Interest in shares and options 706,213 ordinary shares and 631,243 options over ordinary shares.

Committees Member of the Remuneration Committee.

Directorships held in other entities Dr Mitchell is currently a Non‐Executive Director of Compumedics Limited.

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Prof. George Werther Independent Non‐Executive Director Appointed to the Board 24 October 2001


Qualifications MD, MSc(Oxon), FRACP

Experience George Werther is the Director of the Department of Endocrinology and Diabetes at the Royal Children's Hospital, and the Centre for Hormone Research at the hospital's research partner, Murdoch Childrens Research Institute, where he also serves on its Commercialisation Committee. He has served on many national and international scientific committees, and peer review bodies, and is on the editorial board of three international scientific journals. He was the Chairman of the Scientific Advisory Board for Neuren Pharmaceuticals and a member of the Scientific Advisory Board of California‐based Tercica Pharmaceuticals. He was on the council of the Australasian Paediatric Endocrine Group and was a board director of the Australia MedicAlert Foundation. He is also a Professorial Fellow at the University of Melbourne.

Interest in shares and options 2,568,750 ordinary shares and 411,250 options over ordinary shares.

Committees Member of the Remuneration Committee and a member of the Audit Committee.

Directorships held in other entities Nil

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

Company Secretary The following persons held the position of Company Secretary at the end of the financial year:

Mr Phillip Hains has served as the Company's Company Secretary and Chief Financial Officer since 9 November 2006. Mr Hains is a Chartered Accountant operating a specialist public practice, 'The CFO Solution'.

The CFO Solution focuses on providing back office support, financial reporting and compliance systems for listed public companies. A specialist in the public company environment, Mr Hains has served the needs of a number of company boards and their related committees. He has over 20 years' experience in providing businesses with accounting, administration, compliance and general management services.

Ms Kate Plumridge served as the Company's joint Company Secretary from 29 October 2007 to 21 July 2010. Ms Plumridge is a Chartered Accountant and was employed by The CFO Solution.

Principal Activity The principal activity of Antisense Therapeutics Limited during the financial year was the research and development of novel antisense pharmaceuticals.

Dividends The Directors did not pay any dividends during the financial year. The Directors do not recommend the payment of a dividend in respect of the 2011 financial year.

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Significant Changes in State of Affairs There have been no significant changes in the nature of Antisense Therapeutics Limited's principal activities during the financial year.

Significant Events after Balance Date On 5th July 2011 Antisense announced that it has executed an agreement for an exclusive Option to License the Company’s second generation antisense compound ATL1101 with privately‐owned Australian biotechnology firm, Afandin Pty Ltd (refer to Operations Report for details). There have not been any matters or circumstances, other than that referred to in the operations report, financial statements, or notes thereto, that have arisen since the end of the financial year, which significantly affected, or may significantly affect, the operations of Antisense Therapeutics Limited, the results of those operations or the state of affairs of Antisense Therapeutics Limited.

Likely Developments and Expected Results The likely developments in the Company's operations, to the extent that such matters can be commented upon, are covered in the 'Operations Report’.

Operating and Financial Review The loss of the Company after income tax for the financial year was $1,813,550 (2010: $3,424,875). This result has been achieved after fully expensing all research and development costs.

The Company has no borrowings and at 30 June 2011 had cash reserves in excess of $2.3 million.

The 'Operations Report' provides further details regarding the progress made by the Company since the prior financial period, which have contributed to its results for the year.

Risk Management The Board is responsible for overseeing the establishment and implementation of the risk management system, and to review and assess the effectiveness of the Company's implementation of that system on a regular basis.

The Board and senior management will continue to identify the general areas of risk and their impact on the activities of the Company. The potential risk areas for the Company include:

efficacy, safety and regulatory risk of pre‐clinical and clinical pharmaceutical development;

financial position of the Company and the financial outlook;

economic outlook and share market activity;

changing government policy (Australian and overseas);

competitors' products/research and development programs;

market demand and market prices for therapeutics;

environmental regulations;

ethical issues relating to pharmaceutical research and development;

the status of partnership and contractor relationships;

other government regulations including those specifically relating to the biotechnology and health industries; and

occupational health and safety and equal opportunity law.

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Management will continue to perform a regular review of the following:

the major risks that occur within the business;

the degree of risk involved;

the current approach to managing the risk; and

where appropriate, determine: o any inadequacies of the current approach; and o possible new approaches that more efficiently and effectively address the risk.

Biotechnology Companies – Inherent Risks

Some of the risks inherent in the development of a pharmaceutical product include the uncertainty of patent protection and proprietary rights, whether patent applications and issued patents will offer adequate protection to enable product development or may infringe intellectual property rights of other parties, the obtaining of the necessary drug regulatory authority approvals and difficulties caused by the rapid advancements in technology. Also a particular compound may fail the clinical development process through lack of efficacy or safety. Companies such as Antisense Therapeutics Limited are dependent on the success of their research projects and on the ability to attract funding to support these activities. Investment in research and development projects cannot be assessed on the same fundamentals as trading and manufacturing enterprises. Thus investment in these areas must be regarded as speculative taking into account these considerations. Antisense’s drug candidates require significant pre‐clinical and human‐clinical development prior to commercialisation, which is uncertain, expensive, and time consuming. There may be adverse side effects, or inadequate therapeutic efficacy of one or more of the Company’s drug candidates, which would prevent further commercialisation. There may also be adverse outcomes with the broader clinical application of the antisense technology platform which could have a negative impact on the Company’s specific drug development and commercialisation plans. No assurance can be given that the Company’s product development efforts will be successful, or that the required clinical trial, or other regulatory approvals will be obtained. No assurance can be given that the Company will have access to sufficient capital to successfully advance the products through development or to find suitable development or commercial partners for the development and/or any guarantee that such partnering arrangements will generate a material commercial return for the Company. There is a risk that one or more competitive products either currently in development now, or in the future, will prove to be more efficacious, safer, cost effective, or acceptable to patients, than the Antisense’s products. Such an outcome may render Antisense’s research and development efforts obsolete, and hence it would decrease the attractiveness of the Company to potential, or existing licensing partners, which in turn could lead to the termination of partnering agreements while the drugs are still in the research and development phase. The result of which would likely lead to a decrease in the financial value of products, intellectual property, research projects, product pricing, and profit margins. This Report may contain forward‐looking statements regarding the potential of the Company’s projects and interests and the development of the Company’s projects and interests and the development and therapeutic potential of the Company’s research and development projects. Any statement describing a goal, expectation, intention or belief of the Company is a forward‐looking statement and should be considered an at‐risk statement. Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing and commercialising drugs that are safe and effective for use as human therapeutics and the financing of such activities. Actual results of further research could differ from those projected or detailed in this report.

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As a result, you are cautioned not to rely on forward‐looking statements. Consideration should be given to these and other risks concerning the Company’s research and development program referred to in this Directors’ Report and in the Company’s ‘Operations Report’ as contained in this Financial Report for the period ended 30 June 2011.

Environmental Regulation and Performance The Company is involved in pharmaceutical research and development, much of which is contracted out to third parties, and it is the Director’s understanding that these activities do not create any significant/material environmental impact. To the best of the Company's knowledge, the scientific research activities undertaken by, or on behalf of, the Company are in full compliance with all prescribed environmental regulations.

Meetings of Directors During the financial year, 14 meetings of Directors (including committees of Directors) were held. Attendances by each Director during the year were as follows:

Board Meetings Committee Meetings

Audit Remuneration

No. eligible to attend

No. attended


No. attended


No. attended

Mr Robert W Moses 11 11 2 2 1 1

Mr Mark Diamond 11 11 ‐ ‐ ‐ ‐

Dr Chris Belyea 11 11 2 2 1 1

Dr Graham Mitchell 11 7 ‐ ‐ 1 1

Prof. George Werther 11 8 2 1 1 ‐

As at the date of this report the Company had an Audit Committee and Remuneration Committee, with membership of the committees as follows:

Audit Committee

Remuneration Committee

Chairman

Dr Chris Belyea

Mr Robert W Moses Members

Mr Robert W Moses

Dr Chris Belyea

Prof. George Werther Dr Graham Mitchell Prof. George Werther

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Indemnification and Insurance of Directors and other Officers Under the Company's constitution:

(a) To the extent permitted by law and subject to the restrictions in section 199A and 199B of the Corporations Act 2001, the Company indemnifies every person who is or has been an officer of the Company against any liability (other than for legal costs) incurred by that person as an officer of the Company where the Company requested the officer to accept appointment as Director.

(b) To the extent permitted by law and subject to the restrictions in sections 199A and 199B of the Corporations Act 2001, the Company indemnifies every person who is or has been an officer of the Company against reasonable legal costs incurred in defending an action for a liability incurred by that person as an officer of the Company.

The Company has insured its Directors, the Company Secretaries and executive officers for the financial year ended 30 June 2011. Under the Company's Directors' and Officers' Liability Insurance Policy, the Company cannot release to any third party or otherwise publish details of the nature of the liabilities insured by the policy or the amount of the premium. Accordingly, the Company relies on section 300(9) of the Corporations Act 2001 to exempt it from the requirement to disclose the nature of the liability insured against and the premium amount of the relevant policy. The Company also has in place a Deed of Indemnity, Access and Insurance with each of the Directors. This Deed:

(i) indemnifies the Director to the extent permitted by law and the Constitution against certain liabilities

and legal costs incurred by the Director as an officer of any Group Company;

(ii) requires the Company to maintain, and pay the premium for, a D&O Policy in respect of the Director;

and

(iii) provides the Director with access to particular papers and documents requested by the Director for a

Permitted Purpose, both during the time that the Director holds office and for a seven year period after the Director ceases to be an officer of any Group Company, on the terms and conditions contained in the Deed.

Share Options on Issue at 30 June 2011

The unissued ordinary shares of Antisense Therapeutics Limited under option are as follows:

Date of Expiry Exercise Price No. Under Option

31 July 2012 $0.011 128,146,223

27 June 2013 $0.072 2,900,000

30 July 2018 $0.000 6,960,000

Shares Issued as a Result of the Exercise of Options During the year ended 30 June 2011, 2,086,677 ordinary shares of Antisense Therapeutics Limited were issued on the exercise of options. Post 30 June 2011, no ordinary shares have been issued as a result of the exercise of options.

Proceedings on Behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

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Non‐Audit Services The following non‐audit services were provided by the entity's auditor, Ernst & Young. The Directors are satisfied that the provision of non‐audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non‐audit service provided means that auditor independence was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non‐audit services:

2011 $

2010 $

Taxation Services 45,150 78,532

Auditor’s Independence Declaration The auditors Independence Declaration as required under section 307C of the Corporations Act 2001 for the year ended 30 June 2011 has been received and can be found in the ‘Auditor’s Independence Declaration’ section of this Annual Report.

Corporate Governance In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Antisense Therapeutics support and adhere to good corporate governance practices. The Company's Corporate Governance Statement is contained in the ‘Corporate Governance Statement’ section of this Annual Report.

Remuneration Report (Audited) This Remuneration Report outlines the Director and Executive remuneration arrangements of the Company as required by the Corporations Act 2001 and its Regulations.

This report details the nature and amount of remuneration of each Director of Antisense Therapeutics Limited and all other Key Management Personnel.

For the purposes of this report, Key Management Personnel (KMP) are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any Director (whether Executive or otherwise) of the Company. The Key Management Personnel disclosed below are, or were, also the Company’s highest paid executives.

For the purposes of this report, the term 'executive' encompasses the chief executive, senior executives, and secretaries of the Company.

This report details the nature and amount of remuneration for each Director of Antisense Therapeutics Limited, and for the other Key Management Personnel.

The Directors of Antisense Therapeutics Limited during the year were:

Mr Robert W Moses Independent Non‐Executive Chairman Mr Mark Diamond Managing Director Dr Chris Belyea Independent Non‐Executive Director Dr Graham Mitchell Independent Non‐Executive Director Prof. George Werther Independent Non‐Executive Director

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The other Key Management Personnel of Antisense Therapeutics Limited during the year were:

Dr Christopher Wraight 1 Research Director Dr George Tachas Director, Drug Discovery & Patents Ms Nuket Desem2 Development Director Mr Phillip Hains Company Secretary and Chief Financial Officer Ms Kate Plumridge3 Joint Company Secretary 1 Dr Wraight ceased his employment with the Company on 31 August 2010 but has agreed to be available in a consulting capacity for the Company.

2 Ms Desem was not employed on a full time basis. Ms Desem ceased employment with the Company on 31 August 2010. 3 Ms Plumridge ceased in her role as Joint Company Secretary on 21 July 2010,

Section A: Principles used to determine the nature and amount of Remuneration

Remuneration Policy

The Remuneration Policy ensures that Directors and Senior Management are appropriately remunerated having regard to their relevant experience, their performance, the performance of the Company, industry norms/standards and the general pay environment as appropriate. The Remuneration Policy has been established to enable the Company to attract, motivate and retain suitably qualified Directors and Senior Management who will create value for shareholders.

Remuneration Policy versus Company Performance

The Company's Remuneration Policy is not directly based on the Company's earnings. The Company's earnings have remained negative since inception due to the nature of the Company. Shareholder wealth reflects this speculative and volatile market sector. No dividends have ever been declared by the Company.

Net Loss financial year 2011 $1,813,550




Remuneration Committee

The Remuneration Committee of the Board of Directors of Antisense Therapeutics Limited is responsible for overseeing the Remuneration Policy of the Company and for recommending or making such changes to the policy as it deems appropriate.

Non‐Executive Director Remuneration

Objective

The Remuneration Policy ensures that Non‐Executive Directors are appropriately remunerated having regard to their relevant experience, individual performance, the performance of the Company, industry norms/standards and the general pay environment as appropriate.

Structure

The Company's Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non‐Executive Directors shall be determined from time to time by a General Meeting. An amount (not exceeding the amount approved at the General Meeting) is determined by the Board and then divided between the Non‐Executive Directors as agreed. The latest determination was at the General Meeting held on 13 November 2001 when shareholders approved the aggregate maximum sum to be paid or provided as remuneration to the Directors as a whole (other than the Managing Director and Executive Directors) for their services as $300,000 per annum.

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In the year ended 30 June 2011, the Non‐Executive Directors were remunerated in aggregate $147,205 per annum, excluding superannuation.

The manner in which the aggregate remuneration is apportioned amongst Non‐Executive Directors is reviewed periodically.

The Board is responsible for reviewing its own performance. Board, and Board committee performance, is monitored on an informal basis throughout the year with a formal review conducted during the financial year.

No retirement benefits are payable other than statutory superannuation, if applicable.

Executive Director and Executive Officer Remuneration

Objective

The Remuneration Policy ensures that Executive Directors are appropriately remunerated having regard to their relevant experience, individual performance, the performance of the Company, industry norms/standards and the general pay environment as appropriate.

Structure

The Non‐Executive Directors are responsible for evaluating the performance of the Managing Director, who in turn evaluates the performance of the other Senior Executives. The evaluation process is intended to assess the Company's business performance, whether long‐term strategic objectives are being achieved and the achievement of individual performance objectives.

The performance of the Managing Director and Senior Executives are monitored on an informal basis throughout the year and a formal evaluation is performed annually.

Fixed Remuneration

Executives' fixed remuneration comprises salary and superannuation and is reviewed annually by the Managing Director, and in turn, the Remuneration Committee. This review takes into account the Executives' experience, performance in achieving agreed objectives and market factors as appropriate.

Variable Remuneration – Short Term Incentive Scheme

All Executives are entitled to participate in the Employee Short Term Incentive Scheme which provides for annual cash bonuses for outstanding performance in the achievement of key corporate and individual objectives. The Remuneration Committee approves the issue of cash bonuses following the recommendations of the Managing Director in his review of the performance of the Executives and the Company as a whole against agreed Key Result Areas (KRA's). The Short Term Incentive Scheme operates as follows:

The Board approves Corporate KRA's on an annual basis. Personal KRA's are developed for each Executive. The maximum achievable bonus for an Executive is 35% of the Executive's base salary. 30% of the bonus is tied to the achievement of Corporate KRA's and 70% to the achievement of Personal KRA's.

Executives are only eligible to participate in the scheme should they achieve 60% of their Personal KRA's and/or the Company as a whole achieves 60% of the Corporate KRA's for the year under review. The bonus is calculated on a graded scale as follows:

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Corporate KRA's

No. of KRA's achieved

Bonus as a percentage of base

salary 1 N/A 2 N/A 3 2% 4 4% 5 6%

Personal KRA's

No. of KRA's achieved

Bonus as a percentage of base

salary > 60% 2% > 75% 6% > 90% 10% 100% 14%

The Board also has the ability to approve an additional 15% bonus to an Executive up to a maximum of 35% of the Executive's base salary.

Variable Remuneration – Long Term Incentive Scheme

Executives may also be provided with longer‐term incentives through the Company's Employee Option Plan, to allow the Executives to participate in and benefit from the growth of the Company as a result of their efforts and to assist in motivating and retaining those key employees over the long term. Continued service is the condition attached to the vesting of the options. The Board at its discretion determines the total number of options granted to each Executive.

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Section B: Details of Remuneration

Details of Remuneration for the year ended 30 June 2011

The remuneration for each Director and each of the other Key Management Personnel of the Company during the year ended 30 June 2011 was as follows:

30 Jun 2011

Short‐term employee benefits Post‐employment Benefits

Long‐term Benefits

Termination Benefits

Share‐based Payments

Total

Cash salary and fees

$

Cash bonus$

Non‐monetary benefits

$

Super Contribution

$

Long Service Leave $

Options1

$ $

Directors

Mr Robert W Moses 51,205 ‐ ‐ 2,205 ‐ ‐ ‐ 53,410

Mr Mark Diamond 292,986 ‐ ‐ 26,369 9,110 ‐ 2,973 331,438

Dr Chris Belyea 34,000 ‐ ‐ 3,060 ‐ ‐ ‐ 37,060

Dr Graham Mitchell 29,000 ‐ ‐ 2,610 ‐ ‐ ‐ 31,610

Prof. George Werther 33,000 ‐ ‐ 2,970 ‐ ‐ ‐ 35,970

440,191 ‐ ‐ 37,214 9,110 ‐ 2,973 489,488

Other Key Management Personnel

Dr Christopher Wraight* 59,722 ‐ ‐ 3,121 660 ‐ 849 64,352

Dr George Tachas 179,680 ‐ ‐ 16,171 5,587 ‐ 1,062 202,500

Ms Nuket Desem* 39,242 ‐ ‐ 2,332 ‐ ‐ 1,486 43,060

Mr Phillip Hains 2 103,333 ‐ ‐ ‐ ‐ ‐ ‐ 103,333

Ms Kate Plumridge 2* ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

381,977 ‐ ‐ 21,624 6,247 ‐ 3,397 413,245 1 This includes options issued in financial year 2005 and financial year 2009. See note 19 for further detail. Options are expensed over their vesting period.

2 Remunerated through The CFO Solution (see Section D below and the Company Secretary details above for further detail)

* Ceased employment with the Company during the 2010/2011 financial year.

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Details of Remuneration for the year ended 30 June 2010

The remuneration for each Director and each of the other Key Management Personnel of the Company during the year ended 30 June 2010 was as follows:

30 Jun 2010

Short‐term employee benefits Post‐employment Benefits

Long‐term Benefits

Termination Benefits

Share‐based Payments

Total

Cash salary and fees

$

Cash bonus1

$ Non‐monetary

benefits $

Super Contribution

$

Long Service Leave $

Options2

$

$

Directors

Mr Robert W Moses 49,000 ‐ ‐ 4,410 ‐ ‐ ‐ 53,410

Mr Mark Diamond 284,404 22,936 ‐ 27,661 5,401 ‐ 48,425 388,827

Dr Chris Belyea 34,000 ‐ ‐ 3,060 ‐ ‐ ‐ 37,060

Dr Graham Mitchell 29,000 ‐ ‐ 2,610 ‐ ‐ ‐ 31,610

Prof. George Werther 33,000 ‐ ‐ 2,970 ‐ ‐ ‐ 35,970

429,404 22,936 ‐ 40,711 5,401 ‐ 48,425 546,877


Dr Christopher Wraight 194,572 13,620 ‐ 18,737 3,696 48,644 13,569 292,838

Dr George Tachas 174,451 15,701 ‐ 17,114 3,313 ‐ 16,493 227,072

Ms Nuket Desem 155,440 15,544 ‐ 15,389 4,585 ‐ 21,408 212,366

Mr Phillip Hains 3 110,000 ‐ ‐ ‐ ‐ ‐ ‐ 110,000

Ms Kate Plumridge 3 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

634,463 44,865 ‐ 51,240 11,594 48,644 51,470 842,276

1 Bonuses were made in recognition of the achievement of R&D milestones and milestones in respect of the Teva licensing agreement and development of the IP &

Patent Portfolio. The bonuses disclosed above are the cash amounts paid with respect to the bonuses determined in respect to the 2009 year.

2 This includes options issued in financial year 2005 and financial year 2009. See note 19 for further detail. Options are expensed over their vesting period.

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Performance based Remuneration for the year ended 30 June 2011

% of Total Remuneration for the Year that consisted

of cash bonuses

Estimated maximum

value of bonus for the year 1

Estimated minimum value of

bonus for the year

% of remuneration

that is performance

based

% of remuneration that is non‐performance based **

% $ $ % %

Directors

Mr Robert W Moses ‐ ‐ ‐ ‐ 100.00

Mr Mark Diamond ‐ ‐ ‐ ‐ 100.00

Dr Chris Belyea ‐ ‐ ‐ ‐ 100.00

Dr Graham Mitchell ‐ ‐ ‐ ‐ 100.00

Prof. George Werther ‐ ‐ ‐ ‐ 100.00


Dr Christopher Wraight * ‐ ‐ ‐ ‐ 100.00

Dr George Tachas ‐ ‐ ‐ ‐ 100.00

Ms Nuket Desem * ‐ ‐ ‐ ‐ 100.00

Mr Phillip Hains ‐ ‐ ‐ ‐ 100.00

Ms Kate Plumridge * ‐ ‐ ‐ ‐ 100.00


Performance based Remuneration for the year ended 30 June 2010

% of Total Remuneration for the Year that consisted

of cash bonuses

Estimated maximum value of

bonus for the year 1

Estimated minimum value of

bonus for the year

% of remuneration

that is performance

based

% of remuneration that is non‐performance based **

% $ $ % %

Directors

Mr Robert W Moses ‐ ‐ ‐ ‐ 100.00

Mr Mark Diamond 5.90 99,541 ‐ 18.35 81.65

Dr Chris Belyea ‐ ‐ ‐ ‐ 100.00

Dr Graham Mitchell ‐ ‐ ‐ ‐ 100.00

Prof. George Werther ‐ ‐ ‐ ‐ 100.00


Dr Christopher Wraight 4.65 68,100 ‐ 9.28 90.72

Dr George Tachas 6.91 61,058 ‐ 14.18 85.82

Ms Nuket Desem 7.32 54,404 ‐ 17.40 82.60

Mr Phillip Hains ‐ ‐ ‐ ‐ 100.00

Ms Kate Plumridge ‐ ‐ ‐ ‐ 100.00 1 Excludes super contributions

** Performance is evaluated throughout the year and measured against Key Performance Indicators.

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Section C: Share‐based Compensation

In the year ended 30 June 2009, 3,960,000 options were issued to Directors and 4,500,000 options were issued to other Key Management Personnel. The options issued have a zero exercise price, expire on 30 July 2018 and vested on the following dates:

31 July 2008 2,500,00027 October 2008 960,00031 July 2009 2,500,00031 July 2010 2,500,000

In the year ended 30 June 2006, options were issued to the Managing Director and other Key Management Personnel. The options are exercisable at $0.072, on or before 27 June 2013. The options are exercisable as follows:

Prior to 27 June 2006 0% Between 28 June 2006 and 27 June 2007 20% Between 28 June 2007 and 27 June 2008 40% Between 28 June 2008 and 27 June 2009 60% Between 28 June 2009 and 27 June 2010 80% Between 28 June 2010 and 27 June 2013 100%

The expenses relating to the above option issues are recognised over the vesting period and as a result are included in the remuneration tables above.

During the year ended 30 June 2011, 2 million options were exercised by Key Management Personnel. No options were exercised by Directors.

During the year ended 30 June 2010, 1 million options were exercised by Key Management Personnel only.

Section D: Employment Contracts of Key Management Personnel

At the date of this report, the employment conditions of the Managing Director, Mr Mark Diamond and other Key Management Personnel were formalised in contracts of employment. Mr Mark Diamond is employed under a contract, which commenced on 31 October 2001. Subsequent to this contract a notice period for Mr Diamond of between two and four months was negotiated depending upon the party ending the agreement.

The employment contract of Dr George Tachas stipulates a termination period of one to two months. Any options not exercised before ceasing employment may lapse in accordance with the Company's Employee Option Plan.

During the period Ms Nuket Desem and Dr Christopher Wraight ceased employment with the Company on the 31 August 2010 and 3rd September 2010 respectively. Any options they held, which had not been exercised before ceasing employment, lapsed in accordance with the Company's Employee Option Plan.

Antisense Therapeutics Limited has a contract with The CFO Solution, a specialist public practice, focusing on providing back office support, financial reporting and compliance systems for listed public companies. Through this contact the services of Mr Phillip Hains and Ms Kate Plumridge were provided. The contract commenced on 9 November 2006 and can be terminated with three months notice of either party. Ms Plumridge resigned from her position on 21st July 2010.

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Section E: Additional Information

Equity issued as part of remuneration for the year ended 30 June 2011

The following table discloses the value of options granted, exercised, sold or lapsed during the year ended 30 June 2011 for Directors and other Key Management Personnel:

Options Granted

Options Exercised

Options Lapsed

Value of options

included in remuneration for the year 1

Value of options yet

to be expensed 1

% of Total Remuneration for that year consisted of options

Value at Grant Date

Value at Exercise Date

Value at time of Lapse

$ $ $ $ $ %

Directors

Mr Mark Diamond ‐ ‐ ‐ 2,973 ‐ 0.90

‐ ‐ ‐ 2,973 ‐


Dr Christopher Wraight ‐ 5,334 ‐ 849 ‐ 1.32

Dr George Tachas ‐ ‐ ‐ 1,062 ‐ 0.52

Ms Nuket Desem ‐ 16,001 ‐ 1,486 ‐ 3.45

‐ 21,334 ‐ 3,397 ‐

Equity issued as part of remuneration for the year ended 30 June 2010

The following table discloses the value of options granted, exercised, sold or lapsed during the year ended 30 June 2010 for Directors and other Key Management Personnel:

Options Granted

Options Exercised

Options Lapsed

Value of options

included in remuneration for the year 1

Value of options yet

to be expensed 1

% of Total Remuneration for that year consisted of options

Value at Grant Date

Value at Exercise Date

Value at time of Lapse

$ $ $ $ $ %

Directors

Mr Mark Diamond ‐ ‐ ‐ 48,425 2,973 12.45

‐ ‐ ‐ 48,425 2,973


Dr Christopher Wraight ‐ 17,000 ‐ 13,569 849 4.63

Dr George Tachas ‐ ‐ ‐ 16,493 1,062 7.26

Ms Nuket Desem 21,408 1,486 10.08

‐ 17,000 ‐ 51,470 3,397 1 This includes options issued in financial years 2005 and 2009. The options issued in 2009 were granted in 2008.

See Section C – share based compensation and note 19 for further detail.

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

Mr Robert W Moses Mr Mark Diamond Independent Non‐Executive Chairman Managing Director

Dated: This the 11th Day of August 2011

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Corporate Governance Statement

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The Board of Directors of Antisense Therapeutics Limited ("the Company") is responsible for the corporate governance of the Company and guides and monitors the business and affairs of the Company on behalf of its shareholders.

The format of the Corporate Governance Statement is based on the Australian Stock Exchange Corporate Governance Council's ("the Council") "Corporate Governance Principles and Recommendations". In accordance with the Council's recommendations, the Corporate Governance Statement must contain certain specific information and must disclose the extent to which the Company has followed the guidelines during the period. Where a recommendation has not been followed, that fact must be disclosed, together will the reasons for the departure. Antisense Therapeutics Limited's Corporate Governance Statement is structured with reference to the Council's principles and recommendations, which are as follows:

Principle 1. Lay solid foundations for management and oversight

Principle 2. Structure the board to add value

Principle 3. Promote ethical and responsible decision making

Principle 4. Safeguard integrity in financial reporting

Principle 5. Make timely and balanced disclosure

Principle 6. Respect the rights of shareholders

Principle 7. Recognise and manage risk

Principle 8. Remunerate fairly and responsibly

Antisense Therapeutics Limited's corporate governance practices were in place throughout the year ended 30 June 2011 and were, in the Company’s assessment, fully compliant with the Council's recommendations with the exception of one recommendation, the establishment of a nomination committee. The reason for this departure from the recommendation is explained in the following section of this statement 'Structure of the Board'.

For further information on the corporate governance policies adopted by Antisense Therapeutics Limited, please refer to its website: www.antisense.com.au.

Structure of the Board It is the role of the Board of Directors to represent and protect the interests of the Company's shareholders. The Board is responsible for the corporate governance of the Company and guides and monitors the business and affairs of the Company.

In furtherance of its responsibilities, the Board of Directors will:

review, evaluate, provide input into and approve, on a regular basis, the Company's corporate governance strategy;

monitor senior management's performance and implementation of strategy, and ensure appropriate resources are available;

review, evaluate and approve the Company's budget and forecasts;

review, evaluate, approve and monitor major resource allocations and capital investments, and any acquisitions and divestitures;

review and monitor the financial and operating results of the Company;

review and evaluate the overall corporate organisational structure, the assignment of senior management responsibilities and plans for senior management development and succession;

review, evaluate and approve compensation strategy as it relates to senior management of the Company;

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Corporate Governance continued…

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review and ratify systems of risk management and internal compliance and control, codes of conduct, and legal compliance;

appoint and remove the Managing Director (Chief Executive Officer);

ratify the appointment and, where appropriate, the removal of the Chief Financial Officer and the Company Secretary;

monitor its own performance and recommend and implement appropriate changes in composition and size.

The Company will, during the next reporting period, establish and implement a diversity policy which will include, but not be limited to, gender, age, ethnicity and cultural background of the Board and Key Management Personnel. The Company will set measurable objects to measure the achievement of the diversity policy, and introduce procedures to ensure its proper implementation. An internal review will be conducted annually to assess the effectiveness of the policy and its implementation procedures.

The skills, experience and expertise held by each Director in office at the date of this report are included in the Directors' Report under the section headed 'Directors'. The Company's Board Charter stipulates that at least 50% of the Directors on the board should be independent Directors. Directors of Antisense Therapeutics Limited are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement.

In the context of Director independence, to be considered independent, a Non‐Executive Director may not have a direct or indirect material relationship with the Company. The board considers that a material relationship is one which impairs or inhibits, or has the potential to impair or inhibit, a Director's exercise of judgment on behalf of the Company and its shareholders.

From a quantitative perspective, an item is considered to be quantitatively immaterial if it is equal to or less than 5% of the relevant base amount. It is considered to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the relevant base amount.

In accordance with the definition of independence above, and the materiality thresholds described, the majority of Directors are independent as set out below:

Name Position Mr Robert W Moses Independent Non‐Executive Chairman Dr Graham Mitchell Independent Non‐Executive Director Dr Chris Belyea Independent Non‐Executive Director Prof. George Werther Independent Non‐Executive Director

The term in office of each current Director is as follows:

Name Term in Office Mr Robert W Moses 10 years Mr Mark Diamond 10 years Dr Chris Belyea 11 years Dr Graham Mitchell 10 years Prof. George Werther 10 years

To ensure the Board is appropriately equipped to discharge its responsibilities, it has developed guidelines for the nomination and selection of Directors and for the operation of the Board. As the Antisense Therapeutics Limited's Board is not a large board, a formal nomination committee has not been established, as it is perceived that no real efficiencies would be gained from the existence of such a committee. The charter of the nomination committee has been incorporated into the Board Charter and by this action the Board of Directors considers all matters that would be relevant for a nomination committee. For additional details please refer to the Company's Board Charter on its website.

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The Board has procedures to allow Directors, in the furtherance of their duties, to seek independent professional advice at the Company's expense.

As part of its commitment to recognising the legitimate interests of stakeholders, the Company has established a Code of Conduct to guide compliance with legal and other obligations to legitimate stakeholders.

The Company has a 'Code of Practice ‐ Buying & Selling of Shares' that regulates the dealings by Directors and employees, in shares, options and other securities issued by the Company. The policy has been formulated to ensure that Directors and employees are aware of the legal restrictions on trading in Company securities while in possession of unpublished price sensitive information.

Integrity in Financial Reporting In accordance with the Board's policy, the Chief Executive Officer and Chief Financial Officer have made attestations recommended by the Council as to the Company's financial condition prior to the Board signing this Annual Report.

Audit Committee The Audit Committee operates under a charter approved by the Board. It is the Board's responsibility to ensure that an effective control framework exists within the entity. This includes ensuring that there are internal controls to deal with both the effectiveness and efficiency of significant business processes. This includes the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information as well as non‐financial considerations. The Board has delegated the responsibility for the establishment and maintenance of a framework of internal control and ethical standards for the management of the Company to the Audit Committee.

The Audit Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial statements. All members of the Audit Committee are Non‐Executive Directors. The members of the Audit Committee during the year were Dr Chris Belyea, Mr Robert W Moses and Prof. George Werther.

The Audit Committee is also responsible for the nomination of the external auditor and for reviewing the adequacy of the scope and quality of the annual statutory audit and half year statutory review. The Audit Committee Charter can be found on the Company's website.

Qualifications of Audit Committee members Dr Chris Belyea, Non‐Executive Director and chairman of the Audit Committee, was the Managing Director and Chief Scientific Officer of Metabolic Pharmaceuticals Limited, a listed Australian biopharmaceutical company. In these roles he obtained experience with and knowledge of financial reporting and risk management processes relevant to the biotechnology industry.

Mr Robert W Moses draws on more than 35 years experience in the pharmaceutical/biotechnology industry. He has held the positions of Vice President of CSL Limited, Managing Director of commercial law firm Freehills and spent 17 years in various management roles at the multinational pharmaceutical company Eli Lilly. For details regarding other Non‐Executive Chairman positions currently held by Mr Robert W Moses, refer to the section headed ‘Directors' in the Directors' Report.

Prof. George Werther is a Director of the Department of Endocrinology and Diabetes at the Royal Children's Hospital ("the Department") and the Centre for Hormone Research at the hospital's research partner, Murdoch Childrens Research Institute ("the Centre"). He is accountable for and manages the financial budgets for the Department and for the Centre.

For details on the number of meetings for the Audit Committee held during the year and the attendances at those meetings, refer to the Directors' Report under the section headed 'Meetings of Directors'.

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Performance Policies and procedures in place with respect to monitoring the performance of the Board are set out in the Directors' Report under the section headed 'Remuneration Report'.

Remuneration Committee It is the Company's objective to maintain a high quality Board and executive team by remunerating Directors at relevant market conditions. To assist in achieving this objective the Remuneration Committee remunerates Directors and executives having regard to their performance and the performance of the Company.

The expected outcomes of the remuneration policies and practices are to enable the Company to motivate, retain and attract Directors and executives who will create value for shareholders.

Details relating to the policy for performance evaluation and the amount of remuneration (monetary and non‐monetary) paid to each Director and to each of the five highest‐paid (non‐director) executives during the year, are set out in the Directors' Report under the section headed 'Remuneration Report'.

The members of the Remuneration Committee at the date of this report were all Non‐Executive Directors, being Mr Robert W Moses, Dr Chris Belyea, Dr Graham Mitchell and Prof. George Werther. Details relating to performance evaluation are set out in the Directors' Report under the section headed 'Remuneration Report'. For details on the number of meetings of the Remuneration Committee held during the year and the attendees at those meetings, refer to the Directors' Report under the section headed 'Meetings of Directors'.

Timely and Balanced Disclosure The Board has designated the Company Secretary as the person responsible for overseeing and co‐ordinating disclosure of information to the ASX as well as communicating with the ASX. In accordance with ASX Listing Rules the Company immediately notifies the ASX of information concerning the Company:

(a) that a reasonable person would or may expect to have a material effect on the price or value of the Company's securities; and

(b) that would, or would be likely to influence persons who commonly invest in securities in deciding whether to acquire or dispose of the Company's securities.

Rights of Shareholders The Company respects the rights of its shareholders, and to facilitate the effective exercise of the rights, the Company is committed to:

(a) communicating effectively with shareholders through ongoing releases to the market via ASX information and general meetings of the Company;

(b) giving shareholders ready access to balanced and understandable information about the Company and corporate proposals;

(c) making it easy for shareholders to participate in general meetings of the Company; and

(d) requesting the external auditor to attend the Annual General Meeting and be available to answer shareholder's questions about the conduct of the audit, and the preparing and content of the Auditor's Report.

Any shareholder wishing to make inquiries of the Company is advised to contact the registered office. All public announcements made by the Company can be obtained from the ASX's website www.asx.com.au

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Recognise and Manage Risk The Board has established a policy for risk oversight and management within the Company. This is periodically reviewed and updated. Management reports risks identified to the Board through the monthly Operations Report, and via direct and timely communication to the Board where and when applicable.

The Chief Executive Officer and Chief Financial Officer have given a statement to the Board that the integrity of the financial statements is founded on a sound system of risk management and internal compliance and controls based on the Company's Risk Management policies.

Legitimate Interests of Stakeholders The Board acknowledges the legitimate interest of various stakeholders such as employees, clients, customers, government authorities, creditors and the community as a whole. As a good corporate citizen, it encourages compliance and commitment to appropriate corporate practices that are fair and ethical via its 'Code of Conduct'.

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Auditors’ Independence Declaration

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Annual Financial Report For the year ended 30 June 2011

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Statement of Comprehensive Income For the year ended 30 June 2011

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2011 2010

Note $ $

Revenue 2 91,106 102,594

Other income 2 530,584 357,313

Depreciation expenses 3 (6,650) (6,986)

Administration expenses 3 (1,329,791) (1,490,140)

Occupancy expenses 3 (113,729) (112,009)

Patent expenses 3 (147,241) (143,586)

Research and development expenses 3 (829,972) (1,996,636)

Share based payments 3 (7,857) (121,863)

Foreign exchange losses 3 ‐ (34,926)

Loss before income tax (1,813,550) (3,446,239)

Income tax benefit 4 ‐ 21,364

Net loss for the year (1,813,550) (3,424,875)

Total comprehensive loss for the year (1,813,550) (3,424,875)

Note 2011 Cents

2010 Cents

Loss per share for loss attributable to the ordinary equity holders of the Company:

Basic loss per share 7 (0.24) (0.59)

Diluted loss per share 7 (0.24) (0.59)

The accompanying notes form part of these financial statements.

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Statement of Financial Position As at 30 June 2011

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2011 2010

Note $ $

ASSETS

Current Assets

Cash and cash equivalents 8 2,338,356 1,725,878

Trade and other receivables 9 26,589 17,012

Prepayments 63,226 58,294

Total Current Assets 2,428,171 1,801,184

Non‐Current Assets

Plant and equipment 10 7,690 14,341

Total Non‐Current Assets 7,690 14,341

TOTAL ASSETS 2,435,861 1,815,525

LIABILITIES

Current Liabilities

Trade and other payables 12 241,384 217,855

Provisions 13 176,355 238,472

Total Current Liabilities 417,739 456,327

Non‐Current Liabilities

Provisions 13 ‐ 15,099

Total Non‐Current Liabilities ‐ 15,099

TOTAL LIABILITIES 417,739 471,426

NET ASSETS 2,018,122 1,344,099

EQUITY

Contributed equity 14 44,673,775 42,194,058

Reserves 15 1,365,855 1,357,999

Accumulated losses (44,021,508) (42,207,958)

TOTAL EQUITY 2,018,122 1,344,099

The accompanying notes form part of these financial statements. For

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Statement of Changes in Equity For the year ended 30 June 2011

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Contributed Equity

Option Reserve

Accumulated Losses

Total

$ $ $ $

As at 30 June 2009 41,434,449 1,276,136 (38,783,083) 3,927,502

Loss for the year ‐ ‐ (3,424,875) (3,424,875)

Total comprehensive loss for the year ‐ ‐ (3,424,875) (3,424,875)

Transactions with owners in their capacity as owners:

Issue of shares 719,609 ‐ ‐ 719,609

Options exercised net of costs 40,000 (40,000) ‐ ‐

Share‐based payments ‐ 121,863 ‐ 121,863

As at 30 June 2010 42,194,058 1,357,999 (42,207,958) 1,344,099

Loss for the year ‐ ‐ (1,813,550) (1,813,550)

Total comprehensive loss for the year ‐ ‐ (1,813,550) (1,813,550)

Transactions with owners in their capacity as owners:

Issue of shares 2,075,050 ‐ ‐ 2,075,050

Options issued 346,229 ‐ ‐ 346,229

Options to be issued 58,438 ‐ ‐ 58,438

Share‐based payments ‐ 7,856 ‐ 7,856

As at 30 June 2011 44,673,775 1,365,855 (44,021,508) 2,018,122

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Cash Flow Statement For the year ended 30 June 2011

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2011 2010

Notes $ $

CASH FLOWS RELATED TO OPERATING ACTIVITIES

Licensing fees received ‐ 1,814,726

Payments to suppliers and employees (2,480,931) (3,608,271)

Interest received 91,592 99,605

R&D Tax Concession 522,100 357,313

NET OPERATING CASH FLOWS 18a (1,867,239) (1,336,627)

CASH FLOWS RELATED TO INVESTING ACTIVITIES

Payment for purchases of plant and equipment ‐ (13,212)

NET INVESTING CASH FLOWS ‐ (13,212)

CASH FLOWS RELATED TO FINANCING ACTIVITIES

Proceeds from issues of securities (net of costs) 2,479,717 ‐

NET FINANCING CASH FLOWS 2,479,717 ‐

NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS 612,478 (1,349,839)

Cash & cash equivalents at the beginning of the year 1,725,878 3,075,717

CASH & CASH EQUIVALENTS AT THE END OF THE YEAR 8 2,338,356 1,725,878

The accompanying notes form part of these financial statements.

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Notes to the Financial Statements For the year ended 30 June 2011

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Note 1. Statement of Significant Accounting Policies

Corporate Information

The financial report of Antisense Therapeutics Limited (the Company) for the year ended 30 June 2011 was authorised for issue in accordance with a resolution of the Directors on the 11th Day of August 2011.

Antisense Therapeutics Limited is a listed public company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Stock Exchange. The Company also has a Level 1 ADR program traded on the US over‐the‐counter market.

The principal activity of the Company is the research and development of novel antisense pharmaceuticals.

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 and Australian Accounting Standards.

The financial report has been prepared on an accruals basis and is based on historical costs. The financial report is presented in Australian dollars.

Management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of Australian Accounting Standards that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

Going Concern

Some of the risks inherent in the development of a pharmaceutical product include the uncertainty of patent protection and proprietary rights, whether patent applications and issued patents will offer adequate protection to enable product development or may infringe intellectual property rights of other parties and the obtaining of the necessary drug clinical trial or regulatory authority approvals. Also a particular compound may fail the research and clinical development processes through lack of efficacy or safety, or maybe stopped or abandoned due to strategic imperatives including an assessment that the projects will not deliver a sufficient return on investment or have been superseded by newer competitive products or technologies. There is the risk that the Company will be unable to find suitable development or commercial partners for its projects, and that these arrangements may not generate a material return for the Company.

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Notes to the Financial Statements continued…

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Based on the anticipated cost and timeline for the undertaking of its ATL1103 Phase I clinical trial along with certain assumptions on the anticipated receipt of an R&D tax refund, the Company believes that it has sufficient funding to carry out its planned activities until the end of the first quarter 2012. The ability of the Company to continue as a going concern beyond the first quarter of 2012 is depended upon the Company successfully accessing additional capital, and the amount of the additional funds required is dependent on the outcome of its product development programs, and if/and when it out‐licenses any of its pipeline compounds to third parties and on what commercial terms, and on the state of capital markets and the appetite for speculative investment in a company such as Antisense. Notwithstanding the material uncertainty pertaining to the ability of the Company to access additional capital, the financial statements have been prepared on a going concern basis. Accordingly the financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts, or to the amounts and classification of liabilities that might be necessary, should the Company not continue as a going concern.

Statement of Compliance

The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.

Amendments to Australian Accounting Standards

The following amending Standards have been adopted from 1 July 2010. Adoption of these Standards did not have any effect on the financial position or performance of the Company:

Ref Title Summary

AASB

2009‐5 Further Amendments to

Australian Accounting Standards arising from the Annual Improvements Project [AASB 5, 8, 101, 107, 117, 118, 136 & 139]

The amendments to some Standards result in accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes are expected to have no or minimal effect on accounting.

Interpretation 19

Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments

This interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability are “consideration paid” in accordance with paragraph 41 of IAS 39. As a result, the financial liability is derecognised and the equity instruments issued are treated as consideration paid to extinguish that financial liability. The interpretation states that equity instruments issued in a debt for equity swap should be measured at the fair value of the equity instruments issued, if this can be determined reliably. If the fair value of the equity instruments issued is not reliably determinable, the equity instruments should be measured by reference to the fair value of the financial liability extinguished as of the date of extinguishment.

Other than the amended accounting policies listed above, all other account policies adopted by the Company are consistent with the most recent Annual Report for the year ended 30 June 2010.

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The following Australian Accounting Standards and Interpretations have recently been issued or amended but are not yet effective and therefore have not been adopted by the Company for the annual reporting period ended 30 June 2011.

Reference Title Summary Application date of standard

Impact on financial report

Application date

AASB 124 (Revised)

Related Party Disclosures

(December 2009)

The revised AASB 124 simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition, including:

(a) The definition now identifies a subsidiary and an associate with the same investor as related parties of each other

(b) Entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other

(c) The definition now identifies that, whenever a person or entity has both joint control over a second entity and joint control or significant influence over a third party, the second and third entities are related to each other

A partial exemption is also provided from the disclosure requirements for government‐related entities. Entities that are related by virtue of being controlled by the same government can provide reduced related party disclosures.

1 January 2011

No Impact 1 July 2011

AASB 1054

Australian Additional Disclosures This standard is as a consequence of phase 1 of the joint Trans‐Tasman Convergence project of the AASB and FRSB.

This standard relocates all Australian specific disclosures from other standards to one place and revises disclosures in the following areas:

(a) Compliance with Australian Accounting Standards

(b) The statutory basis or reporting framework for financial statements

(c) Whether the financial statements are general purpose or special purpose

(d) Audit fees (e) Imputation credits

1 July 2011

Minimal Impact

1 July 2011

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Reference Title Summary Application date of standard

Impact on financial report

Application date

AASB 2011‐1

Amendments to Australian Accounting Standards arising from the Trans‐Tasman Convergence project

[AASB 1, AASB 5, AASB 101, AASB 107, AASB 108, AASB 121, AASB 128, AASB 132, AASB 134, Interpretation 2, Interpretation 112, Interpretation 113]

This Standard amendments many Australian Accounting Standards, removing the disclosures which have been relocated to AASB 1054.

1 July 2011

Minimal Impact

1 July 2011

Accounting Policies

The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(a) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

Interest ‐ control of the right to receive the interest payment.

Licensing revenue ‐ right to receive the licensing revenue has been confirmed.

(b) Government grants Government grants are recognised when there is reasonable assurance that the grant will be received and all grant conditions will be complied with.

When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is expected to compensate.

(c) Borrowing costs Borrowing costs are expensed as incurred.

(d) Leases The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight‐line basis.

(e) Cash and cash equivalents Cash and short‐term deposits in the Statement of Financial Position comprise cash at bank and in hand and short‐term deposits with an original maturity of three months or less.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above.

(f) Trade and other receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment, once they become over due by more than 60 days. A separate account records the impairment.

An allowance for a doubtful debt is made when there is objective evidence that the Company will not be able to collect the debts. The criteria used to determine that there is objective evidence that an impairment loss has occurred include whether the Financial Asset is past due and whether there is any other information regarding increased credit risk associated with the Financial Asset. Bad debts which are known to be uncollectible are written off when identified.

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(g) Foreign currency translation The functional currency of the Company is based on the primary economic environment in which the Company operates. The functional currency of the Company is Australia dollars.

Transactions in foreign currencies are converted to local currency at the rate of exchange at the date of the transaction.

Amounts payable to and by the Company outstanding at reporting date and denominated in foreign currencies have been converted to local currency using rates prevailing at the end of the financial year.

All exchange differences are taken to profit or loss.

(h) Income tax

Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting loss nor taxable profit or loss.

Deferred income tax assets are recognised for all deductible temporary differences, carry‐forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry‐forward of unused tax assets and unused tax losses can be utilised except where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of transaction, affects neither the accounting loss nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each balance 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 tax rates (and tax laws) that have been enacted or substantively enacted at balance date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

(i) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except:

where the GST incurred on a purchase of goods and 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 are stated with the amount of GST included.

Cash flows arising from operating activities are included in the Cash Flow Statement on a gross basis (i.e. including GST) and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. The net amount of GST recoverable from or payable to, the taxation authority is included as part of the receivables or payables in the Statement of Financial Position.

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(j) Plant and Equipment Plant and equipment are measured at cost less any accumulated depreciation and any impairment losses. Such assets are depreciated over their useful economic lives as follows:

Life Method

Plant and equipment 3‐5years Straight line

(k) Intangible assets Intangible assets are initially measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or infinite. Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, which is a change in an accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

(l) Research and Development Costs Research costs are expensed as incurred.

An intangible asset arising from development expenditure on an internal project is recognised only when the Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development.

Following initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefits from the related project.

The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the asset is not available for use, or more frequently when an indication of impairment arises during the reporting period.

(m) Impairment of non‐financial assets The carrying values of non‐financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash‐generating units). Non‐financial assets that suffer an impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.

An impairment exists when the carrying value of an asset exceeds its estimated recoverable amount. The asset is then written down to its recoverable amount.

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(n) Trade and other payables Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. Licensing fees are recognised as an expense when it is confirmed that they are payable by the Company.

(o) Employee benefits

Wages, salaries and annual leave

Liabilities for wages and salaries, including non‐monetary benefits and annual leave payments expected to be settled within 12 months of the reporting date are recognised in other provisions in respect of employees' service 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 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. 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, to the estimated future cash outflows.

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 Company recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

(p) Share‐based payment transactions The Company provides benefits to employees (including Directors) of the Company in the form of share‐based payment transactions, whereby employees are provided with long‐term incentives through the Company's Employee Option Plan.

The cost of these transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined using a binomial option pricing model, further details of which are given in notes 14 and 19. The cost of these transactions is recognised, together with a corresponding increase in equity, over the period in which the options vest.

The cumulative expense recognised for equity‐settled transactions at each reporting date until vesting dates reflects:

(i) the extent to which the vesting period has expired, and;

(ii) the number of awards that, in the opinion of the Directors of the Company, will ultimately vest. No expense is recognised for awards that do not ultimately vest and an adjustment to the expense is made for awards that will no longer vest. This opinion is formed based on the best available information at balance date.

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(q) Contributed equity Ordinary shares are classified as equity. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction (net of tax) of the share proceeds received.

(r) Earnings per share Basic earnings per share is calculated as net loss attributable to members, adjusted to exclude costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net loss attributable to members, adjusted for:

costs of servicing equity (other than dividends);

the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses;

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.

Note 2. Revenue and other income

2011 2010

$ $

Revenue

Interest from external parties 91,106 102,594

Total Revenue 91,106 102,594

Other income

Research and development tax concession 522,100 357,313

Foreign exchange gain 8,484 ‐

Total Other income 530,584 357,313

Total Revenue 621,690 459,907

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Note 3. Loss for the Year

2011 2010

$ $

Administration expenses

Compliance expenses 266,970 310,543

Office expenses 31,337 34,536

Corporate employee expenses 554,915 585,058

Business development expenses 476,569 560,003

Total Administration expenses 1,329,791 1,490,140

Occupancy expenses

Rent 98,777 98,058

Other expenses 14,952 13,951

Total Occupancy expenses 113,729 112,009

Research and development expenses

ATL laboratory ‐ 1,788

R&D ATL 1102 61,910 78,102

R&D ATL 1103 584,626 1,408,059

R&D staff costs 183,436 508,687

Total Research and development expenses 829,972 1,996,636

Patent expenses 147,241 143,586

Depreciation expenses 6,650 6,986

Share based payments 7,857 121,863

Foreign exchange losses ‐ 34,926

Total Expenses 2,435,240 3,906,146

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Note 4. Income Tax Expense

2011 2010 $ $

(a) The components of tax benefit comprise: Current tax ‐ ‐ Deferred tax ‐ ‐ Withholding tax refund on income earned in foreign tax

jurisdiction ‐ 21,364

‐ 21,364

(b) The prima facie tax on loss from ordinary activities before tax at 30% (2010: 30%) is as follows:

(544,065) (1,033,872)

Add tax effect of: Entertainment 699 572 Share based payments 2,357 252,442

3,056 253,014

Less tax effect of: Research and development tax concession (188,438) (258,225) Section 40‐880 deductions (30,825) (20,801)

(219,263) (279,026)

Benefit of tax losses not brought to account 760,272 1,059,884

Withholding tax paid / (refund) on income earned in foreign tax jurisdiction

‐ (21,364)

Income tax (benefit) attributable to the Company ‐ (21,364)

The applicable weighted average effective tax rates are as follows: 0% 0%

(c) Deferred Tax Assets and Liabilities Foreign Exchange 58,866 120,027 Provision for Annual Leave & Long Service Leave (8,571) 2,144

Gross Deferred Tax Assets 50,295 122,171

Accruals (1,221) 36,745 Other 19,121 659

Gross Deferred Tax Liabilities 17,900 37,404

Net Deferred Tax Asset / (Liability) not recognised 32,395 84,767

Net Deferred Tax Asset / (Liability) ‐ ‐

The Company has estimated tax losses of $39,173,208, a Deferred Tax Asset of $11,751,962 (at 30%) that has not been recognised in the Financial Statements, refer to note 1(h).

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Note 5. Key Management Personnel Compensation

(a) Key Management Personnel Compensation The aggregate compensation made to Directors and other Key Management Personnel of the Company is set out below:

2011 2010

$ $

Short‐term employee benefits 822,168 1,131,668

Post‐employment benefits 58,838 91,951

Long‐term benefits 15,357 16,995

Termination benefits ‐ 48,644

Share‐based payments 6,370 99,895

902,733 1,389,153

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(b) Options and Rights

The number of options over ordinary shares in the Company held during the financial year by each Director of Antisense Therapeutics Limited and other Key Management Personnel of the Company, including their personally related parties, are set out below:

30 June 2011 Balance at start of the

year 1

Granted as Compensation

Options Exercised

Net Change Other 2

Balance at end of the year 1

Vested and exercisable

Unvested

Directors

Mr Robert W Moses 240,000 ‐ ‐ 1,744,370 1,984,370 1,984,370 ‐

Mr Mark Diamond 5,000,000 ‐ ‐ 812,460 5,812,460 5,812,460 ‐

Dr Chris Belyea 240,000 ‐ ‐ 50,000 290,000 290,000 ‐

Dr Graham Mitchell 240,000 ‐ ‐ 391,243 631,243 631,243 ‐

Prof. George Werther 240,000 ‐ ‐ 171,250 411,250 411,250 ‐

5,960,000 ‐ ‐ 3,169,323 9,129,323 9,129,323 ‐


Dr Christopher Wraight * 1,000,000 ‐ (500,000) (500,000) 3 ‐ ‐ ‐

Dr George Tachas 2,000,000 ‐ ‐ 782,485 2,782,485 2,782,485 ‐

Ms Nuket Desem * 1,750,000 ‐ (1,500,000) (250,000) 3 ‐ ‐ ‐

Ms Kate Plumridge * ‐ ‐ ‐ ‐ ‐ ‐ ‐

Mr Phillip Hains ‐ ‐ ‐ 395,393 395,393 395,393 ‐

4,750,000 ‐ (2,000,000) 427,878 3,177,878 3,177,878 ‐

10,710,000 ‐ (2,000,000) 3,597,201 12,307,201 12,307,201 ‐ 1 For those that were not a Director or other Key Management Personnel for the entire period, the opening balance is the balance when they were appointed to the position. If they

ceased employment during the period then the balance at the end of the year is the balance when they ceased employment.

2 Net Change Other refers to equity acquired via the Rights Issue allotted in December 2010, unless stated otherwise.

3 Refers to options which lapsed upon cessation of employment.


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30 June 2010 Balance at start of the

year 1


Options Exercised

Net Change Other


Vested and exercisable

Unvested 2

Directors

Mr Robert W Moses 240,000 ‐ ‐ ‐ 240,000 240,000 ‐

Mr Mark Diamond 5,000,000 ‐ ‐ ‐ 5,000,000 4,000,000 1,000,000

Dr Chris Belyea 240,000 ‐ ‐ ‐ 240,000 240,000 ‐

Dr Graham Mitchell 240,000 ‐ ‐ ‐ 240,000 240,000 ‐

Prof. George Werther 240,000 ‐ ‐ ‐ 240,000 240,000 ‐

5,960,000 ‐ ‐ ‐ 5,960,000 4,960,000 1,000,000


Dr Christopher Wraight 2,000,000 ‐ (1,000,000) ‐ 1,000,000 500,000 500,000

Dr George Tachas 2,000,000 ‐ ‐ ‐ 2,000,000 1,500,000 500,000

Ms Nuket Desem 1,750,000 ‐ ‐ ‐ 1,750,000 1,250,000 500,000

Ms Kate Plumridge ‐ ‐ ‐ ‐ ‐ ‐ ‐

Mr Phillip Hains ‐ ‐ ‐ ‐ ‐ ‐ ‐

5,750,000 ‐ (1,000,000) ‐ 4,750,000 3,250,000 1,500,000

11,710,000 ‐ (1,000,000) ‐ 10,710,000 8,210,000 2,500,000

1 For those that were not a Director or other Key Management Personnel for the entire period, the opening balance is the balance when they were appointed to the position. If they ceased employment during the period then the balance at the end of the year is the balance when they ceased employment.

2 These options vested on 31 July 2010.

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(c) Shareholders

The number of shares in the Company held during the financial year by each Director and other Key Management Personnel of the Company, including their personally related parties, are set out below.

No shares granted to Directors and Key Management Personal during the period as compensation.

30 June 2011 Balance at start of the year 1


Options Exercised

Net Change Other 2


Directors

Mr Robert W Moses 1,793,992 ‐ ‐ 3,721,847 5,515,839

Mr Mark Diamond 299,743 ‐ ‐ 1,562,298 1,862,041

Dr Chris Belyea 500,000 ‐ ‐ 250,000 750,000

Dr Graham Mitchell ‐ ‐ ‐ 706,213 706,213

Prof. George Werther 1,712,500 ‐ ‐ 856,250 2,568,750

4,306,235 ‐ ‐ 7,096,608 11,402,843


Dr Christopher Wraight 2,687,500 ‐ 500,000 ‐ 3,187,500

Dr George Tachas 325,000 ‐ ‐ 1,412,426 1,737,426

Mr Nuket Desem ‐ ‐ 1,500,000 ‐ 1,500,000

Ms Kate Plumridge ‐ ‐ ‐ ‐ ‐

Mr Phillip Hains 41,500 ‐ ‐ 726,963 768,463

3,054,000 ‐ 2,000,000 2,139,389 7,193,389

7,360,235 ‐ 2,000,000 9,235,997 18,596,232

30 June 2010 Balance at start of the year 1


Options Exercised

Net Change Other 2


Directors

Mr Robert W Moses 1,793,992 ‐ ‐ ‐ 1,793,992

Mr Mark Diamond 299,743 ‐ ‐ ‐ 299,743

Dr Chris Belyea 500,000 ‐ ‐ ‐ 500,000

Dr Graham Mitchell ‐ ‐ ‐ ‐ ‐

Prof. George Werther 1,712,500 ‐ ‐ ‐ 1,712,500

4,306,235 ‐ ‐ ‐ 4,306,235


Dr Christopher Wraight 1,687,500 ‐ 1,000,000 ‐ 2,687,500

Dr George Tachas 325,000 ‐ ‐ ‐ 325,000

Mr Nuket Desem ‐ ‐ ‐ ‐ ‐

Ms Kate Plumridge ‐ ‐ ‐ ‐ ‐

Mr Phillip Hains 41,500 ‐ ‐ ‐ 41,500

2,054,000 ‐ 1,000,000 ‐ 3,054,000

6,360,235 ‐ 1,000,000 ‐ 7,360,235 1

For those that were not a Director or other Key Management Personnel for the entire period, the opening balance is the balance when they were appointed to the position. If they ceased employment during the period then the balance at the end of the year is the balance when they ceased employment.

2 Net Change Other refers to equity acquired on market.

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(d) Loans to Directors and Other Key Management Personnel There were no loans made to Directors or other Key Management Personnel of the Company, including their personally related parties.

(e) Other transactions with Other Key Management Personnel There were no further transactions with Directors or other Key Management Personnel not disclosed above or in note 21.

Note 6. Auditor’s Remuneration

2011 2010

$ $

Remuneration of the auditor of the Company, Ernst & Young for:

— auditing or reviewing the financial report 43,406 40,775

— taxation services 35,930 16,225

— taxation services provided by related practice 9,220 62,307

88,556 119,307

Note 7. Loss per Share

2011 2010

Basic loss per share (cents) (0.240) (0.586)

Diluted loss per share (cents) (0.240) (0.586)

a) Net loss used in the calculation of basic and diluted loss per share

($1,813,550) ($3,424,875)

b) Weighted average number of ordinary shares outstanding during the period used in the calculation of basic and diluted loss per share

756,819,286 584,200,876

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

There have been no other conversions to, call of, or subscriptions for ordinary shares, or issues of potential ordinary shares since the reporting date and before the completion of this financial report.

Note 8. Cash and Cash Equivalents

2011 2010

$ $

Cash at bank 838,356 525,878

Term deposits 1,500,000 1,200,000

2,338,356 1,725,878

The interest rates on cash at bank and term deposits at 30 June 2011 was 5.10% and 5.25% (2010: 2.75% and 4.60%). The term deposits have maturity periods of 30 days and 60 days.

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Note 9. Trade and Other Receivables

2011 2010

$ $

Interest receivable 3,897 4,406

Australian Tax Office receivable 2,177 346

Other receivables 20,515 12,260

26,589 17,012

Note 10. Plant and Equipment

2011 2010

$ $

At cost 141,385 141,385

Accumulated depreciation (133,695) (127,044)

7,690 14,341

Balance at the beginning of the year 14,341 8,115

Additions ‐ 13,212

Depreciation expense (6,651) (6,986)

Balance at the end of the year 7,690 14,341

Note 11. Intangibles

2011 2010

$ $

At cost 6,387,500 6,387,500

Accumulated impairment losses / amortisation (6,387,500) (6,387,500)

‐ ‐

The intangible assets have finite useful lives.

(a) The intangible assets relate to certain rights granted to Antisense Therapeutics Limited by Isis Pharmaceuticals Inc. ('Isis') upon listing of the Company. The main features of the agreement are as follows:

Isis has granted Antisense Therapeutics Limited rights to use Isis technology (i.e. Isis' patented technology) to commercialise antisense drugs to a number of protein targets (i.e. a research licence for each protein target). A certain number of these research licences to protein targets are also extendible to commercialisation licences.

The agreements with Isis provide access to and assistance in expanding Antisense Therapeutics Limited's drug pipeline and also provide access to and assistance in the Company's development projects including an exclusive license to a multiple sclerosis drug in Isis' preclinical pipeline; access to Isis manufacturing for provision of bulk quantities of antisense compounds for clinical trials; and access to Isis' preclinical development services for a sufficient period to allow smooth technology transfer.

(b) The intangible assets were amortised on a straight‐line basis over the term of the rights granted, five years. At 30 June 2007, the intangible assets had been fully amortised.

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Note 12. Trade and Other Payables

2011 2010

$ $

Trade payables 52,108 29,084

Accrued expenses 184,699 188,771

Other payables 4,577 ‐

241,384 217,855

Note 13. Provisions

2011 2010

$ $

Current employee provisions 176,355 189,828

Current termination benefits ‐ 48,644

Non‐Current employee provisions ‐ 15,099

176,355 253,571

Note 14. Contributed Equity

2011 2010

Note $ $

Ordinary fully paid shares 14(a) 44,269,108 42,194,058

Options over ordinary shares 14(b) 404,667 ‐

44,673,775 42,194,058

14 (a) Ordinary Shares 2011 2010

No. $ No. $

Balance at the beginning of the year 590,327,999 42,194,058 570,852,999 41,434,449

Shares issued during the year 360,750,813 2,075,050 19,475,000 759,609

Balance at the end of the year 951,078,812 44,269,108 590,327,999 42,194,058

2011 Details Number Issue Price $

10 August 2010 Exercise of Options 500,000 ‐

10 August 2010 Exercise of Options 1,500,000 ‐

9 December 2010 Rights Issue 296,164,136 2,023,083

6 April 2011 Exercise of ANPO Options 40,000 440

28 April 2011 Exercise of ANPO Options 5,077 56

3 June 2011 Exercise of ANPO Options 38,000 418

9 June 2011 Private Placement ‐ Tempo Capital 62,500,000 441,562

30 June 2011 Exercise of ANPO Options 3,600 40

Capital Raising costs associated with the above issues ‐ (390,549)

360,750,813 2,075,050

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12 October 2009 Issue to ISIS Pharmaceuticals Inc 1 18,475,000 719,609

11 May 2010 Exercise of Options 1,000,000 40,000

19,475,000 759,609

1 On 12 October 2009, the Company issued 18,475,000 ordinary shares to Isis Pharmaceuticals Inc (Isis) as consideration for the supply of product

by Isis for clinical trials by the Company. These ordinary shares were valued at USD$650,000. Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. At shareholder meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

14 (b) Options 2011 2010

No. $ No. $

Balance at the beginning of the year ‐ ‐ ‐ ‐

Options issued during the year 159,482,900 404,667 ‐ ‐

Balance at the end of the year 159,482,900 404,667 ‐ ‐


9 December 2010 Rights Issue ‐ Free attaching option (1:5) 59,232,900 159,929

9 December 2010 Rights Issue ‐ Underwriting option 69,000,000 186,300

6 April 2011 Exercise of ANPO Options (40,000) ‐

28 April 2011 Exercise of ANPO Options (5,077) ‐

3 June 2011 Exercise of ANPO Options (38,000) ‐

9 June 2011 Private Placement ‐ Free attaching options 1:2 * 31,250,000 58,438

30 June 2011 Exercise of ANPO Options (3,600) ‐

159,396,223 404,667

* The Company is obligated, subject to shareholder approval, to issue 31,250,000 free unlisted options exercisable at $0.015 on or before 18

months from the date of issue to Tempo Capital Pty Ltd in accordance terms of the Private Placement as announcement to the market on 9th June 2011.

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Note 15. Reserves

(a) Nature and Purpose of the Reserve The option reserve recognises the proceeds from the issue of options over ordinary shares and the expense recognised in respect of share based payments, see Note 19 for further detail.

2011 2010

No. $ No. $

Unlisted options over fully paid ordinary shares 12,610,000 1,357,999 32,360,000 1,276,136

Options exercised (2,000,000) ‐ (1,000,000) (40,000)

Options expired / forfeited (750,000) ‐ (18,750,000) ‐

Employee options expensed 1 ‐ 7,856 ‐ 121,863

9,860,000 1,365,855 12,610,000 1,357,999


10 August 2010 Exercise of options (2,000,000) ‐

31 August 2010 Forfeiture of options (500,000) ‐

3 September 2010 Forfeiture of options (250,000) ‐

31 December 2010 Employee options expensed 1 ‐ 7,856

(2,750,000) 7,856


30 September 2009 Expiry of options (18,750,000) ‐

11 May 2010 Exercise of options (1,000,000) (40,000)

30 June 2010 Employee options expensed 1 ‐ 121,863

(19,750,000) 81,863

1 This includes options issued in financial years 2005 and 2009. See Note 19 for further detail.

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(b) Options Outstanding at 30 June 2011

No. of Options

Date of Issue 05 Jul 2005 27 Oct 2008 27 Oct 2008

On issue at beginning of year 3,650,000 8,000,000 960,000

Issued during the year ‐ ‐ ‐

Exercised during the year ‐ (2,000,000) ‐

Expired during the year (750,000) ‐ ‐

Forfeited during the year ‐ ‐ ‐

Outstanding at balance date 2,900,000 6,000,000 960,000

Expired subsequent to balance date ‐ ‐ ‐

Exercised subsequent to balance date ‐ ‐ ‐

Outstanding at date of Directors' Report 2,900,000 6,000,000 960,000

Original number of recipients 6 4 4

Number of current holders 4 4 4

Exercise price $0.072 ‐ ‐

Exercise period from 28 Jun 2006 27 Oct 2008 27 Oct 2008

To (expiration day) 27 Jun 2013 30 Jul 2018 30 Jul 2018

The following proportion of options vest from the dates shown:

100% 27 Oct 2008

20% 27 Jun 2006

20% 27 Jun 2007

20% 27 Jun 2008

20% 27 Jun 2009

20% 27 Jun 2010

33% 31 Jul 2008

33% 31 Jul 2009

33% 31 Jul 2010

Note 16. Commitments and Contingencies

a) Expenditure commitments relating to research and development are payable as follows:

2011 2010

$ $

‐ not later than 12 months 304,512 15,042

‐ between 12 months and 5 years 42,671 ‐

347,183 15,042

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b) Lease expenditure commitments:

2011 2010

$ $

‐ not later than 12 months 24,693 24,693

‐ between 12 months and 5 years ‐ ‐

24,693 24,693

The lease expenditure commitments relate to the leasing of office premises. The lease is for a term of one year, expiring October 2010 with a renewal option for a further one year. In the normal course of business, the Company’s R&D Tax Concession claim for the period 1 July 2008 to 30 June 2009 is under review by AusIndustry. The Company and its professional advisers are in the process of providing AusIndustry with further information to demonstrate the eligibility of claimed activities.

Note 17. Operating Segments

The Company has identified its operating segments based on the internal reports that are reviewed and used by the management team in assessing performance and determining the allocation of resources. The operating segments are identified by management based on the manner in which the expenses are incurred. Discrete financial information about each of these operating segments is reported by the executive management team to the board on a regular basis. Segments: ATL 1102 ‐ Multiple Sclerosis

ATL 1103 ‐ Growth and Sight Disorders

30 June 2011 Note

ATL1102 Multiple Sclerosis

ATL1103 Growth and Sight

Disorders

Total

Revenue

Segment Revenue ‐ ‐ ‐

Unallocated Revenue 17a ‐ ‐ 613,206

Total Revenue ‐ ‐ 613,206

Result

Segment Result (61,910) (584,337) (646,247)

Unallocated Result 17b (1,780,509)

Income Tax Benefit ‐

Net Result (61,910) (584,337) (1,813,550)

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30 June 2010 Note

ATL1102 Multiple Sclerosis

ATL1103 Growth and Sight

Disorders

Total

Revenue

Segment Revenue ‐ ‐ ‐

Unallocated Revenue 17a 459,907

Total Revenue ‐ ‐ 459,907

Result

Segment Result (78,102) (1,408,059) (1,486,161)

Unallocated Result 17b (2,419,985)

Income Tax Benefit 21,364

Net Result (78,102) (1,408,059) (3,424,875)

2011 2010 $ $

17(a) Unallocated Revenue ‐ Interest from external parties 91,106 102,594

‐ R&D Tax Concession Refund 522,100 357,313

613,206 459,907

17(b) Unallocated Result

‐ Compliance expenses 266,970 310,543

‐ Business development expenses 476,569 560,003

‐ Employee expenses 554,915 585,058

‐ Patent expenses 147,241 143,586

‐ Other expenses 334,814 820,795

1,780,509 2,419,985

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Note 18. Cash Flow Information

(a) Reconciliation of cash flow from operations with loss after income tax

2011 2010

$ $

Net Loss for the year (1,813,550) (3,424,875)

Add back depreciation expense 6,651 6,986

Add back share based payments 7,856 841,472

(Increase)/Decrease in trade and other receivables (9,577) 1,828,641

(Increase)/Decrease in prepayments (4,932) 1,451

Increases/(Decreases) in trade and other payables 23,529 (646,094)

Increases/(Decreases) in provisions (77,216) 55,792

Net cash flows used in operating activities (1,867,239) (1,336,627)

(b) Non‐cash financing and investing activities See note 19 for details regarding issues of options to directors and employees and note 14 for issue of shares to suppliers. Expenses associated with share based payments are included in share based payment expenses and R&D expenses.

Note 19. Share‐based Payments

Executives may also be provided with longer‐term incentives through the Company’s Employee Option Plan, to allow the Executives to participate in and benefit from the growth of the Company as a result of their efforts and to assist in motivating and retaining these key employees over the long term. There are currently 4 employees eligible to participate in this scheme. Options issued to employees are not listed options and as such do not have a readily available market value.

(a) Options Issued under the Employee Option Plan

The following table illustrates the number and weighted average exercise price of and movement in share options issued under the scheme during the year:

2011 2010

No. of Options

Weighted Average

Exercise Price$

No. of Options

Weighted Average

Exercise Price$

Outstanding at the beginning of the year 12,610,000 0.021 13,610,000 0.019

Granted ‐ ‐ ‐ ‐

Forfeited (750,000) ‐ ‐ ‐

Exercised (2,000,000) ‐ (1,000,000) ‐

Expired ‐ ‐ ‐ ‐

Outstanding at year‐end 9,860,000 0.021 12,610,000 0.021

Exercisable at year‐end 9,860,000 0.021 9,610,000 0.027

The options outstanding at 30 June 2011 have a weighted average remaining contractual life of 6 years and exercise prices ranging from nil to $0.072.

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(b) Vesting Terms of Options

The following summarises information about options held by employees and Directors as at 30 June 2011:

Number of Options

Issue Date Vesting Dates Expiry Date Exercise Price $

2,900,000 05‐Jul‐2005 28 June 2006‐10 27‐Jun‐2013 $ 0.072

960,000 27‐Oct‐2008 27‐Oct‐2008 30‐Jul‐2018 ‐

6,000,000 27‐Oct‐2008 31 July 2008‐10 30‐Jul‐2018 ‐

2005 Options

Each of the options with a grant date of 5 July 2005, entitle the holder to purchase one ordinary share in Antisense Therapeutics Limited at an exercise price of $0.072. There are no performance conditions attached to the options, and the option holder may not exercise more than the following proportions of options on the following dates:

Prior to 27 June 2006 0%

Between 28 June 2006 and 27 June 2007 20%




Between 28 June 2010 and 27 June 2013 100% 2009 Options

The options with an issue date of 27 October 2008, entitle the holder to purchase one ordinary share in Antisense Therapeutics Limited at a zero exercise price. There are no performance conditions attached to the options. In respect of the options that did not vest on grant date, the option holders may not exercise more than the following proportions of options on the following dates:

On Issue 33%

Between 1 August 2009 and 31 July 2010 66%

Between 1 August 2010 and 31 July 2018 100%

(c) Vesting Terms of Options

The fair value of the options granted under the Employee Option Plan is estimated as at the grant date using a binominal model taking into account the terms and conditions upon which the options were granted.

The value of the options attributed to the remuneration of Directors and employees for the current financial year is $7,856 (2010: $121,863) and represents the amount that has been determined by allocating the fair value of options issued over the vesting period.

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2005 Options

The following table lists the inputs to the model used to determine the weighted average value of the options expensed during the year:

Vesting date 28‐Jun‐2010 28‐Jun‐2009

Dividend yield ‐ ‐

Expected volatility 0.00% 0.00%

Risk‐free interest rate 5.16% 5.16%

Expected life of option (years) 6.49 6.49

Option exercise price $0.072 $0.072

Weighted average share price at grant date $0.043 $0.043

Value per option $0.019 $0.019

The expected life of the option 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. 2009 Options

Following a General Meeting held on 26 August 2008, the Company issued 9.96m options to Directors and employees under the Employee Option Plan.

The 9 millions options to employees vest over a 2 year period, one third upon issue, one third 31 July 2009 and the remaining third, 31 July 2010. These options are being expensed over their vesting period and were valued as follows:

Vesting date 31 July 2008 ‐ 2010

Dividend yield ‐

Expected volatility 117.73%

Risk‐free interest rate 5.55%

Expected life of option (years) 10.00

Option exercise price ‐

Weighted average share price at grant date $0.060

Value per option $0.062

The Non‐Executive Directors received 240,000 options each with a value of $15,000. The valuation of these options was based on the average trading price of the Company’s shares, 5 days prior to 30 June 2008, being $0.0625. The options issued to the Non‐Executive Directors immediately vested.

At 30 June 2011 the market share price was $0.008.

Note 20. Events after the Balance Date

On 5th July 2011 Antisense announced that it has executed an agreement for an exclusive Option to License the Company’s second generation antisense compound ATL1101 with privately‐owned Australian biotechnology firm, Afandin Pty Ltd (Afandin), founded by Dr Ian Nisbet, PhD, MAICD and Dr Anthony Filippis, PhD, MBA, both highly experienced biotechnology business executives with a strong track record in cancer drug development and commercialisation. Under the terms of the Agreement, Afandin has been granted an option to license ATL1101 to further develop and commercialise the compound for cancer applications subject to Afandin securing an agreed amount of development funding which it is to source over the next 6 months. This funding will be applied to moving ATL1101 into a Phase I/II clinical trial in prostate cancer patients.

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Based on successfully raising the required funds and exercising its Option to License ATL1101, a new corporate entity will be created that will be co‐owned and managed by Afandin. Upon execution of a License Agreement, the new entity will hold the license to develop and commercialise ATL1101. In return for the license to ATL1101, ANP will receive a significant equity stake in the new entity and will also receive a significant percentage of the commercialisation benefits including a percentage of any future licensing income received and a percentage of the royalties on ATL1101 sales. There have not been any matters or circumstances, other than that referred to in the financial statements or notes thereto, that have arisen since the end of the financial year, which significantly affected, or may significantly affect, the operations of Antisense Therapeutics Limited, the results of those operations or the state of affairs of Antisense Therapeutics Limited in future financial years.

Note 21. Related Party Transactions

Transactions between related parties are on normal commercial terms and conditions no more favorable than those available to other parties unless otherwise stated. Transaction with related parties are as follows:

2011 2010

$ $

Purchases from Circadian Technologies Ltd ("Circadian") 1

Circadian owns 13.90% of the ordinary shares in Antisense Therapeutics Limited (2010: 22.39%)

The Company paid Circadian during the year: 930 1,088

At 30 June 2011, the Company owed Circadian: ‐ ‐

Purchases from Isis Pharmaceuticals, Inc ("Isis")

Isis owns 6.19% of the ordinary shares in Antisense Therapeutics Limited (2010: 9.97%)

During the year Isis provided various research and development related services to the Company as well as becoming entitled to milestone payments as a result of the Teva Pharmaceuticals Licence Agreement.

The Company paid Isis during the year: 65,110 806,520

At 30 June 2011, the Company owed Isis: ‐ 64,143

Purchases from Belyea IP

Belyea IP is a consulting company owned and operated by Dr Chris Belyea who is a Non‐Executive Director of the Company

Service fees paid to Belyea IP during the year: 4,764 ‐

Patent renewals cost reimbursed to Belyea IP during the year: 15,963 ‐

Total paid by the Company to Belyea IP during the year: 20,727 ‐

At 30 June 2011, the Company owed Belyea IP: ‐ ‐ 1

As at 30 June 2011, Circadian owns 100% of Polychip Pharmaceuticals Pty Ltd and Polychip Pharmaceuticals Pty Ltd owns 42.38% of Syngene Ltd. Expenses paid to Circadian during the period, related to the reimbursements of miscellaneous office expenses.

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Note 22. Financial Risk Management Objectives and Policies

(a) Financial Instruments The Company's financial instruments consist of cash and cash equivalents, trade and other receivables and trade and other payables:

2011 2010

$ $

Cash and cash equivalents 2,338,356 1,725,878

Trade and other receivables 26,589 17,012

Trade and other payables 241,384 217,855

The Company does not have any derivative instruments at 30 June 2011.

(b) Risk Management Policy

The Board is responsible for overseeing the establishment and implementation of the risk management system, and reviews and assesses the effectiveness of the Company's implementation of that system on a regular basis.

The Board and Senior Management identify the general areas of risk and their impact on the activities of the Company, with Management performing a regular review of:

the major risks that occur within the business;

the degree of risk involved;

the current approach to managing the risk; and

if appropriate, determine:

o any inadequacies of the current approach; and

o possible new approaches that more efficiently and effectively address the risk.

Management report risks identified to the Board through the monthly Operations Report.

The Company seeks to ensure that its exposure to undue risk which is likely to impact its financial performance, continued growth and survival is minimised in a cost effective manner.

(c) Significant Accounting Policy

Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis for measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.

The carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables represents their fair values determined in accordance with the accounting policies disclosed in note 1.

Interest revenue on cash and cash equivalents and foreign exchange movements on trade and other receivables and trade and other payables are disclosed in notes 2 and 3.

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(d) Capital Risk Management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Company may issue new shares or reduce its capital, subject to the provisions of the Company's constitution. The capital structure of the Company consists of equity attributed to equity holders of the Company, comprising contributed equity, reserves and accumulated losses disclosed in Notes 14 and 15. By monitoring undiscounted cash flow forecasts and actual cash flows provided to the Board by the Company's Management the Board monitors the need to raise additional equity from the equity markets.

(e) Financial Risk Management

The main risks the Company is exposed to through its operations are interest rate risk, foreign exchange risk, credit risk and liquidity risk.

Interest Rate Risk

The Company is exposed to interest rate risks via the cash and cash equivalents that it holds. Interest rate risk is the risk that a financial instruments value will fluctuate as a result of changes in market interest rates. The objective of managing interest rate risk is to minimise the Company's exposure to fluctuations in interest rate that might impact its interest revenue and cash flow. To manage interest rate risk, the Company locks a portion of the Company's cash and cash equivalents into term deposits. The maturity of term deposits is determined based on the Company's cash flow forecast.

Interest rate risk is considered when placing funds on term deposits. The Company considers the reduced interest rate received by retaining cash and cash equivalents in the Company's operating account compared to placing funds into a term deposit. This consideration also takes into account the costs associated with breaking a term deposit should early access to cash and cash equivalents be required.

The Company's exposure to interest rate risk and the weighted average interest rates on the Company's financial assets and financial liabilities is as follows:

30 June 2011

Weighted Average Effective Interest Rate

Floating Interest Rate

Fixed Interest Rate within Year

Fixed Interest Rate 1 to

5 years

Fixed Interest Rate over 5 Years

Non‐Interest Bearing

Total

% $ $ $ $ $ $

Financial Assets Cash and cash equivalents 3.94 837,956 1,500,000 ‐ ‐ 400 2,338,356 Trade and other receivables ‐ ‐ ‐ ‐ ‐ 26,589 26,589

837,956 1,500,000 ‐ ‐ 26,989 2,364,945

Financial Liabilities

Trade and other payables ‐ ‐ ‐ ‐ ‐ 241,384 241,384

‐ ‐ ‐ ‐ 241,384 241,384

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30 June 2010

Weighted Average Effective Interest Rate

Floating Interest Rate

Fixed Interest Rate within Year

Fixed Interest Rate 1 to

5 years

Fixed Interest Rate over 5 Years

Non‐Interest Bearing

Total

% $ $ $ $ $ $

Financial Assets Cash and cash equivalents 4.04 525,478 1,200,000 ‐ ‐ 400 1,725,878 Trade and other receivables ‐ ‐ ‐ ‐ ‐ 17,012 17,012

525,478 1,200,000 ‐ ‐ 17,412 1,742,890

Financial Liabilities

Trade and other payables ‐ ‐ ‐ ‐ ‐ 217,855 217,855

‐ ‐ ‐ ‐ 217,855 217,855

There has been no change to the Company's exposure to interest rate risk or the manner in which it manages and measures its risk in the year ended 30 June 2011. The Company has conducted a sensitivity analysis of the Company's exposure to interest rate risk. The analysis shows that if the Company's interest rate was to fluctuate as disclosed below and all other variables had remained constant, then the interest rate sensitivity impact on the Company's loss after tax and equity would be as follows:

(Higher) / Lower

(Higher) / Lower

2011 2010

2011: +1% (2010: +1%) 23,384 17,259

2011: ‐ 1% (2010: ‐1%) (23,384) (17,259)

Foreign Currency Risk

The Company is exposed to foreign currency risk via the trade and other receivables and trade and other payables that it holds. Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company does not have a policy to hedge overseas payments or receivables as they are highly variable in amount and timing, due to the reliance on activities carried out by overseas entities and their billing cycle.

The following financial assets and liabilities are subject to foreign currency risk:

2011 2010

$ $

Trade and other payables (AUD/USD) 28,306 140,036

Trade and other payables (AUD/CHF) ‐ 581 Foreign currency risk is measured by regular review of our cash forecasts, monitoring the dollar amount and currencies that payment are anticipated to be paid in. The Company also considers the market fluctuations in relevant currencies to determine the level of exposure. If the level of exposure is considered by Management to be too high, then Management has authority to take steps to reduce the risk.

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Steps to reduce risk may include the acquisition of foreign currency ahead of the anticipated due date of an invoice or may include negotiations with suppliers to make payment in our functional currency. Should Management determine that the Company should consider taking out a hedge to reduce the foreign currency risk, they would need to seek Board approval.

The Company conducts some activities outside of Australia which exposes it to transactional currency movements, where the Company is required to pay in a currency other than its functional currency.

There has been no change in the manner the Company manages and measures its risk in the year ended 30 June 2011.

The Company is exposed to fluctuations in United States dollars, and Euros. Analysis is conducted on a currency by currency basis using sensitivity variables. The Company has conducted a sensitivity analysis of the Company's exposure to foreign currency risk. The analysis shows that if the Company's exposure to foreign currency risk was to fluctuate as disclosed below and all other variables had remained constant, then the foreign currency sensitivity impact on the Company's loss after tax and equity would be as follows:

(Higher) / Lower

(Higher) / Lower

2011 2010

Trade and other payables

AUD/USD: 2011: +3% (2010: +3%) (849) (4,201)

AUD/USD: 2011: ‐3% (2010: +3%) 849 4,201

Credit Risk

The Company is exposed to credit risk via its cash and cash equivalents and trade and other receivables. Credit risk is the risk that a counter‐party will default on its contractual obligations resulting in a financial loss to the Company. To reduce risk exposure for the Company's cash and cash equivalents, it places them with high credit quality financial institutions.

Historically the Company has had minimal trade and other receivables, with the majority of its funding being provided via shareholder investment. Traditionally the Company's trade and other receivables relate to GST refunds and Research and Development Tax Concession amounts due to the Company from the Australian Tax Office. At 30 June 2011 and 2010, GST accounted for $2,177 and $346 of the trade and other receivables, respectively. At 30 June 2011 and 2010, respectively, accrued interest from the Commonwealth Bank amounted to $3,897 and $4,406.

The trade and other receivables at 90+ days also include the rent bond on the office premises of $8k. This is not considered impaired. The Board believe that the Company does not have significant credit risk at this time in respect of its trade and other receivables.

The Company has analysed its trade and other receivables below. All trade and other receivables disclosed below have not been impaired.

0‐30 days 31‐60 days 61‐90 days 90+ days

$ $ $ $

2011 Trade and other receivables 26,589

2010 Trade and other receivables 8,781 ‐ ‐ 8,231

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Liquidity Risk

The Company is exposed to liquidity risk via its trade and other payables. Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet the commitments associated with its financial instruments. Responsibility for liquidity risk rests with the Board who manage liquidity risk by monitoring undiscounted cash flow forecasts and actual cash flows provided to them by the Company's Management at Board meetings to ensure that the Company continues to be able to meet its debts as and when they fall due. Contracts are not entered into unless the Board believes that there is sufficient cash flow to fund the additional activity. The Board considers when reviewing its undiscounted cash flow forecasts whether the Company needs to raise additional funding from the equity markets.

The Company has analysed its trade and other payables below:

0‐30 days 31‐60 days 61‐90 days 90+ days

$ $ $ $

2011 Trade and other payables 241,347 37

2010 Trade and other payables 217,855 ‐ ‐ ‐

Note 23. Company Details

The registered office of the Company is:

Level 1, 10 Wallace Avenue Toorak, Victoria, 3142

The principal place of business of the Company is:

6 Wallace Avenue Toorak, Victoria, 3142

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Directors’ Declaration

Page 70

The Directors of the Company declare that:

1. the financial statements and notes, as set out on pages 35 to 69 are in accordance with the Corporations Act 2001 and:

a. comply with Accounting Standards and the Corporations Regulations 2001; and

b. give a true and fair view of the financial position as at 30 June 2011 and of the performance for the year ended on that date of the Company;

c. complies with International Financial Reporting Standards as disclosed in Note 1.

2. in the Directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board.

Mr Robert W Moses Mr Mark Diamond Independent Non‐Executive Chairman Managing Director Dated: This the 11th Day of August 2011

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Independent Auditor’s Report

Page 71

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Independent Auditor’s Report continued…

Page 72

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Company Directory

Page 73

DIRECTORS Mr Robert W Moses Independent Non‐Executive Chairman Mr Mark Diamond Managing Director Dr Chris Belyea Independent Non‐Executive Director Dr Graham Mitchell Independent Non‐Executive Director Prof. George Werther Independent Non‐Executive Director

COMPANY SECRETARY Mr Phillip Hains

COMPANY Antisense Therapeutics Limited ABN 41 095 060 745

REGISTERED OFFICE Level 1, 10 Wallace Avenue Toorak, Victoria, 3142 Telephone: + 61 (0)3 9827 8999

PRINCIPAL PLACE OF BUSINESS 6 Wallace Avenue Toorak, Victoria, 3142 Telephone: + 61 (0)3 9827 8999 Fax: + 61 (0)3 9827 1166

AUDITORS Ernst and Young 8 Exhibition Street Melbourne, Victoria, 3000

BANKERS Commonwealth Bank of Australia Melbourne, Victoria

SOLICITORS Minter Ellison Rialto Towers Level 23, 525 Collins Street Melbourne, Victoria, 3000

SHARE REGISTRY Computershare Investor Services Pty Ltd Yarra Falls 452 Johnston Street Abbotsford, Victoria, 3067 Telephone: +61 (0)3 9415 5000

SECURITIES QUOTED Australian Securities Exchange ‐ Ordinary Fully Paid Shares (ASX Code: ANP)

‐ Listed Options exercisable at $0.011 on or before 31 July 2012 (ASX Code: ANPO)

American Depository Receipts (ADR) Level 1 ADR Program, ADRs are traded in the US over‐the‐counter (OTC) market. Ratio: 1 ADR = 20 ordinary shares Symbol: ATHJY CUSIP: 037183100

WEBSITE www.antisense.com.au

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Documents

For personal use only · Appendix 4E – Preliminary Final Report (ASX Listing rule 4.2A) ... including autoimmune, inflammatory, ocular, metabolic and cardiovascular diseases as