Alterity Therapeutics Limited — FY2023 Form 20-F
Reporting period: Fiscal year ended June 30, 2023. This is an annual report, not a 2022 fourth-quarter filing. Financial statements are prepared under IFRS and presented in Australian dollars (A$), unless noted.
Business context
Alterity is a development-stage biotechnology company focused on therapies for neurodegenerative diseases. Its lead candidate, ATH434, is being studied for Multiple System Atrophy (MSA); the company has not commercialized a product or generated product sales. Its ordinary shares trade on the ASX and its ADSs on Nasdaq.
Financial performance and liquidity
| Metric (A$ unless stated) | FY2023 | FY2022 |
|---|---|---|
| Product revenue | None | None |
| R&D tax incentive and other income | 3.916 million | 5.124 million |
| Research and development expense | 13.199 million | 14.746 million |
| General and administrative expense | 5.057 million | 5.514 million |
| Net loss | 13.807 million | 12.847 million |
| Operating cash outflow | 20.036 million | 12.337 million |
| Cash and cash equivalents at year-end | 15.774 million | 34.807 million |
- Basic and diluted loss per share was A$0.0057 (0.57 cents), versus A$0.0053 (0.53 cents) in FY2022.
- Cash declined by A$19.948 million during FY2023. Financing activities provided net cash of A$124,340, including A$316,675 of share proceeds; investing activities used A$36,461.
- Year-end current assets were A$27.049 million and current liabilities A$4.382 million. Total liabilities were A$4.505 million, including A$210,384 of lease liabilities; the filing reports no material conventional borrowing.
- The company recorded an A$3.914 million FY2023 R&D tax incentive receivable/income. Total R&D tax incentive receivable was A$8.584 million at year-end. It received A$4.725 million in August 2023 for the FY2022 incentive.
- No dividends were paid or recommended. The filing reports 2.440 billion ordinary shares outstanding at June 30, 2023.
Changes versus FY2022
- Net loss increased by approximately A$0.959 million, despite lower R&D, administrative, and intellectual-property expenses. Higher FY2022 foreign-exchange gains also contributed to the comparison: gains were A$0.918 million in FY2023 versus A$2.722 million in FY2022.
- Operating cash outflow increased by A$7.699 million, which management attributed principally to increased supplier and employee payments as the ATH434 Phase 2 program advanced. FY2022 included A$4.126 million of R&D tax incentive refunds in operating cash receipts; FY2023 had none.
- Cash fell from A$34.807 million to A$15.774 million. FY2023 share proceeds were substantially lower than FY2022’s A$17.176 million.
Outlook, risks, and unusual items
- Funding and going concern: Management plans to raise equity within six months of year-end, but says funding is uncertain. Management and the auditor identify material uncertainty casting substantial doubt on the company’s ability to continue as a going concern. The auditor nevertheless issued an unqualified opinion on the financial statements, with a going-concern explanatory paragraph.
- Clinical program: ATH434-201, a randomized, placebo-controlled Phase 2 trial in early-stage MSA, began in July 2022 and was enrolling at more than 20 sites, targeting approximately 60 participants. ATH434-202, an open-label biomarker Phase 2 study in up to 15 people with advanced MSA, began in May 2023. No clinical efficacy results from these trials are provided here.
- ATH434 has orphan-drug designation for MSA in the United States and European Union. Development remains exposed to clinical safety and efficacy uncertainty, enrollment or trial delays, manufacturing and regulatory hurdles, competition, and reliance on external research and manufacturing providers.
- R&D tax incentive eligibility is a significant estimate and the auditor identified the related receivable as a critical audit matter. A separate FY2020 incentive claim was assessed as a non-refundable offset after the company did not obtain a required discretionary determination; the company has objected to that assessment.
- The company raised A$316,675 under its at-the-market facility in FY2023. It disclosed 844.7 million unlisted options, including 674.7 million placement options exercisable at A$0.07 and due to expire November 23, 2023, creating potential dilution if exercised.
- Management reported effective disclosure controls and internal control over financial reporting as of June 30, 2023. No material legal proceedings or contingent liabilities were reported.
Important facts for investors to verify
- Current cash, burn rate, and whether subsequent R&D tax incentive receipts or new financing materially extend the company’s funding runway.
- Completion, enrollment, regulatory status, and future data milestones for ATH434-201 and ATH434-202; the filing gives no trial-result guidance or firm completion dates.
- The amount and terms of any post-year-end equity financing, and the actual exercise or expiry of the large option pool.
- Eligibility, timing, and collection of the FY2023 R&D incentive receivable, plus the outcome of the disputed FY2020 claim.
- The filing gives inconsistent accumulated-deficit figures in different sections; the audited balance sheet reports A$195.131 million at June 30, 2023.