Announcement PDF Appendix 4E Preliminary final report 1. Details of reporting period 2. Results for announcement to the market Name of entity ABN Reporting Year Previous Corresponding Year Key information Race Oncology Limited 61 149 318 749 Year ended 30 June 2016 Year ended 30 June 2015 12 months ended 30 June 2016 $ 12 months ended 30 June 2015 $ Increase/ (decrease) % 16,981 494 3,337% Amount change $ 16,487 (317,892) (87,269) 264% (230,623) (317,892) (87,269) 264% (230,623) 0.335 0.001 - - Revenues from ordinary activities Loss from ordinary activities after tax attributable to members Net loss for the period attributable to members Net tangible asset/(deficiency) per share 3. Consolidated statement of profit or loss and other comprehensive income Refer to attached financial statements. 4. Consolidated statement of financial position Refer to attached financial statements. 5. Consolidated statement of cash flows Refer to attached financial statements. 6. Consolidated statement of changes in equity Refer to attached financial statements. 7. Dividends/Distributions No dividends declared in current or prior year. 8. Details of dividend reinvestment plans N/A Page | 1 9. Details of entities over which control has been gained or lost during the period N/A 10. Details of associate and joint venture entities N/A 11. Any other significant information needed by an investor to make an informed assessment of the Company’s financial performance and financial position Refer to attached financial statements. 12. Foreign entities N/A 13. Commentary on results for period and explanatory information Race Oncology Limited incurred a net loss from operations for the financial year ended 30 June 2016 of $317,892 (2015: $87,269 loss). At 30 June 2016, the Group had a cash balance of $4,349,342 (2015: $21,288) and net assets of $4,077,896 (2015: $5,687). The net cash outflow from operating activities for the financial year was $306,065 (2015: $103,690). During the year ended 2016, the Company had no substantive operations, other than activities and expenditure associated with preparation of documents to acquire Bisantrene and preparation for listing on the Australian Securities Exchange (“ASX”). In April 2016, the Company and Update Pharma Inc. entered into a binding heads of agreement, under which the Company would acquire the intellectual property of Update Pharma pertaining to Bisantrene, including two patents related to Bisantrene. Pursuant to its prospectus dated 11 May 2016, the Company raised $4,300,000 from investors and on 1 July 2016, completed the acquisition of all the Bisantrene intellectual property. On the 11 July 2016 under the new name Race Oncology Limited (“RAC” “Company”) the Company was admitted to the official list on the ASX. 14. Audit This report is based on accounts which have been audited and the audit report is included in the attached consolidated financial statements. Managing Director Peter Molloy 29 August 2016 Page | 2 RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 Table of Contents Corporate Directory ....................................................................................................................................................... 1 Directors' Report ........................................................................................................................................................... 2 Remuneration Report (Audited) .................................................................................................................................... 9 Auditor’s Independence Declaration ........................................................................................................................... 14 Statement of Profit or Loss and Other Comprehensive Income .................................................................................. 15 Statement of Financial Position ................................................................................................................................... 16 Statement of Changes In Equity .................................................................................................................................. 17 Statement of Cash Flows ............................................................................................................................................. 18 Directors' Declaration .................................................................................................................................................. 34 Independent Auditors Report ...................................................................................................................................... 35 Corporate Governance Statement ............................................................................................................................... 37 ASX Additional Information ......................................................................................................................................... 44 Corporate Directory Directors Peter Molloy – Managing Director William Garner – Non Executive Chairman Brendan De Kauwe – Non Executive Director Chris Ntoumenopoulos – Non Executive Director Company Secretary Peter Webse Registered office Level 2, 50 Kings Park Road West Perth 6005 Ph: +8 6377 8043 Website: www.raceoncology.com Auditor Bentleys Audit & Corporate (WA) Pty Ltd 216 St Georges Terrace PERTH WA 6000 Share Registry Automic Registry Services Suite 310, 50 Holt Street Surry Hills, NSW 2010 Ph: + 8 9324 2099 Securities Exchange Listing Australian Securities Exchange Limited Level 40, Central Park 152-158 St Georges Terrace Perth, WA, 6000 ASX Code – RAC 1 RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 DIRECTORS’ REPORT Your Directors present their report, together with the financial statements of Race Oncology Limited (“the Company” or “RAC”) for the financial year ended 30 June 2016. Information on Directors Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Peter Molloy — Managing Director (appointed 1 July 2016) Qualifications — Experience — Bachelor of Science (Microbiology and Biochemistry), University of Melbourne Master of Business Administration, University of Adelaide Mr. Molloy worked in pharmaceutical industry for 18 years. At the Australian pharmaceutical company, Faulding, he managed several Faulding subsidiaries, before joining Pharmacia (now Pfizer) as Managing Director of its Australia and NZ operations and later as Vice President of Strategic Marketing for Asia-Pacific and Latin America. Subsequently, he served as CEO of three biotechnology companies – Biota Holdings Ltd, SLIL Biomedical Corp and Florigene Ltd – where he managed numerous R&D programs, raised substantial equity funding and executed four pharmaceutical partnerships. During his tenure as CEO of the ASX-listed company, Biota Holdings Ltd, the company’s market value grew from approximately $30m to nearly $300m in three and a half years. Previously, as CEO of the US company, SLIL Biomedical Corp, he managed R&D and licensing for the company’s oncology drug development program. Between 2008 and 2014, he was a non-executive director of immune-oncology company, Viralytics (ASX:VLA). During his career, he has managed seven biotechnology or pharmaceutical businesses, launched 23 pharmaceutical products, and executed 40 international licensing or distribution deals. Interest in Shares and Options — 4,000,000 ordinary shares — 6,000,000 options expired on 1 July 2021 excisable at $0.25 — Viralytics (October 2008 to September 2014) — Parnell Pharmaceuticals (March 2011 to September 2014) William Garner — Non-Executive Chairman (appointed 1 July 2016) Qualifications — Master of Public Health, Harvard University Directorships held in listed entities Experience — Interest in Shares and Options — Doctor of Medicine, New York Medical College Dr Garner MD is a US physician and entrepreneur. Dr Garner is one of the inventors on the Bisantrene patents, originally filed by Update Pharma, Inc. and now owned by Race Oncology. Previously, he founded EGB Advisors LLC, a life sciences advisory firm whose clients have included the M.D. Anderson Cancer Center, the Kauffman Foundation, ChemGenex (ASX:CXS) and CoTherix. He also founded Inverseon, Inc., which was merged with the ASX-listed company cBio to create Invion Ltd, serving as CEO until May 2013. He also founded Urigen Pharmaceuticals, Inc. and co-founded DelMar Pharmaceuticals, Inc. (NASDAQ:DMPI). Previously, he was at Hoffmann La Roche in oncology medical affairs and worked as a merchant banker in New York City. Dr Garner did residency training in Anatomic Pathology at Columbia-Presbyterian and is currently a licensed physician in the State of New York. 15,000,000 ordinary shares 10,000,000 performance shares Directorships held in listed entities — None 2 RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 DIRECTORS’ REPORT Chris Ntoumenopoulos — Non-Executive Director (appointed 27 April 2016) Qualifications — Bachelor of Commerce, majoring in Money and Banking, Investment Finance and Electronic Commerce Experience — Mr Ntoumenopoulos has worked in financial markets for the past 12 years, focusing on Capital Raisings, Portfolio Management and Corporate Advisory. Mr Ntoumenopoulos has advised and funded numerous ASX companies from early stage venture capital, through to IPO. He is an executive director of various private companies which span across finance, technology and medical sectors. Interest in Shares and Options — 506,250 ordinary shares and 5,000,000 options expiring on 1 July 2018 exercisable at $0.25 Directorships held in listed entities — ResApp Health Limited — Ookami Limited (resigned November 2015) Brendan de Kauwe Qualifications Non-Executive Director (appointed 21 April 2016) — Bachelor of Science and Bachelor of Dental Surgery, University of Western Australia Post Graduate Diploma in Applied Finance, majoring in Corporate Finance, and is currently completing his Masters in Applied Finance Experience — Dr de Kauwe’s extensive science and bio-medical background with more than 10 years’ experience in the health sector; coupled with his finance backing, gives him an integral understanding in the evaluation of projects over a diverse range of sectors. Dr de Kauwe’s is a Director of Otsana Capital, a corporate advisory firm, with vast experience in corporate restructuring and recapitalisations, mergers and acquisitions, IPO/RTO and capital markets. Interest in Shares and Options — 590,000 ordinary shares Directorships held in listed entities — Ookami Limited (current) — XPED Limited (formerly Raya Group Limited) (ceased 24 March 2016) — Actinogen Limited (ceased 18 December 2014) — Prescient Therapeutics (ceased 28 November 2014) Daniel Moore — Non-Executive Director (resigned 1 July 2016) Qualifications — Bachelor of Economics and Law. Experience — Mr Moore worked as a Financial Advisor for Wilson HTM for 10 years and previously for Morgan Stanley in London for 4 years. Interest in Shares and Options — 925,000 Ordinary Shares 5,000,000 options expiring on 1 July 2018 exercisable at $0.25 Directorships held in listed entities — Stratum Metals Limited The following directors resigned during the financial year: Ananda Kathiravelu (resigned 28 April 2016) Solomon Majteles (resigned 22 April 2016) 3 RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 DIRECTORS’ REPORT Company Secretaries Peter Webse — Company Secretary appointed 5 May 2016 Qualifications — B.Bus, FGIA, FCIS, FCPA, MAICD. Experience — Mr Webse has over 24 years' company secretarial experience and is the managing director of Platinum Corporate Secretariat Pty Ltd, a company specialising in providing company secretarial, corporate governance and corporate advisory services. Damon Sweeny — Company Secretary appointed 21 January 2014 Resigned 15 August 2016 Qualifications — Mr Sweeny holds an MBA from Curtin University and a Graduate Diploma of Applied Corporate Governance from Chartered Secretaries Australia. Experience — Mr Sweeny has 29 years’ experience in the mining, accounting and governance fields. Meeting of Directors During the financial year 3 meetings of Directors were held. Attendances by each Director during the year are stated in the following table. DIRECTORS’ MEETINGS Number eligible to attend Number Attended Peter Molloy - - William Garner - - Chris Ntoumenopoulos 1 1 Brendan de Kauwe 1 1 Daniel Moore 3 2 Ananda Kathiravelu 2 2 Solomon Majteles 2 1 Principal Activities Race Oncology is an Australian speciality pharmaceutical company whose business model is to pursue and bring to market later stage assets, principally in the cancer field. The Company’s first asset is a chemotherapy drug, called Bisantrene, which was the subject of more than 40 phase II clinical studies, before it was lost in a series of pharmaceutical mergers during the 1990s. Race Oncology is rediscovering Bisantrene. Race Oncology owns recent patent filings on Bisantrene and has secured Orphan Drug Designation in the US. The Company’s goal is to complete final development of Bisantrene and bring this valuable cancer drug to market. Operating Results The operating loss after income tax amounted to $317,892 (2015: $87,269 loss). Dividends Paid or Recommended No dividends were paid or are payable for the financial year. 4 RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 DIRECTORS’ REPORT Review of Operations During the year ended 2016, the Company had no substantive operations, other than activities and expenditure associated with preparation of documents to acquire Bisantrene and preparation for listing on the Australian Securities Exchange (“ASX”). In April 2016, the Company and Update Pharma Inc. entered into a binding heads of agreement, under which the Company would acquire the intellectual property of Update Pharma Inc. pertaining to Bisantrene (“Acquisition”), including two patents related to Bisantrene. Pursuant to its prospectus dated 11 May 2016, the Company raised $4,300,000 from investors and on 1 July 2016, completed the acquisition of all the Bisantrene intellectual property. On 11 July 2016 and under the new name Race Oncology Limited (“RAC” “Company”) the Company was admitted to the official list on the ASX. Financial Position The net assets of the Company at 30 June 2016 were $ 4,077,896 (2015: $5,687). This increase was due to funds of $4,300,000 received under the public offer. Significant Changes in State of Affairs A binding heads of agreement dated 11 April 2016 between the Company and Update Pharma Inc. was entered into under which the Company would subsequently acquire the intellectual property of Update Pharma Inc. pertaining to Bisantrene, including two patent applications. The Acquisition was settled in July 2016 with the issue of securities contained in the Prospectus dated 11 May 2016. $4,300,000 was received from the public offering and the shares were yet to be issued at the end of the financial year. There were no other significant changes in the state of affairs of the Company during the financial year. Significant Events after the Reporting date The binding heads of agreement dated 11 April 2016 between the Company and Update Pharma Inc. was satisfied and settlement of the Acquisition occurred, including the issue of securities as follows: a) 21,500,000 fully paid ordinary shares in the issued capital of the Company at a price of $0.20 per share under the Public Offer to raise $4,300,000; b) 15,000,000 Consideration Shares and 10,000,000 Performance Shares to Update Pharma Inc. in consideration for the acquisition of the Intellectual Property; c) 4,000,000 Shares and 6,000,000 Options (exercisable at $0.25 and expiring 5 years from the date of issue, being 1 July 2021) to Mr Peter Molloy (or his nominee), Managing Director and Chief Executive Officer; d) 3,000,000 Options (exercisable at $0.25 and expiring 5 years from the date of issue, being 1 July 2021) to John Rothman (or his nominee), Chief Scientific Officer; and e) 5,000,000 Options (exercisable at $0.25 and expiring 2 years from the date of issue, being 1 July 2018) each to Daniel Moore and Chris Ntoumenopoulos (or their nominees), directors. At settlement of the Acquisition: a) John Daniel Moore resigned from the board of the Company; and b) Peter Molloy and William Garner were appointed to the board of the Company. On 1 July 2016 completion of the Acquisition occurred and the Company acquired all the intellectual property relating to the oncology drug, Bisantrene. On 11 July 2016 of Race Oncology Limited (“RAC” “Company”) was admitted to the official list on the Australia Securities Exchange (“ASX”), with trading commencing on the 13 July. On 25 July 2016, the Company signed a development agreement with Crystal Pharmatech, Inc., a New Jersey-based contract research organization. The agreement covers a development program over a period of up to 3 months. On 26 July 2016, the Company signed an agreement with Camargo Pharmaceutical Services, Inc., a leader in 505(b)(2) drug development in the United States. This project is expected to take approximately 6 months. On 1 August 2016, the Company signed a consulting agreement with DEL Biopharma LLC, under which Dr Dan Levy was contracted to coordinate all manufacturing activities for the Company and DEL Biopharma would be granted 200,000 share options in the Company after 13 October 2016. 5 RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 DIRECTORS’ REPORT Significant Events after the Reporting date (con’t) On 21 August 2016, the Company signed a consulting agreement with Mr Gordon Beck to represent the Company as Vice President European Operations. Under the agreement, if two performance milestones are achieved during 2017, Mr Beck would be eligible to receive up to $100,000 in value of shares in the Company with the number of shares being calculated based on a VWAP of Race Oncology shares at the time of the milestone achievement. Apart from the matters disclosed above, no matters or circumstances have arisen since the end of the financial year which significantly affect the operations of the Company, the results of those operations, or the state of the affairs of the Company in future financial years. Future Developments, Prospects and Business Strategies Other than those matters noted elsewhere in this financial report, likely developments, future prospects and business strategies of operations have not been included in this report as the Directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the Company. Environmental Regulations In the normal course of business, there are no environmental regulations or requirements that the Company is subject to. Proceedings on Behalf of Company No person has applied for leave of Court to bring proceedings on behalf of the Company or 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 any part of those proceedings. The Company was not a party to any such proceedings during the year. Share Options Unissued shares under option At the date of this report, the un-issued ordinary shares of Race Oncology Limited under option are as follows: Number of shares under option Grant Date Expiry Date Exercise Price 1 July 2016 1 July 2021 $0.25 9,000,000 1 July 2018 $0.25 10,000,000 1 July 2016 19,000,000 Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate. 6 RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 DIRECTORS’ REPORT Performance Shares Issued Details of the performance shares of Race Oncology Limited are as follows: Grant Date Vesting Dates 1 July 2016 Satisfaction of milestones Expiration dates Number of rights issued Undiscounted Value per Right at Grant Date Total Value 36 months from grant date 10,000,000 20 cents 2,000,000 $ Performance share values at grant date were determined using the performance milestones summarised in the table below. Each Performance share will vest as one (1) Share subject to the satisfaction of certain performance criteria (“Performance Milestones”). Performance Milestones (i) 5,000,000 Performance Shares shall convert upon the Company satisfying the following milestones within a period of 24 months from the date of issue of Shares under the Capital Raising: (a) The Company having received approval under section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act 1938 which allows the use of information from historical clinical trials not conducted by the Company or Update Pharma Inc; and (b) The Company having received approval for, and commenced, a bridging study on a medical product to extrapolate foreign clinical trial data on safety, efficacy and dose response within a new region; and (ii) 5,000,000 Performance Shares shall convert if, within a period of 24 months from the date of issue of the performance shares, the Company has received approval to distribute unauthorised medications to physicians and named patients with unmet medical needs under an early access program. The Performance Shares will vest into ordinary shares in the Company upon the satisfaction of vesting conditions that are market based vesting conditions as disclosed above. If the Performance shares do not convert into ordinary shares within 3 years from the issue date, they will automatically be redeemed by the Company for a sum of $0.0000001 per Performance Share within 10 business days. Indemnification and Insurance of Directors and Officers The Company indemnifies each of its Directors, Officers and Company Secretary. The Company indemnifies each Director or Officer to the maximum extent permitted by the Corporations Act 2001 from liability to third parties, except where the liability arises out of conduct involving lack of good faith, and in defending legal and administrative proceedings and applications for such proceedings. The Company must use its best endeavours to insure a Director or Officer against any liability, which does not arise out of conduct constituting a wilful breach of duty or a contravention of the Corporations Act 2001. The Company must also use its best endeavours to insure a Director or Officer against liability for costs and expenses incurred in defending proceedings whether civil or criminal. The Company has not entered into any agreement with its current auditors indemnifying them against any claims by third parties arising from their report on the financial report. During the year the Company paid insurance premiums to insure directors and officers against certain liabilities arising out of their conduct while acting as an officer of the Group. Under the terms and conditions of the insurance contract, the nature of the liabilities insured against and the premium paid cannot be disclosed. 7 RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 DIRECTORS’ REPORT Non-audit services The Board of Directors is satisfied that the provision of non-audit services during the period is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. There were no non-audit service fees for the year ended 30 June 2016 (nil: 2015). Auditor’s Independence Declaration The auditor’s independence declaration for the year ended 30 June 2016 has been received and can be found on page 14. 8 DIRECTORS’ REPORT RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 REMUNERATION REPORT (AUDITED) This remuneration report for the year ended 30 June 2016 outlines the remuneration arrangements of the Company in accordance with the requirements of the Corporations Act 2001(Cth), as amended (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act. The remuneration report is presented under the following sections: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Introduction Remuneration governance Executive remuneration arrangements Non-executive director fee arrangements Company performance, shareholder wealth and Directors’ and Executives’ remuneration Details of remuneration Additional disclosures relating to options and shares Loans to key management personnel (KMP) and their related parties Service Agreements Other transactions and balances with KMP and their related parties The names of the directors in office at any time during or since the end of the financial year are:William Garner –Non Executive Chairman (appointed 1 July 2016) Peter Molloy – Managing Director (appointed 1 July 2016) John Rothman – Chief Scientific Officer (appointed 1 July 2016) Chris Ntoumenopoulos – Non-Executive Director (appointed 27 April 2016) Brendan de Kauwe – Non-Executive Director (appointed 21 April 2016) John Daniel Moore – Non-Executive Director (resigned 1 July 2016) The following directors resigned during the financial year: Ananda Kathiravelu (resigned 28 April 2016) Solomon Majteles (resigned 22 April 2016) 1. Introduction Key Management Personnel ("KMP") have authority and responsibility for planning, directing and controlling the major activities of the Company. KMP comprise the directors of the Company. Compensation levels for KMP are competitively set to attract and retain appropriately qualified and experienced directors and executives. The Board may seek independent advice on the appropriateness of compensation packages, given trends in comparative companies both locally and internationally and the objectives of the Company’s compensation strategy. 2. Remuneration governance The Directors believe the Company is not currently of a size nor are its affairs of such complexity as to warrant the establishment of a separate remuneration committees. Accordingly, all matters are considered by the full Board of Directors. During the financial year, the Company did not engage any remuneration consultants. 3. Executive remuneration arrangements The compensation structures are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. Compensation packages may include a mix of fixed compensation, equity-based compensation, as well as employer contributions to superannuation funds. Shares and options may only be issued to directors subject to approval by shareholders in a general meeting. 9 DIRECTORS’ REPORT RACE ONCOLOGY LIMITED (Formerly known as Coronado Resources Limited) ACN 149 318 749 ANNUAL REPORT 30 JUNE 2016 REMUNERATION REPORT 3. Executive remuneration arrangements (con’t) At this stage the Board does not consider the Company’s earnings or earnings related measures to be an appropriate key performance indicator (KPI). In considering the relationship between the Company’s remuneration policy and the consequences for the Company’s shareholder wealth, changes in share price are analysed as well as measures such as successful completion of business development and corporate activities. When required the Company will formalise remuneration arrangements with executives in employment agreements. During the year, the Company entered into agreement with Mr. Peter Molloy and Mr. John Rothman. (Refer Services Agreement for further details) 4. Non-executive director fee arrangements The Board policy is to remunerate Non-Executive Directors at a level to comparable Companies for time, commitment, and responsibilities. Non-executive Directors do not receive performance related compensation. Directors’ fees cover all main Board activities and membership of any committee. The Board has no established retirement or redundancy schemes in relation to NonExecutive Directors. The Non-Executive Directors have or may be provided with options that are meant to incentivise the Non-Executive Directors. The board determines payments to the Non-Executive Directors and reviews their remuneration annually based on market practice, duties, and accountability. Independent external advice will be sought when required. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is presently limited to an aggregate of $300,000 per annum and any change is subject to approval by shareholders at the General Meeting. Fees for Non-Executive Directors are not linked to the performance of the Company. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company. Fees for the Non-Executive Directors for the financial year were $Nil (2015: $Nil) and cover main Board activities only. Non-Executive Directors may receive additional remuneration for other services provided to the Company. 5. Company performance, shareholder wealth and Directors’ and Executives’ remuneration The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives and Directors’ and Executives’ performance. This will be facilitated through the issue of the Employee Incentive Option (“Pl