ACRUX LIMITED — AGM Information 2020

Nov 11, 2020

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ACRUX LIMITED (ASX: ACR)

ANNUAL GENERAL MEETING

12 November 2020

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Chairman – Ross Dobinson

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CEO – Michael Kotsanis

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Important notice and disclaimers

This presentation contains forward-looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties.

These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this presentation, are expected to take place.

Actual results could differ materially depending on factors such as the availability of resources, the results of non-clinical and clinical studies, the timing and effects of regulatory actions, the strength of competition, the outcome of legal proceedings and the effectiveness of patent protection.

Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of our Company, the Directors and our management.

We cannot and do not give any assurance that the results, performance or achievements expressed or implied the statements contained in this will occur and investors are by forward-looking presentation actually cautioned not to place undue reliance on these forward-looking statements.

We have no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this presentation, except where required by law and under our continuous disclosure obligations.

These forward looking statements are subject to various risk factors that could cause our actual results to differ materially from the results expressed or anticipated in these statements.

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Business overview

1. Acrux is a specialty topical and transdermal drug development and commercialisation company

2. Acrux is a revenue generating pharmaceutical company with an extensive product pipeline of topical generic pharmaceuticals creating additional regulatory and commercialisation milestones

	Acrux products	Recent Acrux outcomes
	▪Estradiol spray
	Sold as Lenzetto® in 37 countries with royalties
Products commercialised	and milestones received by Acrux from FY17 onwards. Sold as Evamist® in the United States.	▪Acrux revenue from its Estradiol licensees grew 48% in FY20 over prior financial year
by Acrux	▪Testosterone solution Sold in 6 countries with royalties and	▪Royalties payable to Acrux are expected to further grow and exceed $1 million in FY21
	milestones received by Acrux from FY10 – FY18.
	Peak annual sales were US$179 million in 2013.
Acrux Pipeline	▪Acrux has a development pipeline of 13 topical generic pharmaceuticals with 3 of these products submitted to the FDA	▪Multiple licensing deals executed in FY20 ▪Profit share payable to Acrux following product launches with milestones on selected
		products pre and post commercialisation

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Topical Generics – an attractive $18 billion market segment

	Total market	Oral drugs	Acrux focus: Prescription topical drugs
Definition of market (all drugs including NCEs and generics)	Total US prescription pharma market	Drugs that are ingested orally (eg tablets, capsules)	Drugs that are applied topically to the skin, eyes, ears and nose (egcreams,ointments, gels,solutions)
Market size1	>US$510bn	~US$200bn	~US$18bn2
Generic market share	~90%3	~91%3	47%4
Typical generic development complexity	Variable	Low	Greater complexity than oral generic drug development
		High competition	Limited generic competition
Generic competition	Variable	from many generic	given niche market and
		drug manufacturers	development complexity

Source:

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1. US market by dosage form, IQVIA Q1, 2020 MAT, US market sales (US$)

2. Market size for topically applied drugs IQVIA Q1, 2020 MAT, US market sales (US$)

3. IQVIA Global Generic and Biosimilars Trends and Insights – 2018

4. IQVIA, National Sales Perspectives, January 2019 – Unbranded generic share of dermatology, MAT

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Acrux history

• Acrux has over 20 years of experience in the development and commercialisation of topical and transdermal pharmaceuticals

• Acrux products are currently sold in 38 countries

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European Union launch
US FDA Approval for estradiol spray First US FDA Four commercial
Acrux (Lenzetto®), following
for estradiol spray generic (ANDA) licensing contracts
Incorporated (Evamist®) approval in 2015 submission executed
2016
2007 2018 2020
1998
2004 2010 2017 2019
Acrux listed US FDA Approval for Axiron® marketing Third US FDA
on ASX testosterone solution withdrawal. Axiron generic
(ASX: ACR) (Axiron®) generated (ANDA)
cumulative sales of submission
US$826 million
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Revenue generating business model supporting long-term growth

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1 2
Product development
Generic drug
and technology
identification
transfer to CMO
4 Product launch 3
and profit share FDA submission,
revenue from review
commercial marketing and approval
partners
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▪ On market products are generating growing royalty revenues for Acrux

▪ Through the Acrux GMP* facility with 25 specialised scientists, Acrux possesses the capabilities to develop and commercialise generic topical and transdermal pharmaceutical products ▪ Acrux has 6 licensees with products commercialised in 38 countries

▪ The core business model of generic drug development is supported by ongoing licensing opportunities for commercial marketing and distribution

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• Good Manufacturing Practice

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** Contract Manufacturing Organisation

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Acrux product portfolio

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• ** Abbreviated New Drug Application

The Acrux pipeline will add to the commercialised portfolio of products sold through the Acrux network of licensees

• Evamist® sold by Perrigo in the United States and Lenzetto® sold by Gedeon Richter in the European Union and a number of other countries outside the EU

• 6 products licensed from pipeline to TruPharma

• 1 product licensed to Amring Pharmaceuticals

• 1 product licensed to Harris Pharmaceutical

• 1 product licensed to Dash Pharmaceuticals

• Profit share payable to Acrux for the duration of the term of the licence following ANDA** product launches with milestones on selected products pre and post commercialisation

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• Acrux submitted its ANDA for a generic of EMLA® to the FDA in June 2020 and the dossier was accepted for review in August 2020

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Strong and Consistent returns

Acrux’s diversified drug development strategy provides more certainty than novel drug development

Acrux’s generic portfolio strategy

Novel drug development

Portfolio Strategy

Novel drug development will remain speculative given high costs and risks of development

Commercial Strategy

Detailed screening of generic drug candidates along with development and commercialisation track record underpin Acrux’s de-risked portfolio strategy

▪ Acrux rigorously screens market data for topical drug candidates in attractive markets where Acrux can leverage its drug development and commercialisation track record

Development Process

The overall probability of clinical success is estimated to be less than 12%[1]

▪ Acrux is able to develop and commercialise a generic drug for ~AUD$3-4m within ~4 years ▪ Once a licensing deal is executed and a product launched royalty/profit share revenue is expected to grow strongly

Developing a novel drug takes 10+ years[1] Drug development involves multiple expensive long-term trials

Time, Cost and Value

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1. http://phrma-docs.phrma.org/sites/default/files/pdf/rd_brochure_022307.pdf

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Acrux partnered pipeline addressable market

Over US$890 million of addressable market value licensed to TruPharma, Amring Pharmaceuticals, Harris Pharmaceutical and Dash Pharmaceuticals in 2020. Profit share payable to Acrux following product launches with milestones on selected products pre and post commercialisation

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Acrux pipeline
US$1.3 billion in addressable market sales
< $370 million > $440 million
> $30 million
$22 million
> $400 million
TruPharma Dash Pharmaceuticals Amring Harris Pharmaceutical not partnered
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• Rounding of products licensed results in total of non-partnered products being overstated.

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Overview of current licensees

	•	Licensed 6 products to sell		•	Co-development for 1		•	Licensed 1 product to sell
		in the US when approved			product to sell in the US			in the US when approved
		by the FDA			when approved by the FDA			by the FDA
	•	Sells Lenzetto® in 37		•	Sells Evamist® in the		•	Licensed 1 product to sell
		countries including most EU			United States			in the US when approved
		countries						by the FDA

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Key Investment highlights

Acrux is a revenue generating pharmaceutical company with an extensive product pipeline of topical generic pharmaceuticals nearing additional regulatory and commercialisation milestones

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▪ 2 products on market in 38 countries
Focus on ▪ The topical generic market provides attractive returns with fast, low-risk and low development
specialised and costs for highly specialised drug developers
lucrative topical ▪ The size of the topical generic market in the US is ~US$18bn
generic market ▪ 13 products now in the pipeline of generic products, with an addressable market of ~US$1.3bn
▪ Licensing deals executed with recurring revenue and milestone payments for selected products
▪ Proven commercialisation strategy to bring a portfolio of products to market
Highly skilled
▪ Led by an experienced management team, Acrux possesses unique development and
development
commercialisation know-how and capabilities
team
▪ TGA approved, Good Manufacturing Practice (GMP) facility with 25 specialised scientists creates a
substantial competitive advantage in generic product selection, development and commercialisation
▪ Two products currently sold through licensees in Europe, the United States and other countries
R&D investment
▪ Additional products nearing FDA approval
in product
▪ 2 product licensing deals executed with 2 different pharma companies in FY 2020
pipeline entering
▪ Licensing contracts with Harris Pharmaceutical and Dash Pharmaceuticals executed to date in FY21
commercialisation
▪ Objective to be cash flow positive by 2022
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• 12 months sales to end Q1, 2020 based on IQVIA.

• US market by dosage form, IQVIA Q1, 2020 MAT, US market sales (US$)

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Platform for growth established

Through investment in the platform over the past 5 years Acrux has a competitive advantage in the identification, development, registration and launch of generic topical drugs

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Acrux Product Status Description
Acrux receives royalties on a quarterly basis.
2 products sold in 38 Revenue from estradiol licensees grew by 48% in
ON MARKET 2 countries FY20 v FY19
4 product licensing Acrux expects a typical licence agreement to
LAUNCH 9 deals executed in CY2020 for 9 consist of an selected products, milestones pre and post recurring profit share stream and on
products commercialisation
Products accepted Following initial review there may be additional
3 for FDA review in FDA questions to be answered prior to approval [1] .
APPROVE
CY18, 19 Products can be launched following Final Approval.
R&D team with highly specific topical expertise
Generic products
drive development. Acrux has unique capabilities
DEVELOP 10 in development
for topical drug development.
53 Identified topical drugs, Each >US$100m in sales Continue to screen market to identify high potential
prescription topical products
Identified topical drugs,
IDENTIFY 94 Each $10-100m in sales
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1. Under GDUFA II, the FDA has committed to review 90% of Abbreviated New Drug Applications (ANDA) applications within 10 months. ANDA approval will follow if the FDA is satisfied during the review process

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Experienced management team with a proven history of commercialising generic drugs

CEO & MD Michael Kotsanis leads a team of highly credentialed experts in generic drugs

Felicia Colagrande, BSc(Hons), MBA Product Development and Technical Affairs Director

Michael Kotsanis BSc, MBus CEO & Managing Director

Significant pharmaceutical operations, dermal drug development, analytical development and production experience. Leads all technical aspects of pharmaceutical product development including R&D, analytical development, project management and CMC development

• Experienced leader in the pharmaceuticals industry with demonstrated success commercialising generic products

• Formally CCO for Synthon Holding BV, an international pharmaceutical company and a leader in the field of generic medicines

Charles O’Sullivan, B. Pharm Portfolio Director

• Prior to Synthon Michael was President, Europe for Hospira - the largest global generic injectable company, before its acquisition by Pfizer

Experienced healthcare executive with senior and international leadership roles in scientific affairs, medical affairs, health economics and government affairs. Previously Asia Pacific Director of Medical and Government Affairs for Hospira (now Pfizer)

Mark Hyman, Project and Technical Director

Deborah Ambrosini, CA CFO & Company Secretary

Diverse background with more than 30 years’ industry experience, previously holding leadership positions in Product Development, Project Management and Commercial Development. Expertise is project and technical management.

Over 20 years’ experience in accounting and business development spanning the biotechnology, mining, IT communications and financial services. Experience in senior management roles ASX listed PDFs

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CFO – Deborah Ambrosini

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Full Year Profit and Loss

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30 June 30 June
2020 2019 Mvt
$’000 $’000
Revenue and Other Income
Revenue from licensing agreements 1,253 631 98.6%
Other income 2,692 4,655 -42.2%
3,945 5,286 -25.4%
Less: Expenses
R&D investment (10,640) (10,917) -2.5%
Other operating costs (1,976) (2,189) -9.7%
Non Operating Costs (714) (515) 38.6%
(13,330) (13,621) -2.1%
Loss before income tax (9,385) (8,335) 12.6%
Income tax benefit/(expense) (86) 10 -960.0%
Net loss for the year (9,471) (8,325) 13.8%
Basic loss per share (5.65) (5.00)
Cash reserves 9,206 18,152
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Full Year Cashflow

		30 June		30 June
		2020		2019	Mvt
	Operating Activities	$’000		$’000
	Receipts fromproduct agreements	1,093		576	89.8%
	Payments to suppliers and employees -	11,666	-	13,233	-11.8%
	Interest received	216		611	-64.6%
	Income taxes refunded/paid	-		51	-100.0%
	Finance costs -	191		-
	Grant income	2,015		2,057	-2.0%
	Net cash used in operating activities -	8,533	-	9,938	-14.1%
	Net cash used - property, plant and equipment -	254	-	380	-33.2%
	Net cash used in financing activities -	159		-
	Net decrease in cash and cash equivalents -	8,946	-	10,318	-13.3%
	Cash at beginningofyear	18,152		28,470	-36.2%
	Cash at end ofyear	9,206		18,152	-49.3%

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CEO – Michael Kotsanis

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Future catalysts

ACRUX STRATEGY

The success of Acrux’s strategy and management’s execution will be driven and measured by:

• Commercial launch and cash flow generation from new generic drugs

• • Licensing and profit share agreements with generic pharmaceutical companies • FDA approvals for new products • Ongoing screening and initiation of new products in development

FY 2021 OBJECTIVES

• Continued royalty growth of existing on market products

• • 3 additional products submitted for FDA review • 2 product launches with profit share and other payments to Acrux • Licensing contracts with Harris Pharmaceutical and Dash Pharmaceuticals executed

• Continued royalty growth of existing on market products

• • Objective to be cash flow positive by 2022 • Ongoing screening and initiation of new products in development • 4 additional products submitted for FDA review

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FY 2022 OBJECTIVES

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BENEFITS OF A POOLED DEVELOPMENT FUND

1 Companies with PDF status are taxed at 15% on their income and capital gains received from their investments 2 Australian resident shareholders are exempt from capital gains tax after selling their shares

3

Unfranked dividends received by an Australian resident shareholder from the Company will be exempt from tax in the hands of the shareholder 4

Franked dividends will also be exempt from tax unless the shareholder elects to treat the franked dividend as taxable

Shareholders should seek professional advice from their tax advisor regarding Pooled Development Funds and the benefits specifically available to their situation

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Thank you

Michael Kotsanis

CEO & Managing Director Acrux Limited

P: + 61 3 8379 0100 E: michael.kotsanis@acrux.com.au Visit our website: http://www.acrux.com.au/ Follow us on LinkedIn:

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Chairman – Ross Dobinson

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Formal Business

To receive and consider the Financial Report and the Report of the Directors and Auditor for the year ended 30 June 2020.

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Resolution 1

Re-election of Mr Ross Dobinson as a Director

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Resolution 2

Adoption of Remuneration Report

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Resolution 3

Approval of 10% Placement Capacity - Shares

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Resolution 4

Approval of Omnibus Equity Plan – to refresh approval as required by the ASX Listing Rules

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Resolution 5

Grant of rights to Mr Norman Gray

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