Anteris Technologies Global Corp. — Interim / Quarterly Report 2019

Oct 31, 2018

31.10.18

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ASX ANNOUNCEMENT

QUARTERLY REPORT – APPENDIX 4C FOR THE PERIOD TO 30 SEPTEMBER 2018

Admedus Limited (ASX:AHZ) has today released its Appendix 4C – Quarterly Cash Flow report for the period ending 30 September 2018.

HIGHLIGHTS THIS QUARTER:

• Star Bright placement of $7.7M and loan facility of $5M to replace Partners for Growth $10M Facility.

• The Company delivered revenue of $6.3 million for the quarter.

• ADAPT® sales of $3.1 million for the quarter grew by 63% over the PCP driven by growth in the US, EU, Emerging Markets, and favourable foreign exchange movements.

• The North American ADAPT® business delivered strong sales resulting in growth for the quarter of 80% compared to the PCP.

• The European ADAPT® business returned to growth after four consecutive quarters of decline – growth was 24% over the PCP.

• Regulatory approval delays in Europe and the Emerging Markets impacted the timing of expected forecasted revenue for the ADAPT® portfolio.

• Newly released meta-analysis data demonstrates superiority in multiple settings for ADAPT® products compared to competitors.

• Unprecedented multi-centre results in peer-reviewed and presented data demonstrating the clinical superiority of ADAPT® across more than 600 patients.

• Launch preparation completed for expanded ADAPT® 3D portfolio in the US with release expected early in the fourth quarter.

• The Infusion business grew at 3% during the quarter compared to the PCP.

• The Transcatheter Aortic Valve Replacement (TAVR) project continues to progress with the Advisory Board unanimously endorsing the acceleration of this groundbreaking product.

• Admedus is continuing to progress its recapitalisation plan.

Admedus Limited

Registered Office:

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Level 9, 301 Coronation Drive, Milton, Queensland 4064

Customer Service:

T: 1300 550 310 F: 1300 880 398 International: T: +61 (0)7 3152 3200 F: +61 (0)7 3152 3299 E: info@admedus.com W: admedus.com

Brisbane • Minneapolis • Geneva • Singapore

ABN 35 088 221 078

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QUARTER DELIVERS RECORD ADAPT® REVENUE AND MARKET SHARE GROWTH

Admedus delivered revenue of $6.3 million for the group.

ADAPT® sales of $3.1 million for the quarter represents growth of 63% over the PCP, driven by growth in all regions and increased market penetration across key regions. This represents the fourth consecutive quarter of growth across the global ADAPT® business and increases in the USD and EUR against the AUD had a favourable impact on revenue.

During the period, statistical meta-analysis conducted by a world-renowned biostatistics firm, commissioned by Admedus in the prior period, was completed. The data demonstrated unparalleled calcification resistance and biocompatibility of ADAPT® bio-scaffolds. This resulted in the lowest rate of re-coarctation and reintervention in paediatric arch repair across all modes of graft materials.

This meta-analysis was underpinned by an unprecedented series of 600 patients and 830 implants from a multicentre study in Australia and the UK. It demonstrated superior results across the entire spectrum of indications within congenital heart defect repair (this study has been peer reviewed and presented). The quality and quantity of this data, when compared to any other published results in the market, indicate ADAPT treated scaffolds exhibit meaningful clinical benefits for patients and physicians.[1]

The Infusion division delivered sales of $3.2 million for the quarter, which represents 3% growth compared to the PCP. The performance of the Infusion business this quarter reflects the near full impact of our previous announcement regarding the termination of our distribution agreement with GO Medical. Performance during the quarter reflects underlying growth which substantially offsets the impact of the GO Medical contract termination. During the period, we also completed the renewal of our exclusive distribution agreement with Summit Medical; the agreement extends our distribution rights for an eight-year period.

ADAPT®

North America

The ADAPT® North American team delivered record sales in August 2018. Overall growth for the quarter was 80% compared to the PCP and represents three continuous quarters of growth in North America. The continued growth in North America in a highly competitive environment is being driven by a fully engaged sales team, superior clinical data and strategic implementation.

Execution of our strategic account management plan contributed significantly to results in the quarter. Across all three segments, CHD, Vascular, and Adult structural heart, 18 new accounts were opened. This resulted in double-digit growth across our product portfolio, including CardioCel 3D® and VascuCel®.

Additionally, the continued implementation of our corporate accounts strategy advanced significantly; building on the agreement with a major US group purchasing organisation (GPO)

1 Admedus is pursuing opportunities to publish these results.

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announced in the first quarter, we have entered into a committed purchasing agreement this quarter with the second largest hospital system (IDN) within that group.

During the quarter, the Company completed the development and launch preparation for its expanded ADAPT® 3D portfolio. Plans are in place for the three new products to become available to surgeons in the fourth quarter. These launches represent an important milestone in our product portfolio as we strengthen our offerings and execute the strategy to pursue additional indications where high unmet need requires a durable scaffold and complex shapes.

Europe

Building on the reorganisation of the region in the first half, the European business returned to growth after four consecutive quarters of decline. The European team delivered sales growth of 24% compared to the PCP, with growth across existing accounts.

Throughout the region, 13 accounts were either added or reactivated, with five accounts in the UK, four accounts in France, four accounts in Poland, Switzerland, and Germany. Additionally, all accounts that had previously been in decline in Germany were returned to growth.

These results are driven primarily by the effectiveness of our new European leadership and sales team, as well as a renewed focus on the execution of our clinically superior ADAPT® messaging and increased KOL engagement.

The approval process for the expanded ADAPT® portfolio is ongoing.

Emerging Markets

The region experienced growth of 34% compared to sales reported in the PCP. Highlights for the quarter were solid performance in Asia Pacific of 231% growth in key markets such as Singapore, Hong Kong, and Malaysia compared to sales in the PCP, as well as approval for CardioCel® in Vietnam and CardioCel 3D® in UAE. In addition, ANZ experienced 39% growth over PCP driven by the uptake in the SAS[2] program.

During the quarter, progress continued to secure additional approvals for CardioCel 3D® in Saudi Arabia and Kuwait, as well as starting the process for approval of our shaped franchise in India.

Emerging Markets growth was lower than expected due to continued delay in the Therapeutic Goods Administration (TGA) approval to launch ADAPT® in Australia. This delay directly impacts revenue for Australia and inhibits entry into other emerging markets such as Thailand, Taiwan, and the Philippines, who favour applications with home market approval. Additionally, despite good progress in the uptake of the Australian SAS program, several accounts have signalled their desire to wait for TGA approval rather than participate in the SAS, which further compounds the impact of the current approval process. Admedus is continuing to engage in the TGA process as we work through the additional items the agency is requesting.

Slower uptake in India resulted in a restructured distributor network.

2 Special Access Scheme - Australia

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IMMUNOTHERAPIES

CEO Wayne Paterson presented at a biotech symposium and showcase in Shenzhen, PRC on biotech, oncology and opportunities in the commercial medical industry. Admedus Immunotherapies was represented by Mr Paterson and Prof Ian Frazer who addressed an audience of over 500 industry analysts, investors, and government officials. The visit culminated in a signing ceremony which recognised the intent to advance the formalisation of the immunotherapies partnership with Star Bright Holdings.

A Phase I clinical study of the HPV vaccine commenced at the Princess Alexandra Hospital in Brisbane in April 2018. The first-in-human study is a dose escalation study to test the safety, tolerability and immunogenicity of the vaccine in HPV16+ head and neck cancer patients who have received curative treatment.

The lowest dose cohort (n=4) have completed their vaccinations and the HPV vaccine determined to be safe by the Safety Monitoring Committee and allowed to proceed to the next dose. The middle dose cohort also commenced their vaccinations during the period.

Additionally, during the quarter the second payment from Queensland Government for the Advance Queensland grant supporting the clinical study was received.

Due to delays in forming the partnership with Star Bright the exclusivity period has been extended indefinitely and Star Bright has advanced $500,000 to Admedus Immunotherapies. It is Admedus’ intention that this $500,000 be offset against the proposed $18M consideration payable by Star Bright for a 60% interest in Admedus Immunotherapies.

PROGRESS CONTINUES FOR TAVR AND SINGLE-PIECE VALVE PROJECTS

The Transcatheter Aortic Valve Replacement (TAVR) project progressed ahead of schedule, achieving several milestones in the quarter. Leveraging our novel precision thinning technology, combined with ADAPT® shaping technology, we produced the first single-piece valves from significantly thinner tissue than what is currently available. These unique valves were successfully placed in the first animal in July 2018.

In addition, significant progress was made in the engineering of our placement and deployment mechanisms, including the lodgement of a patent for our valve deployment mechanism, as well as three additional patents along the catheter.

We have continued to pursue our partnership strategy with this project during the third quarter. During the period, we have identified our target partners and have made initial contact through our Advisory Board Key Opinion Leaders; discussions with potential partners are scheduled for quarter four.

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CORPORATE ACTIVITIES AND CASH FLOWS

Recapitalisation

The focus of this quarter was initiating and progressing a strategic review and recapitalisation plan which is ongoing. To date, this has resulted in the receipt of $12.7m in funds via Placements to new cornerstone investor, Star Bright Holding Ltd (Star Bright) and the replacement of the fully secured PFG debt facility of $10m ($5m drawn) with a more favourable unsecured loan for $5m.

The Company remains in voluntary suspension to facilitate completion of its recapitalisation plan.

Star Bright invest an additional $7.7m

As previously announced, Hong Kong based strategic investor, Star Bright Holding Ltd (together with its associates) increased its interest[3] in the Company to 19.99% through their purchase of an additional 68,889,502 shares for $7,685,527.

Chinese Joint Venture.

The Company has also begun negotiations with Star Bright to establish an Admedus commercial base in China as part of a joint venture (JV). A JV with a credible partner, and additional resources, will enable Admedus to enter the market in a way that was not previously possible and allow for the shared cost of the upcoming ADAPT® product registration study.

Loan Facility from Star Bright

Admedus has also entered a $5 million unsecured loan facility with Star Bright.

The terms of the facility are:

• 3-year term

• 5% per annum coupon, payable quarterly

• If shareholder approval is obtained, coupon payments can be made by Admedus issuing shares at the then prevailing VWAP during the five trading days prior to the interest payment date

• Purpose of loan is to repay the existing term loan from Partners For Growth (PFG) in full, with any remainder to be used for working capital

• If Admedus closes a pro rata entitlement offer within three months, the amount of the loan equal to the dollar amount of Star Bright’s and its associates’ entitlement that they take up under that offer is repayable at that. Admedus is in discussions with Star Bright about extending this period to give the Company sufficient time to complete the capital raising currently being prepared.

• The Company has the discretion to fully repay the loan at any time after three months and prior to maturity, subject to a 3% prepayment fee

The PFG loan (which had an interest rate of 11.75%) was fully repaid on 28 August 2018 and the security granted under that loan has since been released.

3 ASX Announcement, 10 May 2018, Admedus secures funding through further investment

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CASH FLOWS

The closing cash balance at 30 September 2018 was $6.4m, which has increased by $2.0m compared to 30 June 2018 and includes the following:

• Operating cash outflow of $5.5m, which has reduced from a cash outflow of $6.0m during the previous quarter and includes an ongoing investment in R&D of $1.0m.

• Investing activities of $0.1m relating to IT and office equipment.

• Net cash inflow from financing activities of $7.6m, driven by the additional shares purchased by Star Bright. The PFG loan was repaid through proceeds from the new unsecured loan with Star Bright, as mentioned above.

The operating cash outflows for quarter three were $0.8m higher than the estimate provided at June 2018, mainly due to timing of working capital payments and additional consultancy costs incurred as part of the strategic review and development of our global footprint.

The estimated quarter four operating cash outflow is $12.8m – refer section 9 below for details.

BOARD APPOINTMENTS

Dr Simon Buckingham has resigned as Non-Executive Director of Admedus Limited, effective 4 October 2018 to focus his efforts on early-stage private companies, not-for-profit foundations and advisory opportunities. Ms Catherine Costello also resigned as Executive Director and Company Secretary, effective 27 October 2018.

Dr Wenyi Gu was appointed as Nominee Non-Executive Director on 4 October 2018 for Star Bright Holding Ltd. Dr Gu currently works as a Research Fellow for the Australian Institute for Bioengineering and Nanotechnology at the University of Queensland.

Mr Steve Denaro was appointed to the Board of Directors as a Non-Executive Director and Company Secretary, effective 31 October 2018. Mr Denaro is a Chartered Accountant and Registered Tax Agent with more than thirty years of senior and Board level experience across publicly-listed companies.

IN SUMMARY

The third quarter results marked a continued affirmation of the strategy to pursue growth with the ADAPT portfolio globally which has now expanded to seven products, since beginning with one product two years ago. The quarter represented record sales results across the portfolio. Additional clinical data results became available, and operational costs as a percentage of revenue continued to decline. The Company continues to expand its portfolio with the development of R&D projects such as TAVR and the assessment of several other high-value catheter-based projects.

The Company has strengthened its balance sheet with large investors who also bring strategic benefits in key markets such as China. This will accelerate our entry and our available resources in this commercially important market. The market for TAVR and the ADAPT® portfolio is significant in China, with its future value to Admedus to be determined.

Our capital raise in the second quarter fell short of the target amount and left the Company requiring additional capital. Coupled with results for that quarter that did not meet guidance (although showed significant growth), the Company was put in a position where it was required

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to re-evaluate its capital strategy to better align with its portfolio, global footprint and development opportunities - as well the competitive environment in which it operates.

Going forward, the Company will remain focussed on high-growth strategic markets and products and will continue to advance its portfolio. The Company is pursuing opportunities to exit and divest its non-core business activities. This strategy will allow for greater focus on the high growth ADAPT® portfolio and potential cost savings from other areas.

While the underlying business is significantly outperforming the sectors in which it operates, the Company acknowledges that the share price has not followed the same trend largely due to capital concerns. The Company has taken specific actions to address its capital constraints while implementing strategies that focus on high growth products, key strategic markets, building alliances with strong partners, optimising sales force excellence, and delivering clinical data with superior outcomes.

Yours faithfully

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Wayne Paterson Chief Executive Officer

+Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity: Admedus Limited ABN 35 088 221 078

Quarter ended (“current quarter”)

30 September 2018

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	7,526 (970) (3,434) (216) - (5,970) (2,256) 21 (177)	21,695 (2,412) (10,795) (626) - (17,425) (6,425) 55 (422)
	(5,476)	(16,355)
2. Cash flows related to investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.2 Proceeds from disposal of: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	(100) -	(520) (400)
	(100)	(920)

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayments of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from /(used in) financing activities	7,686 (301) 5,000 (4,667) (165)	16,446 (760) 5,000 (5,000) (193)
	7,553	15,493
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter	4,426 (5,476) (100) 7,553 (26)	8,255 (16,355) (920) 15,493 (96)
	6,377	6,377
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the relate items in the accounts	Current quarter $A'000	Previous quarter $A'000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	5,864 513	4,315 111
	6,377	4,426
6. Payments to directors of the entity and their associates Current quarter $A'000 6.1 Aggregate amount of payments to these parties included in item 1.2 234 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
		Current quarter $A'000
		234
		-
Director fees and CEO remuneration

7.	Payments to related entities of the entity and	Current
	their associates	quarter
		$A'000
7.1	Aggregate amount of payments to these parties	-
	included in item 1.2
7.2	Aggregate amount of cash flow from loans to	-
	these parties included in item 2.3
7.3	Include below any explanation necessary to understand the transactions included in
	items 7.1 and 7.2

8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $A'000 Amount drawn at quarter end $A'000 8.1 Loan facilities 5,000 5,000 8.2 Credit standby arrangements - - 8.3 Other (please specify) 107 107 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.	Total facility amount at quarter end $A'000	Amount drawn at quarter end $A'000
	5,000 - 107	5,000 - 107

facilities as well.
•Star Bright Holding Ltd:	Interest rate: 5% per annum
$5m unsecured loan – fully drawn	coupon, payable quarterly1
The PFG Loan was fully repaid on 28 August 2018 and the security granted under
that loan was released.

• ANZ Financial guarantees - $107k

1 If shareholder approval is obtained, coupon payments can be made by Admedus issuing shares at the then prevailing VWAP during the 5 trading days prior to the interest payment date.

9.	Estimated cash outflows for nextquarter	$A'000	$A'000
9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8	Research and development Product manufacturing and operating costs Advertising and marketing Leased assets Staff costs Administration and corporate costs Other (repayment of borrowings & interest) Total estimated cash outflows	940 3,311 399 - 6,107 1,998 91
		12,846
10.	Acquisitions and disposals of business entities (items 2.1(b) and 2.2(b) above)	Acquisitions	Disposals
10.1 10.2 10.3 10.4 10.5	Name of entity Place of incorporation or registration Consideration for acquisition or disposal Total net assets Nature of business

Compliance statement

1. This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2. This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 31 October 2018

Director Print name: Wayne Paterson

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

About Admedus Limited

Admedus (ASX:AHZ) is a medical technologies company delivering clinically superior solutions that help healthcare professionals create life-changing outcomes for patients. Our focus is on investing in and developing next generation technologies with world class partners, acquiring strategic assets to grow product and service offerings and expanding revenues from our existing, profitable medical sales and distribution business. The company has assets from research & development through clinical development as well as sales, marketing and distribution.

For more information:

Admedus@we-buchan.com

Website: www.admedus.com Twitter: @Admedus Facebook: www.facebook.com/pages/Admedus