BOTANIX PHARMACEUTICALS LTD — Interim / Quarterly Report 2018

Feb 25, 2018

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Appendix 4D

Half‐yearly report Botanix Pharmaceuticals Limited ABN 70 009 109 755

1. Company details

Name of entity: Botanix Pharmaceuticals Limited ABN: 70 009 109 755 Reporting period: For the half‐year ended 31 December 2017 Previous period: For the half‐year ended 31 December 2016

2. Results for announcement to the market

2. Results for announcement to the market
	31 Dec 2017	31 Dec 2016	% change
Revenues from ordinary activities	1,805,276	10,937	16,406%
Loss from continuing operations after tax attributable to the
owners of Botanix Pharmaceuticals Limited	(2,392,381)	(1,246,000)	(92%)
Loss for the half‐year attributable to the owners of Botanix
Pharmaceuticals Limited	(2,374,567)	(1,242,565)	(91.1%)

3. Net tangible assets per security

3. Net tangible assets per security
	31	Dec 2017 31 Dec 2016
		Cents	Cents
Net tangible asset per ordinary security		0.61	0.49

4. Dividends

No dividends were paid during the current or previous financial years and no dividends have been declared subsequent to the financial year end and up to the date of this report.

Botanix Pharmaceuticals Limited Appendix 4D Half-year report

5. Dividend reinvestment plans

There are no dividend or distribution reinvestment plans in operation.

6. Foreign entities

Not applicable.

7. Gain or loss of control over entities

There were no entities over which control was gained or lost during the half‐year ended 31 December 2017.

8. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Report.

9. Attachments

Details of attachments (if any):

The Interim Report of Botanix Pharmaceuticals Limited for the half‐year ended 31 December 2017 is attached.

10. Signed

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Graham Griffiths Non‐Executive Chairman Perth Date: 26 February 2018

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ACN 009 109 755

HALF YEAR REPORT

for the half year ended 31 December 2017

BOTANIX PHARMACEUTICALS LIMITED

ACN: 009 109 755

CONTENTS

CORPORATE INFORMATION ..................................................................................................................... .2 DIRECTORS’ REPORT ................................................................................................................................. .3 AUDITOR’S INDEPENDENCE DECLARATION ............................................................................................. .6 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ................... .7 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ........................................................................... .8 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................................................ .9 CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................................ 10 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ....................................................................... 11 DIRECTORS’ DECLARATION ....................................................................................................................... 17 INDEPENDENT AUDITOR’S REPORT .......................................................................................................... 18

This financial report covers Botanix Pharmaceuticals Limited ("Botanix" or the "Company") and its subsidiaries. The financial report is presented in Australian dollars.

Botanix Pharmaceuticals Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Botanix Pharmaceuticals Limited 68 Aberdeen Street Northbridge WA 6003

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

CORPORATE INFORMATION

Directors

Mr Graham Griffiths Non‐Executive Chairman

Mr Matthew Callahan Executive Director

Dr William Bosch Executive Director

Mr Robert Towner Non‐Executive Director

Registered Office

68 Aberdeen Street Northbridge WA 6003

Telephone: 086 555 2945 Fax: 086 210 1153

Email: info@botanixpharma.com Website: www.botanixpharma.com

Postal Address

P.O. Box 1407 SUBIACO WA 6904

Company Secretary Mr Simon Robertson

Solicitors

Home Securities Exchange:

Australian Securities Exchange Limited Level 40, Central Park 152 – 158 St George’s Terrace PERTH WA 6000

Gilbert + Tobin Level 16, Brookfield Place Tower 2, 123 St Georges Terrace Perth WA 6000

Auditor

ASX Code: BOT

Share Registry

Automic Registry Services Level 2, 267 St Georges Terrace PERTH WA 6000

BDO Audit (WA) Pty Ltd 38 Station Street SUBIACO WA 6008

Bankers

ANZ Level 1, 1275 Hay Street West Perth, WA 6005

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

DIRECTORS’ REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

The Directors of Botanix Pharmaceuticals Limited present the following report for the half‐year ended 31 December 2017:

DIRECTORS

The Directors in office at any time during the half year and until the date of this report are set out below:

Mr Graham Griffiths

Non‐Executive Director and Chairman

Mr Matthew Callahan

Executive Director

Dr William Bosch

Executive Director

Mr Robert Towner

Non‐Executive Director

PRINCIPAL ACTIVITIES

Botanix Pharmaceuticals is a clinical stage dermatology company, which is dedicated to developing new therapeutics for the treatment of serious skin diseases. Our mission is to improve the lives of patients battling acne, atopic dermatitis and other skin diseases, by providing new treatment options for conditions that currently are inadequately addressed, or are treated with therapeutics that are burdened with significant side effects profiles. Botanix is harnessing the potential of a synthetic form of a natural compound (known as cannabidiol), which has a well‐established safety profile and has been studied successfully in a range of other therapeutic areas.

Botanix has successfully completed its first acne patient studies with its lead product, BTX 1503 and is currently conducting another patient study in atopic dermatitis (severe eczema) subjects for its second clinical program, BTX 1204. The Company has an exclusive license to use a proprietary drug delivery system (Permetrex[TM] ) for direct skin delivery of active pharmaceuticals in all skin diseases and plans to progress the development of BTX 1503, BTX 1204 and its pipeline of other Permetrex[TM] enabled products alone, or in collaboration with partners.

REVIEW OF OPERATIONS AND RESULTS

Net loss after income tax of the Company for the six months ended 31 December 2017 was $2,392,381 (2016: loss $1,246,000). The net loss is attributable to expenditure in relation to the research and development activities and general administration costs associated with an ASX listed company.

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

OPERATIONS

BTX 1503 – moderate to severe acne

In early July 2017, Botanix announced the successful completion of its Phase 1 study designed to evaluate the safety, tolerability, and pharmacokinetics (how much drug gets into the blood stream) for its lead acne program, BTX 1503. Top line data demonstrated that BTX 1503 has an excellent safety profile, with little to no skin irritation and also no severe adverse events were recorded. Data also suggested that a significant amount of drug was effectively delivered into the layers of the skin where the target organs for the treatment of acne are located. This clinical study was the first to be conducted globally using active synthetic cannabidiol for the treatment of skin disease, and was completed within 12 months of the Company’s listing.

Following the Phase 1 study completion, Botanix rapidly initiated its first patient study (Phase 1b) for BTX 1503 acne treatment in late‐August 2017. This study was designed to evaluate the safety of BTX 1503 and looked to collect data concerning improvements in acne signs and symptoms in patients with moderate to severe disease. The Phase 1b acne study was conducted at four of the leading acne investigative sites in Australia, with enrolment completed in mid‐December, ahead of target. As outlined in the subsequent events section below, on 29 January 2018, Botanix announced the successful completion of Phase 1b BTX 1503 study in patients with moderate to severe acne, with the study achieving all designated endpoints.

During the Phase 1b study, Botanix also began its preparation to file an Investigational New Drug (IND) application with the United States Food and Drug Administration (FDA) to start the US approval process for BTX 1503. In October Botanix held a Pre‐IND meeting with the FDA’s Division of Dermatology and Dental Products which provided Botanix with an opportunity to seek clarification and support from the FDA on the development plan and data package required to begin Phase 2 clinical studies in the US. The meeting also enabled Botanix to gain consensus from the FDA on the overall drug development plan required for BTX 1503, to support a New Drug Application (NDA) approval in the US.

BTX 1204 – atopic dermatitis

In October 2017, Botanix also commenced its first BTX 1204 atopic dermatitis patient study, after receiving approval from the Human Research Ethics Committee approval (HREC). The Phase 1b patient study is being conducted in Australia at four leading dermatology clinics and is planned to be completed in Q2 CY2018. The study is a randomised, double blind, vehicle (placebo) controlled study, which is designed to evaluate the safety and tolerability of BTX 1204 in patients with mild to moderate atopic dermatitis. The first patients of the study were enrolled in November 2017.

Pipeline products: BTX 1801, BTX 1308 and BTX 1701

Botanix also advanced other pipeline products that utilise the Company’s proprietary Permetrex[TM] delivery technology during the first half of 2017/2018. The Company completed formulation work on BTX 1801, a new pipeline product that has not been announced as yet, with pre‐clinical testing expected to commence in 2Q CY2018. Furthermore, Botanix successfully completed a small patient study at a leading dermatology clinic in the United States for its acne cleanser, BTX 1701. Preliminary results demonstrated positive safety outcomes and indicated that the daily application of BTX 1701 reduces oil levels on the skin and kills P. Acnes , (the bacteria associated with acne), from the surface of the skin, more effectively than a leading facial cleanser product.

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

OPERATING AND FINANCIAL REVIEW (CONTINUED)

Business development and strategic partnerships (Permetrex[TM] )

During the half year Botanix initiated a number of paid collaborations with multiple partners to utilise the Permetrex[TM] delivery technology to formulate those partners’ new drugs in development. These collaborations involve undertaking early stage paid formulation work for select collaborators, which will be followed by human skin testing and potentially human clinical studies to compare the Permetrex[TM] formulation, with the formulation the partner is working with Botanix to improve. This work helps to offset the Company’s operational costs and may also translate into future licensing opportunities for the Permetrex[TM] platform. Multiple technology licenses can provide immediate revenue and the potential for substantial revenues from milestone payments and royalties, at no additional cost to Botanix.

Subsequent to the reporting period

On 29 January 2018, Botanix announced the successful completion of Phase 1b BTX 1503 study in patients with moderate to severe acne. The Phase 1b study achieved all designated endpoints, with top line data indicating that BTX 1503 has an excellent safety profile, is very effective at reducing the number of inflammatory and non‐inflammatory acne lesions and shows an improvement in patient satisfaction. Importantly, BTX 1503 had a dramatic effect on the reduction of inflammatory lesions or pimples, reducing them on average after only 4 weeks by 47%, which is a more substantial effect than both of the 2 leading topical acne products in the US. Between them, these 2 leading products (Epiduo and Aczone) generate revenues of close to $US1billion in annual sales.

Botanix also successfully completed a placement to raise approximately A$15m on 5 February 2018. The placement was significantly oversubscribed with strong support from more than 10 new institutional investors. Funds raised will be used to accelerate clinical development of its lead acne product, BTX 1503, progress other key pipeline products and enable its broader commercialisation strategy.

On the 16 January 2018 the Company announced that it received the Research and Development Tax Incentive refund.

AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

The Auditor’s Independence Declaration is set out on page 6 and forms part of the Directors’ Report for the half year ended 31 December 2017.

Signed in accordance with a resolution of the Directors.

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Graham Griffiths Non‐Executive Chairman

Perth 26 February 2018

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Tel: +61 8 6382 4600 38 Station Street Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF BOTANIX PHARMACEUTICALS LTD

As lead auditor for the review of Botanix Pharmaceuticals Ltd for the half-year ended 31 December 2017, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the review; and

2. No contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Botanix Pharmaceuticals Ltd and the entities it controlled during the period.

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Dean Just

Director

BDO Audit (WA) Pty Ltd

Perth, 26 February 2018

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the half‐year ended 31 December 2017

Note Revenue from continuing operations Interest revenue Revenue Total revenue from continuing operations Other revenue Research and Development incentive scheme Total revenue Employee benefits expense Finance expense Foreign exchange losses Research and Development Professional consultant expense Share based payments Other expenses Travel expenses Total expenses Loss before income tax expense Income tax benefit Loss after income tax for the half year Other Comprehensive Income for the half year: Items that may be reclassified subsequently to profit or loss: Foreign exchange translation difference Other Comprehensive income for the period, net of tax Total Comprehensive Loss for the half year attributed to members of Botanix Pharmaceuticals Limited Loss per share for the half year attributable to members of Botanix Pharmaceuticals Limited: Basic and diluted Loss per share for the year attributable to members of Botanix Pharmaceuticals Limited (cents): Basic and diluted loss per share (cents)	Consolidated Consolidated 31 December 31 December 2017 2016 $ $ 27,358 10,937 145,005 ‐
	172,363 10,937
	1,632,913 ‐
	1,805,276 10,937
	(189,571) (187,401) (1,145) (296) (4,876) (20,250) (3,329,505) (767,175) (362,630) (34,538) (250,029) (11,196) (34,493) (192,011) (25,408) (44,070)
	(4,197,657) (1,256,937)
	(2,392,381) (1,246,000)
	‐ ‐
	(2,392,381) (1,246,000)
	17,814 3,435
	17,814 3,435
	(2,374,567) (1,242,565)
	(0.44) (0.30)

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2017

Note ASSETS Current Assets Cash & cash equivalents Trade and other receivables 2 Total Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 3 Total Current Liabilities Total Liabilities Net Assets EQUITY Contributed equity 4 Share based payment reserves 5 Foreign currency translation reserve 5 Accumulated losses 5 Total Equity	Consolidated Consolidated 31 December 30 June 2017 2017 $ $ 2,245,956 5,720,514 1,892,821 186,909
	4,138,777 5,907,423
	4,138,777 5,907,423
	846,492 470,600
	846,492 470,600
	846,492 470,600
	3,292,285 5,436,823
	11,611,844 11,631,844 517,416 267,387 36,881 19,067 (8,873,856) (6,481,475)
	3,292,285 5,436,823

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the half‐year ended 31 December 2017

Note Balance at 1 July 2016 Total comprehensive loss for the period Loss for the half year Total other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as equity holders: Ordinary shares issued net of costs Options issued during the period Options expired during the period Balance at 31 December 2016 Balance at 1 July 2017 Total comprehensive loss for the period Loss for the half year Total other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as equity holders: Costs associated with Ordinary shares Options issued during the period 5 Balance at 31 December 2017	Contributed Equity Accumulated Losses Share Based Payment Reserve Translation Reserve Total $ $ $ S $
	4,716,525 (1,708,377) 166,410 6,356 3,180,914
	‐ (1,246,000) ‐ ‐ (1,246,000) ‐ ‐ ‐ 3,435 3,435
	‐ (1,246,000) ‐ 3,435 (1,242,565)
	66,723 ‐ ‐ ‐ 66,723 ‐ ‐ 11,196 ‐ 11,196 ‐ ‐ ‐ ‐ ‐
	4,783,248 (2,954,377) 177,606 9,791 2,016,268
	11,631,844 (6,481,475) 267,387 19,067 5,436,823
	‐ (2,392,381) ‐ ‐ (2,392,381) ‐ ‐ ‐ 17,814 17,814
	(2,392,381) 17,814 (2,374,567)
	(20,000) ‐ ‐ ‐ (20,000) ‐ ‐ 250,029 ‐ 250,029
	11,611,844 (8,873,856) 517,416 36,881 3,292,285

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

CONSOLIDATED STATEMENT OF CASH FLOWS

For the half‐year ended 31 December 2017

CONSOLIDATED STATEMENT OF CASH FLOWS For the half‐year ended 31 December 2017
Note CASHFLOWS FROM OPERATING ACTIVITIES Interest received Research and Development Payments to suppliers & employees Finance costs Net cash used in operating activities CASHFLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares net of costs Repayments of borrowings Net cash provided by financing activities Net decrease in cash held Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	31 December 31 December 2017 2016 $ $ 46,752 10,937 (2,878,701) (786,310) (621,464) (389,747) (1,145) (296)
	(3,454,558) (1,165,416)
	(20,000) 66,723 ‐ (181,667)
	(20,000) (114,944)
	(3,474,558) (1,280,360) 5,720,514 3,651,986
	2,245,956 2,371,626

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 December 2017

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES

The half‐year financial report is a general purpose financial report prepared in accordance with AASB 134 ‘Interim Financial Reporting’ and the Corporations Act 2001.

The half‐year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity. The half‐year financial report should be read in conjunction with the annual financial report of Botanix Pharmaceuticals Limited as at 30 June 2017 which was prepared in accordance with the requirements of the Corporations Act 2001 and applicable Australian Accounting Standards. It is also recommended that the half‐year financial report be considered together with any public announcements made by the company during the period 1 July 2017 to the date of this report in accordance with the continuous disclosure obligations of the ASX listing rules.

(a) Basis of Accounting

The half‐year financial report has been prepared on the basis of historical cost, except where stated. For the purpose of preparing the half‐year financial report, the half‐year has been treated as a discrete reporting period.

The half‐year financial report has been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

(b) Segment Reporting

Operating segments are reported in a manner that is consistent with the internal reporting provided to the Board of Directors. The Board, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic steering committee.

(c) Contributed Equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

(d) Government grants

Government grants are assistance by the government in the form of transfers of resources to the Company in return for past or future compliance with certain conditions relating to the operating activities of the entity. Government grants include government assistance where there are no conditions specifically relating to the operating activities of the Company other than the requirement to operate in certain regions or industry sectors. Government grants relating to income are recognised as income over the periods necessary to match them with the related costs and grants relating to assets are regarded as a reduction in asset. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised as income of the period in which it becomes receivable.

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Adoption of New and Revised Accounting Standards

The accounting policies applied by the Group in this consolidated interim financial report are the same as those applied by the Group in its consolidated financial report as at and for the year ended 30 June 2017.

In the half‐year ended 31 December 2017, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2017.

It has been determined by the Directors that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group accounting policies.

The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the half‐year ended 31 December 2017. The Directors have decided against early adoption of any new Standards and Interpretations. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change necessary to Group accounting policies.

The half year financial report was approved by the Board of Directors on 26 February 2018.

NOTE 2: TRADE AND OTHER RECEIVABLES

Current: Trade receivables Government grant Other receivables Prepaid expenses OTE 3: TRADE AND OTHER PAYABLES Current: Trade payables Sundry payables & accrued expenses	31 December 30 June 2017 2017 $ $ 143,808 ‐ 1,632,913 ‐ 111,627 162,535 4,473 24,374
	1,892,821 186,909
	31 December 30 June 2017 2017 $ $ 834,376 453,600 12,116 17,000
	846,492 470,600

NOTE 3: TRADE AND OTHER PAYABLES

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 December 2017

NOTE 4: CONTRIBUTED EQUITY

31 December 2017 Number 31 December 2017 $ 30 June 2017 Number 30 June 2017 $ Fully paid ordinary shares 543,111,296 11,631,844 543,111,296 11,631,844 (b) Movements in fully paid shares on issue Number $ Balance as at 1 July 2017 543,111,296 11,631,844 Capital raising costs ‐ (20,000) Balance as at 31 December 2017 543,111,296 11,611,844 Issued Options Number $ Unlisted Options 47,846,315 517,416 Movements in options on issue Balance as at 1 July 2017 47,846,315 267,387 Add: Director options vesting expense ‐ 73,302 Add: Employee options vesting expense ‐ 57,355 Add: Consultants options vesting expense ‐ 119,372 Balance as at 31 December 2017 47,846,315 517,416	31 December 2017 Number 31 December 2017 $ 30 June 2017 Number 30 June 2017 $ 543,111,296 11,631,844 543,111,296 11,631,844	31 December 2017 Number 31 December 2017 $ 30 June 2017 Number 30 June 2017 $ 543,111,296 11,631,844 543,111,296 11,631,844
		Number $ 543,111,296 11,631,844 ‐ (20,000) 543,111,296 11,611,844 Number $ 47,846,315 517,416 47,846,315 267,387 ‐ 73,302 ‐ 57,355 ‐ 119,372 47,846,315 517,416

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 December 2017

NOTE 5: RESERVES & ACCUMULATED LOSSES

Reserves Share based payments reserve Balance at beginning of year Director Options vesting expense Employee Options vesting expense Consultants Options vesting expense Balance at end of period Foreign currency translation reserve Balance at beginning of year Effect for foreign currency translation during the year Balance at end of period	31 December 30 June 2017 2017 $ $ 554,297 292,179
	267,387 166,410 73,302 84,457 57,355 16,520 119,372 ‐
	517,416 267,387
	19,067 6,356 17,814 12,711
	36,881 19,067

Share Based Payments Reserve

The share‐based payments include the following:

• Items recognised as expenses on valuation of employee and director share options but not exercised.

• Options issued to non‐related parties in exchange for cash or services but not yet exercised.

Foreign Currency Translation Reserve

The foreign currency translation reserve includes the following:

• Effect of foreign currency translation of foreign subsidiary at period end

Accumulated Losses Movements in accumulated losses were as follows: Balance at beginning of year Net loss for the year – continuing operations Balance at end of period	31 December 30 June 2017 2017 $ $ (6,481,475) (1,708,377) (2,392,381) (4,773,098)
	(8,873,856) (6,481,475)

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 December 2017

NOTE 6: SEGMENT REPORTING

The segment report for the reporting period ending 31 December 2017 is as follows:

2017 Segment Performance Other income Net other costs Research and development grant Segment net profit / (loss) before tax as per statement of profit or loss and other comprehensive income Segment Assets Total assets as per statement of financial position Segment Liabilities Total liabilities as per statement of financial position 2016 Segment Performance Other income Net other costs Segment net profit / (loss) before tax as per statement of profit or loss and other comprehensive income Segment Assets Total assets as per statement of financial position Segment Liabilities Total liabilities as per statement of financial position	Research & Development Corporate Consolidated $ $ $ 145,005 27,358 172,363 (3,329,505) (868,152) (4,197,657) 1,632,913 ‐ 1,632,913
	(1,551,587) (840,794) (2,392,381)
	1,632,913 2,505,864 4,138,777
	(725,572) (120,920) (846,492)
	Research & Development Corporate Consolidated $ $ $ ‐ 10,397 10,937 (801,714) (455,224) (1,256,937)
	(801,714) (444,286) (1,246,000)
	‐ 2,410,004 2,410,004
	(292,095) (106,502) (398,597)

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 December 2017

NOTE 7: CONTINGENT ASSETS & LIABILITIES

The Directors are not aware of any contingent assets or liabilities that may arise from the Group’s operations as at 31 December 2017.

NOTE 8: EVENTS OCCURRING AFTER THE REPORTING PERIOD

On 29 January 2018, Botanix announced the successful completion of Phase 1b BTX 1503 study in patients with moderate to severe acne. The Phase 1b study achieved all designated endpoints, with top line data indicating that BTX 1503 has an excellent safety profile, is very effective at reducing the number of inflammatory and non‐inflammatory acne lesions and shows an improvement in patient satisfaction. Importantly, BTX 1503 had a dramatic effect on the reduction of inflammatory lesions or pimples, reducing them on average after only 4 weeks by 47%, which is a more substantial effect than both of the 2 leading topical acne products in the US. Between them, these 2 leading products (Epiduo and Aczone) generate revenues of close to $US1billion in annual sales.

Botanix also successfully completed a placement to raise approximately A$15m on 5 February 2018. The placement was significantly oversubscribed with strong support from more than 10 new institutional investors. Funds raised will be used to accelerate clinical development of its lead acne product, BTX 1503, progress other key pipeline products and enable its broader commercialisation strategy.

On the 16 January 2018 the Company announced that it received the Research and Development Tax Incentive refund.

No other matter or circumstance has arisen since the end of the financial period which significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial periods.

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BOTANIX PHARMACEUTICALS LIMITED ACN: 009 109 755

DIRECTORS’ DECLARATION

In the opinion of the Directors of Botanix Pharmaceuticals Limited (‘the Company’):

1. The attached financial statements and notes thereto are in accordance with the Corporations Act 2001 including:

2. a. complying with Accounting Standards AASB 134: ‘Interim Financial Reporting’ , the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

3. b. giving a true and fair view of the Group’s financial position as at 31 December 2017 and of its performance for the half year then ended.

4. 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 signed in accordance with a resolution of the Board of Directors made pursuant to s.303 (5) of the Corporations Act 2001.

On behalf of the board

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Graham Griffiths Non‐Executive Chairman

Perth 26 February 2018

17

Tel: +61 8 6382 4600 38 Station Street Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Botanix Pharmaceuticals Ltd

Report on the Half-Year Financial Report

Conclusion

We have reviewed the half-year financial report of Botanix Pharmaceuticals Ltd (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2017, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the halfyear then ended, and notes comprising a statement of accounting policies and other explanatory information, and the directors’ declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of the Group is not in accordance with the Corporations Act 2001 including:

• (i) Giving a true and fair view of the Group’s financial position as at 31 December 2017 and of its financial performance for the half-year ended on that date; and

• (ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Directors’ responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2017 and its financial performance for the half-year ended on that date and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of the Group, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

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A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Group, would be in the same terms if given to the directors as at the time of this auditor’s review report.

BDO Audit (WA) Pty Ltd

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Dean Just

Director

Perth, 26 February 2018