IMUGENE LIMITED — Annual Report 2013

Aug 28, 2013

IMUGENE LIMITED

(ASX:IMU)

==> picture [27 x 24] intentionally omitted <==

– Appendix 4E Preliminary Final Report

(ASX Listing rule 4.2A) Company Name: Imugene Limited (the ‘Company’) ABN: 99 009 179 551 Reporting Period: Financial year ended 30 June 2013 Previous Reporting Period: Financial year ended 30 June 2012

Results for Announcement to the Market

The results of Imugene Limited for the year ended 30 June 2013 are as follows:

Revenues	Down	90.51%	to	$23,208
Loss after tax attributable to members	Down	50.23%	to	($1,559,566)
Net loss for the period attributable to members	Down	50.23%	to	($1,559,566)

Brief explanation of figures reported above

The loss for the Company after income tax for the reporting period was $1,559,566 (2012: $3,133,433).

For further details relating to the current period’s results, refer to the Review of Operations contained within this document.

Dividends

No dividends have been paid or declared by the Company since the beginning of the current reporting period. No dividends were paid for the previous reporting period.

Net Tangible Assets

	30 June 2013	30 June 2012
Net Tangible Assets	$619,151	$1,051,715
Shares (No.)	376,162,516	143,637,220
Net Tangible Assets (Cents)	0.16	0.73

Loss per Share

	30 June 2013	30 June 2012
Basic loss per share (cents)	0.48	2.18
Diluted loss per share (cents)	0.48	2.18

Details of entities over which control has been gained or lost during the period

On 17 July 2012 the Company acquired Lingual Consegna Pty Ltd, refer to note 16 for further details.

Status of Audit of Accounts

These accounts are currently in the process of being audited. An Annual Report for the year ended 30 June 2013 containing the Audit Report shall be provided in due course.

Page 1

==> picture [367 x 119] intentionally omitted <==

ABN 99 009 179 551

Appendix 4E Preliminary Final Report

For the Year Ended 30 June 2013

In Compliance with ASX Listing Rule 4.3A

Page 2

Table of Contents

Review of Operations	4
Consolidated Statement of Profit or Loss and Other Comprehensive Income	6
Consolidated Statement of Financial Position	7
Consolidated Statement of Changes in Equity	8
Consolidated Statement of Cash Flows	9
Notes to the Financial Statements	10
Corporate Directory	18

Page 3

Review of Operations

The Directors of Imugene Limited present their report on the Consolidated Entity consisting of Imugene Limited (“the Company or Imugene”) and the entities it controlled (“Consolidated Entity or Group”) during the year ended 30 June 2013.

Principal Activities

The Consolidated Entity is an Australian pharmaceutical company with a platform drug delivery platform technology at the centre of its assets. The platform allows drugs in tablet form to be delivered straight into the blood stream via the mouth accelerating onset of action and reducing side effects of absorption in the stomach.

Review of Operations

Operating Results

The Company reported a loss for the full-year ended 30 June 2013 of $1,559,566 (2012: $3,133,433). The loss is after fully expensing all research and development costs.

Summary Review of Operations

Imugene terminated its animal health vaccine portfolio in September 2012 after a final review. Imugene is a pharmaceutical business with a drug delivery platform at the centre of its assets focusing on consumer healthcare products and Vitamin D therapeutics.

Our three key messages are;

1. We have made rapid progress in advancing our technology for immediate returns.

2. We are committed to driving the business for the long term.

3. Our strategy for new innovation and new drug development is fully on track.

In February 2013, Imugene announced changes to its Board and Management structure with the appointment of Dr. Nicholas Ede as an Executive Director. Dr Ede has a record of successfully evolving research concepts to commercial products and processes. He has over 25 years’ experience in drug discovery and international business development gained at Chiron (acquired by Novartis), EqiTX, Mimotopes, Adistem and Consegna.

Along with the appointment of Dr Ede, existing Non-Executive Director, Mr Steve Harris, stepped forward to fill the role of Non-Executive Chairman of the Company following the resignation of the former Executive Chairman, Mr Fabio Pannuti.

The new Director and management structure, together with the existing Non-Executive Director, Mr Paul Hopper, has taken a very prudent approach to all expenditure, drug development, and overhead expenses by cutting monthly cash burn to 20% of 2012 levels.

The Board and Management Team have also engaged The CFO Solution with whom they’re working very closely with to manage all of the Company’s financial and company secretarial functions, which has resulted i n substantial cost and time savings allowing management to focus on fast-tracking its development programs.

Imugene continues to use outsource specialised professional partners and consultants to minimise its overall internal overhead, enabling maximum efficiency and focus from its personnel to generate product and early revenues.

During the twelve months ended 30 June 2013, the Company completed feasibility testing and formulation development for two initial Vitamin D formulations which have been enhanc ed using Imugene’s proprietary Linguet drug delivery technology.

Consumer Healthcare

Imugene is developing firstly a vitamin D supplement tablet, which melts in the mouth, better known as a “meltlet”. The novel formulation, which utilises the Company’s Linguet™ technology, is designed to address issues of the unpleasant taste of vitamins, and alleviate the stress that millions of people face worldwide who suffer with difficulty in swallowing particularly different forms of vitamin tablets. During the year, Imugene commissioned its own research to firstly validate the issues people have with swallowing and secondly, confirm a melt-in-the-mouth tablet is a solution that is desired. Our research has been supported by discussions held with Australian nutraceutical

Page 4

Continued.... Review of Operations

companies. The vitamins and supplements industry is big business in Australia, worth an estimated $1.5bn each year and the industry is growing at up to 12% annually.

Imugene is also developing a melt-in-the-mouth tablet for ibuprofen, marketed for example as Nurofen® by the Reckitt Benckiser company globally. In June 2013, Imugene contracted IDT Australia to manufacture its ibuprofen tablets. Linguet fast melt 200mg ibuprofen tablets will be formulated to dissolve in the mouth and can then be swallowed, with the goal being there is no burning from acidic ibuprofen and no throat catch. Global ibuprofen sales in 2011 were $US1.98B with the Nurofen® brand in 2012 contributing sales of $US472M (12% growth on 2011).

Therapeutic Program

One-third of Australian adults are Vitamin D deficient.

Imugene will develop a prescription Vitamin D tablet for buccal delivery. Linguet supports “buccal” administration of drugs straight to the blood stream via absorption through the lining of the mouth. There are direct links between several diseases such as diabetes, cancer and chronic kidney disease and a deficiency of vitamin D.

While current vitamin D supplements are available over the counter and by prescription, they do not deliver sufficient amounts or consistent amounts of Vitamin D due to the varying absorption of the drug when it is passed through the gastro-intestinal tract via an oral delivery method.

Commercialisation progress

Imugene’s formulations of Vitamin D have now advanced through formulation development. There is a high level of interest amongst pharmaceutical and nutraceutical companies for new and innovative forms of Vitamin D given the rising rates of deficiency and the lack of novel dosage forms in development. Imugene has commenced preliminary licensing discussions for its nutritional supplement form of Vitamin D.

Events Occurring After Reporting Date

In August 2013, Imugene reported that after completing formulation development on its novel Linguet form of Vitamin D, it had progressed to commercialisation discussions with Australian vitamin manufacturers and suppliers.

In August 2013, Imugene also reported the official granting of a key Japanese patent application for the Company’s novel drug delivery technology Linguet™ (patent no: 5256425), following on from an earlier allo wance in March 2013.

For and on behalf of the Company;

==> picture [88 x 62] intentionally omitted <==

Dr Nicholas Ede Executive Director Melbourne, Victoria

On this day the 29[th] August 2013

Page 5

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the Year Ended 30 June 2013

	30 June 2013 30 June 2012 Note $ AUD $ AUD
	Revenue Total Revenue 3 23,208 244,591 Other Income 3 184,012 46,446 Expenses Amortisation - (170,570) Business development (392,821) (84,102) Corporate administration expenses (691,312) (374,988) Commercialisation expenses (51,305) (488,248) Research and development expenses (603,321) (285,436) Impairment expenses 3 - (2,089,175) Unrealised foreign exchange (gain)/ loss (27,351) 68,049 Depreciation expense (676) -
	Loss before tax 4 (1,559,566) (3,133,433) Income tax expense 5 - -
	Net loss for theyear (1,559,566) (3,133,433)
	Other comprehensive income/ (expense)for theyear,net of tax - -
	Total comprehensive loss for theyear (1,559,566) (3,133,433)
	Loss per share for the year attributable to members of Imugene Ltd: Basic loss per share (cents per share) 0.48 2.18 Diluted loss per share (cents per share) 0.48 2.18

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

Page 6

Consolidated Statement of Financial Position

As at 30 June 2013

	30 June 2013 30 June 2012 Note $ AUD $ AUD
	ASSETS Current Assets Cash and cash equivalents 5 565,629 1,016,748 Trade and other receivables 6 53,522 - Current tax assets 7 - 266,672 Other 8 - 34,291
	Total Current Assets 619,151 1,317,711 Non-Current Assets Property, plant and equipment 9 - 676 Goodwill 10 960,527 - Intangible assets 10 1,004,817 -
	Total Non-Current Assets 1,965,344 676
	TOTAL ASSETS 2,584,495 1,318,387
	LIABILITIES Current Liabilities Trade and other payables 11 160,991 138,758 Provisions 12 5,571 106,216
	Total Current Liabilities 166,562 244,974 Non-Current Liabilities Other financial liabilities 13 531,467 -
	Total Non-Current Liabilities 531,467 -
	TOTAL LIABILITIES 698,029 244,974
	NET ASSETS 1,886,466 1,073,413
	EQUITY Issued capital 14 17,280,072 14,907,453 Option reserve 15 966,003 966,003 Accumulated loss 15 (16,359,609) (14,800,043)
	TOTAL EQUITY 1,886,466 1,073,413

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Page 7

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2013

		Contributed	Share Based	Accumulated	Total
		Equity	Payment	Losses
			Reserve
	Note	$ AUD	$ AUD	$ AUD	$ AUD
Balance as at 1 July 2011		14,907,453	966,003	(11,666,610)	4,206,846
Total comprehensive loss for theyear:		-	-	(3,133,433)	(3,133,433)
Balance at 30 June 2012		14,907,453	966,003	(14,800,043)	1,073,413
Total comprehensive loss for theyear:		-	-	(1,559,566)	(1,559,566)
Transactions with Equity holders in their
capacity as equity holders:
Shares issued	14	2,573,000	-	-	2,573,000
Capital raising costs	14	(205,381)	-	-	(205,381)
Options issued	14	5,000	-	-	5,000
Balance at 30 June 2013		17,280,072	966,003	(16,359,609)	1,886,466

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

==> picture [36 x 39] intentionally omitted <==

Page 8

Consolidated Statement of Cash Flows

For the Year Ended 30 June 2013

	30 June 2013 30 June 2012 Note $ AUD $ AUD
	Cash flows from operating activities Receipts from customers - 235,913 Payments to suppliers and employees (1,815,910) (1,500,109) Other income 447,267 298,274
	Net cash outflows from operating activities (1,368,643) (965,922)
	Cash flows related to investing activities Loans to other entities (5,721) - Interest received 23,208 8,679
	Net cash inflows from investing activities 17,487 8,679
	Cash flows related to financing activities Proceeds from issues of equity securities 1,132,999 - Capital raisingcosts (205,380) -
	Net cash inflows from financing activities 927,619 -
	Net decrease in cash and cash equivalents (423,537) (957,243) Cash and cash equivalents at the beginning of the period 1,016,753 1,905,942 Effects of exchange rate changes on cash and cash equivalents (27,587) 68,049
	Cash and cash equivalents at the end of the year 5 565,629 1,016,748

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Page 9

Notes to the Financial Statements

Note 1 - Statement of Significant Accounting Policies

Corporate Information

Imugene Limited (“Parent Entity”) is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The financial statements consist of consolidated financial statements for Imugene and its subsidiari es (“Group or Consolidated Entity”) .

The Company's Preliminary Financial Report does not include all the notes of the type normally included in an 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 entity as the full financial report.

This Preliminary Financial Report has been prepared in accordance with the recognition and measurement requirements, but not all disclosure requirements, of Australian Accounting Standards and Interpretations and the Corporations Act 2001. Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards.

Significant accounting policies adopted in preparation of the preliminary financial report are consistent with those adopted by the company in preparation of the 30 June 2012 financial report and the 31 December 2012 half year financial report.

The Preliminary Final Report has been prepared on an accruals basis and is based on historical costs, except for the revaluation of certain non-current assets and financial instruments. Cost is based on fair values of the consideration given in exchange for assets.

The preliminary financial report is presented in Australian dollars.

Note 2 - Dividends

The Company has resolved not to declare any dividends for the financial year ended 30 June 2013.

Note 3 - Profit and Loss for the year

Income Revenue Sub-license / contract research fees Interest received Other income Income Tax Refund Government Grant Other Expenses Impairment expense	Consolidated 30 June 2013 30 June 2012 $ $
	- 235,912 23,208 8,679
	23,208 244,591
	184,012 - - (11,715) - 58,161
	184,012 46,446
	- (2,089,175)
	- (2,089,175)

Page 10

Notes to the Financial Statements Continued.....

Note 4 - Segment Information

Management has determined, based on the reports reviewed by the chief operating decision maker that are used to make strategic decisions, that the Group has one reportable segment being the research, development and commercialisation of health technologies.

		Consolidated
	30 June	2013	30 June 2012
		$	$
Reportable segment revenue
Revenue, including interest income, is disclosed below based on the reportable segment:
Revenue from research, development and commercialisation	180,595		224,198
Revenue from other corporate activities	26,625		66,839
	207,220		291,037
		Consolidated
	30 June	2013	30 June 2012
		$	$
Reportable segment assets
Assets are disclosed based on the reportable segment:
Asset from research, development and commercialisation	1,965,344		266,672
Assets from other corporate activities:
Cash and cash equivalents	565,629		1,016,748
Other corporate assets	53,522		34,967
	2,584,495		1,318,387
		Consolidated
	30 June	2013	30 June 2012
		$	$
Reportable segment liabilities
Liabilities are disclosed based on the reportable segment:
Liabilities from research, development and commercialisation	692,458		138,758
Liabilities from other corporate activities:
Trade and other payables		-	-
Other corporate liabilities	5,571		106,216
	698,029		244,974
		Consolidated
	30 June	2013	30 June 2012
		$	$
Reportable segment profit/ (loss)
Profit/ (loss) are disclosed below based on the reportable segment:
Profit/ (loss) from research, development and commercialisation	(1,047,447)		(2,835,171)
Profit/ (Loss) from other corporate activities	(512,119)		(298,262)
	(1,559,566)		(3,133,433)

Page 11

Notes to the Financial Statements Continued.....

Note 5 - Cash

Cash at bank and in hand - AUD Cash at bank and in hand - USD

	Consolidated
30	June 2013	30 June 2012
	$	$
	565,629	46,480
	-	970,268
	565,629	1,016,748

Note 6 - Receivables

Trade receivables Amounts receivable from other entities

		Consolidated
	30	June 2013	30 June 2012
		$	$
		47,801	-
		5,721	-
		53,522	-

Note 7 - Tax Asset

Research and Development Tax Concession Receivable

		Consolidated
30	June	2013	30	June 2012
		$		$
		-		266,672
		-		266,672

Note 8 - Other Assets

Share placement - prepaid costs

		Consolidated
30	June	2013	30	June 2012
		$		$
		-		34,291
		-		34,291

Page 12

Notes to the Financial Statements Continued.....

Note 9 - Property. Plant & Equipment

Plant and equipment At cost Accumulated depreciation Total plant and equipment A reconciliation of movements in property, plant and equipment Plant and equipment Carrying amount at beginning of year Additions Depreciation expense Carrying amount at the end of year	Consolidated 30 June 2013 30 June 2012 $ $ 24,089 24,089 (24,089) (23,413) - 676 is as follows: 676 2,213 - - (676) (1,537) - 676

Note 10 - Intangible Assets

Note Patents, licenses and other rights Opening cost Additions Impairment charge Closing cost Accumulated amortisation Accumulated amortisation at the start of the year Amortisation charge Accumulated amortisation at the end of the year Opening net book amount Closing net book amount 16 Goodwill Opening cost Additions Impairment charge Closing cost 16	Consolidated 30 June 2013 30 June 2012 $ $
	3,027,920 5,117,095 1,004,817 - - (2,089,175)
	4,032,737 3,027,920
	(3,027,920) (2,857,350) - (170,570)
	(3,027,920) (3,027,920)
	- 2,259,745
	1,004,817 -
	- - 960,527 - - -
	960,527 -

Page 13

Notes to the Financial Statements Continued.....

Note 11 - Payables

Trade payables Other payables ote 12 - Provision Employee benefits - annual leave ote 13 - Other Financial Liabilities Note Expected future royalties payable 16		Consolidated 30 June 2013 30 June 2012 $ $
		96,736 116,879 70,592 21,879
		160,991 138,758
		Consolidated 30 June 2013 30 June 2012 $ $
		5,571 106,216
		5,571 106,216
		Consolidated 30 June 2013 30 June 2012 $ $
		531,467 -
		531,467 -

Note 12 - Provision

Note 13 - Other Financial Liabilities

Note 14 - Issued Capital

Note Ordinary shares 14(a) Options 14(b) Total at reporting date	30-June-2013 30-June-2012 No. $ AUD No. $ AUD
	376,162,516 17,275,072 143,637,220 14,907,453 50,000,000 5,000 - -
	17,280,072 14,907,453

Page 14

Notes to the Financial Statements Continued.....

Note 14 - Issued Capital (Continued)

Movements in equity during the year ended 30 June 2013 and prior year are set out below:

(a) Ordinary Shares
			30-June-2013		30-June-2012
		No.	$	No.	$
At the beginning of the period		143,637,220	14,907,453	143,637,220	14,907,453
Share issued duringtheperiod	(i)	232,525,296	2,367,619	-	-
Total at reportingdate		376,162,516	17,275,072	143,637,220	14,907,453

Rights of each type of share

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting or by proxy, is entitled to one vote. Upon a poll every holder is entitled to one vote per share held.

			Issue price
(i) 2013	Details	Number	$	$
31/07/2012	Share Placement	95,000,000	0.0100	950,000
31/07/2012	Acquisition of Lingual Consegna Pty Ltd	100,000,0001	0.0140	1,400,000
4/06/2013	Share Purchase Plan	33,888,932	0.0054	183,000
12/02/2013	Shares issued to corporate consultants	3,636,364	0.0110	40,000
	Transaction costs in relation to share issue	-	-	(205,381)
		232,525,296		2,367,619

1100,000,000 shares were released from escrow period on 31 July 2013.

(b) Options
			30-June-2013		30-June-2012
	Note	No.	$ AUD	No.	$ AUD
At the beginning of the period		-	-	-	-
Options issued duringtheperiod	(i)	50,000,000	5,000	-	-
Total at reportingdate		50,000,000	5,000	-	-

			Value at Grant
(i) 2013	Details	Number	date$AUD	$ AUD
3/08/2012	Unlisted advisor options (IMUAK), exercisable at	50,000,000	0.0001	5,000
	$0.02, expire on 31 December 2015*
		50,000,000		5,000

• The general terms and conditions of the options were:

• Life of 3.4 years from date of issue

• No dividends or voting rights attached

• Exercise price set at a premium to share price at date of entitlement.

• Vested at issue

• All shares allotted upon the exercise of Options will rank pari passu in all respects with other shares

Page 15

Notes to the Financial Statements Continued.....

Note 15 - Reserves and accumulated losses

a) Share-based payment reserve Opening balance Closing Balance b) Accumulated losses Opening balance Net profit/ (loss) for the year Closing Balance	Consolidated 30 June 2013 30 June 2012 $ $
	966,003 966,003
	966,003 966,003
	(14,800,043) (11,666,610) (1,559,566) (3,133,433)
	(16,359,609) (14,800,043)

Note 16 - Business Combination

On 17 July 2012, the Company acquired 100% of the issued share in Lingual Consegna Pty Ltd, a drug delivery technology company which holds the Linguet Patented Buccal Delivery intellectual property.

(a) Consideration

	$AUD
Ordinary Shares 100,000,000 in Imugene Ltd at $0.014 per share*	1,400,000
Total purchase consideration	1,400,000

(*) The issue price is based on the closing share price of Imugene Limited share quoted on ASX on date of acquisition. These shares were released from the escrow period on 31 July 2013.

(b) Fair Value

		Book value	Fair value adjustments	Total
	Note	$AUD	$AUD	$AUD
Assets
Cash and cash equivalents		-	-	-
Intangible assets		2,859,591	(1,854,774)	1,004,817
Total Assets	10	2,859,591	(1,854,774)	1,004,817
Liabilities
Trade and other payables		(33,877)	-	(33,877)
Expected royalties payable	13	(2,386,241)	1,854,774	(531,467)
Total Liabilities		(2,420,118)	1,854,774	(565,344)
Fair value of identifiable net assets		439,473	-	439,473
Goodwill	10			960,527
Total purchase consideration				1,400,000

Page 16

Notes to the Financial Statements Continued.....

Note 17 - Events Subsequent to Balance Date

There were no other events subsequent to reporting date that has not been disclosed elsewhere in this report.

Note 18 - Audit

These accounts are currently in the process of being audited. An Annual Report for the year ended 30 June 2013 containing the Audit Report shall be provided in due course.

Page 17

Corporate Directory

Directors

Mr Steve Harris - Non-Executive Chairman Mr Paul Hopper - Non-Executive Director Dr Nicholas Ede - Executive Director

Company Secretary

Mr Justyn Stedwell Mr Phillip Hains

Patent Attorney

David Collison Cave 1 Nicholson Street, Melbourne, Vic, 3002, Australia

Auditor

BDO Audit (WA) Pty Ltd 38 Station Street Subiaco, WA, 6008, Australia

Registered and Principal Office

Suite 1, 1233 High Street, Armadale, Vic, 3143, Australia Telephone: (61 3) 9824 5254 Facsimile: (61 3) 9822 7735

Share Register

Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace Perth, WA, 6000, Australia Telephone: 1300 557 010 International: (61 8) 9323 2000 Facsimile: (61 8) 9323 2033

Bankers

National Bank of Australia Level 2, 181 William Street, Melbourne, Vic, 3000, Australia

Securities Exchange Listing

Imugene Limited shares are listed on the Australian Securities Exchange (Symbol: IMU)

Website and Email

www.imugene.com Info@imugene.com

Securities Quoted

Australian Securities Exchange - Ordinary Fully Paid Shares (Code: IMU)

Page 18