Cellmid 2017 Annual Report
16
DIRECTORS’
REPORT
CONTINUED
Principal activities and significant changes in nature of activities
The principal activities of the Group during the financial year were:
• Midkine Business: The development and commercialisation of diagnostic and therapeutic products for the management
of diseases such as cancer and various chronic inflammatory conditions by targeting midkine (Lyramid Limited and Kinera
Limited); and
• Consumer Health Business: The development and sale of over the counter (OTC) and cosmetic treatments to alleviate
excessive and abnormal hair loss and re establish the natural hair growth cycle (Advangen Limited)
There were no significant changes in the nature of the Group’s principal activities during the financial year.
2. OPERATING RESULTS AND REVIEW OF OPERATIONS FOR THE YEAR
Operating results
Revenue for the Group increased 44% to $4,496,338 (2016: $3,120,367) during the reporting period, with a 50% increase
in Consumer Health revenue (Japan and Australia) to $4,453,208 (2016: $2,962,306). Consolidated loss was up 27% to
$4,470,136 after providing for income tax (2016: $3,498,916 loss). The increase was primarily due to the investment made in
the US, which included product and brand development as well as manufacturing costs incurred in preparation for the launch
of the evolis® Professional range of FGF5 inhibitor hair loss products. An R&D tax credit of $831,408 was received during the
reporting period (2016: $1,121,562).
Review of operations
The Group achieved several major commercial milestones during FY2017 for the Consumer Health Business (Advangen
Limited) in Australia and Japan and launched its evolis® Professional range in the USA. In Australia, the focus remained on
its retail and online businesses increasing its pharmacy and online sales. In Japan, the Group’s sales in television shopping
channel QVC continued to increase and preparations commenced for the opening of the first Advangen concept store in
Tokyo. In the USA the Group signed a distribution partnership and completed brand development and product launch of its
evolis® Professional range during the period.
The Group’s Midkine Business, Lyramid Limited and Kinera Limited, continued the preclinical development programs and
demonstrated efficacy in several new disease models. Importantly, the Group has increased its key opinion leader network
and its intellectual property was the subject of a publication in Nature, the highest ranked scientific journal. In addition to
receiving the R&D tax credit of $831,408 the Group had an Innovation Connections grant awarded to the value of $100,000 by
the Federal Government for its research into chronic kidney disease, and secured funding for preclinical studies in myocardial
infarct with an R&D loan from Platinum Road during the period.
i. Consumer Health Business (Advangen Limited or Advangen)
The Consumer Health Business was set up to commercialise over the counter hair growth products based on the FGF5
inhibition technology developed by Advangen Inc. (Japan). Following the acquisition of Advangen Inc. (Japan) in May 2013,
the Group became the owner of global rights for the technology and has since rebranded and launched new products in
Australia and the USA, while continuing to achieve double digit sales growth in Japan.