Mar 31, 2018
DIRECTORS REPORT
Dear Shareholders
The Directors submit to you the 28th Annual Report on the business & operations of the Company and Audited Statement of Accounts for the year ended 31 st March, 2018 along with the Auditor''s Report thereon.
Financial Results (Rs. in Lakhs)
Particulars |
2017-2018 |
2016-2017 |
Total Income |
749.09 |
93.84 |
Operational, Administration and other expenses |
222.34 |
284.19 |
Gross Operating Profit |
526.75 |
(190.34) |
Interest and Financial Charges |
102.82 |
43.00 |
Forex Gain/Loss |
0.0132 |
0.00 |
Depreciation |
989.14 |
1752.71 |
Profit before Tax/Loss |
(565.22) |
(1986.06) |
Provision for Tax |
78.61 |
0.00 |
Net Profit/Loss |
(643.83) |
(1986.06) |
OPERATIONS
The total income of the company for the year ended 31st March, 2018 amounted to Rs. 749.09 Lakhs as against Rs- 93.84 Lakhs in the previous year. The company incurred a net Loss of Rs. 643.83 Lakhs for the year as against a loss of Rs. 1986.06 Lakhs in the previous year. As can be noticed, the management started the exercise to revise books of accounts and has written off certain accounts after following the standard accounting policies of India and in consultation with the auditors. This revision has resulted in increased operational profit as compared to operational loss in the previous year.
Review and results of operations
The unfortunate incidence of fraud in the form of GDRs and subsequent SEBI order has adversely impacted on the companyâs operations. However, with prudence and commitment, the management continues to keep the technologies moving forward. Monies raised from sale of unused assets are being utilized to continue the said operations.
It is indeed heartening and provides a boost to the morale of the scientists and the management in general on various and important patents received during the recent past, a testimony of the strengths of technologies that your company possesses.
Transgene is currently working on two technology platforms - Oral delivery of proteins and peptides and AAV.
Although Transgene demonstrated excellent glucose reduction following oral delivery of Insulin certain technical issues have been noted and these are being addressed in the oral delivery of Insulin and its analogues.
The technology has also demonstrated excellent results in the animal studies on oral delivery of Tetanus and other vaccines hitherto possible only though injections.
AAV technology is progressing well and we expect to reach some important milestones during the next one year.
GDR issue
The management hopes that SEBI passes a final order soon giving relief from all sanctions it imposed in the interim order.
On the aspect of GDR funds being siphoned out illegally from the companyâs accounts, the legal teams in London and Singapore are still in pursuit of recovery of those funds. The management hopes a final resolution may be forthcoming in the next few months.
Intellectual property and patents: We are indeed pleased with receipt and approvals of patents from countries such as USA, UK, France, Germany and Italy etc during the last few months on our flagship oral delivery technology.
Although we believe that our patents provide certain protection from competition, we caution that such patents may not be of substantial protection or of commercial benefit to us and they may not afford us adequate protection from competing products, or they will not be challenged or declared invalid in future.
Employee: With limitation of funding sources, the management has been judicious in maintaining optimal strength of the employees to continue its operations without any interruption.
DIVIDEND
Your Directors are unable to recommend any dividend since the company has not made any profits.
STRATEGIC FOCUS AND FUTURE ORIENTATION:
It is an undeniable fact that GDR issue and the consequent SEBI order has crippled the operations of the company at a most crucial time of the company few years ago. However, undeterred with such challenges, the management continued to fight on all fronts while making sure that the core of the company i.e., its technologies do not get derailed completely. It is particularly noteworthy that various patents filed in various prestigious countries have now been approved even though such patent filings and approvals required significant funds.
With the foresight of the management and with approval from the shareholders the management managed to overcome such challenges on the financial front with the monies raised from the sale of unused assets of the company.
It is with that kind of support your company manages to continue with technologies more particularly on oral anti-diabetic molecules and oral delivery of vaccines. As you may realise, oral delivery of Insulin or its analogues and oral delivery of vaccines hitherto possible only through injections have the potential on the global front. Unfortunately, as mentioned elsewhere our operations have been severely curtailed by GDR issue and SEBI order not only in terms of advancing our exciting technologies but also in terms of getting strategic partners. The management sincerely hopes that SEBI will relent on its earlier interim order based on the strength and voluminous evidence presented to it. Once this order is vacated, we sincerely hope that it will provide the momentum required to bring in the expected results on the technology front which has been eluding the company for many years.
Subsidiary Company - Transgene Biotek HK Limited
Although no activities have been undertaken at the subsidiary during the last few years including the year 2017-18, the management feels that with the ongoing investigation by the serious fraud investigation team in Singapore and Hong Kong, it is better and prudent to wait for some more period before deciding for its closure. With no operations carried out in the year 2017-18, the management has not found it relevant to have this subsidiary audited.
However, the focus has not been lost regarding the irregularities committed through the account at Standard Chartered Bank, Singapore with efforts continuing for the recovery of funds transferred illegally from its account. A Statement pursuant to Section 129, read with Rule 5 of the Companies (Accounts) Rules, 2014 in Form AOC - 1 is attached as âAnnexure -Aâ
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report, pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Report and is annexed hereto as âAnnexure B".
CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
Your Company has taken adequate steps to adhere to all the stipulations laid down in under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance is included as part of this Annual Report as âAnnexure - Câ.
Certificate from the Statutory Auditors of the company M/s. Lakshmi & Associates, Chartered Accountants confirming the compliance with the conditions of Corporate Governance as Stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is included as part of this report as âAnnexure D"
DEMATERIALISATION OF SHARES
86.80% of the companyâs paid up Equity Share Capital is in dematerialized form as on 31 st March, 2018 and balance 13.02 % is in physical form. The Companyâs Registrars are M/s. Big Share Services Pvt Ltd, 306, Right Wing, 3rd Floor, Amrutha Ville, Opp.Yashoda Hospital, Raj Bhavan Rd, Somajiguda, Hyderabad, Telangana-500 082.
Number of Board Meetings held
The Board of Directors duly met 5 (Five) times during the financial year from 1 st April, 2017 to 31 st March 2018 the details of which are furnished in the report on Corporate Governance.
Board evaluation
The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015).
The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.
The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.
The Board and the Nomination and Remuneration Committee (âNRCâ) reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.
In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.
Appointment of Independent Directors
As was the case last year too, company is having only one Independent Director for the relevant year 2017-18. Although it is supposed to have at least two Independent Directors, keeping in view of the SEBIâs directive on GDR issues no one is showing interest to serve the Company as Independent Directors however, we managed to invite and appoint one additional independent Director in May 2018.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that:
a) In the preparation of the annual accounts for the year ended 31 st March, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the loss of the company for the same period;
c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) They have prepared the annual accounts on a going concern basis;
e) They have laid down internal financial controls in the company that are adequate and were operating effectively.
f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.
Deposits from public
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
RISK MANAGEMENT POLICY OFTHE COMPANY
The Company has formulated and adopted a risk management policy at its Board Meeting. As per the policy, the management continues to review and assess the risk and also the steps for mitigating the same.
CORPORATE SOCIAL RESPONSIBILITY
The provisions of Section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility does not apply to the company.
Policy on directors âappointment and remuneration and other details
The Companyâs policy on directorsâ appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the directorsâ report.
Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.
Auditorsâ report and Secretarial auditorsâ report:
The auditorsâ report and Secretarial auditorsâ report contain certain qualifications, reservations or adverse remarks. Report of the secretarial auditor is given as an annexure which forms part of this report - âAnnexure - E"
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
(A) The operations of the company are not power intensive nevertheless the company continues its efforts to minimize energy wherever practicable by economizing on the use of power at the offices
(B) Technology absorption NIL
(C) Foreign exchange earning 11.82 Lakhs
(D) Foreign exchange outflow NIL RELATED PARTY TRANSACTIONS
There were no transactions which have been entered into with related parties of the Directors or the Key Managerial Personnel of the company.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as âAnnexure - F"
Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments have been disclosed in the financial statements.
ACKNOWLEDGEMENT
Your Directors take this opportunity to express their sincere thanks and place on record their appreciation of the continued assistance and co-operation extended to the company by its bankers, government and semi government departments, customers, marketing agents and suppliers and in particular Shareholders for the confidence reposed in the company
Your directors also thank all the employees of the company for their dedicated service without which your company would not have achieved those results.
By the Order Of the Board
For TRANSGENE BIOTEK LIMITED
PLACE : HYDERABAD Sd/-
DATE : 14.11.2018 Dr. K. KOTESWARA RAO
CHAIRMAN & MANAGING DIRECTOR
Mar 31, 2015
Dear Members
The Directors invite you to the 25th Annual Report on the business &
operations of the company and Audited Statement of Accounts for the
year ended 31st March, 2015 along with the Auditor's Report thereon.
Financial Results :
(Rs. in Lakhs)
Particulars 2014-15 2013-14
Total Income 33.27 178.11
Operational, Administration
and other expenses 1946.22 2002.42
Gross Operating Profit (1912.94) (1824.31)
Interest and Financial Charges 35.97 0.48
Forex Gain/Loss 0.00 0.00
Depreciation 1718.05 1721.55
Profit before Tax/Loss (1913.55) (1819.10)
Provision for Tax 0.00 0.00
Net Profit (1913.55) (1819.10)
OPERATIONS
The total turnover of the company for the year ended 31st March, 2015
amounted to Rs. 33.27 Lakhs as against Rs.178.11 Lakhs in the previous
year. The company incurred a net Loss of Rs. 1913.55 Lakhs for the year
as against a loss of Rs.1819.10 Lakhs in the previous year.
Review and results of operations
As can be seen, although we started the production of DHA at the purpose
built cGMP compliant biologics manufacturing facility at our partner's
plant in our vicinity, we are facing tough challenges in pushing the
product into markets in spite of the quality of the product produced
being consistently good, possibly due to our inability to campaign and
undertake certain strategic marketing activities. We are hampered by our
inability to raise any finances for marketing operations due to adverse
impact from the unfortunate SEBI order passed last year on the Directors
and promoters.
The operations of the company have been severely impacted to a
significant level due to lack of financial support following the SEBI
interim order on the Directors and promoters of the company in November
2014. This matter is being addressed through available legal channels.
Likewise, operations of the company have been impacted due to lack of
sufficient financial support from banks and institutions as a result of
adverse impact from SEBI order. The management is trying hard to
overcome such challenges through available means at its disposal.
The management has been continuing its efforts to probe further into
the GDR issue and making lot of efforts to recover the funds
transferred illegally from its accounts at Investec bank, Zurich and
from the account of its subsidiary Transgene Biotek HK Ltd at Standard
Chartered Bank, Singapore. These are in addition to the steps taken to
recover from the Indian entities who organized the creation of forged
documents used in the said illegal transfer of funds from its accounts.
Projects and products
DHA: As reported already, production of DHA is continuing but at a much
lower pace at our partner's facility Rampex Labs Pvt Ltd.
Other projects: All other projects in this division are put on hold
till the prevailing adverse impact from SEBI order and working capital
problems are overcome.
BIO-INNOVATIONS
The entire division of bio-innovations has been adversely impacted in
its progress due to the company's inability to raise financial
resources at this crucial period of the product and technology
development.
TrabiORALÂ - Oral delivery of protein and peptide drugs
TrabiORALTM technology continues to hold tremendous opportunity and
continues to advance albeit on a much slower pace due to prevailing
financial challenges.
ONCOLOGY
The entire oncology division has been adversely impacted due to lack of
sufficient financial support at this crucial juncture of product
development.
TBL-0306 a monoclonal antibody drug has almost come to a standstill due
to lack of funding support for advancing to the next stage of studies.
RNAi DRUGS
As in the case of monoclonal antibody drugs, there has been a real
challenge to push through RNAi drugs although these molecules hold a
tremendous potential. It requires continuous funding support which is
lacking at present to exploit such a potential.
TBL-0404 Liver Cancer Drug
Transgene's patented and proprietary AAV genetically modified delivery
system.TBL-0404 is advancing well among cancer projects division.
TBL-0905 Breast Cancer Drug
Since the delivery system being the same as for TBL 0404, the
management has decided to keep this drug development on hold till the
other RNAi drug reaches a next critical inflection point in the drug
development cycle.
Intellectual property and patents: All the patents filed so far are
reaching national level stages. The management is happy to report that
siRNA drug against Liver cancer is tentatively approved for USA patent
and the management is taking steps to conclude the final steps in
securing it. As reported regularly, Transgene as a research-based
biotechnology company, we continue to focus on innovation and shall
continue to priortise the available sparse resources in developing
innovative drugs.
Though Al we believe that our patents provide certain protection from
competition, we caution that such patents may not be of substantial
protection or of commercial benefit to us and they may not afford us
adequate protection from competing products, or they will not be
challenged or declared invalid in future.
Employee: The management is trying to manage the available financial
resources consolidating the strength of existing employees with a view
to create value that benefits the company and employees alike.
DIVIDEND
Your Directors are unable to recommend any dividend since the company
has not made any profits.
GROWTH PLANS AND OUTLOOK AT TRANSGENE
The adverse impact of SEBI order on the board of Directors and
promoters of the company has put your company in a challenging position
and the management is trying hard to overcome all those challenges and
rediscover the path of development. The management is exploring various
opportunities and possibilities in overcoming those challenges and put
the strong product development cycle on a sound footing so as to
complete the development of each product to its objective. Since the
data generated is getting more robust as more studies are conducted, it
only reinforces the novelty, inventiveness and value accrued in each
product as we move into future with the company. Your management is
exploring various possibilities to 'reinvent' the progress on various
products under development with significant inherent value.
Subsidiary Company
There are no activities undertaken at the subsidiary during the year
2014-15.
As on March 31,2015, TBL HK Limited remains as the wholly owned
subsidiary of the Company. In terms of the Section129 of the Companies
Act, 2013 the Balance Sheet, Profit and Loss Account and other
documents of this company is attached with the Balance Sheet of the
Company. A statement pursuant to Section 129, read with Rule 5 of the
Companies (Accounts) Rules, 2014 in Form AOC-1 is attached as "Annexure
- A"
Regarding the irregularities identified in the earlier years pertaining
to GDRs and the monies routed through Transgene Biotek HK, the
management has appointed a law firm in Singapore for recovery of funds
routed through the subsidiary but not accounted for properly.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report, pursuant to Clause 49 of the
Listing Agreement, forms part of this Report and is annexed hereto as
"Annexure B".
CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
Your Company has taken adequate steps to adhere to all the stipulations
laid down in Clause 49 of the Listing Agreement. A report on Corporate
Governance is included as part of this Annual Report as "Annexure - C".
Certificate from the Statutory Auditors of the company M/s. Gopal &
Rajan, Chartered Accountants confirming the compliance with the
conditions of Corporate Governance as Stipulated under Clause 49 of the
Listing Agreement is included as part of this report as "Annexure D"
LISTING WITH STOCK EXCHANGES
The Company confirms that it has paid the Annual Listing Fee for the
year 2014-15 to BSE where the Company Shares are listed.
DEMATERIALISATION OF SHARES
85.75% of the company's paid up Equity Share Capital is in
dematerialized form as on 31st March, 2015 and balance 14.25 % is in
physical form. The Company's Registrars are M/S Big Share Services Pvt
Ltd, 306, Right Wing, 3rd Floor, Amrutha Ville, Opp. Yashoda Hospital,
Raj Bhavan Rd, Somajiguda, Hyderabad, Telangana-500 082.
Number of Board Meetings held
The Board of Directors duly met 6 times during the financial year from
1st April, 2014 to 31st March the details of which are furnished in the
report on Corporate Governance.
Board evaluation
The Board of Directors has carried out an annual evaluation of its own
performance, Board committees and individual directors pursuant to the
provisions of the Act and the corporate governance requirements as
prescribed by Securities and Exchange Board of India ("SEBI") under
Clause 49 of the Listing Agreements ("Clause 49").
The performance of the Board was evaluated by the Board after seeking
inputs from all the directors on the basis of the criteria such as the
Board composition and structure, effectiveness of board processes,
information and functioning, etc.
The performance of the committees was evaluated by the board after
seeking inputs from the committee members on the basis of the criteria
such as the composition of committees, effectiveness of committee
meetings, etc.
The Board and the Nomination and Remuneration Committee ("NRC")
reviewed the performance of the individual directors on the basis of
the criteria such as the contribution of the individual director to the
Board and committee meetings like preparedness on the issues to be
discussed, meaningful and constructive contribution and inputs in
meetings, etc. In addition, the Chairman was also evaluated on the key
aspects of his role.
In a separate meeting of independent Directors, performance of
non-independent directors, performance of the board as a whole and
performance of the Chairman was evaluated, taking into account the
views of executive directors and non-executive directors. The same was
discussed in the board meeting that followed the meeting of the
independent Directors, at which the performance of the Board, its
committees and individual directors was also discussed.
Appointment of Independent Directors
Your Directors state that Ms. Sujana Kadiam who has been appointed as
Independent Woman Director possesses appropriate balance of skills,
expertise and knowledge and is qualified for appointment as Independent
Director.
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
DIRECTORS RESPONSIBILITY STATEMENT :
Pursuant to Section 134(5) of the Companies Act, 2013, Directors of
your Company hereby state and confirm that:
a) In the preparation of the annual accounts for the year ended 31st
March, 2015, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
b) They have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company at the end of the financial year and of the profit of the
company for the same period;
c) The directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities;
d) They have prepared the annual accounts on a going concern basis;
e) They have laid down internal financial controls in the company that
are adequate and were operating effectively.
f) They have devised proper systems to ensure compliance with the
provisions of all applicable laws and these are adequate and are
operating effectively.
Deposits from public
The Company has not accepted any deposits from public and as such, no
amount on account of principal or interest on deposits from public was
outstanding as on the date of the balance sheet.
RISK MANAGEMENT POLICY OF THE COMPANY
The Company has formulated and adopted a risk management policy at its
Board Meeting. As per the policy, the management continues to review
and assess the risk and also the steps for mitigating the same.
CORPORATE SOCIAL RESPONSIBILITY
The provisions of Section 135 of the Companies Act, 2013 relating to
Corporate Social Responsibility does not apply to the company.
Policy on directors' appointment and remuneration and other details
The Company's policy on directors' appointment and remuneration and
other matters provided in Section 178(3) of the Act has been disclosed
in the corporate governance report, which forms part of the directors'
report.
Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacy
are included in the Management Discussion & Analysis, which forms part
of this report.
Auditors' report and Secretarial auditors' report:
The auditors' report and Secretarial auditors' report contain certain
any qualifications, reservations or adverse remarks. Report of the
secretarial auditor is given as an annexure which forms part of this
report - "Annexure - E"
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
(A) The operations of the company are not power intensive nevertheless
the company continues its efforts to minimize energy wherever
practicable by economizing on the use of power at the offices
(B) Technology absorption NIL
(C) Foreign exchange earning NIL
(D) Foreign exchange outflow NIL
RELATED PARTY TRANSACTIONS
There were no transactions which have been entered into with related
parties of the Directors or the Key Managerial Personnel of the
company.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form
MGT-9 is annexed herewith as "Annexure - F"
Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments have been
disclosed in the financial statements.
REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) /
EMPLOYEES
The information required pursuant to Section 197 read with Rule 5 of
The Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 and Companies (Particulars of Employees) Rules, 1975 are
not applicable since the directors are not drawing any salary from the
company as the company do not have any operations. Further the
directors are provided sitting fee only for attending board meetings.
The details of the sitting fee and other perks are mentioned in the
corporate governance report.
ACKNOWLEDGEMENT
Your Directors take this opportunity to express their sincere thanks
and place on record their appreciation of the continued assistance and
co-operation extended to the company by its bankers, government and
semi government departments, customers, marketing agents and suppliers
and in particular Shareholders for the confidence reposed in the
company
Your directors also thank all the employees of the company for their
dedicated service without which your company would not have achieved
those results.
By the Order Of the Board
For TRANSGENE BIOTEK LIMITED
Sd/
Dr. K. KOTESWARA RAO
PLACE: HYDERABAD CHAIRMAN &
DATE: 04.09.2015 MANAGING DIRECTOR
Mar 31, 2014
Dear Shareholders,
The Directors invite you to the 24th Annual Report on the business &
operations of the company and Audited Statement of Accounts for the
year ended 31 st March, 2014 along with the Auditor''s Report thereon.
Financial Results:
(Rs. in Lakhs)
Particulars 2013-2014 2012- 2013
Total Income 181.31 1509.00
Operational, Administration
and other expenses 278.82 1590.95
Gross Operating Profit (99.51) (81.95)
Interest and Financial Charges 0.05 19.98
Forex Gain/Loss 0.00 0.00
Depreciation 1721.55 101.51
Profit before Tax/Loss (1821.11) (203.44)
Extraordinary Items 11522.13 0.00
Provision for Tax 0.00 0.00
Net Profit (13341.24) (203.44)
Review and results of operations
As informed earlier, we have started the production of first of a
series of biogenerics at the purpose built cGMP compliant biologies
manufacturing facility at our partner''s plant in our vicinity.
Now coming to the operations of your company, this year also signifies
several new changes to your company at the board level, administrative
and managerial levels. This new and emerging structure makes your
company more functional than at any time in the past since its
inception in 1991.
A noteworthy aspect in this emerging structure is the new Board of
Directors to be elected to be approved by the shareholders. Your
company is now embarking on a new direction that hopefully leads to the
long expected results that are eluding all these years.
As a part of the emerging scenario, the outgoing Board and management
have segmented the product pipeline into two broad categories:
Biologies and Bio-innovations. Within each category the pipeline is
prioritized on the deliverability and commercial realization at the
earliest.
SEBI INTERIM ORDER :
Securities & Exchange Board of India (SEBI) vide its Interim Order No.
WTM/RKA/ISD/136/ 2014 dated November 20, 2014 had made certain comments
in the matter pertaining to the funds raised in the GDR Issue of the
Company and inter alia, refrained, the Company from issuing securities.
We wish to place before the shareholders that Order has been passed
without giving the Company or its Directors an opportunity of being
heard. The Board has decided to contest the said Order of SEBI at the
appropriate forum. As regards the amounts involved, as stated above,
the Company is taking steps to independently evaluate the matter and
would initiate efforts to protect the interests of all the
shareholders.
AUDITORS'' COMMENTS
As regarding comments of the Auditors under "Emphasis of Matter" the
replies of the Management are as under:-
1) As regards their comment on the Investments made in the Wholly Owned
subsidiary company is concerned, it is stated that due to the
resignation of M/s Anchorman Limited as the Director of the Company
with effect from 24.9.2013 without informing the Indian Parent Company,
there is no one to look after the affairs and now Mr. K Koteswara Rao
was appointed as Sole Director with effect from 24.11.2014. The
appointed Auditor also resigned and new Auditors were appointed with
effect from November 2014 and due to paucity of time, the new
Auditors could not get full evidence which resulted in they stating
disclaimer of opinion. Your Directors are confident that these aspects
would be suitably addressed in the coming days;
2) As regards their comment on the going concern aspect mentioned in
para No.2, your Board reiterate the stand/course of action mentioned
above and are confident that the order of SEBI will have no impact on
the Company as a going concern.
3) As regards their comment in para No.3, the Board is in the process
of taking Expert''s Opinion and appropriate course of action;
4) As regards their comment in para No.4, the Board is of view that the
amounts stated therein are fully recoverable and Board had already
initiated appropriate process.
As regards comments of the Auditors under "Report on other Legal and
Regulatory requirements" under various clauses, your Directors had
already initiated the process of strengthening the systems and
procedures and also assure the shareholders that they will take all the
steps which are necessary for protecting the interests of all the
shareholders.
The comments of the Auditors in respect of Technology are
self-explanatory read with the Notes to the Schedule of Fixed Assets.
BIOLOGICS
As stated above, your management wishes to focus on deliverables as a
priority, hence wishes to commercialise each biological product in
series after stabilization of production and marketing of each product.
The three biologies in the pipeline are DHA, Orlistat and Tacrolimus as
informed previously.
DHA : As reported regularly during the quarterly results, your company
entered into a Manufacturing and Marketing agreement with a
pharmaceutical intermediates manufacturing and marketing company,
Rampex Labs Pvt Ltd, located in the same industrial estate as your
company Transgene Biotek Ltd.
Rampex Labs Pvt Ltd is a pharmaceuticals intermediates manufacturing
company with a marketing prowess to various parts within and outside
India.
Rampex has constructed a purpose built cGMP compliant Biologies
manufacturing facility for the purpose of manufacturing and marketing
the biologies developed by your company. Transgene granted an
exclusive non- transferable license to Rampex for Transgene to transfer
its technology for the manufacture and commercialization of DHA using
the scientists of Transgene for the production. The period of license
is for 10 years.
With the plant being new and purpose built for the production of
biological, the management of your company hopes to utilize that
facility for additional biologies once the DHA production and
commercialization is stabilized. The management also expects Rampex to
get the cGMP certification for DHA production for its entry into
regulated markets that provides significant value addition although the
management expects stiff resistance from the global majors in those
markets.
ORLISTAT: Since the earlier agreement with DRL did not turn out to be a
mutually beneficial relationship, this product with its technology is
to be handed back to your company for it likely to be produced at the
new Rampex plant once the path is clear.
TACROLIMUS : The agreement with Atral Cipan of Portugal has been
terminated because of inordinate delay in commercial production of this
product. The management is exploring for a similar arrangement with
another pharmaceutical company for the manufacturing and
commercialization of this product as in the case of DHA.
BIO-INNOVATIONS
TrabiOralTM - An innovative technology for delivery of protein and
peptide drugs through oral route
TrabORINTM - Oral Delivery of Insulin
TrabORINTM is a proprietary encapsulated formulation that effectively
and efficiently delivers the required dosage of insulin into the
bloodstream, in a sustained release that avoids the ''crests and
troughs'' profile of blood glucose levels that many diabetic patients
suffer from via subcutaneous insulin injections. TrabORINTM, which has
the capacity to deliver large quantities (dosages) of insulin has
demonstrated a very effective reduction of blood-glucose levels in two
different strains of rats in a series of blind studies. These results
highlight the ability of the TrabORINTM delivery technology to cross
the Gl barrier and deliver insulin into systemic blood circulation.
TrabiORALÂ - Oral delivery of protein and peptide drugs
TrabiORALTM technology combines several novel inventions to produce an
orally active transport system (mostly) for protein and peptide drugs.
It employs TBL''s proprietary conjugation technology and patented-
encapsulation technology for amplification of the uptake mechanism in
the Gl tract resisting drug proteolysis. It''s versatility has revealed
an ability to deliver a variety of Protein and Peptide based drugs,
from small molecules (e.g. 6kDa insulin) to larger molecules (e.g.
150kDa mAbs). TrabiORALÂ hence offers a tailored approach for each
individual drug.
There is an ongoing dialogue with different pharma companies for
out-licensing these technologies. In case of TrabiORINTM several new
atudies have been conducted during the last year to demonstrate its
unique mechanism of action and bioavailability in strengthening our
defense during the ongoing dialogue.
ONCOLOGY
TBL-0306 - A novel monoclonal antibody drug
As reported last year, TBL-0306 a monoclonal antibody drug has been
undergoing various studies. However, as a new initiative in
restructuring the company''s operations for improved functionality, the
management wishes to focus on one clinical oncology drug at a time
advancing it to the next critical milestone before on to moving to the
next one. Therefore, TBL-0306 against Colon cancer is one of the drugs
in oncology section priortised to advance before moving on to
Non-Hodgkin''s Lymphoma and Multiple Myeloma. Likewise, the second mAb
against Oesophageal cancer also has been put on hold.
RNAi DRUGS
Like in the case monoclonal antibody drugs, the list of RNAi drugs also
have been priortised.
TBL-0404 Liver Cancer Drug
TBL-0404 against Liver cancer is a new generation complex and highly
advanced oncology drug employing tissue specific miRNA delivered
through Transgene''s patented and proprietary AAV genetically modified
delivery system.TBL-0404 is advancing well with optimized transfection
efficiency and improved purification protocol in order to produce the
drug in larger quantities in preparation for the in-vivo studies.
TBL-0905 Breast Cancer Drug
As mentioned above, the management in its restructuring strategy plans
to advance one drug in each category for optimal utilization and for
better focus before moving on to the next in that section of the drug
development pipeline. Accordingly, TBL-0905 against Breast cancer is
on a slow path till the other RNAi drug reaches a next critical
inflection point in the drug development cycle.
Intellectual property and patents: As a research-based biotechnology
and biological focused company, we apply innovative science and
technology in search of new therapies for better living. We continue to
prioritise our resources and focus on discovery activities to develop
innovative, tissue and target specific drugs based on the individual''s
genetic make- up that is revolutionizing drug discovery. Accordingly,
your company has been filing new patents and advancing the ones filed
earlier to national phases.
Although we believe that our patents provide certain protection from
competition, we caution that such patents may not be of substantial
protection or commercial benefit to us, may not afford us adequate
protection from competing products, or will not be challenged or
declared invalid.
Employee: The management is sad to report the death of one of our
scientists involved in the accident along with two others. In spite of
tremendous amount of care and money spent in providing highly
specialized hospital care, the life could not be saved. The other two
people involved in the same accident recovered well.
In line with the management''s strategy mentioned above, we have
consolidated the strength of our employees with a view to create value
that benefits the company and employees alike.
DIVIDEND
Your Directors are unable to recommend any dividend since the company
has not made any profits.
GROWTH PLANS AND OUTLOOK AT TRANSGENE
With the commencement of commercial production of DHA to be followed by
other biologies the future looks healthier than ever before. Likewise,
the strategic restructuring to priortise the product development of its
R&D pipeline also is expected to yield the long awaited results in the
coming year. The management continues to advance its dialogue with the
MNC pharma companies to out-license at least one drug in its pipeline
at the earliest. Since the data generated is getting more robust as
more studies are conducted, it only reinforces the novelty,
inventiveness and value accrue in each product as we move into future
with the company.
DIRECTORS
With new SEBI guidelines amendments to Clauses 49 of the Listing
Agreement and the Companies Act, 2013 coming into effect, the company
has initiated steps to comply with the set guidelines.
As mentioned earlier, this is a year of change on several fronts, one
of them being the induction of new Directors.
Dr. P. K. Ghosh and Sri S S Marthi have resigned as Independent
Directors from the Board effective from 31st December, 2014.
Your Directors record their appreciation for their contribution to the
company during their tenure as Independent Directors of the company.
S/Sri Sarang Subhash Puranik and Sri Shyam Shankar Das, are being
inducted as directors of the company. A notice has been received from a
Member proposing the candidature of S/Sri Sarang Subhash Puranik and
Shyam Shankar Das for being appointed as Directors of the company.
Subsidiary Company
The management has informed SEBI the developments taken place at
Transgene and its subsidiary Transgene HK.
As on March 31,2014, TBL HK Limited is the wholly owned subsidiary of
the Company. In terms of the section 212(1) of the Companies Act, 1956,
the Balance Sheet, Profit and Loss Account and other documents of this
company is attached with the Balance Sheet of the Company. A statement
pursuant to section 212(1)(e) read with 212(3) of the Companies Act,
1956, relating to Company''s Interest in this subsidiary company for the
financial year under review is attached as Annexure-I to this report.
FIXED DEPOSITS
The company has not accepted any Fixed Deposits and the provisions of
Section 58A of the Companies Act, 1956 are not applicable to the
Company.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Bombay
Stock Exchange, is presented in a separate section forming part of the
Annual Report.
Corporate Governance
The Board is committed to high standards of corporate governance which
is the foundation of a sustainable and successful company.
In line with its adherence to the standards of Corporate Governance,
the Board has initiated steps to scrutinize and to take remedial steps
on some transactions taken place subsequent to GDR issues. As mentioned
above, the management is to file criminal complaint covering several
aspects, covering various areas and covering people involved.
The restructuring operations of the management are already in motion
with focus on the functionality and accountability, be it the
individual or product development.
The Company has taken adequate steps to ensure that all mandatory
provisions of corporate Governance as prescribed under the listing
agreement of the Stock Exchange with due compliance of all the
applicable laws, rules and regulations. A separate report on Corporate
Governance and the Auditor''s certificate on its compliance are annexed
hereto and forms part of this Annual report.
Auditors
M/s. Sarath & Associates, the present statutory auditors of the company
have expressed their inability to continue as Auditors of the company
in the light of the new provisions under the Companies Act, 2013
regarding the appointment of Statutory Auditors.
Hence it is proposed to appoint M/s. Gopal & Rajan, as the statutory
auditors of the company from the conclusion of the ensuing AGM till the
conclusion of the 27th AGM of the company.. The Company has received
requisite certificate from them to the effect that their reappointment,
if made, would be within the limits prescribed under Section 139 of the
Companies Act, 2013 and the rules framed thereunder.
Consolidated Financial Statements
In accordance with the Accounting Standard AS-21 on Consolidated
Financial Statements, the audited Consolidated Financial Statements are
provided in the Annual Report.
Employee Relations
Our success continues to be delivered by our employee talents. We value
both genders, all ages, cultures, experiences and backgrounds as we
build and grow our organization. Transgene is an Equal Opportunity
employer and strives to ensure that there is no discrimination against
anyone applying for a job or in employment for reasons related to race,
religion, national origin, disability or on any other personal
characteristics. What we do focus on is fostering our brave culture,
which aims to provide all our employees with a supportive environment
that values diverse opinions and experiences and enables individual,
group and organizational success. In 2012-13 we focused on leveraging
our diversity to drive our vision to imagine and lead the future of
healthcare.
Transgene recognises that in an industry based on innovation, research
and development, its employees are some of its biggest assets and it
seeks to communicate and, where appropriate, consult with them on
matters affecting them as employees, in the correct manner.
Particulars of employees
The provisions of Section 217(2A) of the Companies Act, 1956, read with
the Companies (Particulars of Employees) Rules, 1975 are not applicable
to the Company for the year under review.
DIRECTORS'' RESPONSIBILITY STATE- MENT
As per the Companies Act, 1956 the Directors wish to state:
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
The Directors have elected to prepare the consolidated financial
statements in conformity with accounting principles generally accepted
in India.
The Directors confirm to the best of their knowledge:
- that the Financial Statements, prepared in accordance with
accounting principles generally accepted in Indian Accounting
Standards, present fairly, in all material respects, the assets,
liabilities, financial position and profit or loss of the company and
undertakings included in the consolidation taken as a whole;
- the management report, which is incorporated into the Financial and
Management review, includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together
with a description;
- that the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
- that the Directors had prepared the annual accounts for the year
ended 31 st March 2014 on a going concern basis.
CONSERVATION OF ENERGY, ENVIRON- MENT, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE
In accordance with Rule 2 of the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 as applicable, the
particulars relating to conservation of energy and technology
absorption are given below.
A. Conservation of Energy, Power and Environment:
The Company continues its policy of giving priority to energy
conservation measures including regular review of energy generation and
consumption and effective control on utilisation of energy. Efforts
for conservation of energy and fuel consumption are ongoing processes
in the Company and every effort is made in that direction.
B. Research & Development:
The Company has always considered Research and Development (R&D) as
crucial for the sustained growth of the Company. The Company''s R&D
division continues to be recognized and certified under DSIR
guidelines. With qualified and experienced research scientists manning
the research and development activities, the Company has focused its
thrust on new and innovative process and product development for the
development of novel drug delivery processes, oncology drugs and
manufacture of APIs.
C. Foreign Exchange Earnings :
Nil
D. Foreign Exchange Outgo :
Nil
D. NOTE OF CAUTION
This annual report includes forward-looking statements regarding
Transgene''s plans, prospects, strategies and performance, etc. The
occurrence of any of the following risks described below and elsewhere
in this document, including the risk that our actual results may differ
materially from those anticipated in these forward looking statements,
could materially adversely affect our business, financial condition,
operating results or prospects and the trading price of our securities.
Additional risks and uncertainties that we do not presently know or
that we currently deem immaterial may also impair our business,
financial condition, operating results and prospects and the trading
price of our securities.
We may take longer to complete our pre-clinical or clinical trials than
we expect, or we may not be able to complete them at all.
We forecast the commencement and completion of pre-clinical or clinical
trials for planning purposes, but actual commencement or completion may
not occur as forecasted or planned due to a number of reasons.
ACKNOWLEDGEMENTS
Your Directors place on record their appreciation for the continued
co-operation and support extended to the Company by all stakeholders
including the banks, government institutions, Shareholders, Auditors,
Customers, vendors and, business associates. Your Directors also thank
the Trade and Consumers for their initiation in patronising the
Company''s products. Your Directors also place on record their profound
admiration and sincere appreciation of the continued hard work put in
by employees at all levels.
By the Order Of the Board
For TRANSGENE BIOTEK LIMITED
Sd/-
Dr. K. KOTESWARA RAO
PLACE: HYDERABAD CHAIRMAN &
DATE: 06.12.2014 MANAGING DIRECTOR
Mar 31, 2013
Dear Shareholders,
The Directors take pleasure in presenting the 23rd Annual Report on
the business & operations of the company and Audited Statement of
Accounts for the year ended 31st March, 2013 along with the Auditor''s
Report thereon.
FINANCIAL RESULTS
(Rs. in Lakhs)
Particulars 2012- 2013 2011- 2012
Total Income 1503.04 2915.29
Operational, Administration
and other expenses 1590.95 2513.56
Gross Operating Profit (87.91) 401.73
Interest and
Financial Charges 19.98 61.87
Forex Gain/Loss 0.00 1417.24
Depreciation 101.51 37.73
Profit before Tax/Loss (209.40) 1719.36
Provision for Tax 0.00 557.85
Net Profit/(Loss) (209.40) 1161.51
Review and results of operations
During the year under review the total income was Rs.1503.04 lakhs as
against Rs.2915.29 lakhs in the previous year and the Net Profit/(Loss)
for the year was Rs. (209.40) lakhs as against Rs.1161.51 lakhs for the
previous year. The company has incurred an amount of Rs.302.40 lakhs
under ongoing product development expenses and Rs93.07 cr on Fixed
Assets during the year as against Rs.260.35 lakhs and Rs.135.57 lakhs
respectively in 2011-12. This increased fixed asset value is on
account of acquisition of technology platform for developing several
drugs against auto-immune diseases after vigorously assessing its
utility for more than a year.
The year 2012-13 has also been a year of significant innovation and
product development for the Company. The company started the commercial
production of DHA and the response has been great. However, the value
of innovation is sadly not recognized in due terms and we believe that
this lack of acknowledged value being unfairly reflected in the stock
price of your company. We site an example of our oral insulin
technology and pipeline of cancer drugs which have immense value, among
few others, as to such lack of recognition.
TrabiOralTM - An innovative technology for delivery of protein and
peptide drugs through oral route
Transgene Biotek has developed an oral delivery platform technology
(TrabiORALTM) with a goal to provide the most preferable method to
administer biotherapeutic drugs for controlling diseases such as
diabetes. TrabiORALTM eliminates the need for painful injections and
expensive healthcare professionals, improves patient compliance
(through greater convenience), offers sustained release of
biotherapeutic drugs over a prolonged period, and eliminates the
typical ''peaks-and- troughs'' in serum profiles.
TrabiORALTM is a proprietary oral drug delivery platform capable of
delivering a range of proteins and peptides from smaller proteins such
as Insulin (6 kDa) to much larger molecules such as mAbs (150 kDa) and
in doing so, happens to be one of very few technology companies in the
world.
TrabiORALTM is a proprietary platform technology that protects the
biotherapeutic drug from proteolysis in the gut and efficiently
delivers the required dosage into the systemic circulation, in a
sustained release that maintains a flatter serum profile (as
highlighted later using insulin). TrabiORALÂ technology combines
several novel inventions to produce an orally active transport system
for protein and peptide drugs.
- TrabiORALÂ employs patented encapsulation technology and conjugation
of biotherapeutics with biologically active ligands to amplify uptake
mechanisms
- Our patented encapsulation technology provides resistance against
gastric proteolysis in the acidic milieu, and releases the drug under
intestinal alkaline pH conditions thereby making the biotherapeutic
accessible to its receptors.
- TrabiORALÂ technology provides enhanced bioavailability of the drug
for enhanced biological activity.
- Versatility - In preliminary studies, TrabiORALÂ revealed an ability
to deliver a variety of Protein and Peptide based drugs, from small
molecules such as insulin (6kDa) to much larger molecules including
Monoclonal antibodies (150kDa).
- We have successfully concluded the "Proof of Concept" studies
mimicking the human intestinal barrier for the oral delivery of
biotherapeutics (Insulin).
- The proof of concept studies were followed by in-vivo single-blinded
efficacy studies in diabetic rats performed at a third party GLP
accredited facility. The data highlighted Transgene''s ability to
achieve sustained insulin uptake mechanism paving the way for this
technology to be adopted as the therapy of choice for the world''s Type
II diabetic population (and sections of the Type I patient population).
- Another study highlighted the versatility of Transgene''s TrabiORALTM
delivery technology, enabling the delivery of smaller proteins such as
insulin (6kDa) as well as larger proteins such as monoclonal antibodies
(150kDa) across the intestinal barrier into systemic circulation in a
biologically functional form, at therapeutic levels.
ONCOLOGY
At Transgene, we are dedicated to the research and development of
innovative drugs for cancer patients with high unmet medical needs. Our
Oncology drug development programs that started nearly 9 years ago
utilize two platforms  monoclonal antibody drugs and siRNA drugs
delivered through our patented AAV platform. We currently have several
compounds in the development stage, two readying for pre-clinical
in-vivo studies during the year 2013-14, followed later by the human
clinical studies. In addition, we have other novel targets in various
stages of preclinical research.
Ab DRUGS
TBL-0306 Â A novel monoclonal antibody drug
TBL-0306 is a monoclonal antibody drug, the antibody being developed
against TBL''s own engineered immunogenic peptide. As reported earlier,
TB-0306 demonstrated their efficacy against Non-Hodgkin''s lymphoma,
Colon cancer and Multiple myeloma, confirmed through several in-vitro
assays. TBL-0306 antigen is shown to express on the cell surface of
these 3 cancers, but has no expression on normal human tissues. In
Colon cancer TBL-0306 exhibited much superior cytotoxic activity
compared to Rituxan which was used as control in studies. TBL-0306 is
soon to undergo in-vivo efficacy and dose escalation studies on large
number of animals, as a prelude to pre-clinical toxicology studies.
RNAi DRUGS
RNAi drugs developed at Transgene employ a proprietary RNAi platform
based on a novel ''gene silencing'' technology to selectively ''knockout''
specific Liver and Breast Cancer producing gene targets.
These drugs have already demonstrated highly effective tumour
regression in animal studies, and are set to undergo preclinical trials
shortly, after subjecting these to a number of confirmatory assays and
studies. Transgene will likely seek to out-license these two drugs
upon completion of Phase I human trials.
Transgene''s patented siRNA delivery platform has been the focus of few
large pharma companies and the management is in active dialogue with
two such companies for a strategic collaborative work.
TBL-0404 Liver Cancer Drug
Hepatocellular carcinoma (HCC) is one of the most common cancers
worldwide and among the leading causes of cancer-related death.
Hepatocellular carcinoma (HCC) is a primary malignancy of the
hepatocyte, generally leading to death within 6-20 months.
Hepatocellular carcinoma frequently arises in the setting of cirrhosis,
appearing 20-30 years following the initial insult to the liver.
However, 25% of patients have no history or risk factors for the
development of cirrhosis. The extent of hepatic dysfunction limits
treatment options, and as many patients die of liver failure as from
tumor progression.
Like other cancers, the development of HCC is a multistep process with
accumulation of genetic and epigenetic changes. Altered miRNA
expressions have been observed in HCCs that originated from different
geographic areas.
TBL-0404 is a miRNA identified by Transgene, its expression being
down-regulated in liver cancer and it is delivered by TRABI-AAV.
TBL-0404 has been shown to negatively regulate the cancer epigenome by
directly targeting a metastasis specific gene in liver cancer. TBL-0404
represents the forced expression of the specific miRNA by our
proprietary AAV vector.
The studies by TBL have shown that TBL-0404 suppresses HCC cell growth,
proliferation and invasion in-vitro and tumor forming ability in-vivo.
TBL-0404 is scheduled to proceed with efficacy studies on large number
of animals, the studies including tumor regression, dose escalation
studies etc followed by safety and toxicology studies.
TBL-0905 Breast Cancer Drug
As reported earlier, TBL-0905 is targeted against Breast Cancer and
delivered by Trabi-AAVÂ. TBL- 0905 targets a gene critical for the
progression and metastasis of Breast Cancer. The target gene is
abnormally over-expressed in Breast Cancer cells and absent in normal
cells. Transgene has cloned the required Adenoviral genes in a plasmid
to prevent any adenoviral contaminations in the purified AAV.
Our work has shown that TBL-0905 promotes apoptosis and inhibits
motility of breast cancer cells in in-vitro studies. In mouse xenograft
studies, the drug confirmed its remarkable tumor regression.
We are optimizing the titration of modified vector transfection,
transduction efficiency to produce virus for undertaking toxicology
studies.
TBL-1203 AIDS (Therapeutic) Vaccine
With significant interest being generated against our other
technologies and molecules during this year, the management felt it
prudent to focus on those as a priority till the negotiations conclude
for a strategic partnership on at least one of those. Therefore, the
work on TBL-1203 and the drug against MS have been paused temporarily,
as is the case with the development of drugs against Auto-immune
diseases.
DHA
Omega-3 DHA (Docosahexaenoic Acid) is a long- chain fatty acid, which
belongs to the Omega-3 fatty acid family. It is found in cold water
fatty fish and fish oil supplements, along with eicosapentaenoic acid
(EPA). Vegetarian sources of DHA come from seaweed and through
fermentation process. DHA is essential for the proper functioning of
our brains as adults, and for the development of our nervous system and
visual abilities during the first 6 months of life. In addition,
omega-3 fatty acids are part of a healthy diet that helps lower risk of
heart disease. Our bodies naturally produce small amounts of DHA, but
we must get the amounts we need from our diet or supplements.
DHA, an Omega-3 fatty acid is the third biogeneric product developed by
Transgene and started its commercial production offering the product in
oil, powder and formulated capsule forms. We believe that Transgene is
only a third company in the world to produce this algal product in oil
and powder forms.
As informed earlier, we initiated the sales of our oil and powder forms
of DHA. Both the forms have been received well by the customers
resulting in the repeat orders and also orders from new customers too.
However, in spite of such interest from the increasing number of
customers and volumes of orders, we are faced with a tricky situation
of capacity constraint compounded by the lack of power supply from the
government and therefore, having to rely entirely and continuously on
the diesel generators especially during later part of the year. This
proved to be an unviable operation and so, we paused on the production.
The management has modified some of its plans and started the
production at our own facilities but with a much reduced output. This
output is only to tide over the immediate needs of the customers on a
temporary basis. We expect to resolve this crisis during the current
financial year to prevent such disruptions to the production in future
and to increase the capacities in order to meet the significant demand
for this product.
Tacrolimus
Tacrolimus is a powerful immune-suppressant drug, the technology for
the manufacture of this is being developed by the scientists of
Transgene.
We have completed the Licensing and Technology Transfer agreement with
Atral Cipan, Portugal.
With the agreement formalities having been concluded, we expect to
start the commercial operations serving the non-regulated markets
during the Q4 of 2013-14 in the first phase after the necessary
manufacturing infrastructure is in place. Unfortunately, this phase has
been delayed by 4-5 months from the earlier planned schedule due to the
late arrival of certain process equipment at our partner''s facility in
Europe combined with their annual holidays in the month of August. The
second phase involves getting regulatory approvals in the developed
countries spanning over a period of 18-24 months.
Auto-immune diseases
We received excellent data and support on the auto-immune disease
platform technology that was acquired in 2011. We are now in the
process of integrating that with our own that will facilitate the
development of several drugs against a variety of auto-immune diseases
such as RA, SLE etc. The same platform is also employed complementing
our own technology to accelerate HIV drug development.
Intellectual property and patents: We dedicate significant resources to
protecting our intellectual property, which is important to our
business. We have filed numerous patent applications to cover U.S. and
various other countries seeking protection of inventions originating
from our research and development. We have a portfolio of issued
patents and filed applications, many of which have foreign
counterparts.
Patents are very important for us in establishing the proprietary
rights to the molecules and products we have developed or licensed. Our
executive management team has reinforced our organizational commitment
to intellectual property. The patent position of pharmaceutical or
biotechnology companies can be uncertain and involve complex legal,
scientific and factual questions. If our intellectual property
positions are challenged, invalidated or circumvented, or if we fail to
prevail on the potential future intellectual property litigation, our
business could be adversely affected.
Although we believe that our patents provide certain protection from
competition, we caution that such patents may not be of substantial
protection or commercial benefit to us, may not afford us adequate
protection from competing products, or will not be challenged or
declared invalid. Patents for individual products extend for varying
periods according to the date of patent filing or grant and the legal
term of patents in the various countries where patent protection is
obtained. The actual protection afforded by a patent, which can vary
from country to country, depends upon the type of patent, the scope of
its coverage and the availability of legal remedies in the country.
Employees: During this year, we have optimized and consolidated the
strength of our employees in line with the management''s focus with a
long term perspective in encouraging and creating value that benefits
the company and employees alike.
DIVIDEND
Your Directors are unable to recommend any dividend due to inadequacy
of profits but more importantly for optimizing the fund utilization
towards the advancement of various projects in order to attain critical
milestones that helps us in our negotiations with potential partners.
GROWTH PLANS AND OUTLOOK
The Global Biotechnology industry comprises of a large range of firms
engaged in biotechnology activities. Global Biotechnology industry
revenue will reach $262.0 billion in 2013, having increased at an
average annual rate of 11.0% over the past five years. "Growth is
expected to continue in 2013, with revenue expected to jump 12.7%,"
says IBISWorld industry analyst Anna Son. This increase follows a
relatively modest 8.7% rise in 2009, as the global recession eroded
demand for nonessential health products and easing fuel prices tempered
the biofuels craze. The Global Biotechnology industry continues to be
populated by many small companies, alongside a few giant
pharmaceutical, chemical and agricultural firms. IBISWorld estimates
that the top industry players are Roche Holding AG, Amgen Inc. and
Merck KGaA. Because companies specialize in certain diseases or
products that are not transferable across other industry segments,
concentration tends to stay low, says Son. In addition, the industry is
still in the growth stage of its life cycle, and despite medium
barriers to entry, new players are expected to enter the market to
provide niche services. Furthermore, continuous technological
advancements and the rapid growth of emerging markets leverage industry
capabilities. Over the next five years, IBISWorld projects the industry
will experience increased merger and acquisition activity as companies
seek to expand their operations by acquiring domestic and foreign
competitors.
Outlook for Indian Biotechnology industry
The pharmaceutical industry has been showing signs of recovery from one
of the biggest patent cliffs in recent times that witnessed major
blockbusters like Merck''s Singulair, Pfizer''s Lipitor,
Sanofi/Bristol-Myers'' Plavix and Eli Lilly''s) Zyprexa losing patent
protection. These products alone represented branded sales worth more
than $15 billion.
However, this loss of patents and novel products turning into generics
was felt mostly in 2012. While the industry won''t be completely free
from this ''genericization'', the major patent expiries are over and done
with. New products should start contributing significantly to results
and increased pipeline visibility and appropriate utilization of cash
should increase confidence in the sector.
The Indian Biotechnology industry has been evolving over three decades.
In terms of market dynamics, the Indian biotech sector had a healthy
growth in 2008-09 with its revenues reaching Rs. 12137 crore. Within
this, BioPharma contributed Rs. 7883 crore.
The enactment of New Patents Act, 2005, brought a paradigm shift in
research and development in the sector. Previously, India had a patent
protection for process rather than the product, which brought about
complacency without initiating much effort upon the development of new
products. The New Patents Act of 2005 enforces product patents thereby
inspiring firms and research institutions to undertake the innovation
at their behest. The growth in BioPharmaceutical drugs and biologics
has outperformed the pharmaceutical market. The total BioPharma segment
in India registered a 14.3% growth in terms of total revenues in 2008-
09 to aggregate Rs. 7883 crore as against Rs. 6889 crore recorded in
2007-08.
Biotechnology is globally recognized as a rapidly emerging, complex and
far reaching technology, and therefore a strong international
partnership, both at the levels of research institutions and at
corporate front, is essential. Such an approach would not only bring in
better technical know-how, but would also help in enhancing India''s
research and development resulting in quicker and faster outcomes.
Outlook at Transgene
Research and development is essential to our business. We spent
considerable money in developing and acquiring products/technologies or
on company-sponsored research and development activities. Because of
the risks and uncertainties associated with the development of a
product candidate, we cannot accurately predict when or whether we will
successfully complete the development of our product candidates or
assess the ultimate product development cost.
However, our product pipeline is robust and is advancing on some
focused products based on the ongoing discussions with few large pharma
companies.
Your Directors have also drawn plans to create verticals for the
business of the company wherever and whenever it is required to focus
on the same and also create a platform for smooth outlicensing of the
products being developed by the company.
DIRECTORS
As per the Articles of Association, Dr P K Ghosh, retires by rotation
in the ensuing AGM and being eligible, offers himself for
reappointment. Brief profile of Dr P K Ghosh as required under Clause
49 of the Listing Agreement is provided in the notes attached to the
Notice convening the Annual General Meeting.
Subsidiary Company
As on March 31, 2013, TBL HK Limited is the wholly owned subsidiary of
the Company. In terms of the section 212(1) of the Companies Act, 1956,
the Balance Sheet, Profit and Loss Account and other documents of this
company is attached with the Balance Sheet of the Company. A statement
pursuant to section 212(1)(e) read with 212(3) of the Companies Act,
1956, relating to Company''s Interest in this subsidiary company for the
financial year under review is attached as Annexure-I to this report.
FIXED DEPOSITS
The company has not accepted any Fixed Deposits and the provisions of
Section 58A of the Companies Act, 1956 are not applicable to the
Company.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Bombay
Stock Exchanges, is presented in a separate section forming part of the
Annual Report.
Corporate Governance
The Board is committed to high standards of corporate governance which
is the foundation of a sustainable and successful company.
Closely linked to governance is culture. It creates a culture which
promotes integrity, responsibility and putting the performance at the
heart of what we do.
The Board''s core activities in 2012-13 included the review of the
Company''s long term strategy, the monitoring of performance,
consideration of the risk identification and management system, the
review of material risks, and board and management succession.
The Company has taken adequate steps to ensure that all mandatory
provisions of corporate Governance as prescribed under the listing
agreement of the Stock Exchange with due compliance of all the
applicable laws, rules and regulations. A separate report on Corporate
Governance and the Auditor''s certificate on its compliance are annexed
hereto and forms part of this Annual report.
Auditors'' report
The Auditors'' Report together with the Audited Accounts for the
financial year ended March 31, 2013 read with the Notes on Accounts are
self- explanatory and therefore do not call for any further comments.
There is an amount of Rs. 561.02 lakhs reported by the auditors as the
outstanding amount payable towards Income Tax. However, the management
is disputing this liability since this amount, in the opinion of the
management, as " profit" arising out of rupee appreciation during the
year 2011-12 which is not payable.
Auditors
M/s. Sarath & Associates, the statutory auditors, hold office upto the
conclusion of the forth coming
Annual General Meeting (AGM). The Company has received requisite
certificate from them to the effect that their re-appointment, if made,
would be within the limits prescribed under section 224(1B) of the
Companies Act, 1956 and that they are not disqualified for such
reappointment within the meaning of Section 226 of the said Act. The
Board of Directors recommend reappointment of M/s. Sarath & Associates
as the statutory auditors of the Company for the year 2013-14.
Consolidated Financial Statements
In accordance with the Accounting Standard AS- 21 on Consolidated
Financial Statements, the audited Consolidated Financial Statements are
provided in the Annual Report.
Employee Relations
Our success continues to be delivered by our employee talents. We value
both genders, all ages, cultures, experiences and backgrounds as we
build and grow our organization. Transgene is an Equal Opportunity
employer and strives to ensure that there is no discrimination against
anyone applying for a job or in employment for reasons related to race,
religion, national origin, disability or on any other personal
characteristics. What we do focus on is fostering our brave culture,
which aims to provide all our employees with a supportive environment
that values diverse opinions and experiences and enables individual,
group and organizational success. In 2012-13 we focused on leveraging
our diversity to drive our vision to imagine and lead the future of
healthcare.
Transgene recognises that in an industry based on innovation, research
and development, its employees are some of its biggest assets and it
seeks to communicate and, where appropriate, consult with them on
matters affecting them as employees, in the correct manner.
Particulars of employees
The provisions of Section 217(2A) of the Companies Act, 1956, read with
the Companies (Particulars of Employees) Rules, 1975 are not applicable
to the Company for the year under review.
DIRECTORS'' RESPONSIBILITY STATEMENT
As per the Companies Act 1956 the Directors wish to state:
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
The Directors have elected to prepare the consolidated financial
statements in conformity with accounting principles generally accepted
in India.
The Directors confirm to the best of their knowledge :
- that the Financial Statements, prepared in accordance with accounting
principles generally accepted in Indian Accounting Standards, present
fairly, in all material respects, the assets, liabilities, financial
position and profit or loss of the company and the undertakings
included in the consolidation taken as a whole; and the management
report, which is incorporated into the Financial and Management review,
includes a fair review of the development and performance of the
business and the position of the Company and the undertakings included
in the consolidation taken as a whole, together with a description.
- that the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
- that the Directors had prepared the annual accounts for the year
ended 31st March 2013 on a going concern basis.
CONSERVATION OF ENERGY, ENVIRONMENT, TECHNOLOGY ABSORPTION AND FOREIGN
EXCHANGE
In accordance with Rule 2 of the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 as applicable, the
particulars relating to conservation of energy and technology
absorption are given below.
A. Conservation of Energy, Power and Environment :
The Company continues its policy of giving priority to energy
conservation measures including regular review of energy generation and
consumption and effective control on utilisation of energy. Efforts for
conservation of energy and fuel consumption are ongoing processes in
the Company and every effort is made in that direction.
B. Research & Development :
The Company has always considered Research and Development (R&D) as
crucial for the sustained growth of the Company. The Company''s R&D
division continues to be recognized and certified under DSIR
guidelines. With qualified and experienced research scientists manning
the research and development activities, the Company has focused its
thrust on new and innovative process and product development for the
development of novel drug delivery processes, oncology drugs and
manufacture of APIs.
C. Foreign Exchange Earnings : Nil
D. Foreign Exchange Outgo : Nil
ACKNOWLEDGEMENTS
Your Directors place on record their appreciation for the continued
co-operation and support extended to the Company by all stakeholders
including the banks, government institutions, Shareholders, Auditors,
Customers, vendors and, business associates. Your Directors also thank
the Trade and Consumers for their initiation in patronising the
Company''s products. Your Directors also place on record their profound
admiration and sincere appreciation of the continued hard work put in
by employees at all levels.
By order of the Board
For TRANSGENE BIOTEK LIMITED
Sd/-
Dr. K. Koteswara Rao
Place: Hyderabad CHAIRMAN &
Date: 15-08-2013 MANAGING DIRECTOR
Mar 31, 2011
Dear Members,
The Board of Directors of your company hereby present the 21" Annual
Report on the business & operations of the company and Audited
Statement of Accounts for the year ended 31st March, 2011 along with
the Auditor's Report thereon.
FINANCIAL RESULTS
Rs. in Lakhs
Particulars 2010- 2011 2009- 2010
Net Sales/Income 1001.21 398.46
Total Expenditure 761.74 234.42
Gross Operating Profit 239.47 164.04
Interest and 71.47 84.98
Finance Charges
Forex Loss 116.05 -
Depreciation 35.16 33.49
Profit before Tax 16.79 45.57
Provision for Tax 3.11 7.42
Net Profit 13.68 38.15
OPERATIONS
The Directors' report that during the year under review the total
income was Rs.1001.21 Lakhs as against Rs.398.46 Lakhs in the previous
year and the Net Profit for the year was Rs.13.69 Lakhs as against
Rs.38.15 Lakhs for the previous year. There was a forex loss of
Rs.116.05 lakhs due to which the profit had come down,During the year,
the company has incurred an amount of Rs.286.01 lakhs on ongoing
product development and Rs.64.33 Lakhs on Fixed Assets as against
Rs.455.77 lakhs and Rs.10.05 Lakhs respectively in 2009-10.
It has been a year of some satisfaction with your company raising the
much needed funds through GDRs, the funds to enhance your company's
ability in reaching the desired objectives on different projects.
With the funds in place, the management has initiated plans to
restructure its operations in order to realize the inherent values of
various projects much faster. The newly structured operations fall
under:
API division
Tacrolimus
- DHA
- Orlistat R&D division
RNAi based drugs
- Breast cancer
- Liver cancer
- Ovarian cancer
- Pancreatic cancer
- Monoclonal antibodies (mAbs)
- Colon cancer
- Multiple myeloma
- Non-Hodgkin's lymphoma
- Esophageal cancer
- BeeCell technology (Auto-immune disease model)
- AIDS therapeutic vaccine
- Multiple Sclerosis
- NDDS
- Oral Insulin
- Oral AIDS vaccine
- Oral mAb based drugs
- Transdermal delivery of AIDs vaccine
APIs and commercial production:
As informed earlier, this division has achieved breakthrough on two
other APIs. Unfortunately, because of the hurdles faced by the company
in getting the approvals for expanding the manufacturing facilities at
the current location of your company, the management is looking at
alternative proposals for and during land with special emphasis on
getting environment and pollution control approvals. Realising the
poosible delays on that front, the management has opted to start the
commercial operations from a third party facility. We have already
entered into a Memorandum of Understanding with a company to start the
production using initially 64 kl fermentation facility with a capacity
to expand it to much larger capacities. Work is progressing with
installation of additional production and supporting equipment.
We are scheduled to start commercial production of DHA, one of the APIs
at the chosen 64 kl facility during Q3 of 2011-12. DHA, an Omega-3
fatty acid, is a product of great demand all over the world for its
inclusion as part of a healthy diet that helps lower risk of heart
disease and for the development of our nervous system and visual
abilities during the first 6 months of life.
Likewise, our second API, Tacrolimus is due to start regular commercial
production soon after DHA production is optimized at Transgene's
current 4 kl facility and transferred to 64 kl plant at the new
location.
With both APIs coming into commercial production during the Q3 of
2011-12, the management is looking at expanding its marketing horizons
beyond the shores of India.
R&D
RNAi drugs
We have added two more oncology drugs to the existing Breast and Liver
cancer drug development program - Pancreatic and Ovarian cancer drugs
with the signing of MoLI with a USA based company last month. We are
scheduled to complete highly complex pre-clinical studies conducted
outside India in North America on specially bred and genetically
modified mice on all these four drugs before the end of Q3 - 2011-12.
This will be followed by animal toxicology and human clinical studies.
mAb drugs
As informed earlier, we have engaged the services of two companies
outside India for humanizing our monoclonal antibody drugs. First step
in the process of humanization has been completed by both companies.
The chimerized antibodies are delivered for conducting in-house
in-vitro cytotoxicity assays prior to advancing and completing the
process of humanization. The antibodies are directed towards Colon
cancer, Multiple myeloma, NHL and Esophageal cancer.
BeeCell technology
The BeeCell technology platform developed by Transgene has been
improved further with the acquisition of another technology. This is to
enable Transgene to accelerate and widen the auto-immune disease drug
development program. It is reported that the drugs against auto-immune
diseases generated in excess of US$10 billion in 2008 and growing
further rapidly.
Intellectual property and patents
The advancement of drug development programs on several fronts along
with addition of new projects, there has been a tremendous increase in
the number of patents filed during the final quarter of 2010-11 and
subsequently. So far, more than 30 patents have been filed during this
period covering India, USA and PCT countries in addition to the earlier
filed ones.
Expansion of scientific staff
In line with the expansion of manufacturing operations and with
advancing R&D milestones, several new and experienced scientists have
been added to each division headed by highly qualified and experienced
leaders.
DIVIDEND
In spite of increased revenue and profits, your Directors are unable to
recommend any dividend for the year due, keeping in mind of substantial
funds needed to support the increasing R&D activities where activities
such as pre-clinical and clinical studies are known to be highly cost
intensive.
GROWTH PLANS AND OUTLOOK
Transgene Biotek's own comprehensive technology platforms represent a
powerful tool for the development of various therapeutic products for
treatment of several dangerous and debilitating conditions'such as
AIDS, Multiple Sclerosis etc. Recent acquisition of another technology
for auto-immune diseases has contributed to the rapid advancement of
drug development for auto-immune diseases apart from addition of two
more drugs for conditions such as Parkinson's disease and Psoariasis.
In cancer treatment, the products being developed by Transgene are
first in-class targeting the tumour cells in a selective manner, with
release of high concentration of siRNAs be it shRNA or miRNAs into the
cancer cells and may therefore induce tumor regression or even tumor
death in a safe and effective manner. This in turn reduces or
eliminates the need for chemo-therapy. With advancing in-vivo studies
on several cancer drugs, the management hopes to enter the critical
milestone of human studies on some of these by the end of 2011- 12. We
have engaged the services of an experienced CRO company in North
America for conducting pre- clinical studies on three products to
substantiate and add value to our pipeline.
"Global sales of cancer drugs will grow at a compounded annual rate of
12 to 15 percent, reaching $75 to $80 billion by 2012, according to a
new forecast by IMS Health (NYSE: RX), the world's leading provider of
market intelligence to the pharmaceutical and healthcare industries.
The growth rate for oncology products will be nearly double the
forecasted growth rate of the global pharmaceutical market. Recent
innovations have improved quality of life, delayed disease progression
and helped prolong survival for patients battling different types of
cancer."
The expanding nature of new drug delivery technologies at Transgene
with the scientists gaining better insight over the last decade into
the challenges posed in delivering those drugs through routes other
than by injectable path, opened up another dimension in creating or
enhancing the value of each drug under development at Transgene. Today,
Transgene is on the cusp of achieving its objective in providing a
better alternative to the injections and in doing so, increasing the
patient compliance resulting in better or effective treatment of
conditions such as AIDs, Cancer etc.
"New or novel drug delivery systems continue to be a fast-growing
market. Currently approaching $54 billion in annual sales, it is
estimated that this industry will reach $67 billion by 2009 - close to
20% of total global pharmaceutical sales."
The API division at Transgene, headed by a highly experienced and
committed team of scientists provides a stable and sustainable platform
for the company in moving forward with its devout objective of becoming
a globally recognized and innovative biotech company as we advance with
API manufacturing and R&D projects. The expanding manufacturing
operations and expansion of its marketing horizons beyond India shail
enhance its value even further.
"The market for Omega-3 fatty acids (DHA/EHA) was estimated at over $2B
(2007), according to Scientia Advisors. With lot of emerging scientific
evidence demonstrating the health benefits of DHA / EPA and consumer
awareness, the market is expected to drive >60% growth in the coming
years, according to a reteni Frost & Sullivan report (2010). Demand is
projected to outstrip available supply. "
Marillion Pharmaceuticals Inc
In the context of its restructuring program, the management has decided
to terminate its proposed acquisition of Marillion Pharmaceuticals Inc
of USA, following an in-depth due diligence exercise. However,
Transgene continues its quest for inorganic growth through selective
acquisition of or strategic partnerships with companies within and
outside India.
In the near and medium term, Transgene is to grow through expanding its
API manufacturing operations within and outside India generating
substantial revenues and profits. Over the longer term, the Company
continues to advance its novel drugs and achieving the critical
milestones which are protected by patents and which are of significant
value.
In summary, despite the economic and financial turbulence in the
developed markets, we now have the team and the strategy in place to
take the business forward to the next stage of its evolution. At
Transgene we will continue to consolidate what we have been building on
our solid platform and diversify where needed. This will be through a
combination of organic growth and innovation, product licensing and
acquisition, and strategic partnerships or company acquisitions.
EMPLOYEES STOCK OPTION SCHEME
The employee stock option scheme is still under implementation.
DIRECTORS
Sri S S Marthi and Dr P K Ghosh retire by rotation and being eligible
offer themselves for re-appointment.
ISSUE OF GDRs
The company was able to successfully issue 2500000 GDRs @ USD 9.2 per
GDR which were fully subscribed. The underlying shares of 25000000
Equity Shares of Rs.10/- each were listed on the Bombay Stock Exchange
Limited w.ef. May 06, 2011.
FIXED DEPOSITS
The company has not accepted any Fixed Deposits and the provisions of
section 58A of the Companies Act, 1956 are not applicable to the
Company.
AUDITORS
M/s Sarath & Associates, Chartered Accountants, the statutory Auditors
of the Company retire at the ensuing Annual General Meeting and are
eligible for reappointment.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under the Companies Act, 1956, your Directors wish to
state:
(a) That in the preparation of the Annual Accounts, the applicable
accounting standards have been followed.
(b) That the Directors had selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent, so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for that period;
(c) That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
(d) That the Directors had prepared the annual accounts for the year
ended 31st March 2011 on a going concern basis.
CORPORATE GOVERNANCE
Pursuant to clause 49 of the listing agreement, your Company has taken
adequate steps to ensure that all mandatory provisions of corporate
Governance as prescribed under the listing agreement of the Stock
Exchange with due compliance of all the applicable laws, rules and
regulations. A separate report on Corporate Governance and the
Auditor's certificate on its compliance are annexed hereto and forms
part of this Annual report.
EMPLOYEE RELATIONS
The key to our success is to develop core values within all of our
staff which lead to an environment where they believe that what they
are doing is making a difference. The core values with which we
operate are participation, achievement, trust and respect, innovation
and enthusiasm.
Transgene recognises that in an industry based on innovation and
research and development, its employees are some of its biggest assets
and it seeks to communicate and, where appropriate, consult with them
on matters affecting them as employees, in the correct manner.
Transgene provides training and development appropriate to individual
needs and offers remuneration packages (including pensions, permanent
health and life insurance) and a working environment that are designed
to be both fair and competitive with larger companies within the
industry.
There is no employee whose particulars are to be furnished pursuant to
the provisions under Section 217 (2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975 as amended by
the Companies (Amendment) Act, 1988.
CONSERVATION OF ENERGY, ENVIRONMENT, TECHNOLOGY ABSORPTION AND FOREIGN
EXCHANGE
A. Conservation of Energy, Power and Environment :
We are committed to minimising the impact of our activities on the
environment and energy efficiency is the most important means of
climate protection currently available to the company. Efforts for
conservation of energy and fuel consumption are ongoing processes in
the Company and every effort is made in that direction.
B. Research & Development:
The Company's R&D division continues to be recognized and certified
under DSIR guidelines. The company fosters the development of molecules
owned/co-owned byTransgene Biotek Ltd, in terms of finding right CROs
in India, US and Europe based on their capabilities, overseeing,
analysis and monitoring of information on in-vivo efficacy/ toxicology
studies being conducted within or outside India.
C. Foreign Exchange Earnings : Nil
D. Foreign Exchange Outgo : Rs. 4,55,64,518
ACKNOWLEDGEMENTS
Our employees remain crucial to the success of Transgene and it is
their skill and expertise that have enabled us to achieve our progress
to date. This has been recognised at various meetings where, over the
past twelve months, Transgene has made presentations on its drug
development pipeline.
We are committed to the development of a motivated and professional
workforce in order to build a business that is constantly looking to
innovate and evolve. On behalf of the Board, we thank all our staff for
their hard work and continued support and commitment.
Your Directors wish to place on record their gratitude to the
Government authorities, for the support and co- operation received from
M/S Union Bank of India, Bankers of the company, Shareholders,
Auditors, Customers, vendors, business associates and Staff of the
Company for their valued support during the year under review.
By order of the Board
For TRANSGENE BIOTEK LIMITED
Place: Hyderabad Dr. K. Koteswara Rao
Date: 05-09-2011 Chairman & Managing Director
Mar 31, 2010
The Board of Directors of your Company hereby present the 20th Annual
Report on the business & operations of the company and Audited
Statement of Accounts for the year ended 31st March, 2010 along with
the Auditors Report thereon.
FINANCIAL RESULTS
Rs. in Lakhs
Particulars 2009-10 2008-09
Net Sales/Income 398.46 370.02
Total Expenditure 234.42 217.29
Gross Operating Profit 164.04 152.73
interest & Financial Charges 84.98 75.37
Depreciation 33.49 34.81
Profit before Tax/Loss 45.57 42.55
Provision for Tax 7.42 4.82
Net Profit 38.15 37.73
OPERATIONS
During the year under review the total income was Rs.398.46 Lakhs as
against Rs.370.02 Lakhs in the previous year and the Net Profit for the
year was Rs.38.15 Lakhs as against Rs.37.73 Lakhs for the previous
year. During the year, the company has incurred an amount of Rs.455.77
lakhs on ongoing product development and Rs.10.05 Lakhs on Fixed Assets
as against Rs.239.09 lakhs and Rs.13.14 Lakhs respectively in 2008-09.
During the year gone by, your company has been advancing on several
fronts especially on the product development aspect. This is highly
satisfying for a company like Transgene where the core focus is the
development of novel and exciting Biotechnology products with first of
their kind on the global scene. In order to mitigate the risks involved
in developing such novel products and also, to strengthen your
companys revenues the management has been focusing
on the development of technologies and commercialization of some API
drugs too. As you already know one of your API drugs, Orlistat, has
already been out-licensed to Dr Reddys Laboratories Limited (DRL) and
the first two installments have been received as a part of the upfront
payment schedule - with the remaining upfront payments and royalties on
the commercial sales to be received from the current year onwards.
Soon after the technology transfer to DRL for Orlistat is completed,
the production facilities shall be utilized for producing other API
drugs which have been put on hold during the last several months.
DIVIDEND
Your Directors are unable to recommend any dividend for the year due to
inadequacy of profits.
GROWTH PLANS AND OUTLOOK
1. This year we hope to complete the scaling up process of the
manufacture of Orlistat - which in turn will lead to a new stream of
revenues emanating from Royalties paid to Transgene by Dr Reddys Labs.
At the moment that process is on-going, and although the scaling up
process has taken a little longer than expected we anticipate moving to
the next level of that process very soon. Problems with this process
have included contamination of production batches - something that
Transgene has taken specific corrective steps to eliminate. Over the
next few weeks and months the completion of that process will see us
visit Dr Reddys Orlistat manufacturing plant in Eastern Europe.
Moving onto the other APIs, as you can understand we chose to direct
all our API resources to the Orlistat project and so made a conscious
decision to put the other projects in this division on hold that
includes Tacrolimus and one or two other APIs also. To reiterate, once
the scaling-up process of Orlistat is completed work on these other
projects will resume. As reported earlier your companys management is
actively pursuing to set-up a large production facility with the help
of funding from SBIRI, Department of Biotechnology, Government of India
to enhance the revenue generation and bottom line of your company.
2. Last year we reported that Transgene had reached some critical
milestones in the development of our therapeutic AIDS vaccine. That
progress has continued this year and we are now on the verge of
entering preclinical trials. We have begun technology optimization
process of our immuno-toxin drug - in preparation for preclinical
toxicology and efficacy studies. Added to the revenues we expect
through royalties from DRL deal, and the prospects for the
out-licensing of our AIDS vaccine during the next calendar year the
future seems very bright indeed.
3. On the development of Oral Insulin, due to a combination of
financial constraints and the fact that your other projects (including
the Oncology drugs and the AIDS vaccine) are progressing at a far
greater pace, we decided to put this project on hold for the time
being. We fully intend to resume work on this front once
financial.constraints are eased from completion and sale of one of our
technologies, or from the successful raising of funds.
4. Moving on to the real pride of your company, namely the Oncology
division comprising of the siRNA drugs and the Monoclonal Antibody
drugs, your directors draw distinct pleasure in telling you how well
these projects are progressing. Within a relatively short space of time
we have managed to create a world class oncology pipeline here at
Transgene Biotek. With our siRNA drugs we have begun our search for
third party CRO companies with whom we will be working to conduct
animal efficacy and preclinical toxicology studies for our Liver cancer
and Breast cancer drugs. This validation by an external CRO will add a
significant degree of integrity and value to our pipeline - something
that should give all of you, our trusted shareholders the confidence
that we are creating enormous value here in your company.
5. Equally pleasing are the strides we are making in the development
of the monoclonal antibody drugs - again, within the oncology division
of your pipeline. Within just a few days from now we expect to receive
the report from a third party CRO company who have been given the task
of validating our in-house studies conducted on four drugs - for Colon
cancer, Multiple Myeloma, Non-Hodgkins Lymphoma and Esophageal cancer.
This will not only serve to enhance the value of our claims on the
efficacy of your pipeline, but will also provide Transgene with a host
of data which can be submitted to regulatory authorities (or other
interested parties) when necessary.
6. The medical centers have been performing steadily on the expected
lines.
7. As we reported in recent weeks, your Board has agreed to acquire
Marillion Pharmaceuticals Inc., of Pennsylvania, USA in an all-share
deal. However, this deal is subject to satisfactory due diligence to be
conducted on Marillion Pharmaceuticals Inc. One of the main strengths
perceived in this deal is Marillions pipeline of 3 oncology products,
two of which are said to be at Phase I human trials stage, and the
third one at Phase II. The perception carried by your management in
trying to acquire this company is not only to enhance Transgenes
reputation as a specialist R&D oncology company, but also extends the
companys pipeline from preclinical to clinical as well. Added to the
expanded product list, the merger is expected to bring with it the
skills and experience of Mari 11 ions CEO Dr Zahed Subhan, an expert
on IND filing and US FDA related matters. In addition, your companys
management felt that this deal also brings Transgene Biotek closer to
the Venture Capital community, a feature that will help Transgenes
capital raising efforts going forward. However, the management is
acutely aware that the consummation of this deal is subject to a
satisfactory due diligence to be carried out by a team of experts
appointed by your companys management on Marillion Pharmaceuticals
from various angles.
In conclusion, the overall changes mentioned above in the stated
business of your company are likely to make significant contributions
to the companys bottom line from the next few months onwards. Add to
this the acquisition of Marillion, which also instantly creates a
presence in western markets with an enhanced, even more lucrative
pipeline - it becomes obvious why we feel so confident about the
companys prospects.
EMPLOYEES STOCK OPTION SCHEME
The employee stock option scheme is still under implementation.
DIRECTORS
Dr P K Ghosh and Sri P Narayana Murthy retire by rotation and being
eligible offer themselves for re-appointment.
PREFERENTIAL OFFER TO THE PROMOTERS
The listing permission of 7,50,000 shares of Rs.10/- each at a
conversion price of Rs.80/- allotted to Dr K K Rao, promoter of the
Company, on preferential basis last year is awaited from Bombay Stock
Exchange.
COMMENTS OF AUDITORS
As per the Audit Report, it has been reported that the company has not
remitted the amounts pertaining to PF, ESI, Income Tax, Central Excise,
etc. Your Directors wish to inform you that due to inadequate financial
resources, the company was unable to remit the said amounts within
stipulated time. However, the same are being paid since then. The
company is also in the process of strengthening the internal control
procedures.
KEY SCIENTIFIC & ADMINISTRATIVE PERSONNEL
In line with the increased activities on R&D front several key
scientific personnel have been recruited.
FIXED DEPOSITS
The company has not accepted any Fixed Deposits and the provisions of
Section 58A of the Companies Act, 1956 are not applicable to the
Company.
AUDITORS
M/s Sarath & Associates, Chartered Accounts, the statutory Auditors of
the Company retire at the ensuing Annual General Meeting and are
eligible for reappointment.
DIRECTORS RESPONSIBILITY STATEMENT
As required under the Companies Act, 1956, your Directors wish to
state:
a) That in the preparation of the annual accounts, the applicable
Accounting standards have been followed.
b) That the Directors had selected such accounting policies and applied
them consistently and made judgements and estimates that were
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit or loss of the Company for the year under review;
c) That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities; and
d) That the Directors had prepared the accounts for the year ended 31st
March, 2010 on a going concern basis.
CORPORATE GOVERNANCE
As required by Clause 49 of the Listing Agreement with the Stock
Exchanges, your Company believes in conducting the business with due
compliance of all the applicable laws, rules and regulations. The
Company has duly implemented the system of Corporate Governance as per
the requirement of the said Listing Agreement. Report on Corporate
Governance along with Compliance Certificate of the Auditors and
Management Discussion and Analysis Report are annexed hereto.
EMPLOYEE RELATIONS
Your Directors wish to express their sincere appreciation of the
efficient services rendered by the employees at all levels of the
company for their excellent support and contribution at all times.
There is no employee whose particulars are to be furnished pursuant to
the provisions under Section 217 (2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975 as amended by
the Companies (Amendment) Act, 1988.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
A. Conservation of Energy, Power:
Efforts for conservation of energy and fuel consumption is an ongoing
process in the Company and every effort is made in that direction.
B. Research & Development:
The Companys R&D division is recognized and certified under DSIR
guidelines. Continuous efforts are being made to optimize and
streamline various developmental and commercial processes.
C. Foreign Exchange Earnings : Nil
D. Foreign Exchange Outgo : Nil
ACKNOWLEDGEMENTS
Your Directors wish to place on record their gratitude to the
Government authorities, for the support and co-operation received from
M/S Union Bank of India, Bankers of the company, Shareholders,
Auditors, Customers, vendors, business associates and Staff of the
Company for their valued support during the year under review.
By the Order of the Board
For Transgene Biotek Limited
Sd/-
Place : Hyderabad Dr.K.Koteswara Rao
Date : 04.09.2010 Chairman & Managing Director