UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

October 31, 2019

(Commission File No. 001-38475)

 

 

ASLAN PHARMACEUTICALS LIMITED

(REG. NO. 289175)

(Translation of registrant’s name into English)

 

 

CAYMAN ISLANDS

(Jurisdiction of incorporation or organization)

83 CLEMENCEAU AVENUE

#12-03 UE SQUARE

SINGAPORE 239920

(Address of registrant’s principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒        Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):

Yes ☐        No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):

Yes ☐        No ☒

 

 

 

Financial Results

On October 31, 2019, ASLAN Pharmaceuticals Limited (the “Company”) issued its financial results for the third quarter ended September 30, 2019 (the “Financial Results”).

A copy of the Financial Results is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

Amended and Restated Memorandum and Articles of Association

On June 21, 2019, the Company adopted its Seventh Amended and Restated Memorandum and Articles of Association (the “Restated Articles”). The Restated Articles, among other things, update and amend the requirements needed to convene a shareholders’ meeting, expand upon the powers of directors to convene general meetings and request the register of members, increase the scope of interested director transactions, amend and simplify shareholder petition rights for and on behalf of the Company against the Company’s director(s) and clarify that the Taipei District Court, ROC, may have jurisdiction over such petition.

The description of the Restated Articles does not purport to be complete and is qualified in its entirety by reference to the Restated Articles, a copy of which is attached hereto as Exhibit 99.2 and incorporated by reference herein.

Loan Facilities

On September 30, 2019 and October 25, 2019, the Company entered into a series of loan facilities with certain of the Company’s directors, existing stockholders or affiliates thereof, and others, for an aggregate loan amount of $2.95 million. The loan facilities provide the Company with additional working capital to support its ongoing research and development programs and clinical studies. The two types of loan facilities are described below:

Convertible Loan Facility

On September 30, 2019, the Company entered into a loan facility with Bukwang Pharmaceutical Co., Ltd., for an amount of $1.0 million (the “September 2019 Loan Facility”). The September 2019 Loan Facility has a two-year term with a 10% interest rate per annum, commencing upon the date the Company draws down on such facility. The Company has the option to repay the amounts owed under the September 2019 Loan Facility at any time, subject to certain conditions.

The lender will have the right to convert, at their option, any outstanding principal amount plus accrued and unpaid interest under the loan into that number of the Company’s newly issued American Depositary Shares (“ADSs”) calculated by dividing (a) such outstanding principal amount and accrued and unpaid interest under the loan by (b) 90% of the volume-weighted average price of the Company’s ADS on the date of the conversion notice. Each ADS represents five ordinary shares of the Company. The ability to convert is subject to certain conditions, including that the Company’s ordinary shares will have been delisted from the Taipei Exchange (“TPEx”), and expires at the expiry of the term of the loan.

The foregoing description of the September 2019 Loan Facility does not purport to be complete and is qualified in its entirety by reference to the full text of such document, which is attached hereto as Exhibit 99.3 and incorporated by reference herein.

October 2019 Loan Facility

On October 25, 2019, the Company entered into a loan facility with certain existing stockholders/directors, or affiliates thereof, for an aggregate amount of $1.95 million (collectively, the “October 2019 Loan Facility”). The October 2019 Loan Facility has a two-year term with a 10% interest rate per annum, commencing upon the date the Company draws down the facility, which must be drawn down in full. The Company has the option to repay not less than $1.0 million of the amounts owed under the October 2019 Loan Facilities at any time, subject to certain conditions. In the event that the Company raises net proceeds of more than $19.5 million in a financing transaction during the loan term, the Company will be obligated to repay any unpaid portion of the principal amount and accrued interest thereunder within 30 days of the receipt of the proceeds from such financing transaction.

The October 2019 Loan Facility provides that, during the time that any amount is outstanding thereunder, the Company will not (i) incur any finance debt which is secured by a security interest or (ii) carry out or implement any merger, consolidation, reorganization (other than the solvent reorganization of the Company), recapitalization, reincorporation, share dividend or other changes in the capital structure of the Company which may have a material adverse effect on the rights of the lenders, in each case except with the prior written consent of the lenders. In addition, upon an event of default (as defined in the October 2019 Loan Facility), the lenders may declare the principal amounts then outstanding and all interest thereon accrued and unpaid to be immediately due and payable to the lenders.

In the event that the Company draws down on the October 2019 Loan Facility, the Company will issue the lenders warrants (the “Warrants”) to purchase an aggregate number of ADSs calculated by dividing (a) 50% of the aggregate principal amount provided to the Company by (b) the Warrant Exercise Price. The “Warrant Exercise Price” is equal to 120% of the volume-weighted average price per ADS on the draw down date, and will be the exercise price per ADS for the Warrants. The Warrants are exercisable only after the Company’s ordinary shares have been delisted from TPEx, and will expire on the earlier of (i) the first anniversary of such TPEx delisting or (ii) expiry of the term of the October 2019 Loan Facility. If, by expiry of the term of the October 2019 Loan Facility, (i) the Company’s shares have not been delisted from TPEx and (ii) the Warrants have not been exercised, the lenders shall be entitled to receive a further sum equal to 5% of the principal amount per annum, by way of additional interest, payable by the Company upon expiry of the loan term.

The foregoing descriptions of the October 2019 Loan Facility and the Warrants do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are attached hereto as Exhibits 99.4 and 99.5, respectively, and incorporated by reference herein.

Exhibits

 

Exhibit Number		Exhibit Description
99.1		ASLAN Pharmaceuticals Limited Financial Results for the Third Quarter Ended September 30, 2019.
99.2		Seventh Amended and Restated Memorandum and Articles of Association of ASLAN Pharmaceuticals Limited.
99.3		Loan Facility dated September 30, 2019.
99.4		Loan Facility dated October 25, 2019.
99.5		Form of Warrant to purchase American Depositary Shares to be issued to October 2019 Loan Facility lenders.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

Date: October 31, 2019

Exhibit 99.1

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In U.S. Dollars)

(Unaudited)

 

		December 31, 2018				September 30, 2019
		Amount				Amount
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6)		$	28,908,901			$	7,993,458
Prepayments			183,599				143,120
Total current assets			29,092,500				8,136,578
NON-CURRENT ASSETS
Financial assets at fair value through profit or loss (Notes 7 and 16)			60,004				38,006
Financial assets at fair value through other comprehensive income (Notes 8 and 16)			187,244				178,198
Property, plant and equipment, net (Note 9)			288,418				56,152
Right-of-use assets (Notes 3, 4, 5 and 10)			—				794,403
Intangible assets (Notes 11 and 16)			23,080,592				23,077,223
Refundable deposits			172,080				108,077
Total non-current assets			23,788,338				24,252,059
TOTAL ASSETS		$	52,880,838			$	32,388,637
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade payables		$	5,315,737			$	2,235,232
Other payables (Notes 12 and 20)			2,682,661				1,892,733
Lease Liabilities – current (Notes 3, 4, 5 and 10)			—				194,437
Total current liabilities			7,998,398				4,322,402
NON-CURRENT LIABILITIES
Long-term borrowings (Note 13)			13,974,794				14,161,243
Lease Liabilities – non-current (Notes 3, 4, 5 and 10)			—				625,156
Other non-current liabilities (Note 20)			289,613				88,497
Total non-current liabilities			14,264,407				14,874,896
Total liabilities			22,262,805				19,197,298
EQUITY (Note 15)
Ordinary shares			51,627,219				51,627,219
Capital surplus			111,459,672				111,502,183
Accumulated deficits			(132,468,858	)			(149,929,017	)
Other reserves			—				(9,046	)
Total equity			30,618,033				13,191,339
TOTAL LIABILITIES AND EQUITY		$	52,880,838			$	32,388,637

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F-1

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In U.S. Dollars)

(Unaudited)

 

		For the Nine months Ended September 30
		2018				2019
		Amount				Amount
NET REVENUE (Notes 16)		$	—			$	3,000,000
COST OF REVENUE (Note 16)			—				(425,000	)
OPERATING EXPENSES (Notes 14, 17 and 20)
General and administrative expenses			(8,613,032	)			(5,253,502	)
Research and development expenses			(22,630,392	)			(13,883,992	)
LOSS FROM OPERATIONS			(31,243,424	)			(16,562,494	)
NON-OPERATING INCOME AND EXPENSES
Interest income			239,694				144,417
Other income (Note 16)			187,244				—
Other gains and losses (Note 17)			170,535				(38,290	)
Finance costs (Notes 4 and 17)			(333,367	)			(608,502	)
Total non-operating income and expenses			264,106				(502,375	)
LOSS BEFORE INCOME TAX			(30,979,318	)			(17,064,869	)
INCOME TAX EXPENSE (Notes 4 and 18)			(14,439	)			(395,290	)
NET LOSS FOR THE PERIOD (Note 15)			(30,993,757	)			(17,460,159	)
OTHER COMPREHENSIVE (LOSS) (Note 15)
Items that will not be reclassified subsequently to profit or loss:
Unrealised losses on investments in equity instruments at fair value through other comprehensive income			—				(9,046	)
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD		$	(30,993,757	)		$	(17,469,205	)
LOSS PER SHARE (Note 19)
Basic and diluted		$	(0.21	)		$	(0.11	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F-2

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In U.S. Dollars)

(Unaudited)

 

										Capital Surplus (Note 15)																Unrealized Valuation Loss on Financial Assets at Fair Value Through Other Comprehensive Income (Note 15 and 16)
		Ordinary Shares (Note 15)
		Shares				Amount				Ordinary Shares				Share Options Reserve				Total				Accumulated Deficits								Total Equity
BALANCE AT JANUARY 1, 2018			130,128,940			$	41,514,016			$	78,384,290			$	5,898,391			$	84,282,681			$	(90,283,261	)		$	—			$	35,513,436
Issuance of ordinary shares for cash (Note 15)			30,000,000				10,073,977				32,106,023								32,106,023												42,180,000
Transaction costs attributable to issue of new ordinary shares											(5,388,866	)							(5,388,866	)											(5,388,866	)
Issue of ordinary shares under employee share option plan (Note 20)			120,000				39,226				41,915				(33,141	)			8,774												48,000
Recognition of employee share options by the Company (Note 20)															420,044				420,044												420,044
Net loss for the nine months ended September 30, 2018																							(30,993,757	)							(30,993,757	)
Total comprehensive loss for the nine months ended September 30, 2018																							(30,993,757	)			—				(30,993,757	)
BALANCE AT SEPTEMBER 30, 2018			160,248,940				51,627,219				105,143,362				6,285,294				111,428,656				(121,277,018	)			—				41,778,857
BALANCE AT JANUARY 1, 2019			160,248,940			$	51,627,219			$	105,143,362			$	6,316,310			$	111,459,672			$	(132,468,858	)		$	—			$	30,618,033
Recognition of employee share options by the Company (Note 20)															42,511				42,511												42,511
Net loss for the nine months ended September 30, 2019																							(17,460,159	)							(17,460,159	)
Other comprehensive loss for the nine months ended September 30, 2019, net of income tax																											(9,046	)			(9,046	)
Total comprehensive loss for the nine months ended September 30, 2019																							(17,460,159	)			(9,046	)			(17,469,205	)
BALANCE AT SEPTEMBER 30, 2019			160,248,940				51,627,219				105,143,362				6,358,821				111,502,183				(149,929,017	)			(9,046	)			13,191,339

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F-3

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. Dollars)

(Unaudited)

 

		For the Nine months ended September 30
		2018				2019
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before income tax		$	(30,979,318	)		$	(17,064,869	)
Adjustments for:
Depreciation expenses			174,404				357,074
Amortization expenses			4,726				3,369
Net loss on fair value changes of financial assets at fair value through profit or loss			—				21,998
Finance costs			333,367				608,502
Interest income			(239,694	)			(144,417	)
Compensation costs recognized (reversed) of share-based payment transactions			1,806,044				(212,551	)
Loss on disposal of property, plant and equipment			—				75,296
Gain on foreign exchange, net			(221,781	)			(140,774	)
Gain on disposal of licensed rights			(187,244	)			—
Loss on lease modification			—				64,287
Changes in operating assets and liabilities
(Increase) Decrease in prepayments			(66,641	)			40,479
Decrease in trade payables			(361,302	)			(3,080,505	)
Decrease in other payables			(303,452	)			(992,887	)
Cash used in operations			(30,040,891	)			(20,464,998	)
Income tax paid			(14,439	)			(395,290	)
Interest received			239,694				144,417
Interest paid			—				(24,374	)
Net cash used in operating activities			(29,815,636	)			(20,740,245	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment			(67,364	)			(2,993	)
Proceeds from disposal of property, plant and equipment			—				4,300
Payments for intangible assets			(23,002,895	)			—
(Increase) Decrease in refundable deposits			(16,278	)			2,545
Net cash (used in) generated from investing activities			(23,086,537	)			3,852
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of the principal portion of lease liabilities			—				(179,050	)
Issuance of ordinary shares			42,180,000				—
Proceeds from exercise of employee share options			48,000				—
Payments for transaction costs attributable to issue of ordinary shares			(5,098,623	)			—
Net cash generated from (used in) financing activities			37,129,377				(179,050	)
NET DECREASE IN CASH AND CASH EQUIVALENTS			(15,772,796	)			(20,915,443	)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD			50,573,211				28,908,901
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		$	34,800,415			$	7,993,458

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F-4

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

1.	GENERAL INFORMATION

ASLAN Pharmaceuticals Limited (the “Company”) was incorporated in the Cayman Islands in June 2014 as the listing vehicle for the initial public offering and listing on both Taipei Exchange (“TPEx”) in Taiwan and Nasdaq Global Market in the United States. The Company and its subsidiaries (collectively referred to as the “Group”) are principally engaged in the development of novel drugs for Asia prevalent cancers.

The main businesses and intragroup relationships of the Group were as follows as of September 30, 2019:

 

Name		Place of Incorporation		Date of Incorporation		Main Business
ASLAN Pharmaceuticals Limited		Cayman Islands		June 2014		Investment holding
ASLAN Pharmaceuticals Pte. Ltd.		Singapore		April 2010		New drug research and development
ASLAN Pharmaceuticals Taiwan Limited		Taiwan		November 2013		New drug research and development
ASLAN Pharmaceuticals Australia Pty Ltd.		Australia		July 2014		New drug research and development
ASLAN Pharmaceuticals Hong Kong Limited		Hong Kong		July 2015		New drug research and development
ASLAN Pharmaceuticals (Shanghai) Co. Ltd.		China		May 2016		New drug research and development
ASLAN Pharmaceuticals (USA) Inc.		United States of America		October 2018		New drug research and development
Jaguahr Therapeutics Pte. Ltd.		Singapore		August 2019		New drug research and development

 

F-5

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

The Company’s shares have been listed on the TPEx since June 1, 2017. In addition, the Company also increased capital through a new share issuance by a depositary institution in order to sponsor its issuance of American Depositary Shares (“ADSs”), which have been listed on the Nasdaq Global Market, on May 4, 2018.

In addition to its main product candidates, the Company has other earlier stage product candidates in development. On September 30, 2019 the Company announced that it will establish a joint venture with Bukwang Pharmaceutical Co., Ltd., a leading research and development focused Korean pharmaceutical company, to develop antagonists of the aryl hydrocarbon receptor (AhR). The joint venture company, in which the Company currently owns a controlling stake, is called Jaguahr Therapeutics Pte. Ltd.

The reporting currency of the Group is the U.S. dollar. The functional currency of the majority of the Group’s entities is the U.S. dollar.

 

2.	APPROVAL OF FINANCIAL STATEMENTS

The condensed consolidated financial statements were approved by the Company’s board of directors on October 29, 2019.

 

3.	APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

 

a.

Amendments to the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) mandatorily effective for the current year

The Company has applied the amendments to IFRSs included in Annual Improvements to IFRSs 2015-2017 Cycle, Amendments to IFRS 9 “Prepayment Features with Negative Compensation”, IFRS 16 “Leases”, Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”, Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures”, and IFRIC 23 “Uncertainty over Income Tax Treatments” for the annual period that began on or after January 1, 2019.

The adoption and impact of these standards from January 1, 2019 are described as below and the new accounting policies are disclosed in Note 4. The other standards did not have material impact on the Group’s accounting policies.

 

F-6

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessee and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration under IFRS 16.

The Group elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases on the condensed consolidated balance sheets except for those whose payments under low-value asset and short-term leases are recognized as expenses on a straight-line basis. On the condensed consolidated statements of comprehensive income, the Group presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the condensed consolidated statements of cash flows, cash payments for the principal portion of lease liabilities are classified within financing activities; cash payments for the interest portion are classified within operating activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses as occurred. Cash flows for operating leases were classified within operating activities on the condensed consolidated statements of cash flows. The Group elects to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized in retained earnings on January 1, 2019. Comparative information is not restated.

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities. The Group applies IAS 36 to all right-of-use assets.

The Group applies the following practical expedients:

 

1)

The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.

 

2)

The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.

 

3)

The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.

 

4)

The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 6%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

 

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018		$	599,393
Less: Recognition exemption for short-term leases			(261,622	)
Less: Recognition exemption for leases of low-value assets			(1,097	)
Undiscounted amounts on January 1, 2019		$	336,674
Discounted amounts using the incremental borrowing rate on January 1, 2019		$	323,850
Lease liabilities recognized on January 1, 2019		$	323,850

 

F-7

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

 

		Carrying amount as of January 1, 2019				Adjustments Arising from Initial Application				Adjusted carrying amount as of January 1, 2019
Total effect on assets (right-of-use assets)		$	—			$	323,850			$	323,850
Lease liabilities—current		$	—			$	219,039			$	219,039
Lease liabilities—non-current		$	—				104,811			$	104,811
Total effect on liabilities						$	323,850

 

b.

New and revised IFRSs issued but not yet effective

Of the new, amended and revised standards and interpretations (collectively the “New IFRSs”) that have been issued but are not yet effective, the Company has not applied the following.

 

New, Amended or Revised Standards and Interpretations		Effective  Date Announced by IASB (Note 1)
Amendments to IFRS 3 “Definition of a Business”		January 1, 2020 (Note 2)
Amendments to IAS 1 and IAS 8 “Definition of Material”		January 1, 2020 (Note 3)
Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”		January 1, 2020
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture”		To be determined by IASB
IFRS 17 “Insurance Contracts”		January 1, 2021

 

Note 1:		Unless stated otherwise, the above New IFRS standards are effective for annual periods beginning on or after their respective effective dates.
Note 2:		The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 3:		The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

As of the date the condensed consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

 

F-8

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

4.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

a.

Statement of compliance

The condensed consolidated financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting”. The condensed consolidated financial statements are not subject to qualification relating to the application of IFRSs as issued by IASB.

 

b.

Basis of preparation

The condensed consolidated financial statements have been prepared on the historical cost basis except for financial instruments and other payable arising from cash-settled share-based payment arrangements which are measured at fair value.

 

c.

Basis of consolidation

The condensed consolidated financial statements incorporate the financial statements of the Company and its subsidiaries.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

 

d.

Other significant accounting policies

Refer to the summary of significant accounting policies for the condensed consolidated financial statements for the year ended December 31, 2018, unless otherwise stated below.

 

1)

Leases

2019

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the condensed consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

 

F-9

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments and the default fine arises from lease termination. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the condensed consolidated balance sheets.

If a change in the scope of the lease, or the consideration of a lease, that was no part of the original terms and conditions of the lease takes place, and both the modification increases the scope of the lease by adding the right to use one or more underlying assets and the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract, the Group shall account for a lease modification as a separate lease. For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification, the Group shall remeasure the lease liaibility by discounting the revised lease payments using a revised discount rate.

The Group shall account for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, shall recognize in profit or loss any gain or loss relating to the partial or full termination of the lease, and shall make a corresponding adjustment to the right-of-use asset for all other lease modification.

2018

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

 

2)

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings. The effect of a change in tax rate resulting from a change in tax law is recognized consistently with the accounting for the transaction itself which gives rise to the tax consequence, and this is recognized in profit or loss, other comprehensive income or directly in equity in full in the period in which the change in tax rate occurs.

 

5.	CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

 

F-10

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

For the critical accounting judgments and key sources of estimation uncertainty and assumption applied in the condensed consolidated financial statements, refer to the condensed consolidated financial statements for the year ended December 31, 2018.

 

6.	CASH AND CASH EQUIVALENTS

 

		December 31 2018				September 30 2019
Cash on hand		$	2,318			$	1,676
Deposits in banks			28,906,583				7,991,782
		$	28,908,901			$	7,993,458

Deposits in banks consisted of highly liquid time deposits that are readily convertible to known amounts of cash and were subject to an insignificant risk or change in value.

 

7.	FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

 

		December 31, 2018				September 30, 2019
Non-current
Financial assets mandatorily classified as at fair value through profit or loss
Derivative financial assets—warrants		$	60,004			$	38,006

In July 2018, the Group acquired warrants to subscribe for ordinary shares of DotBio Pte. Ltd., as detailed in Note 16 (under the heading of “Nanyang Technological University”).

 

F-11

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

8.	FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

 

		December 31, 2018				September 30, 2019
Non-current
Investments in equity instruments at fair value through other comprehensive income
Foreign unlisted ordinary shares		$	187,244			$	178,198

In July 2018, the Group acquired ordinary shares of DotBio Pte. Ltd., as detailed in Note 16 (under the heading of “Nanyang Technological University”), which were not held for trading. The management believes that to recognize short-term fluctuations in the investments’ fair value in profit or loss would not be consistent with the Group’s purpose of holding the investments. As a result, the Group elected to designate the investments in equity instruments as at fair value through other comprehensive income.

 

9.	PROPERTY, PLANT AND EQUIPMENT

The carrying amounts of each class of property, plant and equipment were as follows:

 

		December 31 2018				September 30 2019
Office equipment		$	98,820			$	39,327
Other equipment			11,052				3,324
Leasehold improvements			178,546				13,501
		$	288,418			$	56,152

For the nine months ended September 30, 2018

 

		Office Equipment				Other Equipment				Leasehold Improvements				Total
Cost
Balance at January 1, 2018		$	211,302			$	35,153			$	474,504			$	720,959
Additions			52,735				1,027				13,602				67,364
Balance at September 30, 2018		$	264,037			$	36,180			$	488,106			$	788,323
Accumulated depreciation
Balance at January 1, 2018		$	115,436			$	14,344			$	147,613			$	277,393
Depreciation expenses			45,039				8,094				121,271				174,404
Balance at September 30, 2018		$	160,475			$	22,438			$	268,884			$	451,797

 

F-12

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

For the nine months ended September 30, 2019

 

		Office Equipment				Other Equipment				Leasehold Improvements				Total
Cost
Balance at January 1, 2019		$	276,935			$	36,180			$	488,106			$	801,221
Additions			2,993				—				—				2,993
Disposals			(65,292	)			(889	)			(219,733	)			(285,914	)
Balance at September 30, 2019		$	214,636			$	35,291			$	268,373			$	518,300
Accumulated depreciation
Balance at January 1, 2019		$	178,115			$	25,128			$	309,560			$	512,803
Depreciation expenses			44,591				7,357				103,715				155,663
Disposals			(47,397	)			(518	)			(158,403	)			(206,318	)
Balance at September 30, 2019		$	175,309			$	31,967			$	254,872			$	462,148

No impairment assessment was performed for the nine months ended September 30, 2018 and 2019 as there was no indication of impairment.

The above items of property, plant and equipment used by the Group are depreciated on a straight-line basis over the estimated useful life of 3 years.

 

10.	LEASE ARRANGEMENTS

 

a.

Right-of-use assets—2019

 

		September 30, 2019
Carrying amounts
Buildings		$	794,403

 

F-13

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

		For the nine months ended September 30, 2019
Additions to right-of-use-assets		$	882,670
Depreciation charge for right-of-use assets
Buildings		$	201,411

 

b.

Lease liabilities—2019

 

		September 30, 2019
Carrying amounts
Current		$	194,437
Non-current			625,156
		$	819,593

Discount rate for lease liabilities was as follows:

 

		September 30, 2019
Buildings			6.0	%

 

c.

Material lease-in activities and terms

The Group leases office buildings with lease terms of 3 years. These arrangements do not contain renewal or purchase options at the end of the lease terms.

The office buildings leases across the Group contain extension options. These terms are used to maximize operational flexibility in terms of managing contracts. In cases in which the Group is not reasonably certain to use an optional extended lease term, payments associated with the optional period are not included within lease liabilities. If the payments associated with the optional period are included within lease liabilities, there will be an increase in lease liabilities of $687,351 as of September 30, 2019.

 

d.

Other lease information

2019

 

		For the nine months ended September 30, 2019
Expenses relating to short-term leases		$	216,201
Expenses relating to low-value asset leases		$	6,198
Total cash outflow for leases		$	425,821

 

F-14

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

The Group leases certain office buildings which qualify as short-term leases and certain office equipment which qualify as low-value asset leases. The Group has elected to apply the recognition exemption and, thus, did not recognize right-of-use assets and lease liabilities for these leases.

All lease commitments with lease terms commencing after the balance sheet dates are as follows:

 

		September 30, 2019
Lease commitments		$	98,067

2018

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

 

		December 31, 2018
Not later than 1 year		$	493,534
Later than 1 year and not later than 5 years			105,859
		$	599,393

 

11.	INTANGIBLE ASSETS

The carrying amounts of each class of intangible assets were as follows:

 

		December 31				September 30
		2018				2019
Licenses		$	23,073,400			$	23,073,400
Computer software			7,192				3,823
		$	23,080,592			$	23,077,223

For the nine months ended September 30, 2018

 

		Licenses				Computer Software				Total
Cost
Balance at January 1, 2018		$	73,400			$	40,175			$	113,575
Additions			23,000,000				2,895				23,002,895
Balance at September 30, 2018		$	23,073,400			$	43,070			$	23,116,470
Accumulated amortization
Balance at January 1, 2018		$	—			$	29,523			$	29,523
Amortization expenses			—				4,726				4,726
Balance at September 30, 2018		$	—			$	34,249			$	34,249

 

F-15

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

For the nine months ended September 30, 2019

 

		Licenses				Computer Software				Total
Cost
Balance at January 1, 2019 and September 30, 2019		$	23,073,400			$	43,070			$	23,116,470
Accumulated amortization
Balance at January 1, 2019		$	—			$	35,878			$	35,878
Amortization expenses			—				3,369				3,369
Balance at September 30, 2019		$	—			$	39,247			$	39,247

The intangible assets, namely licenses, include the acquisition in January 2018 of exclusive and worldwide rights to develop, manufacture and commercialize varlitinib from Array Biopharma Inc. and in August 2016 of ASLAN005 from Exploit Technologies Pte Ltd., respectively. The information related to these license agreements is further disclosed in Note 16.

As of December 31, 2018 and September 30, 2019, the aforementioned intangible assets were not amortized since they were not yet available for use. Instead they would be tested for impairment, by comparing the recoverable amounts with the carrying amounts, annually and whenever there is an indication that they may be impaired. For the nine months ended September 30, 2018 and 2019, there was no impairment loss recognized.

Computer software is amortized on a straight-line basis over the estimated useful life of 3 years.

 

F-16

ASLAN PHARMACEUTICALS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019

(In U.S. Dollars, Unless Stated Otherwise)

(Unaudited)

 

12.	OTHER PAYABLES

 

		December 31 2018				September 30 2019
Payables for salaries and bonuses		$	1,153,048			$	237,335
Payables for professional fees			680,708				594,425
Payables for cash-settled share-based payment transactions (Note 20)			669,042				624,882
Interest payables			50,430				307,335
Others			129,433				128,756
		$	2,682,661			$	1,892,733

 

13.	LONG-TERM BORROWINGS

 

		December 31 2018				September 30 2019
Unsecured borrowings
Loans from government(a)		$	7,266,315			$	7,167,232
Other long-term borrowings(b)			4,060,357				4,060,357
Interest payables			2,648,122				2,933,654
		$	13,974,794			$	14,161,243

 

a.

Loans from government

On April 27, 2011, the Singapore Economic Development Board (EDB) awarded the Company a repayable grant (the “Grant”) not exceeding SGD 10 million (approximately $7,482,459) to support the Company’s drug development activities over a five-year qualifying period commencing on February 24, 2011 (the “Project”). The Project was successfully implemented, resulting in substantially the full amount of the Grant being disbursed to the Company.

In the event any of the Company’s clinical product candidates achieve commercial approval after Phase 3 clinical trials, the Company will be required to repay the funds disbursed to the Company under the Grant plus interest of 6.0%. Until the Company has fulfilled its repayment obligations under the Grant, the Company has ongoing update and reporting obligations to the EDB. In the event the Company breaches any of its ongoing obligations under the Grant, EDB can revoke the Grant and demand that the Company repay the funds disbursed to the Company under the Grant.

As of December 31, 2018 and September 30, 2019, the amounts of the funds disbursed to the Company plus accrued interest were $9,914,437 and $10,100,886, respectively.

 

b.

Other long-term borrowings

On May 12, 2014, ASLAN Pharmaceuticals Pte. Ltd. obtained a loan facility of $4.5 million from CSL Finance Pty Ltd. The amount was based on 75% of research and development costs approved by CSL Finance Pty Ltd. at each drawdown period. The loan is repayable within 10 years from the date of the facility agreement. Interest on the loan is computed at 6% plus LIBOR and is payable on a quarterly basis.

Mandatory prepayment of the loan is required upon a successful product launch occurring before maturity of the loan.

As of December 31, 2018 and September 30, 2019, the amount of funds disbursed to the Company plus accrued interest, was $4,110,787 and $4,367,692, respectively.

 

F-17