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2023 ReportPeers and competitors of Kazia Therapeutics Limited:
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ASX:KZA | NASDAQ:KZIA
A N N U A L R E P O R T 2 0 2 1
THERE WILL BE A
GREAT DEAL MORE
DATA TO COME OVER
THE NEXT YEAR OR
TWO, OF COURSE, BUT
OUR FUTURE SUCCESS
WILL MORE AND
MORE BE MEASURED
IN THE DELIVERY OF
MILESTONES RELATING
NOT TO THE DRUG’S
EXPLORATION,
BUT TO ITS
COMMERCIALISATION.
IN SUBTLE BUT
FUNDAMENTAL WAYS,
THE GAME
HAS CHANGED.
II
Kazia Therapeutics Limited
Annual Report 2021
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2020/2021 at a glance
Chairman’s letter
CEO’s report
Key milestones and highlights
Pipeline review
Partner for success
Work with the best
Chapter two in the Kazia story
Financial report FY21
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Annual Report 2021
Kazia Therapeutics Limited
1
CHANGINGTHE PARADIGM
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2021 AT A GLANCE
Two best-in-class
or first-in-class
development
candidates in
clinical trials by
end of CY2021
9
45
>150
ongoing clinical trials
with paxalisib
hospitals currently
recruiting patients in
GBM AGILE
patients treated with
paxalisib worldwide
to date
As at 30 June 2021
As at 30 June 2021
As at 30 June 2021
Paxalisib is under
investigation
across a diverse
range of brain
cancers
Kazia has grown
rapidly, driven
by progress in
its world-class
pipeline of cancer
drug candidates
4
distinct indications
in phase II studies
with paxalisib
Glioblastoma,
DIPG, primary CNS
lymphoma, brain
metastases
3
major cross-border
licensing deals
in FY2021
2
Kazia Therapeutics Limited
Annual Report 2021
Number of phase III
clinical trials active
globally
Average survival
from diagnosis with
glioblastoma
Lung Cancer
184
13
Glioblastoma
12-18
months
SOURCE:
clinicaltrials.gov
SOURCE: National
Brain Tumor Society
US$ 323M
in potential milestone payments from
outbound partnering deals
80%
of operating
cashflows
invested in R&D
For FY2021
$24M
of new equity
capital raised
through financing
in FY2021
Kazia Therapeutics is an innovative oncology-focused drug development company.
We collaborate with clinicians, scientists, and researchers around the world to bring
new hope to patients with cancer.
Overall Survival
Paxalisib
17.5months
Temozolomide
(existing standard of care)
12.7months
Interim analysis as
at November 2020
Average age at
diagnosis with DIPG
5-7
years
Phase I study of
EVT801 expected
to commence by
end CY2021
96
Up to 96 patients
planned in EVT801
phase I study
as at 30 June 2021
Number of new diagnoses
of brain metastases each
year in United States
>200,000
Five-year survival
rate of primary
CNS lymphoma
30%
SOURCE: DIPG.org
SOURCE: American Association
of Neurological Surgeons
Green & Hogg (2020)
Enterprise value
(market capitalisation,
less cash)
(AU$)
$146.0m
Indicative Analyst Valuation (AU$)
19 Sept 2018
$103m
01 Apr 2019
$115m
23 Jun 2019
$137m
28 Aug 2020
$145m
$5.7m
$3.8m
$12.7m $14.9m
$35.6m
10 Dec 2020
19 Apr 2021
$244m
$346m
30 June
2016
30 June
2017
30 June
2018
30 June
2019
30 June
2020
30 June
2021
SOURCE: Edison Research
Annual Report 2021
Kazia Therapeutics Limited
3
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS
CHAIRMAN’S LETTER
Dear Shareholder,
The end of the 2021 financial year
finds Kazia in very robust health,
with dramatic progress reported
across every aspect of our business:
clinical development, partnering,
and financing. It is a pleasure to take
this opportunity to review some of
the most significant milestones of
this past year.
FINANCIAL PERFORMANCE
Our cash balance at 30 June 2021
was $27.6 million, versus $8.8 million
at 30 June 2020. Our total assets
were $58.1m, up from $23.1 million at
30 June 2020. We committed outlays
of $23.9m of which 80% was devoted
directly to investment in R&D.
4
Kazia Therapeutics Limited
PARTNERING LIES AT THE HEART OF KAZIA’S BUSINESS MODEL, AND THE TRANSACTIONS DURING FY2021 DEMONSTRATE THAT THIS IS NOT MERELY AN ASPIRATION BUT AN IMPORTANT AND HIGHLY DIFFERENTIATING ABILITY OF THE COMPANY.BUILDING VALUE We feel that it represents first-class
science, thanks in large part to the
excellent work done by Evotec, its
previous custodians. Its potential
is enormous and we are fully
committed to commencing a phase I
study by the end of calendar 2021.
CONCLUSION
We conclude this financial year
substantially further along our
journey than we were twelve months
ago. Our lead program, paxalisib,
is in a pivotal study for registration
and has already begun to generate
commercial revenue by virtue of a
regional licensing transaction. The
legacy Cantrixil asset has been
successfully partnered to Oasmia,
a company that is ideally placed to
take it forward, as we foreshadowed
in last year’s Annual Report. And
our pipeline has been broadened
and immeasurably enriched by
the addition of an exceptionally
promising new asset, EVT801,
for which we have extremely high
hopes. All in all, it has been a
year of remarkable progress, and
a profound validation of Kazia’s
efforts since 2016.
As always, I would like to thank
my fellow directors and our
management team, led by our CEO,
James Garner, for their first-class
work in support of the company.
We are grateful to our shareholders
whose belief in the company
underpins everything that we do. I
look forward to reporting our further
progress in the year ahead.
Iain Ross
Chairman of the Board
In part, our healthy cash balance
reflects a successful financing round
in October 2020, which raised
gross proceeds of approximately
$24 million. This was anchored by
existing institutional investors, but
also brought several new names to
the register, as well as providing an
opportunity for eligible shareholders
to increase their position via a non-
renounceable entitlement offer.
The company has been grateful
for the consistent and enthusiastic
support of its major shareholders.
I am pleased that the market has
rewarded that support. Kazia ended
the previous financial year with a
share price on the ASX of $0.46.
On 30 June 2021, we closed at $1.31,
representing a 185% appreciation in
12 months. Those who participated
in our October 2020 financing
have made an annualised return of
93% to 30 June 2021. This progress
is set against a backdrop of an
exceptionally challenging second
half for the global biotech industry.
Since its highs near the beginning
of calendar 2021, the NASDAQ
small cap biotech index is down
more than 20%, and Kazia has
remained remarkably resilient in the
context of this challenging market.
BUSINESS DEVELOPMENT
& LICENSING
Almost every young biotech
company goes through several
rounds of financing before it is
able to become economically
self-sufficient. Remarkably, that
transition has already begun in
Kazia. In the second half of FY2021,
we reported material revenues from
partnering activities, pertaining to
licenses for Cantrixil and paxalisib.
In effect, Kazia has declared its
maiden revenue. Future payments
from these transactions will be
necessarily irregular, but we stand
to receive up to a further US$
323 million in milestone payments,
together with very substantial
royalties on commercial sales. The
majority of the territorial rights for
paxalisib, representing more than
90% of the global pharmaceutical
market, remain unpartnered, and
we expect to realise very much
greater value in future partnering
transactions.
PIPELINE PROGRESS
These partnering milestones would no
doubt have been impossible without
the rapid and convincing progress
that has been made in the clinical
development of paxalisib. In January
of this year, the drug commenced
recruitment to the GBM AGILE pivotal
study and is now well advanced in its
enrolment. The initial focus has been
on the United States, but expansion
to Europe and China is anticipated
during the early part of FY2022.
I have previously spoken and written
about the merits of GBM AGILE, and
the highly innovative approach to
drug development that it represents.
So far, our expectations have been
exceeded in terms of the operational
execution of the study and the
extraordinary rate of recruitment.
The Board remains convinced that
GBM AGILE is the appropriate way to
bring paxalisib forward.
Meanwhile, our own phase II study
of paxalisib draws rapidly to a
close. New data presented at the
Society for Neuro-Oncology Annual
Meeting in November 2020 helped
to corroborate the very positive
efficacy signals that have previously
been seen. We expect to conclude
the study in the second half of
calendar 2021.
A NEW ASSET
When we negotiated our license for
GDC-0084, as paxalisib was then
known, with Genentech in 2016,
we never envisioned that we would
become a single-asset company.
Over the intervening years, the rich
opportunities derived from paxalisib
have exceeded all expectations, and
it has been appropriate for us to
focus our resources on exploiting it
to the fullest extent possible.
With that drug now well advanced
on its path to commercialisation,
however, it has proven timely
to revisit our earlier aspirations
and to look at opportunities to
broaden Kazia’s pipeline. The task
set by the Board was simple and
challenging: find a drug candidate
that excites us as much as paxalisib.
After considering many, many
opportunities, EVT801 has been
the first candidate that has met the
threshold we set ourselves.
Annual Report 2021
Kazia Therapeutics Limited
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Dear Shareholder,
It has become almost a cliché to
describe each year in the young life
of Kazia as transformative, but the
word could hardly be more apt. In
the last twelve months, our lead
asset, paxalisib, has commenced
a pivotal study for registration, we
have completed a major financing
round to the tune of AU$ 24 million
in gross proceeds, we have out-
licensed the legacy Cantrixil asset,
we have in-licensed an extremely
promising new asset, EVT801,
and we have begun the process of
commercialising paxalisib through
a substantial partnership with
Simcere Pharmaceutical in China.
CEO’S REPORT
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Kazia Therapeutics Limited
IN ALMOST ANY OTHER SETTING, ONE OR TWO OF THESE MILESTONES WOULD PROVIDE THE CORNERSTONES OF AN EXTREMELY SUCCESSFUL YEAR.
This list, dramatic as it is, is only a
selective compilation of highlights.
One could also point to our receipt
of important regulatory designations
by FDA, such as Fast Track and
Rare Pediatric Disease Designation
for paxalisib. Important new data
read outs have been presented
at international conferences and
several new phase II clinical studies
were launched. These include one
in primary CNS lymphoma at Dana-
Farber Cancer Institute, one in DIPG
with the Pacific Pediatric Neuro-
Oncology Consortium, and a third at
Cornell University examining paxalisib
in combination with ketogenesis. The
scientific advisor for this study is none
other than Professor Lew Cantley, the
scientist who originally discovered the
PI3K pathway.
In almost any other setting, one
or two of these milestones would
provide the cornerstones of an
extremely successful year. For Kazia,
they simply represent the methodical
delivery of the plan that we outlined
some years ago, and which we have
systematically reported on at every
opportunity since. All our recent
achievements represent the fruition of
work that the company commenced
in 2016, and which has seen us grow
from a corporate shell with negligible
enterprise value to an exciting
contender in the global life sciences
industry.
As such, there is a certain continuity
to the first five years of Kazia. It has
been a story dominated by paxalisib,
by our efforts to demonstrate the
broad potential of that drug, and
by our rapid movement through the
clinical development process.
The future will be different. With the
GBM AGILE study underway, Kazia
now finds itself within just a few years
of potentially commercialising a novel
pharmaceutical product. And not just
any product – paxalisib may be the
first new drug for glioblastoma in more
than twenty years.
Increasingly, this will mean that Kazia’s
attentions must focus on preparing
paxalisib for commercialisation. Until
now, the question has been a simple
one: does the drug work?
We have answered that question to
the best of our ability, and at least to
our own satisfaction, and this has been
the basis of its transition to a pivotal
study for registration. There will be a
great deal more data to come over the
next year or two, of course, but our
future success will more and more be
measured in the delivery of milestones
relating not to the drug’s exploration,
but to its commercialisation.
In subtle but fundamental ways,
the game has changed.
In that regard, the most
important achievement of this
past year has perhaps been
our licensing transaction with
Simcere Pharmaceutical for the
commercialisation of paxalisib
in Greater China. This deal
provided gross upfront proceeds
of US$ 11 million, contingent
milestone payments of up to US$ 281
million, and a mid-teen royalty on
commercial sales in the territory.
The deal is important for three
reasons. First, it demonstrates that
paxalisib is attractive to, and able
to withstand detailed due diligence
by, one of the leading companies
in the world’s second largest
pharmaceutical market. A company
with a track record of more than
forty successful commercial products
also believes that the drug has the
potential to be extremely successful.
Second, and to the extent that
this deal provides for the first time
an implicit market valuation for
paxalisib, it has become clear that
the economic value of our asset is
substantial. The deal terms described
above relate to a market which
comprises, at most, around 10% of
the global pharmaceutical market.
The remainder is ours to monetise
at our discretion, and it would be
reasonable to impute equivalent or
greater value to those global rights.
Finally, our ability to deliver a
world-class partnering transaction
validates not just paxalisib, but also
Kazia’s entire business model. We
have always said that Kazia’s core
competencies would lie in clinical
development and partnering.
With nine clinical trials now ongoing,
we have proven the first of these. And
with two international out-licensing
deals in the past six months, we can
now claim to have demonstrated our
capabilities in the second area. As a
business model, Kazia is not reliant
on lofty aspirations, naïve hopes,
or vague possibilities. Rather, the
company has now established a track
record, on which we hope to build
further in the years ahead.
To that end, we have begun the next
phase in the evolution of our pipeline
by bringing on board a second asset.
With paxalisib well advanced, it
seemed timely to revisit our original
goals for the business, which always
envisaged a pipeline of several high-
quality drug candidates at different
stages of development. Having a
diversified pipeline maximises
return and minimises risk for our
shareholders, and it gives us the
scale to build richer relationships
with clinicians, deeper partnerships
with collaborators, and a more
efficient operating model.
The challenge has been to find a
drug candidate of the same calibre
as paxalisib. EVT801 has been the
first opportunity which excites us
as much as paxalisib. Scientifically,
it lies at the intersection of a
well-established area of cancer
treatment – angiogenesis – and a
very new area of cancer treatment
– immuno-oncology. In practice, it
has been taken through preclinical
development by Evotec, one of the
most respected companies in the
business. And in terms of its potential
to benefit patients and realise value
for Kazia, it is every bit the equal
of paxalisib. We could not be more
thrilled to bring it into our portfolio.
EVT801 will enter a phase I clinical
trial by the end of calendar 2021, and
we will have much to report in the
year ahead.
I am immensely grateful to my
colleagues on the Board and in
the Management Team for their
perseverance and commitment
over this past year, to our many
collaborators and partners for their
belief and investment in our drug
candidates, and to our shareholders
for their enthusiastic support of the
company.
Dr James Garner
Chief Executive Officer
Annual Report 2021
Kazia Therapeutics Limited
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KEY MILESTONES AND HIGHLIGHTS – 2020/2021
November 2020
New interim data
from paxalisib
phase II study
in glioblastoma
directionally
confirms earlier
data and
continues to
suggest a survival
benefit associated
with the drug.
August 2020
Paxalisib is
granted Rare
Pediatric Disease
Designation
(RPDD) by the US
FDA for DIPG and
diffuse midline
gliomas, making
it eligible for a
Pediatric Priority
Review Voucher
(PRV) if the drug is
approved in
this indication.
September 2020
Kazia enters into
a partnership
with Dana Farber
Cancer Institute
in Boston, MA to
explore paxalisib
in a phase II
clinical trial in
primary CNS
lymphoma.
August 2020
Paxalisib is
granted Fast Track
Designation (FTD)
by the US FDA
for glioblastoma,
permitting
enhanced
consultation with
FDA and access
to ‘rolling review’
NDA submission.
December 2020
Kazia enters into
a partnership
with the Pacific
Pediatric Neuro-
Oncology
Consortium
(PNOC) to explore
paxalisib in an
international phase
II combination
trial in DIPG and
diffuse midline
gliomas.
October 2020
Kazia raises AU$
24 million via
an accelerated
non-renounceable
rights offering.
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Kazia Therapeutics Limited
Annual Report 2021
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’
March 2021
Kazia partners
paxalisib for
Greater China
to Simcere
Pharmaceutical
for US$ 11 million
upfront, up to
US$ 281 million
in contingent
milestones, and
tiered mid-teen
royalties.
June 2021
Kazia enters into
a partnership with
Cornell University
to explore
paxalisib in
combination with
a ketogenic diet in
a phase II trial for
glioblastoma.
January 2021
GBM AGILE
commences
recruitment to
the paxalisib arm,
marking formal
initiation of the
international
registration study
for the drug.
June 2021
Key
manufacturing
patents granted
for paxalisib,
with potential
to protect
manufacturing
process to 2036.
April 2021
Kazia in-licenses
EVT801, a
selective small-
molecule inhibitor
of VEGFR3, from
Evotec SE of
Germany for € 1
million upfront,
approximately
€ 300 million
in contingent
milestones, and
single-digit
royalties.
March 2021
Kazia partners
Cantrixil legacy
asset to Oasmia
Pharmaceutical of
Sweden for US$ 4
million upfront, up
to US$ 42 million
in contingent
milestones, and
double-digit
royalties.
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Annual Report 2021
Kazia Therapeutics Limited
9
PIPELINE REVIEW: TWO FIRST-CLASS
DEVELOPMENT CANDIDATES
FOR THE LAST FIVE YEARS, KAZIA’S STORY
HAS BEEN PRINCIPALLY THE STORY OF
PAXALISIB. A NEW DRUG CANDIDATE,
EVT801, HAS NOW ENTERED THE KAZIA
PIPELINE, CREATING RICHER AND MORE
NUMEROUS OPPORTUNITIES FOR THE
YEARS AHEAD.
PAXALISIB
One of the most important milestones
in the entire development of paxalisib
occurred on 4 January 2021. On that
day, and right on schedule, paxalisib
began recruitment to a pivotal study
for registration – GBM AGILE, which is
being driven by the Global Coalition
for Adaptive Research.
A pivotal study is the final chapter
in the development of any new
medicine, and the results that emerge
from GBM AGILE will provide the
basis on which FDA, EMA, and other
regulatory agencies determine
whether to grant paxalisib a marketing
authorisation. GBM AGILE will test
paxalisib both in newly diagnosed
glioblastoma patients, and those with
recurrent disease, and the drug may
show benefit in either or both of these
patient populations.
The primary endpoint of paxalisib
is overall survival (OS), which is a
measure of the ability of a drug to
prolong life. It is the most demanding
criterion on which to judge a cancer
drug and is rightly considered
the ‘gold standard’ by regulatory
agencies. In glioblastoma, no drug
this century has shown convincing
evidence of an ability to improve OS.
If our participation in GBM AGILE is
a success, then paxalisib may be the
first new therapy, at least for newly
diagnosed patients, in twenty years.
GBM AGILE will recruit up to 200
patients on paxalisib. However,
the study uses a sophisticated and
novel statistical approach called
an ‘adaptive design’ to readjust
its statistical power as it goes.
Consequently, if an answer becomes
clear after fewer than 200 patients,
the study will conclude early and
Kazia will look to submit a new drug
application to FDA with the final data
in hand. As a base case, we expect
that the duration of the study will be
around two-and-a-half years, but the
adaptive design means that it may be
longer or shorter, depending on the
data that emerges.
The initial focus of GBM AGILE has
been on the United States, where
more than forty leading cancer
hospitals are now participating.
During FY2022, paxalisib will
additionally become available to
patients in Canada, Europe, and
China, which will substantially
accelerate recruitment.
10
Kazia Therapeutics Limited
Annual Report 2021
SURGING AHEAD Much of the work that Kazia has been
doing with paxalisib this year has
been to support GBM AGILE, and to
facilitate the regulatory submission
which hopefully follows conclusion
of the study. One manifestation
of these efforts has been a slew of
‘special designations’ from FDA in
August 2020, comprising orphan
drug designation, rare pediatric
disease designation, and fast track
designation. Collectively, these
regulatory milestones very much
enhance and deepen the discussion
between Kazia and FDA, and help us to
best position the drug for success.
IN GLIOBLASTOMA, NO DRUG
THIS CENTURY HAS SHOWN
CONVINCING EVIDENCE OF AN
ABILITY TO IMPROVE OS. IF OUR
PARTICIPATION IN GBM AGILE IS A
SUCCESS, THEN PAXALISIB MAY BE
THE FIRST NEW THERAPY, AT LEAST
FOR NEWLY DIAGNOSED PATIENTS,
IN TWENTY YEARS.
Kazia has primarily been focused
on FDA, the US Food and Drug
Administration, for much of paxalisib’s
development. Following our partnership
with Simcere Pharmaceutical in China,
however, an almost equal amount of
work is going into preparing paxalisib
for consideration by NMPA, the
Chinese regulatory agency. The Kazia
and Simcere teams have spent many
hundreds of hours preparing for the very
specific requirements set out by NMPA,
with an objective of launching GBM
AGILE in China by the end of CY2021.
Our partnership with Simcere is not
only of great operational value – by
itself, Kazia would never be able
to optimally navigate the Chinese
regulatory environment – but it
also represents another important
milestone for the drug. Our licensing
agreement with Simcere in March
2021 provided gross proceeds of
US$ 11 million upfront, plus up to
$281 million in contingent milestones
and mid-teen royalties on net sales.
These terms represent one of the
richer transactions ever executed in
China for a drug of this type and have,
in effect, provided the first revenue
for paxalisib. As the drug proceeds
through development, further
milestone payments will be reinvested
by Kazia in the global paxalisib
program. Although all eyes are rightly
focused on product registration, the
reality is that paxalisib has already
begun to generate value for Kazia and
its shareholders.
Meanwhile, a broad and growing
portfolio of clinical trials in other
forms of brain cancer will help us in
due course to expand the potential
commercial opportunity for paxalisib.
Although glioblastoma represents,
on a conservative assessment, a
US$ 1.5 billion annual commercial
market, paxalisib has the potential to
provide benefit in a much wider range
of diseases. The clinical program that
has been deployed will help to identify
new opportunities. To be clear, it is
possible that not all of these trials will
be successful. However, if even one of
them suggests an additional use for
paxalisib, it will substantially increase
the commercial value of the product.
A ‘PIVOTAL’ STUDY OR A
‘PHASE III’ STUDY?
Clinical drug development
has traditionally been divided
into three phases, denoted by
Roman numerals. However, the
terminology has become old-
fashioned. Regulatory agencies
increasingly differentiate between
studies which are exploratory
in nature, and those which are
intended to secure product
registration. The latter are
described as ‘pivotal’ studies, or
‘registration’ studies, and Kazia
generally uses that language
in relation to GBM AGILE.
GBM AGILE – KEY FACTS
• An ‘adaptive trial’ that only
recruits the number of patients
needed to reach an answer
• Substantially faster and more
cost-effective than conventional
approaches
• Up to 200 patients on paxalisib,
with the potential to conclude
much earlier, depending on
emergent data
• Operational in >40 hospitals
across the United States, with
expansion to Canada, Europe,
and China in FY2022
Annual Report 2021
Kazia Therapeutics Limited
11
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PIPELINE REVIEW: TWO FIRST-CLASS DEVELOPMENT CANDIDATES (continued)
Sponsor
Phase
Indication
Kazia Therapeutics
II
Glioblastoma
Registration
NCT03522298
Global Coalition for
Adaptive Research
Weill Cornell Cancer Center
Alliance for Clinical Trials
in Oncology
Dana-Farber Cancer Institute
Dana-Farber Cancer Institute
Pacific Pediatric
Neuro-Oncology Consortium
St Jude Children’s Research
Hospital
Memorial Sloan Kettering
Cancer Center
II / III
Glioblastoma
NCT03970447
II
II
II
II
II
I
I
Glioblastoma (with ketogenic diet)
TBD
Brain metastases
NCT03994796
Breast cancer brain metastases (with Herceptin) NCT03765983
Primary CNS lymphoma
NCT04906096
DIPG & DMGs (childhood brain cancer)
TBD
DIPG (childhood brain cancer)
NCT03696355
Brain metastases (with radiotherapy)
NCT04192981
EVT801
In April 2021, Kazia licensed EVT801, an
investigational new drug for multiple
forms of cancer, from Evotec SE, a
European drug development company.
EVT801 is now Kazia’s second
pipeline asset, behind paxalisib, and
it represents a tremendously exciting
addition to the company’s portfolio.
An introduction to EVT801 can be
found later in this Annual Report.
In terms of activity, however, the
entire focus of the program since
April has been on launching a phase
I clinical trial by the end of CY2021.
The Kazia and Evotec teams have been
working closely together to design a
cutting-edge study protocol, identify
suitable clinical trial sites, manufacture
investigational product, and navigate
the European regulatory processes.
The study remains well on track,
indeed potentially ahead of schedule.
The transition into a human trial
is always an enormous step in the
development of any new medicine.
For EVT801, we expect that the
study will rapidly begin to generate
data that demonstrates its potential,
guides its future development, and
establishes it as a worthy companion
to paxalisib in the Kazia portfolio.
Such a rapid transition into human
trials is only possible with the benefit
of a compelling package of preclinical
data. Kazia and Evotec have begun
work on an academic publication
that will summarise this rich body
of data, and it is expected that this
will be published in a peer-reviewed
academic journal and communicated
to investors by the end of CY2021.
Sponsor
Phase
Indication
Registration
Kazia Therapeutics
I
Advanced Solid Tumours
TBD
12
Kazia Therapeutics Limited
Annual Report 2021
PARTNERING FOR SUCCESS: THREE MAJOR
CROSS-BORDER LICENSING DEALS IN FY2021
working closely together to secure
regulatory approval and commercial
success in China. The Greater China
market represents 8-10% of the
global opportunity for a new cancer
drug, and so Kazia remains free to
find other partners in other regions
or, in principle, to commercialise
itself in some territories.
In April 2021, we executed a deal
with Evotec SE which brought a new
asset, EVT801, into our pipeline.
Evotec is one of the world’s leading
drug development partners and
works closely with a wide range of
pharmaceutical companies to help
develop their drug candidates.
Unsurprisingly, the work done
on EVT801 was first-class. Their
business strategy does not envisage
taking their own drugs into clinical
trials, and so it presented an ideal
partnering opportunity for Kazia.
The deal comprised a €1 million
upfront payment, up to €308
million in milestones, and single
digit royalties (i.e. < 10%).
In aggregate, these three transactions
have radically reshaped Kazia
as a business, and left it greatly
strengthened. The sense of
transformation however is deceptive
– these sorts of transactions are a
central part of what Kazia exists to
do and they represent one of our
core competencies as a business.
A typical pharmaceutical licensing
deal has three components:
Upfront Payment – this is paid at the
time of signing a licensing agreement
and is non-refundable.
Milestone Payments – these are
paid throughout the development
and commercialisation of the drug,
providing certain milestones are met.
Typical milestones may include FDA
approval, selling >$500 million in a
given year, or achieving approval for
a second indication.
Royalties – these are paid as a
percentage of net sales. They
may be tiered, so that higher
sales in a given year pay a larger
percentage in royalties.
In March 2021, Kazia partnered the
legacy Cantrixil asset to Oasmia
Pharmaceutical AB of Sweden.
This drug candidate was developed
by Novogen Limited, and Kazia was
of the view that the work needed to
shape it into a viable commercial
product would be better performed
by a larger, more specialised
company. Oasmia has an existing
commercial product in ovarian cancer,
and deep expertise in this field, so it
represented the ideal partner. Kazia
received a US$ 4 million upfront
payment, up to US$ 42 million in
milestone payments, and double-
digit royalties (i.e. ≥ 10%). In this
way, Kazia will substantially benefit
from any future success in the drug,
without needing to devote further
resources to its development.
Also in March 2021, Kazia partnered
the Greater China rights for
paxalisib to Simcere Pharmaceutical.
Regional partnerships such as this
are sometimes executed late in the
development of a drug, so as to
provide the specialist capabilities
required to commercialise in territories
such as China. Kazia received a
US$ 11 million upfront payment,
up to US$ 281 million in milestone
payments, and mid-teen royalties.
Unlike the Cantrixil deal, where
Oasmia will take the lead in the drug’s
future development, the Simcere
partnership envisages the companies
Annual Report 2021
Kazia Therapeutics Limited
13
Not so long ago, drug development
used to be conducted in complete
isolation, with individual companies
working on their own drugs, ‘from
the bench to the bedside’. This is no
longer the case. Today, many drugs
pass through the custodianship
of several companies during their
development and commercialisation.
In 2020, pharmaceutical licensing
deals in oncology alone totalled
US$ 59 billion in value.1
Kazia has been established to
capitalise on this trend. The company
performs no in-house drug discovery.
Rather, we look to identify promising
drug candidates in the global pipeline
which are no longer strategic for their
parent companies. We bring those
in to Kazia, build their value through
innovative clinical development
strategies, and generally seek to
partner them for commercialisation.
One key advantage of this approach
is financial in nature. To bring a good
quality drug candidate to the point
where it can begin clinical trials
costs many millions of dollars. Kazia
typically acquires assets for a discount
to their sunk cost, providing future
upside to licensors in the event of
success. This has allowed us to bring
two world-class drug candidates into
our pipeline at very modest cost.
A second advantage is that it gives
us access to the very best research,
without being limited by the expertise
of in-house scientists.
1S Hardison (2021). BioPharma Dealmakers.
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MAKING DEALSKAZIA’S BUSINESS MODEL IS PREDICATED NOT JUST ON THE ABILITY TO DESIGN AND EXECUTE INNOVATIVE CLINICAL TRIALS, BUT ALSO ON THE CAPACITY TO PARTNER WITH OTHER COMPANIES FOR DISCOVERY AND COMMERCIALISATION.
WORKING WITH THE BEST
Dr Lakshmi Nayak is Director of the
Center for CNS Lymphoma at Dana-
Farber Cancer Institute in Boston,
MA, and an Assistant Professor of
Neurology at Harvard Medical School.
After completing her residency at
Weill Cornell Medical College in New
York, she underwent a fellowship at
Memorial Sloan Kettering Cancer
Center. She became a board-certified
neurologist in 2009, and a board-
certified neuro-oncologist in 2013.
Dr Nayak has been instrumental in
establishing Dana-Farber as a centre
of excellence for the treatment of
primary CNS lymphoma. The CNS
Lymphoma Center is the first of
its kind dedicated specifically to
providing multi-disciplinary care to
patients with primary or secondary
CNS lymphoma. Her research is
focussed on exploring the genomic
landscape of CNS lymphomas,
including identification of targets
and mechanisms of resistance
and response to targeted agents.
To this end, she has established
a cerebrospinal fluid and brain
tumour tissue banking protocol and
developed patient-derived xenograft
models for this rare disease.
In addition to her research interests
in CNS lymphoma, Dr Nayak has led
numerous multicentre clinical trials in
glioblastoma and other solid tumours.
The US National Cancer Institute’s
Cancer Therapy Evaluation Program
(CTEP) selected her proposal for a
phase I study of two novel agents for
a study in solid tumours, including
glioblastoma, from among a highly
competitive field.
Dr Nayak is an author of more than
seventy peer-reviewed academic
publications in brain cancer. She is a
highly sought-after thought leader in
the field, serving on a national panel
of the Joint Guidelines Committee
of the American Association of
Neurological Surgeons (AANS) and
Congress of Neurological Surgeons
(CNS) which has drafted guidelines
for management of progressive
glioblastoma, as well as on the Neuro-
Oncology Guidelines Committee
for the American Academy of
Neurology (AAN). She leads the
Neurologic Assessment in Neuro-
Oncology (NANO) working group
with international thought-leaders in
neuro-oncology and has developed
an objective and quantifiable measure
of neurologic function to facilitate
comparison across clinical trials in
brain tumours.
Dr Nayak has conducted preclinical
and clinical research on the PI3K/
mTOR pathway in primary brain
tumours and is the principal
investigator for a phase II clinical
study of paxalisib (NCT04906096)
in primary CNS lymphoma, which
commenced patient recruitment in
June 2021.
Dr Sabine Mueller is a paediatric
neuro-oncologist who specialises in
caring for children with brain tumours
and related genetic syndromes.
She obtained her PhD and her
medical degree from the Universität
Hamburg School of Medicine. She is
a Professor at University of California,
San Francisco (UCSF), Departments
of Neurology, Neurosurgery and
Pediatrics.
In addition to her roles at UCSF, Dr
Mueller also serves as the Clinical
Lead of The Diffuse Didline Glioma
Center of at the Universität-
Kinderspital in Zurich, Switzerland.
The DIPG/DMG Center in Zurich is a
leading multi-disciplinary unit focused
on clinical practice and translational
research, with a mission to improve
the prognosis for children with DIPG/
DMG.
Prior to her medical career, Dr Mueller
worked as a scientist, director of
genomics, and project leader for
a brain tumour program at AGY
Therapeutics, a biotechnology
company in South San Francisco.
Dr Mueller is a highly experienced
clinical researcher, with specialist
qualifications in trial design and
methodology. She is the Project
lead of the Pacific Pediatric Neuro-
Oncology Consortium (PNOC), an
international coalition of more than
two hundred brain tumour specialists,
focused on finding new treatment
options for children with brain cancer.
Dr Mueller is the principal investigator
for an adaptive clinical study which
will explore multiple combination
therapies in DIPG/DMG. Paxalisib
will be one of the therapies under
investigation. Recruitment is expected
to commence in the second half of
calendar 2021.
14
Kazia Therapeutics Limited
Annual Report 2021
Dr Lakshmi Nayak
Dr Sabine Mueller
KAZIA IS PRIVILEGED TO WORK WITH CANCER RESEARCHERS AROUND THE GLOBE WHO SHARE OUR PASSION FOR GOOD SCIENCE AND OUR COMMITMENT TO PATIENTS. I
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CHAPTER TWO IN THE KAZIA STORY
ANGIOGENESIS: TARGETING
THE SUPPLY CHAIN OF THE
TUMOUR
In a famous academic paper in 1971,
an American medical researcher
named Judah Folkman observed
that tumours were ‘hot and bloody’.
The reason, he surmised, was that a
rapidly growing tumour depended
on rich supply of oxygen and
nutrients to grow, and consequently
needed to trigger the formation of
new blood vessels to supply those
materials. The implication was
obvious: if we could prevent the
formation of new blood vessels,
it would starve the tumour of
essential nutrients, and thereby
slow or even reverse its growth.
More than thirty years later,
Dr Folkman’s theory was proven.
A young biotech company named
Genentech secured FDA approval
for a new drug named Avastin
(bevacizumab), for use in bowel
cancer. Avastin worked by targeting
vascular endothelial growth factor
(VEGF), a chemical that tumours
use to trigger the formation of
new blood vessels. As Dr Folkman
had hypothesised, blocking VEGF
limited the supply of nutrients to
the tumour and thereby slowed or
even reversed its growth. Today,
Avastin is one of the most successful
cancer drugs of all time and is used
in diseases as diverse as lung cancer,
breast cancer, ovarian cancer, and
even some cases of brain cancer.
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VASCULARIZED,
ANGIOGENIC TUMOUR
TREATMENT WITH
ANGIOGENESIS
INHIBITOR
VESSELS BEGIN TO
REGRESS
TUMOUR SHRINKS
Source: Nature Reviews / Cancer
Annual Report 2021
Kazia Therapeutics Limited
15
WITH PAXALISIB WELL ADVANCED ON ITS JOURNEY TO COMMERCIALISATION, KAZIA HAS BROUGHT A NEW ASSET INTO THE PORTFOLIO: EVT801, A NOVEL DRUG CANDIDATE WITH POTENTIAL APPLICATIONS IN A WIDE VARIETY OF CANCERS.
CHAPTER TWO IN THE KAZIA STORY (continued)
TODAY, A WIDE VARIETY OF MARKETED DRUGS TARGET ANGIOGENESIS
Some, like Avastin, work by targeting VEGF. Others target the receptor on blood vessels to which VEGF binds, which is
known as the VEGF receptor or VEFGR. Drugs which work this way include Nexavar (sorafenib) and Sutent (sunitinib).
In aggregate, drugs modulating angiogenesis account for more than US$ 10 billion in annual sales.
Product
Company
Target(s)
Indications
Avastin
(bevacizumab)
Genentech
VEGF-A
– Colorectal cancer
– Lung cancer
– Breast cancer
– Other cancers
Annual Sales
(US$)
$7 billion
Nexavar
(sorafenib)
Bayer
Sutent (sunitinib)
Pfizer
Votrient
(pazopanib)
Novartis
Inlyta (axitinib)
Pfizer
VEGFR
PDGFR
RAF kinases
– Hepatocellular carcinoma
– Renal call carcinoma
– Thyroid cancer
$1 billion
VEGFR
PDGFR
VEGFR
PDGFR
c-Kit
FGFR
VEGFR
c-Kit
PDGFR
– Renal cell carcinoma
– Gastro-intestinal stromal tumor
$750 million
– Renal cell carcinoma
– Soft tissue sarcoma
$1 billion
– Renal cell carcinoma
$400 million
FROM ANGIOGENESIS TO LYMPHANGIOGENESIS – BUILDING A BETTER CANCER DRUG
As effective as it is, targeting
angiogenesis has a very significant
problem. Cutting off the blood
supply reduces the oxygen levels in
the tumour, a situation described as
hypoxia in scientific literature. Initially,
hypoxia stops the tumour from
growing. However, prolonged hypoxia
triggers adaptive mechanisms in
the tumour which allow it to grow
via different means. Because of this,
as tumours mutate and develop,
they eventually become resistant to
anti-angiogenic therapies. Avastin,
and therapies like it, are never
curative, and will eventually become
ineffective in most patients.
Thankfully, the human body has two
circulations. The blood circulation
is the best known and most visible.
But the lymphatic circulation runs in
parallel and is just as important for the
growth of tissues. Cells need access to
both systems. One can think of them
as similar to the water and electricity
supply to a house – both are critical
for the house to be habitable.
Targeting the lymphatic system may
be just as effective in treating cancer.
And as a bonus, oxygen is carried
almost entirely by the blood, and so
cutting off the lymphatic supply to
a tumour does not cause the same
level of hypoxia. In principle, a drug
targeting lymphangiogenesis may
have all the advantages of a drug
targeting angiogenesis, without
the downside of resistance.
16
Kazia Therapeutics Limited
Annual Report 2021
TARGETING VEGFR3 –
A SELECTIVE APPROACH
TO LYMPHANGIOGENESIS
Targeting lymphangiogenesis is much
more technically challenging. Of the
five subtypes of VEGF, VEGF-C and
VEGF-D are substantially involved in
promoting lymphangiogenesis, but
they also promote angiogenesis, so
they are not promising as targets for a
selective therapy.
Fortunately, there are three
subtypes of VEGF receptor, and
VEGFR3 is specifically involved in
lymphangiogenesis. A drug which
was able to inhibit VEGFR3 would
selectively reduce the formation of
new lymphatic vessels but would
leave blood vessels untouched.
The result should be a reduction in
tumour growth, without the problem
of hypoxia-induced resistance. That is
the principle that led to the invention
of EVT801.
EVT801 – A NEXT GENERATION
ANTI-LYMPHANGIOGENESIS
THERAPY
EVT801 was originally invented by
Sanofi, a French pharmaceutical
company, and was licensed to
Evotec as part of a transaction
between those companies. Evotec
took the drug through the complex
process of preclinical development,
building a formidable body of
data that supports its activity.
The drug is a selective VEGFR3
inhibitor. This selectivity is very
important. Several of the existing
anti-angiogenesis drugs do have some
activity against VEGFR3. However,
they are all relatively non-specific,
affecting a wide variety of other
targets, and this leads to substantial
toxicity. A drug which is selective for
VEGFR3 should successfully inhibit
lymphangiogenesis without the many
toxicities seen in other agents.
EVT801 inhibits the growth of tumours
in the same way as older anti-
angiogenic therapies: by starving the
tumour of essential nutrients. However,
it also has two other important
benefits. First, many tumours spread
(metastasise) via the lymphatic system.
By restricting the development of
lymphatic vessels, EVT801 is likely to
reduce the potential metastasis of the
tumour. This would be very valuable,
because tumours become much more
difficult to treat when they spread.
The final potential advantage
for EVT801 is something that
would be less obvious from an
understanding of its mechanism
of action. For reasons that are
incompletely understood, drugs
targeting angiogenesis and
lymphangiogenesis have the effect
of changing the balance of white
blood cells in and around the
tumour. White blood cells are the
main actors in the immune system,
and this effect has important
therapeutic consequences. One of
the most significant advances of
the last decade has been the ability
to use the body’s own immune
system to fight cancer. ‘Immuno-
oncology’ drugs have rapidly
gained a foothold in diseases such
as melanoma and lung cancer.
However, many tumours do not
have many white blood cells in
them, or they have the wrong
kind of white blood cells, and in
these ‘cold’ tumours, immuno-
oncology drugs are usually
ineffective. If EVT801 is able to
turn cold tumours ‘hot’, as it does
in the laboratory, then it may be a
valuable adjunct to these therapies.
EVT801 IS EXPECTED TO HAVE THREE PRIMARY MECHANISMS OF ACTION
1
2
3
TUMOR KILLING
Direct effect on VEGFR3-expressing tumor
cells (typically from endothelial origin,
eg. sarcoma)
INCREASE IN ANTI-TUMOR
IMMUNE ACTIVITY
Increased infiltration of effector T-cells, and
reduction in immunosupressive myeloid cells
INHIBITION OF METASTASIS
Stabilsation of tumor vasculature and
avoidance of hypoxia decreases potential for
metastatic spread
Annual Report 2021
Kazia Therapeutics Limited
17
Blood vessel
Lymphatic vessel
Normal tissue
Tumor cell
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FINANCIAL REPORTS
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Kazia Therapeutics Limited
Annual Report 2021
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Annual Report 2021
Kazia Therapeutics Limited
19
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the
‘consolidated entity’) consisting of Kazia Therapeutics Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the
entities it controlled at the end of, or during, the year ended 30 June 2021.
DIRECTORS
The following persons were Directors of Kazia Therapeutics Limited (ABN 37 063 259 754) during the whole of the financial year
and up to the date of this report, unless otherwise stated:
Iain Ross
Bryce Carmine
Steven Coffey
James Garner
PRINCIPAL ACTIVITIES
During the financial year the principal continuing activity of the consolidated entity consisted of pharmaceutical research and
development with a view to commercialising the results of our research through license transactions or other means.
DIVIDENDS
There were no dividends paid, recommended or declared during the current or previous financial year.
REVIEW OF OPERATIONS
The loss for the consolidated entity after providing for income tax amounted to $8,421,960 (30 June 2020: $12,467,466).
The attached financial statements detail the performance and financial position of the consolidated entity for the year ended
30 June 2021.
Cash resources
At 30 June 2021, the consolidated entity had total funds, comprising cash at bank and on hand of $21,086,760 and short term
deposits of $6,500,000, giving total cash resources amounting to $27,586,760 at year end. Total current assets at year-end stand
at $29,390,818.
Going concern
The financial statements have been prepared on a going concern basis. The Directors have considered this to be appropriate.
Refer to ‘Going concern’ in note 2 to the financial statements for further details.
Impact of COVID-19
The Directors have considered the impact of COVID-19 on the operations of the Company and make the following observations:
(1) Kazia’s key clinical trials have not been materially impacted by COVID-19 to date. The GBM Agile study, the pivotal study
for paxalisib in glioblastoma, is on track with recruitment running to plan, and no disruption to this schedule is foreseen. The
Phase II study of paxalisib in glioblastoma was fully recruited prior to the onset of restrictions and is in wrap up stage at the
date of this report. Plans are on track for the commencement of a Phase I trial for the consolidated entity’s new asset, EVT801,
before the end of 2021. Further details of this asset are included later in this report.
(2) In general, clinical research in advanced cancer is relatively protected from pandemic disruption due to the ongoing and
time-critical need for patient care in specialised facilities which cannot easily be repurposed;
(3) The Company’s staff have been working remotely since the onset of the pandemic, and hence no operational disruptions have
occurred or are anticipated to occur; and
(4) The Company is not reliant on ongoing revenue from customers, and so changes in customer behaviour over the next several
years due to public health restrictions and reduced economic activity will have little to no impact on its finances.
Accordingly the Directors do not foresee any material impacts on the Company’s operations as a result of the COVID-19
outbreak.
Rounding of amounts
The Company is a type of Company referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest dollar.
20
20
Kazia Therapeutics Limited
Annual Report 2021
Research and development report
The company’s lead development candidate is paxalisib (formerly known as GDC-0084), a small molecule, brain-penetrant
inhibitor of the PI3K / Akt / mTor pathway, that is being developed as a potential therapy for glioblastoma (GBM), the most
common and most aggressive form of primary brain tumour in adults, as well as other forms of brain cancer. Paxalisib is orally
administered and is presented in a 15mg capsule formulation. The development candidate is the subject of IND 112,608 with the
US FDA.
Paxalisib was developed by Genentech, Inc (South San Francisco, California) and the company entered into a worldwide exclusive
license for the asset in October 2016. Prior to this transaction, Genentech had completed an extensive preclinical development
program that provided convincing validation for paxalisib as a potential drug for brain cancer. Genentech also completed a phase
I clinical trial in 47 patients with advanced recurrent grade III and grade IV glioma (NCT01547546). The most common adverse
events were oral mucositis and hyperglycemia. Per RANO criteria, 40% of patients exhibited a best observable response of stable
disease, and 26% demonstrated a metabolic partial response on FDG-PET.
The development candidate was granted the International Non-Proprietary Name (INN) ‘paxalisib’ by the World Health Organisation
in December 2019. This was confirmed as the United States Adopted Name (USAN) by the USAN Council in April 2020.
Paxalisib is the subject of granted or pending composition-of-matter patents in all key territories. In general, the expiry of these
patents is in December 2031. However, the company expects that it will be able to secure patent term extensions in the most
substantial markets, including US, EU, China, Japan, and Korea, and that these extensions will provide effective protection
until 2036. In addition, the company has recently received notice of grant for a patent protecting the manufacturing process
associated with paxalisib, and this will provide an additional layer of protection in relevant territories until 2036.
Paxalisib was granted orphan drug designation (ODD) by FDA for glioblastoma in February 2018, and for the broader indication of
glioma in August 2020. The development candidate also received Fast Track designation (FTD) for glioblastoma in August 2020,
and Rare Pediatric Disease Designation (RPDD) for diffuse midline gliomas in August 2020. Collectively, these special designations
provide paxalisib with enhanced access to FDA, a waiver of PDUFA fees, a period of data exclusivity and, in the specific case of
RPDD, the potential to secure a pediatric Priority Review Voucher (pPRV) should paxalisib be approved in this indication.
Paxalisib commenced recruitment to GBM AGILE (NCT03970447), a phase II / III adaptive clinical trial in glioblastoma, in
January 2021. GBM AGILE is sponsored by the Global Coalition for Adaptive Research, a US-based 501(C)(3) non-profit
organisation dedicated to advancing the development of new therapies via the application of cutting-edge statistical
methodologies. The study is a platform study, or master protocol study, in which multiple experimental agents are evaluated
in parallel, and are compared against a shared control arm. GBM AGILE uses an adaptive Bayesian statistical design to ensure
that only the number of patients required to reach a definitive answer are enrolled. Three patient populations are included in the
study: newly diagnosed patients with unmethylated MGMT promotor status, newly diagnosed patients with methylated MGMT
promotor status, and recurrent patients. Paxalisib is participating in the first and third of these groups but will not examine
patients with methylated MGMT promotor status in this study.
As at 30 June 2021, three experimental agents are enrolling patients in GBM AGILE: Bayer’s regorafenib, Kazia’s paxalisib,
and VAL-083, manufactured by Kintara Therapeutics. The study has screened approximately 650 patients, and approximately
two-dozen study sites are open to the paxalisib arm, with more expected to open during 2H CY2021.
A company-sponsored phase II study of paxalisib in newly diagnosed patients with unmethylated MGMT promotor status
(NCT03522298) remains ongoing. In November 2020, an interim analysis was presented at the Society for Neuro-Oncology
(SNO) Annual Meeting. This analysis showed a median progression-free survival (PFS) of 8.4 months, and a median overall
survival (OS) of 17.5 months, each of which compare favourably to the corresponding figures of 5.3 months and 12.7 months
which are associated in this patient population with temozolomide, the existing standard of care. The safety profile of paxalisib
continues to appear highly favourable, with rash, hyperglycemia, and oral mucositis representing the most common toxicities. In
April 2021, the company presented additional interim data focusing on pharmacokinetics at the American Association for Cancer
Research Annual Meeting. This data supported 60mg as the go-forward dose, and suggested no significant food effect, allowing
for both fed and fasted administration in future studies.
In May 2021, the last patient in the phase II study experienced disease progression and came off study drug, after some 2.3 years
of treatment. The study is now in survival follow-up, with final data expected by end of CY2021.
An investigator-initiated phase I study of paxalisib in children with diffuse intrinsic pontine glioma (DIPG) and other diffuse midline
gliomas (DMGs) (NCT03696355), sponsored by St Jude Children’s Research Hospital in Memphis, TN, reported initial interim
data in an oral presentation at the SNO Annual Meeting in November 2020. The study met its primary objective and determined
a maximum tolerated dose for paediatric use of 27 mg/m2. 27 patients were recruited, of whom 24 received at least one dose
of paxalisib. The safety profile and pharmacokinetics were highly consistent with the adult data. The study had not at that stage
demonstrated a survival benefit. As at 30 June 2021, a number of patients remain in survival follow-up.
Three further investigator-initiated studies in patients with brain metastases continued to recruit during the period: a phase II
genomically-guided study in patients with brain metastases (NCT03994796), sponsored by the Alliance for Clinical Trials in
Oncology; a phase II study in patients with HER2-positive breast cancer brain metastases, in which paxalisib is administered in
combination with Herceptin (trastuzumab) (NCT03765983), sponsored by Dana-Farber Cancer Institute in Boston, MA; and a
phase I study in patients with brain metastases and leptomeningeal metastases, in which paxalisib is administered in combination
with radiotherapy (NCT04192981), sponsored by Memorial Sloan-Kettering Cancer Center in New York, NY. Each of these studies
are expected to provide interim data during FY2022.
During the period, the company initiated three further investigator-initiated studies. In September 2020, the company signed
an agreement with Dana-Farber Cancer Institute in Boston, MA, for an investigator-initiated phase II clinical study of paxalisib in
patients with primary CNS lymphoma (PCNSL) (NCT04906096). This study commenced recruitment in June 2021. Four of the
five FDA-approved PI3K inhibitors are indicated for various forms of lymphoma, so this is considered a high-potential indication
for paxalisib. The unique brain-penetrant qualities of paxalisib make it ideally suitable for investigation in this patient group. The
Annual Report 2021
Kazia Therapeutics Limited
21
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS study is expected to recruit around 25 patients, and to run for approximately two years. The Principal Investigator is Professor
Lakshmi Nayak, a highly experienced clinical researcher in brain cancer, with a specialist interest in PCNSL.
In December 2020, the company entered into a letter of intent with the Pacific Pediatric Neuro-Oncology Consortium (PNOC)
to execute an investigator-initiated phase II adaptive study of paxalisib in patients with DIPG and other DMGs, a group which
collectively constitutes one of the most aggressive childhood cancers. The study will explore paxalisib in combination with
ONC-201, a small-molecule investigational new drug which targets dopamine receptor D2 (DRD2), and which is manufactured by
Oncoceutics, Inc, a wholly-owned subsidiary of Chimerix, Inc. The St Jude phase I study in DIPG has already provided invaluable
information regarding dosing and safety of paxalisib in a paediatric population, but it has always been assumed that combination
therapy would be required to achieve meaningful efficacy in such an aggressive tumour. Research by Professor Matt Dun at the
Hunter Medical Research Institute in Newcastle, Australia, has shown compelling evidence of combinatorial synergy between
paxalisib and ONC-201, and so the PNOC study will investigate this combination, among others, in patients.
In June 2021, the company entered into an agreement with the Joan & Sanford I Weill Medical College of Cornell University in
New York, NY, known generally as Weill Cornell Medicine, for an investigator-initiated phase II clinical trial combining paxalisib with
ketogenesis in patients with newly-diagnosed and recurrent glioblastoma. In addition to the general interest in ketogenic diets as a
potential adjunct to treatment for various forms of cancer, research by Professor Lew Cantley and colleagues has demonstrated the
potential for insulin to antagonise PI3K inhibition. Administering a PI3K inhibitor in the context of minimal insulin secretion should
allow the drug to achieve its full potential, and a combination of ketogenic diet and metformin will be used in this study to achieve
a hypoinsulinaemic state. Professor Cantley serves as a scientific advisor to the study, and Dr Howard Fine, a highly experienced
neuro-oncologist, will serve as Principal Investigator. The study is expected to commence recruitment during 2H CY2021.
The company’s second development candidate is EVT801, a small-molecule selective inhibitor of vascular endothelial growth
factor receptor 3 (VEGFR3). EVT801 was originally discovered by Sanofi SA and was licensed to Evotec SE as part of a broader
transaction. Evotec conducted an extensive program of preclinical development, which showed compelling evidence of activity in
a broad range of animal models. The drug was licensed to Kazia in April 2021.
For several decades, it has been clear that growing tumours require an extensive network of newly formed blood vessels and
lymphatic vessels to satisfy their substantial nutrient requirements. Drugs which inhibit the formation of new blood vessels
(angiogenesis inhibitors) have proven effective in a wide range of solid tumours, with Avastin (bevacizumab) being the best-known
example of the class. However, the use of such drugs is limited by hypoxia-induced resistance mechanisms and, in the case of
many small-molecule inhibitors, by toxicity. EVT801 has been designed to respond to these challenges by selectively targeting
lymphangiogenesis, the formation of new lymphatic vessels. Doing so, and with a high degree of selectivity, is expected to
provide many of the same benefits as inhibition of angiogenesis, but without the attendant problems of resistance and toxicity.
In addition, drugs which target VEGF receptors have shown the potential to alter the population of immune cells within the
tumour micro-environment, thereby potentially making ‘cold’ tumours more susceptible to immuno-oncology agents such as
checkpoint inhibitors. A wealth of preclinical evidence supports this hypothesis with EVT801 and provides a second and almost
entirely distinct mechanism of action through which the drug may provide benefit to cancer patients.
EVT801 is protected by granted or pending composition-of-matter patents in all key territories, with exclusivity generally through
to the early 2030s.
Kazia has initiated work on a phase I clinical trial of EVT801, which will seek to explore both of these mechanisms, as well as
provide critical information regarding the safety, tolerability, and pharmacokinetics of the drug. The planned phase I study will be
initiated at two trial sites in France and will aim to recruit up to 96 patients with advanced cancer. Multiple stages of the study will
evaluate EVT801 both as monotherapy and in combination with one or more immuno-oncology agents. The study is expected to
commence recruitment by the end of CY2021.
Subsequent events
There were no significant events subsequent to the reporting date.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the consolidated entity during the financial year.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The consolidated entity has a reasonable expectation that over the course of the coming 12 months:
• Final results will be reported from the phase II clinical trial of paxalisib in glioblastoma;
•
•
•
Interim results will be reported from the phase II clinical trial of paxalisib in combination with trastuzumab in breast cancer
metastases;
Interim results will be reported from the phase II genomically-guided study of paxalisib in brain metastases;
Interim results will be reported from the phase I study of paxalisib in combination with radiotherapy in brain metastases;
• Final data will be reported from the phase I study of paxalisib in children with diffuse intrinsic pontine glioma (DIPG);
• The phase II study of paxalisib in combination with a ketogenic diet in glioblastoma will commence recruitment;
• The phase II study of paxalisib in combination with ONC-201 in DIPG and DMGs will commence recruitment; and
• The phase I study of EVT801 in patients with advanced solid tumours will commence recruitment.
ENVIRONMENTAL REGULATION
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.
22
22
Kazia Therapeutics Limited
Annual Report 2021
INFORMATION ON DIRECTORS
‘Other current directorships’ quoted below are current directorships for listed entities only and excludes directorships of all other
types of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted below are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Iain Ross
Non-Executive Director, Chairman
B.Sc. (Hons). C Dir.
Iain, based in the UK, is an experienced Director and has served on a number of
Australian company boards. He is Chairman of Silence Therapeutics plc (LSE &
NASDAQ:SLN), ReNeuron Group plc (LSE:RENE) and BiVitctriX Therapeutics plc
(LSE:BVX) as well as unlisted Biomer Technology Limited. He is also a non-executive
director of Palla Pharma Limited (ASX:PAL). In his career he has held senior positions
in Sandoz AG, Fisons Plc, Hoffmann-La Roche AG and Celltech Group Plc and also
undertaken a number of start-ups and turnarounds on behalf of banks and private
equity groups. His track record includes multiple financing transactions having raised
in excess of £400 million, both publicly and privately, as well as extensive experience
of divestments and strategic restructurings and has over 25 years in cross-border
management as a Chairman and CEO. He has led and participated in 8 Initial Public
Offerings,(5 LSE, 1 ASX, 2 NASDAQ) and has direct experience of mergers and
acquisitions transactions in Europe, USA and the Pacific Rim
Silence Therapeutics plc (LSE:SLN), ReNeuron Group plc (LSE:RENE), Palla Pharma
Limited (ASX:PAL) and BiVictriX Therapeutics plc (LSE:BVX)
Redx Pharma plc (LSE:REDX), Premier Veterinary Group Plc (LSE:PVG), Anatara
Lifesciences Limited (ASX:ANR) and e-Therapeutics plc (LSE:ETX).
Member of Remuneration and Nomination Committee, Member of Audit, Risk and
Governance Committee.
1,000,001 ordinary shares
400,000 options with exercise price of $1.132 expiring 9 November 2024
Contractual rights to shares:
None
Name:
Title:
Qualifications:
Experience and expertise:
Bryce Carmine
Non-Executive Director
B.Sc., Biochemistry, Microbiology & Genetics
Bryce spent 36 years working for Eli Lilly & Co. and retired as Executive Vice President
for Eli Lilly & Co, and President, Lilly Bio-Medicines. Prior to this he lead the Global
Pharmaceutical Sales and Marketing and was a member of the company’s Executive
Committee. Mr Carmine previously held a series of product development portfolio
leadership roles culminating when he was named President, Global Pharmaceutical
Product Development, with responsibility for the entire late-phase pipeline
development across all therapeutic areas for Eli Lilly. During his career with Lilly,
Bryce held several country leadership positions including President Eli Lilly Japan,
Managing Dir. Australia/NZ & General Manager of a JV for Lilly in Seoul, Korea. Bryce
is currently Chairman and CEO of HaemaLogiX Pty Ltd, a Sydney based privately
owned biotech.
Other current directorships:
Former directorships (last 3 years):
None
None
Special responsibilities:
Interests in shares:
Interests in options:
Member of Audit, Risk and Governance Committee, Chair of Remuneration and
Nomination Committee.
372,693 ordinary shares
400,000 options with exercise price of $1.132 expiring 9 November 2024
Contractual rights to shares:
None
Annual Report 2021
Kazia Therapeutics Limited
23
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS Name:
Title:
Qualifications:
Experience and expertise:
Steven Coffey
Non-Executive Director
B. Comm, CA
Steven is a Chartered Accountant and registered company auditor and has over
35 years experience in the accounting and finance industry. He has been a partner in
the chartered accounting firm Watkins Coffey Martin since 1993. Steven sits on the
board of a number of large private family companies and audits a number of large
private companies and not-for-profit entities.
Other current directorships:
None
Former directorships (last 3 years):
The Docyard Limited (ASX:TDY)
Special responsibilities:
Interests in shares:
Interests in options:
Chair of Audit, Risk and Governance Committee, Member of Remuneration and
Nomination Committee.
434,265 ordinary shares
400,000 options with exercise price of $1.132 expiring 9 November 2024
Contractual rights to shares:
None
Name:
Title:
Qualifications:
Experience and expertise:
Dr James Garner
Chief Executive Officer, Managing Director
MA, MBA, MBBS, BSc (Hons), MAICD
Dr Garner is an experienced life sciences executive who has previously worked with
companies ranging from small biotechs to multinational pharmaceutical companies
such as Biogen and Takeda. His career has focused on regional and global
development of new medicines from preclinical to commercialisation.
Dr Garner is a physician by training and holds an MBA from the University of
Queensland. He began his career in hospital medicine and worked for a number of
years as a corporate strategy consultant with Bain & Company before entering the
pharmaceutical industry. Prior to joining Kazia in 2016, he led R&D strategy for Sanofi
in Asia-Pacific and was based in Singapore.
Other current directorships:
Former directorships (last 3 years):
None
None
Interests in shares:
Interests in options:
430,000 ordinary shares
1,200,000 options with exercise price of $0.4925 expiring 4 January 2024
800,000 options with exercise price of $0.8812 expiring 13 January 2025
Contractual rights to shares:
None
COMPANY SECRETARY
Kate Hill (CA, GAICD, BSc (Hons)) has held the role of Company Secretary since 9 September 2016.
Kate has over 20 years’ experience as an audit partner with Deloitte Touche Tohmatsu, working with ASX listed and privately
owned clients. She has worked extensively in regulated environments including assisting with Initial Public Offerings, capital
raising and general compliance, as well as operating in an audit environment. She is a Non-executive Director of Countplus
Limited and Elmo Software Limited (ASX:ELO) as well as Chair of their Audit and Risk Committees. She is also Chair of Seeing
Machines Limited (LSE:SEE).
MEETINGS OF DIRECTORS
The number of meetings of the company’s Board of Directors (‘the Board’) and of each Board committee held during the year
ended 30 June 2021, and the number of meetings attended by each director were:
Full Board
Audit,
Risk & Governance
Committee
Remuneration &
Nomination
Committee
Attended
Held
Attended
Held
Attended
Held
13
12
13
13
13
13
13
13
2
2
2
-
2
2
2
-
1
1
1
-
1
1
1
-
Iain Ross
Bryce Carmine
Steven Coffey
James Garner
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Note: James Garner is not a member of the Audit, Risk and Governance Committee or the Remuneration and Nomination
Committee, but attended all meetings as a guest.
24
24
Kazia Therapeutics Limited
Annual Report 2021
REMUNERATION REPORT (AUDITED)
The remuneration report, which has been audited, outlines the Key Management Personnel (‘KMP’) remuneration arrangements
for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
KMP are defined as those persons having authority and responsibility for planning, directing and controlling the major activities
of the group, directly or indirectly.
The remuneration report is set out under the following main headings:
• Principles used to determine the nature and amount of remuneration
• Details of remuneration
• Service agreements
• Share-based compensation
• Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
Remuneration philosophy
Remuneration for Directors and Senior Executives is based on the overall objective of attracting and retaining people of high
quality who will make a worthwhile contribution to the consolidated entity in the short, medium and long term, and thereby
contribute to long term shareholder value. The Board and its Remuneration and Nomination Committee take a balanced position
between the need to pay market rates to attract talent, and the financial resources of the consolidated entity, in determining
remuneration.
Non-Executive Directors remuneration
The Constitution of the consolidated entity and the ASX listing rules specify that the aggregate remuneration of Non-Executive
Directors shall be determined from time to time by General Meeting. The last determination for the consolidated entity was at the
Annual General Meeting held on 7 November 2020 when the shareholders approved an aggregate remuneration of $700,000.
Non-Executive Directors’ fees are reviewed periodically by the Board and are regularly compared with those of companies of
comparable market capitalisation and stage of development. The Chairman’s fees are determined independently to the fees of
other non-executive Directors based on comparative roles in the external market.
The directors fees were held constant in recent years as a result of funding constraints, and in the current financial year, after
conducting a benchmarking exercise, directors fees were increased to a market rate, and a bonus was paid to Non-Executive
Directors to reflect their service over recent years at a discounted remuneration level. Further, at the 2020 AGM the shareholders
approved the award of 400,000 options to each Non-Executive Director.
In relation to the cap on aggregate fees of Non-Executive Directors, the value of the options has been excluded from the
calculation of aggregate fees because the options were separately approved by the shareholders.
Executive Directors and other KMP
The Board and the Remuneration and Nomination Committee, in consultation with the Managing Director, have put in
place a remuneration structure which provides incentive for employees to drive the activities of the company forward. These
arrangements are reviewed annually at the end of the calendar year.
The Board determines an appropriate level of fixed remuneration for the CEO and Group Executives, as well as the proportion of
performance based remuneration.
The executive remuneration and reward framework has three components:
•
fixed remuneration
• short-term performance incentives - cash bonus
• share-based payments - award of options through the ESOP
Fixed remuneration is reviewed annually by the Remuneration and Nomination Committee based on individual performance,
the overall performance of the consolidated entity and comparable market remunerations. The Remuneration and Nomination
Committee approved increases in fixed remuneration during the financial year ended 30 June 2021.
Annual Report 2021
Kazia Therapeutics Limited
25
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS The short-term incentives program is designed to align the targets of the consolidated entity with the performance hurdles of
executives. Short-term incentive payments are granted to executives based on specific annual performance objectives, metrics
and performance appraisals. Annual performance reviews are conducted at the end of each calendar year and bonuses are paid
shortly after the performance reviews are completed. Annual performance objectives cover matters such as progress in clinical
trials, and management of the Company’s financial resources.
The Board or the Remuneration and Nomination Committee may, at its discretion, award bonuses for exceptional performance.
During the year the Remuneration and Nomination Committee approved the payment of cash bonuses to the CEO and
employees in respect of the financial year ended 30 June 2020.
The long-term incentive comprises equity-based payments. The consolidated entity aims to attract and retain high calibre
executives, and align their interests with those of the shareholders, by granting equity-based payments which are issued at a
premium to the share price on date of issue and vest in tranches based on tenure. The share-options issued to executives are
governed by the ESOP.
Employee share option plan
The Employee Share Option Plan (‘ESOP’) was most recently approved by shareholders on 6 November 2020.
The ESOP provides for the issue of options to eligible individuals, being employees, Non-executive directors and Officers of the
consolidated entity.
Each option issued under the ESOP entitles its holder to acquire one fully paid ordinary share and is exercisable at a price based
on a formula, which includes the weighted average price of such shares at the close of trading on the Australian Securities
Exchange for the seven days prior to the date of issue, and a premium which is applied to this value. The number of options
offered, the amount payable, the vesting period, the option period, the conditions of exercise or any other factors are at the
discretion of the Board of Directors.
The consolidated entity issued 2,200,000 share options under the ESOP during the financial year ended 30 June 2021, of which
2,100,000 were issued to KMP.
Any change to the ESOP will require approval by shareholders.
Use of remuneration consultants
During the year ended 30 June 2021 the consolidated entity did not engage remuneration consultants to assist with the
determination of remuneration levels.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The KMP of the consolidated entity consisted of the following directors of Kazia Therapeutics Limited:
•
Iain Ross - Non-Executive Director, Chairman
• Bryce Carmine - Non-Executive Director
• Steven Coffey - Non-Executive Director
• Dr James Garner - Managing Director, CEO
And the following persons:
• Gabrielle Heaton - Director of Finance and Administration
• Kate Hill - Company Secretary
26
26
Kazia Therapeutics Limited
Annual Report 2021
Short-term benefits
Post-
employment
benefits
Share-
based
payments
Salary &
fees Cash
$
Bonus
Cash
$
Movements
in accrued
leave
Non-
monetary
$
Super-
annuation
$
Options
Equity-
settled
$
Total
$
147,436
20,000
82,500
22,500
82,500
22,500
-
-
-
-
119,067
286,503
9,975
9,975
119,067
234,042
119,067
234,042
503,000 240,000
90,400
70,585
228,651
1,132,636
204,000
25,000
108,525
26,400
(241)
-
21,755
15,069
265,583
-
15,677
150,602
1,127,961
356,400
90,159
112,290
616,598
2,303,408
2021
Non-Executive Directors:
I Ross*
B Carmine
S Coffey
Executive Directors:
J Garner
Other Key Management Personnel:
G Heaton
K Hill
*
Salary paid in UK pounds, but disclosed in Australian dollars using a conversion rate of 0.5562
Annual Report 2021
Kazia Therapeutics Limited
27
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS Short-term benefits
Post-
employment
benefits
Share-
based
payments
Salary &
fees Cash
$
Bonus
Cash
$
Movement
in accrued
leave
Non-
monetary
$
Super-
annuation
$
Options
Equity-
settled
$
135,272
75,000
75,000
-
-
-
-
-
-
-
7,125
7,125
-
-
-
Total
$
135,272
82,125
82,125
473,000
180,000
23,423
62,035
206,465
944,923
195,000
17,500
127,875
15,000
7,275
-
20,188
-
10,745
12,826
250,708
155,701
1,081,147
212,500
30,698
96,473
230,036
1,650,854
2020
Non-Executive Directors:
I Ross*
B Carmine
S Coffey
Executive Directors:
J Garner
Other Key Management Personnel:
G Heaton
K Hill
*
Salary paid in UK pounds, but disclosed in Australian dollars using a conversion rate of 0.5323
The relative proportions of remuneration that are linked to performance and those that are at risk
Name
Non-Executive Directors:
Iain Ross
Bryce Carmine
Steven Coffey
Executive Directors:
James Garner
Other Key Management Personnel:
Gabrielle Heaton
Kate Hill
Fixed remuneration
At risk - STI
At risk - LTI
2021
2020
2021
2020
2021
2020
51%
40%
40%
100%
100%
100%
7%
10%
10%
-
-
-
42%
50%
50%
-
-
-
59%
59%
21%
19%
20%
22%
85%
72%
89%
82%
9%
18%
7%
10%
6%
10%
4%
8%
28
28
Kazia Therapeutics Limited
Annual Report 2021
Consequences of performance on shareholder wealth
Shareholder wealth in a company engaged in drug development is generally driven by successful commercialisation, out-licence
or sale of a drug candidate, and is a long term proposition, rather than being linked to annual financial performance. The
directors have selected a CEO and key management team who, in the directors opinion, are well placed to realise such an
outcome for our shareholders. Now that the current CEO and management team have been in place for a number of years,
the directors are able to provide the below table showing increase in enterprise value of the Company over the relevant period,
with details of bonuses and options awarded each year, to demonstrate the link between performance, reward and increase in
shareholder wealth.
June 2017
June 2018
June 2019
June 2020
June 2021
Enterprise Value
5,736,560
12,659,955
14,884,643
35,582,939
145,349,234
Total bonuses paid to KMP
Number of bonus participants
Share options issued to KMP
191,135
5
-
-
125,400
212,500
356,400
3
3
6
450,000
362,000
100,000
1,300,000
2,100,000
Number of KMP granted options
2
2
2
3
6
Enterprise Value of the Company has been calculated as the market capitalisation of the Company at each period end, adjusted
for cash held at year end, and the for anticipated R&D cash rebate (deemed to be essentially cash). The use of Enterprise Value
seeks to represent the underlying value of the business after adjusting for cash or debt balances.
Voting and comments made at the consolidated entity’s last Annual General Meeting
The consolidated entity received 93.63% of “yes” votes on its Remuneration Report for the financial year ending 30 June 2020.
The consolidated entity received no specific feedback on its Remuneration Report at the Annual General Meeting.
Bonuses included in remuneration
Details of short term incentive cash bonuses awarded as remuneration to each key management personnel are included in the
above tables.
Service agreements
Under Remuneration and Nomination Committee policy, employment contracts are entered into with each of the executives
who is considered to be KMP. Under the terms of the contracts, remuneration is reviewed at least annually. The employment
contracts of KMPs include a termination clause whereby a party can terminate the agreement on notice. Such notice may vary
between 4 weeks and 6 months. Under the terms of each contract, payment in lieu can be made by the consolidated entity to
substitute the notice period. The consolidated entity may terminate the contracts at any time without cause if serious misconduct
has occurred. In the event that employment is terminated for cause, no severance pay or other benefits are payable by the
consolidated entity.
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of
these agreements are as follows:
Name:
Title:
James Garner
Chief Executive Officer, Managing Director
Agreement commenced:
1 February 2016
Term of agreement:
Full-time employment
Details:
Name:
Title:
Base salary to be reviewed annually by the Remuneration and Nomination Committee.
James’s appointment with the consolidated entity may be terminated with the consolidated
entity giving 6 months’ notice or by James giving 6 months’ notice. The consolidated entity
may elect to pay James equal amount to that proportion of his salary equivalent 6 months’
pay in lieu of notice, together with any outstanding entitlements due to him.
The current base salary, as from 1 January 2021, is $510,000 including an allowance for
health benefits.
Gabrielle Heaton
Director of Finance and Administration
Agreement commenced:
13 March 2017
Term of agreement:
Full time employment
Details:
Base salary to be reviewed annually by the Remuneration and Nomination Committee.
Gabrielle’s appointment with the consolidated entity may be terminated with the consolidated
entity giving 4 weeks’ notice or by Gabrielle giving 4 weeks’ notice. The consolidated entity
may elect to pay Gabrielle equal amount to that proportion of her salary equivalent 4 weeks’
pay in lieu of notice, together with any outstanding entitlements due to her.
The current base salary, from 1 January 2021, is $208,000.
Annual Report 2021
Kazia Therapeutics Limited
29
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS Name:
Title:
Kate Hill
Company Secretary
Agreement commenced:
9 September 2016
Term of agreement:
Part-time contractor
Details:
Base remuneration is based on time worked. Daily rate to be reviewed annually by the
Remuneration and Nomination Committee, with a monthly rate of $11,900 for a two-day
week, applied from 1 January 2021. The contract is open ended. Kate’s appointment with
the consolidated entity may be terminated with the consolidated entity giving 60 days’
notice or by Kate giving 60 days’ notice.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of options
The terms and conditions of each grant of options over ordinary shares granted as remuneration to Directors or other Key
Management Personnel in this financial year or future financial years are set out below.
The options issued on 9 November 2020 were to James Garner (800,000 options with a fair value at grant date of $402,000),
Iain Ross (400,000 options with a fair value at grant date of $165,300), Bryce Carmine (400,000 options with a fair value at grant
date of $165,300) and Steven Coffey (400,000 options with a fair value at grant date of $165,300).
The options issued on 4 January 2021 were to Kate Hill (50,000 options, with a fair value at grant date of $29,929) and Gabrielle
Heaton (50,000 options, with a fair value at grant date of $29,929). Service conditions are that any unvested options are forfeit
on cessation of employment. There are no performance conditions, consistent with the Company’s Employee Share Option Plan
rules, as reapproved by shareholders on 6 November 2020.
Grant date
09/11/2020
09/11/2020
09/11/2020
09/11/2020
09/11/2020
09/11/2020
09/11/2020
09/11/2020
04/01/2021
04/01/2021
04/01/2021
04/01/2021
No
of options
Vesting
date
200,000
200,000
200,000
200,000
300,000
300,000
300,000
300,000
25,000
25,000
25,000
25,000
2,100,000
13/01/2021
13/01/2022
13/01/2023
13/01/2024
01/01/2021
01/07/2021
01/01/2022
01/07/2022
04/01/2022
04/01/2023
04/01/2024
04/01/2025
Expiry date
13/01/2025
13/01/2025
13/01/2025
13/01/2025
09/11/2024
09/11/2024
09/11/2024
09/11/2024
04/01/2025
04/01/2025
04/01/2025
04/01/2025
Exercise price
$
Fair value at
grant date
$
$0.881
$0.881
$0.881
$0.881
$1.132
$1.132
$1.132
$1.132
$1.690
$1.690
$1.690
$1.690
$0.450
$0.490
$0.520
$0.550
$0.379
$0.403
$0.425
$0.446
$0.520
$0.576
$0.627
$0.671
Options granted carry no dividend or voting rights. Each option is convertible to one ordinary share upon exercise. During
the year, 96,500 options were exercised by Gabrielle Heaton and 245,000 options were exercised by Kate Hill.
30
30
Kazia Therapeutics Limited
Annual Report 2021
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of Key Management
Personnel of the consolidated entity, including their personally related parties, is set out below:
Ordinary shares
B Carmine
S Coffey
I Ross
J Garner
K Hill
G Heaton
Balance at
the start of
the year
Purchased
on market
Allocated on
entitlement
offer
Exercise of
options
Balance at
the end of
the year
266,293
326,474
800,001
275,000
30,000
10,000
43,900
45,291
75,000
92,500
-
-
1,707,768
256,691
62,500
62,500
125,000
62,500
20,000
6,668
339,168
-
-
-
-
245,000
96,500
341,500
372,693
434,265
1,000,001
430,000
295,000
113,168
2,645,127
Option holding
The number of options over ordinary shares in the company held during the financial year by each Director and other members of
Key Management Personnel of the consolidated entity, including their personally related parties, is set out below:
Options over ordinary shares
J Garner *
K Hill *
G Heaton *
Iain Ross *
Bryce Carmine *
Steven Coffey *
Balance at
the start of
the year
Granted as
remuneration
Expired
Exercised
Balance at
the end of
the year
1,200,000
800,000
320,000
242,000
-
-
-
50,000
50,000
400,000
400,000
400,000
1,762,000
2,100,000
-
-
-
-
-
-
-
-
2,000,000
(245,000)
(96,500)
-
-
-
125,000
195,500
400,000
400,000
400,000
(341,500)
3,520,500
*
Options issued under the Employee Share Option Plan. Unvested options are forfeited upon cessation of employment with the Company.
Options over ordinary shares - vested and unvested
J Garner
K Hill
G Heaton
Iain Ross
Bryce Carmine
Steven Coffey
Vested and
exercisable
Unvested
Balance at
the end of
the year
1,200,000
800,000
2,000,000
12,500
92,500
100,000
100,000
100,000
112,500
103,000
300,000
300,000
300,000
125,000
195,500
400,000
400,000
400,000
1,605,000
1,915,500
3,520,500
Other transactions with key management personnel and their related parties
There was no other transaction with KMP and their related parties.
This concludes the remuneration report, which has been audited.
Annual Report 2021
Kazia Therapeutics Limited
31
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS SHARES UNDER OPTION
Unissued ordinary shares of Kazia Therapeutics Limited under option at the date of this report are as follows. All options are
unlisted and were issued under the Company’s Employee Share Option Plan.
Grant date
5 September 2016
31 October 2016
12 October 2016
21 November 2016
7 August 2017
5 February 2018
4 January 2019
13 November 2019
13 January 2020
9 November 2020
9 November 2020
4 January 2021
Expiry date
5 September 2021
1 November 2021
17 October 2021
23 November 2021
7 August 2022
5 February 2023
4 January 2024
4 January 2024
13 January 2025
13 January 2025
9 November 2024
4 January 2025
Exercise
Price
Closing
Balance
$1.630
$1.380
$1.560
$1.380
$0.670
$0.780
$0.493
$0.493
$0.881
$0.881
$1.132
$1.690
50,000
12,500
62,000
50,000
87,000
320,000
37,500
1,200,000
200,000
800,000
1,200,000
200,000
4,219,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
company or of any other body corporate.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
The following ordinary shares of Kazia Therapeutics Limited were issued during the year ended 30 June 2021 and up to the date
of this report on the exercise of options granted:
Date options granted
7 August 2017
5 February 2018
4 January 2019
Exercise
price
Number of
shares issued
$0.670
$0.780
$0.490
121,500
120,000
200,000
441,500
INDEMNITY AND INSURANCE OF OFFICERS
The consolidated entity has not indemnified the Directors and Executives of the consolidated entity for costs incurred, in their
capacity as a Director or Executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the consolidated entity paid a premium in respect of a contract to insure the Directors and Executives
of the consolidated entity against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
INDEMNITY AND INSURANCE OF AUDITOR
The consolidated entity has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the consolidated entity or any related entity against a liability incurred by the auditor.
During the financial year, the consolidated entity has not paid a premium in respect of a contract to insure the auditor of the
consolidated entity or any related entity.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of
the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf
of the company for all or part of those proceedings.
32
32
Kazia Therapeutics Limited
Annual Report 2021
NON-AUDIT SERVICES
There were no non-audit services provided during the financial year by the auditor.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF GRANT THORNTON
AUDIT PTY LTD
There are no officers of the company who are former partners of Grant Thornton Audit Pty Ltd.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors’ report.
AUDITOR
Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
Mr Iain Ross
Chairman
26 August 2021
Sydney
Dr James Garner
Managing Director, Chief Executive Officer
Annual Report 2021
Kazia Therapeutics Limited
33
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS
KAZIA THERAPEUTICS LIMITED
Auditor’s independence declaration
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Kazia Therapeutics Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Kazia
Therapeutics Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have
been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
S M Coulton
Partner – Audit & Assurance
Sydney, 26 August 2021
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
34
34
34
Kazia Therapeutics Limited
Annual Report 2021
CONTENTS
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report to the members of Kazia Therapeutics Limited
Shareholder information
Corporate directory
Page
37
38
39
41
42
65
67
70
73
Annual Report 2021
Kazia Therapeutics Limited
35
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS GENERAL INFORMATION
The financial statements cover Kazia Therapeutics Limited as a consolidated entity consisting of Kazia Therapeutics Limited and
the entities it controlled at the end of or during the year. The financial statements are presented in Australian dollars, which is
Kazia Therapeutics Limited’s functional and presentation currency.
Kazia Therapeutics Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Three International Towers,
Level 24
300 Barangaroo Avenue
Sydney NSW 2000
A description of the nature of the consolidated entity’s operations and its principal activities are included in the Directors’ report,
which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 26 August 2021. The directors
have the power to amend and reissue the financial statements.
36
36
Kazia Therapeutics Limited
Annual Report 2021
Revenue
Other income
Finance income
Expenses
Research and development expense
General and administrative expense
Fair value losses on financial assets at fair value through profit or loss
Loss on revaluation of contingent consideration
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit for the year attributable to the owners of
Kazia Therapeutics Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net exchange difference on translation of financial statements of foreign controlled
entities, net of tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
Kazia Therapeutics Limited
Basic earnings per share
Diluted earnings per share
Note
5
6
Consolidated
2021
$
15,182,711
2,192
42,240
2020
$
-
995,000
65,905
(14,541,366)
(9,494,328)
(7,021,823)
(3,689,867)
-
(2,570,261)
(167,814)
(474,557)
(8,906,307)
(12,765,661)
8
484,347
298,195
(8,421,960)
(12,467,466)
1,868
1,868
(3,520)
(3,520)
(8,420,092)
(12,470,986)
Cents
(7.16)
(7.16)
Cents
(17.07)
(17.07)
31
31
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying
notes
Annual Report 2021
Kazia Therapeutics Limited
37
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the year ended 30 June 20212021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Trade and other receivables
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employee benefits
Contingent consideration
Total current liabilities
Non-current liabilities
Deferred tax
Employee benefits
Contingent consideration
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other contributed equity
Reserves
Accumulated losses
Total equity
Note
Consolidated
2021
$
2020
$
9
10
11
10
12
13
14
15
16
14
15
17
18
19
27,586,760
8,764,044
84,362
1,352,252
1,719,696
537,305
29,390,818
10,653,601
6,693,628
-
22,002,593
12,410,139
28,696,221
12,410,139
58,087,039
23,063,740
4,932,660
3,488,933
229,337
191,451
3,164,557
1,387,089
8,326,554
5,067,473
2,928,441
3,412,788
54,684
-
8,926,641
457,899
11,909,766
3,870,687
20,236,320
8,938,160
37,850,719
14,125,580
80,290,062
48,781,214
464,000
464,000
1,300,566
1,065,923
(44,203,909)
(36,185,557)
37,850,719
14,125,580
The above statement of financial position should be read in conjunction with the accompanying notes
38
38
Kazia Therapeutics Limited
Annual Report 2021
STATEMENT OF FINANCIAL POSITIONAs at 30 June 2021 Consolidated
Contributed
equity
$
Other
contributed
equity
$
Foreign
currency
translation
reserve
$
Share
based
payments
reserve
$
Accumulated
losses Total equity
$
$
Balance at 1 July 2019
36,641,519
464,000
(451,668)
2,489,121
(24,948,206)
14,194,766
Loss after income tax benefit
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Shares issued (note 17)
Share issue costs (note 17)
Transactions with owners in their
capacity as owners:
Share-based payments (note 32)
Expired options
-
-
-
12,972,747
(833,052)
-
-
-
-
-
-
-
-
-
-
(3,520)
(3,520)
-
-
-
-
-
-
-
-
-
262,105
(12,467,466)
(12,467,466)
-
(3,520)
(12,467,466)
(12,470,986)
-
-
-
12,972,747
(833,052)
262,105
-
(1,230,115)
1,230,115
Balance at 30 June 2020
48,781,214
464,000
(455,188)
1,521,111
(36,185,557)
14,125,580
The above statement of changes in equity should be read in conjunction with the accompanying notes
Annual Report 2021
Kazia Therapeutics Limited
39
STATEMENT OF CHANGES IN EQUITYFor the year ended 30 June 20212021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS Consolidated
Contributed
equity
$
Other
contributed
equity
$
Foreign
currency
translation
reserve
$
Share
based
payments
reserve
$
Accumulated
losses Total equity
$
$
Balance at 1 July 2020
48,781,214
464,000
(455,188)
1,521,111
(36,185,557)
14,125,580
Loss after income tax benefit
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Shares issued (note 17)
Share issue costs (note 17)
Transactions with owners in their
capacity as owners:
-
-
-
32,908,949
(1,673,388)
Issue of shares on exercise of options
273,287
Share based payment (note 32)
Expired options
-
-
-
-
-
-
-
-
-
-
-
1,868
1,868
-
-
-
-
-
-
-
-
-
-
(8,421,960)
(8,421,960)
-
1,868
(8,421,960)
(8,420,092)
- 32,908,949
-
(1,673,388)
(80,353)
636,383
80,353
273,287
-
636,383
(323,255)
323,255
-
Balance at 30 June 2021
80,290,062
464,000
(453,320)
1,753,886
(44,203,909)
37,850,719
The above statement of changes in equity should be read in conjunction with the accompanying notes
40
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Kazia Therapeutics Limited
Annual Report 2021
STATEMENT OF CHANGES IN EQUITY (CONTINUED)For the year ended 30 June 2021 Cash flows from operating activities
Receipts from customers *
Payments to suppliers (inclusive of GST)
R&D cash rebate
Net cash used in operating activities
Net cash from investing activities
Cash flows from financing activities
Note
Consolidated
2021
$
2020
$
13,739,254
-
(23,868,218)
(10,200,368)
1,018,448
1,390,849
30
(9,110,516)
(8,809,519)
-
-
Proceeds from issue of shares - net of issuance costs
17
28,108,848
12,139,695
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
28,108,848
12,139,695
18,998,332
3,330,176
8,764,044
5,433,868
(175,616)
-
Cash and cash equivalents at the end of the financial year
9
27,586,760
8,764,044
*
Receipts from customers were subject to deduction of VAT and withholding tax at source.
The above statement of cash flows should be read in conjunction with the accompanying notes
Annual Report 2021
Kazia Therapeutics Limited
41
STATEMENT OF CASH FLOWSFor the year ended 30 June 20212021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 1. GENERAL INFORMATION
The financial statements cover Kazia Therapeutics Limited as a consolidated entity consisting of Kazia Therapeutics Limited and
its subsidiaries. The financial statements are presented in Australian dollars, which is Kazia Therapeutics Limited’s functional and
presentation currency.
Kazia Therapeutics Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Three International Towers
Level 24, 300 Barangaroo Avenue
Sydney NSW 2000
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 26 August 2021. The Directors
have the power to amend and reissue the financial statements.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance
or position of the consolidated entity.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have
not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2021. The consolidated entity’s
assessment of the impact of these new or amended Accounting Standards and Interpretations is that none are deemed to have a
material impact on the entity.
Going concern
The consolidated entity incurred a loss after income tax of $8,421,960 (2020: $12,467,466), was in a net current asset position of
$21,064,264 (2020: net current asset position of $5,586,128) and had net cash outflows from operating activities of $9,110,516
(2020: $8,809,519) for the year ended 30 June 2021.
As at 30 June 2021 the consolidated entity had cash in hand and at bank, including cash on deposit, of $27,586,760.
The financial statements have been prepared on a going concern basis, which contemplates continuity of normal activities and
realisation of assets and settlement of liabilities in the normal course of business. As is often the case with drug development
companies, the ability of the consolidated entity to continue its development activities as a going concern is dependent upon it
deriving sufficient cash from investors, from licensing and partnering activities, and from other sources of revenue such as grant
funding.
The directors have considered the cash flow forecasts and the funding requirements of the business and continue to explore grant
funding, licensing opportunities and equity investment opportunities in the Company. In particular, the directors have considered
the impact of COVID-19 on the operations of the Company, and make the following observations:
• Kazia’s key clinical trials have not been impacted by COVID-19 to date. The GBM Agile study, the pivotal study for paxalisib in
glioblastoma, is on track with recruitment running to plan, and no disruption to this schedule is foreseen. The Phase II study
of paxalisib in glioblastoma was fully recruited prior to the onset of restrictions and is in wrap up stage at the date of this
report. Plans are on track for the commencement of a Phase I trial for EVT801 before the end of 2021;
•
In general, clinical research in advanced cancer is relatively protected from pandemic disruption due to the ongoing and
time-critical need for patient care in specialised facilities which cannot easily be repurposed;
• The Company is not reliant on ongoing revenue from customers, and so changes in customer behaviour over the next several
years due to public health restrictions and reduced economic activity have little to no impact on its finances;
• The Company was able to secure funding of approximately $9 million at the height of the initial wave of COVID-19 in April
2020, and additional funds of approximately $25 million during the 2021 financial year;
• Based on budgets and forecasts, the Company has sufficient cash to fund the operations for a period of at least 12 months
from the date of this report; and
• As a consequence, the directors do not foresee any other impacts of COVID-19 on the Company’s ability to pursue its
objectives, and in particular on its ability to raise additional funding if required.
Accordingly the directors have prepared the financial statements on a going concern basis. Should the above assumptions
not prove to be appropriate, there is material uncertainty whether the consolidated entity will continue as a going concern and
therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in
these financial statements.
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Kazia Therapeutics Limited
Annual Report 2021
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for
for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board (‘IASB’).
The financial statements have been prepared on an accruals basis and under the historical cost conventions, except for listed
equity investments which are carried at fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are
disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 28.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Kazia Therapeutics Limited
(‘company’ or ‘parent entity’) as at 30 June 2021 and the results of all subsidiaries for the year then ended. Kazia Therapeutics
Limited and its subsidiaries together are referred to in these financial statements as the ‘consolidated entity’.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when
the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference is between the consideration
transferred and the book value.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated
entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
Operating segments
Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as
the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of
resources to operating segments and assessing their performance. The CODM is considered to be the Board of Directors.
Foreign currency translation
The financial statements are presented in Australian dollars, which is the consolidated entity’s functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or
loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates,
which approximate the rate at the date of the transaction, for the period. All resulting foreign exchange differences are recognised
in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation is disposed of.
Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation
shall be recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net
investment.
Annual Report 2021
Kazia Therapeutics Limited
43
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the
financial instrument and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value
through profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets and financial
liabilities are described below. Financial assets are derecognised when the contractual rights to the cash flows from the
financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction
price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where
applicable).
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:
•
•
financial assets at amortised cost
financial assets at fair value through profit or loss (FVPL)
Classifications are determined by both:
•
•
the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial assets
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL):
•
•
they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this
category of financial instruments.
Financial assets at fair value through profit or loss (FVPL)
Financial assets that are held within a business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair
value through profit and loss. Further, irrespective of business model, financial assets whose contractual cash flows are not solely
payments of principal and interest are accounted for at FVPL. The Group’s investments in equity instruments and derivatives fall
under this category.
Impairment of financial assets
AASB 9’s new impairment model uses more forward looking information to recognize expected credit losses - the ‘expected
credit losses (ECL) model’. The application of the new impairment model depends on whether there has been a significant
increase in credit risk. The Group considers a broader range of information when assessing credit risk and measuring expected
credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
•
•
financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk
(‘Stage 1’) and
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not
low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date. ‘12-month expected
credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected
life of the financial instrument.
Classification and measurement of financial liabilities
The Group’s financial liabilities comprise trade and other payables. Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or
loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included
within finance costs or finance income.
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Kazia Therapeutics Limited
Annual Report 2021
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue from contracts with customers
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances, rebates and amounts collected on behalf of third parties. Revenue is recognised using a five step
approach in accordance with AASB 15 Revenue from Contracts with Customers to depict the transfer of promised services to
customers in an amount that reflects the consideration to which the Group expects to be entitled in exchange for those services.
Distinct promises within the contract are identified as performance obligations. The transaction price of the contract is measured
based on the amount of consideration the consolidated entity expects to be entitled to from the customer in exchange for
services. Factors such as requirements around variable consideration, significant financing components, noncash consideration,
or amounts payable to customers also determine the transaction price. The transaction is then allocated to separate performance
obligations in the contract based on relative standalone selling prices. Revenue is recognised when, or as, performance
obligations are satisfied, which is when control of the promised service is transferred to the customer. Amounts received prior
to satisfying the revenue recognition criteria are recorded as deferred revenue. Amounts expected to be recognised as revenue
within the 12 months following the balance sheet date are classified within current liabilities. Amounts not expected to be
recognised as revenue within the 12 months following the balance sheet date are classified within non-current liabilities.
The consolidated entity recognises contract liabilities for consideration received in respect of unsatisfied performance obligations
and reports these amounts as other liabilities in its consolidated statement of financial position. Similarly, if the consolidated
entity satisfies a performance obligation before it receives the consideration, the consolidated entity recognises either a contract
asset or a receivable in its statement of financial position, depending on whether something other than the passage of time is
required before the consideration is due.
Licensing revenues, including milestone revenue
Revenue from licensees of the consolidated entity’s intellectual property reflects the transfer of a right to use the intellectual
property as it exists at the point in time in which the licence is transferred to the customer.
Licensing agreements are examined to determine whether they contain additional performance obligations, over and above
the right to use the intellectual property. To the extent that additional performance obligations exist, the transaction price the
consolidated entity expects to receive for the contract is allocated to the separate performance obligations.
The receipt of milestone payments is often contingent on meeting certain clinical, regulatory or commercial targets, and is
therefore considered variable consideration. The transaction price of the contingent milestone is estimated using the most likely
amount method. Within the transaction price, the price associated with a contingent milestone is included only to the extent that
it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Milestone payments
that are not within the control of the Group, such as regulatory approvals, are not considered highly probable of being achieved
until those approvals are achieved.
Finance Income
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net
carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Grant Income
The R&D Tax Incentive is a government program which helps to offset some of the incurred costs of R&D. Eligible expenditure
incurred under the scheme in a financial year attracts an additional 43.5% tax deduction, and for a group earning income of less
than $20 million, the cash value of the additional deduction is remitted to the taxpayer. In accordance with AASB 120, as the
compensation relates to expenses already incurred, it is recognised in profit or loss of the period in which it becomes receivable.
Accordingly the group accounts for the R&D Tax Incentive in the same year as the expenses to which it relates.
Income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction
that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing
of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying
amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there
are future taxable profits available to recover the asset.
Annual Report 2021
Kazia Therapeutics Limited
45
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either
the same taxable entity or different taxable entities which intend to settle simultaneously.
Kazia Therapeutics Limited (the ‘parent entity’) and its wholly-owned Australian controlled entities have formed an income
tax consolidated group under the tax consolidation regime. Kazia Therapeutics Limited as the parent entity discloses all of
the deferred tax assets of the tax consolidated group in relation to tax losses carried forward (after elimination of inter-group
transactions). The tax consolidated group has applied the ‘separate taxpayer in the group’ allocation approach in determining the
appropriate amount of taxes to allocate to members of the tax consolidated group.
As the tax consolidation group continues to generate tax losses there has been no reason for the company to enter a tax funding
agreement with members of the tax consolidation group.
Interpretation 23 Uncertain tax positions
Interpretation 23 clarified the application of the recognition and measurement criteria in AASB 112 Income Taxes (AASB 112)
where there is uncertainty over income tax treatments and requires an assessment of each uncertain tax position as to whether
it is probable that a taxation authority will accept the position. Where it is not probable, the effect of the uncertainty is reflected
in determining the relevant taxable profit or loss, tax bases, unused tax losses and unused tax credits or tax rates. The amount
is determined as either the single most likely amount or the sum of the probability weighted amounts in a range of possible
outcomes, whichever better predicts the resolution of the uncertainty. Judgments are reassessed as and when new facts and
circumstances are presented.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held
primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash
or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting
period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it
is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the
liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Research and development
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised
only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be
measured reliably.
Leases
Under AASB 16, leases are accounted for as follows:
• Right-of-use assets and lease liabilities are recognised in the consolidated statement of financial position, initially measured at
the present value of future lease payments;
• Depreciation on right-of-use assets and interest on lease liabilities are recognised in the consolidated statement of profit or
loss; and
• The total amount of cash paid under lease arrangements is separated into a principal portion (presented within financing
activities) and interest (presented within operating activities) in the consolidated cash flow statement.
Lease incentives under AASB 16 are recognised as part of the measurement of right-of-use assets and lease liabilities.
Under AASB 16, right-of-use assets are tested for impairment in accordance with AASB 136 Impairment of Assets. This replaces
the previous requirement to recognise a provision for onerous lease contracts.
For short-term leases (lease term of 12 months or less) and leases of low-value assets, the consolidated entity has opted to
recognise a lease expense on a straight-line basis as permitted by AASB 16. This expense is presented within other expenses in
the consolidated statement of profit or loss.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the
date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not
amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured
at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of
intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset.
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Kazia Therapeutics Limited
Annual Report 2021
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption
or useful life are accounted for prospectively by changing the amortisation method or period. Amortisation expense is included in
research and development expenditure.
Licensing agreement for paxalisib
The Licensing agreement asset was initially brought to account at fair value, and is being amortised on a straight-line basis over
the period of its expected benefit, being the remaining life of the patent, which was 15 years from the date of acquisition.
Licensing agreement for EVT801
The Licensing agreement asset was initially brought to account at cost and is being amortised on a straight-line basis over the
period of its expected benefit, being the remaining life of the patent, which was 12.5 years from the date of acquisition.
Impairment of non-financial assets
Non-financial assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present
value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating
unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating
unit.
Compound financial instruments
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost
using the effective interest rate method, whereas the equity component is not remeasured. Interest, gains and losses relating to
the financial liability are recognised in profit or loss. On conversion, the financial liability is reclassified to equity; no gain or loss is
recognised on conversion.
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event,
it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount
of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled
within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date is measured
as the present value of expected future payments to be made in respect of services provided by employees up to the reporting
date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date
on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash
outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees under the terms of the Employee Share Option
Plan (‘ESOP’) and consultants as compensation for services performed.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using the
Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution,
the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free
interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated
entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of
the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss
for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
Annual Report 2021
Kazia Therapeutics Limited
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2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
• during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
•
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are
considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the
share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated
as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the
vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is
treated as if they were a modification.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred, including interest on short-term and long-term borrowings.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value
is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the
absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use.
Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value,
are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance
of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are
determined based on a reassessment of the lowest level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available
or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where
there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes
a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options, including share based payments relating to the issue
of shares are, shown in equity as a deduction, net of tax, from the proceeds.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Kazia Therapeutics Limited, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
48
48
Kazia Therapeutics Limited
Annual Report 2021
NOTE 3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect
the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to
assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on
historical experience and on other various factors, including expectations of future events, management believes to be reasonable
under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The
judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities (refer to the respective notes) within the next financial year are discussed as follows:
Research and development expenses
The Directors do not consider the development programs to be sufficiently advanced to reliably determine the economic benefits
and technical feasibility to justify capitalisation of development costs. These costs have been recognised as an expense when
incurred.
Research and development expenses relate primarily to the cost of conducting human clinical and pre-clinical trials. Clinical
development costs are a significant component of research and development expenses. Estimates have been used in determining
the expense liability under certain clinical trial contracts where services have been performed but not yet invoiced. Generally the
costs, and therefore estimates, associated with clinical trial contracts are based on the number of patients, drug administration
cycles, the type of treatment and the outcome being measured. The length of time before actual amounts can be determined will
vary depending on length of the patient cycles and the timing of the invoices by the clinical trial partners.
Revenue recognition
The consolidated entity applies judgement in determining whether contracts entered into fall within the scope of AASB 15
‘Revenue from Contracts with Customers’. In doing so, management considers the commercial substance of the transaction and
how risks and benefits of the contract accrue to the various parties to the contract. In determining the accounting treatment of
the contracts with each customer, management assessed that the contracts were within the scope of AASB 15 ‘Revenue from
Contracts with Customers’. Management has also made the judgement in each case that the grant of the licence and transfer of
associated know-how and materials are accounted for as one performance obligation as they are not considered to be distinct;
they are highly interrelated and could not provide benefits to the customer independently from each other. Judgements were also
made in relation to the transfer of the licence and know-how in each case, and whether this should be recognised over time or a
point in time. The point in time has been determined with regard to the point at which the transfer of know-how has substantially
been completed and the customer has control of the asset and the ability to direct the use of and receive substantially all of the
remaining benefits.
Clinical trial expenses
The timing of payment for work conducted under clinical trials often bears little relation to the timing of the work effort.
Detailed estimates are made to determine the amount of work effort expended during a reporting period in order to determine
the appropriate expense to be recognised, with the resulting prepayments or un-invoiced amounts being recognised as a
prepayment or an accrual respectively.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes option pricing
model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact profit or loss and equity.
Acquisition of intangible assets
The consolidated entity has applied judgement in determining the accounting treatment for the acquisition of the License
agreement for EVT801. The License agreement has been determined to be a stand alone transaction, independent from any
other agreements which have been or may be entered into with Evotec (France) SAS. Management has also made the decision
to account for the cost of the asset conferred by the License agreement on the basis of the milestones that are probable of being
payable, that is, those for which there is judged to be a probability of greater than 50% that the milestone will be triggered.
Contingent consideration
Contingent consideration relates to the intangible assets acquired, and the fair value of contingent consideration is dependent on
the key assumptions used in accounting for the acquisition of those intangible assets. These assumptions include the probability
of milestones occurring, and can also include the anticipated timing of settlement and discount rates used.
In the case where contingent consideration is recognised on the basis that the liability is probable of occurring, judgement is used
in determining which milestones are considered probable of being triggered.
Intangible assets available for use
The consolidated entity has exercised judgement in determining that its intangible assets, being license agreements, have a finite
life and are available for use once acquired. As the business model is to acquire such assets and then develop them to generate
returns from future license transactions or other means, management have determined that the assets are available for use from
the time that they are acquired. In each case the prima facie useful life is the remaining life of the patent over the asset, unless
other factors over-ride this assessment.
Annual Report 2021
Kazia Therapeutics Limited
49
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
(CONTINUED)
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may
lead to impairment. Judgement is used to determine whether any indicators of impairment exist, and reference is made to the
considerations included in AASB 136 Impairment of Assets in this assessment. If an impairment trigger is found to exist, the
recoverable amount of the asset is determined.
NOTE 4. OPERATING SEGMENTS
Identification of reportable operating segments
The consolidated entity’s operating segment is based on the internal reports that are reviewed and used by the Board of
Directors (being the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of
resources.
The consolidated entity operates in the pharmaceutical research and development business. There are no operating segments for
which discrete financial information exists.
The information reported to the CODM, on at least a quarterly basis, is the consolidated results as shown in the statement of
profit or loss and other comprehensive income and statement of financial position.
Major customers
During the year the consolidated entity transacted with two customers, and revenue from each customer amounted to in excess
of 10% of the total revenue from the period. Both companies entered into license agreements for the consolidated entity’s drug
assets.
NOTE 5. REVENUE
Licensing revenue
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Geographical regions
China
Sweden
Timing of revenue recognition
Licensing revenue recognised at a point in time
NOTE 6. OTHER INCOME
Net foreign exchange gain
Payroll tax rebate
Subsidies and grants
Research and development rebate
Other income
50
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Kazia Therapeutics Limited
Annual Report 2021
Consolidated
2021
$
15,182,711
2020
$
-
Consolidated
2021
$
2020
$
10,006,031
5,176,680
15,182,711
15,182,711
-
-
-
-
Consolidated
2021
$
-
2,192
-
-
2020
$
4,631
2,259
20,000
968,110
2,192
995,000
NOTE 7. EXPENSES
Loss before income tax includes the following specific expenses:
Amortisation
Paxalisib licensing agreement
Evotech licensing agreement
Total amortisation
Net foreign exchange loss
Net foreign exchange loss
Leases
Expense relating to short term leases
Superannuation expense
Defined contribution superannuation expense
Employee benefits expense excluding superannuation
Employee benefits expense excluding superannuation
Other expenses
Chinese With-Holding Tax incurred on license transaction
Chinese Value Added Tax incurred on license transaction
NOTE 8. INCOME TAX BENEFIT
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
Tax at the statutory tax rate of 26% (2020: 27.5%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Amortisation of intangibles
Share-based payments
Gain/loss on revaluation of contingent consideration
Research and Development claim
Adjustment to deferred tax balances as a result of change in statutory tax rate
Tax losses and timing differences not recognised
Income tax benefit
Consolidated
2021
$
2020
$
1,084,344
1,084,344
180,965
-
1,265,309
1,084,344
430,273
-
92,552
107,929
138,010
139,697
1,562,868
1,525,599
931,099
537,578
1,468,677
-
-
-
Consolidated
2021
$
2020
$
(8,906,307)
(12,765,661)
(2,315,640)
(3,510,557)
347,960
175,005
706,822
-
298,195
72,079
130,503
279,675
(1,085,853)
(2,730,105)
(186,152)
787,658
-
2,431,910
(484,347)
(298,195)
Consolidated
2021
$
2020
$
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised-Australia
70,896,259
67,429,803
Potential tax benefit @ 26% (2020: 27.5%)
Unused tax losses for which no deferred tax asset has been recognised-US
Potential tax benefit at statutory tax rates @ 21%-US
18,433,027
17,531,749
2,038,587
1,570,207
428,103
329,743
Annual Report 2021
Kazia Therapeutics Limited
51
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 9. CASH AND CASH EQUIVALENTS
Current assets
Cash at bank and on hand
Short-term deposits
NOTE 10. TRADE AND OTHER RECEIVABLES
Current assets
Trade receivables
R&D tax rebate receivable
Other receivables
Deposits held
Less: Provision for impairment of deposits held
Non-current assets
Deposit paid
Consolidated
2021
$
2020
$
21,086,760
1,264,044
6,500,000
7,500,000
27,586,760
8,764,044
Consolidated
2021
$
2020
$
-
-
-
76,675
7,687
439
1,017,278
1,017,717
177,125
566,508
-
(409,098)
84,362
1,352,252
6,693,628
-
6,777,990
1,352,252
Of the deposit paid, $6.65m represents an advance to GCAR at the start of the GBM Agile trial, and is refundable if not utilised
against trial expenses. The amount will be allocated against expenditure towards the latter end of the trial, which is expected to
be over 12 months from year end.
NOTE 11. OTHER ASSETS
Current assets
Prepayments
NOTE 12. INTANGIBLES
Non-current assets
Licensing agreement – at acquired fair value
Less: Accumulated amortisation
Licensing agreement – at cost
Less: Accumulated amortisation
52
52
Kazia Therapeutics Limited
Annual Report 2021
Consolidated
2021
$
2020
$
1,719,696
537,305
Consolidated
2021
$
2020
$
16,407,788
16,407,788
(5,081,993)
(3,997,649)
11,325,795
12,410,139
10,857,763
(180,965)
10,676,798
-
-
-
22,002,593
12,410,139
NOTE 12. INTANGIBLES (CONTINUED)
Consolidated
Balance at 1 July 2019
Amortisation expense
Balance at 30 June 2020
Additions
Amortisation expense
Balance at 30 June 2021
EVT801
licensing
agreement
$
Paxalisib
licensing
agreement
$
Total
$
-
-
-
10,857,763
13,494,483
13,494,483
(1,084,344)
(1,084,344)
12,410,139
-
12,410,139
10,857,763
(180,965)
(1,084,344)
(1,265,309)
10,676,798
11,325,795
22,002,593
During the financial year the consolidated entity acquired exclusive rights to EVT801, a small-molecule selective inhibitor of
vascular endothelial growth factor receptor 3 (VEGFR3).
NOTE 13. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Accrued payables
Refer to note 21 for further information on financial instruments.
NOTE 14. EMPLOYEE BENEFITS
Current liabilities
Annual leave
Non-current liabilities
Long service leave
NOTE 15. CONTINGENT CONSIDERATION
Current liabilities
Contingent consideration – paxalisib
Contingent consideration - EVT801
Non-current liabilities
Contingent consideration – paxalisib
Contingent consideration – EVT801
Consolidated
2021
$
2020
$
1,893,150
1,693,632
3,039,510
1,795,301
4,932,660
3,488,933
Consolidated
2021
$
2020
$
229,337
191,451
54,684
284,021
-
191,451
Consolidated
2021
$
2020
$
-
1,387,089
3,164,557
-
3,164,557
1,387,089
1,015,249
7,911,392
8,926,641
457,899
-
457,899
12,091,198
1,844,988
Annual Report 2021
Kazia Therapeutics Limited
53
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 15. CONTINGENT CONSIDERATION (CONTINUED)
Contingent consideration - paxalisib
During the 2017 financial year, the consolidated entity acquired 100% of the issued shares in Glioblast Pty Ltd, a privately-
held, neuro-oncology-focused Australian biotechnology company. On the same day, Kazia entered into a worldwide licensing
agreement with Genentech to develop and commercialise GDC-0084, now known as paxalisib.
The Glioblast acquisition contains four contingent milestone payments, the first two milestone payments are to be settled with Kazia
shares, and the third and fourth milestone payments are to be settled with either cash or Kazia shares at the discretion of Kazia.
Milestones 1 and 4 have now been paid out, and Milestone 3 has lapsed. Milestone 2 comprises shares to the value of $1,250,000.
The Genentech agreement comprises of one milestone payment payable on the first commercial licensed product sale, in the
amount of $1,394,000.
Each milestone payment is probability weighted for valuation purposes. The milestone payments are discounted to present
value, using a discount rate of 15% (previously 35%) per annum. The discount rate was considered at 30 June 2021 and it was
determined that the risk of the asset, and therefore of the milestones being met, has been considerably decreased as a result of
paxalisib entering the pivotal GBM Agile trial, which is progressing well, and the license transaction with Simcere Pharmaceutical
Group, which provides an external validation of paxalisib. Accordingly, the discount rate applied to future expected cash flows has
been revised downwards.
Kazia is also required to pay royalties to Genentech in relation to net sales. These payments are related to future financial
performance, and are not considered as part of the consideration in relation to the Genentech agreement.
Contingent consideration - EVT801
As set out in note 2, the acquisition of EVT801 has been accounted for at cost, with milestones where the payment is considered
probable being booked as a current or non-current liability at year end, according to the estimated payment date. Milestones
where the payment is not considered probable at year end have not been accounted for as a liability. The total amount of
milestone payments not booked at year end amounts to €300,500,000 ($475,474,684).
NOTE 16. DEFERRED TAX
Consolidated
2021
$
2020
$
Non-current liabilities
Deferred tax liability associated with Licensing Agreement
2,928,441
3,412,788
NOTE 17. CONTRIBUTED EQUITY
Consolidated
2021
Shares
2020
Shares
2021
$
2020
$
Ordinary shares – fully paid
132,012,209
94,598,369
80,290,062
48,781,214
54
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Kazia Therapeutics Limited
Annual Report 2021
NOTE 17. CONTRIBUTED EQUITY (CONTINUED)
Movements in ordinary share capital
Details
Balance
Share placement
Share placement
Issued under Share Purchase Plan
Issued on conversion of options
Less: share issue transaction costs
Date
Shares
Issue price
$
1 July 2019
62,166,673
36,641,519
1 November 2019
10,000,000
$0.400
4,000,000
16 April 2020
11 May 2020
18,041,667
4,390,010
19
-
$0.400
$0.400
$4.000
$0.000
7,216,667
1,756,004
76
(833,052)
48,781,214
Balance
30 June 2020
94,598,369
Issued on conversion of options
28 August 2020
25,000
$0.493
12,313
Institutional placement under ANREO
12 October 2020
20,525,820
$0.800
16,420,656
Retail placement under ANREO
Issued on conversion of options
Issued on conversion of options
Share placement
Issued on achievement of milestone
Less: share issue transaction costs
Balance
Ordinary shares
26 October 2020
11,017,075
$0.800
8,813,660
2 March 2021
15 March 2021
28 April 2021
21 May 2021
391,500
25,000
3,037,580
2,391,865
$0.635
$0.493
$1.407
248,661
12,313
4,274,633
$1.421
3,400,000
-
$0.000
(1,673,388)
30 June 2021
132,012,209
80,290,062
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to
the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not
have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it
can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce
the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as
total borrowings less cash and cash equivalents.
The capital structure of the consolidated entity consists of cash and cash equivalents and equity attributable to equity holders.
The overall strategy of the consolidated entity is to continue its drug development programs, which depends on raising sufficient
funds, through a variety of sources including issuing of additional share capital, as may be required from time to time.
The capital risk management policy remains unchanged from the prior year.
NOTE 18. OTHER CONTRIBUTED EQUITY
Convertible note – Triaxial
Consolidated
2021
$
2020
$
464,000
464,000
On 4 December 2014, the consolidated entity and the convertible note holder (‘Triaxial’) signed a Convertible Note Deed Poll
(‘Deed’) which superseded the precedent Loan Agreement between Triaxial shareholders and the consolidated entity. The
Deed extinguishes the liability created by the Loan Agreement and provides that the Convertible Notes will convert into a
pre-determined number of ordinary shares on the achievement of defined milestones established in the schedule of the Deed.
Accordingly the convertible note has been reclassified as an equity instrument rather than debt instrument.
Annual Report 2021
Kazia Therapeutics Limited
55
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 18. OTHER CONTRIBUTED EQUITY (CONTINUED)
During the financial year ended 30 June 2017, the Company reached two milestones triggering the conversion of a portion of its
convertible note as follows;
• on 11 August 2016 the Company announced the submission of an IND application. On 10 September 2016, the Company
received a letter from the FDA advising the study may proceed triggering conversion of 20,000,000 ordinary shares; and
• on 31 October 2016, the Company announced it had licensed a Phase II ready molecule triggering the conversion of
16,000,000 ordinary shares.
During the financial year ended 30 June 2018, a portion of the convertible notes was extinguished.
The remaining portion of the convertible note will be exercised at the holders’ discretion on completion of Phase II clinical trial or
achieving Breakthrough Designation, and would convert to 1,856,000 ordinary shares if converted. Completion will be deemed to
occur upon the receipt by the consolidated entity of a signed study report or notification of the designation. There is a possibility
for an early conversion of the convertible notes if a third party acquires more than 50% of the issued capital of the consolidated
entity.
NOTE 19. RESERVES
Foreign currency translation reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations to
Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and executive directors as part of their
remuneration, and other parties as part of their compensation for services.
NOTE 20. DIVIDENDS
There were no dividends paid, recommended or declared during the current or previous financial year.
NOTE 21. FINANCIAL INSTRUMENTS
Financial risk management objectives
The consolidated entity’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The
consolidated entity uses different methods to measure and manage the different types of risks to which it is exposed. These
methods include monitoring the levels of exposure to interest rates and foreign exchange, ageing analysis and monitoring of
specific credit allowances to manage credit risk, and, rolling cash flow forecasts to manage liquidity risk.
Market risk
Foreign currency risk
The consolidated entity operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the US dollars (‘USD’). Foreign exchange risk arises from future transactions and recognised assets and
liabilities denominated in a currency that is not the entity’s functional currency and net investments in foreign operations.
As of 30 June 2021, the consolidated entity did not hold derivative financial instruments in managing its foreign currency,
however, the consolidated entity may from time to time enter into hedging arrangements where circumstances are deemed
appropriate. The consolidated entity used natural hedging to reduce the foreign currency risk, which involved processing USD
payments from cash held in USD. Foreign subsidiaries with a functional currency of Australian Dollars (‘AUD’) have exposure to
the local currency of these subsidiaries and any other currency these subsidiaries trade in.
The carrying amount of the consolidated entity’s foreign currency denominated financial assets and financial liabilities at the
reporting date was as follows:
Consolidated
US dollars
Euros
Assets
2021
$
Liabilities
2020
$
2021
$
2020
$
21,072,592
272,450
3,447,803
2,196,281
-
-
15,943
-
21,072,592
272,450
3,463,746
2,196,281
The consolidated entity had net assets denominated in foreign currencies of $17,608,845 as at 30 June 2021 (2020: net liabilities
$1,923,831).
56
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Kazia Therapeutics Limited
Annual Report 2021
NOTE 21. FINANCIAL INSTRUMENTS (CONTINUED)
If the AUD had strengthened against the USD by 10% (2020: 10%) then this would have had the following impact:
Consolidated - 2021
% change
Effect on
profit before
tax
Effect on
equity
% change
AUD strengthened
AUD weakened
Effect on
profit before
tax
Effect on
equity
US dollars
Euros
10%
10%
(1,762,479)
(1,762,479)
1,594
1,594
(10%)
(10%)
1,762,479
1,762,479
(1,594)
(1,594)
(1,760,885)
(1,760,885)
1,760,885
1,760,885
Consolidated - 2020
% change
Effect on
profit before
tax
Effect on
equity
% change
AUD strengthened
AUD weakened
Effect on
profit before
tax
Effect on
equity
US dollars
Price risk
10%
192,383
192,383
(10%)
(192,383)
(192,383)
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The consolidated entity’s exposure to market interest rates relate primarily to the investments of cash balances.
The consolidated entity has cash reserves held primarily in Australian dollars and United States dollars and places funds on
deposit with financial institutions for periods generally not exceeding three months.
As at the reporting date, the consolidated entity had the following variable interest rate balances:
Consolidated
Cash at bank and in hand
Short term deposits
2021
2020
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
-
21,086,760
0.04%
6,500,000
0.04%
0.95%
Net exposure to cash flow interest rate risk
27,586,760
Balance
$
1,264,044
7,500,000
8,764,044
The consolidated entity has cash and cash equivalents totalling $27,586,760 (2020: $8,764,044). An official increase/decrease in
interest rates of 100 basis points (2020: 100 basis points) would have a favourable/adverse effect on profit before tax and equity
of $275,867 (2020: $87,640) per annum. The percentage change is based on the expected volatility of interest rates using market
data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The entity is not exposed to significant credit risk on receivables.
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the consolidated entity based on recent sales experience, historical collection rates and forward-looking
information that is available.
The consolidated entity places its cash deposits with high credit quality financial institutions and by policy, limits the amount
of credit exposure to any single counter-party. The consolidated entity is averse to principal loss and ensures the safety and
preservation of its invested funds by limiting default risk, market risk, and reinvestment risk. The consolidated entity mitigates
default risk by constantly positioning its portfolio to respond appropriately to a significant reduction in a credit rating of any
financial institution.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the
failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a
period greater than 1 year.
There are no significant concentrations of credit risk within the consolidated entity. The credit risk on liquid funds is limited as the
counter parties are banks with high credit ratings.
Credit risk is managed by limiting the amount of credit exposure to any single counter-party for cash deposits.
Annual Report 2021
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2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 21. FINANCIAL INSTRUMENTS (CONTINUED)
Liquidity risk
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring actual and
forecast cash flows and matching the maturity profiles of financial assets and liabilities. In particular, contingent consideration
may be satisfied either by payment of cash or by issue of shares, at the discretion of the entity.
Remaining contractual maturities
The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Weighted
average
interest
rate
%
1 year or less
$
Between
1 and 2
years
$
Between
2 and 5
years
$
Over 5
years
$
Remaining
contractual
maturities
$
-
-
-
1,893,150
3,039,510
3,164,557
8,097,217
-
-
-
-
-
-
9,305,392
9,305,392
-
-
-
-
1,893,150
3,039,510
12,469,949
17,402,609
Weighted
average
interest
rate
%
1 year or less
$
Between
1 and 2
years
$
Between
2 and 5
years
$
Over 5
years
$
Remaining
contractual
maturities
$
-
-
-
1,693,632
1,795,301
-
-
-
4,199,000
3,488,933
4,199,000
-
-
-
-
-
-
-
-
1,693,632
1,795,301
4,199,000
7,687,933
Consolidated - 2021
Non-derivatives
Trade payables
Accrued payables
Contingent consideration
Total non-derivatives
Consolidated - 2020
Non-derivatives
Trade payables
Accrued payables
Contingent consideration
Total non-derivatives
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
NOTE 22. FAIR VALUE MEASUREMENT
Fair value hierarchy
The following tables detail the consolidated entity’s assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 2021
Liabilities
Contingent consideration
Total liabilities
Consolidated - 2020
Liabilities
Contingent consideration
Total liabilities
Level 1
$
-
-
Level 1
$
-
-
Level 2
$
-
-
Level 2
$
-
-
Level 3
$
1,015,249
1,015,249
Level 3
$
1,844,988
1,844,988
Total
$
1,015,249
1,015,249
Total
$
1,844,988
1,844,988
58
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Kazia Therapeutics Limited
Annual Report 2021
NOTE 22. FAIR VALUE MEASUREMENT (CONTINUED)
There were no transfers between levels during the financial year.
The fair value of contingent consideration related to the acquisition of Glioblast Pty Ltd and the licence agreement is estimated
by probability-weighting the expected future cash outflows, adjusting for risk and discounting.
The effects on the fair value of risk and uncertainty in the future cash flows are dealt with by adjusting the estimated cash flows
rather than adjusting the discount rate. The estimated cashflows were adjusted based on the directors’ assessment of achieving
contracted milestones as disclosed in Note 15. The probabilities used fell in the range of 35% to 55% and were informed by
generally accepted industry probabilities of drugs achieving certain milestones in their progression towards registration.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2019
Losses recognised in profit or loss
Balance at 30 June 2020
Losses recognised in profit and loss
Payout of milestone
Balance at 30 June 2021
Level 3
$
1,370,431
474,557
1,844,988
2,570,261
(3,400,000)
1,015,249
Available-
for-sale
$
-
-
-
-
-
-
Total
$
1,370,431
474,557
1,844,988
2,570,261
(3,400,000)
1,015,249
NOTE 23. KEY MANAGEMENT PERSONNEL DISCLOSURES
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is
set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2021
$
2020
$
1,574,520
1,324,345
112,290
616,598
96,473
230,036
2,303,408
1,650,854
Please refer to Note 27 for other transactions with key management personnel and their related parties.
NOTE 24. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by Grant Thornton Audit Pty Ltd, the
auditor of the company:
Audit services - Grant Thornton Audit Pty Ltd
Audit or review of the financial statements
NOTE 25. CONTINGENT LIABILITIES
Consolidated
2021
$
2020
$
151,400
124,250
Other than the contingent consideration set out in note 15, the consolidated entity does not have any other contingent liabilities.
NOTE 26. COMMITMENTS
Lease commitments comprise contracted amounts for leases of premises. The agreement has a duration less than 12 months
from financial year end.
Annual Report 2021
Kazia Therapeutics Limited
59
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 27. RELATED PARTY TRANSACTIONS
Parent entity
Kazia Therapeutics Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 29.
Key management personnel
Disclosures relating to key management personnel are set out in note 23 and the remuneration report included in the directors’
report.
Transactions with related parties
There was no other transaction with KMP and their related parties.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
NOTE 28. PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Other contributed equity
Reserves
Accumulated losses
Total equity
Parent
2021
$
2020
$
(16,853,528)
(11,064,061)
(16,853,528)
(11,064,061)
Parent
2021
$
25,041,721
47,044,314
3,177,348
15,032,430
2020
$
9,702,674
22,112,813
1,521,946
5,392,633
80,290,062
48,781,213
464,000
1,753,886
464,000
1,521,111
(50,496,064)
(34,046,144)
32,011,884
16,720,180
Reserves comprise Share Based Payments Reserve.
Contingent liabilities
The parent entity contingent liabilities as at 30 June 2021 and 30 June 2020 are as set out in Note 15. The contingent
consideration is specific to the parent entity.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment at as 30 June 2021 and 30 June 2020.
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Kazia Therapeutics Limited
Annual Report 2021
NOTE 28. PARENT ENTITY INFORMATION (CONTINUED)
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except for
the following:
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
• Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator
of an impairment of the investment.
NOTE 29. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
the accounting policy described in note 2:
Name
Kazia Laboratories Pty Limited
Kazia Research Pty Limited
Kazia Therapeutics Inc.
Glioblast Pty Limited
Kazia Therapeutics (Hong Kong) Limited
Principal place of business /
Country of incorporation
Australia
Australia
United States of America
Australia
Hong Kong
Ownership interest
2021
%
100.00%
100.00%
100.00%
100.00%
100.00%
2020
%
100.00%
100.00%
100.00%
100.00%
-
NOTE 30. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH USED IN
OPERATING ACTIVITIES
Loss after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Net fair value loss on financial assets
Share-based payments
Foreign exchange differences
Loss on contingent consideration
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
Increase in prepayments
Increase in trade and other payables
Decrease in deferred tax liabilities
Increase in other provisions
Net cash used in operating activities
Consolidated
2021
$
2020
$
(8,421,960)
(12,467,466)
1,265,309
1,084,344
-
636,383
430,273
2,570,261
(5,027,134)
(1,182,391)
1,010,520
(484,347)
92,570
167,814
262,105
-
474,557
358,452
(167,701)
1,721,472
(298,195)
55,099
(9,110,516)
(8,809,519)
Significant non-cash transactions
During the year the consolidated entity acquired a licensing agreement in relation to the asset EVT801. At year end no portion of
the purchase price had been paid and accordingly the transaction does not appear in the cash flow statement.
Furthermore, the consolidated entity issued shares in satisfaction of an acquisition milestone. This transaction did not involve cash
and accordingly the transaction does not appear in the cash flow statement.
Annual Report 2021
Kazia Therapeutics Limited
61
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 31. EARNINGS PER SHARE
Consolidated
2021
$
2020
$
Loss after income tax attributable to the owners of Kazia Therapeutics Limited
(8,421,960)
(12,467,466)
Weighted average number of ordinary shares used in calculating basic earnings per share
117,674,543
Weighted average number of ordinary shares used in calculating diluted earnings per share
117,674,543
Number
Basic earnings per share
Diluted earnings per share
Cents
(7.16)
(7.16)
Number
73,053,514
73,053,514
Cents
(17.07)
(17.07)
1,865,000 unlisted convertible notes with a face value of $464,000 and 4,446,500 unlisted options have been excluded from the
above calculations as they were anti-dilutive.
NOTE 32. SHARE-BASED PAYMENTS
All of the options set out below have been issued to employees and directors under the ESOP. During the financial year an
expense of $636,383 was recognised.
2021
Tranche Grant date Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
1
2
3
4
5
6
7
8
9
10
11
12
13
16/11/2015
16/11/2020
$2.200
236,667
05/09/2016
05/09/2021
12/10/2016
17/10/2021
31/10/2016
01/11/2021
21/11/2016
23/11/2021
$1.630
$1.560
$1.380
$1.380
50,000
62,000
12,500
50,000
07/08/2017
07/08/2022
$0.670
224,000
05/02/2018 05/02/2023
$0.780
440,000
04/01/2019
04/01/2024
$0.492
250,000
13/11/2019
04/01/2024
$0.492
1,200,000
13/01/2020
13/01/2025
$0.881
250,000
-
-
-
-
-
-
-
-
-
-
09/11/2020
13/01/2025
$1.132
09/11/2020
13/01/2025
$0.881
04/01/2021
04/01/2025
$1.690
-
-
-
1,200,000
800,000
200,000
Expired /
lapsed
on termination
of employment
(236,667)
-
-
-
-
(15,500)
Balance at
the end of
the year
-
50,000
62,000
12,500
50,000
87,000
-
320,000
-
-
-
-
-
(121,500)
(120,000)
(200,000)
(12,500)
37,500
-
-
-
-
-
-
1,200,000
(50,000)
200,000
-
-
-
1,200,000
800,000
200,000
Weighted average
exercise price
No options were forfeited during the year.
2,775,167
2,200,000
(441,500)
(314,667)
4,219,000
$0.797
$1.090
$0.620
$1.850
$0.826
At the end of the period the following outstanding options were vested and exercisable:
• Options in tranche 1 have expired during the year
• Options in tranches 2 - 8 were vested and exercisable except for tranche 6 which was vested as to 53%
• Options in tranche 9 were vested as to 1million of the 1.2million options on issue
• Options in tranches 10-12 were 25% vested
• Options in tranche 13 were unvested at year end
The weighted average remaining contractual life of options outstanding at 30 June 2021 is 2.6 years.
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Kazia Therapeutics Limited
Annual Report 2021
NOTE 32. SHARE-BASED PAYMENTS (CONTINUED)
2020
Tranche Grant date Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Modified
Expired
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
04/03/2015
16/12/2019
$1.500
04/03/2015
18/12/2019
$1.500
46,647
19,952
24/06/2015
30/06/2020
$4.000
519,000
15/11/2015
16/11/2020
$2.200
236,667
18/03/2016
01/02/2021
$1.990
300,000
18/03/2016
01/02/2021
$1.990
200,000
18/03/2016
01/02/2021
05/09/2016
05/09/2021
12/10/2016
17/10/2021
31/10/2016
01/11/2021
21/11/2016
23/11/2021
$2.610
$1.630
$1.560
$1.380
$1.380
250,000
50,000
62,000
12,500
50,000
07/08/2017
07/08/2022
$0.670
224,000
05/02/2018 05/02/2023
$0.780
440,000
04/01/2019
04/01/2024
$0.492
250,000
13/11/2019
04/01/2024
$0.492
13/01/2020
13/01/2025
$0.880
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(300,000)
(200,000)
(250,000)
-
-
-
-
-
-
-
1,200,000
250,000
-
(46,647)
(19,952)
(519,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
Weighted average exercise price
$1.960
$0.880
$2.348
$3.716
2,660,766
250,000
450,000
(585,599)
Balance at
the end of
the year
-
-
-
236,667
-
-
-
50,000
62,000
12,500
50,000
224,000
440,000
250,000
1,200,000
250,000
2,775,167
$0.797
At the end of the period the following options were vested and exercisable:
• Options in Tranches 4, 8, 10, 11 and 13 were vested and exercisable
• Options in Tranche 16 were unvested
• Options in other tranches were vested as follows: 9: 75%, 12: 50%, 14: 50%, 15: 67%
All remaining options are expected to vest in future periods.
The weighted average remaining contractual life of options outstanding at 30 June 2020 is 2.78 years.
Employee share options
During the year ended 30 June 2021, 2,200,000 options have been issued to directors and employees by the consolidated entity
pursuant to the Company’s Employee Share Option Plan.
• Tranche 11 vests in four equal 6-monthly tranches from 1 January 2021
• Tranche 12 vests in four equal annual amounts from 13 January 2021
• Tranche 13 vests in four equal annual tranches from 4 January 2022
Options within all tranches will only vest if the option holder continues to be a full-time employee with the Company or an
Associated Company during the vesting period relating to the option.
Conditions for an option to be exercised:
• The option must have vested;
• Option holder must have provided the Company with an Exercise Notice and have paid the Exercise Price for the option.
• The Exercise Notice must be for the exercise of at least the Minimum Number of Options;
• The Exercise Notice must have been provided to the Company and Exercise Price paid before the expiry of 5 years from the
date the Option is issued.
Options Valuation
In order to obtain a fair valuation of these options, the following assumptions have been made:
The Black Scholes option valuation methodology has been used with the expectation that the majority of these options would be
exercised towards the end of the option term. Inputs into the Black Scholes model includes the share price at grant date, exercise
price, volatility, and the risk free rate of a five year Australian Government Bond on grant date.
Annual Report 2021
Kazia Therapeutics Limited
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2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS NOTE 32. SHARE-BASED PAYMENTS (CONTINUED)
Risk-free rate and grant date
For all tranches, the risk-free rate of a five-year Australian Government bond on grant date was used. Please refer to the table
below for details.
Options in Tranches 1 to 13 have various vesting periods and exercising conditions. These options are unlisted as at 30 June 2021.
No dividends are expected to be declared or paid by the consolidated entity during the terms of the options.
The underlying expected volatility was determined by reference to historical data of the Company’s shares over a period of time.
No special features inherent to the options granted were incorporated into measurement of fair value.
Based on the above assumptions, the table below sets out the valuation for each tranche of options:
Grant date
Expiry date
05/09/2016
05/09/2021
12/10/2016
17/10/2021
31/10/2016
01/11/2021
21/11/2016
23/11/2021
07/08/2017
07/08/2022
05/02/2185
05/02/2023
04/01/2019
04/01/2024
13/11/2019
04/01/2024
13/01/2020
13/01/2025
09/11/2020
09/11/2024
09/11/2020
09/11/2024
09/11/2020
09/11/2024
09/11/2020
09/11/2024
09/11/2020
13/01/2025
09/11/2020
13/01/2025
09/11/2020
13/01/2025
09/11/2020
13/01/2025
04/01/2021
04/01/2025
04/01/2021
04/01/2025
04/01/2021
04/01/2025
04/01/2021
04/01/2025
Share
price at
Grant Date
Exercise
price Volatility (%)
Remaining
Life (years)
Risk free
Rate (%)
Fair value
per option
$0.105
$0.098
$0.090
$0.092
$0.430
$0.500
$0.340
$0.410
$0.620
$0.890
$0.890
$0.890
$0.890
$0.890
$0.890
$0.890
$0.890
$1.185
$1.185
$1.185
$1.185
$1.630
$1.560
$1.380
$1.380
$0.670
$0.780
$0.493
$0.493
$0.881
$1.132
$1.132
$1.132
$1.132
$0.881
$0.881
$0.881
$0.881
$1.169
$1.169
$1.169
$1.169
122.00%
122.00%
122.00%
122.00%
74.50%
74.50%
74.50%
74.50%
74.50%
90.00%
90.00%
90.00%
90.00%
90.00%
90.00%
90.00%
90.00%
90.00%
90.00%
90.00%
90.00%
1.16
1.29
1.20
1.20
2.08
2.58
3.50
4.20
4.50
2.10
2.30
2.60
2.80
2.20
2.70
3.20
3.70
2.50
3.00
3.50
4.00
1.60%
1.89%
1.87%
2.10%
1.95%
1.95%
1.95%
1.95%
1.95%
0.10%
0.10%
0.10%
0.10%
0.10%
0.10%
0.10%
0.10%
0.19%
0.19%
0.19%
0.19%
$0.840
$0.780
$0.720
$0.730
$0.206
$0.200
$0.140
$0.180
$0.340
$0.379
$0.403
$0.425
$0.446
$0.450
$0.490
$0.520
$0.550
$0.520
$0.576
$0.627
$0.671
NOTE 33. SUBSEQUENT EVENTS
There were no significant events subsequent to the reporting date.
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Kazia Therapeutics Limited
Annual Report 2021
DIRECTORS’ DECLARATION
In the directors’ opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as at
30 June 2021 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Board of Directors
Mr Iain Ross
Chairman
26 August 2021
Sydney
Dr James Garner
Managing Director, Chief Executive Officer
Annual Report 2021
Kazia Therapeutics Limited
65
2021 AT A GLANCECHAIRMAN’S LETTERCEO’S REPORTKEY MILESTONESPIPELINE REVIEWPARTNER FOR SUCCESSWORK WITH THE BEST#2 IN THE KAZIA STORYFINANCIAL REPORTS
KAZIA THERAPEUTICS LIMITED
Independent auditor’s report to the members of Kazia Therapeutics Limited
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
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Independent Auditor’s Report
To the Members of Kazia Therapeutics Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Kazia Therapeutics Limited (the Company) and its controlled entities (the Group),
which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit
or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash
flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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Liability limited by a scheme approved under Professional Standards Legislation.
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Annual Report 2021
KAZIA THERAPEUTICS LIMITED
Independent auditor’s report to the members of Kazia Therapeutics Limited
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Intangible asset impairment (Note 2, Note 3 & Note 12)
The Group carries in its statement of financial position intangible
assets relating to:
Our procedures included, amongst others:
the Licensing Agreement which grants the Group the right to
develop the paxalisib molecule; and
the Licensing Agreement which grants the Group the right to
develop the EVT801 molecule.
obtaining an understanding of and evaluating management’s
process and controls related to the assessment of the existence of
impairment indicators;
reviewing and assessing management’s assessment of the
existence of any impairment indicators, including making enquiries
of management’s experts;
considering each of the internal and external factors outlined by
The paxalisib Licensing Agreement has a carrying value of
$11,325,795 and the EVT801 Licensing Agreement has a carrying
value of $10,676,798. These assets are being amortised over the
remaining life of the underlying patents at acquisition date, being 15
years and 12.5 years respectively.
AASB 136 and assessing whether any indicators of impairment are
present;
reviewing management’s assessment of the potential impact of
COVID-19 on the performance of the assets; and
assessing the adequacy of the relevant disclosures in the financial
statements.
AASB 136 Impairment of Assets requires an entity to assess at the
end of each reporting period whether there is any indication that an
asset may be impaired. If any indication exists, the entity shall
estimate the recoverable amount of the asset.
This is a key audit matter due to the materiality of amounts in question
and the high degree of management judgement required in assessing
whether there are indicators of impairment.
Asset acquisition accounting (Note 2, Note 3, Note 12 and
Note 15)
On 19 April 2021 the Group entered into a worldwide exclusive
licensing agreement with Evotec SE, for the oncology drug candidate
EVT801.
The transaction has been accounted for as an asset acquisition and
as noted in note 15, the agreement contains contingent payments
dependent on the achievement of contracted milestones.
Management has exercised judgement in determining the probability
of achieving such milestones and the timing of each. The estimated
contingent consideration at 30 June 2021 is $11,075,949.
This is a key audit matter due to the materiality of amounts in question
and the high degree of management judgement required.
Our procedures included, amongst others:
obtaining and reviewing the license agreement to understand the
terms and conditions of the transaction;
reviewing management’s assessment of the proposed accounting
treatment of the transaction;
agreeing key terms of agreements utilised in management’s
assessment;
challenging key assumptions made by management in its
assessment of accounting treatment;
assessing management’s method of amortisation;
making enquiries of management’s experts; and
assessing the adequacy of the relevant disclosures within the
financial statements.
Annual Report 2021
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Independent auditor’s report to the members of Kazia Therapeutics Limited
Accounting for license agreements under AASB15
Revenues from Contracts with Customers (Note 2, Note 3
and Note 5)
During the year, the Group entered into the following transactions:
Our procedures included, amongst others:
On 1 March 2021, the Group entered into an exclusive worldwide
license agreement with Oasmia Pharmaceutical AB (Oasmia),
granting Oasmia the worldwide rights to develop and
commercialise Cantrixil; and
On 29 March 2021 the Group entered into a licensing agreement
with Simcere Pharmaceutical Group Ltd (Simcere), granting
Simcere the rights to develop and commercialise Paxalisib, in the
Greater China territory.
The transactions included the receipt if upfront cash payments of
US$4 million and US$7million made to the Group from Oasmia and
Simcere respectively.
obtaining and reviewing copies of the license agreements to
understand the terms and conditions of the transactions;
reviewing management’s accounting papers documenting the
accounting treatments, including in relation to the applicability of
AASB15;
agreeing key terms of agreements utilised in management’s
assessment;
challenging key assumptions made by management in its
assessment of accounting treatments;
making enquiries of management’s experts; and
assessing the adequacy of the relevant disclosures within the
financial statements.
This is a key audit matter due to the materiality of the transactions and
the judgement required by management in accounting for these
transactions in accordance with AASB15 Revenue from Contracts
with Customers.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
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Annual Report 2021
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KAZIA THERAPEUTICS LIMITED
Independent auditor’s report to the members of Kazia Therapeutics Limited
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: https://www.auasb.gov.au/auditors_responsibilites/ar1_2020.pdf. This description forms part of
our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 25 to 31 of the Directors’ report for the year ended 30 June
2021.
In our opinion, the Remuneration Report of Kazia Therapeutics Limited, for the year ended 30 June 2021 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
S M Coulton
Partner – Audit & Assurance
Sydney, 26 August 2021
Annual Report 2021
Kazia Therapeutics Limited
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Shareholder information
30 June 2021
The shareholder information set out below was applicable as at 24 August 2017.
Equity security holders
Unquoted equity securities
There are no unquoted equity securities.
Substantial holders
There are no substantial holders in the company.
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
There are no other classes of equity securities.
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SHAREHOLDER INFORMATION
The shareholder information set out below was applicable at 17 August 2021.
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Holding less than a marketable parcel
EQUITY SECURITY HOLDERS
The names of the twenty largest quoted equity security holders are listed below:
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
WILLOUGHBY CAPITAL PTY LTD
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