More annual reports from Kazia Therapeutics Limited:
2023 ReportPeers and competitors of Kazia Therapeutics Limited:
Aptevo Therapeutics Inc.ANNUAL REPORT 2022
ANNUAL REPORT 2022
CONTENTS
2022 at a Glance
Chairman’s Letter
CEO’s Report
Key Milestones
Pipeline Review
2
4
6
8
10
Environment, Society & Governance
14
Our Collaborators
Financial Reports
16
20
ii
ASX:KZA | NASDAQ:KZIA
The journey of a young biotech company is often circuitous,
but we have nevertheless continued to make great progress
in the past year. We have two first-class drug candidates in
clinical development, with a diverse portfolio of trials that have
the potential to open up very substantial commercial markets.
We have an experienced and capable team, and an
international network of supportive partners and collaborators.
In almost every important respect, the fundamentals of Kazia
have never been stronger.
kaziatherapeutics.com
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2022 AT A GLANCE
GLOBAL COLLABORATION
OUR CLINICAL RESEARCH
Kazia Therapeutics
is a late clinical stage
oncology company.
We work alongside
clinicians, researchers,
and partners to bring
impactful new therapies
to patients with cancer.
OUR PATIENTS
Paxalisib has shown
evidence of activity
in multiple forms of
brain cancer
6scientific conference
presentations of
paxalisib data in
1H CY2022
400+
hospitals
involved in
paxalisib
clinical trial
program
4distinct indications
in phase II studies
with paxalisib
glioblastoma, DIPG, PCNSL,
brain metastases
3special designations
awarded to paxalisib
by FDA
Fast Track designation,
Orphan Drug designation,
Rare Pediatric Disease
designation
82%
of operating
cashflows
invested in
R&D
OUR BUSINESS
Kazia has grown
rapidly, driven
by progress in its
world-class pipeline
of cancer drug
candidates
Indicative Analyst
Valuation (US$)
Jan 2020
$93M
Dec 2020
Apr 2021
Oct 2021
Mar 2022
$174M
$247M
$277M
$294M
Edison Research
for FY2022
2
6countries involved in
clinical development
of paxalisib
United States, Canada,
Spain, France, Switzerland,
United Kingdom
2H CY
2023
final data
anticipated
from pivotal
study of
paxalisib in
2H CY2023
8ongoing
clinical trials
with paxalisib
as at 30 June 2022
Phase I
study of
EVT801
underway
in France
Most
common
cause of
cancer death
in children is
brain cancer
CBTRUS
84-94%
GBM forecast adoption
of paxalisib in US,
if approved by FDA
Triangle Insights
research project,
commission by Kazia
Therapeutics
2childhood brain
cancers under
investigation with
paxalisib
No FDA-approved
therapies for DIPG
or AT/RT
4licensing
partnerships
in place
200k
approximate patients
per annum treated
with whole brain
radiotherapy in United
States
Brown et al. (2018). J Clin
Oncol. 36(5):483-491
150+
years of
aggregate drug
development
experience
among
management
team
Multiple
potential
indications
for EVT801,
including lung
cancer, bowel
cancer, and
kidney cancer
$4.2m
of new equity capital
raised through
financing in FY2022
AU$
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CHAIRMAN’S LETTER
ADVANCING THE PIPELINE
Dear Shareholder,
Kazia has continued to make
real progress during the
2022 fiscal year, despite the
headwinds resulting from an
enormously challenging financial
environment for listed biotech
companies. Notwithstanding,
I am pleased to be able to review
here some of key developments
in Kazia over the past year.
PIPELINE PROGRESS
The company’s pipeline remains
understandably dominated by
paxalisib, our late-stage asset
for brain cancer, however, during
the financial year, Kazia has also
made very good progress with
EVT801, our second asset, which
was licensed from Evotec SE
in April 2021. That drug is now
well-advanced in a phase I clinical
trial, and we anticipate some
initial results in 1H CY2023. With
the benefit of an additional year,
we’ve had the chance to further
understand, discuss, and chart
its potential, and I should say
that we are even more excited
by EVT801 now than we were
at the time of its licensing.
For paxalisib, the confidence
of some of our investors has
understandably been shaken by the
news, post period, that the drug
would not enrol the second stage
of the GBM AGILE pivotal trial. The
implications of this development
are discussed elsewhere in this
annual report, and so I will not
recapitulate them here. Suffice to
say, however, that the first stage of
the study remains ongoing, having
achieved full recruitment, and will
report final data in 2H CY2023.
There remains every chance that
paxalisib will yet achieve approval
in glioblastoma on the basis of
this substantial data set, and all
involved with its development
continue to push forward on
that basis with all the resources
and energy at their command.
The news demonstrates the
inherent unpredictability of drug
development. Thankfully, Kazia’s
strategy has always been to
diversify its activities as broadly
as possible, so that the company
and its shareholders are insulated
from adverse developments.
GBM AGILE is only one of eight
ongoing clinical trials of paxalisib,
covering four distinct disease
areas. The news from GBM AGILE
was bookended by very positive
outcomes in two studies of brain
metastases and was preceded by
exceptionally promising preclinical
data in two forms of childhood
brain cancer. We believe that
paxalisib has great promise, across
a wide range of brain cancers,
and we remain resolute in the task
of demonstrating its potential.
FINANCIAL PERFORMANCE
We concluded FY2022 with a
cash balance at 30 June 2022 of
$7.4 million, versus $27.6 million
at 30 June 2021. Our total assets
were $35 million, compared to
$58 million at 30 June 2021. During
FY2022, we deployed $22 million
to move forward the company’s
pipeline, representing over 80% of
our total expenditure for the year.
We should acknowledge that we
are reporting these results when the
financial markets are characterised
by extremely negative sentiment
towards the biotech sector. Between
30 June 2021 and 30 June 2022,
XBI, the de facto NASDAQ small
cap biotech index, lost more than
45% of its value, and there is
evidence that smaller companies
such as ours have, on average, been
even more adversely affected.
In recent months, there have at
times been more than 200 listed
biotech companies on NASDAQ
whose market capitalisation is less
than their cash balance. Meanwhile,
the number of IPOs and secondary
offerings has fallen to a trickle,
with many institutional investors
reserving capital to support their
existing portfolio investments.
For Kazia, there is no doubt that
these dynamics have complicated
the natural cadence of our funding
cycle. Our strategy has always
been to fund the company to
milestones, taking only what we
need in each financing round
to move the pipeline to its next
stage of development, thereby
minimising both risk and dilution
for our investors. Given the current
state of the market, we have in
some respects taken this strategy
one step further by making the
decision to implement an ‘at-
the-market’ (ATM) facility to
provide interim access to capital
through the market downturn.
ATMs are a common financing
instrument for small companies,
particularly on NASDAQ. In brief,
the tool allows us to place stock
directly into the market, allowing
us to periodically raise modest
amounts of capital at no discount
to market, with no requirement
for warrants or options, and with
very modest banking fees. For a
company such as Kazia, which runs
exceptionally lean, the ATM can
be an excellent device to manage
cashflows. Indeed, in our case it
has enabled us in recent months
to fully support the company’s
ongoing activities, in a way that
has spared our shareholders the
very deleterious terms that would
have inevitably accompanied a
more conventional transaction.
4
We believe that
paxalisib has great
promise, across a
wide range of brain
cancers, and we
remain resolute in the
task of demonstrating
its potential.
However, the ATM is not a
permanent solution and to fulfil
its potential, Kazia will need to
continue to bring good quality,
long-term, fundamentally-driven
healthcare investors onto its
register. As and when the market re-
opens, we will waste no opportunity
to put the company’s compelling
story in front of the widest range of
investors we can. In the meantime,
however, the access that we have
been able to secure to cost-effective
and minimally dilutive capital
has been vital to our business.
CONCLUSION
The journey of any biotech company
is often circuitous, but we have
nevertheless continued to make
great progress in the past year.
We have two first-class drug
candidates in clinical development,
with a diverse portfolio of trials
that have the potential to open
up very substantial commercial
markets. We have an experienced
and capable team, and an
international network of supportive
partners and collaborators. In
almost every important respect,
the fundamentals of Kazia
have never been stronger.
I would like to thank, once again,
my fellow directors and our
management team, led by our
CEO, James Garner, for their
dedication to the company’s
work. And, as always, we remain
grateful for the ongoing support
of our many shareholders, whose
faith in the company makes
possible everything that we do.
Iain Ross
Chairman of the Board
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CEO’S REPORT
A DIVERSE PORTFOLIO
Dear Shareholder,
The past twelve months have been
an extremely fertile period for
Kazia’s research and development
efforts, particularly in respect of
our lead program, paxalisib.
We have commenced two new
clinical trials: one at Weill Cornell
Medicine investigating paxalisib
in combination with a low-insulin
state for glioblastoma, and one
in collaboration with the Pacific
Pediatric Neuro-Oncology
Consortium, examining paxalisib
in combination with another drug
for the treatment of diffuse midline
gliomas (DMGs), a highly-aggressive
group of childhood brain cancers.
The work that we start is, in a sense,
an investment whose return is
the data we receive a year or two
hence. Several of the studies that
we began in the past few years have
reported important milestones
during FY2022. Our own phase II
study of paxalisib has completed,
with very encouraging results in
the final efficacy data. The phase
II study in brain metastases, run
by the Alliance for Clinical Trials
in Oncology, has graduated to a
second stage in patients with breast
cancer brain metastases. And, in
early August, we saw extremely
positive signals from a study of
paxalisib in combination with
radiotherapy for brain metastases,
in which every evaluable patient
demonstrated radiological
response. The ever-growing body
of data around paxalisib, derived
from a very broad range of clinical
trials and laboratory studies,
helps to provide both confidence
in its activity and breadth in
its commercial opportunity.
While clinical trials naturally more
readily capture the imagination,
we have also reported this year
some very promising preclinical
data in childhood brain cancer. A
team from Johns Hopkins Medical
School reported data in atypical
teratoid / rhabdoid tumours (AT/
RT) at the AACR Conference in
April 2022, and Professor Matt
Dun of the University of Newcastle
presented data on DIPG to the
ISPNO Conference in June 2022.
Together, these presentations,
from leading scientists at first-
rate institutions, have expanded
our thinking in relation to the
opportunity for paxalisib in
childhood brain cancer. We see
this as an increasingly important
plank in paxalisib’s overall
development. We have secured
orphan designation and rare
pediatric disease designation in
both AT/RT and DIPG, and these
achievements help to greatly
facilitate our regulatory strategy in
childhood brain cancer. If paxalisib
is approved in either disease,
we may be eligible to receive a
pediatric priority review voucher
(pPRV), which can be sold to other
companies and which typically
commands a price in excess of
one hundred million dollars.
No doubt, however, these important
and exciting developments are
coloured to some extent by the
news we received at the end of
July, that paxalisib would not
‘graduate’ to the second stage of
the GBM AGILE pivotal study. It
is important to be clear what this
development may or may not mean
for the drug’s further development.
The two-stage design of GBM
AGILE was designed primarily
to increase the statistical power
of the study. A drug which
successfully clears both stages
of the trial may be considered
almost unimpeachable in terms
of the statistical confidence that
accompanies its data. However,
this approach sets a high bar for
any drug participating in the study,
and it is very far from certain that
failure to complete both stages
is incompatible with an eventual
product approval. GBM AGILE will
likely provide for the evaluation
of paxalisib a more substantial
number of patients than were
available to support the approval
of temozolomide, the existing
standard of care in glioblastoma,
and the study remains ongoing.
As is almost invariably the case in
drug development, we will need
to wait and see the data before
we understand our position. We
continue to anticipate that data
in 2H CY2023 and, until then, all
Kazia personnel remain ‘blinded’ to
efficacy and safety. In the meantime,
the patients who have enrolled in
GBM AGILE continue to receive
treatment and to undergo follow-
up, per protocol, and will continue
to provide data for analysis. As the
data matures, we will no doubt learn
a great deal more about paxalisib
and will be much better placed to
understand its potential benefit
to patients with glioblastoma.
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Kazia Theraputics Limited Annual Report 2022
The ever-growing
body of data around
paxalisib, derived from
a very broad range
of clinical trials and
laboratory studies,
helps to provide both
confidence in its
activity and breadth
in its commercial
opportunity.
It is entirely understandable that
this development has caused
uncertainty in the minds of some
of our investors. In truth, however,
there is almost nothing concrete
that we have learned from GBM
AGILE to date, for better or for
worse, that we did not know this
time last year. The study is scarcely
half-complete. And ultimately, in
a disease such as glioblastoma,
which is characterised by an
overwhelming unmet medical
need, there may be an inclination
on the part of regulators and
clinicians to accommodate
a drug which can show any
degree of meaningful benefit.
Meanwhile, the other seven
clinical trials of paxalisib continue
to progress well in general, with
multiple positive read-outs in recent
months and a great deal more
data to come. And EVT801, which
joined our pipeline last year, is now
well-advanced in a phase I study in
Europe, with initial data anticipated
in 1H CY2023. Regardless of
the eventual outcome of GBM
AGILE, both of our outstanding
drug candidates are blessed with
many opportunities to succeed.
To that end, all of us in the Kazia
team continue to apply ourselves
wholeheartedly to the task of
finding how best to use our drug
candidates to help patients. I am
grateful to my colleagues on the
Board and in the Management
Team for their perseverance
and their professionalism,
and to our shareholders for
their ongoing support.
Dr James Garner
Chief Executive Officer
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KEY MILESTONES
HIGHLIGHTS – 2021/2022
December 2021
Kazia releases top-line
final data from phase
II study of paxalisib
in glioblastoma,
showing meaningful
signals of efficacy.
Kazia expands
management team
with two senior US-
based appointments:
Dr John Friend as Chief
Medical Officer, and
Karen Krumeich as
Chief Financial Officer.
These appointments
bring, in aggregate,
more than 50 years of
biotech experience to
the management team.
April 2022
Preclinical data in AT/RT,
a rare childhood brain
cancer is presented at
the AACR conference.
This data expands the
opportunity for paxalisib
in childhood brain
cancer, positioning it
as a substantial area
of focus for the drug’s
development.
September 2021
EVT801 is granted
approval by ANSM, the
French regulatory agency,
to commence a phase I
clinical trial, less than six
months after the asset
was licensed by Kazia.
November 2021
EVT801 phase I study
commences recruitment
at Oncopole Hospital in
Toulouse, France. The
biomarker-enhanced study
is intended to provide
safety and dosing data
but also to demonstrate
the pharmacological
activity of EVT801.
November 2021
February 2022
May 2022
GBM AGILE pivotal
study of paxalisib
in glioblastoma
expands to Europe.
A phase II study of
paxalisib in combination
with a ketogenic diet
for the treatment of
glioblastoma commences
recruitment at Weill
Cornell Medicine. This
study is informed by
world-class research
from Professor Lew
Cantley, who discovered
the PI3K pathway that
paxalisib targets.
Paxalisib commences
recruitment to a phase
II adaptive study in
DIPG run by the Pacific
Pediatric Neuro-Oncology
Consortium (PNOC).
This study administers
paxalisib with ONC201,
a combination which
has shown evidence of
activity in preclinical data
and compassionate use.
GBM AGILE pivotal
study of paxalisib
in glioblastoma
expands to Canada.
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June 2022
Final data from the
phase II study of paxalisib
in glioblastoma is
presented at ASCO.
Preclinical data examining
the combination of
paxalisib with ONC201
for treatment of DIPG
is presented at the
ISPNO conference. The
data provides powerful
support for the ongoing
PNOC study, which
commenced recruitment
in November 2021.
The Alliance study
of paxalisib in brain
metastases moves into
an expansion cohort
in breast cancer brain
metastases, having
seen positive signals in
the initial exploratory
cohort. Further cohorts
continue to examine
brain metastases from
lung cancer and other
primary tumours.
Paxalisib receives orphan
drug designation from
FDA for the treatment
of AT/RT, providing
additional market
exclusivity, waiver of
PDUFA fees, and access
to grant opportunities.
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PIPELINE REVIEW
A BROAD CLINICAL PIPELINE
PAXALISIB
Although glioblastoma remains
very much the lead indication,
childhood brain cancer has
emerged as a very important
second element in the paxalisib
story. Brain cancer is the most
common cause of cancer death
in children, and it remains terribly
poorly treated. Both diffuse intrinsic
pontine glioma (DIPG) and atypical
teratoid / rhabdoid tumours (AT/
RT), two diseases which have been
a strong focus for Kazia in the past
year, have no FDA-approved drug
treatments and, as a consequence,
the prognosis is very poor.
The second quarter of CY2022
saw important preclinical data
presented at international
conferences in this area. Professor
Jeffrey Rubens and colleagues at
Johns Hopkins Medical School
presented very positive data
for paxalisib in AT/RT at the
American Association of Cancer
Research (AACR) Annual Meeting
in April 2022. This data enabled
paxalisib to receive Orphan Drug
Designation (ODD) for this disease
in June 2022. Kazia is currently
in discussion about potential
opportunities to translate this very
promising work into a clinical trial.
In June 2022, Associate Professor
Matt Dun from the Hunter Medical
Research Institute at the University
of Newcastle, Australia, presented
very powerful results from his
research in the combination of
paxalisib with a drug called ONC201
(manufactured by Chimerix, Inc)
in the treatment of DIPG. This
data has already enabled a clinical
trial of the combination in this
disease, which began recruitment
in November 2021. Professor Dun’s
presentation also included several
very promising case studies from
compassionate use experience with
the two drugs in combination.
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Kazia’s pipeline is remarkable for its
diversity. Paxalisib, the lead program, is in
clinical trials for multiple forms of brain
cancer. EVT801 has potential applications
in a wide range of solid tumours.
Together, they give Kazia an extensive breadth
of opportunity for a company of its size.
Another element of the paxalisib
program that has been emerging
as a very promising opportunity has
been brain metastases, a collective
term for cancer which spreads to
the brain from other parts of the
body. More than 200,000 patients
each year develop brain metastases
in the United States alone, and
treatment options are limited.
Three clinical trials have been
examining paxalisib as a potential
treatment for these patients.
One of these studies, run by
the Alliance for Clinical Trials in
Oncology, has already seen positive
data for paxalisib in patients with
breast cancer brain metastases
and, on that basis, has moved the
drug into an expansion phase. The
study remains in an exploratory
phase for patients with lung
cancer brain metastases, and for
patients with brain metastases
from other primary tumours.
A second study, at Memorial Sloan
Kettering Cancer Center, has
similarly moved into an expansion
phase, with initial data from the
first part of the trial accepted for a
prestigious oral presentation at a
specialist scientific conference on
brain metastases organised jointly
by the Society for Neuro-Oncology
(SNO) and the American Society
for Clinical Oncology (ASCO).
Excitingly, this data showed all
evaluable patients responding
to the combination of paxalisib
with whole brain radiotherapy,
suggesting the potential for
our drug to play an important
role in augmenting the efficacy
of this ubiquitous therapy.
In addition, paxalisib is also the
subject of a clinical trial in primary
CNS lymphoma, a less common
form of brain cancer that remains
very challenging to treat. Paxalisib
belongs to a class of medicines
known as PI3K inhibitors, and four
KEY GLOBAL
REGULATORY
AGENCIES
of the five PI3K inhibitors that have
been approved by FDA have been
approved for types of lymphoma.
Since none of these drugs cross
the blood-brain barrier, they are
far from ideal to treat lymphoma
in the brain, but paxalisib is very
well suited to this patient group.
Meanwhile, paxalisib is now
some eighteen months into
GBM AGILE, the pivotal
clinical trial for registration in
glioblastoma. Completion of a
pivotal clinical trial is one of the
most critical landmarks in the
development of a new medicine.
We learned at the end of July that
the drug would not ‘graduate’
to the second stage of the GBM
AGILE study. For any participating
drug to do so requires it to clear a
very ambitious statistical hurdle as
soon as it completes recruitment to
the first stage. Graduation would
have provided an exceptionally
high degree of confidence in
paxalisib’s eventual success, but
failure to graduate certainly does
not mean that the drug will not
yet show a statistically significant
and clinically meaningful benefit.
Stage 1 is fully recruited, and
patients remain on treatment or
in follow-up, per protocol, and we
anticipate receiving final data in 2H
CY2023. Whatever the results may
indicate now, there is substantial
opportunity for the picture to
evolve as the data matures.
All Kazia personnel remain blinded
to the study, as is typically required
of ongoing pivotal studies by
regulatory agencies. As such, it is
impossible to make any meaningful
inferences about the performance
of paxalisib. In common with
most clinical trials at this stage
of development, we will need to
wait for final data before we can
assess how best to proceed.
Operationally, GBM AGILE has been
progressing well. In January 2022,
the Global Coalition for Adaptive
Research (GCAR) announced
that the study had screened over
one thousand patients. Not every
screened patient is enrolled, but
this nevertheless represents a
phenomenal pace of recruitment,
and has far exceeded Kazia’s
expectations at the time of joining
the study. That pace has only
increased, with several European
countries joining the United States
and Canada in recruiting to the
study. Indeed, GBM AGILE has
been so successful in an operational
sense that two new arms have
been welcomed into the study,
adding to the three drugs that
were already participating.
If GBM AGILE ultimately proves
successful for paxalisib, data from
the trial will be packaged with
information on manufacturing,
toxicology, and other activities for
submission to regulatory agencies
such as the US Food and Drug
Administration (FDA), as the
basis of a New Drug Application
(NDA). Drugs which complete a
pivotal study successfully have
more than a 90% likelihood of
becoming a commercial product.
With this inflection point fast
approaching, Kazia has become
increasingly focused on preparing
paxalisib for a potential regulatory
filing. Behind the scenes, a great
deal of work has been underway
Kazia Theraputics Limited Annual Report 2022
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PIPELINE REVIEW
in areas such as manufacturing,
where we look to tie down the
final commercial process, and in
drug safety, where we have begun
to pool all the vast collection of
safety data from the many clinical
studies of paxalisib that have
been and are being performed.
The final NDA submission will
consist of many thousands of
pages of narrative and data.
An NDA approval allows Kazia,
either directly or through licensees
and distributors, to begin selling
paxalisib commercially. We have
invested substantial work in
the past year to explore brain
cancer as a commercial market,
with the support in some areas
of specialist consultants in drug
commercialisation. What we have
learned has been tremendously
encouraging. For example,
presented with the profile of a drug
such as paxalisib, US prescribers
estimate that they would use it
for between 84% and 94% of
newly diagnosed patients. This
is an extraordinary adoption
rate. And discussions with payors
suggest that pricing for paxalisib
should be comparable to some
of the most successful cancer
drugs launched in recent years.
Clearly, the global commercial
launch of a drug such as paxalisib
is beyond the remit of a small
company such as Kazia. We have
always been clear that we expect
to work with partners to bring
the drug to market around the
world. We took the first step in
that journey in March 2021, when
we licensed the Greater China
region to Simcere Pharmaceutical,
a leading Chinese pharma
company. Simcere have proven
themselves to be an excellent
partner, and their expertise and
resources have greatly expedited
the entry of paxalisib into China.
It is likely that similar partnerships
will support the commercialisation
of paxalisib in other territories.
Kazia would be foolhardy to try
and launch a drug itself in Japan
or in Latin America, for example.
The timing of such partnerships
is always a balance. Waiting until
final data is available typically
allows for the most lucrative deal.
However, partnering earlier can
allow the company to share risk
and cost with its partners, and can
also provide access to in-country
expertise. The latter point was a
critical consideration for Kazia’s
partnership with Simcere, given the
complexity of the Chinese market.
It is not inconceivable that Kazia
could consider launching paxalisib
in the United States itself. The
US market typically accounts for
45-50% of the commercial value
of a new cancer drug, and there is
an economic argument in favour
of retaining that value within
Kazia. Glioblastoma is a specialist
disease area, in which patients
are cared for by a relatively small
group of clinicians, and it would
not require a large commercial
infrastructure to support a product
launch. Ultimately, our approach,
as in all matters, will be governed
by pragmatism, but we are in the
fortunate position of having several
compelling approaches to consider.
12
PAXALISIB CLINICAL PROGRAMSponsorPhaseIndicationRegistrationGlobal Coalition for Adaptive ResearchII / IIIGlioblastomaNCT03970447Weill Cornell Cancer CenterIIGlioblastoma(with ketogenic diet + metformin)NCT05183204Alliance for Clinical Trials in OncologyIIBrain metastasesNCT03994796Dana-Farber Cancer InstituteIIBreast cancer brain metastases(with trastuzumab)NCT03765983Dana-Farber Cancer InstituteIIPrimary CNS lymphomaNCT04906096Pacific Pediatric Neuro Oncology ConsortiumIIDIPG & DMGsNCT05009992St Jude Children’s Research HospitalIDIPG (childhood brain cancer)NCT03696355Memorial Sloan Kettering Cancer CenterIBrain metastases (with radiotherapy)NCT04192981 Second, by decreasing the
oxygen levels in the tumour,
they trigger adaptive resistance
mechanisms which mean that
their effect is generally temporary.
EVT801 has been designed to
combat these challenges.
In November 2021, EVT801
commenced recruitment to a phase
I ‘first-in-human’ clinical trial. The
primary purpose of any such trial
is to understand the safety profile
of the drug and how much can be
given to patients, the ‘maximum
tolerated dose’ (MTD). A phase I
study also measures how long the
drug remains in the body. These
are key things that drug developers
must understand before moving
into more advanced trials.
However, the EVT801 phase I study
also incorporates some cutting-
edge scientific measurements that
will allow Kazia to better understand
the likely efficacy of the drug and to
assess which patients may benefit
most. The trial will assess which
genes are switched on and off by
treatment with EVT801, how the
drug affects the immune system,
and whether certain features of
a tumour make it more likely to
respond. In addition, the trial will
apply machine learning techniques
to evaluate CT scans from patients,
hopefully providing greater insight
into their response to treatment.
EVT801
EVT801 is the second drug in
Kazia’s pipeline, but its potential
to bring benefit to patients is no
less than paxalisib. EVT801 works
by targeting a process called
angiogenesis, which is critical
to the growth of many kinds of
cancer. Angiogenesis denotes the
formation of new blood vessels
around a tumour, and this process
is required to supply the tumour
with nutrients and oxygen to
support its rapid growth. Inhibiting
angiogenesis is a very effective
way to treat many such tumours,
and drugs which function this way
have been used across a range
of cancers for several decades.
There are two challenges with
existing therapies in this class.
First, they tend to be quite toxic
due to ‘off-target’ effects on
other biochemical pathways.
PHASES OF CANCER DRUG DEVELOPMENT
PHASE I
PHASE II
PHASE III
20-50 patients
40-200 patients
200-2000 patients
Understand dosing
and safety profile
Obtain initial signals
of efficacy
Demonstrate and quantify
efficacy and safety
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EVT801 CLINICAL PROGRAMSponsorPhaseIndicationRegistrationKazia TherapeuticsIAdvanced Solid TumoursNCT05114668
ENVIRONMENT, SOCIETY & GOVERNANCE
OUR CORPORATE RESPONSIBILITY
As a healthcare company, Kazia is committed to the highest
standards of corporate responsibility. We launched a new
ESG (Environment – Society – Governance) framework this
year, and we anticipate more detailed reporting on our
commitments and achievements in future years.
ENVIRONMENT
SOCIETY
GOVERNANCE
OUR WORLD
OUR COMMUNITY
OUR COMPANY
Kazia strives to be a good corporate
citizen, and has always observed
the highest standards of corporate
governance. As a company listed
on both ASX and NASDAQ,
we respect the governance
frameworks of both jurisdictions.
Did You Know?
Kazia has pre-emptively and
voluntarily begun to implement
a rigorous validation for vendors
and partners, which includes
compliance with Australia’s
Modern Slavery Act 2018 (Cth).
Kazia is mindful of its impact
on the environment and strives
to reduce its carbon footprint,
minimise its use of non-recyclable
matter, and observe the very
highest standards of laboratory
and manufacturing practice to
avoid any risk of contamination,
leakage, or pollution.
Did You Know?
Kazia’s head office, at Barangaroo
in Sydney, Australia, is located in
the International Towers complex,
which is 100% carbon neutral and
the first location globally to receive
a 100% climate resilience score from
GRESB, the leading ESG benchmark
for real assets. It is also holds a
six star GreenStar rating, which
is the highest rating attainable.
Kazia recognises the enormous
impact that a cancer diagnosis
can have for patients and their
families. We work closely with
advocacy organisations and not-
for-profit groups to help inform
the community about the disease
areas we work in. We are attentive
to the need for diversity in clinical
trial recruitment, and we work
hard to ensure that our medicines
eventually become accessible to
the widest range of patients.
Did You Know?
Although clinical trial participation
is always the preferred way to
access experimental therapies, we
recognise that it is not an option
for every patient. For some years,
Kazia has run a ‘compassionate
use’ program, which can in rare
cases make our drugs available to
patients outside of clinical trials. To
date, more than thirty patients in six
countries have received paxalisib
on a compassionate use basis.
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OUR COLLABORATORS
WORKING WITH THE BEST
Kazia is privileged to work with cancer researchers around the globe
who share our passion for good science and our commitment to
patients. We would like to recognise two of these researchers who have
had an important impact on some of our clinical trials this past year.
DR HOWARD FINE
Dr Howard Fine is the founding
Director of the Brain Tumor
Center at New York-Presbyterian
Weill Cornell Medical Center
and Co-Director of the Rhodes
Glioblastoma Center, Weill Cornell
Medicine, Columbia Medical
Center and NewYork Presbyterian
Hospital. He is also Professor
of Neurology and Chief of the
Division of Neuro-Oncology in
the Department of Neurology.
Dr Fine received his medical
degree at the Mount Sinai School
of Medicine in New York City,
completed an internship and
residency in Internal Medicine at
the University of Pennsylvania in
Philadelphia, and a fellowship in
Medical Oncology at the Dana-
Farber Cancer Institute and
Harvard Medical School in Boston.
Dr Fine founded and Directed
the Dana-Farber Cancer Institute
Center for Neuro-Oncology at
Harvard Medical School, and the
Neuro-Oncology Branch, at the
National Institutes of Health.
In a career spanning more than
30 years of experience in clinical
practice as well as laboratory
and clinical research, Dr Fine
has cared for nearly 20,000
patients with brain and spinal
cord tumors, has conducted over
100 clinical trials, published over
250 papers and book chapters
on brain tumours, and has run a
continuously operating laboratory
devoted to a better understanding
of and better therapies for brain
tumors for over two decades.
Dr Fine is the lead investigator on
a study of paxalisib in combination
with ketogenesis for the treatment
of glioblastoma. The study is
based on the hypothesis that
a low insulin state will enhance
the efficacy of PI3K inhibitors,
the class of medicines to which
paxalisib belongs, and the best
way to minimise insulin levels is to
observe a ketogenic diet. Dr Fine’s
study also co-administers a drug
named metformin, which serves
to further lower insulin levels. The
study commenced recruitment
in Q1 CY2022, and initial data
is expected during CY2023.
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Dr Gomez Roca is an active
member of ESMO, ASCO and
AACR. In addition, he has
contributed to more than 60
peer-reviewed publications
including publications as
first or second author in the
Journal of Clinical Oncology
and Annals of Oncology. He
currently serves as Chair of the
Membership Committee (2022-
2023) of ESMO, and he is a
member of the ESMO Council
and the ESMO-Magnitude of
Clinical Benefit Scale Working
Group. He also leads the Patient
Advocacy Group at the Société
Française d’Immuno-Thérapie
du Cancer (FITC) since 2019.
Dr Gomez-Roca is the lead
investigator in Kazia’s phase I
study of EVT801 in patients with
advanced solid tumours. The
study commenced recruitment
in Q4 CY2021 and is currently
underway at two hospitals in
France. Initial data is expected
within 12-18 months.
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DR CARLOS GOMEZ-ROCA
Dr Carlos Gomez-Roca is Co-
Chair of the Clinical Research
Unit at IUCT-Oncopole in
Toulouse, France, and leader
in the Early Phase Unit with a
focus on targeted therapies
and immuno-oncology. His
main research interests are
early clinical development,
phase I trials across solid
tumours, innovative methods
of evaluation of novel drugs’
clinical activity, personalised
medicine and mechanisms
of toxicities of new targeted
agents and immunotherapies.
Dr Gomez-Roca completed
his medical training in 2000
at the University of Buenos
Aires and trained as internal
medicine specialist at Instituto
Universitario CEMIC at Buenos
Aires (Argentina) and obtained
his degree with honours in 2005.
He continued his training in
Medical Oncology and obtained
his diploma at Paris-Sud Medical
School (France) in 2007 and
completed his Master in Oncology
in 2008 at the same university.
He is a member of Professor
Maha Ayyoub’s laboratory,
T2i (anti-tumor immunity and
immunotherapy), where he is
involved with research into the
complexity of microenvironment
interactions between the
primary tumour and metastases
as part of his PhD.
ANNUAL REPORT 2022
FINANCIAL REPORTS
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Kazia Theraputics Limited Annual Report 2022
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CONTENTS
Director’s Report
Auditor’s independent declaration
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
21
38
39
40
41
43
44
75
76
80
iii
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 29 August 2022.
The directors have the power to amend and reissue the financial statements.
20
DIRECTORS’ REPORT 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 2022.
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 $24,647,815 (30 June 2021: $8,421,960).
The attached financial statements detail the performance and financial position of the consolidated entity for the year
ended 30 June 2022.
Cash resources
At 30 June 2022, the consolidated entity had total funds, comprising cash at bank and on hand of $7,361,112 the majority of
which is held in US dollars. Total current assets at year-end stand at $7,608,240.
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 identify no material impact from the ongoing COVID-19 pandemic to its operations. Given the evolution
of the pandemic, the directors will hereafter discontinue routine updates on this topic and will notify the market of
COVID-related impact only on an as needed basis.
Kazia Therapeutics Limited Research and Development Overview
The company is an oncology-focused biotechnology company that has a portfolio of development candidates, diversified
across several distinct technologies, with the potential to yield first-in-class and best-in-class agents in a range of oncology
indications.
Our lead drug candidate is paxalisib (formerly GDC-0084), a small molecule, brain-penetrant inhibitor of the PI3K/Akt/
mTOR pathway. Paxalisib is a potent and selective inhibitor of all four isoforms of phosphoinositide-3-kinase (PI3K) and
a moderate inhibitor of the mammalian target of rapamycin (mTOR). The PI3K/Akt/mTOR signaling axis has been shown
to be dysregulated in approximately 85-90% of cases of glioblastoma per Cancer Genome Atlas, and is considered a
promising target in this disease. Paxalisib is involved in eight active clinical trials for various forms of brain cancer at varying
stages of development.
The company is also developing EVT801, a small molecule selective inhibitor of vascular endothelial growth factor receptor
3 (VEGFR3), which was licensed from Evotec SE in April 2021. Evotec has conducted an extensive program of preclinical
development. Preclinical data has demonstrated EVT801 to be active against a broad range of tumour types and has
provided compelling evidence of synergy with immune-oncology agents. A phase 1 study commenced recruitment in
November 2021.
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Kazia Theraputics Limited Annual Report 20222022 at a GlanceChairman’s LetterCEO’s ReportKey MilestonesPipeline ReviewESGFinancial Reports
Broad Clinical Program Ongoing
Sponsor
PAXALISIB
Phase
Indication
Registration
Global Coalition for Adaptive Research
II/III
Glioblastoma
Weill Cornell Medicine
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
EVT801
Kazia Therapeutics
Research and development report
II
II
II
II
II
I
I
I
Glioblastoma
(with ketogenesis)
Brain metastases
Breast cancer brain metastases
(with Herceptin)
NCT03970447
NCT05183204
NCT03994796
NCT03765983
Primary CNS Iymphoma
NCT04906096
DIPG (childhood brain cancer)
NCT05009992
DIPG
Brain metastases
(with radiotherapy)
NCT03696355
NCT04192981
Advanced solid tumours
NCT05114668
Paxalisib
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 Genentech Early Development
Paxalisib was developed by Genentech, Inc (South San Francisco, California). Genentech has 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. 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.
Paxalisib Worldwide Exclusive License and Intellectual Property
The company entered into a worldwide exclusive license for the asset in October 2016. Under the terms of the exclusive
license agreement with Genentech, Kazia has the right to develop and commercialise the drug in all indications. Genentech
is eligible to receive milestone income on commercialisation of the asset and royalties on net sales in any indication.
Genentech has no right to direct the development of paxalisib, no right of approval for Kazia to sub-license, and no right of
first refusal.
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.
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 Regulatory Activity
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.
In addition, paxalisib was granted ODD by the US FDA for AT/RT, a rare pediatric brain cancer in June 2022 and RPDD in
early July. 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 either of these indications.
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DIRECTORS’ REPORT Paxalisib Development in Glioblastoma
GBM AGILE International Pivotal Study
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 2022, five experimental agents are participating in GBM AGILE: Bayer’s regorafenib, Kazia’s paxalisib,
VAL-083, manufactured by Kintara Therapeutics, Biohaven’s troriluzole, and Vigeo Therapeutics’ VT1021. The study has
screened over 1,000 patients, and approximately fifty sites are engaged. The study opened to the paxalisib arm in Canada
in November 2021, in Switzerland in May 2022, and in France in June 2022. The study received IND approval to open in
China in December 2021, and work is ongoing as at 30 June 2022 to open sites in this country.
GBM AGILE is intended to serve as the registration study for paxalisib in glioblastoma. The study has been designed with
registrational intent, and FDA has indicated that it considers the study suitable for this purpose.
Post year, on August 1 2022, the company was advised by GCAR that the first stage of the paxalisib arm had completed
recruitment. The treatment arm did not meet pre-defined criteria for continuing to a second stage, and patients enrolled in
the first stage of the paxalisib arm will therefore continue on treatment as per protocol, and in follow-up, until completion
of the final analysis, which the company anticipates receiving in 2H CY2023, as previously disclosed. Given that completion
of recruitment has now occurred, the study will not open to the paxalisib arm in Germany or China. The company will
work with its licensing partner to determine the way forward in China, given that country’s general requirement for local
data to register a new pharmaceutical product. All company personnel continue to be blinded to efficacy and safety data
from the ongoing study, as required by regulatory authorities, and so the company remains unable to provide analysis or
interpretation of the study until follow-up is complete and final data is available.
Final Phase II Glioblastoma Data Presented at ASCO
The final data from the company’s phase II study of paxalisib in patients with newly diagnosed glioblastoma and
unmethylated MGMT status was presented at the American Society for Clinical Oncology (ASCO) annual meeting in June
2022. The poster presentation described an overall survival (OS) in the intent-to-treat (ITT) population of 15.7 months,
and a progression-free survival (PFS) of 8.6 months. These figures compare favourably with the corresponding figures of
12.7 months and 5.3 months which are associated with temozolomide, the existing FDA-approved standard of care, in this
patient group. The safety profile of paxalisib continues to appear highly favourable and tolerability was consistent with prior
clinical trial experience, with hyperglycaemia, mucositis, and rash among 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.
Phase II Study in Glioblastoma in Combination with Ketogenesis
In June 2021, the company entered into an agreement with the Joan & Stanford I Weill Medical College of Cornell
University in New York, NY, known generally as Weill Cornell Medicine, for an investigator-initiated phase II 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
content 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 is the Principal Investigator.
Paxalisib Development in Childhood Brain Cancers
Phase I Study in DIPG at St Jude Children’s Research Hospital
In February 2020, the company’s collaborators at St Jude Children’s Research Hospital in Memphis, TN completed
recruitment to a phase I investigator-initiated clinical study of paxalisib in diffuse intrinsic pontine glioma (DIPG), a
rare but highly-aggressive childhood brain cancer with no approved pharmacological treatments. The St Jude study
(NCT03696355) seeks to establish an MTD in the pediatric population before enrolling an expansion cohort to seek
definitive signals of efficacy. The St Jude study is primarily funded by the hospital, with support via a financial grant from
Kazia. In September 2019, the company announced that a pediatric MTD of 27 mg/m2 had been determined, which is
approximately comparable to the doses used in adult clinical studies. The investigators reported 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 2022, the study remains in survival follow-up.
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Kazia Theraputics Limited Annual Report 20222022 at a GlanceChairman’s LetterCEO’s ReportKey MilestonesPipeline ReviewESGFinancial Reports
Phase II Study in DIPG with the Pacific Pediatric Neuro-Oncology Consortium
In November 2021, an international phase II study sponsored by the Pacific Pediatric Neuro-Oncology Consortium (PNOC)
commenced recruitment. The study is designed to examine the combination of paxalisib with ONC201 (Chimerix, Inc), and
potentially other therapies in the future, for the treatment of DIPG and diffuse midline gliomas (DMGs). Recruitment remains
ongoing, with initial data anticipated in CY2023.
Preclinical Data in DIPG
The PNOC DIPG study is supported by preclinical data from an international consortium of scientists led by Associate
Professor Matt Dun at the Hunter Medical Research Institute at the University of Newcastle, Australia. Dr Dun’s work has
identified PI3K pathway activation as a primary resistance mechanism to ONC201 and has demonstrated synergistic
efficacy when the two drugs are combined in preclinical models of DIPG. This work was the subject of a poster presentation
at the annual International Symposium on Pediatric Neuro-Oncology (ISPNO) conference in Hamburg, Germany, in June
2022. Dr Dun also reported case studies of two patients who had received the combination through compassionate access
and who had demonstrated marked clinical improvement while on therapy.
Preclinical Data in AT/RT
At the American Association of Cancer Research (AACR) Annual Meeting in New Orleans, LA, in April 2022, Professor
Jeffrey Rubens and colleagues presented preclinical data describing the combination of paxalisib with two other
investigational cancer therapies for the treatment of atypical teratoid / rhabdoid tumours (AT/RT), a rate form of childhood
brain cancer. Dr Ruben’s team noted both single agent activity for paxalisib and synergy in combination with an HDAC
inhibitor and a MEK inhibitor.
Paxalisib Development in Brain Metastases
Phase II Study in HER2+ Breast Cancer Brain Metastases at Dana Farber Cancer Institute
A phase II investigator-initiated clinical study is ongoing at Dana-Farber Cancer Institute in Boston, MA, exploring paxalisib
in combination with Herceptin (trastuzumab) for HER2+ breast cancer brain metastases, a population for which there are
no approved pharmacological treatments (NCT03765983). The Dana-Farber study is primarily funded by the hospital, with
support via a financial grant from Kazia. Initial interim efficacy data is expected in 2H CY2022.
Phase II Genomically Guided Study in Brain Metastases
Paxalisib is one of the three pharmacological agents being investigated in a multi-drug, genomically-guided clinical study
in brain metastases (NCT03994796), sponsored by the Alliance for Clinical Trials in Oncology and substantially funded by
the US National Cancer Institute. The study assigns patients to either paxalisib, abemaciclib (Eli Lilly & Co), or entrectinib
(Genentech, Inc) on the basis of their tumour’s genetic characteristics. Each drug is investigated in parallel in three patient
cohorts: breast cancer, lung cancer, and other tumours. In June 2022, Kazia was informed that paxalisib had graduated to
an expansion stage of the study in breast cancer, with work ongoing in the other two cohorts.
Phase I Study in Brain Metastases in Combination with Whole Brain Radiotherapy
Paxalisib is the subject of a phase I study in combination with whole brain radiotherapy for the treatment of brain and
leptomeningeal metastases, sponsored by Memorial Sloan Kettering Cancer Center in New York, NY (NCT04192981).
Whole brain radiotherapy (WBRT) is a ubiquitous therapeutic modality in this patient population, with an estimated
200,000 patients receiving treatment each year in the United States alone. The first stage of the study comprises
approximately 12 patients and is designed to determine the maximum tolerated dose of paxalisib when combined with
WBRT. On the basis of promising results, the study has the potential to open a second stage which will recruit a further
12 patients.
Post period, on August 5 2022, the company announced an upcoming oral presentation of promising new data from an
ongoing phase 1 clinical trial of paxalisib in combination with radiotherapy for the treatment of brain metastases, sponsored
by Memorial Sloan Kettering Cancer Center in New York, NY . Interim data from the first stage of the study reports that
all 9 evaluable patients experienced complete or partial response, representing an overall response rate (ORR) of 100%,
according to RANO-BM criteria. The patients comprised a range of primary tumours, with breast cancer the most common,
representing one third of patients. The trial is designed in two stages: an initial exploratory stage and a confirmatory
expansion stage. Recruitment to the expansion stage has already commenced, with the objective of recruiting an additional
12 patients.
Paxalisib Development in Primary CNS Lymphoma (PCNSL)
Phase II Study in PCNSL at Dana-Farber Cancer Institute
A phase II study is ongoing at Dana Farber Cancer Institute in Boston, MA, to investigate paxalisib as monotherapy
in patients with PCNSL (NCT04906096). Four of the five PI3K inhibitors that have received FDA approval have been
indicated for lymphoma outside the CNS, and so this may be considered a high potential indication for paxalisib. The study
commenced recruitment in 2021 and remains ongoing as at 30 June 2022.
24
DIRECTORS’ REPORT EVT801
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 broad range of animal models. The drug was licensed to Kazia in April 2021.
EVT801 Worldwide Exclusive License and Intellectual Property
The company entered into an exclusive worldwide license agreement with Evotec SE in April 2021, under which Kazia has
the right to develop and commercialise the asset in all indications. Evotec stands to receive up to €301 million in contingent
milestone payments, and a royalty on net sales. Evotec has no right to direct the development of EVT801, no right of
approval for Kazia to sub-license, and no right of first refusal. However, in the event of sub-licensing, Kazia may under
certain circumstances share a portion of receipts from a sub-licensee with Evotec.
EVT801 is protected by granted or pending composition-of-matter patents in all key territories, with exclusivity generally
through to the early 2030s.
Phase I Study in Advanced Solid Tumours
In November 2021, Kazia commenced recruitment to a phase I, first-in-human, multiple-ascending-dose, clinical trial of
EVT801 in patients with advanced solid tumours (NCT05114668). The trial is being performed at two hospitals in France:
Oncopole in Toulouse and Centre Léon Beraud in Lyons. In addition to the primary endpoints of safety and tolerability, the
study is designed to include a rich array of biomarkers that will allow a deeper understanding of the drug’s pharmacology
and may inform design of subsequent studies. As at 30 June 2022, the study remains ongoing, with initial data anticipated
in 1H CY2023.
Subsequent events
GBM AGILE Pivotal Study
On 1 August 2022, the company was advised by the Global Coalition for Adaptive Research (GCAR) that the first stage
of the paxalisib arm in the company’s GBM AGILE pivotal study had completed recruitment. The treatment arm did not
meet pre-defined criteria for continuing to a second stage, and patients enrolled in the first stage of the paxalisib arm will
therefore continue on treatment as per protocol, and in follow-up, until completion of the final analysis, which the company
anticipates receiving in 2H CY2023, as previously disclosed. Given that completion of recruitment has now occurred, the
study will not open to the paxalisib arm in Germany or China. The company will work with its licensing partner to determine
the way forward in China, given that country’s general requirement for local data to register a new pharmaceutical product.
All company personnel continue to be blinded to efficacy and safety data from the ongoing study, as required by regulatory
authorities, and so the company remains unable to provide analysis or interpretation of the study until follow-up is complete
and final data is available.
At-The-Market (ATM) Facility
In May 2022, the company established the NASDAQ based ATM financing facility with Oppenheimer and Company. During
the months of July and August through 11 August 2022, the company raised total proceeds for the period of US$2.53million
(approximately AU$3.67million). The weighted average share price from ATM financings is AU$0.50 cents per ordinary
share, increasing the total shares outstanding to 149,636,656 and materially expanding the company’s runway with minimal
dilution to existing shareholders. On the most active day during this period, the ATM accounted for 5% of the day’s trading
volume, implying minimal price impact as a result of its use. Of note, shares issued under the ATM are issued at the spot
market price, with no discount, no accompanying warrants or options, and with banking fees approximately half of those
associated with more traditional financing methods.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect
the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future
financial years.
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:
•
•
•
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;
and
• Final data will be reported from the phase I study of paxalisib in children with diffuse intrinsic pontine glioma (DIPG).
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Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
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
(NASDAQ:SLN), ReNeuron Group plc (LSE:RENE) and BiVitctriX Therapeutics
plc (LSE:BVX) as well as unlisted Biomer Technology Limited. 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 £500 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) and
BiVictriX Therapeutics plc (LSE:BVX)
Redx Pharma plc (LSE:REDX), e-Therapeutics plc (LSE:ETX) and Palla Pharma
Limited (ASX:PAL)
Member of Remuneration and Nomination Committee, Member of Audit, Risk
and Governance Committee.
1,075,001 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.
419,862 ordinary shares
400,000 options with exercise price of $1.132 expiring 9 November 2024
Contractual rights to shares:
None
26
DIRECTORS’ REPORT 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 with the chartered accounting firm Watkins Coffey Martin which recently
merged with Charternet Chartered Accountants and Steven is a consultant
to that group. 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.
484,265 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:
500,000 ordinary shares
1,200,000 options with exercise price of $0.4925 expiring 13 November 2023
800,000 options with exercise price of $0.8812 expiring 9 November 2024
1,000,000 options with exercise price of $1.69 expiring 16 November 2025
1,500,000 options with exercise price of $2.24 expiring 16 November 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).
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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 2022, 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
11
11
11
11
11
11
11
11
3
3
3
-
3
3
3
-
3
3
3
-
3
3
3
-
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.
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 did not change during the financial year ended 30 June 2022 and no options were awarded.
28
DIRECTORS’ REPORT 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 2022.
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 2021.
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 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 10 November 2021.
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 may include a premium. 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 4,800,000 share options under the ESOP during the financial year ended 30 June 2022, of
which 4,300,000 were issued to KMP.
Any change to the ESOP will require approval by shareholders.
Use of remuneration consultants
During the year ended 30 June 2022 the consolidated entity did not engage remuneration consultants to assist with the
determination of remuneration levels.
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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:
• Kate Hill - Company Secretary
•
John Friend - Chief Medical Officer - from 15 November 2021
• Gabrielle Heaton - Director Finance & Administration - to 2 January 2022
• Karen Krumeich - Chief Financial Officer - from 3 January 2022
Changes within the reporting period:
John Friend was appointed as Chief Medical Officer and commenced employment on 15 November 2021.
Karen Krumeich was appointed as Chief Financial Officer and commenced employment on 3 January 2022. Consequently
Gabrielle Heaton is no longer considered to be key management personnel and therefore only remuneration from 1 July
2021 to 2 January 2022 is shown below.
Short-term benefits
Post-
employment
benefits
Share-
based
payments
Movements
in accrued
leave
Non-
monetary
$
Movements
in long
service
leave
Non-
monetary
$
Healthcare
&
Insurance
Cash
$
Salary
& fees
Cash
$
Bonus
Cash
$
Super-
annuation
$
Options
Equity-
settled
$
Total
$
2022
Non-Executive
Directors:
I Ross*
B Carmine
S Coffey
Executive
Directors:
150,546
85,000
85,000
-
-
-
-
-
-
-
-
-
J Garner
530,500 325,000
35,905
12,074
Other Key
Management
Personnel:
-
-
-
-
-
46,159
196,705
8,500
8,500
46,159
139,659
46,159
139,659
85,550
1,015,198 2,004,227
J Friend**
430,279 201,978
K Krumeich***
277,972
-
G Heaton
104,000 30,000
K Hill
195,501
21,000
34,336
15,272
2,337
-
-
-
26,819
6,307
-
-
250,194
943,606
100,331
399,882
19,262
-
-
-
13,400
27,910
196,909
-
27,820
244,321
1,858,798 577,978
87,850
31,336
33,126
115,950
1,559,930
4,264,968
*
**
***
Salary paid in UK pounds, but disclosed in Australian dollars using conversion rate of 0.5447
Salary paid in USD, but disclosed in Australian dollars using conversion rate of 0.7192
Salary paid in USD, but disclosed in Australian dollars using conversion rate of 0.7195
30
DIRECTORS’ REPORT 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
119,067
234,042
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
The relative proportions of remuneration that are linked to performance and those that are at risk
Name
2022
2021
2022
2021
2022
2021
Fixed remuneration
At risk - STI
At risk - LTI
Non-Executive Directors:
I Ross
B Carmine
S Coffey
Executive Directors:
J Garner
Other Key Management
Personnel:
J Friend
K Krumeich
G Heaton
K Hill
77%
67%
67%
51%
40%
40%
-
-
-
7%
10%
10%
23%
33%
33%
42%
50%
50%
33%
59%
16%
21%
51%
20%
52%
75%
71%
80%
-
-
85%
72%
21%
-
15%
9%
-
-
9%
18%
27%
25%
14%
11%
-
-
6%
10%
Consequences of performance on shareholder wealth
Shareholder wealth in a company engaged in drug development is best delivered through retention of KMPs with an expert
level of knowledge of our drug candidates. Non performance vesting options best deliver this value to investors, through
driving an increased retention of KMPs. 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.
June 2016
June 2017
June 2018
June 2019 June 2020
June 2021
June 2022
Enterprise Value
6,451,958
8,704,373
13,496,157
15,715,234
34,751,206 145,349,234
77,973,444
Total bonuses paid
to KMP
Number of bonus
participants
Share options
issued to KMP
Number of KMP
granted options
38,967
191,135
4
5
-
-
125,400
212,500
356,400
577,978
3
3
6
4
8,800,000
450,000
362,000
100,000
1,300,000
2,100,000
4,300,000
3
2
2
2
3
6
5
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Voting and comments made at the consolidated entity’s last Annual General Meeting
The consolidated entity received 92.29% of “yes” votes on its Remuneration Report for the financial year ending 30 June
2021. 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 2022, is $543,000 including an allowance
for healthcare benefits.
Karen Krumeich
Chief Financial Officer
Agreement commenced:
3 January 2022
Term of agreement:
Full time employment
Details:
Name:
Title:
Base salary for the year ending 30 June 2022 of USD400,000 and health care and
insurance benefits, to be reviewed annually by the Remuneration and Nomination
Committee. Karen's employment with the consolidated entity is at-will, and if
terminated, it must pay any outstanding entitlements due to her.
John Friend
Chief Medical Officer
Agreement commenced:
15 November 2021
Term of agreement:
Full-time employment
Details:
Base salary for the year ending 30 June 2022 of USD492,000, a sign on bonus of
USD120,000 paid after 60 days commencement and healthcare and insurance
benefits to be reviewed annually by the Remuneration and Nomination Committee.
John's employment with the consolidated entity is at-will, and if terminated, it must
pay any outstanding entitlements due to him.
32
DIRECTORS’ REPORT Name:
Title:
Gabrielle Heaton
Director of Finance and Administration
Agreement commenced:
13 March 2017
Term of agreement:
Full time employment
Details:
Name:
Title:
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 2022, is $218,000.
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 $5,950
for a one-day week, applied from 1 June 2022. 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 16 November 2021 were to James Garner (1,000,000 options with an exercise price set at a premium
to the volume weighted average (VWAP) of shares during the 5 trading days immediately prior to the issue date with a value
of $850,000 and 1,500,000 options with an exercise price set at a premium to the volume weighted average (VWAP) of
shares during the 5 trading days immediately prior to the issue date with a value of $1,125,000), and John Friend (800,000
options with an exercise price set at the volume weighted average (VWAP) of shares during the 5 trading days immediately
prior to the issue date with a value of $776,000).
The options issued on 1 February 2022 were to Kate Hill (100,000 options with an exercise price set at the volume weighted
average (VWAP) of shares during the 5 trading days immediately prior to the issue date with a value of $59,000), Gabrielle
Heaton (100,000 options with an exercise price set at the volume weighted average (VWAP) of shares during the 5 trading
days immediately prior to the issue date with a value of $59,000) and Karen Krumeich (800,000 options with an exercise
price set at the volume weighted average (VWAP) of shares during the 5 trading days immediately prior to the issue date
with a value of $472,000). 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.
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The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and other Key
Management Personnel in this financial year or future reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
16 November 2021
16 November 2021
16 November 2025
16 November 2021
16 November 2022
16 November 2025
16 November 2021
16 November 2023
16 November 2025
16 November 2021
16 November 2024
16 November 2025
16 November 2021
16 November 2022
16 November 2025
16 November 2021
16 November 2023
16 November 2025
16 November 2021
16 November 2024
16 November 2025
16 November 2021
16 November 2022
16 November 2026
16 November 2021
16 November 2023
16 November 2026
16 November 2021
16 November 2024
16 November 2026
16 November 2021
16 November 2025
16 November 2026
1 February 2022
1 February 2023
1 February 2027
1 February 2022
1 February 2024
1 February 2027
1 February 2022
1 February 2025
1 February 2027
1 February 2022
1 February 2026
1 February 2027
Exercise
Price
$1.6900
$1.6900
$1.6900
$1.6900
$2.2400
$2.2400
$2.2400
$1.5600
$1.5600
$1.5600
$1.5600
$0.9400
$0.9400
$0.9400
$0.9400
Fair value
per option
at grant date
$0.850
$0.850
$0.850
$0.850
$0.750
$0.750
$0.750
$0.970
$0.970
$0.970
$0.970
$0.590
$0.590
$0.590
$0.590
Additional disclosures relating to key management personnel
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:
Balance at
the start of
the year
Granted as
remuneration
Exercised
2,000,000
2,500,000
-
125,000
195,500
400,000
400,000
400,000
100,000
100,000
-
-
-
-
-
800,000
800,000
(25,000)
-
-
-
-
-
-
Disposed
(for KMP
reporting
purposes
only)
Balance at
the end of
the year
-
-
4,500,000
200,000
(295,500)
-
-
-
-
-
-
400,000
400,000
400,000
800,000
800,000
Options over ordinary shares
J Garner*
K Hill*
G Heaton**
Iain Ross*
Bryce Carmine*
Steven Coffey*
John Friend*
Karen Krumeich*
3,520,500
4,300,000
(25,000)
(295,500)
7,500,000
*
**
Options issued under the Employee Share Option Plan. Unvested options are forfeited upon cessation of employment with the Company.
Options issued under the Employee Share Option Plan. Unvested options are forfeited upon cessation of employment with the Company.
Disposal for KMP reporting purposes only. G Heaton still holds 295,500 options.
During the year, 25,000 options were exercised by K Hill.
34
DIRECTORS’ REPORT 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
372,693
434,265
1,000,001
430,000
295,000
113,168
2,645,127
47,169
50,000
75,000
70,000
-
-
242,169
Disposed*
(For KMP
reporting
purposes
only)
-
-
-
-
-
(113,168)
(113,168)
Exercise of
options
Balance at
the end of
the year
-
-
-
-
25,000
-
419,862
484,265
1,075,001
500,000
320,000
-
25,000
2,799,128
*
G Heaton still holds 113,168 shares. Disposal is for the purposes of KMP reporting only.
Options over ordinary shares - vested and unvested
J Garner
K Hill
I Ross
B Carmine
S Coffey
J Friend
K Krumeich
Vested and
exercisable
Unvested
Balance at
the end of
the year
1,850,000
2,650,000
4,500,000
37,500
300,000
300,000
300,000
-
-
162,500
100,000
100,000
100,000
800,000
800,000
200,000
400,000
400,000
400,000
800,000
800,000
2,787,500
4,712,500
7,500,000
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.
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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
7 August 2017
5 February 2018
13 November 2019
13 January 2020
9 November 2020
9 November 2020
4 January 2021
9 September 2021
16 November 2021
16 November 2021
16 November 2021
1 February 2022
24 May 2022
Expiry date
7 August 2022
5 February 2023
13 November 2023
13 January 2025
9 November 2024
9 November 2024
4 January 2025
21 June 2026
16 November 2025
16 November 2025
16 November 2026
1 February 2027
24 May 2027
Exercise
Price
$0.6700
$0.7800
$0.4930
$0.8810
$0.8810
$1.1320
$1.6900
$1.3700
$1.6900
$2.2400
$1.5600
$0.9400
$0.7800
Closing
Balance
15,500
240,000
1,200,000
200,000
800,000
1,200,000
200,000
100,000
1,000,000
1,500,000
800,000
1,300,000
100,000
8,655,500
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.
The following ordinary shares of Kazia Therapeutics Limited were issued during the year ended 30 June 2022 and up to the
date of this report on the exercise of options granted:
25,000 shares with an exercise price of 0.67 cents with an option grant date of 7 August 2017.
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.
36
DIRECTORS’ REPORT Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 25 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 25 to the financial statements do not compromise the
external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
•
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards. All services have been pre-approved
by the Audit, Risk and Governance Committee.
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
29 August 2022
Sydney
Dr James Garner
Managing Director, Chief Executive Officer
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AUDITOR’S INDEPENDENT DECLARATION
38
AUDITOR’S INDEPENDENCE DECLARATIONGrant Thornton Audit Pty Ltd Level 17 383 Kent Street Sydney NSW 2000 Locked Bag Q800 Queen Victoria Building NSW 1230 T +61 2 8297 2400 #7496575v2w www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘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 Limited 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 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. 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 2022, I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b no contraventions of any applicable code of professional conduct in relation to the audit. Grant Thornton Audit Pty Ltd Chartered Accountants M Aziz Partner – Audit & Assurance Sydney, 29 August 2022 STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2022
Revenue
Other income
Finance income
Expenses
Research and development expense
General and administrative expense
Loss on revaluation of contingent consideration
Commercialisation expense
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
3
8
Consolidated
2022
$
2021
$
-
15,182,711
24,956
2,094
2,192
42,240
(20,252,152)
(14,541,366)
(4,511,463)
(7,021,823)
(152,287)
(2,570,261)
(127,043)
-
(25,015,895)
(8,906,307)
368,080
484,347
(24,647,815)
(8,421,960)
34,615
34,615
1,868
1,868
(24,613,200)
(8,420,092)
Cents
(18.61)
(18.61)
Cents
(7.16)
(7.16)
32
32
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
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FINANCIAL REPORT
STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Intangibles
Trade & other receivables - non-current
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
2022
$
2021
$
9
10
12
13
11
14
15
16
17
15
16
18
19
20
7,361,112
27,586,760
90,975
156,153
84,362
1,719,696
7,608,240
29,390,818
20,049,652
22,002,593
7,300,870
6,693,628
27,350,522
28,696,221
34,958,762
58,087,039
3,760,120
4,932,660
166,196
758,840
229,337
3,164,557
4,685,156
8,326,554
2,560,361
2,928,441
319,017
54,684
8,755,941
8,926,641
11,635,319
11,909,766
16,320,475
20,236,320
18,638,287
37,850,719
84,480,249
80,290,062
-
464,000
2,411,665
1,300,566
(68,253,627)
(44,203,909)
18,638,287
37,850,719
The above statement of financial position should be read in conjunction with the accompanying notes
40
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2022
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 18)
Share issue costs (note 18)
32,908,949
(1,673,388)
Transactions with owners in their
capacity as owners:
Issue of shares on exercise of
options
Share based payment (note 33)
Expired options
273,287
-
-
-
-
-
-
-
-
-
-
-
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)
80,353
273,287
636,383
-
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
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FINANCIAL REPORT
STATEMENT OF CHANGES IN EQUITY CONTINUED
For the year ended 30 June 2022
Consolidated
Contributed
equity
$
Other
contributed
equity
$
Foreign
currency
translation
reserve
$
Share
based
payments
reserve
$
Accumulated
losses Total equity
$
$
Balance at 1 July 2021
80,290,062
464,000
(453,320)
1,753,886 (44,203,909)
37,850,719
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 18)
Share issue costs (note 18)
4,202,222
(492,735)
Transactions with owners in their
capacity as owners:
Immaterial reclassification
Issue of shares on exercise of
options
Cancellation of convertible note
(note 9)
Share based payment (note 33)
Expired options
-
16,700
-
-
Balance at 30 June 2022
84,480,249
464,000
(464,000)
-
-
-
-
-
-
-
-
-
-
-
34,615
34,615
-
-
(433,333)
-
-
-
-
-
-
(24,647,815)
(24,647,815)
-
34,615
(24,647,815)
(24,613,200)
-
-
4,202,222
(492,735)
433,333
-
-
-
-
-
(5,622)
5,622
16,700
-
1,674,581
-
-
-
1,674,581
(159,142)
159,142
-
(852,038)
3,263,703 (68,253,627)
18,638,287
The above statement of changes in equity should be read in conjunction with the accompanying notes
42
STATEMENT OF CASH FLOWS
For the year ended 30 June 2022
Cash flows from operating activities
Receipts from customers*
Payments to suppliers (inclusive of GST)
R&D cash rebate
Government grant
Bad debt recovery
Net cash used in operating activities
Cash flows from investing activities
Payment of milestone relating to contingent consideration
Net cash used in investing activities
Cash flows from financing activities
Consolidated
2022
$
2021
$
Note
-
13,739,254
(22,787,619)
(23,868,218)
-
1,018,448
10,000
14,956
-
-
(22,762,663)
(9,110,516)
(2,364,732)
(2,364,732)
-
-
31
16
Proceeds from issue of shares - net of issuance costs
18
3,726,187
28,108,848
Net cash from financing activities
Net increase/(decrease) 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
3,726,187
28,108,848
(21,401,208)
18,998,332
27,586,760
8,764,044
1,175,560
(175,616)
Cash and cash equivalents at the end of the financial year
9
7,361,112
27,586,760
*
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
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2022 at a GlanceChairman’s LetterCEO’s ReportKey MilestonesPipeline ReviewESGFinancial ReportsKazia Theraputics Limited Annual Report 2022
NOTES TO THE
FINANCIAL STATEMENTS
30 June 2022
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 29 August 2022.
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 2022.
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 $24,647,815 (2021: $8,421,960), was in a net current asset
position of $2,923,084 (2021: net current asset position of $21,064,264) and had net cash outflows from operating
activities of $22,762,663 (2021: $9,110,516) for the year ended 30 June 2022.
As at 30 June 2022 the consolidated entity had cash in hand and at bank of $7,361,112.
The financial statements have been prepared on a going concern basis, which contemplates continuity of normal
activities and realisation of assets and settlement of liabilities in the normal course of business. As is often the case with
drug development companies, the ability of the consolidated entity to continue its development activities as a going
concern is dependent upon it deriving sufficient cash from investors, from licensing and partnering activities, and from
other sources of revenue such as grant funding.
The directors have considered the cash flow forecasts and the funding requirements of the business and continue to
explore grant funding, licensing opportunities and equity investment opportunities in the Company. The directors do not
foresee any other impacts of COVID-19 on the Company’s ability to pursue its objectives.
An ‘at-the-market’ equity program (ATM) with Oppenheimer & Co. Inc. (Oppenheimer), as sales agent was established
in May 2022. Under the ATM, Kazia may offer and sell via Oppenheimer up to US$ 35 million of its ordinary shares, in
the form of American Depository Shares (ADSs), with each ADS representing ten ordinary shares. Kazia entered into an
Equity Distribution Agreement, dated as of 22 April 2022 (the Sales Agreement), with Oppenheimer, who will act as sales
agent.
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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NOTES TO THE FINANCIAL STATEMENTS30 June 2022FINANCIAL REPORT 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.
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 29.
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 2022 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.
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Kazia Theraputics Limited Annual Report 20222022 at a GlanceChairman’s LetterCEO’s ReportKey MilestonesPipeline ReviewESGFinancial Reports
Note 2. Significant accounting policies continued
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.
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; and
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.
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FINANCIAL REPORTNOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022 Note 2. Significant accounting policies continued
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 recognise 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.
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.
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.
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Kazia Theraputics Limited Annual Report 20222022 at a GlanceChairman’s LetterCEO’s ReportKey MilestonesPipeline ReviewESGFinancial Reports
Note 2. Significant accounting policies continued
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 recognised
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.
Grant Income
Grants from governments are recognised at their fair value when there is a reasonable assurance that the grant will be
received and the Company will comply with all attached conditions. Government grants relating to operating costs are
recognised in the Statements of Comprehensive Income as grant income. A New South Wales Export Development
Grant was received in the current financial year.
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.
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FINANCIAL REPORTNOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022 Note 2. Significant accounting policies continued
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.
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. Management believes that historical tax losses are not
expected to be available for offset against the deferred tax liability at 30 June 2022.
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.
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Note 2. Significant accounting policies continued
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
Separately acquired intangible assets are shown at historical cost. Intangible assets acquired as part of a business
combination are recognised at fair value at the acquisition date. They have a finite useful life and are subsequently carried
at cost less accumulated amoritsation and impairment losses. 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.
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.
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FINANCIAL REPORTNOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022 Note 2. Significant accounting policies continued
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 value of the instruments is measured by reference to the fair value of the underlying instruments on grant date, as
required by AASB2 Share-Based Payments. 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.
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.
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Note 2. Significant accounting policies continued
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.
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FINANCIAL REPORTNOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022 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.
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.
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Note 3. Critical accounting judgements, estimates and assumptions continued
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.
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.
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FINANCIAL REPORTNOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022 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
Consolidated
2022
$
2021
$
-
15,182,711
Consolidated
2022
$
2021
$
-
-
-
-
10,006,031
5,176,680
15,182,711
15,182,711
During fiscal year 2021, the company recognized a total of US$11 million in accordance with the terms of the company’s
license agreements with Oasmia Pharmaceutical AB and Simcere Pharmaceutical Group LTD. The terms of the license
agreements are described in the following paragraphs.
License Agreement with Oasmia Pharmaceutical AB
In March 2021, the company entered into an exclusive worldwide license agreement with Oasmia Pharmaceutical AB, an
innovation -focused specialty pharmaceutical company, for Cantrixil (TRX-E-002-1), a clinical stage drug candidate for
the treatment of ovarian cancer. During fiscal 2021, Oasmia made an upfront payment of US$4 million with contingent
milestones of up to US$42 million and double-digit royalties on commercial sales.
License Agreement with Simcere Pharmaceutical Group Ltd.
In March 2021, the company entered into a licensing agreement with Simcere Pharmaceutical Group LTD. to develop
and commercialise the company’s investigational drug candidate, paxalisib, in Greater China. Under the terms of the
agreement, Simcere assumed responsibility for the development, registration and commercialization of paxalisib in
Greater China (a territory that includes Mainland China, Hong Kong, Macau and Taiwan). The company received an
upfront payment of US$11 million comprising US$7 million in cash and a US$4 million equity investment, priced at a
20% premium to recent trading. The company will also receive contingent milestone payments of up to US$281 million
for glioblastoma, with further milestones payable for indications beyond glioblastoma. Simcere will additionally pay
mid-teen percentage royalties on commercial sales.
During fiscal year 2022, the company did not recognise revenue from either license agreements described in the above
paragraphs in accordance with the terms of the agreements and revenue recognition policy in accordance with note 2.
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Note 6. Other income
Payroll tax rebate
Subsidies and grants
Bad debt recovery
Other income
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Research and development
EVT-801 program costs
Cantrixil program costs
Paxalisib program costs
Employee benefits expense
- salaries & wages and staff benefits
- superannuation
- share based payment
Consolidated
2022
$
-
10,000
14,956
24,956
2021
$
2,192
-
-
2,192
Consolidated
2022
$
2021
$
2,519,673
1,073,253
11,614
429,441
13,713,454
11,403,531
1,664,572
25,198
364,700
336,114
25,720
7,998
Total research & development (excluding amortisation)
18,299,211
13,276,057
Amortisation
Paxalisib licensing agreement
Evotech licensing agreement
Total amortisation
Total research and development
Net foreign exchange loss
Net foreign exchange loss
Leases
Expense relating to short term leases
Employee benefits expense G&A
- salaries & wages and staff benefits
- superannuation
- share based payment
Total employee benefits expense G&A
Other expenses
Chinese With-Holding Tax incurred on license transaction
Chinese Value Added Tax incurred on license transaction
1,084,351
1,084,344
868,590
180,965
1,952,941
1,265,309
20,252,152
14,541,366
-
430,273
73,138
92,552
1,674,344
1,011,338
129,241
1,309,880
3,113,465
-
-
-
112,290
551,530
1,675,158
931,099
537,578
1,468,677
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FINANCIAL REPORTNOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022 Note 8. Income tax (benefit)/expense
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
Tax at the statutory tax rate of 25% (2021: 26%)
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
Adjustment recognised for prior periods
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
2022
$
2021
$
(25,015,895)
(8,906,307)
(6,253,974)
(2,315,640)
488,235
418,645
38,072
347,960
175,005
706,822
(5,309,022)
(1,085,853)
16,265
(113,258)
5,037,935
-
(186,152)
787,658
(368,080)
(484,347)
Consolidated
2022
$
2021
$
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised-Australia
96,069,419
70,896,259
Potential tax benefit @ 25% (2021: 26%)
24,017,355
17,724,065
Unused tax losses for which no deferred tax asset has been recognised-US
2,379,604
2,038,587
Potential tax benefit at statutory tax rates @ 21%-US
499,717
428,103
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
Other receivables
Deposits held
Consolidated
2022
$
2021
$
7,361,112
21,086,760
-
6,500,000
7,361,112
27,586,760
Consolidated
2022
$
51,353
39,622
90,975
2021
$
76,675
7,687
84,362
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Note 11. Trade & other receivables - non-current
Non-current assets
GBM Agile deposit
Corporate credit card deposit
Consolidated
2022
$
2021
$
7,257,947
6,650,705
42,923
42,923
7,300,870
6,693,628
The GBM Agile deposit was advanced 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.
Note 12. Other assets
Current assets
Prepayments
Note 13. Intangibles
Non-current assets
Licensing agreement - Paxalisib
Less: Accumulated amortisation
Licensing agreement - EVT-801
Less: Accumulated amortisation
Reconciliations
Consolidated
2022
$
2021
$
156,153
1,719,696
Consolidated
2022
$
2021
$
16,407,788
16,407,788
(6,166,344)
(5,081,993)
10,241,444
11,325,795
10,857,763
10,857,763
(1,049,555)
(180,965)
9,808,208
10,676,798
20,049,652
22,002,593
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2020
Additions
Amortisation expense
Balance at 30 June 2021
Amortisation expense
Balance at 30 June 2022
58
EVT801
licensing
agreement
$
Paxalisib
licensing
agreement
$
-
12,410,139
10,857,763
-
Total
$
12,410,139
10,857,763
(180,965)
(1,084,344)
(1,265,309)
10,676,798
11,325,795
22,002,593
(868,590)
(1,084,351)
(1,952,941)
9,808,208
10,241,444
20,049,652
FINANCIAL REPORTNOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022 Note 14. Trade and other payables
Current liabilities
Trade payables
Accrued payables
Refer to note 22 for further information on financial instruments.
Note 15. Employee benefits
Current liabilities
Annual leave
Non-current liabilities
Annual leave
Long service leave
Consolidated
2022
$
2021
$
1,524,174
1,893,150
2,235,946
3,039,510
3,760,120
4,932,660
Consolidated
2022
$
2021
$
166,196
229,337
202,421
116,596
319,017
485,213
-
54,684
54,684
284,021
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Note 16. Contingent consideration
Current liabilities
Contingent consideration – EVT801
Non-current liabilities
Contingent consideration – paxalisib
Contingent consideration – EVT801
Consolidated
2022
$
2021
$
758,840
3,164,557
1,167,536
7,588,405
1,015,249
7,911,392
8,755,941
8,926,641
9,514,781
12,091,198
Reconciliations
Reconciliation of the balance at the beginning and end of the reporting period is set out below:
Contingent consideration at start of period
EVT801 acquisition
Payment of paxalisib milestone
Payment of EVT801 milestone
Effect of exchange rates on contingent consideration
Loss on revaluation of contingent consideration
Consolidated
2022
$
2021
$
12,091,198
1,844,988
-
-
11,075,949
(3,400,000)
(2,364,732)
(363,972)
-
-
152,287
2,570,261
9,514,781
12,091,198
Contingent consideration - paxalisib
During the 2017 financial year, the consolidated entity acquired the rights to develop and commercialise paxalisib, as part
of a business combination.
The acquisition contained four contingent milestone payments, the first two milestone payment settlements being
Kazia shares, and the third and fourth milestone payment settlements 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.
Each milestone payment is probability weighted for valuation purposes. The milestone payments are discounted to
present value, using a discount rate of 15% per annum (15% - 2021). 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.
In April 2022 the paxalisib Phase II clinical study was successfully completed and a final clinical study report received.
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FINANCIAL REPORTNOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022 Note 16. Contingent consideration continued
Contingent consideration - EVT801
As set out in note 2, the acquisition of EVT801 has been accounted at cost as a separately acquired intangible asset
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 ($456,063,136).
Note 17. Deferred tax
Consolidated
2022
$
2021
$
Non-current liabilities
Deferred tax liability associated with Licensing Agreement
2,560,361
2,928,441
Company management has completed an analysis of the availability of historical tax losses to offset the deferred tax
liability. Accordingly, the company concludes that the historical tax losses are not expected to be available for offset
against the deferred tax liability.
Note 18. Contributed equity
Consolidated
2022
Shares
2021
Shares
2022
$
2021
$
Ordinary shares – fully paid
138,755,376
132,012,209
84,480,249
80,290,062
Movements in ordinary share capital
Details
Balance
Date
Shares
Issue price
$
1 July 2020
94,598,369
48,781,214
Issued on conversion of options
28 August 2020
25,000
$0.4930
12,313
Institutional placement under ANREO
12 October 2020
20,525,820
$0.8000
16,420,656
Retail placement under ANREO
26 October 2020
11,017,075
$0.8000
8,813,660
Issued on conversion of options
Issued on conversion of options
Share placement
Issued on achievement of milestone
Less: share issue transaction costs
2 March 2021
15 March 2021
28 April 2021
21 May 2021
391,500
25,000
3,037,580
2,391,865
$0.6350
$0.4930
$1.4070
248,661
12,313
4,274,633
$1.4210
3,400,000
-
$0.0000
(1,673,388)
Balance
30 June 2021
132,012,209
80,290,062
Issued on conversion of options
15 December 2021
Conversion of Triaxial Convertible Note
ATM issue of shares No. 1
ATM issue of shares No. 2
ATM issue of shares No. 3
ATM issue of shares No. 4
ATM issue of shares No. 5
ATM issue of shares No. 6
ATM issue of shares No. 7
5 May 2022
24 May 2022
2 June 2022
6 June 2022
9 June 2022
14 June 2022
15 June 2022
20 June 2022
25,000
1,855,357
10,000
10,000
88,710
603,500
75,940
2,000
4,072,660
$0.6680
$0.2500
$0.8260
$0.8020
$0.8370
$0.8400
$0.8240
$0.8300
$0.8690
16,700
464,000
8,256
8,025
74,258
507,035
62,583
1,661
3,540,403
Less: share issue transaction costs
-
$0.0000
(492,734)
Balance
30 June 2022
138,755,376
84,480,249
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Note 18. Contributed equity continued
Ordinary shares
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 19. Other contributed equity
Convertible note – Triaxial
Consolidated
2022
$
2021
$
-
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.
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.
On 21 April 2022 the completion of the phase II study of paxalisib in glioblastoma (NCT03522298) was announced and
on 5 May 2022 the remaining portion of the convertible note was extinguished and converted to 1,855,357 ordinary
shares.
62
NOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022FINANCIAL REPORT Note 20. 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 21. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 22. 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 2022, 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
2022
$
Liabilities
2021
$
2022
$
2021
$
7,275,701
21,072,592
3,071,170
3,447,803
-
-
204,886
15,943
7,275,701
21,072,592
3,276,056
3,463,746
The consolidated entity had net assets denominated in foreign currencies of $3,999,645 as at 30 June 2022 (2021: net
assets $17,608,845).
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Note 22. Financial instruments continued
If the AUD had strengthened against the USD by 10% (2021: 10%) then this would have had the following impact:
Consolidated - 2022
% change
Effect on
profit before
tax
Effect on
equity
AUD strengthened
US dollars
Euros
10%
10%
(420,453)
(420,453)
20,489
20,489
(399,964)
(399,964)
AUD strengthened
% change
(10%)
(10%)
Consolidated - 2021
% change
Effect on
profit before
tax
Effect on
equity
% change
AUD weakened
Effect on
profit before
tax
420,453
(20,489)
399,964
AUD weakened
Effect on
profit before
tax
Effect on
equity
420,453
(20,489)
399,964
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
Price risk
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
2022
2021
Weighted
average
interest rate
%
-
-
Weighted
average
interest rate
%
Balance
$
-
21,086,760
Balance
$
7,361,112
-
0.04%
6,500,000
Net exposure to cash flow interest rate risk
7,361,112
27,586,760
The consolidated entity has cash and cash equivalents totalling $7,361,112 (2021: $27,586,760). An official increase/
decrease in interest rates of 100 basis points (2021: 100 basis points) would have a favourable/adverse effect on profit
before tax and equity of $73,611 (2021: $275,867) 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.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022FINANCIAL REPORT Note 22. Financial instruments continued
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.
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.
Consolidated - 2022
Non-derivatives
Trade payables
Accrued payables
Contingent consideration
Total non-derivatives
Consolidated - 2021
Non-derivatives
Trade payables
Accrued payables
Contingent consideration
Total non-derivatives
Weighted
average
interest
rate
%
1 year or
less
$
Between
1 and 2
years
$
Between
2 and 5
years
$
Over 5
years
$
Remaining
contractual
maturities
$
-
-
-
1,524,174
2,235,946
758,840
4,518,960
-
-
-
-
-
-
8,982,641
8,982,641
-
-
-
-
1,524,174
2,235,946
9,685,481
13,445,601
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
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
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Note 23. 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 - 2022
Liabilities
Contingent consideration
Total liabilities
Consolidated - 2021
Liabilities
Contingent consideration
Total liabilities
Level 1
$
-
-
Level 1
$
-
-
Level 2
$
-
-
Level 2
$
-
-
Level 3
$
1,167,534
1,167,534
Level 3
$
1,015,249
1,015,249
Total
$
1,167,534
1,167,534
Total
$
1,015,249
1,015,249
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. Only the
paxalisib contingent consideration is shown here as it held at fair value and EVT801 is held at cost.
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 16. 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 2020
Losses recognised in profit and loss
Payout of milestone
Balance at 30 June 2021
Losses recognised in profit and loss
Balance at 30 June 2022
Level 3
$
1,844,988
2,570,261
(3,400,000)
1,015,249
152,287
1,167,536
Available-
for-sale
$
-
-
-
-
-
-
Total
$
1,844,988
2,570,261
(3,400,000)
1,015,249
152,287
1,167,536
66
NOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022FINANCIAL REPORT Note 24. 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
2022
$
2021
$
2,589,088
1,574,520
115,950
1,559,930
4,264,968
112,290
616,598
2,303,408
Please refer to Note 28 for other transactions with key management personnel and their related parties.
Note 25. 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
Other services - Grant Thornton Audit Pty Ltd
Comfort letter ATM
Consolidated
2022
$
2021
$
154,935
151,400
25,719
180,654
-
151,400
Comfort letter ATM refers to the fee in relation to Comfort Letter provided to Oppenheimer for ATM facility.
Note 26. Contingent liabilities
Other than the contingent consideration set out in note 16, the consolidated entity does not have any other contingent
liabilities.
Note 27. Commitments
Lease commitments comprise contracted amounts for leases of premises. The agreement has a duration less than
12 months from financial year end.
Note 28. Related party transactions
Parent entity
Kazia Therapeutics Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 30.
Key management personnel
Disclosures relating to key management personnel are set out in note 24 and the remuneration report included in the
directors’ report.
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Note 28. Related party transactions continued
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 29. 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
2022
$
2021
$
(23,874,537)
(16,853,528)
(23,874,537)
(16,853,528)
Parent
2022
$
5,895,164
25,944,816
1,090,400
2021
$
25,041,721
47,044,314
3,177,348
12,406,702
15,032,430
84,480,249
80,290,062
-
3,263,703
464,000
1,753,886
(74,205,838)
(50,496,064)
13,538,114
32,011,884
Reserves comprise Share Based Payments Reserve.
Contingent liabilities
The parent entity contingent liabilities as at 30 June 2022 and 30 June 2021 are as set out in Note 16. 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 2022 and 30 June 2021.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022FINANCIAL REPORT Note 29. 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 30. 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
2022
%
100.00%
100.00%
100.00%
100.00%
100.00%
2021
%
100.00%
100.00%
100.00%
100.00%
100.00%
Note 31. Reconciliation of loss after income tax to net cash used in operating
activities
Consolidated
2022
$
2021
$
Loss after income tax benefit for the year
(24,647,815)
(8,421,960)
Adjustments for:
Depreciation and amortisation
Share-based payments
Foreign exchange differences
Loss on contingent consideration
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease/(increase) in prepayments
Increase/(decrease) in trade and other payables
Decrease in deferred tax liabilities
Increase in other provisions
Net cash used in operating activities
1,952,941
1,674,581
(1,789,464)
1,265,309
636,383
430,273
152,287
2,570,261
(6,613)
1,563,543
(1,495,235)
(368,080)
201,192
(22,762,663)
(5,027,134)
(1,182,391)
1,010,520
(484,347)
92,570
(9,110,516)
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Note 32. Earnings per share
Loss after income tax attributable to the owners of Kazia Therapeutics Limited
(24,647,815)
(8,421,960)
Consolidated
2022
$
2021
$
Weighted average number of ordinary shares used in calculating basic
earnings per share
Weighted average number of ordinary shares used in calculating diluted
earnings per share
Basic earnings per share
Diluted earnings per share
Note 33. Share-based payments
Number
Number
132,467,686
117,674,543
132,467,686
117,674,543
Cents
(18.61)
(18.61)
Cents
(7.16)
(7.16)
All of the options set out below have been issued to employees and directors under the ESOP. During the financial year
an expense of $1,674,581 was recognised.
Number of
options
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
Outstanding at the beginning of the financial year
4,219,000
$0.8911
2,775,167
2022
2022
2021
Granted
Exercised
Expired
Outstanding at the end of the financial year
Exercisable at the end of the financial year
4,800,000
$1.6110
2,200,000
(25,000)
$0.6700
(338,500)
$1.1123
(441,500)
(314,667)
8,655,500
3,180,500
$1.2826
4,219,000
$0.8770
2,506,667
2021
$0.7970
$1.0915
$0.6195
$1.8473
$0.8911
$0.6195
70
NOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022FINANCIAL REPORT Note 33. Share-based payments continued
2022
Tranche Grant date Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired /
lapsed
on termination
of employment
Balance at
the end of
the year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
5/09/2016
5/09/2021
$1.6300
12/10/2016
17/10/2021
$1.5600
31/10/2016
1/11/2021
$1.3800
21/11/2016
23/11/2021
$1.3800
7/08/2017
7/08/2022
$0.6700
50,000
62,000
12,500
50,000
87,000
5/02/2018
5/02/2023
$0.7800
320,000
4/01/2019
4/01/2024
$0.4925
37,500
13/11/2019
13/11/2023
$0.4925
1,200,000
13/01/2020
13/01/2025
$0.8812
200,000
9/11/2020
9/11/2024
$1.1320
1,200,000
9/11/2020
9/11/2024
$0.8812
800,000
4/01/2021
4/01/2026
$1.6900
200,000
-
-
-
-
-
-
-
-
-
-
-
-
9/09/2021
26/06/2026
$1.3700
16/11/2021
16/11/2025
$1.6900
16/11/2021
16/11/2025
$2.2400
16/11/2021
16/11/2025
$1.5600
1/02/2022
1/02/2027
$0.9400
1/02/2022
1/02/2027
$0.9400
24/05/2022 24/05/2027
$0.7800
-
-
-
-
-
-
-
100,000
1,000,000
1,500,000
800,000
500,000
800,000
100,000
-
-
-
-
(25,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
(62,000)
(12,500)
(50,000)
(46,500)
-
-
-
-
15,500
(80,000)
240,000
(37,500)
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
200,000
1,200,000
800,000
200,000
100,000
1,000,000
1,500,000
800,000
500,000
800,000
100,000
Weighted average exercise price
$0.8911
$1.6110
$0.6700
$1.1123
$1.2826
4,219,000 4,800,000
(25,000)
(338,500)
8,655,500
At the end of the period the following outstanding options were vested and exercisable:
• Options in tranche 1 - 4 expired during the year
• Options in tranches 1 - 8 were vested and exercisable, apart from those in the above table which have expired
• Options in tranches 9 - 10 were vested and exercisable as to 50%
• Options in tranche 11 were vested and exercisable as to 75%
• Options in tranches 12 - 14 were vested and exercisable as to 25%
• Options in tranches 15 - 19 were unvested
The weighted average remaining contractual life of options outstanding at 30 June 2022 is 3.048 years
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Note 33. Share-based payments continued
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
$2.2000
236,667
05/09/2016 05/09/2021
$1.6300
12/10/2016
17/10/2021
$1.5600
31/10/2016
01/11/2021
$1.3800
21/11/2016
23/11/2021
$1.3800
50,000
62,000
12,500
50,000
07/08/2017 07/08/2022
$0.6700
224,000
05/02/2018 05/02/2023
$0.7800
440,000
04/01/2019 04/01/2024
$0.4925
250,000
13/11/2019
13/11/2023
$0.4925
1,200,000
13/01/2020
13/01/2025
$0.8810
250,000
-
-
-
-
-
-
-
-
-
-
09/11/2020
09/11/2024
$1.1320
09/11/2020
09/11/2024
$0.8810
04/01/2021 04/01/2026
$1.6900
-
-
-
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
$0.7970
$1.0915
$0.6195
$1.8473
$0.8911
2,775,167
2,200,000
(441,500)
(314,667)
4,219,000
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.
Employee share options
During the year ended 30 June 2022, 4,800,000 options have been issued to directors and employees by the
consolidated entity pursuant to the Company’s Employee Share Option Plan.
• Tranche 14 vests as to 25% immediately on issue and then in three equal annual amounts from one year from the date
of issue.
• Tranches 13 & 15 - 19 vest in four equal annual amounts from one year of the date of issue
Vesting conditions for options within all tranches, is based on service period only; i.e. options 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; and
• 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.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022FINANCIAL REPORT Note 33. Share-based payments continued
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.
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.
The abovementioned options have various vesting periods and exercising conditions. These options are unlisted as at
30 June 2022.
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
Share
price at
Grant Date
07/08/2017
07/08/2022
$0.4300
05/02/2018
05/02/2023
$0.5000
Exercise
price
$0.6700
$0.7800
13/11/2019
13/11/2023
$0.4100
$0.4900
13/01/2020
13/01/2025
09/11/2020
09/11/2024
09/11/2020
09/11/2024
04/01/2021
04/01/2025
09/09/2021
21/06/2026
16/11/2021
16/11/2025
16/11/2021
16/11/2025
16/11/2021
16/11/2026
$0.6200
$0.8900
$0.8900
$1.1850
$1.4200
$1.5700
$1.5700
$1.5700
$0.8810
$1.1320
$0.8800
$1.1690
$1.3700
$1.6900
$2.2400
$1.5600
01/02/2022
01/02/2027
$0.9600
$0.9400
24/05/2022
24/05/2027
$0.8000
$0.7800
Volatility
(%)
Dividend
yield (%)
Risk free
Rate (%)
Fair value
per option
74.50%
74.50%
74.50%
74.50%
90.00%
90.00%
90.00%
76.00%
76.00%
76.00%
76.00%
79.00%
44.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
1.95%
1.95%
1.95%
1.95%
0.10%
0.10%
0.19%
1.50%
1.50%
1.50%
1.50%
1.50%
2.95%
$0.206
$0.200
$0.180
$0.340
$0.413
$0.503
$0.600
$0.880
$0.850
$0.750
$0.970
$0.590
$0.630
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Kazia Theraputics Limited Annual Report 20222022 at a GlanceChairman’s LetterCEO’s ReportKey MilestonesPipeline ReviewESGFinancial Reports
Note 34. Subsequent events
GBM AGILE Pivotal Study
Post period, on 1 August 2022, the company was advised by the Global Coalition for Adaptive Research (GCAR) that the
first stage of the paxalisib arm in the company’s GBM AGILE pivotal study had completed recruitment. The treatment
arm did not meet pre-defined criteria for continuing to a second stage, and patients enrolled in the first stage of the
paxalisib arm will therefore continue on treatment as per protocol, and in follow-up, until completion of the final analysis,
which the company anticipates receiving in 2H CY2023, as previously disclosed. Given that completion of recruitment has
now occurred, the study will not open to the paxalisib arm in Germany or China. The company will work with its licensing
partner to determine the way forward in China, given that country’s general requirement for local data to register a new
pharmaceutical product. All company personnel continue to be blinded to efficacy and safety data from the ongoing
study, as required by regulatory authorities, and so the company remains unable to provide analysis or interpretation of
the study until follow-up is complete and final data is available.
At-The-Market (ATM) Facility
In May 2022, the company established the NASDAQ based ATM financing facility with Oppenheimer and Company.
During the months of July and August through 11 August 2022, the company raised total proceeds for the period of
US$2.53million (approximately AU$3.67million). The weighted average share price from ATM financings is AU$0.50 cents
per ordinary share, increasing the total shares outstanding to 149,636,656 and materially expanding the company’s
runway with minimal dilution to existing shareholders. On the most active day during this period, the ATM accounted
for 5% of the day’s trading volume, implying minimal price impact as a result of its use. Of note, shares issued under the
ATM are issued at the spot market price, with no discount, no accompanying warrants or options, and with banking fees
approximately half of those associated with more traditional financing methods.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect
the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future
financial years.
74
NOTES TO THE FINANCIAL STATEMENTS CONTINUED30 June 2022FINANCIAL REPORT 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 2022 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
29 August 2022
Sydney
Dr James Garner
Managing Director, Chief Executive Officer
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DIRECTORS’ DECLARATION30 June 2022Kazia Theraputics Limited Annual Report 20222022 at a GlanceChairman’s LetterCEO’s ReportKey MilestonesPipeline ReviewESGFinancial Reports
76
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KAZIA THERAPEUTICS LIMITEDFINANCIAL REPORTGrant Thornton Audit Pty Ltd Level 17 383 Kent Street Sydney NSW 2000 Locked Bag Q800 Queen Victoria Building NSW 1230 T +61 2 8297 2400 #7976891v1w www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘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 Limited 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 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. 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 subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2022, 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 2022 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. O
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Kazia Theraputics Limited Annual Report 20222022 at a GlanceChairman’s LetterCEO’s ReportKey MilestonesPipeline ReviewESGFinancial ReportsGrant Thornton Australia Limited(cid:3)Material uncertainty related to going concern We draw attention to Note 2 in the financial statements, which indicates that the Group incurred a net loss of $24,647,815 during the year ended 30 June 2022 and had net cash outflows from operating activities of $22,762,663. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. 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. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Key audit matter How our audit addressed the key audit matter Intangible asset impairment (Note 2, 3, 13) The Group carries in its statement of financial position intangible assets relating to: • the Licensing Agreement, which grants the Group the right to develop and commercialise the paxalisib molecule; and • the Licensing Agreement, which grants the Group the right to develop and commercialise the EVT801 molecule. The paxalisib Licensing Agreement has a carrying value of $10,241,444, and the EVT801 Licensing Agreement has a carrying value of $9,808,208. These assets are amortised over the remaining life of the underlying patents at the acquisition date, being 15 years and 12.5 years respectively. 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. The entity shall estimate the asset’s recoverable amount if any indication exists. This is a key audit matter due to the materiality of the amounts and the high degree of management judgement required to assess whether there are impairment indicators. Our procedures included, amongst others: • obtained an understanding of and evaluating management’s process and controls relating to the assessment of the existence of impairment indicators; • obtaining and assessing management’s papersdocumenting its consideration of the existence ofany impairment indicators; as well as making enquiries with the Company’s experts for their expert opinions relating to the science; • considering each of the internal and external factorsoutlined by AASB 136 and assessing whether any indicators of impairment are present; and • assessed the adequacy of the relevant disclosuresin the financial statements. (cid:3)(cid:3)
78
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KAZIA THERAPEUTICS LIMITEDFINANCIAL REPORTGrant Thornton Australia Limited(cid:3)Contingent consideration (Note 2, 3, 16) In 2017, the consolidated entity acquired the rights to develop and commercialise paxalisib, as part of a business combination. As part of that transaction, the Company engaged an expert to perform purchase price accounting, determine the fair value of the intangible asset acquired in the business combination, and estimate the value of contingent consideration based on the likelihood of achieving certain milestones. The total contingent consideration in respect of paxalisib is $1,167,536. In 2021, Kazia entered into a worldwide exclusive licensing agreement with Evotec SE to develop the drug candidate EVT801. As part of this agreement, contingent fees are payable on achieving certain milestones. The total contingent consideration in respect of EVT801 is $8,347,245. The contingent consideration is a key audit matter due to the high subjectivity and management judgement involved in calculating the contingent consideration and the materiality of the amounts in question. Our procedures included, amongst others; • obtaining an understanding of and evaluating management’s process and controls related to the estimation of the liability; • evaluating the competence, capabilities and objectivity of management's experts; • obtaining management’s calculation of the contingent consideration liability and assessing the key inputs and assumptions made by management’s experts; • where management’s assumptions are applied to other critical accounting estimates, such as the valuation of intangible assets described above, assessing whether those assumptions have been applied consistently across estimates; • assessing the accuracy of the calculations and evaluating the approach and methodology for consistency; • evaluating the appropriate classification of the liabilities between current and non-current; and • assessing the adequacy of the relevant disclosuresin the financial statements. 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 2022, 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. O
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Kazia Theraputics Limited Annual Report 20222022 at a GlanceChairman’s LetterCEO’s ReportKey MilestonesPipeline ReviewESGFinancial ReportsGrant Thornton Australia Limited(cid:3)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 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 M Aziz Partner – Audit & Assurance Sydney, 29 August 2022 Opinion on the remuneration report We have audited the Remuneration Report included in pages 28 to 35 of the Directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Kazia Therapeutics Limited, for the year ended 30 June 2022 complies with section 300A of the Corporations Act 2001.
The shareholder information set out below was applicable at 18 August 2022
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Holding less than a marketable parcel
Equity security holders
Total holders
1,238
1,100
372
558
97
3,365
1,736
Number
of shares
643,404
2,852,476
2,906,676
16,366,945
126,867,155
149,636,656
1,403,049
The names of the twenty largest quoted equity security holders are listed below:
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
WILLOUGHBY CAPITAL PTY LTD
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