APPENDIX 4E Preliminary Final Report to the Australian Stock Exchange Name of Entity Paradigm Biopharmaceuticals Limited ABN (ABN 94 169 346 963) Year Ended 30 June 2024 Previous Corresponding Reporting Period 01 July 2022 to 30 June 2023 1. Results for Announcement to the Market $ $ and % increase/(decrease) over previous corresponding period Revenue from continuing activities 6,519,931 (2,061,008) (24.02%) (Loss) from continuing activities after tax attributable to members (58,653,188) 6,743,175 12.99% Net (loss) for the period attributable to members (58,653,188) 6,743,175 12.99% Dividends (distributions) Amount per security Franked amount per security Final Dividend N/A N/A Interim Dividend N/A N/A Record date for determining entitlements to the dividends (if any) N/A Brief explanation of any of the figures reported above necessary to enable the figures to be understood: N/A 2. Key ratios Current Period Previous corresponding period Basic earnings per ordinary security (cents per share) (20.00) cents (20.78) cents Diluted earnings per ordinary security (cents per share) (20.00) cents (20.78) cents Net tangible asset backing per ordinary security (cents per share) 5.95 cents 18.00 cents 3. Control Gained Over Entities Having Material Effect Name of entity (or group of entities) N/A Date control gained N/A Profit / (loss) from ordinary activities after tax of the controlled entity since the date in the current period on which control was acquired. N/A Profit / (loss) from ordinary activities after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period. N/A 4. Audit/Review Status This report is based on accounts to which one of the following applies: (Tick one) The accounts have been audited The accounts are in the process of being audited If the accounts are subject to audit dispute or qualification, a description of the dispute or qualification: N/A 5. Attachments Forming Part of Appendix 4E The Annual Report of Paradigm Biopharmaceuticals Limited for the year ended 30 June 2024 is attached. 6. Signed Signed in accordance with a resolution of the Directors. Signed ______________________________ Date: 30 August 2024 Paul Rennie Managing Director ANNUAL REPORT 2024 EXPLORING THE POSSIBILITIES Paradigm Biopharmaceuticals Ltd. is a late-stage clinical development company. We are driven by a purpose to improve patients’ health and quality of life by discovering, developing, and delivering pharmaceutical therapies. Paradigm has a vision to be recognised as a global leader in the development and commercialisation of innovative pharmaceutical therapies. Paradigm’s values of innovation, transparency, adaptability, collaboration, respect, and accountability comprise the central pillars of the organisation and influence all activities and decisions. Contents 01 Highlights 02 Chairman and Managing Director’s Report 06 Chief Medical Officer’s Report 10 iPPS: Effect Size Determines Phase 3 Potential 13 Directors’ Report 21 Remuneration Report 28 Auditor’s Independence Declaration 29 Consolidated Statement of Profit or Loss and Other Comprehensive Income 30 Consolidated Statement Financial Position 31 Consolidated Statement of Cash Flows 32 Consolidated Statement of Changes in Equity 33 Notes to the Consolidated Financial Statements 55 Consolidated Entity Disclosure Statement 56 Directors’ Declaration 57 Independent Audit Report 61 Shareholder Information 63 Corporate Governance Statement 64 General Information 65 Corporate Directory Paradigm Biopharmaceuticals Limited ABN 94 169 346 963 HIGHLIGHTS 600 5X $7.3m AUD Subjects randomised in Stage 1 Para_OA_002. In PARA_OA_008, rescue medication use was 5 times lower in the twice weekly iPPS group compared to placebo. R&D Tax Incentive received for FY 2023 claim. Indicative Phase 3 Trial Site Locations • Australia • Belgium • Canada • Czechia • Poland • United Kingdom • United States Key Highlights from FY 2024 iPPS demonstrates 12-month duration Structural improvements at 6-months PARA_OA_002 Stage 1 completion Paradigm reported significant new phase 2 PARA_OA_008 data demonstrating improvements in patient-reported outcomes of WOMAC pain, function and PGIC scores for participants receiving 2mg/kg twice weekly iPPS compared to placebo at Day 365. A 6-week twice weekly course of subcutaneous iPPS was shown to increase cartilage thickness and volume and to reduce bone marrow lesions and synovitis from baseline on MRI follow-up at 6 months. The first stage of the harmonised phase 3 clinical program was completed during the period. 120 sites were activated across seven countries completing the randomisation of 600 subjects demonstrating the effectiveness of Paradigm’s recruitment initiatives. During FY 2024 Paradigm completed clinical trials for MPS I & VI and the PARA_OA_008 and PARA_OA_002 clinical trials. Annual Report 2024 01 Paradigm Biopharmaceuticals Limited Dear Shareholders, As Chair and Managing Director, I am pleased to provide you with key clinical, regulatory and business highlights from the 2024 financial year. Paradigm Biopharmaceuticals Ltd (Paradigm or the Company), is a late-clinical-stage drug development company headquartered in Melbourne, Australia and established in 2014 based on the insight that the properties of injectable pentosan polysulfate sodium (iPPS) could have not only a notable potential in treating musculoskeletal disease but also provide a significant commercial opportunity for shareholders. Paradigm’s mission is to develop and commercialise iPPS for the treatment of pain associated with musculoskeletal disorders driven by injury, inflammation, aging, degenerative disease, infection or genetic predisposition. The company’s lead asset is utilising iPPS for the treatment of knee OA. In FY 2024, our focus was on expanding the potential of iPPS in treating knee osteoarthritis (OA) while simultaneously completing the final recruitment and analysis of the stage 1 dose-ranging study of our phase 3 OA program. Paradigm achieved significant milestones, including outstanding data readouts from the phase 2 clinical study PARA_OA_008. This study demonstrated that iPPS not only alleviates pain and enhances knee functionality but also shows promise in improving joint health, as evidenced by synovial fluid biomarker analysis and MRI imaging. Clinical OA Program Highlights In FY 2024, our focus was on expanding the potential of iPPS in treating knee osteoarthritis (OA) while simultaneously completing the final recruitment and analysis of the stage 1 dose-ranging study of our phase 3 OA program. Paradigm achieved significant milestones, including a readout from the phase 2 clinical study PARA_OA_008. In July 2023, Paradigm completed the first stage of its two-stage, adaptive, randomised, double-blinded, placebo- controlled, phase 3 PARA_OA_002 clinical trial. The trial involved randomising 600 participants across 120 sites in Australia, the US, Canada, the UK, Belgium, Poland, and Czechia. Paradigm also requested an interim analysis be conducted by the independent Data Monitoring Committee to evaluate the performance of all treatment arms in stage 1. This analysis revealed that the doses: used in stage 1 (less than 2 mg/kg twice weekly) did not meet the pre-specified performance threshold based on previous outcomes with a 2 mg/kg twice weekly dosing regimen. The interim analysis, conducted ahead of schedule, assessed the effectiveness of three iPPS doses against a placebo. The analysis, which included data from the first 300 participants up to Day 56, provided additional insights to complement Paradigm’s previous phase 2 studies. This data determined the lowest effective dose of iPPS and contributed to preparations for the next stage of the phase 3 OA program. Paradigm’s PARA_OA_008 clinical trial reached a successful 12-month milestone reported in September 2023. The trial attained its primary endpoint of a change in one or more synovial fluid biomarkers and also delivered positive clinical data at Days 56, 168, and 365. Notable results at Day 365 include significant pain reduction, functional “Paradigm Biopharmaceuticals made significant advancements in FY 2024 with clinical programs in knee osteoarthritis (OA) and mucopolysaccharidosis (MPS). The Company reported outstanding phase 2 data de-risking iPPS for musculoskeletal disorders and engaged in major regulatory discussions with the FDA to advance the 2mg/kg dose for the phase 3 OA program.” CHAIRMAN AND MANAGING DIRECTOR’S REPORT Paul Rennie Chairman and Managing Director $30.1m AUD Capital raise Capital raise in October 2023 comprising $18 million AUD institutional placement and fully underwritten $12.1 million AUD entitlement offer. 600 Subjects randomised in stage 1 PARA_OA_002 Paradigm demonstrated its experience in clinical trial recruitment, randomising 600 participants globally. 113.25% Increased OA prevalence globally from 1990 to 2019. Globally, OA prevalence increased by 113.25%, from 247.5 million in 1990 to 527.8 million sufferers in 2019. Annual Report 2024 02 Paradigm Biopharmaceuticals Limited improvement and a substantial decrease in the use of rescue pain medication in the iPPS twice-weekly group. Early access programs had previously provided substantial testimonials that the effects of iPPS are durable for at least 12 months. It was crucial for Paradigm to validate these findings under clinical trial conditions, and the data confirmed that a single 6-week course of iPPS provided durable pain relief and functional improvement for up to 12 months. Additionally, quantitative MRI analysis from the phase 2 PARA_OA_008 trial reported in October 2023 demonstrated that iPPS treatment resulted in increased cartilage thickness and volume, and resolution or reduction of bone marrow lesions and synovitis. Specifically, the iPPS group saw an increase in overall cartilage thickness by 0.17mm and cartilage volume by 1.9%, compared to decreases in the placebo group. These results highlighted that iPPS not only treats OA symptoms but also preserves and regenerates joint tissues, establishing Paradigm as a leader in OA treatment innovation. Progression of Phase 3 Program In April 2024, Paradigm submitted a comprehensive response to the US FDA following a Type D meeting held on January 10, 2024. This submission included results from five nonclinical studies, data from the successful phase 2 clinical trial (PARA_OA_008), and clinical data from 600 participants dosed in stage 1 of the PARA_OA_002 trial. The key elements addressed in the Type D response include the justification for the minimal effective dose, additional nonclinical studies completed to Good Laboratory Practice (GLP) standards “FY 2024 has been a year of clinical advancement delivering exceptional new data for Paradigm Biopharmaceuticals confirming the potential of iPPS for osteoarthritis. Our focus for financial year 2025 remains steadfast on delivering an innovative treatment for those suffering with osteoarthritis whilst creating value for our shareholders.” addressing previously noted adrenal findings, the draft clinical trial protocol, and a revised safety monitoring and mitigation plan. The submission was made through a request for review pathway, which does not have strict timelines under the Prescription Drug User Fee Act. Paradigm has utilised the time awaiting the agencies feedback effectively ensuring that the selected clinical trial sites that were high performing sites in stage 1 of the Phase 3 program remain updated to enable rapid start-up once we have agreement from the US FDA. Annual Report 2024 03 Paradigm Biopharmaceuticals Limited MPS Clinical Program Highlights During the March 2024 quarter, Paradigm announced that the phase 2 MPS VI trial conducted in 2 sites in Brazil, successfully achieved its primary endpoint and showed positive results in several secondary outcomes. The main goal of the study was to assess the safety and tolerability of iPPS compared to a placebo. iPPS was found to be well-tolerated, with all adverse events classified as mild to moderate, mostly involving injection site reactions. The analysis confirmed that iPPS is a safe adjunctive therapy to enzyme replacement therapy for managing joint pain, stiffness, and functional disability associated with MPS VI. It was gratifying to see that all 13 participants in the study have chosen to either begin iPPS treatment, for those who initially received the placebo, or continue treatment following the conclusion of the clinical trial. This outcome highlights the positive benefits that patients receiving iPPS for MPS VI are experiencing in alleviating the effects of their disease. With these results, we resolved to conclude our R&D investment in the MPS program to concentrate our resources on the OA clinical program. Board Activities A key activity for the Paradigm Board during the first half of the financial year was to create and implement through a ‘yes’ vote at the 2023 Annual General Meeting, a new Employee Incentive Scheme that was in-line with our investors’ expectations. The Paradigm Employee Performance Rights Plan is the company’s long-term incentive (LTI) designed to motivate key employees towards our success while aligning their interests with those of the shareholders. The Paradigm Board developed this Plan with input from an external remuneration consultant and an employee share scheme specialist to ensure it meets best practices and shareholder expectations. The Plan involves granting performance rights to key employees, which convert to shares if certain conditions are met after a vesting period of three years. These conditions include achieving specific business targets, ensuring a minimum return for shareholders, and satisfactory employee performance. The Plan’s aim is to retain key employees over the long term, preserving corporate knowledge and enhancing shareholder value. Central to the Plan is the win-win-win principle, ensuring benefits for shareholders, the company, and employees. Each offer under the Plan includes performance targets tied to company goals and market benchmarks, ensuring employees are rewarded based on objectively measurable business outcomes and their individual performance. I would like to thank all our investors’ for approving this plan and aiding Paradigm to continue to attract and retain talented staff to the Paradigm organisation. Paradigm also saw a restructure of the Board through FY 2024 with both John Gaffney and Helen Fisher exiting their positions as Non-Executive Directors and the addition of Matthew Fry as a Non-Executive Director to the Paradigm Board. Matthew Fry’s appointment as a Non-Executive Director at Paradigm is a notable addition to the company’s Board. With extensive experience in the biopharmaceutical industry, Mr Fry brings a wealth of knowledge and strategic insight to Paradigm. His background in guiding companies through growth phases and his expertise in corporate governance have been invaluable assets for the Company. I would like to thank both John and Helen for their dedication to Paradigm over the last 9 and 3 years respectively. Key Operational Aspects A key focus of the 2024 fiscal year was containment of costs through a significant period toward the end of the first half with the conclusion of two phase 2 studies in MPS, the phase 2 PARA_OA_008 clinical trial and completion of enrolment and interim analysis of the PARA_OA_002 clinical trial. Whilst this period saw significant increases in R&D expenditure, administrative costs were reduced compared to prior periods to ensure Paradigm’s capital was focused on activities related to progressing iPPS and producing compelling data to support regulatory discussions. Paradigm’s cash position was bolstered on 30 October 2023, with Paradigm announcing a fully underwritten capital raise of $30.1M. This included a fully underwritten $18M institutional placement and a 1 for 10 accelerated non-renounceable entitlement offer of $12.1M, raised at $0.43 per share. The placement received strong participation from domestic and offshore institutional investors. As part of the capital raise, Paradigm issued 3 attaching listed options for every 4 new shares taken up in the capital raise. The options have an exercise price of $0.65 and expire on 30 November 2024. If exercised, these options will provide additional funding to support Paradigm’s phase 3 clinical program in osteoarthritis. FY 2024 has been a year of clinical advancement delivering exceptional new data for Paradigm Biopharmaceuticals confirming the potential of iPPS for osteoarthritis. The new data produced during the financial year was accepted for presentation at multiple global conferences including the Orthopedic Research Society and OARSI World Congress on OA. Our focus for financial year 2025 has been and remains steadfast on delivering an innovative treatment for those suffering with osteoarthritis whilst creating value for our shareholders. As we look forward to the rest of financial year 2025, we are well-positioned to commence our phase 3 clinical, and deliver on our strategic and corporate milestones, driving Paradigm towards sustained success and growth. I extend my heartfelt gratitude to our shareholders for their unwavering support as we progress on this journey at Paradigm. Additionally, I want to express my deep appreciation to the Paradigm team for their dedication, hard work, and accomplishments in FY 2024. I eagerly anticipate sharing more significant milestones with you in the coming year. On behalf of the Directors, Paul Rennie Chairman and Managing Director Melbourne, Victoria 30 August 2024 CHAIRMAN AND MANAGING DIRECTOR’S REPORT continued Annual Report 2024 04 Paradigm Biopharmaceuticals Limited Annual Report 2024 05 Paradigm Biopharmaceuticals Limited Dear Shareholders, As Chief Medical Officer at Paradigm Biopharmaceuticals, I am pleased to present the significant advancements we have made over the past year in our clinical programs, in the development of our lead candidate, injectable pentosan polysulfate sodium (iPPS), for the treatment of osteoarthritis (OA). This report highlights the key outcomes from our recent clinical trials and regulatory submissions, including the successful Phase 2 studies, the long-term durability of iPPS, and the critical next steps in our regulatory journey. These milestones underscore our commitment to addressing unmet medical needs with innovative therapies that improve patient outcomes and quality of life. The PARA_OA_008 clinical trial has been a cornerstone in establishing the efficacy of iPPS for the treatment of knee osteoarthritis. The trial involved 61 participants and focused on assessing the structural and long-term impact of a single 6-week course of iPPS administered at 2 mg/kg once or twice weekly compared to placebo. iPPS Demonstrates Significant Osteoarthritis Pain Reduction and Functional Improvement at 12 Months The PARA_OA_008 trial demonstrated that participants receiving twice weekly iPPS experienced significant and sustained reductions in pain over a 12-month period. WOMAC pain scores showed a statistically significant improvement at both Day 56 (p=0.045) and Day 365 (p=0.054) when compared to placebo, with 55% of participants achieving a clinically meaningful pain reduction of at least 30% by the end of the study. In addition to pain relief, the trial highlighted considerable improvements in physical function, as reflected by WOMAC function scores, which showed significant enhancements at Day 56 (p=0.017) and Day 365 (p=0.048) in the iPPS group compared to placebo. More than half of the participants (55%) receiving iPPS reported over a 50% improvement in function by Day 365. Patient-reported outcomes as measured by the Patient Global Impression of Change (PGIC), also indicated that participants in the iPPS group experienced a statistically significant overall improvement or stabilisation in their OA condition, with a PGIC score of 3.74 at Day 365 compared to 1.96 in the placebo group (p=0.005). Additionally, the use of paracetamol as a rescue medication was over five times lower in the iPPS group compared to the placebo group at Day 365, underscoring the long-term efficacy of iPPS in managing OA pain. iPPS Reduces Cartilage Degeneration in Phase 2 Trial In addition to symptomatic relief, iPPS has shown promise in addressing the structural components of OA. The PARA_OA_008 study also focused on the impact of iPPS on cartilage thickness and overall joint health changes from baseline to Day 168 as measured by Magnetic Resonance Imaging (MRI). The quantitative MRI (qMRI) findings from the PARA_OA_008 clinical trial highlighted the potential impact of iPPS on cartilage preservation in patients with knee osteoarthritis. At Day 168, participants treated with iPPS exhibited an increase in overall cartilage thickness, measuring 0.17mm (p=0.05) compared to overall decrease of -0.09mm in placebo as measure by qMRI. An overall increase in cartilage volume by 1.9% (p=0.07) was also reported in the iPPS group compared “Our dedicated efforts in advancing iPPS through clinical trials have yielded remarkable results, bringing us closer to offering a novel and effective treatment option for millions suffering from OA worldwide.” CHIEF MEDICAL OFFICER’S REPORT Dr Donna Skerrett Chief Medical Officer 0.17mm Average increase in overall cartilage thickness across all knee compartments. Compared to a 0.09 decrease in the placebo group in PARA_OA_008. 1 Year Pain reduction and functional improvement iPPS demonstrated one 6 week course provides up to 12 month pain relief and functional improvement in phase 2 PARA_OA_008. Annual Report 2024 06 Paradigm Biopharmaceuticals Limited to a decrease of -1.58% in the placebo group, over the same period. This stark contrast underscores the ability of iPPS to effectively slow down or prevent the deterioration of cartilage, a critical factor in the progression of osteoarthritis. The placebo group’s significant cartilage thinning is consistent with the typical progression of osteoarthritis, where ongoing cartilage degradation leads to increased pain and loss of joint function. In contrast, the iPPS group not only avoided this deterioration but also maintained much of their existing cartilage thickness, suggesting that iPPS may play a protective role in joint health. Additionally, the iPPS-treated group demonstrated a 30% reduction in bone marrow lesions (BMLs), while the placebo group exhibited only a minimal reduction of 5%, emphasising the effectiveness of iPPS in addressing this key indicator of joint degeneration. The data also revealed that iPPS treatment led to a 20% reduction in synovitis (inflammation of the synovial membrane), whereas the placebo group showed no significant change in synovitis levels. The ability of iPPS to preserve cartilage that would otherwise deteriorate, highlights its unique position in the OA treatment landscape, setting it apart from conventional therapies that primarily target pain relief. PARA_OA_002 Stage 1 Interim Findings The 2024 financial year also saw Paradigm complete several critical steps in our phase 3 development plan for iPPS in knee OA. The PARA_ OA_002 clinical trial evaluating dosing successfully completed the recruitment of 600 subjects globally, marking a significant milestone in our journey toward bringing iPPS to market as a treatment for osteoarthritis. The success of this recruitment phase is also attributed to several strategic initiatives that were implemented to ensure timely and effective enrolment. Collaborations with specialised teams in patient recruitment and digital outreach played a crucial role in accelerating our efforts. Their expertise in engaging patients and innovative approaches to digital outreach allowed us to reach a diverse and broad patient population across multiple regions globally. The PARA_OA_002 trial represented a critical step in advancing iPPS toward regulatory approval. Stage 1 of this study focused on determining the lowest effective dosing regimen of iPPS in a larger population. During FY 2024 an interim analysis of the PARA_OA_002 clinical trial was conducted at a critical juncture to evaluate the effectiveness of the dosing regimens under investigation and to ensure the study was progressing as expected. This analysis was performed after 300 patients had Annual Report 2024 07 Paradigm Biopharmaceuticals Limited reached the 56-day follow-up, allowing the data monitoring committee to assess the early efficacy signals of the various doses in the study. The decision to conduct the interim analysis at this stage was driven by the need to make informed adjustments to the trial design if necessary and to compare to the 2 mg/kg twice-weekly regimen identified as optimal in previous studies ensuring that we could maximise the likelihood of achieving conclusive and meaningful results. The interim analysis of PARA_OA_002 highlighted that the dosing regimen of 2 mg/kg twice weekly, as identified in previous studies, remains the most effective. The data confirmed that doses lower than 2 mg/kg or less frequent dosing did not demonstrate the same level of efficacy. In January 2024, Paradigm held a Type D meeting with the U.S. Food and Drug Administration (FDA) to discuss critical aspects of the ongoing development of iPPS for osteoarthritis treatment. This meeting provided a platform for Paradigm to address key regulatory considerations and to align with the FDA on the next steps required to advance the program for registration. Following this meeting, Paradigm submitted a comprehensive written response to the FDA, which included data from five nonclinical studies, results from the successful PARA_OA_008 phase 2 clinical trial, and clinical data from over 600 participants dosed in stage 1 of PARA_OA_002. Importantly, the submission included the draft protocol of the pivotal phase 3 clinical trial for evidence of efficacy and safety with the selected dose. This submission is a significant step forward, as it sets the stage for the continued progression of the phase 3 program, with Paradigm eagerly awaiting the FDA’s feedback to expedite the path to bringing iPPS to market. Outlook for 2024 As we continue to navigate the regulatory landscape, our focus remains on delivering iPPS to the market as swiftly and safely as possible. The data generated thus far provide a compelling case for iPPS as a transformative treatment for OA, offering hope to millions of patients who currently lack satisfactory therapeutic options. We are confident that our ongoing phase 3 program will further validate the efficacy and safety of iPPS, paving the way for regulatory approvals and commercial success. I sincerely thank the Board for their steadfast support this year, and I’m deeply grateful to the Paradigm team for their relentless effort in delivering exceptional results. Our commitment to improving patient outcomes drives every step we take, and we look forward to achieving more milestones in the year ahead. Dr Donna Skerrett Chief Medical Officer New York City, New York 30 August 2024 CHIEF MEDICAL OFFICER’S REPORT continued “This report highlights the key outcomes from our recent clinical trials and regulatory submissions, including the successful Phase 2 studies, the long-term durability of iPPS, and the critical next steps in our regulatory journey.” Annual Report 2024 08 Paradigm Biopharmaceuticals Limited Annual Report 2024 09 Paradigm Biopharmaceuticals Limited iPPS: EFFECT SIZE DETERMINES PHASE 3 POTENTIAL Effect size is a key metric in clinical trial research that measures the difference in outcomes between groups subjected to different interventions. It’s an extremely useful analysis that cuts through dense data to tease out the magnitude of an intervention’s effect on trial participants, providing valuable insights into clinical efficacy. Following is an exploration and interpretation of effect size analysis of Paradigm’s clinical trials. Paradigm’s Experience of iPPS for Knee OA Paradigm has conducted four high- quality clinical trials investigating the effects of injectable pentosan polysulfide sodium (iPPS) on participant pain and impaired function caused by knee osteoarthritis (with or without associated bone marrow lesions – BML) or due to anterior cruciate ligament (ACL) injury, and which included a total of 11 participants. In three studies Paradigm investigated 2 mg/kg total body weight iPPS – the highest dose evaluated over the clinical program – with dosing twice weekly Understanding Clinical Trial Analysis Models and Effect Size In two phase 2 clinical trials evaluating the efficacy of iPPS versus placebo, the statistical analysis model Mixed- Model Repeated Measures (MMRM) was employed to calculate the effect size of the treatment over time. The effect size is the magnitude of difference between groups and provides a meaningful relationship between variables or the differences between groups. Importantly, effect sizes are independent of the sample size and are categorised as either small (0.20–0.49), medium over six weeks. All three studies demonstrated reduced pain and improved function and established an iPPS safety profile. In addition, Paradigm has collected real-world iPPS usage data from iPPS supplied under the Therapeutic Goods Administration Special Access Scheme (TGA SAS) in patients with knee OA and other similar conditions (hip, foot, or hand OA), as well as patients with knee OA in an Expanded Access compassionate use program in the US. Altogether, over 1000 trial participants and patients have been treated with Paradigm’s iPPS. Annual Report 2024 10 Paradigm Biopharmaceuticals Limited (0.50–0.79), or large (0.80–1)1 – this categorisation is known as Cohen’s d effect size. The calculation of clinical trial effect size in the MMRM model does not inherently minimise the placebo effect, but it allows for clearer differentiation between the actual treatment effect and the placebo effect. The effect size thus represents the additional benefit of the treatment over and above any changes seen in the placebo group. Therefore effect size provides a standardised measure that is independent of sample size, offering a clear understanding of the clinical significance of PPS. Effect Size Impact on Paradigm Study Design Effect size calculation is a pivotal component when designing the phase 3 clinical trial, offering a quantitative measure of the treatment’s impact on pain scores from prior Paradigm studies. A larger effect size at Day 56—the primary endpoint for the phase 3 clinical trial—would indicate a more pronounced treatment effect, supporting the therapeutic potential of PPS in reducing OA-related pain. This approach will ensure a comprehensive evaluation of the therapeutic impact of iPPS, accommodating the complexity and variability inherent in clinical trial data. PARA_005 Key Takeaways and Effect Size In Paradigm’s PARA_005 phase 2 study conducted in participants with knee OA pain, iPPS administration (2 mg/ kg twice weekly for six weeks) resulted in a significant reduction in OA-related knee pain, improvement in function, and overall outcome as assessed by Patient Global Impression of Change evaluation (PGIC). A peak treatment effect of 0.32 was seen for iPPS vs placebo at Day 53 for Knee Injury and Osteoarthritis Outcome Score (KOOS) pain. +500m +1,000 More than 500 million people worldwide have knee osteoarthritis. Over 1,000 participants or patients have received iPPS under Paradigm sponsored clinical trials or through special or expanded access where Paradigm has provided product to prescribing doctors. Annual Report 2024 11 Paradigm Biopharmaceuticals Limited PARA_OA_008 Key Takeaways and Effect Size In the phase 2 PARA_OA_008 study, 61 participants with knee OA pain received 2 mg/kg iPPS twice weekly or placebo for six weeks and were assessed for knee pain and function out to twelve months, as well as synovial joint biomarker and MRI assessments at intermediate timepoints. iPPS treatment reduced knee pain and improved function compared to placebo for the duration of the 12-month study. A treatment effect size of 0.66 was seen for iPPS vs placebo at Day 56 for WOMAC pain, and a treatment effect of 0.74 was seen at Day 365 for WOMAC pain. Implications for the Phase 3 Program The observed effect sizes in these two phase 2 studies demonstrate the potential therapeutic impact of iPPS in treating knee OA and related conditions. These findings support the advancement of iPPS to phase 3 clinical trials, where larger sample sizes can further validate the efficacy and safety of the iPPS treatment. In the initial Phase 2 study (PARA_005), the treatment demonstrated a small effect size of 0.32, which was modest but indicated some level of efficacy. However, in the subsequent Phase 2 PARA_OA_008 study, iPPS showed a more substantial effect, ranging from medium to large. This significant improvement can be attributed to the critical learnings from the first trial that were effectively integrated into the second. One of the key adjustments was the enhanced training provided to both clinical staff and patients to better manage and mitigate the placebo response, which had potentially diluted the observed treatment effects in the first study. These refined strategies not only underscore the importance of careful trial design and execution but also will be vital as the iPPS program advances into Phase 3, where managing placebo response and maintaining robust effect sizes will be crucial for regulatory success and clinical adoption. Paradigm, in consultation with its statistician, has conducted a comprehensive analysis of the two prior phase 2 studies to calculate the effect sizes observed in those trials. By integrating the results from both studies, a blended effect size of 0.4 has been established, which will be used to inform the design of the upcoming phase 3 clinical trial. Effect size is critical in determining the appropriate trial population size needed to achieve statistical significance. Based on these calculations, the proposed phase 3 clinical trial will randomise approximately 400 participants in a 1:1 ratio, with half receiving iPPS and the other half receiving a placebo. This sample size, at an effect size of 0.4, is designed to ensure robust statistical power with a 98% probability of detecting a statistically significant difference between the two groups. IPPS: EFFECT SIZE DETERMINES PHASE 3 POTENTIAL continued 1. Sullivan, G. M., & Feinn, R. (2012). Using Effect Size—or Why the P Value Is Not Enough. Journal of Graduate Medical Education, 4(3), 279–282. doi:10.4300/JGME-D-12-00156.1. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3444174/. 2. Mallinckrodt, C. H., Lane, P. W., Schnell, D., Peng, Y., & Mancuso, J. P. (2008). Recommendations for the Primary Analysis of Continuous Endpoints in Longitudinal Clinical Trials. Therapeutic Innovation & Regulatory Science, 42(4), 303-319. doi:10.1177/009286150804200402. What is Zilosul®? Injectable pentosan polysulfate sodium (iPPS)—or Zilosul® for the use of treating osteoarthritis—is a semi-synthetic heparin-like drug manufactured from the wood of European beech trees. Extracted glucuronoxylans are then sulphated via a proprietary method to produce a negatively charged product that mimics natural glycosaminoglycans (GAGs). GAGs are complex carbohydrates that play a regulatory role in the body through interacting with proteins involved with inflammation. PPS has several key features including anti-inflammatory activity and pain reduction. The mechanism of action of PPS occurs by reducing the transcription factor NFκB. This reduction then modulates nerve growth factor (NGF) expression, potentially reducing pain signalling12–14. The Company’s broader focus is therefore to explore the use of PPS in the treatment of a wide spectrum of conditions that begin with and are sustained by inflammation, such as alpha-viral induced arthralgia, heart failure, osteoarthritis (OA), and the ultra-rare disease mucopolysaccharidosis (MPS). Zilosul® is the registered name of injectable PPS when used for the treatment of pain and to improve function in people with osteoarthritis. Annual Report 2024 12 Paradigm Biopharmaceuticals Limited The Directors present their report together with the Financial Report of Paradigm and the entities it controlled at the end of, or during, the year ended 30 June 2024 (referred to hereafter as the ’Consolidated Entity’ or ‘Paradigm’) Directors Information on Directors The Directors of Paradigm at any time during or since the end of the financial year are: Paul Rennie, Managing and Executive Director (Appointed as Managing Director and ceased as Non-Executive Chairman on 22 November 2022) Paul Rennie BSc, MBM, Grad Dip Commercial Law, MSTC, has sales, marketing, business development, operational and IP commercialisation experience in the biopharmaceutical sector. Paul’s experience includes working for Boehringer Mannheim (now Roche Diagnostics), Merck KGGA as national sales and marketing manager and Soltec (FH Faulding Ltd) as their Director of business development. Paul also led the commercialisation of Recaldent® a novel biopharmaceutical arising from research at the dental school, University of Melbourne. Paul took an R&D project from the laboratory bench to a commercial product now marketed globally as an additive to oral care products. More recently Paul worked in a number of positions with Mesoblast Ltd. Paul was the inaugural COO and moved into Executive Vice President New Product Development for the adult stem cell company. Paul is the founder of Paradigm Biopharmaceuticals. Paul is also Executive Chairman and Interim Chief Executive Officer of NeuroScientific Biopharmaceuticals Ltd (ASX:NSB). Dr Donna Skerrett, Executive Director and Chief Medical Officer (Appointed on 03 July 2020) Dr Donna Skerrett, has more than 30 years’ experience in transfusion medicine, cellular therapy, and transplantation. She brings a wealth of experience in medical, clinical, and regulatory affairs. Donna served previously as Chief Medical Officer at Mesoblast. She was Director of Transfusion Medicine and Cellular Therapy at Weill Cornell Medical Center in New York (2004 – 2011), and prior to that was Associate Director of Transfusion Medicine and Director of Stem Cell Facilities at Columbia University’s New York-Presbyterian Hospital. She has previously chaired the New York State Council on Blood and Transfusion Services, and served on the Board of Directors of the Fox Chase Cancer Center in Philadelphia, PA and is currently a member of the Board of Visitors of Lewis Katz School of Medicine at Temple University. Amos Meltzer, Non-Executive Director (Appointed on 09 December 2020) Amos Meltzer is a scientist and an intellectual property lawyer with over 25 years of experience in international trade and in commercialising technologies, principally in the life sciences sector. He has presided over life science research and product development projects clinical trials as well as the commercialisation of life sciences assets through both licensing and the sale and marketing of a pharmaceutical product. Previously Amos served as General Counsel and IP director at two Nasdaq-listed companies Compugen and Gilat, as a non-executive director of a biotechnology company Evogene and as VP of Business Development and then CEO of an ASX-listed biopharmaceutical company Immuron. Amos currently serves as Chief Legal Officer of neuro-medical device company Synchron, chairman of the Board of surgeons’ education services company Vasculab and as a legal advisor to a number of ASX listed and private life science companies. Amos is a member of the Remuneration and Nomination Committee and a member of the Audit and Risk Management Committee. Matthew Fry, Non-Executive Director (Appointed on 04 March 2024) Matthew joins the Paradigm board with more than 25 years in business creation, strategy, and expansion in healthcare and medical diagnostics globally. He is currently the CEO, Managing Director and Founder of AM Diagnostics Pty Ltd, a manufacturer and distributor of world class medical diagnostic products. Matthew has significant experience with global regulatory agencies, in particular the Australian TGA and US FDA. Through his role as Founder and CEO of AM Diagnostics, Matthew drove the company’s expansion into the United States in 2009 and is a leading biotechnology device supplier with a deep understanding of sales channels in both the US medical wholesale market and retail market, and how to negotiate with private health providers. DIRECTORS’ REPORT Annual Report 2024 13 Paradigm Biopharmaceuticals Limited Helen Fisher, Non-Executive Director (Ceased on 04 March 2024) Helen Fisher, BSc, LLB (Hons), LLM, MCom, is Chief Executive Officer and managing director of Bio Capital Impact Fund (BCIF) and Non–Executive Director and Chair of the Audit and Risk Management Committee of Calix Limited (ASX:CXL), a company with a platform technology with applications in climate change, water management, biotech, and pharmaceutical areas. Prior to establishing BCIF, Helen was a partner of Deloitte and led Deloitte’s life science practice in Australia for 5 years, having had many years’ experience in the life sciences and health care sector. Helen is Chair of the Audit and Risk Management Committee and a member of the Remuneration and Nomination Committee. John Gaffney, Non-Executive Director (Ceased on 20 October 2023) John Gaffney LL.M is a lawyer with over 30 years’ experience and has undertaken the AICD Company Directors qualification. He brings to the Board a compliance and corporate governance background and is experienced in financial services compliance. John also has corporate and commercial experience having worked with a major national law firm as a senior lawyer and also practised as a Barrister at the Victorian Bar. Previously John has been a Non-Executive Director of a US based biotechnology company and SelfWealth Ltd (ASX:SWF). John is Chair of the Remuneration and Nomination Committee and is a member of the Audit and Risk Management Committee. Company Secretary Abby Macnish Niven, Company Secretary (Appointed on 30 August 2022) Abby Macnish Niven (BComm, Bsc, CFA, GAICD) has over 20 years’ experience in wealth management in Australia. She holds a Bachelor of Commerce degree with a double major in Commerce and Science, is a CFA Charterholder and is a member of the Australian Institute of Company Directors. She has also completed the Certificate in Governance Practice. Directorships in Other Listed Entities Directorships of other listed entities held by Directors of Paradigm during the last three years immediately before the end of the financial year are as follows: Period of Directorship Director Company From To Paul Rennie NeuroScientific Biopharmaceuticals Ltd 22-Jun-21 05-Dec-23 Directors’ Meetings The number of Directors’ meetings (including meetings of committees of Directors) and the number of meetings attended by each of the Directors of Paradigm during the financial year are: Board Nomination & Remuneration Committee Audit & Risk Committee Director Held Attended Held Attended Held Attended Paul Rennie 11 11 – – – – Donna Skerrett 11 10 – – – – Amos Meltzer 11 11 1 1 2 2 Matthew Fry 4 4 – – – – Helen Fisher 6 5 1 1 2 2 John Gaffney 3 3 1 1 2 2 In addition to the formal meetings identified in the table above, the committee members and the Board members each convened on many occasions including for the purpose of, in the case of the committees, preparing recommendations to present to the Board and, in the case of the Board, to attend to matters discussed at formal Board meetings and ensure that the Board decisions are implemented, and action items acted upon. DIRECTORS’ REPORT continued Annual Report 2024 14 Paradigm Biopharmaceuticals Limited Committee Membership As at the date of the report, the Paradigm Board resolved to streamline and simplify the Company’s corporate structure, and dissolved the Remuneration and Nomination Committee and Audit and Risk Management Committee of the Board of Directors. Principal Activities The principal activities of Paradigm are researching and developing therapeutic products for human use. Operating Review This report summarises the key operational activities of Paradigm Biopharmaceuticals Ltd. (ASX:PAR) for the financial year 2024, highlighting major achievements, clinical trial progress, financial performance, and strategic engagements. Paradigm made a loss of $58,653,188 (2023: $51,910,013) for the financial year ended 30 June 2024, an increase of $6,743,175 on the prior year. Given Paradigm is a late-stage clinical development company, it is likely that NPAT losses can be expected in future years as the clinical development of Zilosul continues towards marketing approval. Throughout the year, Paradigm made significant investments in trial setup costs for stage 1 of the Phase 3 trial to ensure sites were prepared for the next stage, streamlining the recruitment and enrolment process. The number of clinical trial sites increased from 80 to 120 across seven countries, including Australia, the US, Canada, the UK, Belgium, Poland, and Czechia. An increase in regulatory engagement and consultancy cost were also significantly increase during the financial year. Paradigm met with the US FDA on January 10, 2024, to address the next steps for the Phase 3 clinical program in Osteoarthritis. The company filed response documents containing updated nonclinical and clinical data, and the proposed clinical trial protocol for the next stage of the Phase 3 OA program. In April, Paradigm submitted a comprehensive response package to the US FDA and is expecting an imminent response. Additionally, at the end of June, Paradigm submitted the provisional approval determination application to the TGA, including data from the PARA_OA_008 phase 2 clinical trial. The company is preparing a full dossier submission for provisional approval marketing authorisation, pending a positive determination application decision. In October 2023, Paradigm announced a fully-underwritten capital raise of $30.1M. This comprised an $18M institutional placement and a $12.1M accelerated non-renounceable entitlement offer at $0.43 per share. As part of this raise, the company issued 3 attaching listed options for every 4 new shares, which are exercisable at $0.65AUD and expire on November 30, 2024. The funds were focused on the continuation of phase 3 clinical development and new drug application (NDA) related activities for Zilosul®, business development related activities, product development related activities such as an auto injector, and working capital. Revenue from continuing operations of $65,800 (2023: $46,760) increased compared to the prior corresponding period by $19,040. This revenue is related to the TGA approved Special Access Scheme (SAS). Under the SAS program, Zilosul® has been made available to selected physicians to treat patients experiencing chronic arthralgia from Ross River Virus (RRV) infection, previous SAS patients seeking re-treatment, and other subjects that do not qualify for recruitment in the PARA_OA_002 or PARA_OA_008 clinical studies. The pay-for-use SAS program was launched late in FY 2021, with Paradigm supplying product to prescribing doctors experienced with iPPS, and have the ability to provide the safety monitoring necessary for this program. Subject monitoring is of a standard consistent with those in the PARA_OA_002 and PARA_OA_008 studies which does add further cost to the SAS program. Paradigm is willing to continue to provide SAS for subjects who meet strict participation criteria, knowing that this provides a therapy option for those that have participated in SAS previously or are ineligible for participating in the open studies. Due to the strict monitoring guidelines and reporting procedures, Paradigm has determined necessary to provide access only to prescribing doctors who have considerable experience with the iPPS whilst the Company is conducting its global phase 3 program. Due to this we expect continued modest take up of the SAS program into FY 2025. Other income of $6,454,131 (2023: $8,534,179) is lower than the prior corresponding period by $2,080,048. The main reasons for this decrease are the R&D Tax Incentives received during the year was lower than FY 2023 by $995,078 and the interest received during the year was much lower than FY 2023 by $995,563 due to lower cash at bank in FY 2024. Annual Report 2024 15 Paradigm Biopharmaceuticals Limited Expenditure on research and development increased on the prior corresponding period by $5,654,429 to $58,333,626. Most of the increased spend is directly related to the clinical development program for Zilosul®, a phase 3 asset in treating pain and joint function associated with OA of the knee. The PARA_OA_002 clinical trial underwent an interim analysis that revealed lower doses did not meet performance thresholds, leading to the adoption of a 2mg/kg twice weekly dose regimen for the next stage of the Phase 3 clinical program. The trial successfully completed the randomisation of 600 subjects for stage 1. In the PARA_OA_008 Phase 2 study, significant results were observed, demonstrating durable improvements in WOMAC scores for pain, function, stiffness, and overall effects up to 12 months, along with significant reductions in rescue pain medication use in the iPPS group. Quantitative MRI analysis showed increases in cartilage thickness and volume, and decreases in bone marrow lesions and synovitis compared to the placebo group. Additionally, the phase 2 MPS VI study met its primary endpoint of safety and tolerance and achieved promising clinical improvements in pain and functional assessments following iPPS administration compared to placebo. On October 20 2023, Paradigm announced the resignation of independent Non-Executive Director Mr John Gaffney. Subsequently, on April 4th, 2024, the Company announced that Mr Matthew Fry agreed to join Paradigm as a Non-Executive Director, bringing over 25 years of experience in healthcare and medical diagnostics. Non-Executive Director Helen Fisher stepped down from her position as non-executive director following the addition of Mr Fry. The Paradigm Board has dissolved its Audit and Risk and Remuneration and Nomination Committees, with the current Board of Directors collectively assuming the responsibilities and duties previously held by the committee. This change reflects the Board’s commitment to streamlining governance processes and ensuring comprehensive oversight of audit and risk management functions within the Company. General and administrative costs of $6,215,954 (2023: $6,564,548) were lower than the prior corresponding period by $348,594. The reduced costs in FY 2024 are the result of our targeted cost reduction programs during FY 2024. Commercial expenses of $553,614 (2023: $822,695) were lower than the prior corresponding period by $269,081. The decrease in spend relates primarily to our cost reduction program, whilst still ensuring the delivery of targeted stakeholder engagement and communication programs to continue to raise the external profile of Paradigm’s clinical programs globally. The impairment loss during the period was Nil (2023: Nil). Basic and diluted net loss per share decreased to 20 cents (2023: 20.78 cents as restated) due to a reduced loss attributable to the number of shares. During the period Paradigm conducted a fully underwritten capital raise of $30.1M. In October Paradigm issued approximately 42 million shares via a placement to institutional investors at an issue price of $0.43 to raise approximately $18M before costs of the offer. An accelerated non-renounceable entitlement offer of 1 share for every 10 shares held was also offered to eligible Paradigm shareholders raising approximately $12.1M, with the retail component of the entitlement offer closing in November 2023. Looking ahead, Paradigm plans to commence subject enrolment into the Phase 3 clinical trial (PARA_OA_012) in the second half of CY2024, subject to FDA clearance. Paradigm has made significant strides in clinical trials, regulatory engagements, and financial management throughout the financial year 2024. The company remains focused on advancing its clinical programs and maintaining fiscal discipline to enhance shareholder value and improve patient outcomes. Environmental Regulation Paradigm’s operations are not regulated by any significant environmental law of the Commonwealth or of a state or territory of Australia. Risk Statement Clinical Development Clinical trials are inherently very risky and may prove unsuccessful or non-efficacious, impracticable or costly – which may impact on the prospect of completion. Failure or negative or inconclusive results can occur at many stages in development and the results of earlier clinical trials are not necessarily predictive of future results. In addition, data obtained from trials is susceptible to varying interpretations, and regulators may not interpret the data as favourably as Paradigm, which may delay, limit or prevent regulatory approval. Research and Development Activities Paradigm’s future success is dependent on the performance of Paradigm in clinical trials and whether its therapeutic product candidate proves to be a safe and effective treatment. Paradigm’s lead product is an experimental product in clinical development and product commercialisation resulting in potential product sales and revenues is likely to still be a few years away, and there is no guarantee that, even when commercialised, it will be successful. It requires additional research and development, including ongoing clinical evaluation of safety and efficacy in clinical trials and regulatory approval, prior to marketing authorisation. Drug development is associated with a high failure rate and, until Paradigm is able to provide further clinical evidence of the ability of Paradigm’s product to improve outcomes in patients, the future success of the product in developed remains speculative. Research and development risks include uncertainty of the outcome of results, difficulties or delays in development and generally the uncertainty that surrounds the scientific development of pharmaceutical products. DIRECTORS’ REPORT continued Annual Report 2024 16 Paradigm Biopharmaceuticals Limited Regulatory Approval Paradigm operates within a highly regulated industry, relating to the manufacture, distribution and supply of pharmaceutical products. There is no guarantee that Paradigm will obtain the required approvals, licenses and registrations from all relevant regulatory authorities in all jurisdictions in which it operates. The Commencement of clinical trials may be delayed and Paradigm may incur further costs if the Food and Drug Administration (FDA) and other Regulatory Agencies observe deficiencies that require resolution or request additional studies be conducted in addition to those that are currently planned. A change in regulation may also adversely affect Paradigm’s ability to commercialise and manufacture its treatments. Intellectual Property Risks Securing rights in technology and patents is an integral part of securing potential product value in the outcomes of biotechnology research and development. Competition in retaining and sustaining protection of technology and the complex nature of technologies can lead to patent disputes. Paradigm’s success depends, in part, on its ability to obtain patents, maintain trade secret protection and operate without infringing the proprietary rights of third parties. Because the patent position of biotechnology companies can be highly uncertain and frequently involves complex legal and factual questions, neither the breadth of claims allowed in biotechnology patents nor their enforceability can be predicted. There can be no assurance that any patents which Paradigm may own, access or control will afford Paradigm commercially significant protection of its technology or its products or have commercial application or that access to these patents will mean that Paradigm will be free to commercialise its drug candidates. The granting of a patent does not guarantee that the rights of others are not infringed or that competitors will not develop technology or products to avoid Paradigm’s patented technology. Paradigm’s current Patenting strategies do not cover all countries which may lead to generic competition arising in those markets. Competition The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change, both in Australia and internationally, and there are no guarantees about Paradigm’s ability to successfully compete. Paradigm’s products may compete with existing alternative treatments that are already available to customers. In addition, a number of companies, both in Australia and internationally, are pursuing the development of competing products. Some of these companies may have, or may develop, technologies superior to Paradigm’s own technology. Some competitors of Paradigm may have substantially greater financial, technical and human resources than Paradigm does, as well as broader product offerings and greater market and brand presence. Paradigm’s services, expertise or products may be rendered obsolete or uneconomical or decrease in attractiveness or value by advances or entirely different approaches developed by either Paradigm or its competitors. Commercial Risk Paradigm may, from time to time, consider acquisition, licensing, partnership or other corporate opportunities for Paradigm’s product development programs. There can be no assurance that any such acquisition, licensing, partnership or corporate opportunities can be concluded on terms that are, or are believed by Paradigm to be, commercially acceptable. In the case of licensing and partnership opportunities, even if such terms are agreed there is a risk that the performance of distributors and the delivery of contracted outcomes by collaborators will not occur due to a range of unforeseen factors relating to environment, technology and market conditions. Market Penetration Where Paradigm does obtain regulatory approval, future success will also depend on Paradigm’s ability to achieve market acceptance and attract and retain customers, which includes convincing potential consumers and partners of the efficacy of Paradigm’s products and Paradigm’s ability to manufacture a sufficient quantity and quality of products at a satisfactory price. Manufacturing There is a risk that scale-up of manufacturing of Pentosan Polysulfate Sodium (PPS) for commercial supply may present certain difficulties. Any unforeseen difficulty relating to manufacturing or supply of commercial GMP quantities of PPS may negatively impact Paradigm’s ability to generate profit in future. Reliance on Key Personnel Paradigm is reliant on key personnel employed or engaged by Paradigm. Loss of such personnel may have a material adverse impact on the performance of Paradigm. In addition, recruiting qualified personnel is critical to Paradigm’s success. As Paradigm’s business grows, it may require additional key financial, administrative, investor and public relations personnel as well as additional staff or operations. While Paradigm believes that it will be successful in attracting and retaining qualified personnel, there can be no assurance of such success. The loss of key personnel or the inability to attract suitably qualified additional personnel could have a material adverse effect on Paradigm’s financial performance. Insurance and Uninsured Risks Although Paradigm maintains insurance to protect against certain risks in such amounts as it considers to be reasonable, its insurance will not cover all the potential risks associated with its operations and insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. It is not always possible to obtain insurance against all such risks and Paradigm may decide not to insure against certain risks because of high premiums or other reasons. Annual Report 2024 17 Paradigm Biopharmaceuticals Limited Product Safety and Efficacy Serious or unexpected health, safety or efficacy concerns with Paradigm’s (or similar third party) products may expose Paradigm to reputational harm or reduced market acceptance of its products, and lead to product recalls and/or product liability claims and resulting liability, and increased regulatory reporting. There can be no guarantee that unforeseen adverse events or manufacturing defects will not occur. Paradigm will seek to obtain adequate product liability insurance at the appropriate time in order to minimise its liability to such claims however there can be no assurance that adequate insurance coverage will be available at an acceptable cost. Any health, safety or efficacy concerns are likely to lead to reduced customer demand and impact on potential future profits of Paradigm. Litigation In the ordinary course of conducting its business, Paradigm is exposed to potential litigation and other proceedings, including through claims of breach of agreements, intellectual property infringement or in relation to employees (through personal injuries, occupational health and safety or otherwise). If such proceedings were brought against Paradigm, it would incur considerable defence costs (even if successful), with the potential for damages and costs awards against Paradigm if it were unsuccessful, which could have a significant negative financial effect on Paradigm’s business. Changes in laws can also heighten litigation risk (for example, antitrust and intellectual property). Circumstances may also arise in which Paradigm, having received legal advice, considers that it is reasonable or necessary to initiate litigation or other proceedings, including, for example, to protect its intellectual property rights. There has been substantial litigation and other proceedings in the pharmaceutical industry, including class actions from purchasers and end users of pharmaceutical products. Share Price Fluctuations The market price of Paradigm shares will fluctuate due to various factors, many of which are non-specific to Paradigm, including recommendations by brokers and analysts, Australian and international general economic conditions, inflation rates, interest rates, changes in government, fiscal, monetary and regulatory policies, global geo-political events and hostilities and acts of terrorism, and investor perceptions. Fluctuations such as these may adversely affect the market price of Paradigm shares. Neither Paradigm nor the directors warrant the future performance of Paradigm or any return on investment in Paradigm. Dilution Risk Eligible shareholders that do not take up all or part of their entitlements will be diluted by not participating to the full extent in the Entitlement Offer and by the Institutional Placement, but and will not be exposed to future increases or decreases in Paradigm’s share price in respect of those shares which would have been issued to them had they taken up all of their entitlement. Economic Risks Paradigm is exposed to economic factors in the ordinary course of business. A number of economic factors/conditions, both domestic and global, affect the performance of financial markets generally, which could affect the price at which Paradigm Shares trade on ASX. Among other things, adverse changes in macroeconomic conditions, including movements on international and domestic stock markets, interest rates, exchange rates, cost and availability of credit, general consumption and consumer spending, input costs, employment rates and industrial disruptions, inflation and inflationary expectations and overall economic conditions, economic cycles, investor sentiment, political events and levels of economic growth, both domestically and internationally, as well as government taxation, fiscal, monetary, regulatory and other policy changes may affect the demand for, and price of, Paradigm Shares and adversely impact Paradigm’s business, financial position and operating results. Trading prices can be volatile and volatility can be caused by general market risks such as those that have been mentioned. Shares in Paradigm may trade at or below the price at which they are currently commence trading on ASX including as a result of any of the factors that have been mentioned, and factors such as those mentioned may also affect the income, expenses and liquidity of Paradigm. Additionally, the stock market can experience price and volume fluctuations that may be unrelated or disproportionate to the operating performance of Paradigm. Dividend Guidance No assurances can be given in relation to the payment of future dividends. Future determinations as to the payment of dividends by Paradigm will be at the discretion of Paradigm and will depend upon the availability of profits, the operating results and financial conditions of Paradigm, future capital requirements, covenants in relevant financing agreements, general business and financial conditions and other factors considered relevant by Paradigm. No assurance can be given in relation to the level of tax deferral of future dividends. Tax deferred capacity will depend upon the amount of capital allowances available and other factors. Forward-looking Statements There can be no guarantee that the assumptions and contingencies on which any forward-looking statements, opinions and estimates contained in materials published by Paradigm are based will ultimately prove to be valid or accurate. The forward-looking statements, opinions and estimates depend on various factors, including known and unknown risks, many of which are outside the control of Paradigm. Actual performance of Paradigm may materially differ from forecast performance. DIRECTORS’ REPORT continued Annual Report 2024 18 Paradigm Biopharmaceuticals Limited Significant Changes in the State of Affairs Other than the movement in issued capital which has been disclosed in note 16, there has been no matter or significant changes in the state of affairs of the entities in Paradigm during the year. Please refer to information on the share capital raise in the Operating Review section above Dividends No dividends were declared or paid since the start of the financial year. No recommendation for payment of dividends has been made. Matters Subsequent to the End of the Financial Year No matters or circumstance has arisen since 30 June 2024 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. Likely Developments and Expected Results of Operations Paradigm plans to commence subject enrolment into the Phase 3 clinical trial (PARA_OA_012) in the second half of CY2024, subject to FDA clearance. The company also filed its determination application with the Australian TGA. A positive outcome would allow Paradigm to submit a full dossier to the TGA for review and potentially gain provisional approval for iPPS to in the treatment of moderate to severe knee osteoarthritis, which would expedite the pathway to revenues. Corporate Governance The Corporate Governance Statement appears on Paradigm’s website at: https://paradigmbiopharma.com/about-paradigm/#corporate-governance Directors’ Interests The relevant interest of each Director in the shares and options issued by Paradigm at the date of this report is as follows: Director Ordinary shares Paul Rennie 20,678,805 Donna Skerrett 1,094,284 Amos Meltzer – Matthew Fry 1,069,830 Indemnification and Insurance of Officers Indemnification Paradigm has agreed to indemnify the current Directors of Paradigm against all liabilities to another person (other than Paradigm or a related body corporate) that may arise from their position as Directors of Paradigm, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that Paradigm will meet to the maximum extent permitted by law, the full amount of any such liabilities, including costs and expenses. Insurance Premiums Paradigm paid a premium during the year in respect of a Director and Officer liability insurance policy, insuring the Directors of Paradigm, the Company Secretary, and all Executive Officers of Paradigm against a liability incurred as such a Director, Secretary or Executive Officer to the extent permitted by the Corporations Act 2001. The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the Directors’ and Officers’ liability and legal expenses insurance contracts, as such disclosure is prohibited under the terms of the contract. Annual Report 2024 19 Paradigm Biopharmaceuticals Limited Proceedings on Behalf of Paradigm No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of Paradigm, or to intervene in any proceedings to which Paradigm is a party for the purpose of taking responsibility on behalf of Paradigm for all or part of those proceedings. Officers of Paradigm Who are Former Partners of RSM Australia There are no Officers of Paradigm who are former partners of RSM Australia. Auditor’s Independence Declaration The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 28 of the annual report. Auditor RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001. DIRECTORS’ REPORT continued Annual Report 2024 20 Paradigm Biopharmaceuticals Limited Audited Remuneration Report This Remuneration Report outlines the Director and Executive Remuneration arrangements of Paradigm in accordance with the requirements of the Corporations Act 2001 and the Corporations Regulations 2001. For the purposes of this report, Key Management Personnel (KMP) of Paradigm are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of Paradigm, directly or indirectly, including any Director (whether executive or otherwise) of Paradigm. Remuneration Report The following were KMP of Paradigm at any time during the year and unless otherwise indicated, were KMP for the entire year: Name Position held Date appointed Date ceased Paul Rennie Managing and Executive Director 22 November 2022 Paul Rennie Chairman 22 November 2021 22 November 2022 Donna Skerrett Executive Director 3 July 2020 Amos Meltzer Non-Executive Director 9 December 2020 Matthew Fry Non-Executive Director 4 March 2024 Helen Fisher Non-Executive Director 23 February 2021 4 March 2024 John Gaffney Non-Executive Director 30 September 2014 20 October 2023 Remuneration and Nomination Committee The Paradigm Board has dissolved the Remuneration and Nomination Committee, with the current Board of Directors collectively assuming the responsibilities and duties previously held by the committee. This change reflects the Board’s commitment to streamlining governance processes and ensuring comprehensive oversight of audit and risk management functions within the Company. The board collectively will propose candidates for Director and senior Company executive appointment, review the fees payable to senior Company executives and to Non-Executive Directors and consider and review succession planning. The Board has the authority to consult any independent professional adviser it considers appropriate to assist it in meeting its responsibilities. The Board is responsible to shareholders for ensuring that Paradigm: • has coherent remuneration policies and practices, which are observed, and which enable it to attract and retain Executives and Directors who will create value for shareholders; • fairly and responsibly rewards Executives having regard to the performance of Paradigm, the performance of the Executive and the general pay environment; • provides disclosure in relation to Paradigm’s remuneration policies to enable investors to understand the costs and benefits of those policies and the link between remuneration paid to Directors and key Executives and corporate performance; and • complies with the provisions of the ASX Listing Rules and the Corporations Act 2001. REMUNERATION REPORT Annual Report 2024 21 Paradigm Biopharmaceuticals Limited Principles of Remuneration The objectives of the Company’s remuneration policies are to align directors and KMP to the Company’s and shareholders’ long-term interests and to ensure that remuneration structure is fair and competitive. Paradigm has developed a remuneration philosophy that seeks to combine elements of Fixed Remuneration, Short-Term Incentive (STI) and Long-Term Incentive (LTI) that aims to ensure its remuneration strategy successfully aligns the interests of its executives and employees with those of its shareholders. Paradigm is a late-stage development, pre-commercial revenue pharma company, with less than 50 employees across the US and Australia. The Board maintains a simple remuneration structure and performance review process that comprises: • Fixed remuneration, that allows the organisation to attract and retain individuals with the necessary skills and experience to execute on the Company’s strategy • STI that is linked to individual and Company performance, payable upon achieving individual KPIs and on execution of the Company’s strategy that will grow shareholder value • LTI that is aimed at long term retention of staff and rewards staff in a manner that is aligned with the growth in shareholder value. The Paradigm Employee Performance Rights Plan (the Plan) is a long-term incentive (LTI) designed to motivate key employees towards the company’s success while aligning their interests with those of the shareholders. This Plan was developed with input from an external remuneration consultant and an employee share scheme specialist to ensure it meets best practices and shareholder expectations. The Plan involves granting performance rights to key employees, which convert to shares if certain conditions are met after a vesting period of three years. These conditions include achieving specific business targets, ensuring a minimum return for shareholders, and satisfactory employee performance. The Plan aims to retain key employees over the long term, preserving corporate knowledge and enhancing shareholder value. Central to the Plan is the win-win-win principle, ensuring benefits for shareholders, the company, and employees. Each offer under the Plan includes performance targets tied to company goals and market benchmarks, ensuring employees are rewarded based on objectively measurable business outcomes and their individual performance. The Plan also aims for consistency, treating Australian and U.S. employees similarly as much as legal constraints allow. To maintain the company’s ability to raise capital without prior shareholder approval, the Plan received shareholder approval at the 2023 Annual General Meeting under Listing Rule 7.2 (Exception 13(b)). This approval enables the company to issue securities under the Plan over three years without affecting the 15% limit on equity issuance under Listing Rule 7.1. The securities issued under the Plan are excluded from this limit, providing flexibility in capital management. Remuneration Framework Review The Board adopted the Remuneration Committee’s recommendations that the process of awarding STIs needs to be based on pre-determined KPIs that are objectively measurable and that the award of LTIs needs to be aligned with value created by the Company for the Company’s shareholders. The award of STIs to the KMP is reviewed by the Remuneration Committee that then provides its recommendation to the Board. In preparing its recommendation to the Board, the Remuneration Committee considers the KMPs’ respective KPIs and a formal performance evaluation takes place annually, where each KMP’s actual performance is measured against that KMP’s KPIs. STIs are measured principally based on objectively measurable KPIs and there is generally a small element of discretion that the Remuneration Committee is required to exercise. The CEO performs the evaluations of the Company’s other senior executives. This too occurs annually. To ensure that the value of the LTIs is aligned with value created for the Company’s shareholders, the proposed vesting conditions for the new LTI plan, which is subject to shareholder approval, include the Company attaining value inflection milestones. If the vesting conditions are not met, LTIs do not vest and Company employees to whom LTIs are awarded are not able to realise any of the potential value of the LTIs. Based on the principles that the Remuneration Committee has formulated, the Board continues to devise remuneration policies that benchmark Paradigm’s framework with its peers and is able to effectively attract and retain the best KMP to manage the Company and continue to create value for the Company’s shareholders. REMUNERATION REPORT continued Annual Report 2024 22 Paradigm Biopharmaceuticals Limited Non-Executive Director Remuneration The Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting of shareholders. Remuneration of Non-Executive Directors is determined in maximum aggregate amount of $500,000 by the shareholders and is allocated by the Board. The Board will take independent advice in respect to Directors’ fees on an as needed basis. There is no payment made for attendance at Board committee meetings or participation in other Board activities beyond the global remuneration payable to the directors that is described above. Directors are not required to hold shares in Paradigm as part of their appointment. There is to be no plan to provide remuneration, reward or other benefits to Non-Executive Directors upon the cessation of them holding office as a Director. Executive Remuneration Executive Directors receive no extra remuneration for their service on the Board beyond their executive salary package. KMP remuneration is compared against similar positions across the industry peers to ensure that remuneration levels and structures remain consistent with roles of comparable skill, experience and responsibility levels. Movement in Shares The movement during the reporting period in the number of ordinary shares in Paradigm held directly, indirectly or beneficially by each Director and KMP, including their related entities is as follows: Directors and Key Management Persons Held at year opening Purchases Disposals/ lapsed Issued via ESP Held at year end Paul Rennie 20,512,805 466,000 (300,000) – 20,678,805 Donna Skerrett 1,094,284 – – – 1,094,284 Amos Meltzer – – – – – Matthew Fry – 1,069,830* – – 1,069,830 * Addition of 1,069,830 shares represents shares held at appointment date as of 4 March 2024. Issue of Performance Rights Name Date Performance Rights Fair value of Performance Rights $ Paul Rennie 29 February 2024 1,200,000 $0.235 282,000 Donna Skerrett 29 February 2024 1,000,000 $0.235 235,000 Movements in Performance Rights Directors and Key Management Persons Held at year opening Purchases Disposals/ ESP lapsed Issued via LTI Held at year end Paul Rennie – – – 1,200,000 1,200,000 Donna Skerrett – – – 1,000,000 1,000,000 Shares Under Option Unissued ordinary shares of Paradigm under option at the date of this report are as follows: Directors and Key Management Persons Grant date Expiry date Options Exercise price Paul Rennie 30 November 2023 30 November 2024 349,500 $0.65 Matthew Fry 30 November 2023 30 November 2024 1,302,372 $0.65 Annual Report 2024 23 Paradigm Biopharmaceuticals Limited Employment Agreements The Board has reviewed the remuneration package for the Managing Director in November 2023 where the Managing Director voluntarily agreed to a salary reduction of 20%. The Remuneration and other terms of employment for the Managing Director is formalised in a service agreement. Details of this agreement are as follows: Name: Paul Rennie Title: Managing Director and Chief Executive Officer Agreement commenced: 22 November 2022 Term of agreement: Commence on the Commencement Date and will continue until terminated in accordance with this Agreement. Details: Base annual package *, STI ** and LTI ***, subject to annual performance review, 6-month termination notice by either party, 3-12-month non-solicitation clause after termination depending on the area. Paradigm may terminate the agreement with cause in certain circumstances such as gross misconduct. * Base annual package for financial year 2023/24 has been reduced from $1,060,000 to $848,000 gross per annum inclusive of superannuation effective 1 December 2023, to be reviewed annually by the Board. ** STI to be paid in cash up to a maximum of 30% of the Base Salary (excluding superannuation), provided KPIs agreed with the Board have been met. For financial year 2024, the Board determined not to award STIs within the Company. *** LTI via invitation to participate in Paradigm’s LTI plan, which is subject to shareholder approval. The Board has reviewed the remuneration package for the Chief Medical Officer on 10th August 2023. The Remuneration and other terms of employment for the Chief Medical Officer is formalised in a service agreement. Details of this agreement are as follows: Name: Donna Skerrett Title: Chief Medical Officer Agreement commenced: 1 September 2019 Term of agreement: Role is ongoing Details: Base annual package *, STI ** and LTI ***, subject to annual performance review, 3-month termination notice by either party, 3-12-month non-solicitation clause after termination depending on the area. Paradigm may terminate the agreement with cause in certain circumstances such as gross misconduct. * Base annual package for financial year 2024 – US$608,615 per annum plus 401K contribution of 6%, to be reviewed annually by the Board ** STI to be paid in cash up to a maximum of 30% of the Base Salary, provided KPIs agreed with the Board have been met. For FY 2024, the Board determined not to award STIs within the Company. *** LTI via invitation to participate in Paradigm’s LTI plan, which is subject to shareholder approval. REMUNERATION REPORT continued Annual Report 2024 24 Paradigm Biopharmaceuticals Limited Remuneration of Key Management Personnel Details of the nature and amount of each major element of the remuneration of each Key Management Personnel of Paradigm for the year ended 30 June 2024 are: Short-term Post- employment Long- term Share- based payments Proportion of remun- eration perfor- mance related % Value of options as proportion of remun- eration % Directors and Key Management Personnel Salary & fees $ Annual leave $ Cash bonus $ Super- annuation and benefits $ Long service leave $ Options & Perform- ance Rights $ Total $ Non-Executive Amos Meltzer 80,000 – – 8,800 – – 88,800 0.0% 0.00% Matthew Fry 24,242 – – – – – 24,242 0.0% 0.00% Helen Fisher 53,333 – – 5,867 – – 59,200 0.0% 0.00% John Gaffney 26,667 – – 2,933 – – 29,600 0.0% 0.00% Executive Paul Rennie1 947,820 20,421 – 27,399 – 100,647 1,096,287 0.00% 9.18% Donna Skerrett2,3 928,305 130,838 – 28,504 – 140,297 1,227,944 0.00% 11.43% Total 2,060,367 151,259 – 73,503 – 240,944 2,526,073 0.00% 9.54% 1. Share Based Payments represents valuation of shares awarded on 19 November 2020 and performance rights awarded in February 2024 in line with the Company’s accounting policy for accounting for share based payments. 2. Share Based Payments represents valuation of share awarded on 19 November 2020 and January 2022 and performance rights awarded in February 2024 in line with the Company’s accounting policy for accounting for share based payments. 3. Dr Donna Skerrett is paid in USD, remuneration figures have been translated to AUD at a conversion rate of 0.6556. Remuneration and awards for financial year ended 30 June 2024 Board of Directors Remuneration The Board is responsible for establishing remuneration of Directors. Non-Executive Director fees were unchanged in FY 2024. KMP Remuneration Following the company performance review, the Board has resolved that there will be an increase of 3-6% applied to gross salaries in FY 2024. Performance outcomes for KMP are as follows: During FY 2024, the Company achieved many milestones, including significant clinical trial readouts and 100% recruitment and completion of stage 1 of the PARA_OA_002 clinical trial. Paradigm achieved the randomisation of 600 subjects globally for the PARA_OA_002 clinical trial, recruiting subjects across 7 countries including Australia, the US, UK, Europe and Canada. Once the first 300 subjects completed the designated Day 56, an interim analysis was performed to evaluate the performance of all treatment arms in stage 1. The interim analysis, conducted ahead of schedule, assessed the effectiveness of three iPPS doses against a placebo and identified the optimal dose to prepare for the next stage of the phase 3 OA program. Paradigm also reported new clinical data from the phase 2 PARA_OA_008 clinical trial. Notable results at Day 365 include significant pain reduction, functional improvement and a substantial decrease in the use of rescue pain medication in the iPPS twice-weekly group. Additionally, quantitative MRI analysis demonstrated that iPPS treatment resulted in increased cartilage thickness and volume, and resolution or reduction of bone marrow lesions and synovitis. These findings represent a major advancement, as no previous OA drug has shown such durable and meaningful improvements in pain and function at the 12-month mark and improvements in cartilage at 6-months following a single course of iPPS. Annual Report 2024 25 Paradigm Biopharmaceuticals Limited Whilst many of the Board approved strategic objectives were met and, in some cases, exceeded which have created value for the organisation, this value creation is not yet been reflected in the Company share price. Therefore, the Board resolved that due to cost containment measures and the reduction in shareholder value over FY 2024 no STI’s will be awarded relating to FY 2024 performance. Details of the nature and amount of each major element of the remuneration of each Key Management Personnel of Paradigm for the year ended 30 June 2023 are: Short-term Post- employment Long- term Share- based payments Proportion of remun- eration perfor- mance related % Value of options as proportion of remun- eration % Directors and Key Management Personnel Salary & fees $ Annual leave $ Cash Bonus $ Super- annuation and benefits $ Long service leave $ Options $ Total $ Non-executive Paul Rennie 83,333 – 8,750 – – 92,083 0.0% 0.00% Amos Meltzer 80,000 – 8,400 – – 88,400 0.0% 0.00% Helen Fisher 80,000 – 8,400 – – 88,400 0.0% 0.00% John Gaffney 80,000 – 8,400 – – 88,400 0.0% 0.00% Executive Paul Rennie1 601,791 46,349 72,000 16,542 – 194,513 931,195 7.73% 20.89% Donna Skerrett2 & 3 1,001,144 45,375 120,137 92,604 – 255,596 1,514,856 7.93% 16.87% Marco Polizzi4 662,349 34,650 – 297,686 – – 994,685 0.00% 0.00% Total 2,588,617 126,374 192,137 440,782 – 450,109 3,798,019 5.06% 11.85% 1. Share Based Payments represents valuation of shares awarded on 19 November 2020 in line with the Company’s accounting policy for accounting for share based payments. 2. Share Based Payments represents valuation of shares awarded on 19 November 2020 and 25 January 2022 in line with the Company’s accounting policy for accounting for share based payments. 3. Dr Donna Skerrett is paid in USD, remuneration figures have been translated to AUD at a conversion rate of 0.6734. 4. Mr Marco Polizzi is paid in USD, remuneration figures have been translated to AUD at a conversion rate of 0.6734. The proportion of remuneration linked to performance and the fixed proportion are as follows: Fixed remuneration At risk – STI At risk – LTI Name 2024 2023 2024 2023 2024 2023 Non-Executive Amos Meltzer 100.00% 100.00% – – – – Matthew Fry 100.00% 100.00% – – – – Helen Fisher 100.00% 100.00% – – – – John Gaffney 100.00% 100.00% – – – – Executive Paul Rennie 90.82% 71.38% 0.00% 7.73% 9.18% 20.89% Donna Skerrett 88.57% 75.20% 0.00% 7.93% 11.43% 16.87% REMUNERATION REPORT continued Annual Report 2024 26 Paradigm Biopharmaceuticals Limited The proportion of the cash bonus paid/payable or forfeited is as follows: STI paid/payable STI forfeited Name 2024 2023 2024 2023 Non-Executive Amos Meltzer – – – – Matthew Fry – – – – Helen Fisher – – – – John Gaffney – – – – Executive Paul Rennie 0.00% 40.00% 100.00% 60.00% Donna Skerrett 0.00% 40.00% 100.00% 60.00% Additional Information The earnings of Paradigm for the five years to 30 June 2024 are summarised below: 2024 $ 2023 $ 2022 $ 2021 $ 2020 $ 2019 $ Income 6,519,931 8,580,939 8,787,830 8,941,647 4,695,494 3,245,628 Loss after income tax (58,653,188) (51,910,013) (39,249,584) (34,297,184) (12,298,887) (15,627,544) The factors that are considered to affect total shareholders return (TSR) are summarised below: 2024 2023 2022 2021 2020 2019 Share price at financial year end ($) 0.26 0.99 0.97 2.10 3.15 1.4 Total dividends declared (cents per share) – – – – – – Basic loss per share (cents per share) (20.00) (20.78) (16.87) (14.92) (6.12) (10.93) This is the end of the audited Remuneration Report. Dated at Melbourne, Victoria this 30th day of August 2024. Signed in accordance with a resolution of the Directors, pursuant to section 298(2)(a) of the Corporations Act 2001: Paul Rennie Managing Director Annual Report 2024 27 Paradigm Biopharmaceuticals Limited 28 THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation RSM Australia Partners Level 27, 120 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Paradigm Biopharmaceuticals Limited for the year ended 30 June 2024, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS R J MORILLO MALDONADO Partner Dated: 30 August 2024 Melbourne, Victoria AUDITOR’S INDEPENDENCE DECLARATION Annual Report 2024 28 Paradigm Biopharmaceuticals Limited CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 30 June 2024 Notes Year ended 30-Jun-24 $ Year ended 30-Jun-23 $ Cost of sales (8,988) (18,827) Other income 2 6,519,931 8,580,939 Other gains and losses 3 (46,567) (389,269) Research and development expenses (58,333,626) (52,679,197) General and administration expenses (6,215,954) (6,564,548) Commercial expenses (553,614) (822,695) Finance costs (14,370) (16,416) Loss before income tax (58,653,188) (51,910,013) Income tax expense/(benefit) – – Loss for the year (58,653,188) (51,910,013) Other comprehensive loss – – Items that may be reclassified subsequently to profit or loss Foreign currency translation (697,973) (300,402) Other comprehensive loss for the year, net of tax (697,973) (300,402) Total comprehensive loss attributable to members of the Consolidated Entity (59,351,161) (52,210,415) Earnings per share – loss (cents) Basic and diluted loss per share 21 (20.00) cents (20.78) cents The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes. Annual Report 2024 29 Paradigm Biopharmaceuticals Limited Notes 2024 $ 2023 $ ASSETS Current assets Cash and cash equivalents 5 17,820,827 56,333,085 Trade and other receivables 6 5,082,505 6,807,301 Prepaid expenses 7 1,303,662 599,078 Financial assets held at amortised cost 46,200 46,200 Total current assets 24,253,194 63,785,664 Non-current assets Intangible assets 8 2,947,588 2,947,588 Plant and equipment 9 31,462 42,601 Right-of-use assets 10 158,194 293,791 Total non-current assets 3,137,244 3,283,980 Total assets 27,390,438 67,069,644 LIABILITIES Current liabilities Trade and other payables 11 2,821,157 12,161,182 Employee benefits 12 416,812 776,196 Lease liabilities 13 121,842 104,971 Total current liabilities 3,359,811 13,042,349 Non-current liabilities Employee benefits 14 107,042 112,830 Lease liabilities 15 117,488 236,694 Total non-current liabilities 224,530 349,524 Total liabilities 3,584,341 13,391,873 Net assets 23,806,097 53,677,771 EQUITY Issued capital 16 238,113,171 209,833,883 Share based payment reserve 17 7,549,821 7,786,686 Currency translation reserve (1,126,757) (428,784) Accumulated losses 18 (220,730,138) (163,514,014) Total equity 23,806,097 53,677,771 The consolidated statement of financial position is to be read in conjunction with the accompanying notes. CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2024 Annual Report 2024 30 Paradigm Biopharmaceuticals Limited CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2024 Notes Year ended 30-Jun-24 $ Year ended 30-Jun-23 $ Cash flows from operating activities Research and development and other tax incentive received 7,327,441 7,404,899 Receipts from customers 82,900 23,043 Payments to suppliers and employees (Inclusive of GST) (74,186,537) (53,548,260) Interest received 845,895 950,455 Interest repayment of lease liabilities (14,370) (16,416) Net cash outflow from operating activities 26 (65,944,671) (45,186,279) Cash flows from investing activities Proceeds for financial assets held at amortised cost – – Net cash inflow from investing activities – – Cash flows from financing activities Proceeds from issue of shares 30,116,902 65,987,641 Payment of share issue costs (1,837,614) (3,764,871) Limited recourse loan repaid under ESP – 416,341 Principal repayment of lease liabilities (102,335) (104,489) Net cash inflow from financing activities 28,176,953 62,534,622 Net increase/(decrease) in cash and cash equivalents (37,767,718) 17,348,343 Cash at the beginning of the financial year 56,333,085 39,674,413 Net effect of cash flows on foreign exchange (744,540) (689,671) Cash at the end of the financial year 17,820,827 56,333,085 *There are no non-cash investing or financing activities in the period. The consolidated statement of cash flows is to be read in conjunction with the accompanying notes. Annual Report 2024 31 Paradigm Biopharmaceuticals Limited Issued capital $ Share option reserve $ Accumulated losses $ Currency translation reserve $ Total $ Balance at 30 June 2022 147,194,772 9,261,765 (114,015,544) (128,382) 42,312,611 Loss for the period – – (51,910,013) – (51,910,013) Other comprehensive (loss) – – – (300,402) (300,402) Total comprehensive (loss) for the year ended 30 June 2023 – – (51,910,013) (300,402) (52,210,415) Transactions with owners in their capacity as owners: Shares issued 65,987,641 – – – 65,987,641 Costs in relation to shares issued (3,764,871) – – – (3,764,871) Share based payment expenses for the year (Note 17) – 1,447,590 – – 1,447,590 ESP lapsed in the period – (1,914,909) 1,403,783 – (511,126) Unlisted options lapsed in the period – (786,568) 786,568 – – Transfer from share-based payments reserve on exercise of options – (221,192) 221,192 – – Shares issued relating to repayment of limited recourse loan for ESP 416,341 – – – 416,341 Balance at 30 June 2023 209,833,883 7,786,686 (163,514,014) (428,784) 53,677,771 Loss for the period – – (58,653,188) – (58,653,188) Other comprehensive (loss) – – – (697,973) (697,973) Total comprehensive (loss) for the year ended 30 June 2024 – – (58,653,188) (697,973) (59,351,161) Transactions with owners in their capacity as owners: Shares issued 30,116,854 – – – 30,116,854 Costs in relation to shares issued (1,837,614) – – – (1,837,614) Options exercised in the period 48 – – – 48 Share based payment expenses for the year (Note 17) – 380,752 – 380,752 Options issued in the period – 819,447 – – 819,447 ESP lapsed in the period – (1,437,064) 1,437,064 – – Balance at 30 June 2024 238,113,171 7,549,821 (220,730,138) (1,126,757) 23,806,097 The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2024 Annual Report 2024 32 Paradigm Biopharmaceuticals Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 1. Material Accounting Policy Information The accounting policies that are material to the Consolidated Entity are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Reporting Entity Paradigm Biopharmaceuticals Limited (the “Consolidated Entity”) is a company incorporated and domiciled in Australia. Paradigm Biopharmaceuticals Limited is a company limited by shares which are publicly traded on the Australian Securities Exchange from 19 August 2015. The consolidated financial report of the Consolidated Entity for the year ended 30 June 2024 comprises the Company and controlled entities (together referred to as the “Consolidated Entity”). The nature of the operations and principal activities of the Consolidated Entity are described in the Directors’ Report. For the purposes of preparing the Financial Statements the Consolidated Entity is a for-profit entity. (b) Basis of Preparation Statement of Compliance This financial report is a general-purpose financial report prepared in accordance with the Australian Accounting Standards (“AASs”) (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board and the Corporations Act 2001. This Consolidated Financial Report complies with the International Financial Reporting Standards (”IFRSs”) and interpretations adopted by the International Accounting Standards Board (IASB). Basis of Measurement Historical Cost Convention The Financial Statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of plant and equipment and derivative financial instruments. 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 1 (c). Significant Accounting Policies The accounting policies set out below have been applied consistently by the Consolidated Entity to all periods presented in these Financial Statements. New, Revised or Amending 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. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Rounding of Amounts The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investment Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest dollar. Foreign Currency Translation The financial statements are presented in Australian dollars, which is Paradigm Biopharmaceutical Limited’s functional and presentation currency. Foreign Currency Transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Annual Report 2024 33 Paradigm Biopharmaceuticals Limited 1. Material Accounting Policy Information continued 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 rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. (c) Significant Accounting Estimates, Assumptions and Judgements 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 and estimates on historical experience and on various other factors it 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 below. 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 either the Binomial or Black-Scholes 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. R&D Expenditure The Company’s research and development activities are eligible under the Australian R&D Tax Incentive. The Company has assessed these activities and expenditure to determine which are likely to be eligible under the incentive scheme. The Company has assessed that all research and development expenditure to date does not meet the requirements for capitalisation as an intangible asset because it is not yet probable that the expected future economic benefits that are attributable to the asset will flow. 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. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions. Other Indefinite Life Intangible Assets The Consolidated Entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 1. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Refer to note 8 for further information. Employee Benefits Provision As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been considered. Lease Term The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the consolidated entity’s operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The consolidated entity reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 34 Paradigm Biopharmaceuticals Limited Incremental Borrowing Rate Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the Consolidated Entity estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. Lease Make Good Provision A provision has been made for the present value of anticipated costs for future restoration of leased premises. The provision includes future cost estimates associated with closure of the premises. The calculation of this provision requires assumptions such as application of closure dates and cost estimates. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are recognised in the statement of financial position by adjusting the asset and the provision. Reductions in the provision that exceed the carrying amount of the asset will be recognised in profit or loss. (d) Summary of Significant Accounting Policies (i) Basis of Consolidation Parent Entity 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 25. Subsidiaries The consolidated Financial Statements comprise those of the Consolidated Entity, and the entities it controlled at the end of, or during, the financial year. The balances and effects of transactions between entities in the Consolidated Entity included in the Financial Statements have been eliminated. Where an entity either began or ceased to be controlled during the year, the results are included only from the date control commenced or up to the date control ceased. Subsidiaries are entities controlled by the Consolidated Entity. Control exists 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. The Financial Statements of subsidiaries are included in the consolidated Financial Statements from the date control is transferred to the Consolidated Entity until the date that control ceases. Transactions Eliminated on Consolidation Intra-company balances and all gains and losses or income and expenses arising from intra-company transactions are eliminated in preparing the consolidated Financial Statements. (ii) Cash and Cash Equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity 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. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above but also include as a component of cash and cash equivalents bank overdrafts (if any), which are included as borrowings on the statement of financial position. (iii) Trade and Other Receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Consolidated Entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any provision for impairment. (iv) Investments Investments are initially measured at cost. Transaction costs are included as part of the initial measurement. They are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories is restricted. Annual Report 2024 35 Paradigm Biopharmaceuticals Limited 1. Material Accounting Policy Information continued (v) Intangible Assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. 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. (a) Patents and Trademarks Patents have a finite useful life and are carried at cost less accumulated amortisation and impairment losses once the patents are considered held ready for use. Intellectual property and licences are amortised on a systematic basis matched to the future economic benefits over the useful life of the project once the patents are considered held ready for use. Significant costs associated with trademarks are capitalised and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10 years. (b) 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. (vi) Impairment At the end of each reporting period, the Consolidated Entity assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value-in-use, to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of the money and risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. The Consolidated Entity bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Consolidated Entity’s projects to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. Impairment losses of continuing operations are recognised in the statement of profit or loss in expense categories consistent with the function of the impaired asset. (vii) Plant and Equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and equipment over their expected useful lives of 2-15 years. The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Consolidated Entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 36 Paradigm Biopharmaceuticals Limited (viii) Right-of-use Assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. (ix) Trade and Other Payables Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the entity during the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within the requisite terms specified by the supplier. (x) Share Capital Ordinary and preference shares are classified as equity. Any incremental costs directly attributable to the issue of new shares or options are recognised in equity as a deduction, net of tax, from the proceeds. (xi) 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. (xii) Revenue Interest Income Interest income is recognised on a time proportion basis using the effective interest rate method. Other Revenue Other revenue is recognised when it is received or when the right to receive payment is established. Government Grants Grants that compensate the Consolidated Entity for expenditures incurred are recognised in profit or loss on a systematic basis in the periods in which the expenditures are recognised. R&D tax offset receivables will be recognised in profit before tax (in EBIT) over the periods necessary to match the benefit of the credit with the costs for which it is intended to compensate. Such periods will depend on whether the R&D costs are capitalised or expensed as incurred. (xiii) Employee Benefits Wages and Salaries, Cash Bonus, Annual Leave and Long Service Leave Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required, and they are capable of being measured reliably. Provisions made in respect of employee benefits are measured based on an assessment of the existing benefits to determine the appropriate classification under the definition of short-term and long-term benefits, placing emphasis on when the benefit is expected to be settled. Short-term benefits provisions that are expected to be settled within 12 months are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Annual Report 2024 37 Paradigm Biopharmaceuticals Limited 1. Material Accounting Policy Information continued Long term benefits provisions that are not expected to be settled within 12 months and are measured as the present value of the estimated future cash outflows to be made by the Consolidated Entity in respect of services provided by employees up to reporting date. Consideration is given to the 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 to estimate the future cash flows at a pre-tax rate that reflects current market assessments of the time value of money. Regardless of the expected timing of settlement, provisions made in respect of employee benefits are classified as a current liability unless there is an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date, in which case it would be classified as a non-current liability. Provisions made for annual leave and unconditional long service leave are classified as a current liability where the employee has a present entitlement to the benefit. Provisions for conditional long service are classified as a non-current liability. Share-based Payments The Consolidated Entity operates an incentive scheme to provide these benefits, known as the Paradigm Biopharmaceuticals Limited Employee Share Plan (“ESP”) approved on 22 October 2014. Issues of shares to employees with limited recourse loans under the ESP are share based payments in the form of options. The fair value of options granted under the ESP is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is determined using a binomial pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, 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 limited recourse loan. In valuing share-based payment transactions, no account is taken of any non-market performance conditions. The Consolidated Entity provides benefits to employees (including Directors) of the Consolidated Entity in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares. The cost of share-based payment transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of the Consolidated Entity, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. (xiv) Lease Liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Consolidated Entity’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 38 Paradigm Biopharmaceuticals Limited (xv) 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 the 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 be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: • when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or • when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at 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. The Consolidated Entity and its wholly-owned Australian resident entities are part of a tax-consolidated entity. As a consequence, all members of the tax-consolidated entity are taxed as a single entity. The head entity within the tax-consolidated entity is Paradigm Biopharmaceuticals Limited. Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated entity are recognised in the separate Financial Statements of the members of the tax-consolidated entity using the ‘separate taxpayer within Consolidated Entity’ approach by reference to the carrying amount of assets and liabilities in the separate Financial Statements of each entity and the tax values applying under tax consolidation. Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head entity in the tax-consolidated entity. Any difference between these amounts is recognised by the Consolidated Entity as an equity contribution or distribution. Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability is recognised by the head entity only. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity. (xvi) 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 classified as current when: it is either expected to be realised or intended to be sold or consumed in the Consolidated Entity’s 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 classified as current when: it is either expected to be settled in the Consolidated Entity’s 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. Annual Report 2024 39 Paradigm Biopharmaceuticals Limited 1. Material Accounting Policy Information continued (xvii) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows at their nominal value inclusive of GST. (xviii) Earnings (Loss) Per Share The Consolidated Entity presents basic and, when applicable, diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to the ordinary shareholders of the Consolidated Entity by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is calculated by adjusting basic earnings for the impact of the after-tax effect of costs associated with dilutive ordinary shares and the weighted average number of additional ordinary shares that would be outstanding assuming the conversion of all dilutive potential ordinary shares. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share. (xix) 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 interests. 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 at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of 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. There are no assets held at fair value on a recurring or non-recurring basis. The Consolidated Entity does not have any assets or liabilities held at fair value on a recurring or non-recurring basis. (xx) Operating Segment Identification of Reportable Operating Segments The Consolidated Entity is organised into one operating segment based on the research and development of pharmaceutical drugs. The operating segment is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers (‘CODM’) in assessing performance and in determining the allocation of resources. The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on a monthly basis. New Standards and Interpretations Not Yet Effective 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 2024. The Consolidated Entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 40 Paradigm Biopharmaceuticals Limited 2. Other Income 2024 $ 2023 $ R&D tax incentive 6,047,117 7,042,194 Interest received 407,014 1,402,577 Gain on lease modification – 89,408 Revenue from continuing operations 65,800 46,760 6,519,931 8,580,939 3. Other Gains and Losses 2024 $ 2023 $ Realised currency gains/(losses) (67,542) (116,860) Unrealised currency gains/(losses) 20,975 (272,409) (46,567) (389,269) 4. Expenses Loss before income tax from continuing operations includes the following specific expenses: 2024 $ 2023 $ Short term leases 86,792 71,421 Superannuation 427,075 619,700 Share-based payment expenses 1,200,199 936,462 1,714,066 1,627,583 The Company has elected to show a functional view of its profit and loss. Total wages and salaries for 2024 is $7,634,626 (2023: $9,877,486) including superannuation. 5. Cash and Cash Equivalents 2024 $ 2023 $ Cash at bank and in hand 17,820,827 56,333,085 17,820,827 56,333,085 6. Trade and Other Receivables 2024 $ 2023 $ GST receivable 54,944 43,435 Interest receivable 17,731 456,612 R&D tax incentive receivable 4,985,980 6,266,304 Other receivables 23,850 40,950 5,082,505 6,807,301 7. Prepaid Expenses 2024 $ 2023 $ Prepaid insurance 218,477 248,362 Other prepaid expenses 1,085,185 350,717 1,303,662 599,078 Annual Report 2024 41 Paradigm Biopharmaceuticals Limited 8. Intangible Assets 2024 $ 2023 $ Patents 9,926,366 9,926,366 Less: Accumulated amortisation (6,978,778) (6,978,778) 2,947,588 2,947,588 Reconciliation Carrying amount at the beginning of the period 2,947,588 2,947,588 Additions during the period – – Disposals – – Amortisation expense – – Impairment loss – – Balance at the end of the financial year 2,947,588 2,947,588 The Consolidated Entity performed its annual impairment test in June 2024. The Consolidated Entity remains committed to its respiratory intangible asset. Investigating the use of iPPS as a potential therapy for Hay Fever, Asthma or Chronic Obstructive Pulmonary Disease (COPD) remains part of the Company’s development pipeline. Further consideration is being given around delivery mechanism and developing the formulation to effectively deliver the therapy to treat patients suffering from these illnesses before further development costs are committed. Respiratory Patent The respiratory patent covers the use of PPS for treating Allergic Rhinitis, Allergic Asthma and COPD. The Respiratory patent is now granted in Australia, New Zealand, China, Canada and Europe. The recoverable amount of the respiratory patent as at 30 June 2024 has been determined based on a value-in-use calculation using a 5-year cash flow projection approved by senior management. The after-tax discount rate applied to cash flow projections is in the range of 25-30%. It was concluded that the risk adjusted value-in-use exceeds the carrying amount of the cash generating unit by $11,340,407. As a result of this analysis, management has not recognised an impairment charge. Key Assumptions Used in Value-in-use Calculations and Sensitivity to Changes in Assumptions The calculation of value-in-use for both respiratory and anti-inflammatory/autoimmune patents is most sensitive to the following assumptions: • projected milestone revenue • projected development costs • discount rate Projected revenue has been forecast based on projected partnering income associated with the development of the respiratory asset. The milestone income assumptions in the value in use calculation are comparable to other Global Partnering arrangements with an estimated gross profit of $81m from FY 2025 to FY 2028. The value in use calculation does not include royalty from product sales, as this is seen to be outside of the 5 year period of the calculation. In terms of development costs used in the value in use calculation, there are broad assumptions made, which as Paradigm continues to refine its approach to this asset, may see development costs reduce (i.e. once Paradigm determines the delivery mechanism, formulation of therapy and dose regimen, development costs will become clearer and will be reflected in the model). An after-tax discount rate of between 25-30% has been applied to the projected free cash flow of the cash generating unit. The discount rate reflects the Consolidated Entity’s estimated cost of capital based on the risk-free rate, market risk premium, volatility of the share price relative to market movements, company specific risk factors and some allowance for probability of success adjustment in the interest rate. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 42 Paradigm Biopharmaceuticals Limited 9. Plant and Equipment 2024 $ 2023 $ Computer equipment 104,522 104,522 Less: Accumulated depreciation (100,646) (96,665) 3,876 7,857 Reconciliation Carrying amount at the beginning of the period 7,858 16,033 Additions during the period – – Disposals – – Depreciation expense (3,982) (8,176) Balance at the end of the financial year 3,876 7,857 Clinical trial equipment 9,419 9,419 Less: Accumulated depreciation (9,119) (8,962) 300 457 Reconciliation Carrying amount at the beginning of the period 457 700 Additions during the period – – Disposals – – Depreciation expense (157) (243) Balance at the end of the financial year 300 457 Office equipment 78,038 78,038 Less: Accumulated depreciation (53,516) (47,897) 24,522 30,141 Reconciliation Carrying amount at the beginning of the period 30,141 37,705 Additions during the period – – Disposals – – Depreciation expense (5,619) (7,564) Balance at the end of the financial year 24,522 30,141 Leasehold improvements 20,431 20,431 Less: Accumulated amortisation (17,667) (16,285) 2,764 4,146 Reconciliation Carrying amount at the beginning of the period 4,146 6,219 Additions during the period – – Disposals – – Amortisation expense (1,382) (2,073) Balance at the end of the financial year 2,764 4,146 31,462 42,601 Annual Report 2024 43 Paradigm Biopharmaceuticals Limited 10. Right-of-use Assets 2024 $ 2023 $ Land and buildings – right-of-use 813,579 813,579 Less: Accumulated depreciation (655,385) (519,788) 158,194 293,791 There has been no additions to right of use assets in the current financial year. 11. Trade and Other Payables 2024 $ 2023 $ Trade and other creditors 2,821,157 12,161,182 2,821,157 12,161,182 12. Employee Benefits 2024 $ 2023 $ Annual leave and on-costs 416,812 776,196 416,812 776,196 The current provision for employee benefits includes all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rate payments in certain circumstances. The entire amount is presented as current since the Consolidated Entity does not have an unconditional right to defer settlement. 13. Current Liabilities – Lease Liabilities 2024 $ 2023 $ Lease liabilities 121,842 104,971 121,842 104,971 14. Non-current Liability – Employee Benefits 2024 $ 2023 $ Long service leave provision 107,042 112,830 107,042 112,830 15. Non-current Liability – Lease Liabilities 2024 $ 2023 $ Lease liabilities 20,570 139,776 Make good provision 96,918 96,918 117,488 236,694 Make Good Provision The provision represents the present value of the estimated costs to make good the premises leased by the Consolidated Entity at the end of the respective lease terms. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 44 Paradigm Biopharmaceuticals Limited Movements in Provisions Movements in each class of provision during the current financial year, other than employee benefits, are set out below: Consolidated Lease make good 2024 $ Lease make good 2023 $ Carrying amount at the start of the year 96,918 94,351 Unwinding of discount – 2,567 Carrying amount at the end of the year 96,918 96,918 16. Issued Capital 2024 Number of Shares 2023 Number of Shares 2024 $ 2023 $ Ordinary shares fully paid 350,364,346 281,756,625 238,113,171 209,833,883 The following movements in issued capital occurred during the year: 2024 Number of shares 2023 Number of shares 2024 $ 2023 $ Ordinary shares Balance as at the beginning of the period 281,756,625 232,680,798 209,833,883 147,194,772 Ordinary shares issued 70,039,216 50,759,724 30,116,854 65,987,641 Ordinary shares issue costs (Net of GST) – – (1,837,614) (3,764,871) Shares issued under ESP – 2,000,000 – – ESP shares lapsed/buy-back in the period (1,431,570) (3,683,897) – – Limited recourse loan repaid under ESP – – – 416,341 Options exercised in the period 75 – 48 – Balance as at the end of the period 350,364,346 281,756,625 238,113,171 209,833,883 Ordinary Shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Consolidated Entity in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Consolidated Entity 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. Capital Risk Management The Consolidated Entity’s objectives when managing capital is 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. In order to maintain or adjust the capital structure, the Consolidated Entity may adjust the number of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Consolidated Entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current Consolidated Entity’s share price at the time of the investment. The Consolidated Entity is not actively pursuing additional investments in the short-term as it continues to integrate and grow its existing businesses in order to maximise synergies. The Consolidated Entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The capital risk management policy remains unchanged from the 30 June 2023 Annual Report. Annual Report 2024 45 Paradigm Biopharmaceuticals Limited 17. Share Based Payment Reserve 2024 $ 2023 $ Balance as at the beginning of the period 7,786,686 9,261,765 Share based payment expenses in the period 380,752 1,447,590 Options issued in the period 819,447 – ESP options lapsed in the period (1,437,064) (1,914,909) Unlisted options lapsed in the period – (786,568) Transfer from share reserve on exercise of options – (221,192) 7,549,821 7,786,686 Once approved by the Board, monies are loaned by the Consolidated Entity interest free and on a non-recourse basis to participants to finance the purchase of shares in the company. The ESP shares are registered in the name of participants but are subject to a restriction on disposal for a period of five years (from date of issue) and for further periods whilst they remain financed. On cessation of employment, the entitlement to any shares held for less than three years is pro-rated. Fair values at loan date are determined using a Binomial Hedley pricing model that takes into account the issue price, the term of the loan, the share price at loan date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the loan. The weighted average share price during the financial year was $0.4739 (30 June 2023: $1.2746). Set out below are summaries of options granted under the Employee Share plan: 30-Jun-24 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised Expired/ cancelled Balance at the end of the year 7/11/2019 7/11/2024 $2.93 1,128,893 – – (431,570) 697,323 10/07/2020 10/07/2025 $3.24 1,365,000 – – (450,000) 915,000 19/11/2020 19/11/2025 $3.05 1,100,000 – – 1,100,000 10/09/2021 10/09/2026 $2.41 1,970,000 – – (640,000) 1,330,000 25/01/2022 25/01/2027 $1.89 375,000 – – – 375,000 5,938,893 – – (1,521,570) 4,417,323 30-Jun-23 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised Expired/ forfeited Balance at the end of the year 7/11/2019 7/11/2024 $2.93 2,245,890 – (713,100) (403,897) 1,128,893 10/07/2020 10/07/2025 $3.24 1,915,000 – – (550,000) 1,365,000 19/11/2020 19/11/2025 $3.05 1,100,000 – – – 1,100,000 10/09/2021 10/09/2026 $2.41 2,700,000 – – (730,000) 1,970,000 25/01/2022 25/01/2027 $1.89 375,000 – – 375,000 7/07/2022 7/07/2027 $0.96 – 2,000,000 – (2,000,000) – 8,335,890 2,000,000 (713,100) (3,683,897) 5,938,893 For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the grant date, are as follow: Grant date Expiry date Share price at grant date Exercise price Expected volatility Dividend yield Risk free rate Fair value at grant date 30/11/2023 30/11/2024 $0.39 $0.65 72.00% 0.00% 4.10% $0.07 12/02/2024 9/02/2026 $0.35 $0.65 70.00% 0.00% 3.83% $0.07 In addition, the Consolidated Entity has the following unlisted options as at 30 June 2024: (i) 2,500,000 unlisted options exercisable at $0.65 each on or before 9 February 2026 in accordance with existing corporate services mandate the weighted average remaining contractual life of options outstanding at the end of the financial year was 1.61 years. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 46 Paradigm Biopharmaceuticals Limited Listed Options 30-Jun-24 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised/ lapsed Balance at the end of the year 30/11/2023 30/11/2024 $0.65 – 51,800,629 – 51,800,629 27/11/2023 30/11/2024 $0.65 – 10,100,635 (75) 10,100,560 – 61,901,264 (75) 61,901,189 Unlisted Options 30-Jun-24 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised/ lapsed Balance at the end of the year 12/02/2024 9/02/2026 $0.65 – 2,500,000 – 2,500,000 – 2,500,000 – 2,500,000 30-Jun-23 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised Balance at the end of the year 24/03/2020 24/03/2023 $1.75 550,000 – (550,000) – 28/02/2020 28/02/2023 $1.75 275,000 – (275,000) – 825,000 – (825,000) – For the performance rights granted during the current financial year, the valuation model inputs used to determine the fair value at the grant date, are as follow: Grant date Expiry date Share price at grant date Expected volatility Risk free rate Fair value at grant date 29/02/2024 29/02/2027 $0.40 90% 4.01% $0.235 Unlisted performance rights 30-Jun-24 Grant date Expiry date Balance at the start of the year Granted Exercised/ lapsed Balance at the end of the year 29/02/2024 29/02/2027 – 3,968,639 3,968,639 – 3,968,639 – 3,968,639 18. Accumulated Losses 2024 $ 2023 $ Balance as at the beginning of the period (163,514,014) (114,015,544) Loss for the accounting period (58,653,188) (51,910,013) ESP options lapsed in the period 1,437,064 1,403,783 Unlisted options lapsed in the period – 786,568 Transfer from share reserve on exercise of options – 221,192 (220,730,138) (163,514,014) Annual Report 2024 47 Paradigm Biopharmaceuticals Limited 19. Commitments The Consolidated Entity had no material capital or operational commitments as at 30 June 2024 and 30 June 2023. 20. Contingencies The Consolidated Entity had no contingent liabilities as at 30 June 2024 and 30 June 2023. 21. Loss Per Share 2024 $ 2023 $ Net loss for the year attributable to ordinary shareholders (58,653,188) (51,910,013) Number Number Weighted average number of ordinary shares used in calculating basic loss per share 293,283,517 249,755,554 Weighted average number of ordinary shares used in calculating diluted loss per share 293,283,517 249,755,554 Cents Cents Basic loss per share 20.00 20.78 Diluted loss per share 20.00 20.78 22. Financial Instruments Disclosure The Consolidated Entity’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and accounts payable. The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in the accounting policies of these Financial Statements, are as follows: 2024 $ 2023 $ Financial assets Current Cash and cash equivalents 17,820,827 56,333,085 Other receivables 96,526 540,997 Term deposits 46,200 46,200 17,963,553 56,920,282 Financial liabilities Current Trade and other payables at amortised cost 2,821,157 12,161,182 Lease liabilities 121,842 104,971 2,942,999 12,266,153 Non-current Lease liabilities 20,570 139,776 20,570 139,776 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 48 Paradigm Biopharmaceuticals Limited Financial Risk Management Objectives The Consolidated Entity’s activities expose it to a variety of financial risks: market risk (including foreign currency risk), credit risk and liquidity risk. The Consolidated Entity’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Consolidated Entity. The Consolidated Entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk. Risk management is carried out by senior finance executives (‘finance team’) under policies approved by ‘the Board. These policies include identification and analysis of the risk exposure of the Consolidated Entity and appropriate procedures, controls and risk limits. The finance team identifies, evaluates and hedges financial risks within the Consolidated Entity’s operating units and reports to the Board on a monthly basis. Market Risk Market risk is the risk that changes in market prices, such as foreign currency fluctuations, interest rates and equity prices will affect the Consolidated Entity’s income and expenses or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Equity Price Risk The Consolidated Entity is currently not subject to equity price risk movement. Interest Rate Risk Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from fluctuations in interest bearing financial assets and liabilities that the Consolidated Entity uses. Interest bearing assets comprise cash and cash equivalents which are considered to be short-term liquid assets and investment decisions are governed by the monetary policy. During the year, the Consolidated Entity had no variable rate interest bearing liability. It is the Consolidated Entity’s policy to settle trade payables within the credit terms allowed and therefore not incur interest on overdue balances. Foreign Currency Risk The carrying amount of the Consolidated Entity’s foreign currency denominated financial assets and financial liabilities at the reporting date were as follows: Assets Liabilities Consolidated 2024 $ 2023 $ 2024 $ 2023 $ US dollars 39,096 135,617 98,317 372,716 39,096 135,617 98,317 372,716 The Consolidated Entity’s main currency exposure is the AUD:USD pair, with much of the Company’s clinical development costs being denominated in USD. The Company review’s its currency needs and uses a combination of sourcing currency at spot or via forward contracts to manage USD flows. The consolidated entity had net liabilities denominated in foreign currencies of US$59K as at 30 June 2023 (2023: US$237K net liabilities). Based on this exposure, had the Australian dollar weakened by 10%/strengthened by 10% against these foreign currencies with all other variables held constant, the Consolidated Entity’s profit before tax for the year would have been $6.6K lower/higher (2023: $26K lower/higher). The percentage change is illustrative of overall volatility of the significant currencies, which is based on management’s assessment of reasonable possible fluctuations taking into consideration movements over the last 6 months each year and the spot rate at each reporting date. The actual unrealised foreign exchange loss for the year ended 30 June 2024 was $46.6K (2023: loss of $389K). Credit Risk Credit risk is the risk of financial loss to the Consolidated Entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Consolidated Entity’s receivables from customers and investment securities. The Consolidated Entity does not presently have customers and consequently does not have credit exposure to outstanding receivables. Trade and other receivables represent GST refundable from the Australian Taxation Office and R&D Tax incentive claims. Trade and other receivables are neither past due nor impaired. Credit risk of the Consolidated Entity is low because the majority financial instruments are cash in bank. Annual Report 2024 49 Paradigm Biopharmaceuticals Limited 22. Financial Instruments Disclosure continued Liquidity Risk Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they fall due. The Consolidated Entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Consolidated Entity’s reputation. The Consolidated Entity’s objective is to maintain a balance between continuity of funding and flexibility. The Consolidated Entity’s exposure to financial obligations relating to corporate administration and projects expenditure, are subject to budgeting and reporting controls, to ensure that such obligations do not exceed cash held and known cash inflows for a period of at least 1 year. 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 – 2024 Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ Non-derivatives Non-interest bearing Trade payables – 2,821,157 – – – 2,821,157 Other payables – – – – – – Interest-bearing – fixed rate Lease liability 4.70% 123,172 20,709 – – 143,881 Total non-derivatives 2,944,329 20,709 – – 2,965,038 Consolidated – 2023 Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ Non-derivatives Non-interest bearing Trade payables – 12,161,182 – – – 12,161,182 Other payables – – – – – – Interest-bearing – fixed rate Lease liability 4.70% 116,706 123,172 20,709 – 260,587 Total non-derivatives 12,277,888 123,172 20,709 – 12,421,769 Fair Value of Financial Assets and Liabilities The fair value of cash and cash equivalents and non-interest-bearing financial assets and financial liabilities of the Consolidated Entity is equal to their carrying value. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 50 Paradigm Biopharmaceuticals Limited 23. Related Parties Receivable from and Payable to Related Parties The following transactions occurred with related parties: Consolidated 2024 $ 2023 $ Payments for legal services provided by Biomeltzer, which Amos Meltzer is also a director of 8,730 31,680 Parent Entity The Parent Entity is Paradigm Biopharmaceuticals Limited. Controlled Entities Interests in controlled entities are outlined in note 24. In the Financial Statements of the Consolidated Entity, investments in subsidiaries are measured at cost. All entity interests held are fully paid ordinary shares or units. The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries in accordance with the accounting policy described in note 1: 24. Controlled Entities Ownership interest Name Principal place of business 2024 % 2023 % Paradigm Health Sciences Pty Ltd Australia 100.00% 100.00% Xosoma Pty Ltd Australia 100.00% 100.00% C4M Pharmaceuticals Pty Ltd Australia 100.00% 100.00% Paradigm Biopharmaceuticals (Ireland) Limited Ireland 100.00% 100.00% Paradigm Biopharmaceuticals (USA) Inc. USA 100.00% 100.00% Subsidiaries An inter-company loan exists between Paradigm Biopharmaceuticals Limited (Parent) and Paradigm Health Sciences (Subsidiary) of amounts owing to Paradigm Biopharmaceuticals Limited $334,061 (2023: $334,061). Annual Report 2024 51 Paradigm Biopharmaceuticals Limited 25. Parent Entity Disclosures Set out below is the supplementary information about the parent entity 2024 $ 2023 $ Statement of profit or loss and other comprehensive income Loss after income tax (13,675,226) (17,296,643) Statement of financial position Total current assets 24,066,645 61,465,176 Total assets 138,755,637 123,084,610 Total current liabilities 2,611,928 2,620,168 Total liabilities 2,836,458 2,969,692 Total equity 135,919,179 120,114,918 There are no guarantees entered into by the parent entity in relation to the debts of its subsidiaries. Contingent Liabilities The parent entity had no contingent liabilities as at 30 June 2024 and 30 June 2023. Commitments The parent entity had no material capital or operational commitments as at 30 June 2024 and 30 June 2023. Significant Accounting Policies The accounting policies of the parent entity are consistent with those of the Consolidated Entity. 26. Reconciliation of Cash Flows Provided by Operating Activities 2024 $ 2023 $ Loss for the year (58,653,188) (51,910,013) Gain on lease modification – (89,408) Depreciation and amortisation 146,736 153,656 Foreign exchange unrealised gains/(losses) 46,567 389,272 Share based payment expense 1,200,199 936,462 Change in operating assets and liabilities (Increase)/decrease in trade receivables 1,285,915 363,619 (Increase)/decrease in other receivables 438,881 (452,122) (Increase)/decrease in other assets (704,584) 131,637 Increase/(decrease) in payables (9,340,024) 5,072,903 Increase/(decrease) in provisions (365,173) 217,716 Net cash used in operating activities (65,944,671) (45,186,279) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 52 Paradigm Biopharmaceuticals Limited 27. Events Subsequent to Reporting Date No matters or circumstance has arisen since 30 June 2024 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. 28. Key Management Personnel Remuneration Disclosures The aggregate remuneration made to directors and other members of key management personnel of the Consolidated Entity is set out below: 2024 $ 2023 $ Short-term employee benefits 2,211,626 2,907,128 Post-employment benefits 73,503 440,782 Long-term employee benefits – – Share-based payments 240,944 450,109 2,526,073 3,798,019 29. Auditor’s Remuneration Note During the financial year the following fees were paid or payable for services provided by RSM Australia Partners, the auditor of the company 2024 $ 2023 $ Audit services Audit or review of the financial statements 83,300 79,000 83,300 79,000 Other services network firms Provision of Ireland Registered Office and corporation services 5,913 3,535 Preparation of the Ireland tax return and other tax matters 7,249 – 13,162 3,535 96,462 82,535 In addition, RSM Ireland provided services tax and secretarial services for Paradigm. Since July 2023, services in relation to preparing Income tax returns and R&D tax incentive claim for Paradigm are no longer performed by RSM. Annual Report 2024 53 Paradigm Biopharmaceuticals Limited 30. Income Tax Expenses 2024 $ 2023 $ Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense (58,653,188) (51,910,013) Tax at the statutory tax rate of 25% (14,663,297) (12,977,503) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Depreciation and amortisation 36,684 38,414 Entertainment expenses 1,324 3,143 Share-based payment 300,050 234,115 Employee benefits (91,293) 54,429 Foreign exchange losses 11,642 95,624 Differences in tax rate from different jurisdictions (1,799,067) (1,384,500) Current year tax losses not recognised (16,203,957) (13,936,278) Income tax expense – – Tax losses not recognised Unrecognised deferred tax assets in relation to tax losses 46,125,495 29,921,538 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 continued Annual Report 2024 54 Paradigm Biopharmaceuticals Limited Entity name Entity type Place formed/ Country of incorporation Ownership interest % Tax residency Paradigm Biopharmaceuticals Limited Body corporate Australia 100.00% Australia* Paradigm Health Sciences Pty Ltd Body corporate Australia 100.00% Australia* Xosoma Pty Ltd Body corporate Australia 100.00% Australia* C4M Pharmaceuticals Pty Ltd Body corporate Australia 100.00% Australia* Paradigm Biopharmaceuticals (Ireland) Limited Body corporate Ireland 100.00% Ireland Paradigm Biopharmaceuticals (USA) Inc. Body corporate USA 100.00% USA * Paradigm Biopharmaceuticals Limited (the ‘Consolidated Entity’) and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. CONSOLIDATED ENTITY DISCLOSURE STATEMENT for the year ended 30 June 2024 Annual Report 2024 55 Paradigm Biopharmaceuticals Limited In the Directors opinion (a) the Financial Statements and notes thereto and the Remuneration Report contained in the Directors’ Report are in accordance with the Corporations Act 2001 and other mandatory professional reporting requirements: (b) the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1(b) to the financial statements; (c) the attached financial statements and notes give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2024 and of its performance for the financial year ended on that date; (d) there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable. (e) the information disclosed in the attached consolidated entity disclosure statement is true and correct. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 for the financial year ended on 30 June 2024. Signed in accordance with a resolution of the Directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the Directors Paul Rennie Managing Director Dated at Melbourne, Victoria this 30th day of August 2024. DIRECTORS’ DECLARATION Annual Report 2024 56 Paradigm Biopharmaceuticals Limited INDEPENDENT AUDIT REPORT 57 THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation RSM Australia Partners Level 27, 120 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199 www.rsm.com.au INDEPENDENT AUDITOR’S REPORT To the Members of Paradigm Biopharmaceuticals Limited Opinion We have audited the financial report of Paradigm Biopharmaceuticals Limited (the “Company”) and its subsidiaries (the “Consolidated entity”), which comprises the consolidated statement of financial position as at 30 June 2024, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, the consolidated entity disclosure statement and the directors' declaration. In our opinion the accompanying financial report of the Consolidated entity is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Consolidated entity's financial position as at 30 June 2024 and of its financial performance for the year then ended; and (ii) 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 Consolidated Entity 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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Annual Report 2024 57 Paradigm Biopharmaceuticals Limited 58 Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our audit addressed this matter Research and development expenses Refer to Note 1 (d) (v) in the financial statements The Consolidated entity incurred in expenditure amounting to $58.3m in relation to Research and development expenses of ongoing projects, primarily for the phase 3 clinical trials programs of the osteoarthritis project. These activities are the primary business of Paradigm and deemed to be still in ‘research phase’. Accordingly, these expenses have been recognised in the profit or loss as incurred in line with AASB 138 Intangible Assets (‘AASB 138’). We considered the accounting of Research and development expenses to be a key audit matter because it is the Consolidated entity main business activity and represents its most significant expense. In addition, management is required to exercise significant judgment to determine whether a particular project is categorised to be in ‘research’ or ‘development’ phase, which then dictates the appropriate accounting treatment in the financial statements. Our audit procedures in relation to this matter included: • Holding discussions with management regarding the current status of each project to gather an understanding of management’s conclusion that the projects are still being in the ‘research phase’ as defined by AASB 138; • Gathering an understanding the entity level of controls (in particular regarding control activities relevant to procurement, payables and payments). This procedure included an evaluation of the effectiveness of the design of the controls in place; and • Performing substantive detail testing by agreeing a sample of expenses to supporting documentation to understand the nature of the expenditure incurred and to verify the accuracy and existence of the recorded expenses. Other Information The directors are responsible for the other information. The other information comprises the information included in the Consolidated entity's annual report for the year ended 30 June 2024; but does not include the financial report and the auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. INDEPENDENT AUDIT REPORT continued Annual Report 2024 58 Paradigm Biopharmaceuticals Limited 59 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: a. the financial report (other than the consolidated entity disclosure statement) that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; and b. the Consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001, and Responsibilities of the Directors for the Financial Report (Continued) for such internal control as the directors determine is necessary to enable the preparation of: i. the financial report (other than the consolidated entity disclosure statement) that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and ii. the Consolidated entity disclosure statement that is true and correct and is free of misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Consolidated entity 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 Consolidated entity or to cease operations, or have no realistic alternative but to do so. 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/admin/file/content102/c3/ar2_2020.pdf. This description forms part of our auditor's report. Annual Report 2024 59 Paradigm Biopharmaceuticals Limited 60 Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in page 21 to 27 of the directors' report for the year ended 30 June 2024. In our opinion, the Remuneration Report of Paradigm Biopharmaceuticals Limited, for the year ended 30 June 2024, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. RSM AUSTRALIA PARTNERS R J MORILLO MALDONADO Partner Dated: 30 August 2024 Melbourne, Victoria INDEPENDENT AUDIT REPORT continued Annual Report 2024 60 Paradigm Biopharmaceuticals Limited Details of shares and options as at 14 August 2024: Top Holders The 20 largest holders of each class of equity security as at 14 August 2024 were: Fully Paid Ordinary Shares Name Number of shares % HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 16,098,954 4.59% CITICORP NOMINEES PTY LIMITED 15,194,109 4.34% SANDHURST TRUSTEES LTD15,148,692 4.32% KZEE PTY LTD 11,380,902 3.25% MR PAUL JOHN RENNIE 8,500,548 2.43% NETWEALTH INVESTMENTS LIMITED 7,233,311 2.06% BNP PARIBAS NOMS PTY LTD 7,223,423 2.06% BNP PARIBAS NOMINEES PTY LTD 7,167,669 2.05% MR EVAN PHILIP CLUCAS & MS LEANNE JANE WESTON 6,129,195 1.75% NANCY EDITH WILSON-GHOSH 3,475,835 0.99% BNP PARIBAS NOMINEES PTY LTD 2,470,966 0.71% 39KP PTY LTD 2,427,367 0.69% MR ADAM WILLIAM HUTS 2,405,000 0.69% WACC PTY LTD 2,337,318 0.67% MR ANTHONY MARK VAN DER STEEG 2,051,787 0.59% JUZCORP PTY LIMITED 1,607,958 0.46% FINCLEAR SERVICES PTY LTD 1,585,274 0.45% FLINDERS MEDICAL CENTRE FOUNDATION 1,562,000 0.45% MS LENNA YU LING TYE 1,441,631 0.41% LEMPIP NOMINEES PTY LTD 1,276,512 0.36% Totals: Top 20 holders of ORDINARY FULLY PAID SHARES 116,718,451 33.31% Total Remaining Holders Balance 233,645,895 66.69% Distribution Schedules A distribution of each class of equity security as at 14 August 2024: Fully Paid Ordinary Shares Range Total holders Units % of issued capital 1 – 1,000 4,020 2,108,450 0.01 1,001 – 5,000 4,702 12,334,747 0.04 5,001 – 10,000 1,751 13,391,528 0.04 10,001 – 100,000 2,826 88,240,084 0.25 100,001 Over 459 234,289,537 0.67 Total 13,758 350,364,346 100.00 SHAREHOLDER INFORMATION Annual Report 2024 61 Paradigm Biopharmaceuticals Limited Substantial Shareholders The names of substantial shareholders and the number of shares to which each substantial shareholder and their associates have a relevant interest, as disclosed in substantial shareholding notices given to the Consolidated Entity, are set out below: Substantial shareholder Number of shares PAUL RENNIE AND RELATED COMPANIES 20,678,805 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 16,098,954 CITICORP NOMINEES PTY LIMITED 15,194,109 SANDHURST TRUSTEES LTD 15,148,692 Unmarketable Parcels Holdings less than a marketable parcel of ordinary shares (being 2,272 shares at 14 August 2024): Holders Units 6,325 5,853,703 Voting Rights The voting rights attaching to ordinary shares are: • On a show of hands every member present in person or by proxy shall have one vote and upon a poll each share shall have one vote. • Options do not carry any voting rights. On-market Buy Back There is no current on-market buy-back. SHAREHOLDER INFORMATION continued Annual Report 2024 62 Paradigm Biopharmaceuticals Limited The Board and management of Paradigm Biopharmaceuticals Limited (Consolidated Entity) are committed to conducting the business of the Consolidated Entity in an ethical manner and in accordance with the highest standards of corporate governance. The Consolidated Entity has adopted and has substantially complied with the ASX Corporate Governance Principles and Recommendations (Fourth Edition) to the extent appropriate to the size and nature of the Consolidated Entity’s operations. This Corporate Governance Statement is accurate and up to date as at 29 August 2024 and has been approved by the Board. The Corporate Governance Statement is available on the Consolidated Entity’s website at: http://www.paradigmbiopharma.com/investors/corporate-governance CORPORATE GOVERNANCE STATEMENT Annual Report 2024 63 Paradigm Biopharmaceuticals Limited The Financial Statements cover Paradigm Biopharmaceuticals Limited as a Consolidated Entity consisting of Paradigm Biopharmaceuticals Limited and the entities it controlled at the end of, or during the year. The Financial Statements are presented in Australian dollars, which is Paradigm Biopharmaceuticals Limited’s functional and presentation currency. Paradigm Biopharmaceuticals Limited is a listed public company limited by shares, incorporated and domiciled in Australia. A description of the nature of the Consolidated Entity’s operations and its principal activities are included as part of the Financial Statements. The Financial Statements were authorised for issue, in accordance with a resolution of Directors, on 30 August 2024. The Directors have the power to amend and reissue the Financial Statements. GENERAL INFORMATION Annual Report 2024 64 Paradigm Biopharmaceuticals Limited Directors Mr Paul Rennie Managing and Executive Director Dr Donna Skerrett Executive Director Mr Amos Meltzer Non-Executive Director Mr Matthew Fry Non-Executive Director (Appointed on 04 March 2024) Ms Helen Fisher Non-Executive Director (Ceased on 04 March 2024) Mr John Gaffney Non-Executive Director (Ceased on 20 October 2023) Company Secretary Ms Abby Macnish Niven Principal Place of Business Level 15, 500 Collins Street Melbourne, VIC 3000 Registered Office Level 15, 500 Collins Street Melbourne, VIC 3000 Auditor RSM Australia Partners Level 27, 120 Collins Street Melbourne, VIC 3000 Solicitors Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street Perth, WA 6000 Share Registry Automic Group Level 5, 191 St Georges Terrace Perth, WA 6000 Bankers Commonwealth Bank Level 20, Tower One, Collins Square 727 Collins Street Melbourne, VIC 3008 Stock Exchange ASX Limited Level 4, North Tower, 525 Collins Street Melbourne, VIC 3000 ASX Code: PAR Website https://paradigmbiopharma.com/ CORPORATE DIRECTORY Annual Report 2024 65 Paradigm Biopharmaceuticals Limited