Kazia Therapeutics Annual Report 2021

This list, dramatic as it is, is only a selective compilation of highlights. One could also point to our receipt of important regulatory designations by FDA, such as Fast Track and Rare Pediatric Disease Designation for paxalisib. Important new data read outs have been presented at international conferences and several new phase II clinical studies were launched. These include one in primary CNS lymphoma at Dana- Farber Cancer Institute, one in DIPG with the Pacific Pediatric Neuro- Oncology Consortium, and a third at Cornell University examining paxalisib in combination with ketogenesis. The scientific advisor for this study is none other than Professor Lew Cantley, the scientist who originally discovered the PI3K pathway. In almost any other setting, one or two of these milestones would provide the cornerstones of an extremely successful year. For Kazia, they simply represent the methodical delivery of the plan that we outlined some years ago, and which we have systematically reported on at every opportunity since. All our recent achievements represent the fruition of work that the company commenced in 2016, and which has seen us grow from a corporate shell with negligible enterprise value to an exciting contender in the global life sciences industry. As such, there is a certain continuity to the first five years of Kazia. It has been a story dominated by paxalisib, by our efforts to demonstrate the broad potential of that drug, and by our rapid movement through the clinical development process. The future will be different. With the GBM AGILE study underway, Kazia now finds itself within just a few years of potentially commercialising a novel pharmaceutical product. And not just any product – paxalisib may be the first new drug for glioblastoma in more than twenty years. Increasingly, this will mean that Kazia’s attentions must focus on preparing paxalisib for commercialisation. Until now, the question has been a simple one: does the drug work? We have answered that question to the best of our ability, and at least to our own satisfaction, and this has been the basis of its transition to a pivotal study for registration. There will be a great deal more data to come over the next year or two, of course, but our future success will more and more be measured in the delivery of milestones relating not to the drug’s exploration, but to its commercialisation. In subtle but fundamental ways, the game has changed. In that regard, the most important achievement of this past year has perhaps been our licensing transaction with Simcere Pharmaceutical for the commercialisation of paxalisib in Greater China. This deal provided gross upfront proceeds of US$ 11 million, contingent milestone payments of up to US$ 281 million, and a mid-teen royalty on commercial sales in the territory. The deal is important for three reasons. First, it demonstrates that paxalisib is attractive to, and able to withstand detailed due diligence by, one of the leading companies in the world’s second largest pharmaceutical market. A company with a track record of more than forty successful commercial products also believes that the drug has the potential to be extremely successful. Second, and to the extent that this deal provides for the first time an implicit market valuation for paxalisib, it has become clear that the economic value of our asset is substantial. The deal terms described above relate to a market which comprises, at most, around 10% of the global pharmaceutical market. The remainder is ours to monetise at our discretion, and it would be reasonable to impute equivalent or greater value to those global rights. Finally, our ability to deliver a world-class partnering transaction validates not just paxalisib, but also Kazia’s entire business model. We have always said that Kazia’s core competencies would lie in clinical development and partnering. With nine clinical trials now ongoing, we have proven the first of these. And with two international out-licensing deals in the past six months, we can now claim to have demonstrated our capabilities in the second area. As a business model, Kazia is not reliant on lofty aspirations, naïve hopes, or vague possibilities. Rather, the company has now established a track record, on which we hope to build further in the years ahead. To that end, we have begun the next phase in the evolution of our pipeline by bringing on board a second asset. With paxalisib well advanced, it seemed timely to revisit our original goals for the business, which always envisaged a pipeline of several high- quality drug candidates at different stages of development. Having a diversified pipeline maximises return and minimises risk for our shareholders, and it gives us the scale to build richer relationships with clinicians, deeper partnerships with collaborators, and a more efficient operating model. The challenge has been to find a drug candidate of the same calibre as paxalisib. EVT801 has been the first opportunity which excites us as much as paxalisib. Scientifically, it lies at the intersection of a well-established area of cancer treatment – angiogenesis – and a very new area of cancer treatment – immuno-oncology. In practice, it has been taken through preclinical development by Evotec, one of the most respected companies in the business. And in terms of its potential to benefit patients and realise value for Kazia, it is every bit the equal of paxalisib. We could not be more thrilled to bring it into our portfolio. EVT801 will enter a phase I clinical trial by the end of calendar 2021, and we will have much to report in the year ahead. I am immensely grateful to my colleagues on the Board and in the Management Team for their perseverance and commitment over this past year, to our many collaborators and partners for their belief and investment in our drug candidates, and to our shareholders for their enthusiastic support of the company. Dr James Garner Chief Executive Officer 2021 AT A GLANCE CHAIRMAN’S LETTER CEO’S REPORT KEY MILESTONES PIPELINE REVIEW PARTNER FOR SUCCESS WORK WITH THE BEST #2 IN THE KAZIA STORY FINANCIAL REPORTS Kazia Therapeutics Limited Annual Report 2021 7