ANNUAL REPORT 2022
ii ANNUAL REPORT 2022 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review Environment, Society & Governance Our Collaborators Financial Reports 2 4 6 8 10 14 16 20 CONTENTS ASX:KZA | NASDAQ:KZIA
1 The journey of a young biotech company is often circuitous, but we have nevertheless continued to make great progress in the past year. We have two first-class drug candidates in clinical development, with a diverse portfolio of trials that have the potential to open up very substantial commercial markets. We have an experienced and capable team, and an international network of supportive partners and collaborators. In almost every important respect, the fundamentals of Kazia have never been stronger. kaziatherapeutics.com Kazia Theraputics Limited Annual Report 2022 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Our Collaborators Financial Reports
2 2022 AT A GLANCE OUR PATIENTS OUR CLINICAL RESEARCH OUR BUSINESS Paxalisib has shown evidence of activity in multiple forms of brain cancer Kazia Therapeutics is a late clinical stage oncology company. We work alongside clinicians, researchers, and partners to bring impactful new therapies to patients with cancer. Kazia has grown rapidly, driven by progress in its world-class pipeline of cancer drug candidates 4 distinct indications in phase II studies with paxalisib 3 special designations awarded to paxalisib by FDA 400+ hospitals involved in paxalisib clinical trial program 6 scientific conference presentations of paxalisib data in 1H CY2022 82% of operating cashflows invested in R&D Indicative Analyst Valuation (US$) Mar 2022 Oct 2021 Apr 2021 Dec 2020 Jan 2020 $294M $277M $247M $174M $93M GLOBAL COLLABORATION for FY2022 Edison Research glioblastoma, DIPG, PCNSL, brain metastases Fast Track designation, Orphan Drug designation, Rare Pediatric Disease designation
3 Most common cause of cancer death in children is brain cancer 2 childhood brain cancers under investigation with paxalisib No FDA-approved therapies for DIPG or AT/RT 200k approximate patients per annum treated with whole brain radiotherapy in United States Multiple potential indications for EVT801, including lung cancer, bowel cancer, and kidney cancer 2H CY 2023 final data anticipated from pivotal study of paxalisib in 2H CY2023 Phase I study of EVT801 underway in France 8 ongoing clinical trials with paxalisib 6 countries involved in clinical development of paxalisib $4.2m of new equity capital raised through financing in FY2022 4 licensing partnerships in place 150+ years of aggregate drug development experience among management team 84-94% GBM forecast adoption of paxalisib in US, if approved by FDA Kazia Theraputics Limited Annual Report 2022 Triangle Insights research project, commission by Kazia Therapeutics AU$ CBTRUS Brown et al. (2018). J Clin Oncol. 36(5):483-491 United States, Canada, Spain, France, Switzerland, United Kingdom as at 30 June 2022 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Financial Reports Our Collaborators
4 CHAIRMAN’S LETTER Dear Shareholder, Kazia has continued to make real progress during the 2022 fiscal year, despite the headwinds resulting from an enormously challenging financial environment for listed biotech companies. Notwithstanding, I am pleased to be able to review here some of key developments in Kazia over the past year. PIPELINE PROGRESS The company’s pipeline remains understandably dominated by paxalisib, our late-stage asset for brain cancer, however, during the financial year, Kazia has also made very good progress with EVT801, our second asset, which was licensed from Evotec SE in April 2021. That drug is now well-advanced in a phase I clinical trial, and we anticipate some initial results in 1H CY2023. With the benefit of an additional year, we’ve had the chance to further understand, discuss, and chart its potential, and I should say that we are even more excited by EVT801 now than we were at the time of its licensing. For paxalisib, the confidence of some of our investors has understandably been shaken by the news, post period, that the drug would not enrol the second stage of the GBM AGILE pivotal trial. The implications of this development are discussed elsewhere in this annual report, and so I will not recapitulate them here. Suffice to say, however, that the first stage of the study remains ongoing, having achieved full recruitment, and will report final data in 2H CY2023. There remains every chance that paxalisib will yet achieve approval in glioblastoma on the basis of this substantial data set, and all involved with its development continue to push forward on that basis with all the resources and energy at their command. The news demonstrates the inherent unpredictability of drug development. Thankfully, Kazia’s strategy has always been to diversify its activities as broadly as possible, so that the company and its shareholders are insulated from adverse developments. GBM AGILE is only one of eight ongoing clinical trials of paxalisib, covering four distinct disease areas. The news from GBM AGILE was bookended by very positive outcomes in two studies of brain metastases and was preceded by exceptionally promising preclinical data in two forms of childhood brain cancer. We believe that paxalisib has great promise, across a wide range of brain cancers, and we remain resolute in the task of demonstrating its potential. FINANCIAL PERFORMANCE We concluded FY2022 with a cash balance at 30 June 2022 of $7.4 million, versus $27.6 million at 30 June 2021. Our total assets were $35 million, compared to $58 million at 30 June 2021. During FY2022, we deployed $22 million to move forward the company’s pipeline, representing over 80% of our total expenditure for the year. We should acknowledge that we are reporting these results when the financial markets are characterised by extremely negative sentiment towards the biotech sector. Between 30 June 2021 and 30 June 2022, XBI, the de facto NASDAQ small cap biotech index, lost more than 45% of its value, and there is evidence that smaller companies such as ours have, on average, been even more adversely affected. In recent months, there have at times been more than 200 listed biotech companies on NASDAQ whose market capitalisation is less than their cash balance. Meanwhile, the number of IPOs and secondary offerings has fallen to a trickle, with many institutional investors reserving capital to support their existing portfolio investments. For Kazia, there is no doubt that these dynamics have complicated the natural cadence of our funding cycle. Our strategy has always been to fund the company to milestones, taking only what we need in each financing round to move the pipeline to its next stage of development, thereby minimising both risk and dilution for our investors. Given the current state of the market, we have in some respects taken this strategy one step further by making the decision to implement an ‘atthe-market’ (ATM) facility to provide interim access to capital through the market downturn. ATMs are a common financing instrument for small companies, particularly on NASDAQ. In brief, the tool allows us to place stock directly into the market, allowing us to periodically raise modest amounts of capital at no discount to market, with no requirement for warrants or options, and with very modest banking fees. For a company such as Kazia, which runs exceptionally lean, the ATM can be an excellent device to manage cashflows. Indeed, in our case it has enabled us in recent months to fully support the company’s ongoing activities, in a way that has spared our shareholders the very deleterious terms that would have inevitably accompanied a more conventional transaction. ADVANCING THE PIPELINE
However, the ATM is not a permanent solution and to fulfil its potential, Kazia will need to continue to bring good quality, long-term, fundamentally-driven healthcare investors onto its register. As and when the market reopens, we will waste no opportunity to put the company’s compelling story in front of the widest range of investors we can. In the meantime, however, the access that we have been able to secure to cost-effective and minimally dilutive capital has been vital to our business. CONCLUSION The journey of any biotech company is often circuitous, but we have nevertheless continued to make great progress in the past year. We have two first-class drug candidates in clinical development, with a diverse portfolio of trials that have the potential to open up very substantial commercial markets. We have an experienced and capable team, and an international network of supportive partners and collaborators. In almost every important respect, the fundamentals of Kazia have never been stronger. I would like to thank, once again, my fellow directors and our management team, led by our CEO, James Garner, for their dedication to the company’s work. And, as always, we remain grateful for the ongoing support of our many shareholders, whose faith in the company makes possible everything that we do. Iain Ross Chairman of the Board 5 We believe that paxalisib has great promise, across a wide range of brain cancers, and we remain resolute in the task of demonstrating its potential. Kazia Theraputics Limited Annual Report 2022 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Financial Reports Our Collaborators
Kazia Theraputics Limited Annual Report 2022 6 CEO’S REPORT Dear Shareholder, The past twelve months have been an extremely fertile period for Kazia’s research and development efforts, particularly in respect of our lead program, paxalisib. We have commenced two new clinical trials: one at Weill Cornell Medicine investigating paxalisib in combination with a low-insulin state for glioblastoma, and one in collaboration with the Pacific Pediatric Neuro-Oncology Consortium, examining paxalisib in combination with another drug for the treatment of diffuse midline gliomas (DMGs), a highly-aggressive group of childhood brain cancers. The work that we start is, in a sense, an investment whose return is the data we receive a year or two hence. Several of the studies that we began in the past few years have reported important milestones during FY2022. Our own phase II study of paxalisib has completed, with very encouraging results in the final efficacy data. The phase II study in brain metastases, run by the Alliance for Clinical Trials in Oncology, has graduated to a second stage in patients with breast cancer brain metastases. And, in early August, we saw extremely positive signals from a study of paxalisib in combination with radiotherapy for brain metastases, in which every evaluable patient demonstrated radiological response. The ever-growing body of data around paxalisib, derived from a very broad range of clinical trials and laboratory studies, helps to provide both confidence in its activity and breadth in its commercial opportunity. While clinical trials naturally more readily capture the imagination, we have also reported this year some very promising preclinical data in childhood brain cancer. A team from Johns Hopkins Medical School reported data in atypical teratoid / rhabdoid tumours (AT/ RT) at the AACR Conference in April 2022, and Professor Matt Dun of the University of Newcastle presented data on DIPG to the ISPNO Conference in June 2022. Together, these presentations, from leading scientists at firstrate institutions, have expanded our thinking in relation to the opportunity for paxalisib in childhood brain cancer. We see this as an increasingly important plank in paxalisib’s overall development. We have secured orphan designation and rare pediatric disease designation in both AT/RT and DIPG, and these achievements help to greatly facilitate our regulatory strategy in childhood brain cancer. If paxalisib is approved in either disease, we may be eligible to receive a pediatric priority review voucher (pPRV), which can be sold to other companies and which typically commands a price in excess of one hundred million dollars. No doubt, however, these important and exciting developments are coloured to some extent by the news we received at the end of July, that paxalisib would not ‘graduate’ to the second stage of the GBM AGILE pivotal study. It is important to be clear what this development may or may not mean for the drug’s further development. The two-stage design of GBM AGILE was designed primarily to increase the statistical power of the study. A drug which successfully clears both stages of the trial may be considered almost unimpeachable in terms of the statistical confidence that accompanies its data. However, this approach sets a high bar for any drug participating in the study, and it is very far from certain that failure to complete both stages is incompatible with an eventual product approval. GBM AGILE will likely provide for the evaluation of paxalisib a more substantial number of patients than were available to support the approval of temozolomide, the existing standard of care in glioblastoma, and the study remains ongoing. As is almost invariably the case in drug development, we will need to wait and see the data before we understand our position. We continue to anticipate that data in 2H CY2023 and, until then, all Kazia personnel remain ‘blinded’ to efficacy and safety. In the meantime, the patients who have enrolled in GBM AGILE continue to receive treatment and to undergo followup, per protocol, and will continue to provide data for analysis. As the data matures, we will no doubt learn a great deal more about paxalisib and will be much better placed to understand its potential benefit to patients with glioblastoma. A DIVERSE PORTFOLIO
It is entirely understandable that this development has caused uncertainty in the minds of some of our investors. In truth, however, there is almost nothing concrete that we have learned from GBM AGILE to date, for better or for worse, that we did not know this time last year. The study is scarcely half-complete. And ultimately, in a disease such as glioblastoma, which is characterised by an overwhelming unmet medical need, there may be an inclination on the part of regulators and clinicians to accommodate a drug which can show any degree of meaningful benefit. Meanwhile, the other seven clinical trials of paxalisib continue to progress well in general, with multiple positive read-outs in recent months and a great deal more data to come. And EVT801, which joined our pipeline last year, is now well-advanced in a phase I study in Europe, with initial data anticipated in 1H CY2023. Regardless of the eventual outcome of GBM AGILE, both of our outstanding drug candidates are blessed with many opportunities to succeed. To that end, all of us in the Kazia team continue to apply ourselves wholeheartedly to the task of finding how best to use our drug candidates to help patients. I am grateful to my colleagues on the Board and in the Management Team for their perseverance and their professionalism, and to our shareholders for their ongoing support. Dr James Garner Chief Executive Officer 7 The ever-growing body of data around paxalisib, derived from a very broad range of clinical trials and laboratory studies, helps to provide both confidence in its activity and breadth in its commercial opportunity. Kazia Theraputics Limited Annual Report 2022 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Financial Reports Our Collaborators
8 KEY MILESTONES HIGHLIGHTS – 2021/2022 November 2021 Paxalisib commences recruitment to a phase II adaptive study in DIPG run by the Pacific Pediatric Neuro-Oncology Consortium (PNOC). This study administers paxalisib with ONC201, a combination which has shown evidence of activity in preclinical data and compassionate use. GBM AGILE pivotal study of paxalisib in glioblastoma expands to Canada. February 2022 A phase II study of paxalisib in combination with a ketogenic diet for the treatment of glioblastoma commences recruitment at Weill Cornell Medicine. This study is informed by world-class research from Professor Lew Cantley, who discovered the PI3K pathway that paxalisib targets. May 2022 GBM AGILE pivotal study of paxalisib in glioblastoma expands to Europe. September 2021 EVT801 is granted approval by ANSM, the French regulatory agency, to commence a phase I clinical trial, less than six months after the asset was licensed by Kazia. November 2021 EVT801 phase I study commences recruitment at Oncopole Hospital in Toulouse, France. The biomarker-enhanced study is intended to provide safety and dosing data but also to demonstrate the pharmacological activity of EVT801. December 2021 Kazia releases top-line final data from phase II study of paxalisib in glioblastoma, showing meaningful signals of efficacy. Kazia expands management team with two senior USbased appointments: Dr John Friend as Chief Medical Officer, and Karen Krumeich as Chief Financial Officer. These appointments bring, in aggregate, more than 50 years of biotech experience to the management team. April 2022 Preclinical data in AT/RT, a rare childhood brain cancer is presented at the AACR conference. This data expands the opportunity for paxalisib in childhood brain cancer, positioning it as a substantial area of focus for the drug’s development.
9 Kazia Theraputics Limited Annual Report 2022 June 2022 Final data from the phase II study of paxalisib in glioblastoma is presented at ASCO. Preclinical data examining the combination of paxalisib with ONC201 for treatment of DIPG is presented at the ISPNO conference. The data provides powerful support for the ongoing PNOC study, which commenced recruitment in November 2021. The Alliance study of paxalisib in brain metastases moves into an expansion cohort in breast cancer brain metastases, having seen positive signals in the initial exploratory cohort. Further cohorts continue to examine brain metastases from lung cancer and other primary tumours. Paxalisib receives orphan drug designation from FDA for the treatment of AT/RT, providing additional market exclusivity, waiver of PDUFA fees, and access to grant opportunities. 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Financial Reports Our Collaborators
10 PIPELINE REVIEW A BROAD CLINICAL PIPELINE PAXALISIB Although glioblastoma remains very much the lead indication, childhood brain cancer has emerged as a very important second element in the paxalisib story. Brain cancer is the most common cause of cancer death in children, and it remains terribly poorly treated. Both diffuse intrinsic pontine glioma (DIPG) and atypical teratoid / rhabdoid tumours (AT/ RT), two diseases which have been a strong focus for Kazia in the past year, have no FDA-approved drug treatments and, as a consequence, the prognosis is very poor. The second quarter of CY2022 saw important preclinical data presented at international conferences in this area. Professor Jeffrey Rubens and colleagues at Johns Hopkins Medical School presented very positive data for paxalisib in AT/RT at the American Association of Cancer Research (AACR) Annual Meeting in April 2022. This data enabled paxalisib to receive Orphan Drug Designation (ODD) for this disease in June 2022. Kazia is currently in discussion about potential opportunities to translate this very promising work into a clinical trial. In June 2022, Associate Professor Matt Dun from the Hunter Medical Research Institute at the University of Newcastle, Australia, presented very powerful results from his research in the combination of paxalisib with a drug called ONC201 (manufactured by Chimerix, Inc) in the treatment of DIPG. This data has already enabled a clinical trial of the combination in this disease, which began recruitment in November 2021. Professor Dun’s presentation also included several very promising case studies from compassionate use experience with the two drugs in combination. Kazia’s pipeline is remarkable for its diversity. Paxalisib, the lead program, is in clinical trials for multiple forms of brain cancer. EVT801 has potential applications in a wide range of solid tumours. Together, they give Kazia an extensive breadth of opportunity for a company of its size. Another element of the paxalisib program that has been emerging as a very promising opportunity has been brain metastases, a collective term for cancer which spreads to the brain from other parts of the body. More than 200,000 patients each year develop brain metastases in the United States alone, and treatment options are limited. Three clinical trials have been examining paxalisib as a potential treatment for these patients. One of these studies, run by the Alliance for Clinical Trials in Oncology, has already seen positive data for paxalisib in patients with breast cancer brain metastases and, on that basis, has moved the drug into an expansion phase. The study remains in an exploratory phase for patients with lung cancer brain metastases, and for patients with brain metastases from other primary tumours. A second study, at Memorial Sloan Kettering Cancer Center, has similarly moved into an expansion phase, with initial data from the first part of the trial accepted for a prestigious oral presentation at a specialist scientific conference on brain metastases organised jointly by the Society for Neuro-Oncology (SNO) and the American Society for Clinical Oncology (ASCO). Excitingly, this data showed all evaluable patients responding to the combination of paxalisib with whole brain radiotherapy, suggesting the potential for our drug to play an important role in augmenting the efficacy of this ubiquitous therapy. In addition, paxalisib is also the subject of a clinical trial in primary CNS lymphoma, a less common form of brain cancer that remains very challenging to treat. Paxalisib belongs to a class of medicines known as PI3K inhibitors, and four
11 KEY GLOBAL REGULATORY AGENCIES Kazia Theraputics Limited Annual Report 2022 of the five PI3K inhibitors that have been approved by FDA have been approved for types of lymphoma. Since none of these drugs cross the blood-brain barrier, they are far from ideal to treat lymphoma in the brain, but paxalisib is very well suited to this patient group. Meanwhile, paxalisib is now some eighteen months into GBM AGILE, the pivotal clinical trial for registration in glioblastoma. Completion of a pivotal clinical trial is one of the most critical landmarks in the development of a new medicine. We learned at the end of July that the drug would not ‘graduate’ to the second stage of the GBM AGILE study. For any participating drug to do so requires it to clear a very ambitious statistical hurdle as soon as it completes recruitment to the first stage. Graduation would have provided an exceptionally high degree of confidence in paxalisib’s eventual success, but failure to graduate certainly does not mean that the drug will not yet show a statistically significant and clinically meaningful benefit. Stage 1 is fully recruited, and patients remain on treatment or in follow-up, per protocol, and we anticipate receiving final data in 2H CY2023. Whatever the results may indicate now, there is substantial opportunity for the picture to evolve as the data matures. All Kazia personnel remain blinded to the study, as is typically required of ongoing pivotal studies by regulatory agencies. As such, it is impossible to make any meaningful inferences about the performance of paxalisib. In common with most clinical trials at this stage of development, we will need to wait for final data before we can assess how best to proceed. Operationally, GBM AGILE has been progressing well. In January 2022, the Global Coalition for Adaptive Research (GCAR) announced that the study had screened over one thousand patients. Not every screened patient is enrolled, but this nevertheless represents a phenomenal pace of recruitment, and has far exceeded Kazia’s expectations at the time of joining the study. That pace has only increased, with several European countries joining the United States and Canada in recruiting to the study. Indeed, GBM AGILE has been so successful in an operational sense that two new arms have been welcomed into the study, adding to the three drugs that were already participating. If GBM AGILE ultimately proves successful for paxalisib, data from the trial will be packaged with information on manufacturing, toxicology, and other activities for submission to regulatory agencies such as the US Food and Drug Administration (FDA), as the basis of a New Drug Application (NDA). Drugs which complete a pivotal study successfully have more than a 90% likelihood of becoming a commercial product. With this inflection point fast approaching, Kazia has become increasingly focused on preparing paxalisib for a potential regulatory filing. Behind the scenes, a great deal of work has been underway 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Financial Reports Our Collaborators
12 PIPELINE REVIEW in areas such as manufacturing, where we look to tie down the final commercial process, and in drug safety, where we have begun to pool all the vast collection of safety data from the many clinical studies of paxalisib that have been and are being performed. The final NDA submission will consist of many thousands of pages of narrative and data. An NDA approval allows Kazia, either directly or through licensees and distributors, to begin selling paxalisib commercially. We have invested substantial work in the past year to explore brain cancer as a commercial market, with the support in some areas of specialist consultants in drug commercialisation. What we have learned has been tremendously encouraging. For example, presented with the profile of a drug such as paxalisib, US prescribers estimate that they would use it for between 84% and 94% of newly diagnosed patients. This is an extraordinary adoption rate. And discussions with payors suggest that pricing for paxalisib should be comparable to some of the most successful cancer drugs launched in recent years. Clearly, the global commercial launch of a drug such as paxalisib is beyond the remit of a small company such as Kazia. We have always been clear that we expect to work with partners to bring the drug to market around the world. We took the first step in that journey in March 2021, when we licensed the Greater China region to Simcere Pharmaceutical, a leading Chinese pharma company. Simcere have proven themselves to be an excellent partner, and their expertise and resources have greatly expedited the entry of paxalisib into China. It is likely that similar partnerships will support the commercialisation of paxalisib in other territories. Kazia would be foolhardy to try and launch a drug itself in Japan or in Latin America, for example. The timing of such partnerships is always a balance. Waiting until final data is available typically allows for the most lucrative deal. However, partnering earlier can allow the company to share risk and cost with its partners, and can also provide access to in-country expertise. The latter point was a critical consideration for Kazia’s partnership with Simcere, given the complexity of the Chinese market. It is not inconceivable that Kazia could consider launching paxalisib in the United States itself. The US market typically accounts for 45-50% of the commercial value of a new cancer drug, and there is an economic argument in favour of retaining that value within Kazia. Glioblastoma is a specialist disease area, in which patients are cared for by a relatively small group of clinicians, and it would not require a large commercial infrastructure to support a product launch. Ultimately, our approach, as in all matters, will be governed by pragmatism, but we are in the fortunate position of having several compelling approaches to consider. PAXALISIB CLINICAL PROGRAM Sponsor Phase Indication Registration Global Coalition for Adaptive Research II / III Glioblastoma NCT03970447 Weill Cornell Cancer Center II Glioblastoma (with ketogenic diet + metformin) NCT05183204 Alliance for Clinical Trials in Oncology II Brain metastases NCT03994796 Dana-Farber Cancer Institute II Breast cancer brain metastases (with trastuzumab) NCT03765983 Dana-Farber Cancer Institute II Primary CNS lymphoma NCT04906096 Pacific Pediatric Neuro Oncology Consortium II DIPG & DMGs NCT05009992 St Jude Children’s Research Hospital I DIPG (childhood brain cancer) NCT03696355 Memorial Sloan Kettering Cancer Center I Brain metastases (with radiotherapy) NCT04192981
13 EVT801 EVT801 is the second drug in Kazia’s pipeline, but its potential to bring benefit to patients is no less than paxalisib. EVT801 works by targeting a process called angiogenesis, which is critical to the growth of many kinds of cancer. Angiogenesis denotes the formation of new blood vessels around a tumour, and this process is required to supply the tumour with nutrients and oxygen to support its rapid growth. Inhibiting angiogenesis is a very effective way to treat many such tumours, and drugs which function this way have been used across a range of cancers for several decades. There are two challenges with existing therapies in this class. First, they tend to be quite toxic due to ‘off-target’ effects on other biochemical pathways. Second, by decreasing the oxygen levels in the tumour, they trigger adaptive resistance mechanisms which mean that their effect is generally temporary. EVT801 has been designed to combat these challenges. In November 2021, EVT801 commenced recruitment to a phase I ‘first-in-human’ clinical trial. The primary purpose of any such trial is to understand the safety profile of the drug and how much can be given to patients, the ‘maximum tolerated dose’ (MTD). A phase I study also measures how long the drug remains in the body. These are key things that drug developers must understand before moving into more advanced trials. However, the EVT801 phase I study also incorporates some cuttingedge scientific measurements that will allow Kazia to better understand the likely efficacy of the drug and to assess which patients may benefit most. The trial will assess which genes are switched on and off by treatment with EVT801, how the drug affects the immune system, and whether certain features of a tumour make it more likely to respond. In addition, the trial will apply machine learning techniques to evaluate CT scans from patients, hopefully providing greater insight into their response to treatment. Kazia Theraputics Limited Annual Report 2022 EVT801 CLINICAL PROGRAM Sponsor Phase Indication Registration Kazia Therapeutics I Advanced Solid Tumours NCT05114668 20-50 patients Understand dosing and safety profile 40-200 patients Obtain initial signals of efficacy 200-2000 patients Demonstrate and quantify efficacy and safety PHASE I PHASE II PHASE III PHASES OF CANCER DRUG DEVELOPMENT 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Financial Reports Our Collaborators
14 OUR CORPORATE RESPONSIBILITY ENVIRONMENT OUR WORLD Kazia is mindful of its impact on the environment and strives to reduce its carbon footprint, minimise its use of non-recyclable matter, and observe the very highest standards of laboratory and manufacturing practice to avoid any risk of contamination, leakage, or pollution. Did You Know? Kazia’s head office, at Barangaroo in Sydney, Australia, is located in the International Towers complex, which is 100% carbon neutral and the first location globally to receive a 100% climate resilience score from GRESB, the leading ESG benchmark for real assets. It is also holds a six star GreenStar rating, which is the highest rating attainable. SOCIETY OUR COMMUNITY Kazia recognises the enormous impact that a cancer diagnosis can have for patients and their families. We work closely with advocacy organisations and notfor-profit groups to help inform the community about the disease areas we work in. We are attentive to the need for diversity in clinical trial recruitment, and we work hard to ensure that our medicines eventually become accessible to the widest range of patients. Did You Know? Although clinical trial participation is always the preferred way to access experimental therapies, we recognise that it is not an option for every patient. For some years, Kazia has run a ‘compassionate use’ program, which can in rare cases make our drugs available to patients outside of clinical trials. To date, more than thirty patients in six countries have received paxalisib on a compassionate use basis. GOVERNANCE OUR COMPANY Kazia strives to be a good corporate citizen, and has always observed the highest standards of corporate governance. As a company listed on both ASX and NASDAQ, we respect the governance frameworks of both jurisdictions. Did You Know? Kazia has pre-emptively and voluntarily begun to implement a rigorous validation for vendors and partners, which includes compliance with Australia’s Modern Slavery Act 2018 (Cth). As a healthcare company, Kazia is committed to the highest standards of corporate responsibility. We launched a new ESG (Environment – Society – Governance) framework this year, and we anticipate more detailed reporting on our commitments and achievements in future years. ENVIRONMENT, SOCIETY & GOVERNANCE
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16 OUR COLLABORATORS WORKING WITH THE BEST DR HOWARD FINE Dr Howard Fine is the founding Director of the Brain Tumor Center at New York-Presbyterian Weill Cornell Medical Center and Co-Director of the Rhodes Glioblastoma Center, Weill Cornell Medicine, Columbia Medical Center and NewYork Presbyterian Hospital. He is also Professor of Neurology and Chief of the Division of Neuro-Oncology in the Department of Neurology. Dr Fine received his medical degree at the Mount Sinai School of Medicine in New York City, completed an internship and residency in Internal Medicine at the University of Pennsylvania in Philadelphia, and a fellowship in Medical Oncology at the DanaFarber Cancer Institute and Harvard Medical School in Boston. Dr Fine founded and Directed the Dana-Farber Cancer Institute Center for Neuro-Oncology at Harvard Medical School, and the Neuro-Oncology Branch, at the National Institutes of Health. In a career spanning more than 30 years of experience in clinical practice as well as laboratory and clinical research, Dr Fine has cared for nearly 20,000 patients with brain and spinal cord tumors, has conducted over 100 clinical trials, published over 250 papers and book chapters on brain tumours, and has run a continuously operating laboratory devoted to a better understanding of and better therapies for brain tumors for over two decades. Dr Fine is the lead investigator on a study of paxalisib in combination with ketogenesis for the treatment of glioblastoma. The study is based on the hypothesis that a low insulin state will enhance the efficacy of PI3K inhibitors, the class of medicines to which paxalisib belongs, and the best way to minimise insulin levels is to observe a ketogenic diet. Dr Fine’s study also co-administers a drug named metformin, which serves to further lower insulin levels. The study commenced recruitment in Q1 CY2022, and initial data is expected during CY2023. Kazia is privileged to work with cancer researchers around the globe who share our passion for good science and our commitment to patients. We would like to recognise two of these researchers who have had an important impact on some of our clinical trials this past year.
17 Kazia Theraputics Limited Annual Report 2022 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Financial Reports DR CARLOS GOMEZ-ROCA Dr Carlos Gomez-Roca is CoChair of the Clinical Research Unit at IUCT-Oncopole in Toulouse, France, and leader in the Early Phase Unit with a focus on targeted therapies and immuno-oncology. His main research interests are early clinical development, phase I trials across solid tumours, innovative methods of evaluation of novel drugs’ clinical activity, personalised medicine and mechanisms of toxicities of new targeted agents and immunotherapies. Dr Gomez-Roca completed his medical training in 2000 at the University of Buenos Aires and trained as internal medicine specialist at Instituto Universitario CEMIC at Buenos Aires (Argentina) and obtained his degree with honours in 2005. He continued his training in Medical Oncology and obtained his diploma at Paris-Sud Medical School (France) in 2007 and completed his Master in Oncology in 2008 at the same university. He is a member of Professor Maha Ayyoub’s laboratory, T2i (anti-tumor immunity and immunotherapy), where he is involved with research into the complexity of microenvironment interactions between the primary tumour and metastases as part of his PhD. Dr Gomez Roca is an active member of ESMO, ASCO and AACR. In addition, he has contributed to more than 60 peer-reviewed publications including publications as first or second author in the Journal of Clinical Oncology and Annals of Oncology. He currently serves as Chair of the Membership Committee (20222023) of ESMO, and he is a member of the ESMO Council and the ESMO-Magnitude of Clinical Benefit Scale Working Group. He also leads the Patient Advocacy Group at the Société Française d’Immuno-Thérapie du Cancer (FITC) since 2019. Dr Gomez-Roca is the lead investigator in Kazia’s phase I study of EVT801 in patients with advanced solid tumours. The study commenced recruitment in Q4 CY2021 and is currently underway at two hospitals in France. Initial data is expected within 12-18 months. Our Collaborators
Kazia Theraputics Limited Annual Report 2022 18 ANNUAL REPORT 2022 FINANCIAL REPORTS
19 Kazia Theraputics Limited Annual Report 2022 Financial Reports 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Our Collaborators
20 DIRECTORS’ REPORT GENERAL INFORMATION Page Director’s Report 21 Auditor’s independent declaration 38 Statement of profit or loss and other comprehensive income 39 Statement of financial position 40 Statement of changes in equity 41 Statement of cash flows 43 Notes to the financial statements 44 Directors’ declaration 75 Independent auditor’s report to the members of Kazia Therapeutics Limited 76 Shareholder information 80 Corporate directory iii The financial statements cover Kazia Therapeutics Limited as a consolidated entity consisting of Kazia Therapeutics Limited and the entities it controlled at the end of or during the year. The financial statements are presented in Australian dollars, which is Kazia Therapeutics Limited’s functional and presentation currency. Kazia Therapeutics Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Three International Towers, Level 24 300 Barangaroo Avenue Sydney NSW 2000 A description of the nature of the consolidated entity’s operations and its principal activities are included in the Directors’ report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 29 August 2022. The directors have the power to amend and reissue the financial statements. CONTENTS
21 Kazia Theraputics Limited Annual Report 2022 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Financial Reports The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of Kazia Therapeutics Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2022. Directors The following persons were Directors of Kazia Therapeutics Limited (ABN 37 063 259 754) during the whole of the financial year and up to the date of this report, unless otherwise stated: Iain Ross Bryce Carmine Steven Coffey James Garner Principal activities During the financial year the principal continuing activity of the consolidated entity consisted of pharmaceutical research and development with a view to commercialising the results of our research through license transactions or other means. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The loss for the consolidated entity after providing for income tax amounted to $24,647,815 (30 June 2021: $8,421,960). The attached financial statements detail the performance and financial position of the consolidated entity for the year ended 30 June 2022. Cash resources At 30 June 2022, the consolidated entity had total funds, comprising cash at bank and on hand of $7,361,112 the majority of which is held in US dollars. Total current assets at year-end stand at $7,608,240. Going concern The financial statements have been prepared on a going concern basis. The Directors have considered this to be appropriate. Refer to ‘Going concern’ in note 2 to the financial statements for further details. Impact of COVID-19 The Directors identify no material impact from the ongoing COVID-19 pandemic to its operations. Given the evolution of the pandemic, the directors will hereafter discontinue routine updates on this topic and will notify the market of COVID-related impact only on an as needed basis. Kazia Therapeutics Limited Research and Development Overview The company is an oncology-focused biotechnology company that has a portfolio of development candidates, diversified across several distinct technologies, with the potential to yield first-in-class and best-in-class agents in a range of oncology indications. Our lead drug candidate is paxalisib (formerly GDC-0084), a small molecule, brain-penetrant inhibitor of the PI3K/Akt/ mTOR pathway. Paxalisib is a potent and selective inhibitor of all four isoforms of phosphoinositide-3-kinase (PI3K) and a moderate inhibitor of the mammalian target of rapamycin (mTOR). The PI3K/Akt/mTOR signaling axis has been shown to be dysregulated in approximately 85-90% of cases of glioblastoma per Cancer Genome Atlas, and is considered a promising target in this disease. Paxalisib is involved in eight active clinical trials for various forms of brain cancer at varying stages of development. The company is also developing EVT801, a small molecule selective inhibitor of vascular endothelial growth factor receptor 3 (VEGFR3), which was licensed from Evotec SE in April 2021. Evotec has conducted an extensive program of preclinical development. Preclinical data has demonstrated EVT801 to be active against a broad range of tumour types and has provided compelling evidence of synergy with immune-oncology agents. A phase 1 study commenced recruitment in November 2021. Our Collaborators
22 DIRECTORS’ REPORT Broad Clinical Program Ongoing Sponsor Phase Indication Registration PAXALISIB Global Coalition for Adaptive Research II/III Glioblastoma NCT03970447 Weill Cornell Medicine II Glioblastoma (with ketogenesis) NCT05183204 Alliance for Clinical Trials in Oncology II Brain metastases NCT03994796 Dana-Farber Cancer Institute II Breast cancer brain metastases (with Herceptin) NCT03765983 Dana-Farber Cancer Institute II Primary CNS Iymphoma NCT04906096 Pacific Pediatric Neuro-Oncology Consortium II DIPG (childhood brain cancer) NCT05009992 ST Jude Children’s Research Hospital I DIPG NCT03696355 Memorial Sloan Kettering Cancer Center I Brain metastases (with radiotherapy) NCT04192981 EVT801 Kazia Therapeutics I Advanced solid tumours NCT05114668 Research and development report Paxalisib The company’s lead development candidate is paxalisib (formerly known as GDC-0084), a small molecule, brain-penetrant inhibitor of the PI3K / Akt / mTor pathway, that is being developed as a potential therapy for glioblastoma (GBM), the most common and most aggressive form of primary brain tumour in adults, as well as other forms of brain cancer. Paxalisib is orally administered and is presented in a 15mg capsule formulation. The development candidate is the subject of IND 112,608 with the US FDA. Paxalisib Genentech Early Development Paxalisib was developed by Genentech, Inc (South San Francisco, California). Genentech has completed an extensive preclinical development program that provided convincing validation for paxalisib as a potential drug for brain cancer. Genentech also completed a phase I clinical trial in 47 patients with advanced recurrent grade III and grade IV glioma. The most common adverse events were oral mucositis and hyperglycemia. Per RANO criteria, 40% of patients exhibited a best observable response of stable disease, and 26% demonstrated a metabolic partial response on FDG-PET. Paxalisib Worldwide Exclusive License and Intellectual Property The company entered into a worldwide exclusive license for the asset in October 2016. Under the terms of the exclusive license agreement with Genentech, Kazia has the right to develop and commercialise the drug in all indications. Genentech is eligible to receive milestone income on commercialisation of the asset and royalties on net sales in any indication. Genentech has no right to direct the development of paxalisib, no right of approval for Kazia to sub-license, and no right of first refusal. Paxalisib is the subject of granted or pending composition-of-matter patents in all key territories. In general, the expiry of these patents is in December 2031. However, the company expects that it will be able to secure patent term extensions in the most substantial markets, including US, EU, China, Japan, and Korea, and that these extensions will provide effective protection until 2036. In addition, the company has recently received notice of grant for a patent protecting the manufacturing process associated with paxalisib, and this will provide an additional layer of protection in relevant territories until 2036. The development candidate was granted the International Non-Proprietary Name (INN) ‘paxalisib’ by the World Health Organisation in December 2019. This was confirmed as the United States Adopted Name (USAN) by the USAN Council in April 2020. Paxalisib Regulatory Activity Paxalisib was granted orphan drug designation (ODD) by FDA for glioblastoma in February 2018, and for the broader indication of glioma in August 2020. The development candidate also received Fast Track designation (FTD) for glioblastoma in August 2020, and Rare Pediatric Disease Designation (RPDD) for diffuse midline gliomas in August 2020. In addition, paxalisib was granted ODD by the US FDA for AT/RT, a rare pediatric brain cancer in June 2022 and RPDD in early July. Collectively, these special designations provide paxalisib with enhanced access to FDA, a waiver of PDUFA fees, a period of data exclusivity and, in the specific case of RPDD, the potential to secure a pediatric Priority Review Voucher (pPRV) should paxalisib be approved in either of these indications.
23 Kazia Theraputics Limited Annual Report 2022 2022 at a Glance Chairman’s Letter CEO’s Report Key Milestones Pipeline Review ESG Financial Reports Paxalisib Development in Glioblastoma GBM AGILE International Pivotal Study Paxalisib commenced recruitment to GBM AGILE (NCT03970447), a phase II / III adaptive clinical trial in glioblastoma, in January 2021. GBM AGILE is sponsored by the Global Coalition for Adaptive Research, a US-based 501(C)(3) non-profit organisation dedicated to advancing the development of new therapies via the application of cutting-edge statistical methodologies. The study is a platform study, or master protocol study, in which multiple experimental agents are evaluated in parallel, and are compared against a shared control arm. GBM AGILE uses an adaptive Bayesian statistical design to ensure that only the number of patients required to reach a definitive answer are enrolled. Three patient populations are included in the study: newly diagnosed patients with unmethylated MGMT promotor status, newly diagnosed patients with methylated MGMT promotor status, and recurrent patients. Paxalisib is participating in the first and third of these groups but will not examine patients with methylated MGMT promotor status in this study. As at 30 June 2022, five experimental agents are participating in GBM AGILE: Bayer’s regorafenib, Kazia’s paxalisib, VAL-083, manufactured by Kintara Therapeutics, Biohaven’s troriluzole, and Vigeo Therapeutics’ VT1021. The study has screened over 1,000 patients, and approximately fifty sites are engaged. The study opened to the paxalisib arm in Canada in November 2021, in Switzerland in May 2022, and in France in June 2022. The study received IND approval to open in China in December 2021, and work is ongoing as at 30 June 2022 to open sites in this country. GBM AGILE is intended to serve as the registration study for paxalisib in glioblastoma. The study has been designed with registrational intent, and FDA has indicated that it considers the study suitable for this purpose. Post year, on August 1 2022, the company was advised by GCAR that the first stage of the paxalisib arm had completed recruitment. The treatment arm did not meet pre-defined criteria for continuing to a second stage, and patients enrolled in the first stage of the paxalisib arm will therefore continue on treatment as per protocol, and in follow-up, until completion of the final analysis, which the company anticipates receiving in 2H CY2023, as previously disclosed. Given that completion of recruitment has now occurred, the study will not open to the paxalisib arm in Germany or China. The company will work with its licensing partner to determine the way forward in China, given that country’s general requirement for local data to register a new pharmaceutical product. All company personnel continue to be blinded to efficacy and safety data from the ongoing study, as required by regulatory authorities, and so the company remains unable to provide analysis or interpretation of the study until follow-up is complete and final data is available. Final Phase II Glioblastoma Data Presented at ASCO The final data from the company’s phase II study of paxalisib in patients with newly diagnosed glioblastoma and unmethylated MGMT status was presented at the American Society for Clinical Oncology (ASCO) annual meeting in June 2022. The poster presentation described an overall survival (OS) in the intent-to-treat (ITT) population of 15.7 months, and a progression-free survival (PFS) of 8.6 months. These figures compare favourably with the corresponding figures of 12.7 months and 5.3 months which are associated with temozolomide, the existing FDA-approved standard of care, in this patient group. The safety profile of paxalisib continues to appear highly favourable and tolerability was consistent with prior clinical trial experience, with hyperglycaemia, mucositis, and rash among the most common toxicities. In April 2021, the company presented additional interim data focusing on pharmacokinetics at the American Association for Cancer Research Annual Meeting. This data supported 60mg as the go-forward dose, and suggested no significant food effect, allowing for both fed and fasted administration in future studies. Phase II Study in Glioblastoma in Combination with Ketogenesis In June 2021, the company entered into an agreement with the Joan & Stanford I Weill Medical College of Cornell University in New York, NY, known generally as Weill Cornell Medicine, for an investigator-initiated phase II trial combining paxalisib with ketogenesis in patients with newly-diagnosed and recurrent glioblastoma. In addition to the general interest in ketogenic diets as a potential adjunct to treatment for various forms of cancer, research by Professor Lew Cantley and colleagues has demonstrated the potential for insulin to antagonise PI3K inhibition. Administering a PI3K inhibitor in the content of minimal insulin secretion should allow the drug to achieve its full potential, and a combination of ketogenic diet and metformin will be used in this study to achieve a hypoinsulinaemic state. Professor Cantley serves as a scientific advisor to the study, and Dr. Howard Fine, a highly experienced neuro-oncologist is the Principal Investigator. Paxalisib Development in Childhood Brain Cancers Phase I Study in DIPG at St Jude Children’s Research Hospital In February 2020, the company’s collaborators at St Jude Children’s Research Hospital in Memphis, TN completed recruitment to a phase I investigator-initiated clinical study of paxalisib in diffuse intrinsic pontine glioma (DIPG), a rare but highly-aggressive childhood brain cancer with no approved pharmacological treatments. The St Jude study (NCT03696355) seeks to establish an MTD in the pediatric population before enrolling an expansion cohort to seek definitive signals of efficacy. The St Jude study is primarily funded by the hospital, with support via a financial grant from Kazia. In September 2019, the company announced that a pediatric MTD of 27 mg/m2 had been determined, which is approximately comparable to the doses used in adult clinical studies. The investigators reported interim data in an oral presentation at the SNO Annual Meeting in November 2020. The study met its primary objective and determined a maximum tolerated dose for paediatric use of 27 mg/m2. 27 patients were recruited, of whom 24 received at least one dose of paxalisib. The safety profile and pharmacokinetics were highly consistent with the adult data. The study had not at that stage demonstrated a survival benefit. As at 30 June 2022, the study remains in survival follow-up. Our Collaborators
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