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
RkJQdWJsaXNoZXIy MjE2NDg3