UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended June 30, 2019
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report
For the transition period from to
Commission file number 0-29962
Kazia Therapeutics Limited
ACN 063 259 754
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrants name into English)
New South Wales, Australia
(Jurisdiction of incorporation or organization)
Three International Towers Level 24, 300 Barangaroo Avenue, Sydney, New South Wales 2000, Australia
(Address of principal executive offices)
Gabrielle Heaton
(e)Gabrielle.Heaton@kaziatherapeutics.com (t) +61-2-9472-4101
Three International Towers Level 24, 300 Barangaroo Avenue, Sydney, New South Wales 2000, Australia
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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American Depositary Shares, each representing ten Ordinary Shares* | KZIA | The NASDAQ Stock Market |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
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Not for trading, but only in connection with the registration of American Depositary Shares. |
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Not Applicable
Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.
The number of outstanding Ordinary Shares of the issuer as at June 30, 2019, was 62,166,673.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Note Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of large accelerated filer, accelerated filer, and emerging growth company in Rule 12b-2 of the Exchange Act:
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing
U.S. GAAP ☐ |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ |
Other ☐ |
If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
This Annual Report on Form 20-F includes forward-looking statements, which involve a number of risks and uncertainties. These forward-looking statements can generally be identified as such because the context of the statement will include words such as may, will, intend, plan, believe, anticipate, expect, estimate, predict, potential, continue, likely, or opportunity, the negative of these words or other similar words. Similarly, statements that describe our future plans, strategies, intentions, expectations, objectives, goals or prospects and other statements that are not historical facts are also forward-looking statements. Discussions containing these forward-looking statements may be found, among other places, in Business Overview and Operating and Financial Review and Prospects in this Annual Report on Form 20-F. For such statements, we claim the protection of the Private Securities Litigation Reform Act of 1995 and section 27A of the Securities Act and Section 21E of the Exchange Act. Readers of this Annual Report on Form 20-F are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the time this Annual Report on Form 20-F was filed with the Securities and Exchange Commission, or SEC. These forward-looking statements are based largely on our expectations and projections about future events and future trends affecting our business and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include, without limitation, those discussed in Risk Factors and in Operating and Financial Review and Prospects of this Annual Report on Form 20-F. In addition, past financial or operating performance is not necessarily a reliable indicator of future performance, and you should not use our historical performance to anticipate results or future period trends. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition. Except as required by law, we undertake no obligation to update publicly or revise our forward-looking statements to reflect events or circumstances that arise after the filing of this Annual Report on Form 20-F.
In this Annual Report on Form 20-F, Kazia, Company, we, us and our refer to Kazia Therapeutics Limited and its wholly owned subsidiaries on a consolidated basis, unless the context otherwise provides.
Item 1. |
Identity of Directors, Senior Management and Advisors |
Item 1 details are not required to be disclosed as part of the Annual Report.
Item 2. |
Offer Statistics and Expected Timetable |
Item 2 details are not required to be disclosed as part of the Annual Report.
Item 3. |
Key Information |
A. Selected financial data
The selected financial data have been derived from the consolidated financial statements of the Company for and as of the fiscal years ended June 30, 2017, 2018 and 2019 included in this Annual Report. The selected financial data as of June 30, 2017, 2016 and 2015 and for the years ended June 30, 2016, and 2015 have been derived from the consolidated financial statements of the Company is not included in this Annual Report. This data should be read in conjunction with, and are qualified in their entirety by, reference to those statements and the notes thereto.
1
This financial report complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated financial statements have been audited in accordance with the Public Company Accounting Oversight Board (PCAOB) auditing standards in the United States by the Companys independent registered public accounting firm. The Companys fiscal year ends on June 30. As used throughout this Annual Report, the word fiscal followed by a year refers to the 12-month period ended on June 30 of that year. For example, the term fiscal 2019 refers to the 12 months ended June 30, 2019. Except as otherwise indicated, all dollar amounts referred to in this Annual Report are at the consolidated level and exclude inter-company amounts.
Summary of consolidated profit or loss and other comprehensive income (IFRS) |
2015
A$000 |
2016
A$000 |
2017
A$000 |
2018
A$000 |
2019
A$000 |
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Revenue and other income |
2,842 | 4,071 | 8,812 | 13,108 | 1,565 | |||||||||||||||
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Loss before income tax expense from continuing operations |
(7,306 | ) | (12,155 | ) | (10,869 | ) | (6,344 | ) | (10,568 | ) | ||||||||||
Loss after income tax expense from discontinued operations |
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Loss after income tax expense for the year |
(7,306 | ) | (12,155 | ) | (10,670 | ) | (6,039 | ) | (10,270 | ) | ||||||||||
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Net (loss) attributable to members of Kazia Therapeutics Limited |
(7,139 | ) | (12,062 | ) | (10,670 | ) | (6,039 | ) | (10,270 | ) | ||||||||||
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Earnings per share for loss from continuing operations attributable to the owners of Kazia Therapeutics Limited |
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Basic (loss) per share (cents per share) |
(2.99 | ) | (2.82 | ) | (2.28 | ) | (12.48 | ) | (17.86 | ) | ||||||||||
Diluted (loss) per share (cents per share) |
(2.99 | ) | (2.82 | ) | (2.28 | ) | (12.48 | ) | (17.86 | ) | ||||||||||
Weighted average number of ordinary share shares used to calculate earnings per share |
238,418,048 | 427,431,910 | 467,833,849 | 48,376,525 | 57,503,555 | |||||||||||||||
Number of outstanding ordinary shares at year end |
423,116,465 | 429,733,982 | 483,287,914 | 48,409,621 | 62,166,673 |
2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||
Summary of consolidated financial position (IFRS) | A$000 | A$000 | A$000 | A$000 | A$000 | |||||||||||||||
Cash and cash equivalents |
44,371 | 33,453 | 14,455 | 5,956 | 5,434 | |||||||||||||||
Total assets |
46,140 | 35,517 | 35,910 | 28,175 | 21,177 | |||||||||||||||
Net assets/Equity |
44,362 | 33,931 | 25,338 | 19,242 | 14,195 | |||||||||||||||
Debt |
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Capital Stock |
190,404 | 191,301 | 193,769 | 31,576 | 36,642 |
2
The Company publishes its consolidated financial statements expressed in Australian dollars. In this Annual Report, references to U.S. dollars or US$ are to the currency of the United States of America (U.S.) and references to Australian dollars or A$ are to the currency of Australia. For the convenience of the reader, this Annual Report contains translations of certain Australian dollar amounts into U.S. dollars at specified rates. These translations should not be construed as representations that the Australian dollar amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise stated, the translations of Australian dollars into U.S. dollars have been made at the rate of US$0.7009 = A$1.00, the foreign exchange rate as issued weekly by the Board of Governors of the Federal Reserve System (www.federalreserve.gov/releases) on June 30, 2019.
B. Capitalization and Indebtedness.
Not applicable.
C. Reasons for the Offer and Use of Proceeds.
Not applicable.
D. Risk factors
Investment in our securities involves a high degree of risk. You should consider carefully the risks described below, together with other information in this Annual Report on Form 20-F and our other public filings, before making investment decisions regarding our securities. If any of the following events actually occur, our business, operating results, prospects or financial condition could be materially and adversely affected. This could cause the trading price of our common stock to decline and you may lose all or part of your investment. Moreover, the risks described below are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business, operating results, prospects or financial condition.
Risks Related to Our Financial Condition and Capital Requirement
We have incurred significant net losses. We anticipate that we will continue to incur significant net losses for the foreseeable future and we may never achieve or maintain profitability.
We are a biotechnology company and have not yet generated significant revenue. We have incurred losses A$10.7 million, A$6.0 million and A$10.3 million for the fiscal years ended June 30, 2017, 2018 and 2019, respectively. We have not generated any revenues from sales of any of our product candidates.
As of June 30, 2019, we had accumulated losses of A$24.9 million. We have devoted most of our financial resources to research and development, including our clinical and preclinical development activities. To date, we have financed our operations primarily through the issuance of equity securities, research and development grants from the Australian government and payments from our collaboration partners. We have not generated, and do not expect to generate, any significant revenue for the foreseeable future, and we expect to continue to incur significant operating losses for the foreseeable future due to the cost of research and development, preclinical studies and clinical trials and the regulatory approval process for product candidates. The amount of our future net losses is uncertain and will depend, in part, on the rate of our future expenditures. Our ability to continue operations will depend on, among other things, our ability to obtain funding through equity or debt financings, strategic collaborations or additional grants.
We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:
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continue our research, preclinical and clinical development of our product candidates; |
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expand the scope of our current preclinical and clinical studies for our product candidates or initiate additional preclinical or clinical or other studies for product candidates; |
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seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical trials; |
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further develop the manufacturing process for our product candidates; |
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change or add additional manufacturers or suppliers; |
3
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seek to identify and validate additional product candidates; |
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acquire or in-license other product candidates and technologies; |
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maintain, protect and expand our intellectual property portfolio; |
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create additional infrastructure to support our operations as a public company in the United States and our product development and future commercialization efforts; and |
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experience any delays or encounter issues with any of the above. |
The net losses we incur may fluctuate significantly from year to year, such that a period to-period comparison of our results of operations may not be a good indication of our future performance. In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause the price of the ADSs to decline.
We have never generated any revenue from product sales and may never be profitable.
Our ability to generate significant revenue and achieve profitability depends on our ability, alone or with strategic collaboration partners, to successfully complete the development of and obtain the regulatory approvals for our product candidates, to manufacture sufficient supply of our product candidates, to establish a sales and marketing organization or suitable third-party alternative for the marketing of any approved products and to successfully commercialize any approved products on commercially reasonable terms. All of these activities will require us to raise sufficient funds to finance business activities. We do not expect any milestone payments from our collaborative partners to be significant in the foreseeable future. In addition, we do not anticipate generating revenue from commercializing product candidates for the foreseeable future, if ever. Our ability to generate future revenues from commercializing product candidates depends heavily on our success in:
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establishing proof of concept in preclinical studies and clinical trials for our product candidates; |
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successfully initiating and completing clinical trials of our product candidates; |
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obtaining regulatory and marketing approvals for product candidates for which we complete clinical trials; |
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maintaining, protecting and expanding our intellectual property portfolio, and avoiding infringing on intellectual property of third parties; |
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establishing and maintaining successful licenses, collaborations and alliances with third parties; |
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developing a sustainable, scalable, reproducible and transferable manufacturing process for our product candidates; |
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establishing and maintaining supply and manufacturing relationships with third parties that can provide products and services adequate, in amount and quality, to support clinical development and commercialization of our product candidates, if approved; |
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launching and commercializing any product candidates for which we obtain regulatory and marketing approval, either by collaborating with a partner or, if launched independently, by establishing a sales, marketing and distribution infrastructure; |
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obtaining market acceptance of any product candidates that receive regulatory approval as viable treatment options; |
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obtaining favorable coverage and reimbursement rates for our products from third-party payers; |
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addressing any competing technological and market developments; |
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identifying and validating new product candidates; and |
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negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter. |
Even if one or more of our product candidates is approved for commercial sale, we may incur significant costs associated with commercializing any approved product candidate. As one example, our expenses could increase beyond expectations if we are required by the Food and Drug Administration, or FDA, or other regulatory agencies, domestic or foreign, to perform clinical and other studies in addition to those that we currently anticipate. Even if we are able to generate revenues from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations, which could have an adverse effect on our business, financial condition, results of operations and prospects.
4
The Company is currently conducting clinical trials of two experimental therapies. Failure of one or both of these therapies to show benefit to patients could materially affect the continuity of our business and our financial condition.
The Companys lead programs include GDC-0084, a small molecule inhibitor of the PI3K/Akt/mTor pathway, and Cantrixil (TRX-E-002-1), a small molecule agent with activity against tumor-initiating cells. However, even though progress has been made, such as the clinical validation of the PI3K/Akt/mTor pathway as a target for oncology therapies, developments of our product candidates may prove unsuccessful, after completion of clinical trials, due to any failure to provide any beneficial effect to cancer patients. It is possible that either or both agents may fail to show sufficient benefit as a treatment for cancer to become commercially-viable products.
The Company has ongoing clinical trials in which experimental therapies are administered to human subjects. If profound and unexpected safety concerns are encountered in clinical trials, it may materially affect the continuity of our business and our financial condition.
Despite all applicable efforts to characterise the safety profile of our drug development candidates through animal studies and other mechanisms, the possibility of unexpected safety concerns remains. If one or both of our clinical stage candidates were found to be associated with profound and unexpected toxicity, Kazia may be required to cease development, and may additionally incur other impairments to the business including reputational damage.
The Companys ability to continue as a going concern is dependent on its ability to raise capital to support its R&D programs.
The Company has limited cash resources and will periodically need additional funds to maintain the planned level of R&D activity. We expect to consume cash and incur operating losses for the foreseeable future as the Company continues developing its oncology drug candidates. The impact on cash resources and results from operations will vary with the extent and timing of future clinical trial programs. While it is not possible to make accurate predictions of future operating results, we expect existing cash and cash equivalents will be sufficient to enable us to continue our research and development activities until approximately the end of calendar 2019.
As at June 30, 2019, we had cash in hand and at bank of A$5.4 million and further readily realizable assets of A$2.1 million. The financial statements have been prepared on a going concern basis, which contemplates continuity of normal activities and realisation of assets and settlement of liabilities in the normal course of business. As is often the case with drug development companies, our ability to continue as a going concern is dependent upon our ability to derive sufficient cash from investors, from licensing and partnering activities and from other sources of revenue such as grant funding. The directors have considered the cash flow forecasts and the funding requirements of the business and are confident that the strategies in place are appropriate to generate sufficient funding to allow us to continue as a going concern. Accordingly the directors have prepared the financial statements on a going concern basis. Should the above assumptions not prove to be appropriate, there is material uncertainty whether we will continue as a going concern and therefore whether the Company will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in these financial statements.
If the Company is unable to obtain additional funds on favorable terms or at all, it may be required to cease or reduce its operations. Also, if the Company raises more funds by selling additional securities, the ownership interests of holders of its securities will be diluted.
From time to time we receive Australian government research and development grants, and generally receive an R&D tax rebate each year. If we lose funding from these research and development grants, or fail to qualify for the R&D cash rebate, we may encounter difficulties in the funding of future research and development projects, which could harm our operating results.
We have historically received, and expect to continue to receive, grants through the Australian federal governments Research and Development Tax Incentive program (R&D tax rebate), under which the government provides a cash refund for a percentage of eligible research and development expenditures by small Australian entities (defined as Australian entities with less than A$20 million in revenue) having a tax loss. The R&D tax rebate is made by the Australian federal government for eligible research and development purposes based on the filing of an annual application. We received R&D tax rebates during fiscal 2018 and 2019 of A$4.0 million and A$2.2 million, respectively. In respect of fiscal 2019, we estimate the rebate which will be received in early fiscal 2020 and have accrued an amount of A$1.4 million as income in the statement of profit or loss and other comprehensive income. This rebate is available for our research and development activities in Australia, as well as activities in the United States and other countries to the extent such non-Australian based expenses relate to our activities in Australia, do not exceed 50% of the expenses for the relevant activities and are approved by the Australian government.
To the extent our research and development expenditures are deemed to be ineligible, then our rebates would decrease. In addition, the Australian government may in the future decide to modify the requirements of, reduce the amounts of the rebates available under, or discontinue the R&D tax rebate program.
5
Negative global economic conditions may pose challenges to the Companys business strategy, which relies on access to capital from the markets or collaborators. Failure to obtain sufficient funding on acceptable terms could have a material adverse effect on our business, results of operations and financial condition.
Negative conditions in the global economy, including credit markets and the financial services industry, have generally made equity and debt financing more difficult to obtain, and may negatively impact the Companys ability to complete financing transactions. The duration and severity of these conditions is uncertain, as is the extent to which they may adversely affect the Companys business and the business of current and prospective vendors and collaborators. If negative global economic conditions persist or worsen, the Company may be unable to secure additional funding to sustain its operations or to find suitable collaborators to advance its internal programs, even if positive results are achieved from research and development efforts.
If we are unable to raise sufficient funding on acceptable terms, we may be unable to continue to operate. There is no assurance that we will be successful in obtaining sufficient financing on acceptable terms and conditions to fund continuing operations, if at all. Our failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Our Business Operations
We may not successfully engage in strategic transactions or enter into new collaborations, which could adversely affect our ability to develop and commercialize product candidates, impact our cash position, increase our expenses and present significant distractions to our management.
From time to time, we may consider additional strategic transactions, such as collaborations, acquisitions, asset purchases or sales and out- or in-licensing of product candidates or technologies. In particular, we will evaluate and, if strategically attractive, seek to enter into additional collaborations, including with major biotechnology or pharmaceutical companies. The competition for collaborators is significant, and the negotiation process is time-consuming and complex. Any new collaboration may be on terms that are not optimal for us, and we may not be able to maintain any new or existing collaboration if, for example, development or approval of a product candidate is delayed, sales of an approved product candidate do not meet expectations or the collaborator discontinues the collaboration. Any such collaboration, or other strategic transaction, may require us to incur non-recurring or other charges, increase our expenditures, pose significant integration or implementation challenges or disrupt our management or business.
These transactions would entail numerous operational and financial risks, including exposure to unknown liabilities, incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs, higher than expected collaboration, acquisition or integration costs, write-downs of assets or goodwill or impairment charges, increased amortization expenses, difficulty and cost in facilitating the collaboration or combining the operations and personnel of any acquired business, impairment of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership and the inability to retain key employees of any acquired business.
Accordingly, although there can be no assurance that we will undertake or successfully complete any additional transactions of the nature described above, any transactions that we do complete may be subject to the foregoing or other risks and have a material adverse effect on our business, results of operations, financial condition and prospects. Conversely, any failure to enter any collaboration or other strategic transaction that would be beneficial to us could delay and make more expensive the development and potential commercialization of our product candidates and have a negative impact on the competitiveness of any product candidate that reaches market.
Any inability to attract and retain qualified key management and technical personnel would impair our ability to implement our business plan.
Our success largely depends on the continued service of key management and other specialized personnel. The loss of one or more members of our management team or other key employees or advisors could delay or increase the cost of our research and development programs and materially harm our business, financial condition, results of operations and prospects. The relationships that our key managers have cultivated within our industry make us particularly dependent upon their continued employment with us. We are dependent on the continued service of our technical personnel because of the highly technical nature of our product candidates and the specialized nature of the regulatory approval process for our product candidates. Because our management team and key employees are not obligated to provide us with continued service, they could terminate their employment with us at any time without penalty. We do not maintain key person life insurance policies on any of our management team members or key employees. Our future success will depend in large part on our continued ability to attract and retain other highly qualified scientific, technical and management personnel, as well as personnel with expertise in clinical testing, manufacturing, governmental regulation and commercialization. We face competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations.
6
Our collaborations with outside scientists and consultants may be subject to restriction and change.
We work with medical experts, chemists, biologists and other scientists at academic and other institutions, and consultants who assist us in our research, development and regulatory efforts, including the members of our scientific advisory board. In addition, these scientists and consultants have provided, and we expect that they will continue to provide, valuable advice regarding our programs and regulatory approval processes. These scientists and consultants are not our employees and may have other commitments that would limit their future availability to us. If a conflict of interest arises between their work for us and their work for another entity, we may lose their services. In addition, we are limited in our ability to prevent them from establishing competing businesses or developing competing products. For example, if a key scientist acting as a principal investigator in any of our future clinical trials identifies a potential product or compound that is more scientifically interesting to his or her professional interests, his or her availability to remain involved in any future clinical trials could be restricted or eliminated.
We face potential product liability, and, if successful claims are brought against us, we may incur substantial liability and costs. If the use of our product candidates harms patients, or is perceived to harm patients even when such harm is unrelated to our product candidates, our regulatory approvals could be revoked or otherwise negatively impacted and we could be subject to costly and damaging product liability claims.
The use of our product candidates in clinical trials and the sale of any products for which we may in the future obtain marketing approval exposes us to the risk of product liability claims. Product liability claims might be brought against us by consumers, healthcare providers, pharmaceutical companies or others selling or otherwise coming into contact with our product candidates. There is a risk that our product candidates may induce adverse events. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result in:
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impairment of our business reputation; |
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withdrawal of clinical trial participants; |
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costs due to related litigation; |
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distraction of managements attention from our primary business; |
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substantial monetary awards to patients or other claimants; |
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the inability to commercialize our product candidates; |
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decreased demand for our product candidates, if approved for commercial sale; and |
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increased cost, or impairment of our ability, to obtain or maintain product liability insurance coverage. |
We may use our limited financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.
Because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or product candidates or for indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs for product candidates may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through strategic collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate, or we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a collaboration arrangement.
Our internal computer and information technology systems, or those of our collaborators and other development partners, third-party Contract Research Organisations (CROs) or other contractors or consultants, may fail or suffer security breaches, which could result in a disruption of our product development programs.
Despite the implementation of security measures, our internal computer and information technology systems and those of our current and any future CROs and other contractors, consultants and collaborators are vulnerable to damage from computer viruses, cyber-attacks, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such events could cause interruptions of our operations. While we have not experienced any material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other similar disruptions. For example, the loss of clinical trial data from ongoing or future clinical trials or data from preclinical studies could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Likewise, we rely on third parties to manufacture our product candidates and will rely on third parties to conduct future clinical trials, and similar events relating to their computer systems could also have similar consequences to our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our product candidates could be delayed and become more expensive.
7
Our ability to utilize our net operating losses and certain other tax attributes may be limited.
We have substantial carried forward tax losses which may not be available to offset any future assessable income. In order for an Australian corporate taxpayer to carry forward and utilize tax losses, the taxpayer must pass either the continuity of ownership test, or, if it fails the COT, the same business test (SBT), or similar business test, in respect of relevant tax losses.
We have not carried out any analysis as to whether we have met the COT or, failing the COT, the SBT or similar business test over relevant periods. In addition, future shareholding changes may result in a significant ownership change for us. It is therefore uncertain as to whether any of our tax losses carried forward as of June 30, 2019 will be available to be carried forward and available to offset our assessable income, if any, in future periods.
Risks Related to the Product Development and Regulatory Approval of Our Product Candidates
We may not be able to obtain orphan drug exclusivity, where relevant, in all markets for our product candidates.
Regulatory authorities in some jurisdictions, including the United States, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a product intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States. The FDA may also designate a product as an orphan drug if it is intended to treat a disease or condition of more than 200,000 individuals in the United States and there is no reasonable expectation that the cost of developing and making a drug or biological product available in the United States for this type of disease or condition will be recovered from sales of the product candidate.
Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing application for the same drug for such indication for that time period. The applicable period is seven years in the United States. Orphan drug exclusivity may be lost if the FDA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.
In April 2015, the FDA granted orphan drug designation in the United States for Cantrixil (TRX-E-002-1) and in February 2018, the FDA granted orphan drug designation status in the United States for GDC-0084. Even if we obtain orphan drug exclusivity for additional products in the United States or other jurisdictions, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition, and the same drug could be approved for a different condition. Moreover, even after an orphan drug is approved, the FDA can subsequently approve the same drug, made by a competitor, for the same condition if the FDA concludes that the competitive product is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.
Positive results from preclinical studies of our product candidates are not necessarily predictive of the results of our planned clinical trials of our product candidates.
Positive results in preclinical proof of concept and animal studies of our product candidates may not result in positive results in clinical trials in humans. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical trials after achieving positive results in preclinical development or early stage clinical trials, and we cannot be certain that we will not face similar setbacks. These setbacks have been caused by, among other things, preclinical findings made while clinical trials were underway or safety or efficacy observations made in clinical trials, including adverse events. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or other regulatory authority approval. If we fail to produce positive results in our clinical trials of our product candidates, the development timeline and regulatory approval and commercialization prospects for our product candidates, and, correspondingly, our business and financial prospects, would be negatively impacted.
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Even if the Company receives regulatory approval to commercialize its drug candidates, the ability to generate revenues from any resulting products will be subject to a variety of risks, many of which are out of the Companys control.
Regardless of regulatory approval, products arising from the development process may not gain market acceptance among physicians, patients, healthcare payers or the medical community. The Company believes that the degree of market acceptance and its ability to generate revenues from such products will depend on a number of factors, including, but not limited to:
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advancements in the treatment of cancer that make our treatments obsolete; |
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market exclusivity and competitor products; |
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timing of market introduction of the Companys drugs and competitive drugs; |
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actual and perceived efficacy and safety of the Companys drug candidates; |
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prevalence and severity of any side effects; |
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potential or perceived advantages or disadvantages over alternative treatments; |
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strength of sales, marketing and distribution support; |
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price of future products, both in absolute terms and relative to alternative treatments; |
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the effect of current and future healthcare laws on the Companys drug candidates; and |
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availability of coverage and reimbursement from government and other third-party payers. |
If any of the Companys drugs are approved and fail to achieve market acceptance, the Company may not be able to generate significant revenue to achieve or sustain profitability.
Risks Related to Commercialization of Our Product Candidates
The Company may not be able to establish the contractual arrangements necessary to develop, market and distribute the product candidates. Our failure to do so may adversely affect our business, results of operations and financial condition.
The Company has been successful in executing contractual agreements with strategic partners. This remains a key part of the Companys business plan and the Company must continue to partner with third parties to manufacture clinical grade drug product and conduct key pre-clinical and clinical investigations. Strategic agreements around packaging, branding, market access and distribution for its drug products will also eventually be required.
However, potential partners could be discouraged by the Companys limited operating history. There is no assurance that the Company will be able to negotiate commercially acceptable licensing or other agreements for the future exploitation of its drug product candidates including continued clinical development, manufacture or marketing. If the Company is unable to successfully contract for these services, or if arrangements for these services are terminated, the Company may have to delay the commercialization program which will adversely affect its ability to generate operating revenues.
The Companys commercial opportunity will be reduced or eliminated if competitors develop and market products that are more effective, have fewer side effects or are less expensive than its drug candidates.
The development of drug candidates is highly competitive and is high risk. A number of other companies have products or drug candidates in various stages of pre-clinical or clinical development that are intended for the same therapeutic indications for which the Companys drug candidates are being developed. Some of these potential competing drugs are further advanced in development than the Companys drug candidates and may be commercialized sooner. Even if the Company is successful in developing effective drugs, its compounds may not compete successfully with products produced by its competitors.
The Companys competitors include pharmaceutical companies and biotechnology companies, as well as universities and public and private research institutions. In addition, companies active in different but related fields represent substantial competition. Many of the Companys competitors developing oncology drugs have significantly greater capital resources, larger R&D staff and facilities and greater experience in drug development, regulation, manufacturing and marketing. These organizations also compete with the Company and its service providers, to recruit qualified personnel, and to attract partners for joint ventures and to license technologies. As a result, the Companys competitors may be able to develop technologies and products that would render the Companys technologies or its drug candidates obsolete or non-competitive.
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Risks Related to Our Intellectual Property
If we are unable to protect intellectual property rights related to our product candidates, we may not be able to obtain exclusivity for our product candidates or prevent others from developing similar competitive products.
We rely upon a combination of patents, know-how, trade secret protection and confidentiality agreements to protect the intellectual property related to our product candidates.
The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates in the United States or other jurisdictions. In addition, we cannot guarantee that any patents will issue from any pending or future patent applications owned by or licensed to us. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents cover our product candidates, third parties may initiate opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation action in court or before patent offices or similar proceedings challenging the validity, enforceability or scope of such patents, which may result in the patent claims being narrowed or invalidated. Furthermore, even if our patents and patent applications are unchallenged, they may not adequately protect our intellectual property, provide exclusivity for our product candidates or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competition from third parties.
If the patent applications we hold or have in-licensed with respect to our programs or product candidates fail to issue, or are revoked, if the breadth or strength of our patent protection is threatened, or if our patent portfolio fails to provide meaningful exclusivity for our product candidates, it could dissuade companies from collaborating with us to develop product candidates and threaten our ability to commercialize future products. Any successful opposition to any patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product candidates that we may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced. Even where we have a valid and enforceable patent, we may not be able to exclude others from practicing our invention where the other party can show that they used the invention in commerce before our filing date or the other party benefits from a compulsory license. In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from competitive medications, including biosimilar or generic medications. This risk is material in light of the length of the development process of our products and lifespan of our current patent portfolio.
In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. What constitutes a trade secret and what protections are available for trade secrets varies from state to state in the United States and country by country worldwide. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. Security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.
The Company is at an early stage of drug development and is in the process of applying for patents over composition and matter and use for both of its drug technology platforms. There is no certainty that patent protection will be granted or maintained in the event of challenge by an external party.
The Company has a patent portfolio to protect its key assets. The patent strategy is adapted for each technology platform and the sub-sections of each platform. The over-arching strategy in the IP portfolio is to cover the three critical corner stones of pharmaceutical patent: composition of matter (the breadth structures covered in the patent), method of manufacture (the chemical processes used to manufacture the compounds disclosed in the patent) and method of use. Our key patents covering lead assets have been granted in Australia and are at different stages of entering national phase in other jurisdictions. Consequently, the risk to our patent coverage for our lead assets has been substantially reduced. While the Companys patent strategy is closely supervised by experienced patent attorneys and every effort made to ensure the likely success of achieving approval of patent claims in all major territories, there is no guarantee that any or all jurisdictions will grant such claims.
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Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and applications are required to be paid to the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and applications. The USPTO and various corresponding governmental patent agencies outside of the United States require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process and after a patent has issued. There are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
Our success depends, in part, on our ability to protect our intellectual property and our technologies.
Our commercial success depends, in part, on our ability to obtain and maintain patent and trade secret protection for our technologies, our traits, and their uses, as well as our ability to operate without infringing upon the proprietary rights of others. If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.
Filing, prosecuting and defending patents on product candidates in all countries around the world would be prohibitively expensive. In addition, we may at times in-license third-party technologies for which limited international patent protection exists and for which the time period for filing international patent applications has passed. Consequently, we may not be able to prevent third parties from practicing our inventions, or from selling or importing products made using our inventions. Potential competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection but enforcement is difficult. These products may compete with our product candidates, if approved, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights around the world. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Risks Related to Our Reliance on Third Parties
The Company relies on third parties to conduct its pre-clinical studies. If those parties do not successfully carry out their contractual duties or meet expected deadlines, the Companys drug candidates may not advance in a timely manner or at all.
In the course of discovery, pre-clinical testing and clinical trials, the Company relies on third parties, including laboratories, investigators, clinical contract research organizations (CROs), and manufacturers, to perform critical services. For example, the Company relies on third parties to conduct all of its pre-clinical and clinical studies. These third parties may not be available when the Company needs them or, if they are available, may not comply with all regulatory and contractual requirements or may not otherwise perform their services in a timely or acceptable manner, and the Company may need to enter into new arrangements with alternative third parties and the studies may be extended, delayed or terminated. These independent third parties may also have relationships with other commercial entities, some of which may compete with the Company. As a result of the Companys dependence on third parties, it may face delays or failures outside of its direct control. These risks also apply to the development activities of collaborators, and the Company does not control their research and development, clinical trial or regulatory activities.
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The Company has no direct control over the cost of manufacturing its drug candidates. Increases in the cost of manufacturing the Companys drug candidates would increase the costs of conducting clinical trials and could adversely affect future profitability.
The Company does not intend to manufacture the drug product candidates in-house, and it will rely on third parties for drug supplies both for clinical trials and for commercial quantities in the future. The Company has taken the strategic decision not to manufacture active pharmaceutical ingredients (API) for the drug candidates, as these can be more economically supplied by third parties with particular expertise in this area. The Company outsources the manufacture of its drug products and their testing to FDA requirements. The Company uses contract facilities that are registered with the FDA, have a track record of large scale API manufacture, and have already invested in capital and equipment. The Company has no direct control over the cost of manufacturing its product candidates. If the cost of manufacturing increases, or if the cost of the materials used increases, these costs may be passed on, making the cost of conducting clinical trials more expensive. Increases in manufacturing costs could adversely affect the Companys future profitability if it was unable to pass all of the increased costs along to its customers.
Risks Related to our Securities
Enforceability of civil liabilities under the federal securities laws against the Company or the Companys officers and directors may be difficult.
The Company is a public company limited by shares and is registered and operates under the Australian Corporations Act 2001. Some of the Companys directors and officers reside outside of the United States. In addition, a substantial portion of the directly owned assets of the Company are located outside of the United States. As a result, it may be difficult or impossible for investors to effect service of process within the United States against the Company or its directors and officers or to enforce against them any of the judgments, including those obtained in original actions or in actions to enforce judgments of the U.S. courts, predicated upon the civil liability provisions of the federal or state securities laws of the United States. There is doubt as to the enforceability in the Commonwealth of Australia, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon federal or state securities laws of the U.S., especially in the case of enforcement of judgments of U.S. courts where the defendant has not been properly served in Australia.
The trading price of the Companys ordinary shares and American Depositary Shares (ADSs) is highly volatile. Your investment could decline in value and the Company may incur significant costs from class action litigations.
The trading price of the Companys ordinary shares and ADSs is highly volatile in response to various factors, many of which are beyond the Companys control, including:
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unacceptable toxicity findings in animals and humans; |
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lack of efficacy in human trials at Phase II stage or beyond; |
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announcements of technological innovations by the Company and its competitors; |
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new products introduced or announced by the Company or its competitors; |
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changes in financial estimates by securities analysts; |
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actual or anticipated variations in operating results; |
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expiration or termination of licenses, research contracts or other collaboration agreements; |
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conditions or trends in the regulatory climate in the biotechnology, pharmaceutical and genomics industries; |
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changes in the market values of similar companies; |
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the liquidity of any market for the Companys securities; and |
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additional sales by the Company of its shares. |
In addition, equity markets in general and the market for biotechnology and life sciences companies in particular, have experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the companies traded in those markets. Further changes in economic conditions in Australia, the U.S., EU, or globally, could impact the Companys ability to grow profitably. Adverse economic changes are outside the Companys control and may result in material adverse effects on the Companys business or results of operations. These broad market and industry factors may materially affect the market price of the Companys ordinary shares and ADSs regardless of its development and operating performance. In the past, following periods of volatility in the market price of a companys securities, securities class action litigation has often been instituted against that company. Such litigation, if instituted against the Company, could cause it to incur substantial costs and divert managements attention and resources.
If the market price of the Companys ADSs remains below US$5.00 per share, under stock exchange rules, the Companys stockholders will not be able to use such ADSs as collateral for borrowing in margin accounts. This inability to use ADSs as collateral may depress demand as certain institutional investors are restricted from investing in securities priced below US$5.00 and may lead to sales of such ADSs, creating downward pressure on and increased volatility in the market price of the Companys ordinary shares and ADSs.
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A decrease in the trading price of our ADSs could cause their delisting from NASDAQ.
Under NASDAQ rules, companies listed on the NASDAQ Capital Market are required to maintain a share price of at least US$1.00 per share to avoid delisting of their shares. If the share price declines below US$1.00 for a period of 30 consecutive business days, then that listed company would have 180 days to regain compliance with the US$1.00 per share minimum. In the event that the Companys share price declines below US$1.00, it may be required to take action, such as a reverse stock split, in order to comply with the NASDAQ rules that may be in effect at the time.
You are reliant on the depositary to exercise your voting rights and to receive distributions on ADSs and, as a result, you may be unable to exercise your voting rights on a timely basis or you may not receive certain distributions.
In certain circumstances, holders of ADSs may have limited rights relative to holders of ordinary shares. The rights of holders of ADSs with respect to the voting of ordinary shares and the right to receive certain distributions may be limited in certain respects by the deposit agreement entered into by us and The Bank of New York Mellon. For example, although ADS holders are entitled under the deposit agreement, subject to any applicable provisions of Australian law and of our Constitution, to instruct the depositary as to the exercise of the voting rights pertaining to the ordinary shares represented by the ADSs, and the depositary has agreed that it will try, as far as practical, to vote the ordinary shares so represented in accordance with such instructions, ADS holders may not receive notices sent by the depositary in time to ensure that the depositary will vote the ordinary shares. This means that, from a practical point of view, the holders of ADSs may not be able to exercise their right to vote. In addition, under the deposit agreement, the depositary has the right to restrict distributions to holders of the ADSs in the event that it is unlawful or impractical to make such distributions. We have no obligation to take any action to permit distributions to holders of our ADSs. As a result, holders of ADSs may not receive distributions.
There is a risk that we are, or will become, a passive foreign investment company, or PFIC, which will subject our U.S. investors to adverse tax rules
There is a risk that we are, or will become, a passive foreign investment company, commonly referred to as a PFIC. Our treatment as a PFIC could result in a reduction in the after-tax return to the U.S. holders of our ordinary shares or ADSs and would likely cause a reduction in the value of such ordinary shares or ADSs. For U.S. federal income tax purposes, we will be classified as a PFIC for any taxable year in which either (i) 75% or more of our gross income is passive income, or (ii) at least 50% of the average quarterly value of all of our assets for the taxable year produce or are held for the production of passive income. If we are classified as a PFIC for U.S. federal income tax purposes, highly complex rules will apply to U.S. holders owning ordinary shares or ADSs. Accordingly, you are urged to consult your tax advisors regarding the application of such rules. See Item 10 - Additional Information - Taxation, United States Federal Income Tax Consequences for a more complete discussion of the U.S. federal income tax risks related to owning and disposing of our ordinary shares or ADSs. |
Currency fluctuations may adversely affect the price of our ordinary shares, ADSs.
Our ordinary shares are quoted in Australian dollars on the ASX and the ADSs are quoted in U.S. dollars on NASDAQ. Movements in the Australian dollar/U.S. dollar exchange rate may adversely affect the U.S. dollar price of the ADSs. In the past year the Australian dollar has generally weakened against the U.S. dollar. However, this trend may not continue and may be reversed.
Australian takeover laws may discourage takeover offers being made for us or may discourage the acquisition of a significant position in our ordinary shares and ADSs.
We are incorporated in Australia and are subject to the takeover laws of Australia. Among other things, we are subject to the Australian Corporations Act 2001, or the Corporations Act. Subject to a range of exceptions, the Corporations Act prohibits the acquisition of a direct or indirect interest in our issued voting shares if the acquisition of that interest will lead to a persons voting power in us increasing to more than 20%, or increasing from a starting point that is above 20% and below 90%. Australian takeover laws may discourage takeover offers being made for us or may discourage the acquisition of a significant position in our ordinary shares. This may have the ancillary effect of entrenching our board of directors and may deprive or limit our shareholders and ADS holders opportunity to sell their ordinary shares and ADSs and may further restrict the ability of our shareholders and ADS holders to obtain a premium from such transactions. See Item 10.B Additional Information Memorandum and Articles of Association.
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Item 4. |
Information on the Company |
A. History and development of the Company
Kazia Therapeutics Limited (Kazia), a public company limited by shares, was incorporated in March 1994 under the laws of New South Wales, Australia. Kazia is registered and operates under the Australian Corporations Act 2001.
Kazia has its registered office at Three International Towers, Level 24, 300 Barangaroo Avenue, Sydney, NSW 2000, Australia. Its telephone number and other contact details are: Phone +61-2-9472 4101; email info@kaziatherapeutics.com; and website, www.kaziatherapeutics.com (the information contained in the website does not form part of the Annual Report). Our agent for service of process in the United States is C T Corporation System, 111 Eighth Avenue, New York, New York 10011, USA.
The Companys Ordinary Shares are listed on the Australian Securities Exchange (ASX) under the symbol KZA and its ADSs, each representing ten Ordinary Shares, trade on the NASDAQ Capital Market under the symbol KZIA. The Depositary for the Companys ADSs is The Bank of New York Mellon, 101 Barclay Street 22W New York, N.Y. 10286. All information we file with the SEC is available through the SECs Electronic Data Gathering, Analysis and Retrieval system, which may be accessed through the SECs website at www.sec.gov.
B. Business overview
Since its inception in 1994, the principal business of the Company has been pharmaceutical drug development. The Company is an emerging 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. The lead drug candidate is GDC-0084, a small molecule inhibitor of the PI3K / AKT / mTOR pathway, which is involved in five active trials as follows:
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A Kazia sponsored Phase II clinical trial to examine GDC-0084 in glioblastoma, the most common malignant and highly aggressive form of primary brain tumor in adults; |
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A Phase I clinical trial examining GDC-0084 in diffuse intrinsic pontine glioma (DIPG), a rare but very aggressive form of childhood brain cancer. This trial is being run by St Jude Childrens Research Hospital; |
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A Phase II study being conducted at Dana-Farber Cancer Institute, examining breast cancer metastases breast cancer which has spread to the brain in combination with Herceptin; |
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GDC-0084 is participating in an NCI funded multi-drug study of brain metastases cancer which has spread to the brain from any primary tumor. This study is a Phase II trial and is being conducted by the Alliance for Clinical Trials in Oncology; and |
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Memorial Sloan Kettering Cancer Center is investigating the potential use of GDC-0084 in combination with radiotherapy in a Phase I clinical trial for cancer which has spread to the brain. |
Cantrixil (TRX-E-002-1) is the Companys second clinical asset and is being developed as a potential therapy for ovarian cancer.
The Company has out-licensed all of its other pre-clinical assets to a range of entities in order to focus its time and cash resources on the above two important programs. We hold an ownership stake in those entities in order to share in any upside from successful development of those pre-clinical assets.
Research and Development
GDC-0084
The companys lead development candidate is 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 malignant and highly aggressive form of primary brain tumour in adults, as well as other forms of brain cancer. GDC-0084 is orally administered and is presented in a 15mg capsule formulation. The development candidate was granted orphan designation by FDA in February 2018.
GDC-0084 was developed by Genentech, Inc (South San Francisco, California) and the company entered into a worldwide exclusive license for the asset in October 2016. Prior to this transaction, Genentech had completed an extensive preclinical development program that provided convincing validation for GDC-0084 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.
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During the period, the company has commenced recruitment to a Phase IIa clinical study in patients with newly-diagnosed glioblastoma who exhibit unmethylated MGMT promotor status (NCT03522298). Unmethylated MGMT status confers near-total resistance to temozolomide, the existing standard of care, and represents approximately two-thirds of the total incident GBM population. This Phase IIa study is ongoing at seven centres in the United States. In May 2019, the company reported interim data from the initial dose escalation component of the study. In the newly-diagnosed population, a maximum tolerated dose (MTD) of 60mg was achieved, which is higher than the MTD of 45mg reported in the phase I study in recurrent patients. Adverse events were generally mild and reversible. Dose-limiting toxicities of mucositis and hyperglycemia were consistent with the PI3K inhibitor class and with prior clinical experience of this agent. An expansion cohort of 20 patients is currently recruiting, with initial efficacy data expected by the end of CY2019 or early in CY2020.
In October 2018, the company announced a Phase I investigator-initiated study at St Jude Childrens Research Hospital in Memphis, TN (NCT03696355). The St Jude study is designed to explore GDC-0084 as a monotherapy for diffuse intrinsic pontine glioma (DIPG), a rare but highly-aggressive childhood brain cancer with no approved pharmacological treatments. The study 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. The study is ongoing, with initial data potentially expected in 2H CY2019.
Also in October 2018, the company announced a Phase II investigator-initiated study at Dana-Farber Cancer Institute in Boston, MA (NCT03765983). The Dana-Farber study examines GDC-0084 in combination with Herceptin (trastuzumab) in the treatment of HER2-positive breast cancer brain metastases (BCBM), a population for which there are again no approved pharmacological treatments. The Dana-Farber study is primarily funded by the hospital, with support via a financial grant from Kazia. The study is ongoing, and the company hopes to receive data during the latter part of CY2019 from this trial.
In May 2019, the company announced a Phase II study sponsored by the Alliance for Clinical Trials in Oncology, a large academic research organisation, and funded by the US National Cancer Institute (NCT03994796). The Alliance study is a genomicallyguided, multi-drug study in patients with brain metastases from any primary tumour. Those with mutations affecting the PI3K / Akt / mTOR pathway will be assigned to receive GDC-0084, while patients with other driving mutations may receive abemaciclib (Eli Lilly & Company) or entrectenib (Genentech, Inc.). The study is due to commence recruitment in July 2019, and is expected to recruit approximately 150 patients, evenly divided between the three treatment arms, over the course of a two-year period.
A number of preclinical experiments with GDC-0084 reported data during the period. Of note, a paper by FM Ippen at al. from Harvard Medical School reported in vivo data from a model of breast cancer brain metastases. It concluded that treatment with GDC-0084 markedly inhibited the growth of PIK3CA-mutant [brain tumours]. Meanwhile, R Duchatel et al. from the University of Newcastle reported in vitro data examining GDC-0084 in DIPG cell lines in a poster presentation at the SNO Pediatric Brain Tumor meeting, and found the drug to be highly active across all tested lines.
In August 2019, the company announced that the World Health Organisation (WHO) had selected paxalisib as the provisional International Nonproprietary Name (pINN) for GDC-0084 and that, subject to final confirmation in late CY2019, the company would begin to deploy this name and discontinue public use of the GDC-0084 code number.
Cantrixil (TRX-E-002-1)
Cantrixil (TRX-E-002-1) is the companys second clinical asset and is derived from a proprietary drug discovery program. It is being developed as a potential therapy for ovarian cancer.
Research undertaken by Yale University (New Haven, Connecticut) has provided preclinical evidence that Cantrixil is active against both differentiated cancer cells and tumor-initiating cells (sometimes referred to as cancer stem cells). The latter are thought to be an important component of chemotherapy resistance and disease recurrence in diseases such as ovarian cancer, and thus Cantrixil has potential to offer benefit to the approximately three-quarters of ovarian cancer patients who are not adequately managed by conventional chemotherapy treatments.
In December 2016, the company commenced a phase I clinical trial of Cantrixil in patients with ovarian cancer (NCT02903771). The study is designed to establish the safety and tolerability of the development candidate, to determine a Maximum Tolerated Dose (MTD), and to explore indicative signals of clinical efficacy. Data from the initial dose escalation cohort was reported at the American Association of Cancer Research meeting in April 2019. Cantrixil was broadly well-tolerated, and an MTD of 5 mg/kg was determined. Dose-limiting toxicities were generally gastrointestinal in nature. Of nine evaluable patients, five (56%) achieved stable disease after two cycles of Cantrixil monotherapy, and one patient went on to exhibit a partial response after treatment with Cantrixil and chemotherapy. The study has now completed recruiting a 12-patient dose expansion cohort and is expected to report efficacy data by the end of CY2019.
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Patent Protection
The Company has an aggressive global Intellectual Property (IP) strategy to protect its key assets and we have partnered with a global patent law firm to lodge patents that offer the best possible protection for our assets. The patent strategy is adapted for each technology platform and the principle mode of protection is through the patenting procedure, seeking to obtain exclusive licenses for all its key inventions and drug pipeline. The overarching strategy in the IP portfolio is to cover the three critical corner stones of pharmaceutical patent: composition of matter (the breadth structures covered in the patent), method of manufacture (the chemical processes used to manufacture the compounds disclosed in the patent) and method of use. Patents are submitted initially as provisional applications and after 12 months progress through to a Patent Cooperation Treaty (PCT) application.
Drug discovery/development efforts are contributing to our pipeline with our other technology platforms also delivering hit and lead drug candidates. As the research programs reveal new hit molecules, these are protected through lodging patents. The Company will continue to pursue a broad patent filing strategy based on multiple jurisdictions with a focus on those member countries offering the most significant market opportunities for future development.
Regulatory requirements
Australian Regulatory Requirements
The Therapeutic Goods Act 1989 (1989 Act), sets out the legal requirements for the import, export, manufacture and supply of pharmaceutical products in Australia. The 1989 Act requires that all pharmaceutical products to be imported into, supplied in, manufactured in or exported from Australia be included in the Australian Register of Therapeutic Goods (ARTG), unless specifically exempted under the Act.
Medicines with a higher level of risk (prescription medicines, some non-prescription medicines) are evaluated for quality, safety and efficacy and are registered on the ARTG. Medicines with a lower risk (many over the counter medicines including vitamins) are assessed only for quality and safety. Medicines included in the ARTG can be identified by the AUST R number (for registered medicines) or an AUST L number (for listed medicines) which appears on the packaging of the medicine.
In order to ensure that a product can be included in the ARTG, a sponsoring company must make an application to the Therapeutic Goods Administration (TGA). The application usually consists of a form accompanied by data (based on the EU requirements) to support the quality, safety and efficacy of the product for its intended use and payment of a fee. Application details are available on the TGA website www.tga.gov.au.
The first phase of evaluation, known as the Application Entry Process, is usually a short period during which an application is assessed at an administrative level to ensure that it complies with the basic guidelines. The TGA may request further details from the applicant and may agree with sponsors that additional data (which while not actually required by the application, could enhance the assessment outcome) may be submitted later at an agreed time. The TGA must decide within at least 40 working days whether it will accept the application for evaluation.
Once an application is accepted for evaluation, aspects of the data provided are allocated to evaluators within the different relevant sections, who prepare clinical evaluation reports. Following evaluation, the chemistry, quality control bioavailability and pharmacokinetics aspects of a product may be referred to a Pharmaceutical Sub-Committee (PSC), which is a sub-committee of the TGA prescription medicine expert advisory committee, the Advisory Committee on Prescriptive Medicines (ACPM) to review the relevant clinical evaluation reports.
The clinical evaluation reports (along with any resolutions of the ACPM sub-committee) are sent to the sponsoring company who then has the opportunity to comment on the views expressed within the evaluation report, provide corrections and to submit supplementary data to address any issues raised in the evaluation reports.
Once the evaluations are complete, the TGA prepares a summary document on the key issues on which advice will be sought from either the ACPM (for new medicines) or from the Peer Review Committee (PRC) for extensions to products which are already registered. This summary is sent to the sponsoring company, which is able to submit a response to the ACPM or PRC dealing with issues raised in the summary and those not previously addressed in the evaluation report. The ACPM/PRC provide independent advice on the quality, risk/benefit, effectiveness and access of the product and conduct medical and scientific evaluations of the application. The ACPM meets every two months to examine the applications referred by the TGA and its resolutions are provided to the sponsoring company within five working days after the ACPM meeting.
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The TGA takes into account the advice of the ACPM or PRC in reaching a decision to approve or reject a product. Any approval for registration on the ARTG may have conditions associated with it.
From the time that the TGA accepts the initial application for evaluation, the TGA must complete the evaluation and make a decision on the registration of the product within at least 255 working days. If not completed within 255 working days, the TGA forfeits 25% of the evaluation fee otherwise payable by the sponsor, but any time spent waiting for a response from the sponsor is not included in the 255 working days. The TGA also has a system of priority evaluation for products that meet certain criteria, including where the product is a new chemical entity that it is not otherwise available on the market as an approved product, and is for the treatment of a serious, life-threatening illness for which other therapies are either ineffective or not available.
U.S. Regulatory Requirements
The FDA regulates and imposes substantial requirements upon the research, development, pre-clinical and clinical testing, labelling, manufacture, quality control, storage, approval, advertising, promotion, marketing, distribution, import and export of pharmaceutical products including drugs and biologics, as well as significant reporting and record-keeping obligations. State governments may also impose obligations in these areas.
In the United States, pharmaceutical products are regulated by the FDA under the Federal Food, Drug, and Cosmetic Act (FDCA), and other laws in the case of biologics, the Public Health Service Act and other acts that implement regulations. The Company believes that the FDA will regulate its products as drugs. The process required by the FDA before drugs may be marketed in the United States generally involves the following:
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pre-clinical laboratory evaluations, including formulation and stability testing, and animal tests performed under the FDAs Good Laboratory Practices regulations to assess pharmacological activity and toxicity potential; |
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submission and approval of an IND Application, including results of pre-clinical studies, clinical experience, manufacturing information, and protocols for clinical tests, which must become effective before clinical trials may begin in the United States; |
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obtaining approval of Institutional Review Boards (IRBs), to administer the products to human subjects in clinical trials; |
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adequate and well-controlled human clinical trials to establish the safety and efficacy of the product for the products intended use; |
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development of manufacturing processes which conform to FDA current Good Manufacturing Practices (cGMPs), as confirmed by FDA inspection; |
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submission of results for pre-clinical and clinical studies, and chemistry, manufacture and control information on the product to the FDA in a New Drug Approval (NDA) Application; and |
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FDA review and approval of an NDA, prior to any commercial sale, promotion or shipment of a product. |
The testing and approval process requires substantial time, effort, and financial resources, and the Company cannot be certain that any approval will be granted on a timely basis, if at all.
The results of the pre-clinical studies, clinical experience together with initial specified manufacturing information, the proposed clinical trial protocol, and information about the participating investigators are submitted to the FDA as part of an IND, which must become effective before the Company may begin human clinical trials in the U.S. Additionally, an independent IRB must review and approve each study protocol and oversee conduct of the trial. An IND becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day period, raises concerns or questions about the conduct of the trials as outlined in the IND and imposes a clinical hold. If the FDA imposes a clinical hold, the IND sponsor must resolve the FDAs concerns before clinical trials can begin. Pre-clinical tests and studies can take several years to complete, and there is no guarantee that an IND submitted, based on such tests and studies, will become effective within any specific time period, if at all.
Human clinical trials are typically conducted in three sequential phases that may overlap, which are:
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Phase I: The drug is initially introduced into healthy human subjects or patients and tested for safety and dosage tolerance. For oncology medicines, patients with the target disease are used rather than healthy patients. Absorption, metabolism, distribution, and excretion testing, among other tests, are generally performed at this stage. These studies may also provide early evidence of effectiveness. The maximum tolerated dose of the drug may be calculated from Phase I studies; |
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Phase II: The drug is studied in controlled, exploratory therapeutic trials in a limited number of subjects with the disease or medical condition for which the new drug is intended to be used in order to identify possible adverse effects and safety risks, to determine the preliminary or potential efficacy of the product for specific targeted diseases or medical conditions, and to determine dosage tolerance and the optimal effective dose; and |
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Phase III: While Phase II studies demonstrate that a specific dosage range of the drug is likely to be effective and the drug has an acceptable safety profile, controlled, large-scale therapeutic, Phase III trials are undertaken at multiple study sites to demonstrate clinical efficacy and to further test for safety in an expanded patient population. These studies are used to evaluate the overall benefit risk relationship of the drug and provide a basis for physician labelling. |
The Company cannot be certain that it will successfully complete Phase I, Phase II or Phase III testing of its products within any specific time period, if at all. Furthermore, the FDA, the IRB or the Company may suspend or terminate clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.
Results of pre-clinical studies and clinical trials, as well as detailed information about the manufacturing process, quality control methods, and product composition, among other things, are submitted to the FDA as part of an NDA seeking approval to market and commercially distribute the product on the basis of a determination that the product is safe and effective for its intended use. Before approving an NDA, the FDA will inspect the facilities at which the product is manufactured and will not approve the product unless GMP compliance is satisfactory. If applicable regulatory criteria are not satisfied, the FDA may deny the NDA or require additional testing or information. As a condition of approval, the FDA also may require post-marketing testing or surveillance to monitor the products safety or efficacy. Even after an NDA is approved, the FDA may impose additional obligations or restrictions (such as labelling changes), or even suspend or withdraw a product approval on the basis of data that arise after the product reaches the market, or if compliance with regulatory standards is not maintained. The Company cannot be certain that the FDA on a timely basis, if at all will approve any NDA it submits. Also, any such approval may limit the indicated uses for which the product may be marketed. Any refusal to approve, delay in approval, suspension or withdrawal of approval, or restrictions on indicated uses could have a material adverse impact on the Companys business prospects.
A user fee, pursuant to the requirements of the Prescription Drug User Fee Act (PDUFA), and its amendments, applies to NDAs. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA also imposes an annual product fee for prescription drugs and biologics, and an annual establishment fee on facilities used to manufacture prescription drugs and biologics. A written request can be submitted for a waiver under certain circumstances. Waivers may be possible for the application fee for the first human drug application that is filed by a small business, as defined by the FDCA, but there are no small business waivers for product or establishment fees. Waivers may also be possible for one or more fees, upon written request, when a waiver or reduction is necessary to protect the public health, the user fees would present a significant barrier to innovation, or the fees are anticipated to exceed the present or future costs incurred by FDA. The Company is not at the stage of development with its products where it is subject to these fees, but they are significant expenditures that may be incurred in the future and must be paid at the time of application submissions to FDA.
Satisfaction of FDA requirements typically takes several years. The actual time required varies substantially, based upon the type, complexity, and novelty of the pharmaceutical product, among other things. Government regulation imposes costly and time-consuming requirements and restrictions throughout the product life cycle and may delay product marketing for a considerable period of time, limit product marketing, or prevent marketing altogether. Success in pre-clinical or early stage clinical trials does not ensure success in later stage clinical trials. Data obtained from pre-clinical and clinical activities are not always conclusive and may be susceptible to varying interpretations that could delay, limit, or prevent marketing approval. Even if a product receives marketing approval, the approval is limited to specific clinical indications. Further, even after marketing approval is obtained, the discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market.
After product approval, there are continuing significant regulatory requirements imposed by the FDA, including record-keeping requirements, obligations to report adverse events in patients using the products, and restrictions on advertising and promotional activities. Quality control and manufacturing procedures must continue to conform to GMPs, and the FDA periodically inspects facilities to assess GMP compliance. Additionally, post-approval changes in ingredient composition, manufacturing processes or facilities, product labelling, or other areas may require submission of an NDA Supplement to the FDA for review and approval. New indications will require additional clinical studies and submission of an NDA Supplement. Failure to comply with FDA regulatory requirements may result in an enforcement action by the FDA, including warning letters, product recalls, suspension or revocation of product approval, seizure of product to prevent distribution, impositions of injunctions prohibiting product manufacture or distribution, and civil and criminal penalties. Maintaining compliance is costly and time-consuming. The Company cannot be certain that it, or its present or future suppliers or third-party manufacturers, will be able to comply with all FDA regulatory requirements, and potential consequences of noncompliance could have a material adverse impact on its business prospects.
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The FDAs policies may change, and additional governmental regulations may be enacted that could delay, limit, or prevent regulatory approval of the Companys products or affect its ability to manufacture, market, or distribute its products after approval. Moreover, increased attention to the containment of healthcare costs in the U.S. and in foreign markets could result in new government regulations that could have a material adverse effect on the business. The Companys failure to obtain coverage, an adequate level of reimbursement, or acceptable prices for future products could diminish any revenues the Company may be able to generate. The Companys ability to commercialize future products will depend in part on the extent to which coverage and reimbursement for the products will be available from government and health administration authorities, private health insurers, and other third-party payers. EU member states and U.S. government and other third-party payers increasingly are attempting to contain healthcare costs by consideration of new laws and regulations limiting both coverage and the level of reimbursement for new drugs. The Company cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the U.S. or abroad.
The Companys activities may also be subject to state laws and regulations that affect its ability to develop and sell products. The Company is also subject to numerous federal, state, and local laws relating to such matters as safe working conditions, clinical, laboratory, and manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. The Company may incur significant costs to comply with such laws and regulations now or in the future, and the failure to comply may have a material adverse impact on the Company.
The FDCA includes provisions designed to facilitate the development and expedite the review of drugs and biological products intended for treatment of serious or life-threatening conditions that demonstrate the potential to address unmet medical needs for such conditions. These provisions set forth a procedure for designation of a drug as a fast track product. The fast track designation applies to the combination of the product and specific indication for which it is being studied. A product designated as fast track is ordinarily eligible for additional programs for expediting development and review, but products that are not in fast-track drug development programs may also be able to take advantage of these programs if they meet the necessary requirements. These programs include priority review of NDAs and accelerated approval. Drug approval under the accelerated approval regulations may be based on evidence of clinical effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. A post-marketing clinical study will be required to verify clinical benefit, and other restrictions to assure safe use may be imposed.
Under the Drug Price Competition and Patent Term Restoration Act of 1984, a sponsor may obtain marketing exclusivity for a period of time following FDA approval of certain drug applications, regardless of patent status, if the drug is a new chemical entity or if new clinical studies were required to support the marketing application for the drug. This marketing exclusivity prevents a third party from obtaining FDA approval for an identical or nearly identical drug under an Abbreviated New Drug Application or a 505(b)(2) New Drug Application. The statute also allows a patent owner to obtain an extension of applicable patent terms for a period equal to one-half the period of time elapsed between the filing of an IND and the filing of the corresponding NDA plus the period of time between the filing of the NDA and FDA approval, with reductions taken for any time an applicant did not act with due diligence. There is a five-year maximum patent extension and a maximum of 14 years protection from product approval. The Company cannot be certain that it will be able to take advantage of either the patent term extension or marketing exclusivity provisions of these laws.
European Union Regulatory Requirements
Outside the United States, the Companys ability to market its products will also be contingent upon receiving marketing authorizations from the appropriate regulatory authorities and compliance with applicable post-approval regulatory requirements. Although the specific requirements and restrictions vary from country to country, as a general matter, foreign regulatory systems include risks similar to those associated with FDA regulation, described above. Under EU regulatory systems, marketing authorizations may be submitted either under a centralized or a national procedure. Under the centralized procedure, a single application to the European Medicines Agency (EMA) leads to an approval granted by the European Commission that permits the marketing of the product throughout the EU. The centralized procedure is mandatory for certain classes of medicinal products, but optional for others. For example, all medicinal products developed by certain biotechnological means, and those developed for cancer and other specified diseases and disorders, must be authorized via the centralized procedure. The Company assumes that the centralized procedure will apply to its products that are developed by means of a biotechnology process. The national procedure is used for products not requiring authorization by the centralized procedure. Under the national procedure, an application for a marketing authorization is submitted to the competent authority of one-member state of the EU. The holders of a national marketing authorization may submit further applications to the competent authorities of the remaining member states via either the decentralized or mutual recognition procedure. The decentralized procedure enables applicants to submit an identical application to the competent authorities of all member states where approval is sought at the same time as the first application, while under the mutual recognition procedure, products are authorized initially in one-member state, and other member states where approval is sought are then requested to recognize the original authorization based upon an assessment report prepared by the original authorizing competent authority. Both the decentralized and mutual recognition procedures should take no longer than 90 days, but if one-member state makes an objection, which under the legislation can only be based on a possible risk to human health, the application will be automatically referred to the Committee for Medicinal Products for Human Use (CHMP) of the EMA. If a referral for arbitration is made, the procedure is suspended. However, member states that have already approved the application may, at the request of the applicant, authorize the product in question without waiting for the result of the arbitration. Such authorizations will be without prejudice to the outcome of the arbitration. For all other concerned member states, the opinion of the CHMP, which is binding, could support or reject the objection or alternatively could reach a compromise position acceptable to all EU countries concerned. The arbitration procedure may take an additional year before a final decision is reached and may require the delivery of additional data.
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As with FDA approval, the Company may not be able to secure regulatory approvals in the EU in a timely manner, if at all. Additionally, as in the U.S., post-approval regulatory requirements, such as those regarding product manufacture, marketing, or distribution, would apply to any product that is approved in the EU, and failure to comply with such obligations could have a material adverse effect on the Companys ability to successfully commercialize any product.
The conduct of clinical trials in the EU is governed by the European Clinical Trials Directive (2001/20/EC), which was implemented in May 2004. This Directive governs how regulatory bodies in member states control clinical trials. No clinical trial may be started without a clinical trial authorization granted by the national competent authority and favorable ethics approval.
Accordingly, there is a marked degree of change and uncertainty both in the regulation of clinical trials and in respect of marketing authorizations that face the Company or its products in the EU.
Stock market listing compliance
On May 30, 2017, NASDAQ notified the Company that for the previous 30 business days the bid price of the Companys common stock closed below the minimum US$1 per share requirement for continued inclusion on the NASDAQ Capital Market under NASDAQ Rule 5450(a)(1). On July 14, 2017, the Company effected a ratio change on the ADS program from 25 Ordinary Shares representing 1 ADS, to 100 Ordinary Shares representing 1 ADS. As a result, the traded price of the Companys common stock increased by a factor of 4, bringing the Company back into compliance with NASDAQ Listing Rule 5450(a)(1).
The Company has met the compliance requirements for ASX listings and accordingly has not been in breach of those requirements.
Product and Corporate Developments during Fiscal 2019
The Company continued to pursue its strategy of focusing resources on clinical programs, being those most likely to provide a return to shareholders.
In October 2018, the Company raised $3.8 million (net of costs) from a share placement to industry investors, as well as a Share Purchase Plan to qualifying shareholders. The Company also realized $2.4 million from the sale of shares held in another listed entity, which were obtained in the prior fiscal year as a result of an intellectual property dispute. Together these two sources of funds substantially funded the operations of the Company for fiscal 2019.
As well as our two ongoing clinical trials, the Companys assets are now also involved in a further four clinical trials, all being conducted by world renowned research organization and principally funded by parties other than Kazia, giving us multiple opportunities to realise value from our drugs.
The Company has continued to make all efforts to improve operating efficiency and to reduce G&A costs. The full year effects of previous streamlining efforts were fully realized during the year, and a 41% reduction in cash used in operating activities over a two-year period (fiscal 2017 to fiscal 2019), while still spending some 63% of these operating outflows on our clinical programs.
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C. Organizational structure
Kazia Therapeutics Limited is incorporated in Australia and has the following wholly-owned subsidiaries:
Name |
Country of incorporation |
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Kazia Laboratories Pty Ltd | Australia | |
Kazia Research Pty Ltd | Australia | |
Kazia Therapeutics Inc. | United States (Delaware) | |
Glioblast Pty Ltd | Australia |
D. Property, plant and equipment
During fiscal 2019, the Company continued to work out of a serviced office in the Sydney, which is subject to a renewable one-year workspace license agreement.
Item 4A. |
Unresolved Staff Comments |
None.
Item 5. |
Operating and Financial Review and Prospects |
Critical accounting policies
We prepare our financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). As such, we are required to make certain estimates, judgments, and assumptions that management believes are reasonable based upon the information available. These estimates, judgments and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The critical accounting policies are summarized in Item 18. Financial StatementsNote 3Critical Accounting Policies.
The following discussion and analysis should be read in conjunction with Item 18. Financial Statements included below. Operating results are not necessarily indicative of results that may occur in future periods. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in the forward-looking statements as a result of many factors including, but not limited to, those set forth under Forward-Looking Statements and Risk Factors in Item 3 Key Information included above in this Annual Report on Form 20-F. All forward-looking statements included in this document are based on the information available to the Company on the date of this document and the Company assumes no obligation to update any forward-looking statements contained in this Annual Report on Form 20-F.
A. Operating results
The following discussion relates to our consolidated results of operations, financial condition and capital resources. You should read this discussion in conjunction with our consolidated financial statements and the notes thereto contained elsewhere in this report.
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The following tables provide a summary of revenues and income for the past three fiscal years:
For the fiscal year ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
A$000 | A$000 | A$000 | ||||||||||
Revenue |
| 119 | 249 | |||||||||
Finance income |
100 | | | |||||||||
Other income: |
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Net foreign exchange gain |
| 224 | | |||||||||
Payroll tax rebate |
| | 7 | |||||||||
Reimbursement of expenses |
25 | 8 | 17 | |||||||||
Gain on legal settlement |
| 8,411 | | |||||||||
Research and development rebate |
1,431 | 2,200 | 8,409 | |||||||||
Subsidies and grants |
9 | 685 | 130 | |||||||||
Gain on Revaluation of Contingent Consideration |
| 1,461 | ||||||||||
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Total revenue and other income |
1,565 | 13,108 | 8,812 | |||||||||
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Fiscal 2019 compared to fiscal 2018
Finance income and other income
The Company earns interest income derived from interest bearing bank account, which is directly linked with the amounts held on deposit. The amount of finance income earned decreased from marginally as a result of decreased cash balances.
Research and development rebate decreased from A$2.2 million in fiscal 2018 to A$1.4 million in fiscal 2019. The key factor influencing this reduction was the reduced level of R&D expenditure incurred in Australia during fiscal 2019 because the majority of the R&D expenditure on the GDC-0084 trials is expended in the United States and is therefore not eligible for the rebate.
During fiscal 2018, we recognized a gain of A$8.4 million as a result of a settlement reached with Noxopharm there was no equivalent gain recognized in fiscal 2019.
The Company also made a gain on revaluation of contingent consideration of A$1.5 million in relation to the acquisition of Glioblast Pty Limited in fiscal 2018. In fiscal 2019 there was a small loss on revaluation of the contingent consideration, which was reflected in the Companys expenses for the year.
Expenses
Research and development expenses fell from A$9.8 million in fiscal 2018 to A$6.5 million in fiscal 2019 (34%) as a result of the Companys approach of focusing our cash resources on the two main clinical programs. Early stage discovery assets were out-licensed part way through fiscal 2018 and staff numbers reduced accordingly. The full impact of this change has been experienced during fiscal 2019.
General and administrative costs reduced from A$5.6 million in fiscal 2018 to A$3.8 million in fiscal 2019 (33%) as a result of the Companys focus on cost reduction and streamlining the business during fiscal 2018 the full year effects are now being experienced.
Net loss
The Companys loss after income tax increased from A$6.0 million in fiscal 2018 to A$10.3 million in fiscal 2019. The change was mainly as a result of some unusual items of other income during the 2018 fiscal year as described above, including a gain on legal settlement and a gain on revaluation of contingent consideration, offset by a reduction in R&D expenditure and G&A expenditure during fiscal 2019.
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Fiscal 2018 compared to fiscal 2017
This analysis can be found in Item 5 of the Companys annual report on Form 20-F for fiscal 2018.
B. Liquidity and capital resources
We have incurred cumulative losses and negative cash flows from operations since our inception and, as of June 30, 2019, we had accumulated losses of A$24.9 million. We anticipate that we will continue to incur losses for at least the next several years. We expect that our research and development expenditure will continue to increase and, as a result, we will need additional capital to fund our operations, which we may raise through a combination of equity offerings, other third-party funding, and other collaborations, strategic alliances and licensing arrangements.
We had no borrowings in fiscal 2019 and do not currently have a credit facility.
As of June 30, 2019, we had cash and cash equivalents of A$5.4 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Currently, our cash and cash equivalents are held in bank accounts. Our short-term investments consist of term deposits with maturity within 90 days. At June 30, 2019, term deposits amounting to A$4.6 million had a weighted average interest rate of 1.88%.
We expect to consume cash and incur operating losses for the foreseeable future as the Company continues developing its oncology drug candidates. The impact on cash resources and results from operations will vary with the extent and timing of the future clinical trial programs. The financial statements have been prepared on a going concern basis, which contemplates continuity of normal activities and realisation of assets and settlement of liabilities in the normal course of business. As is often the case with drug development companies, the Companys ability to continue its development activities as a going concern is dependent upon it deriving sufficient cash from investors, from licensing and partnering activities and from other sources of revenue such as grant funding. The directors have considered the cash flow forecasts and the funding requirements of the business and are confident that the strategies in place are appropriate to generate sufficient funding to allow us to continue as a going concern. Accordingly, the directors have prepared the financial statements on a going concern basis. Should the above assumptions not prove to be appropriate, there is material uncertainty whether the Company will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.
Cash flows
The following table set forth the sources and uses of cash for the past three fiscal years:
(in A$ thousands) | 2019 | 2018 | 2017 | |||||||||
Net cash used in operating activities |
(6,714 | ) | (8,661 | ) | (11,435 | ) | ||||||
Net cash from/(used in) investing activities |
2,359 | 150 | (7,117 | ) | ||||||||
Net cash from/(used in) financing activities |
3,815 | | (18 | ) |
Operating activities. Net cash used in operating activities for the three fiscal years primarily represents net outflows for the cost of the R&D programs and the general and administrative costs of running the business. This amount has been reduced over the three years by virtue of a focus on preserving funds for use in clinical research programs.
Investing activities. Net cash used in investing activities in fiscal 2017 represents the purchase of a business and the in-licensing of a clinical stage asset, GDC 0084 during that year. The cash inflow in fiscal 2018 represents the cash portion of a legal settlement while the cash inflow in fiscal 2019 represents funds generated from the sale of shares in a listed entity, which were obtained via the settlement of an IP dispute.
Financing activities. Net cash from financing activities arose as a result of a placement of shares to industry funds as well as a Share Purchase Plan to qualifying existing shareholders. No such activity occurred in fiscal 2017 or 2018.
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At June 30, 2019, the Company did not hold any derivative financial instruments for managing its foreign currency; however, the Company may from time to time enter into hedging arrangements where circumstances are deemed appropriate.
The Company believes that its future ability to fund its operations will be dependent on deriving sufficient cash from investors through successful capital raising, from licensing and partnering activities and return from government grants as well as continuing to qualify for the Research and Development Tax Incentive Program available in Australia. The R&D Tax Incentive is an Australian government run program which helps to offset some of the costs of R&D. Annually, the Company claims a refundable tax offset and has disclosed this as other income in the statement of profit or loss and other comprehensive income. The Company currently accounts for R&D Tax Incentive on an accruals basis providing a reasonable estimation can be made at year end.
The Company had no commitments for capital expenditure at the end of fiscal 2019.
The Company continuously pursues opportunities for non-dilutive funding, such as grant applications.
The Company cannot provide assurance that it or its subsidiaries will be able to raise the funds necessary to complete the planned clinical trial programs or find appropriate collaboration or licensing opportunities.
Financing activities
Equity issues
The Company has historically financed its operations primarily from issuing equity capital.
During fiscal 2017, the Company issued 53,553,932 ordinary shares. The details of these ordinary shares issuing are as follows:
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In September 2016, 400,000 shares were issued to the Companys Scientific Advisory Board for no consideration in respect of services rendered; |
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In September 2016, 20,000,000 shares were issued in relation to the conversion of part of the Triaxial convertible note (the Convertible Notes); |
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In October 2016, 17,153,932 shares were issued in relation to the acquisition of Glioblast Pty Ltd to support the development of GDC-0084; and |
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In November 2016, 16,000,000 shares were issued in relation to the conversion of part of the Triaxial convertible note. |
During fiscal 2018 the Company undertook a consolidation of its share capital whereby one new ordinary share represented 10 of the old ordinary shares. As a result of fractional holdings, an additional 830 of old ordinary shares were issued during this process. In addition, a further 80,000 new ordinary shares were issued during fiscal 2018 to the Companys Scientific Advisory Board in consideration of services rendered.
During fiscal 2019 the Company issued 13,757,052 ordinary shares. The details of these share issues are as follows:
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In October 2018 the Company issued 8,900,001 shares to industry funds and other investors and raised $3,382,000 before costs. |
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In November 2018, the Company issued 2,820,824 shares in relation to a milestone associated with the acquisition of Glioblast Pty Limited |
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In November 2018 the Company issued 2.036,227 shares to qualifying existing shareholders under the Companys Share Purchase Plan, raising funds of $773,760 before costs. |
Foreign currency fluctuations were not material for the Company in fiscal 2019. See Item 18. Financial StatementsNote 25 Financial Instruments for disclosures about financial risk management including interest rate risk, foreign currency risk and liquidity risk.
Convertible note (Triaxial) carrying value of A$464,000
During the year ended June 30, 2013 the Company issued Convertible Notes with a face value of A$1,500,000 to Triaxial in consideration of the acquisition of patents and intellectual property assets. The terms of these Convertible Notes were amended on December 4, 2014. During fiscal 2017, Kazia reached two milestones that triggered the conversion of a portion of its Convertible Notes. On September 14, 2016 the directors approved the issue of 20,000,000 ordinary shares as a consequence of a conversion of A$500,000 of the Convertible Notes, and on November 1, 2016 a further 16,000,000 ordinary shares were issued as a result of the conversion of a further portion of the Convertible Notes. During fiscal 2018, one of the noteholders waived his rights to the remaining tranche of convertible notes, resulting in the reduction of the convertible note carrying value by a further A$136,000. As of June 30, 2019, the Convertible Notes carrying value amounts to A$464,000.
24
C. Research and development, Patents and Licenses, etc.
Expenditure during the research phase of a project is recognized as an expense when incurred. Development costs are capitalized only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.
Research and development expenses consist primarily of costs incurred for the development of our product candidates, which include:
|
expenses incurred under agreements with academic research centres, clinical research organizations and investigative sites that conduct our clinical trials; and |
|
the cost of acquiring, developing, and manufacturing clinical trial materials. |
We cannot determine with certainty the duration and completion costs of the current or future product development, preclinical studies or clinical trials of our product candidates. The duration, costs, and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:
|
the scope, rate of progress, and expense of our ongoing as well as any additional clinical trials and other research and development activities; |
|
the countries in which trials are conducted; |
|
future clinical trial results; |
|
uncertainties in clinical trial enrolment rates or drop-out or discontinuation rates of patients; |
|
potential additional safety monitoring or other studies requested by regulatory agencies; |
|
significant and changing government regulation; and |
|
the timing and receipt of any regulatory approvals. |
A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA, or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required to complete clinical development of a product candidate or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.
In fiscal 2019, 2018 and 2017, we spent, respectively, a total of A$6.5 million, A$9.8 million and A$11.1 million on company-sponsored research and development activities. We plan to increase our research and development expenses for the foreseeable future as we continue the development of product candidates and explore further potential applications of our technology.
D. Trend Information
Subject to the risk factors discussed in Item 3D, we have a reasonable expectation that during fiscal 2020:
|
Results will be reported from the phase I clinical trial of Cantrixil (TRX-E-002-1); |
|
Results will be reported from the phase II clinical trial of GDC-0084 in glioblastoma; |
|
Initial data will be reported from the phase I clinical trial of GDC-0084 in DIPG at St Jude; and |
|
Initial data will be reported from the phase II clinical trial of GDC-0084 in BCBM at Dana-Farber. |
In parallel, the Company continues to actively explore licensing and partnering opportunities with other companies that have the potential to effect further refinements in the scope of the Companys business.
25
E. Off-balance sheet arrangements
The Company does not have any off-balance sheet arrangements.
F. Tabular disclosure of contractual obligations
The Company does not have any contractual obligations for future periods as at June 30, 2019.
Item 6. |
Directors, Senior Management and Employees |
A. Directors and Senior Management
The names and details of the Companys Directors and senior management at the date of this report are as follows:
Iain Ross | Chairman, Non-Executive Director | |
Bryce Carmine | Non-Executive Director | |
Steven Coffey | Non-Executive Director | |
James Garner | Managing Director, Chief Executive Officer | |
Kate Hill | Company Secretary | |
Gabrielle Heaton |
Director of Finance and Administration |
Directors were in office for the entire period unless otherwise stated.
Names, titles, experience and expertise
Name: | Iain Ross | |
Title: | Chairman, Non-Executive Director | |
Experience and expertise: | Iain, based in the UK, is an experienced Director and has served on a number of Australian company boards. He is Chairman of e-Therapeutics plc (LSE:ETX), Redx Pharma plc (LSE:REDX), Silence Therapeutics plc (LON:SLN) and Biomer Technology Limited. In his career he has held senior positions in Sandoz AG, Fisons Plc, Hoffmann-La Roche AG and Celltech Group Plc and also undertaken a number of start-ups and turnarounds on behalf of banks and private equity groups. His track record includes multiple financing transactions having raised in excess of £300 million, both publicly and privately, as well as extensive experience of divestments and strategic restructurings and has over 20 years in cross-border management as a Chairman and CEO. He has led and participated in six Initial Public Offerings, (4 LSE, 1 ASX, 1 NASDAQ) and has direct experience of mergers and acquisitions transactions in Europe, USA and the Pacific Rim. | |
Other current directorships: | e-Therapeutics plc (LSE: ETX), Redx Pharma plc (LSE:REDX), Silence Therapeutics plc (LON:SLN) | |
Special responsibilities: | Member of Remuneration and Nomination Committee, Member of the Audit, Risk and Governance Committee. | |
Name: | Bryce Carmine | |
Title: | Non-Executive Director | |
Experience and expertise: | Bryce spent 36 years working for Eli Lilly & Co. and retired as Executive Vice President for Eli Lilly & Co, and President, Lilly Bio-Medicines. Prior to this he led the Global Pharmaceutical Sales and Marketing and was a member of the Companys Executive Committee. Bryce previously held a series of product development portfolio leadership roles culminating when he was named President, Global Pharmaceutical Product Development, with responsibility for the entire late-phase pipeline development across all therapeutic areas for Eli Lilly. During his career with Lilly, Bryce held several country leadership positions including President Eli Lilly Japan, Managing Dir. Australia/NZ & General Manager of a JV for Lilly in Seoul, Korea. Bryce is currently Chairman and CEO of HaemaLogiX Pty Ltd, a Sydney based privately owned biotech. | |
Other current directorships: | None | |
Special responsibilities: | Chair of Remuneration and Nomination Committee, member of Audit, Risk and Governance Committee. |
26
Name: | Steven Coffey | |
Title: | Non-Executive Director | |
Experience and expertise: | Steven is a Chartered Accountant and registered company auditor and has over 35 years experience in the accounting and finance industry. He has been a partner in the chartered accounting firm Watkins Coffey Martin since 1993. He has previously served on the board of an ASX listed public company and sits on the board of a number of large private family companies. He audits a number of large private companies as well as a number of not-for-profit entities. | |
Other current directorships: | None | |
Special responsibilities: | Chair of Audit, Risk and Governance Committee, member of Remuneration and Nomination Committee. | |
Name: | Dr. James Garner | |
Title: | Managing Director and Chief Executive Officer | |
Experience and expertise: |
Dr Garner is an experienced life sciences executive who has previously worked with companies ranging from small biotechs to multinational pharmaceutical companies such as Biogen and Takeda. His career has focused on regional and
global development of new medicines from preclinical to commercialisation.
Dr Garner is a physician by training and holds an MBA from the University of Queensland. He began his career in hospital medicine and worked for a number of years as a corporate strategy consultant with Bain & Company before entering the pharmaceutical industry. Prior to joining Kazia in 2016, he led R&D strategy for Sanofi in Asia-Pacific and was based in Singapore. |
|
Other current directorships: | None | |
Special responsibilities: | None | |
Name: | Kate Hill | |
Title: | Company Secretary | |
Experience and expertise: | Kate has over 20 years experience as an audit partner with Deloitte Touche Tohmatsu, working with ASX listed and privately-owned clients. She has worked extensively in regulated environments including assisting with Initial Public Offerings, capital raising and general compliance, as well as operating in an audit environment. She is a Non-Executive Director of CountPlus Limited (ASX:CUP) and Elmo Software Limited (ASX:ELO) as well as Chair of the Audit and Risk Committee for both of these companies. She is also Chair of Seeing Machines Limited (AIM:SEE). Kate is a member of the Institute of Chartered Accountants in Australia and New Zealand, and a graduate of the Australian Institute of Company Directors. | |
Name: | Gabrielle Heaton | |
Title: | Director of Finance and Administration | |
Experience and expertise: | Gabrielle Heaton has over 30 years of commercial experience in media, property services and healthcare for multinational, ASX listed and overseas companies. She has held a number of senior Finance positions including CFO, Quality Auditor and been responsible for Human Resources and IT. Gabrielle has a Bachelor of Business from the University of Technology and is a member of CPA Australia. |
Appointment of Scientific Advisory Board (SAB)
In September 2016, the Company announced the appointment of a Scientific Advisory Board (the SAB), a consultative advisory body, providing input and guidance to scientific programs but with no formal governance role. Reporting to the CEO, members of the SAB are appointed for two-year terms, with appointments renewable by mutual agreement. The SAB initially includes four newly-appointed members, including Professor Peter Gunning, who stepped down as a Non-Executive Director of the Company at this time. The inaugural membership of the SAB includes:
|
Professor Sir Murray Brennan, GNZM Chairman Emeritus of the Department of Surgery, Benno C Schmidt Chair in Clinical Oncology, and Vice President of International Programs, at Memorial Sloan Kettering Cancer Centre, New York. |
|
Dr Karen Ferrante former Chief Medical Officer at Millennium Pharmaceuticals and former Head of Oncology Development at Pfizer Inc. (NYSE: PFE). |
|
Professor Alex Matter, Chairman and Chief Executive Officer of the Experimental Therapeutics Centre, and also Chief Executive Officer of the D3 Platform, both part of A*STAR, the Agency for Science, Technology, and Research, in Singapore. Emeritus Professor of the Medical Faculty of the University of Basel, and an Honorary Adjunct Professor of the Department of Pharmacology in the Yong Loo Lin School of Medicine at the National University of Singapore. |
|
Professor Peter Gunning, Head of the School of Medical Sciences at the University of New South Wales. |
27
B. Compensation
Principles used to determine the nature and amount of remuneration
Remuneration philosophy
Remuneration for Directors and Senior Executives is based on the overall objective of attracting and retaining people of high quality who will make a worthwhile contribution to the consolidated entity in the short, medium and long term, and thereby contribute to long term shareholder value. The Board and its Remuneration and Nomination Committee take a balanced position between the need to pay market rates to attract talent, and the financial resources of the consolidated entity, in determining remuneration.
Non-Executive Directors remuneration
The Constitution of the consolidated entity and the ASX listing rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by General Meeting. The last determination for the consolidated entity was at the Annual General Meeting held on 28 October 2005 when the shareholders approved an aggregate remuneration of $560,000.
Non-Executive Directors fees are reviewed periodically by the Board and are regularly compared with those of companies of comparable market capitalisation and stage of development. The Chairmans fees are determined independently to the fees of other non-executive Directors based on comparative roles in the external market. The Non-Executive Directors fee structure is a fixed fee model and includes superannuation. Directors fees for the current financial year have been held at the same level as in the prior financial year.
Executive Directors and other Key Management Personnel (KMP)
The Board and the Remuneration and Nomination Committee, in consultation with the Managing Director, have put in place a remuneration structure which provides incentive for employees to drive the activities of the company forward. These arrangements are reviewed annually at the end of the calendar year.
The Board determines an appropriate level of fixed remuneration for the CEO and Group Executives, as well as the proportion of performance-based remuneration.
The executive remuneration and reward framework has three components:
|
fixed remuneration |
|
short-term performance incentives - cash bonus |
|
share-based payments - award of options through the ESOP |
Fixed remuneration is reviewed annually by the Remuneration and Nomination Committee based on individual performance, the overall performance of the consolidated entity and comparable market remunerations. The Remuneration and Nomination Committee approved increases in fixed remuneration during the financial year ended 30 June 2019.
28
The short-term incentives program is designed to align the targets of the consolidated entity with the performance hurdles of executives. Short-term incentive payments are granted to executives based on specific annual performance objectives, metrics and performance appraisals. Annual performance reviews are conducted at the end of each calendar year and bonuses are paid shortly after the performance reviews are completed. Annual performance objectives cover matters such as progress in clinical trials, and management of the Companys financial resources.
The Board or the Remuneration and Nomination Committee may, at its discretion, award bonuses for exceptional performance.
The Remuneration and Nomination Committee approved the payment of cash bonuses to the CEO and employees in respect of the financial year ended 30 June 2019.
The long-term incentive comprises equity-based payments. The consolidated entity aims to attract and retain high calibre executives, and align their interests with those of the shareholders, by granting equity-based payments based on tenure. The share-options issued to executives are governed by the ESOP.
Employee share option plan
The Employee Share Option Plan (ESOP) was approved by shareholders on 4 March 2015 and re-approved by shareholders on 15 November 2017.
The ESOP provides for the issue of options to eligible individuals, being employees or Officers of the consolidated entity, however it excludes Non-Executive Directors.
Each option issued under the ESOP entitles its holder to acquire one fully paid ordinary share and is exercisable at a price based on a formula, which includes the weighted average price of such shares at the close of trading on the Australian Securities Exchange for the seven days prior to the date of issue. The number of options offered, the amount payable, the vesting period, the option period, the conditions of exercise or any other factors are at the discretion of the Board of Directors.
The consolidated entity issued 250,000 share options under the ESOP during the financial year that ended 30 June 2019.
Any change to the ESOP will require approval by shareholders.
29
Use of remuneration consultants
During the financial year ended 30 June 2019, the consolidated entity did not engage remuneration consultants.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The KMP of the consolidated entity consisted of the following directors of Kazia Therapeutics Limited:
|
Iain Ross - Non-Executive Director, Chairman |
|
Bryce Carmine - Non-Executive Director |
|
Steven Coffey - Non-Executive Director |
|
Dr James Garner - Managing Director, CEO |
And the following persons:
|
Gabrielle Heaton - Director of Finance and Administration |
|
Kate Hill - Company Secretary |
Short-term
benefits |
Short-term
benefits |
Post-
employment benefits |
Share-based
payments |
|||||||||||||||||||||
Movements in
accrued leave |
||||||||||||||||||||||||
Cash salary | Cash | Non- | Super- | Equity- | ||||||||||||||||||||
and fees | Bonus | monetary | annuation | settled options | Total | |||||||||||||||||||
2019 | A$ | A$ | A$ | A$ | A$ | A$ | ||||||||||||||||||
Non-Executive Directors: |
||||||||||||||||||||||||
I Ross* |
130,270 | | | | | 130,270 | ||||||||||||||||||
B Carmine |
75,000 | | | 7,125 | | 82,125 | ||||||||||||||||||
S Coffey |
75,000 | | | 7,125 | | 82,125 | ||||||||||||||||||
Executive Directors: |
||||||||||||||||||||||||
J Garner |
445,500 | 90,000 | 16,562 | 50,873 | 88,150 | 691,085 | ||||||||||||||||||
Other Key Management Personnel: |
||||||||||||||||||||||||
G Heaton |
180,000 | 20,400 | 2,666 | 19,038 | 15,280 | 237,384 | ||||||||||||||||||
K Hill |
125,000 | 15,000 | | | 21,580 | 161,580 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
1,030,770 | 125,400 | 19,228 | 84,161 | 125,010 | 1,384,569 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
* |
Salary paid in UK pounds, but disclosed in Australian dollars using a conversion rate of 0.5527 |
30
The cash bonuses were granted by the Remuneration Committee at a meeting held on 3 December 2018. The amounts were determined on a discretionary basis by the Remuneration Committee after assessing the corporate achievements for the 2018 calendar year.
Service agreements
Under Remuneration and Nomination Committee policy, employment contracts are entered into with each of the executives who is considered to be KMP. Under the terms of the contracts, remuneration is reviewed at least annually. The employment contracts of KMPs include a termination clause whereby a party can terminate the agreement on notice. Such notice may vary between 4 weeks and 6 months. Under the terms of each contract, payment in lieu can be made by the consolidated entity to substitute the notice period. The consolidated entity may terminate the contracts at any time without cause if serious misconduct has occurred. In the event that employment is terminated for cause, no severance pay or other benefits are payable by the consolidated entity.
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:
Name: Title: Agreement commenced: Term of agreement: Details: |
James Garner Chief Executive Officer, Managing Director 1 February 2016 Full-time employment Base salary to be reviewed annually by the Remuneration and Nomination Committee. Jamess appointment with the consolidated entity may be terminated with the consolidated entity giving 6 months notice or by James giving 6 months notice. The consolidated entity may elect to pay James equal amount to that proportion of his salary equivalent 6 months pay in lieu of notice, together with any outstanding entitlements due to him. |
|
The current base salary, as from 1 January 2019, is $458,000 including an allowance for health benefits. | ||
Name: Title: Agreement commenced: Term of agreement: Details: |
Gabrielle Heaton Director of Finance and Administration 13 March 2017 Full time employment Base salary to be reviewed annually by the Remuneration and Nomination Committee. Gabrielles appointment with the consolidated entity may be terminated with the consolidated entity giving 4 weeks notice or by Gabrielle giving 4 weeks notice. The consolidated entity may elect to pay Gabrielle equal amount to that proportion of her salary equivalent 4 weeks pay in lieu of notice, together with any outstanding entitlements due to her. |
|
The current base salary, from 1 January 2019, is $190,000. | ||
Name: Title: Agreement commenced: Term of agreement: Details: |
Kate Hill Company Secretary 9 September 2016 Part-time contractor Base remuneration is based on time worked. Daily rate to be reviewed annually by the Remuneration and Nomination Committee, with an uplift of 10% on the daily rate applied from 1 January 2019. The contract is open ended. Kates appointment with the consolidated entity may be terminated with the consolidated entity giving 60 days notice or by Kate giving 60 days notice. |
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
31
Share-based compensation
Issue of shares
The terms and conditions of each grant of options over ordinary shares granted as remuneration to Directors or other Key Management Personnel in this financial year or future financial years are set out below. The options issued on 4 January 2019 were to Kate Hill (50,000 options, with a fair value at grant date of $7,000) and Gabrielle Heaton (50,000 options, with a fair value at grant date of $7,000). Service conditions are that any unvested options are forfeit on cessation of employment. There are no performance conditions, consistent with the Companys Employee Share Option Plan rules, as reapproved by shareholders on 15 November 2017.
Grant date |
No of
options |
Vesting date |
Exercise
date |
Expiry date |
Exercise
price A$ |
Fair value per
option at grant date |
||||||||||||||||||
4-Jan-19 |
25,000 | 4-Jul-19 | 4-Jul-19 | 4-Jan-24 | $ | 0.49 | $ | 0.14 | ||||||||||||||||
4-Jan-19 |
25,000 | 4-Jan-20 | 4-Jan-20 | 4-Jan-24 | $ | 0.49 | $ | 0.14 | ||||||||||||||||
4-Jan-19 |
25,000 | 4-Jul-20 | 4-Jul-20 | 4-Jan-24 | $ | 0.49 | $ | 0.14 | ||||||||||||||||
4-Jan-19 |
25,000 | 4-Jan-21 | 4-Jan-21 | 4-Jan-24 | $ | 0.49 | $ | 0.14 |
Options granted carry no dividend or voting rights. Each option is convertible to one ordinary share upon exercise. The number and exercise price of options was adjusted during the year ended 30 June 2018 as a result of the share consolidation whereby ten of the former ordinary shares of the Company were exchanged for one new ordinary share. No options were exercised or lapsed during the year.
Pension benefits
The Company paid A$84,161 during fiscal 2019 for employee superannuation benefits and pension benefits related to KMPs.
C. Board Practices
The role of the Board is as follows:
|
representing and serving the interests of shareholders by overseeing and appraising the strategies, policies and performance of the Company. This includes overviewing the financial and human resources the Company has in place to meet its objectives and the review of management performance; |
|
protecting and optimising Company performance and building sustainable value for shareholders in accordance with any duties and obligations imposed on the Board by law and the Companys Constitution and within a framework of prudent and effective controls that enable risk to be assessed and managed; |
|
responsible for the overall Corporate Governance of Kazia Therapeutics Limited and its subsidiaries, including monitoring the strategic direction of the Company and those entities, formulating goals for management and monitoring the achievement of those goals; |
|
setting, reviewing and ensuring compliance with the Companys values (including the establishment and observance of high ethical standards); and |
|
ensuring shareholders are kept informed of the Companys performance and major developments affecting its state of affairs. |
Responsibilities/functions of the Board include:
|
selecting, appointing and evaluating from time to time the performance of, determining the remuneration of, and planning for the successor of, the CEO; |
|
reviewing procedures in place for appointment of senior management and monitoring of its performance, and for succession planning. This includes ratifying the appointment and the removal of the Company Secretary; |
32
|
overseeing the Company, including its control and accountability systems; |
|
input into and final approval of management development of corporate strategy, including setting performance objectives and approving operating budgets; |
|
reviewing and guiding systems of risk management and internal control and ethical and legal compliance. This includes reviewing procedures in place to identify the main risks associated with the Companys businesses and the implementation of appropriate systems to manage these risks; |
|
overseeing and monitoring compliance with the Code of Conduct and other corporate governance policies; |
|
monitoring corporate performance and implementation of strategy and policy; |
|
approving major capital expenditure, acquisitions and divestitures, and monitoring capital management; |
|
monitoring and reviewing management processes in place aimed at ensuring the integrity of financial and other reporting; |
|
monitoring and reviewing policies and processes in place relating to occupational health and safety, compliance with laws, and the maintenance of high ethical standards; and |
|
performing such other functions as are prescribed by law or are assigned to the Board. |
In carrying out its responsibilities and functions, the Board may delegate any of its powers to a Board committee, a director, employee or other person subject to ultimate responsibility of the directors under the Australian Corporations Act 2001.
Matters which are specifically reserved for the Board or its committees include the following:
|
appointment of a Chair; |
|
appointment and removal of the CEO; |
|
appointment of directors to fill a vacancy or as additional directors; |
|
establishment of Board committees, their membership and delegated authorities; |
|
approval of dividends; |
|
development and review of corporate governance principles and policies; |
|
approval of major capital expenditure, acquisitions and divestitures in excess of authority levels delegated to management; |
|
calling of meetings of shareholders; and |
|
any other specific matters nominated by the Board from time to time. |
Structure of the Board
The Companys Constitution governs the regulation of meetings and proceedings of the Board. The Board determines its size and composition, subject to the terms of the Constitution. The Board does not believe that it should establish a limit on tenure other than stipulated in the Company Constitution (refer to Term of Directors below).
While tenure limits can help to ensure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight in the Company and its operation and, therefore, an increasing contribution to the Board as a whole. It is intended that the Board should comprise a majority of independent non-executive directors and comprise directors with a broad range of skills, expertise and experience from a diverse range of backgrounds, including compliance with the Diversity Policy. The Board regularly reviews the independence of each director in light of the interests disclosed to the Board.
The Board only considers directors to be independent where they are independent of management and free of any business or other relationship that could materially interfere with, or could reasonably be perceived to interfere with, the exercise of their unfettered and independent judgment. The Board has adopted a definition of independence based on that set out in Principle 2.3 of the ASX Corporate Governance Principles and Recommendations (3rd edition). The Board will review the independence of each director in light of interests disclosed to the Board from time to time. In accordance with the definition of independence above, and the materiality thresholds set, the Board considers Bryce Carmine, Iain Ross and Steven Coffey to be independent directors.
There are procedures in place, agreed by the Board, to enable directors in furtherance of their duties to seek independent professional advice at the Companys expense.
33
The appointment and expiration dates of each director in office at the date of this report is as follows:
Name | Position | Year First Appointed | Current term expires | |||
Bryce Carmine |
Non-executive Director | 2015 | Nov-20 | |||
Iain Ross |
Non-executive Director, Chairman |
2014 | Nov-21 | |||
Steven Coffey |
Non-executive Director | 2012 | Nov-19 | |||
James Garner |
Managing director, CEO | 2016 | N/A* |
* |
The managing director is exempt from standing for re-election under the constitution and Australian corporate law. |
Further details on each director can be found in Names, titles, experience and expertise above.
Term of Directors
The Companys Constitution requires that at each Annual General Meeting of the Company, one third (or the number nearest to but not exceeding one third) of the directors, (excluding a director who is the Managing Director, and a director appointed to fill a casual vacancy) must retire from office provided that no director may retain office for more than three years without offering himself/herself for re-election even though such submission results in more than one third of the directors retiring from office.
The Board of Directors has the power to appoint any person to be a director either to fill a casual vacancy or as an additional director (up to a maximum of 10). Any director so appointed may hold office only until the next Annual General Meeting when he or she shall be eligible for election by the Company shareholders.
Board of Directors
The Board of Kazia Limited is elected by and accountable to shareholders. The Board monitors and directs the business and is responsible for the corporate governance of the Company. As at June 30, 2019, the Board comprised of four directors, three of whom were non-executive directors.
Committees
The Board has established an Audit, Risk and Governance Committee and a Remuneration and Nomination Committee.
Audit, Risk and Governance Committee
The Board has established an Audit, Risk and Governance Committee which operates under a Charter approved by the Board, which is available on the Companys website. It is the Boards responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations such as the benchmarking of operational key performance indicators. The Board has delegated responsibility for establishing and maintaining a framework of internal control and ethical standards to the Audit, Risk and Governance Committee.
The Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial reports.
Members of the Audit, Risk and Governance Committee are Steven Coffey (Chairman), Bryce Carmine and Iain Ross, each of whom is an independent director.
Remuneration and Nomination Committee
The purpose of the Remuneration and Nomination Committee is to assist and advise the Board to develop, implement and, from time to time, update policies in relation to:
|
the selection, nomination and appointment processes for directors; and |
|
the remuneration of key management personnel and directors. |
34
This committee is accountable to the Board for its performance and is subject to an annual review by the Board. Members of the Remuneration and Nomination Committee are Bryce Carmine (Chairman), Steven Coffey and Iain Ross.
Performance
The performance of the Board and key executives is reviewed regularly using both measurable and qualitative indicators.
On an annual basis, directors will provide written feedback in relation to the performance of the Board and its Committees against a set of agreed criteria:
|
each Committee of the Board will also be required to provide feedback in terms of a review of its own performance; |
|
feedback will be collected by the chair of the Board, or an external facilitator, and discussed by the Board, with consideration being given as to whether any steps should be taken to improve performance of the Board or its Committees; |
|
the Chief Executive Officer will also provide feedback from senior management in connection with any issues that may be relevant in the context of Board performance review; and |
|
where appropriate to facilitate the review process, assistance may be obtained from third party advisors. |
Remuneration
It is the Companys objective to provide maximum shareholder benefit from the retention of a high-quality Board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. To assist in achieving this objective, the Board, in assuming the responsibilities of assessing remuneration to employees, links the nature and amount of executive directors and officers remuneration to the Company and Companys financial and operational performance.
The expected outcomes of the remuneration structure are:
|
retention and motivation of key executives; |
|
attraction of high-quality management to the Company and Company; and |
|
performance incentives that allow executives to share in the success of Kazia Therapeutics Limited. |
For a more comprehensive explanation of the Companys remuneration framework and the remuneration received by directors and key executives in the current period, please refer to the section Compensation above.
There is no plan to provide retirement benefits to executive or non-executive directors, except for the Australian Government Superannuation Guarantee.
The Remuneration and Nomination Committee is responsible for determining and reviewing compensation arrangements for the directors themselves and the Chief Executive Officer and executive team.
D. Employees
As of the end of each of the last three fiscal years, the Company employed the following number of people - FTEs:
Category of Activity | 2019 | 2018 | 2017 | |||||||||
Research and Development |
3.6 | 3.6 | 10 | |||||||||
Finance and Administration |
1.7 | 1.7 | 6 | |||||||||
|
|
|
|
|
|
|||||||
Total |
5.3 | 5.3 | 16 | |||||||||
|
|
|
|
|
|
|||||||
Geographic Location | 2019 | 2018 | 2017 | |||||||||
Australia |
5.3 | 5.3 | 15 | |||||||||
United States |
0 | 0 | 1 | |||||||||
|
|
|
|
|
|
|||||||
Total |
5.3 | 5.3 | 16 | |||||||||
|
|
|
|
|
|
35
E. Share Ownership
Directors and KMP interests in the shares and options of the Company for fiscal 2019:
Shareholding
The number of shares in the Company held during fiscal 2019 by each Director and other members of Key Management Personnel of the Company, including their personally related parties, is set out below:
Balance at
start of year |
Received as
part of rem |
Additions | Disposals |
Balance at
end of year |
||||||||||||||||
Ordinary shares |
||||||||||||||||||||
B Carmine* |
91,819 | | 39,474 | | 131,293 | |||||||||||||||
S Coffey* |
142,000 | | 39,474 | | 181,474 | |||||||||||||||
J Garner* |
50,000 | | 60,000 | | 110,000 | |||||||||||||||
I Ross* |
220,000 | | 255,001 | | 475,001 | |||||||||||||||
K Hill* |
30,000 | | | | 30,000 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
533,819 | | 393,949 | | 927,768 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
* |
Each Director and Key Management Personnel owns less than 1% of shareholding. |
Option holding
The number of options over ordinary shares in the Company held during fiscal 2019 by each Director and other members of Key Management Personnel of the Company, including their personally related parties, is set out below:
Balance at
start of year |
Granted |
Expired/
forfeit |
Balance at
end of year |
|||||||||||||
Options |
||||||||||||||||
S Coffey |
5,875 | | | 5,875 | ||||||||||||
J Garner |
750,000 | | | 750,000 | ||||||||||||
G Heaton |
142,000 | 50,000 | | 192,000 | ||||||||||||
K Hill |
220,000 | 50,000 | | 270,000 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
1,117,875 | 100,000 | 1,217,875 | ||||||||||||||
|
|
|
|
|
|
|
|
The granted options were issued as part of remuneration and under the Employee Share Option Plan. Unvested options are forfeited upon cessation of employment with the Company.
Share-based compensation
There were no shares issued to Directors or other KMP as part of compensation during fiscal 2019.
Item 7. |
Major Shareholders and Related Party Transactions |
A. Major shareholders
As of October 3, 2019
Hishenk Pty Limited (Hishenk) and associated parties beneficially owned 11.38 million or 18.3% of the total outstanding ordinary shares on issue. Hishenk and associated parties progressively increased their ownership up from 13.81% on October 8, 2018.
Platinum International Healthcare Fund (Platinum) beneficially owned 6.58 million or 11% of the total outstanding ordinary shares on issue. Platinum acquired these shares when they subscribed to a private placement in the Companys shares in October 2018.
At October 3, 2019 there were 1,710,890 of the Companys ADSs outstanding, representing 17,108,908 ordinary shares (or 27.5% of the then outstanding ordinary shares). At October 3, 2019 there were 52 registered holders of the Companys ADSs. On that same date, 100 ordinary shares were held by US holders.
There have been no other significant shareholders in the last three fiscal years. All shareholders have the same voting rights.
36
B. Related party transactions
During fiscal 2019, we did not enter into any transactions or loans with any: (i) enterprises that directly or indirectly, through one or more intermediaries, control, are controlled by or are under common control with us; (ii) associates; (iii) individuals owning, directly or indirectly, an interest in our voting power that gives them significant influence over us, and close members of any such individuals family; (iv) executive officers and close members of such individuals families; or (v) enterprises in which a substantial interest in our voting power is owned, directly or indirectly, by any person described in (iii) or (iv) or over which such person is able to exercise significant influence.
Transactions between related parties, when they occur, are on normal commercial terms and the conditions no more favorable than those available to other non-related parties.
C. Interests of Experts and Counsel
Not applicable
Item 8. |
Financial Information |
A. Consolidated Statements and Other Financial Information
Consolidated financial statements are included in Item 18. Financial Statements commencing on page F-1.
Legal proceedings
The consolidated entity is continuing to prosecute its Intellectual Property (IP) rights against an Austrian company, APOtrend. At 30 June 2019 the Austrian Supreme Court has rendered a final decision on the patent infringement. As a result, Kazia is entitled to make a claim against APOtrend in relation to two of the three products which were the subject of the claim, while for the third product, Kazias claim was denied. In respect of this third product, APOtrend is entitled to claim compensation for damages caused by a preliminary injunction. At the date of this report, no claim has been made by either party. Kazia is entitled to access APOtrends books to calculate a license fee/other payment claims against APOtrend. Kazia is currently trying to enforce this right in court. The consolidated entity has provided a guarantee to the value of 250,000 ($387,657) with the court to provide a security for potential damage claims raised by APOtrend (which is not limited to this amount, however). As at 30 June 2019, the receivable balance continues to be fully impaired on the basis that it is unlikely to be recovered.
Dividends
There were no dividends paid, recommended or declared during fiscal years 2019, 2018 or 2017.
B. Significant Changes
No significant change has occurred since the date of the annual financial statements included in this Annual Report on Form 20-F.
Item 9. |
The Offer and Listing |
A. Offer and listing details
See Item 9C for more information.
B. Plan of Distribution
Not applicable
C. Markets
Kazias principal listing exchange and the exchange upon which its ordinary shares are quoted is the Australian Securities Exchange (ASX). The trading symbol on ASX is KZA.
Kazias ordinary shares trade in the U.S. in the form of ADSs on the NASDAQ Capital Market. Each ADS represents 10 ordinary shares of Kazia. The trading symbol on the NASDAQ Capital Market is KZIA. Kazia has entered into a Deposit Agreement with The Bank of New York Mellon under which the Bank of New York, acting as depositary, issues the ADSs.
37
D. Selling Shareholders
Not applicable
E. Dilution
Not applicable
F. Expenses of the issue
Not applicable
Item 10. |
Additional Information |
A. Share Capital
Not applicable
B. Memorandum and Articles of Association
Our Constitution is similar in nature to the bylaws of a U.S. corporation. It does not provide for or prescribe any specific objectives or purposes of Kazia. Our Constitution is subject to the terms of the ASX Listing Rules and the Corporations Act. It may be amended or repealed and replaced by special resolution of shareholders, passed by at least 75% of the votes cast by shareholders entitled to vote on the resolution.
Under Australian law, a company has the legal capacity and powers of an individual both within and outside Australia. The material provisions of our Constitution are summarized below. This summary is not intended to be complete nor to constitute a definitive statement of the rights and liabilities of our shareholders, and is qualified in its entirety by reference to the complete text of our Constitution, a copy of which is filed as Exhibit 1.1 to this Annual Report.
Interested Directors
Subject to the Corporations Act and the ASX Listing Rules, neither a director nor that directors alternate may vote in respect of any contract or arrangement in which the director has, directly or indirectly, any material interest according to our Constitution. However, that director may execute or otherwise act in respect of that contract or arrangement notwithstanding any material personal interest. Unless a relevant exception applies, the Corporations Act requires our directors to provide disclosure of any material personal interest, and prohibits directors from voting on matters in which they have a material personal interest or being present while such matter is being considered at the board meeting. In addition, the Corporations Act and the ASX Listing Rules require shareholder approval of any provision of related party benefits to our directors.
Directors compensation
Our directors are paid remuneration for their services as directors (but excluding any remuneration payable to a director under any executive services contract with us or one of our related bodies corporate) which is determined in a general meeting of shareholders. The aggregate, fixed sum for directors remuneration is to be divided among the directors in such proportion as the directors themselves agree and in accordance with our Constitution. The fixed sum remuneration for directors may not be increased except at a general meeting of shareholders and the particulars of the proposed increase are required to have been provided to shareholders in the notice convening the meeting. In addition, executive directors may be paid remuneration as determined by the directors from time to time and, subject to the ASX Listing Rules, including as a salary, commission or participation in profits and/or by the issue of shares, options to acquire shares or performance rights or other incentives (or a combination of any of these methods of remuneration).
Fees payable to our non-executive directors must be by way of a fixed sum and not by way of a commission on or a percentage of profits or operating revenue. Remuneration paid to our executive directors must also not include a commission or percentage of operating revenue.
Pursuant to our Constitution, if, at our boards request, any director performs extra services or makes special exertions, Kazia may remunerate that director by paying for those services and exertions.
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In addition to other remuneration provided in our Constitution, all of our directors are entitled to be paid by us for all other travelling, accommodation and other expenses incurred by the directors in attending and returning from general meetings, board meetings, committee meetings or otherwise in connection with our business.
Borrowing powers exercisable by Directors
Pursuant to our Constitution, the management and control of our business affairs are vested in our board of directors. Our board of directors has the power to raise or borrow money or obtain other financial accommodation for Company purposes, and may grant security for the repayment of that sum or sums or the payment, performance or fulfilment of any debts, liabilities, contracts or obligations incurred or undertaken by the Company in any manner and on any terms and conditions as our board thinks fit.
Retirement of Directors
Pursuant to our Constitution and the ASX Listing Rules, at least one director, other than the Managing Director, must retire from office at every annual general meeting unless there has been an election of directors earlier that year. A director, other than the director who is the Managing Director, must retire from office at the conclusion of three years or following the third annual general meeting after which the director was elected, whichever is longer. If no director is required to retire at an annual general meeting, then the director to retire will be the director who has been longest in office since last being elected. Retired directors are eligible for a re-election to the board of directors unless disqualified from acting as a director under the Corporations Act or our Constitution.
Rights and restrictions on classes of shares
The rights attaching to our ordinary shares are detailed in our Constitution. Our Constitution provides that our directors may issue shares with any preferential, deferred or special rights, privileges or conditions or with any restriction (whether in relation to dividends, voting, return of share capital or otherwise) as our board of directors may determine. Subject to any approval which is required from our shareholders under the Corporations Act and the ASX Listing Rules, we may issue further shares on such terms and conditions as our board of directors resolves.
Dividend rights
Our board of directors may from time to time determine to pay and declare dividends to shareholders. All dividends unclaimed for one year after having been declared may be invested or otherwise made use of by our board of directors for our benefit until claimed or otherwise disposed of in accordance with our Constitution.
Voting rights
Under our Constitution, and subject to any voting exclusions imposed under the ASX Listing Rules (which typically exclude parties from voting on resolutions in which they have an interest), the rights and restrictions attaching to a class of shares, each shareholder has one vote on a show of hands at a meeting of the shareholders unless a poll is demanded under the Constitution or the Corporations Act. On a poll vote, each shareholder shall have one vote for each fully paid share and a fractional vote for each share held by that shareholder that is not fully paid, such fraction being equivalent to the proportion of the amount that has been paid to such date on that share. Shareholders may vote in person or by proxy, attorney or representative. Under Australian law, shareholders of a public company are generally not permitted to approve corporate matters by written consent. Our Constitution does not provide for cumulative voting. Note that ADS holders may not directly vote at a meeting of the shareholders but may instruct the depositary to vote the number of deposited ordinary shares their ADSs represent.
Right to share in our profits
Pursuant to our Constitution, our shareholders are entitled to participate in our profits only by payment of dividends. Our board of directors may from time to time determine to pay dividends to the shareholders; however, no dividend is payable except in accordance with the thresholds set out in the Corporations Act.
Rights to share in the surplus in the event of winding up
Our Constitution provides for the right of shareholders to participate in a surplus in the event of our winding up, subject to the rights attaching to a class of shares, the Constitution, the Corporations Act and the ASX Listing Rules.
39
No redemption provision for ordinary shares
There are no redemption provisions in our Constitution in relation to ordinary shares. Under our Constitution, any preference shares may be issued on the terms that they are, or may at the option of Kazia or the holder be, liable to be redeemed or converted into ordinary shares.
Variation or cancellation of share rights
Subject to the Corporations Act, the ASX Listing Rules and the terms of issue of shares of that class, the rights attached to shares in a class of shares may only be varied or cancelled by either:
|
a special resolution passed at a meeting of members holding shares in that class; or |
|
the written consent of members with at least 75% of the shares in that class. |
Directors may make calls
Our Constitution provides that our directors may make calls on a shareholder for all monies unpaid on shares held by that shareholder, other than monies payable at fixed times under the conditions of allotment.
General Meetings of Shareholders
General meetings of shareholders may be called by our board of directors. Except as permitted under the Corporations Act, shareholders may not convene a meeting. The Corporations Act requires the directors to call and arrange to hold a general meeting on the request of shareholders with at least 5% of the votes that may be cast at a general meeting. Notice of the proposed meeting of our shareholders is required at least 28 days prior to such meeting under the Corporations Act.
Foreign Ownership Regulation
Our Constitution does not impose specific limitations on the rights of non-residents to own securities. However, acquisitions and proposed acquisitions of securities in Australian companies may be subject to review and approval by the Australian Federal Treasurer under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (the Foreign Takeovers Act), which generally applies to acquisitions or proposed acquisitions:
|
by a foreign person (as defined in the Foreign Takeovers Act) or associated foreign persons that would result in such persons having an interest in 20% or more of the issued shares of, or control of 20% or more of the voting power in, an Australian company; and |
|
by non-associated foreign persons that would result in such foreign persons having an aggregate interest in 40% or more of the issued shares of, or control of 40% or more of the voting power in, an Australian company, where the Australian company is valued above the monetary threshold prescribed by Foreign Takeovers Act. |
However, in general terms, no such review or approval under the Foreign Takeovers Act is required if the foreign acquirer is a U.S. entity or an entity from certain other countries and the value of the target is less than A$1,154 million, unless the company operates in certain sensitive industries. Exemptions do not apply to investments by foreign governments and their associated entities.
The Australian Federal Treasurer may prevent a proposed acquisition in the above categories or impose conditions on such acquisition if the Treasurer is satisfied that the acquisition would be contrary to the national interest. If a foreign person acquires shares or an interest in shares in an Australian company in contravention of the Foreign Takeovers Act, the Australian Federal Treasurer may make a range of orders including an order the divestiture of such persons shares or interest in shares in that Australian company.
Ownership Threshold
There are no specific provisions in our Constitution that require a shareholder to disclose ownership above a certain threshold. The Corporations Act, however, requires a shareholder to notify us and the ASX once it, together with its associates, acquires a 5% interest in our ordinary shares, at which point the shareholder will be considered to be a substantial shareholder. Further, once a shareholder owns (alone or together with associates) a 5% interest in us, such shareholder must notify us and the ASX of any increase or decrease of 1% or more in its holding of our ordinary shares, and must also notify us and the ASX on its ceasing to be a substantial shareholder. As we are also a U.S. public company, our shareholders are also subject to disclosure requirements under U.S. securities laws.
40
Issues of Shares and Change in Capital
Subject to our Constitution, the Corporations Act, the ASX Listing Rules and any other applicable law, we may at any time issue shares and give any person a call or option over any shares on any terms, with preferential, deferred or special rights, privileges or conditions or with any restrictions and for the consideration and other terms that the directors determine.
Subject to the requirements of our Constitution, the Corporations Act, the ASX Listing Rules and any other applicable law, including relevant shareholder approvals, we may consolidate or divide our share capital into a larger or smaller number by resolution, reduce our share capital in any manner (provided that the reduction is fair and reasonable to our shareholders as a whole, does not materially prejudice our ability to pay creditors and obtains the necessary shareholder approval) or buy back our ordinary shares whether under an equal access buy-back or on a selective basis.
Change of Control
Takeovers of listed Australian public companies, such as Kazia, are regulated by the Corporations Act, which prohibits the acquisition of a relevant interest in issued voting shares in a listed company if the acquisition will lead to that persons or someone elses voting power (being the persons relevant interests plus those of its associates) in Kazias issued shares increasing from 20% or below to more than 20% or increasing from a starting point that is above 20% and below 90% (Takeovers Prohibition), subject to a range of exceptions.
Generally, a person will have a relevant interest in securities if the person:
|
is the holder of the securities or the holder of an ADS over the shares; |
|
has power to exercise, or control the exercise of, a right to vote attached to the securities; or |
|
has the power to dispose of, or control the exercise of a power to dispose of, the securities, including any indirect or direct power or control. |
If, at a particular time:
|
a person has a relevant interest in issued securities; and |
|
the person has: |
|
entered or enters into an agreement with another person with respect to the securities; |
|
given or gives another person an enforceable right, or has been or is given an enforceable right by another person, in relation to the securities (whether the right is enforceable presently or in the future and whether or not on the fulfillment of a condition); or |
|
granted or grants an option to, or has been or is granted an option by, another person with respect to the securities; and |
|
the other person would have a relevant interest in the securities if the agreement were performed, the right enforced or the option exercised, |
Then the other person is taken to already have a relevant interest in the securities.
There are a number of exceptions to the Takeovers Prohibition on acquiring a relevant interest in issued voting shares above 20%. In general terms, some of the more significant exceptions include:
|
when the acquisition results from the acceptance of an offer under a formal takeover bid; |
|
when the acquisition is conducted on market by or on behalf of the bidder during the bid period for a full takeover bid that is unconditional or only conditional on certain prescribed matters set out in the Corporations Act, |
|
when the acquisition has been previously approved by shareholders of Kazia by resolution passed at general meeting; |
|
an acquisition by a person if, throughout the six months before the acquisition, that person or any other person has had voting power in Kazia of at least 19% and, as a result of the acquisition, none of the relevant persons would have voting power in Kazia more than three percentage points higher than they had six months before the acquisition; |
|
when the acquisition results from the issue of securities under a pro rata rights issue; |
|
when the acquisition results from the issue of securities under a dividend reinvestment scheme or bonus share plan; |
41
|
when the acquisition results from the issue of securities under certain underwriting arrangements; |
|
when the acquisition results from the issue of securities through a will or through operation of law; |
|
an acquisition that arises through the acquisition of a relevant interest in another listed company which is listed on a prescribed financial market or a foreign market approved by ASIC; |
|
an acquisition arising from an auction of forfeited shares conducted on-market; or |
|
an acquisition arising through a compromise, arrangement, liquidation or buy-back. |
Breaches of the takeovers provisions of the Corporations Act are criminal offenses. The Australian Securities and Investments Commission, or ASIC, and the Australian Takeover Panel have a wide range of powers relating to breaches of takeover provisions or other circumstances deemed to be unacceptable (whether or not they involve a breach of the takeover provisions), including the ability to make orders canceling contracts, freezing transfers of, and rights attached to, securities, and forcing a party to dispose of securities. There are certain defenses to breaches of the takeover provisions provided in the Corporations Act.
Access to and Inspection of Documents
Inspection of our records is governed by the Corporations Act. Any member of the public has the right to inspect or obtain copies of our registers on the payment of a prescribed fee. Shareholders are not required to pay a fee for inspection of our registers or minute books of the meetings of shareholders. Other corporate records, including minutes of directors meetings, financial records and other documents, are not open for inspection by shareholders. Where a shareholder is acting in good faith and an inspection is deemed to be made for a proper purpose, a shareholder may apply to the court to make an order for inspection of our books.
C. Material contracts
License Agreement with Genentech Inc.
In October 2016, the Company entered into a worldwide licensing agreement with Genentech, a member of the Roche Group, to develop and commercialise GDC-0084, a small molecule inhibitor of the phosphoinositide-3-kinase (PI3K) pathway. Under the terms of the agreement, the Company paid Genentech an upfront payment of US$5 million. In addition the terms of the agreement call for performance-related consideration linked to regulatory and commercial outcomes and royalty payments in-line with industry benchmarks.
Acquisition of Glioblast Pty LtdShare Sale Agreement with Kilinwata Investments Pty. Ltd., Mi Ok Chong and Paul Hopper
In October 2016, the Company acquired 100% of the issued shares of Glioblast Pty Ltd, a privately-held, neuro-oncology-focused Australian biotechnology company. The transaction included an upfront payment of A$2.1 million, comprising A$600,000 in cash and ordinary fully-paid shares valued at A$1.5 million, with the actual number of shares determined on the basis of the volume-weighted average price of the Companys shares on the ASX in the seven days prior to this announcement. The shareholders of Glioblast will be eligible for further payments in cash or equity on the achievement of performance related milestones. The first two of these milestones provide for the issue of ordinary fully-paid shares valued at A$1.25 million respectively on commencement and successful completion of a phase II clinical trial of GDC-0084, with the actual number of shares determined on the basis of the volume-weighted average price of the Companys shares on the ASX in the seven days prior to satisfaction of the relevant milestone being announced. A further two milestones may trigger payments in cash or equity at the Companys sole discretion. Any issue of equity in the Company will be subject to a minimum six-month escrow period.
Convertible Note Deed Poll and Amendment
On December 4, 2014, we and Triaxial signed a Convertible Note Deed Poll (Deed) which superseded the precedent Loan Agreement. The Deed extinguishes the liability created by the Loan Agreement, which previously allowed for a cash settlement and now allows Triaxial to convert their debt into ordinary shares, provided that the Company achieves defined milestones established in the schedule of the Deed. Accordingly the convertible note has been reclassified as an equity instrument rather than debt instrument.
During the Financial year ended June 30, 2017, the Company reached two milestones triggering the conversion of a portion of its convertible note as follows;
|
On August 11, 2016 the Company announced the submission of an IND application. On September 10, 2016, the Company received a letter from the FDA advising the study may proceed. This triggered the conversion of Convertible Notes with a face value of A$500,000 into 20,000,000 ordinary shares. |
42
|
on October 31, 2016, the Company announced it had licensed a Phase II ready molecule. This triggered the conversion of Convertible Notes with a face value of A$400,000 into 16,000,000 ordinary shares. |
During fiscal 2018, A$136,000 of the Convertible Notes was extinguished. The remaining Convertible Notes with a face value of A$464,000 at year end may be converted into 1,856,000 ordinary shares of the Company (post share consolidation).
The remaining portion of the convertible note will be exercised at the holders discretion on completion of Phase II clinical trial or achieving Breakthrough Designation. Completion will be deemed to occur upon the receipt by the Company of a signed study report or notification of the designation. There is a possibility for an early conversion of the Convertible Notes if a third party acquires more than 50% of the issued capital of the Company.
D. Exchange controls
Australia has largely abolished exchange controls on investment transactions. The Australian dollar is freely convertible into U.S. dollars. In addition, (other than as specified under taxation below and certain restrictions imposed under Australian law in relation to dealings with the assets of and transactions with, designated countries, entities and persons specified by the Australian Government Department of Foreign Affairs and Trade from time to time, including, persons connected with terrorism) there are currently no specific rules or limitations regarding the export from Australia of profits, dividends, capital, or similar funds belonging to foreign investors, except that certain payments to non-residents must be reported to the Australian Transaction Reports and Analysis Centre, which monitors such transactions.
Under Australian law, foreign persons require the approval from the Australian Treasurer to acquire more than a limited percentage of the interests in an Australian company. These limitations are set forth in the Australian Foreign Acquisitions and Takeovers Act 1975 (Cth) (the Foreign Takeovers Act).
Under the Foreign Takeovers Act, in general terms, the approval of the Australian Treasurer is required for any foreign person (either alone or together with any one or more of its associates) to acquire an interest of 20% or more of the voting power (including potential voting power) or issued shares (including rights to issued shares) (Substantial Interest) in an Australian entity, whose total issued securities value or total asset value (whichever is higher) exceed A$266 million. If the person is a U.S. investor, the A$266 million threshold applies only for investments in prescribed sensitive sectors, otherwise a threshold of A$1,154 million rather than A$266 million applies. All direct investment by foreign governments and their related entities regardless of the value of the investment, including proposals to establish new businesses, must be notified to the Australian Treasurer. Where an acquisition is made in breach of these requirements, the Australian Treasurer may make a range of orders including an order requiring the acquirer to dispose of its Substantial Interest within a specified period of time.
In addition, if a foreign person acquires a Substantial Interest in Kazia in circumstances where the above monetary thresholds would be exceeded and as a result the total holdings of all foreign persons and their associates exceeds 40% in aggregate without the approval of the Australian Treasurer, then the Australian Treasurer may make a range of orders including an order requiring the acquirer to dispose of its Substantial Interest within a specified period of time. The same rule applies if the total holdings of all foreign persons and their associates already exceeds 40% and a foreign person (or its associate) acquires any further interests, including in the course of trading in the secondary market of the ADSs.
Under the current Australian foreign investment policy, the Australian Treasurer has the power to make such an order in relation to an acquisition that contravenes the Foreign Takeovers Act where the level of foreign ownership exceeds 40% in the ordinary course of trading, if the Australian Treasurer is satisfied that the acquisition is contrary to the national interest. The Foreign Takeovers Act allows foreign persons to seek prior approval of acquisitions of Kazia interests which could otherwise result in the Australian Treasurer making an order requiring the foreign person to dispose of any Substantial Interest.
If a foreign person holds more than 20% of the interests of Kazia or if the level of aggregate foreign ownership of Kazia exceeds 40% at any time, Kazia would be considered a foreign person under the Foreign Takeovers Act. In such event, Kazia would be required to obtain the approval of the Australian Treasurer for Kazia, together with its associates, to acquire: (i) more than 20% of an Australian company or business with a total issued securities value or total asset value (whichever is higher) totaling over A$266 million; or (ii) any direct or indirect ownership interest in Australian land. However, as mentioned above, in general terms, proposals by U.S. investors for investment in non-sensitive sectors do not require notification to the Australian Treasurer or the Australian Treasurers approval unless the value of the target Australian company or business exceeds A$1,154 million.
The percentage of foreign ownership of Kazia would also be included in determining the foreign ownership of any Australian company or business in which it may choose to invest. Kazia has no current plans for any such acquisitions. The Companys Constitution does not impose specific limitations on a non-residents right to hold or vote the Companys securities.
43
E. Taxation
U.S. Taxation
This section describes the material U.S. federal income tax consequences to a U.S. holder (as defined below) of owning ordinary shares or ADSs. It applies only to ordinary shares or ADSs that are held as capital assets for tax purposes. This section does not apply to a holder of ordinary shares or ADSs that is a member of a class of holders subject to special rules, including a financial institution, a dealer or trader in securities, a regulated investment company, a real estate investment trust, a grantor trust, a U.S. expatriate, a tax-exempt organization, an insurance company, a person liable for alternative minimum tax, a person who actually or constructively owns 10% or more of the stock of the Company, a person that holds ordinary shares or ADSs as part of a straddle or a hedging or conversion transaction, a person that purchases or sells ordinary shares or ADSs as part of a wash sale for tax purposes, or a person whose functional currency is not the U.S. dollar. Further, this description does not address state, local, non-U.S, or other tax laws, nor does it address the 3.8% U.S. federal Medicare tax on net investment income, the alternative minimum tax or the U.S. federal gift and estate tax consequences of owning and disposing of ordinary shares or ADSs.
For purposes of this description, a U.S. holder is a beneficial owner of ordinary shares or ADSs who holds such ordinary shares or ADSs as capital assets within the meaning of the Code and is, for U.S. federal income tax purposes: (i) an individual citizen or resident of the United States; (ii) a corporation created or organised in or under the laws of the United States or any state thereof, including the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust that either (a) is subject to the supervision of a court within the United States and has one or more U.S. persons with authority to control all substantial decisions or (b) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
If a partnership holds the ordinary shares or ADSs, the U.S. federal income tax treatment of a partner generally will depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the ordinary shares or ADSs should consult its tax advisor with regard to the U.S. federal income tax treatment of an investment in the ordinary shares or ADSs.
This section is in part based on the representations of the Depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms. In general, for U.S. federal income tax purposes, a holder of ADSs will be treated as the owner of the ordinary shares represented by those ADSs. Exchanges of ordinary shares for ADSs, and ADSs for ordinary shares generally will not be subject to U.S. federal income tax.
Distributions
Subject to the Passive Foreign Investment Company (PFIC) rules discussed below, U.S. holders generally will include as dividend income the U.S. dollar value of the gross amount of any distributions of cash or property (without deduction for any withholding tax), other than certain pro rata distributions of ordinary shares, with respect to ordinary shares or ADSs to the extent the distributions are made from our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. A U.S. holder will include the dividend income on the day actually or constructively received (i) by the holder, in the case of ordinary shares, or (ii) by the depositary, in the case of ADSs. We do not intend to maintain calculations of earnings and profits, as determined for U.S. federal income tax purposes. Consequently, any distributions generally will be treated as dividend income.
Dividends paid to a non-corporate U.S. holder on shares or ADSs will generally be taxable at the preferential rates applicable to long-term capital gains provided (a) that certain holding period requirements are satisfied, (b) (i) the U.S.-Australia income tax treaty (the Treaty) is a qualified treaty and we are eligible for benefits under the Treaty or (ii) our ordinary shares or ADSs are readily tradable on a U.S. securities market, and (c) provided that we were not, in the taxable year prior to the year in which the dividend was paid, and are not, in the taxable year in which the dividend is paid, a PFIC. The Treaty has been approved for the purposes of the qualified dividend rules and the ADSs are listed on NASDAQ. If the Company is a PFIC, any dividends paid to a noncorporate U.S. holder will not qualify for the preferential tax rates ordinarily applicable to qualified dividends. In the case of a corporate U.S. holder, dividends on shares and ADSs are taxed as ordinary income and will not be eligible for the dividends received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.
The amount of any cash distribution paid in any foreign currency will be equal to the U.S. dollar value of such currency, calculated by reference to the spot rate in effect on the date such distribution is received by the U.S. holder or, in the case of ADSs, by the Depositary, regardless of whether and when the foreign currency is in fact converted into U.S. dollars. If the foreign currency is converted into U.S. dollars on the date received, the U.S. holder generally should not recognize foreign currency gain or loss on such conversion. If the foreign currency is not converted into U.S. dollars on the date received, the U.S. holder will have a basis in the foreign currency equal to its U.S. dollar value on the date received, and generally will recognize foreign currency gain or loss on a subsequent conversion or other disposal of such currency. Such foreign currency gain or loss generally will be treated as U.S. source ordinary income or loss for foreign tax credit limitation purposes.
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Dividends will be income from sources outside the United States, and generally will be passive category income or, for certain taxpayers, general category income, which are treated separately from each other for the purpose of computing the foreign tax credit allowable to a U.S. holder. The availability of the foreign tax credit and the application of the limitations on its availability are fact specific and are subject to complex rules. In general, a taxpayers ability to use foreign tax credits may be limited and is dependent on the particular circumstances. U.S. holders should consult their own tax advisors with respect to these matters.
Sale, Exchange or other Disposition of Ordinary Shares or ADSs
Subject to the PFIC rules discussed below, a U.S. holder who sells or otherwise disposes of ordinary shares or ADSs will recognize a capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value of the amount realized and the holders tax basis, determined in U.S. dollars, in those ordinary shares or ADSs. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. The capital gain of a non-corporate U.S. holder is generally taxed at preferential rates where the holder has a holding period greater than 12 months in the shares or ADSs sold. There are limitations on the deductibility of capital losses.
The U.S. dollar value of any foreign currency received upon a sale or other disposition of ordinary shares or ADSs will be calculated by reference to the spot rate in effect on the date of sale or other disposal (or, in the case of a cash basis or electing accrual basis taxpayer, at the spot rate of exchange on the settlement date). A U.S. holder will have a tax basis in the foreign currency received equal to that U.S. dollar amount, and generally will recognize foreign currency gain or loss on a subsequent conversion or other disposal of the foreign currency. This foreign currency gain or loss generally will be treated as U.S. source ordinary income or loss for foreign tax credit limitation purposes. If such foreign currency is converted into U.S. dollars on the date received by the U.S. holder, a cash basis or electing accrual basis U.S. holder should not recognize any gain or loss on such conversion.
Passive Foreign Investment Company
A non-U.S. corporation will be a PFIC for U.S. federal income tax purposes for any taxable year if either:
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75% or more of its gross income for such year is passive income which for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions and gains from assets that produce passive income; or |
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50% or more of the value of its gross assets (based on an average of the quarterly values of the gross assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. |
Passive income does not include rents and royalties derived from the active conduct of a trade or business. If the stock of a non-U.S. corporation is publicly traded for the taxable year, the asset test is applied using the fair market value of the assets for purposes of measuring such corporations assets. If we own at least 25% (by value) of the stock of another corporation, we will be treated, for purposes of the PFIC tests, as owning our proportionate share of the other corporations assets and receiving our proportionate share of the other corporations income for purposes of the PFIC income and asset tests. If the stock of a non-U.S. corporation is publicly-traded for the taxable year, the asset test is applied using the fair market value of the assets for purposes of measuring such corporations assets. If we were a PFIC in any year during a U.S. holders holding period for our ordinary shares or ADSs, we would ordinarily continue to be treated as a PFIC for each subsequent year during which the U.S. holder owned the ordinary shares or ADSs. Based on the composition of our assets and income, we believe that we should not be treated as a PFIC for U.S. federal income tax purposes with respect to our 2019 taxable year and we do not intend or anticipate becoming a PFIC for any future taxable year. However, the determination of PFIC status is a factual determination that must be made annually at the close of each taxable year and therefore, there can be no certainty as to our status in this regard until the close of the current or any future taxable year. Changes in the nature of our income or assets or a decrease in the trading price of our ordinary shares or ADSs may cause us to be considered a PFIC in the current or any subsequent year. Therefore, there can be no assurance that we or any of our subsidiaries will not be classified as a PFIC until the close of the current taxable year or for any future taxable year.
U.S. Information Reporting and Back-up Withholding
Dividend payments with respect to our ordinary shares or ADSs and proceeds from the sale or other disposition of our ordinary shares or ADSs may be subject to information reporting to the IRS and possible U.S. backup withholding. Back-up withholding will not apply, however, to a U.S. holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from back-up withholding. U.S. holders who are required to establish their exempt status may be required to provide such certification on Internal Revenue Service (IRS) Form W-9. U.S. holders should consult their tax advisors regarding the application of the U.S. information reporting and back-up withholding rules.
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Back-up withholding is not an additional tax. Amounts withheld as back-up withholding may be credited against a U.S. holders U.S. federal income tax liability, and such holder may obtain a refund of any excess amounts withheld under the back-up withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.
Information With Respect to Foreign Financial Assets
Certain U.S. holders that own specified foreign financial assets with an aggregate value in excess of $50,000 are generally required to file an information statement along with their U.S. federal tax returns, currently on IRS Form 8938, with respect to such assets. Specified foreign financial assets include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. If a U.S. holder does not include in such holders gross income an amount relating to one or more specified foreign financial assets, and the amount such U.S. holder omits is more than $5,000, any tax such U.S. holder owes for the tax year can be assessed at any time within 6 years after the filing of such U.S. holders federal tax return. U.S. holders who fail to report the required information could be subject to substantial penalties. U.S. holders are encouraged to consult with their own tax advisors regarding the possible application of the foregoing to our ordinary shares or ADSs in light of their particular circumstances.
Australian Tax Considerations
In this section, we discuss the material Australian income tax, stamp duty and goods and services tax considerations related to the acquisition, ownership and disposal by the absolute beneficial owners of the ordinary shares or ADSs.
It is based upon existing Australian tax law as of the date of this registration statement, which is subject to change, possibly retrospectively. This discussion does not address all aspects of Australian tax law which may be important to particular investors in light of their individual investment circumstances, such as shares held by investors subject to special tax rules (for example, financial institutions, insurance companies or tax-exempt organizations). In addition, this summary does not discuss any foreign or state tax considerations, other than stamp duty.
Prospective investors are urged to consult their tax advisors regarding the Australian and foreign income and other tax considerations of the acquisition, ownership and disposition of the shares. This summary is based upon the premise that the holder is not an Australian tax resident and is not carrying on business in Australia through a permanent establishment (referred to as a Non-Australian Shareholder in this summary).
Australian Income Tax
Nature of ADSs for Australian Taxation Purposes
Ordinary shares represented by ADSs held by a U.S. holder will be treated for Australian taxation purposes as held under a bare trust for such holder. Consequently, the underlying ordinary shares will be regarded as owned by the ADS holder for Australian income tax and capital gains tax purposes. Dividends paid on the underlying ordinary shares will also be treated as dividends paid to the ADS holder, as the person beneficially entitled to those dividends. Therefore, in the following analysis we discuss the tax consequences to Non-Australian Shareholders which, for Australian taxation purposes, will be the same as to U.S. holders of ADSs.
Taxation of Dividends
Australia operates a dividend imputation system under which dividends may be declared to be franked to the extent of tax paid on company profits. Fully franked dividends are not subject to dividend withholding tax. Dividends payable to Non-Australian Shareholders will be subject to dividend withholding tax, to the extent the dividends are not declared to be conduit foreign income, or CFI, and are unfranked. Dividend withholding tax will be imposed at 30%, unless a shareholder is a resident of a country with which Australia has a double taxation agreement and qualifies for the benefits of the treaty. Under the provisions of the current Double Taxation Convention between Australia and the United States, the Australian tax withheld on unfranked dividends that are not CFI paid by us to whom a resident of the United States is beneficially entitled is limited to 15%.
If a company that is a Non-Australian Shareholder directly owns a 10% or more interest, the Australian tax withheld on unfranked dividends (that are not CFI) paid by us to whom a resident of the United States is beneficially entitled is limited to 5%. In limited circumstances, the rate of withholding can be reduced to zero.
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Tax on Sales or other Dispositions of SharesCapital Gains Tax
Non-Australian Shareholders will not be subject to Australian capital gains tax on the gain made on a sale or other disposal of ordinary shares, unless they, together with associates, hold 10% or more of our issued capital, at the time of disposal or for 12 months of the last two years prior to disposal.
Non-Australian Shareholders who own a 10% or more interest would be subject to Australian capital gains tax if more than 50% of our assets held directly or indirectly, determined by reference to market value, consists of Australian real property (which includes land and leasehold interests) or Australian mining, quarrying or prospecting rights. The Double Taxation Convention between the United States and Australia is unlikely to limit the amount of this taxable gain. Australian capital gains tax applies to net capital gains of foreign shareholders at the Australian tax rates for non-Australian residents, which start at a marginal rate of 32.5% for individuals (or a flat rate of 27.5% or 30% for companies, depending on the size of the company). Net capital gains are calculated after reduction for capital losses, which may only be offset against capital gains.
The 50% capital gains tax discount is not available to Non-Australian Shareholders. Companies are not entitled to a capital gains tax discount.
Broadly, where there is a disposal of certain taxable Australian property, the purchaser will be required to withhold and remit to the Australian Taxation Office (ATO) 12.5% of the proceeds from the sale. A transaction is excluded from the withholding requirements in certain circumstances, including where the value of the taxable Australian property is less than A$750,000, the transaction is an on-market transaction conducted on an approved stock exchange, a securities lending, or the transaction is conducted using a broker operated crossing system. There is also an exception to the requirement to withhold where the entity selling the shares provides the purchaser a declaration specifying either that they are an Australian resident or that the shares are not taxable Australian property (specifically, not indirect Australian real property interests). The Non-Australian Shareholder may be entitled to receive a tax credit for the tax withheld by the purchaser which they may claim in their Australian income tax return.
Tax on Sales or other Dispositions of SharesShareholders Holding Shares on Revenue Account
Some Non-Australian Shareholders may hold ordinary shares on revenue rather than on capital account for example, share traders. These shareholders may have the gains made on the sale or other disposal of the ordinary shares and/or warrants included in their assessable income under the ordinary income provisions of the income tax law, if the gains are sourced in Australia.
Non-Australian Shareholders assessable under these ordinary income provisions in respect of gains made on ordinary shares held on revenue account would be assessed for such gains at the Australian tax rates for non-Australian residents, which start at a marginal rate of 32.5% for individuals (or a flat rate of 27.5% or 30% for companies, depending on the size of the company). Some relief from Australian income tax may be available to Non-Australian Shareholders under the Double Taxation Convention between the United States and Australia.
To the extent an amount would be included in a Non-Australian Shareholders assessable income under both the capital gains tax provisions and the ordinary income provisions, the capital gain amount would generally be reduced, so that the shareholder would not be subject to double tax on any part of the income gain or capital gain.
The comments above in Tax on Sales or Other Dispositions of SharesCapital Gains Tax regarding a purchaser being required to withhold 12.5% tax on the acquisition of certain taxable Australian property equally applies where the disposal of the Australian real property asset by a foreign resident is likely to generate gains on revenue account, rather than a capital gain.
Dual Residency
If a shareholder is a resident of both Australia and the United States under those countries domestic taxation laws, that shareholder may be subject to tax as an Australian resident. If, however, the shareholder is determined to be a U.S. resident for the purposes of the Double Taxation Convention between the United States and Australia, the Australian tax would be subject to limitation by the Double Taxation Convention (albeit the tie-breaker rules only apply for individuals). Shareholders should obtain specialist taxation advice in these circumstances.
Stamp Duty
No Australian stamp duty is payable by Australian residents or non-Australian residents on the issue, transfer and/or surrender of the ADSs or the ordinary shares in Kazia, provided that the shares issued, transferred and/or surrendered do not represent 90% or more of the issued shares in Kazia.
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Australian Death Duty
Australia does not have estate or death duties. As a general rule, no capital gains tax liability is realized upon the inheritance of a deceased persons shares. The disposal of inherited shares by beneficiaries may, however, give rise to a capital gains tax liability if the gain falls within the scope of Australias jurisdiction to tax.
Goods and Services Tax
The supply of ADSs or ordinary shares in Kazia will not be subject to Australian goods and services tax.
F. Dividends and paying agents
Not applicable
G. Statement by experts
Not applicable
H. Documents on Display
The Company is subject to the reporting requirements of the Exchange Act that are applicable to a foreign private issuer. Under the Exchange Act, the Company is required to file periodic reports and other information with the SEC. These materials, including this Annual Report and the exhibits hereto, may be inspected without charge and copied at established rates at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 to obtain information on the operation of the public reference room. Such materials can also be obtained at the SECs website at www.sec.gov.
I. Subsidiary Information
Not applicable
Item 11. |
Quantitative and Qualitative Disclosures about Market Risk |
Interest rate risk
The Companys exposure to market interest rates relate primarily to the investments of cash balances. The Company has cash reserves held primarily in Australian dollars and places funds on deposit with financial institutions for periods generally not exceeding three months.
Credit risk
The Company places its deposits with high credit quality financial institutions, and, by policy, limits the amount of credit exposure to any single counter-party. The Company is averse to principal loss and ensures the safety and preservation of its invested funds by limiting default risk, market risk and reinvestment risk. The Company mitigates default risk by depositing funds with only the safest and highest credit quality financial institutions and by constantly positioning its portfolio to respond appropriately to a significant reduction in a credit rating of any financial institution.
The Company has no interest rate exposure due to rate changes for long-term debt obligations. The Company primarily enters into debt obligations to support general corporate purposes, including capital expenditures and working capital needs. The Company does not consider the effects of interest rate movements to be a material risk to its financial condition.
For additional disclosure regarding interest rate risk see Item 18. Financial Statements Note 24 Financial Instruments.
Foreign currency risk
The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. dollar. Foreign exchange risk arises from future transactions and recognised assets and liabilities denominated in a currency that is not the entitys functional currency and net investments in foreign operations.
As of June 30, 2019, the Company did not hold derivative financial instruments in managing its foreign currency, however, the Company may from time to time enter into hedging arrangements where circumstances are deemed appropriate. The Company used natural hedging to reduce the foreign currency risk, which involved processing USD payments from cash held in USD. Foreign subsidiaries with a functional currency of Australian Dollar (AUD) have exposure to the local currency of these subsidiaries and any other currency these subsidiaries trade in.
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For additional disclosure regarding market risk see Item 18. Financial Statements Note 24 Financial Instruments.
Item 12. |
Description of Securities Other than Equity Securities |
A. Debt Securities
Not applicable
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable
D. American Depositary Shares
The depositary collects its fees for delivery and surrender of American Depositary Shares (ADSs) directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid. The depositary may collect any of its fees by deduction from any cash distribution payable to you that are obligated to pay those fees.
From time to time, the depositary may make payments to us to reimburse or share revenue from the fees collected from you, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the ADS program. In performing its duties under the deposit agreement, the depositary may use brokers, dealers or other service providers that are affiliates of the depositary and that may earn or share fees or commissions.
Persons depositing or withdrawing shares must pay: |
For: |
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US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | | Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property | ||
| Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates | |||
US$.05 (or less) per ADS | | Any cash distribution to ADS registered holders | ||
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs | | Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS registered holders | ||
US$.05 (or less) per ADSs per calendar year | | Depositary services | ||
Registration or transfer fees | | Transfer and registration of shares on the Companys share register to or from the name of the depositary or its agent when you deposit or withdraw shares | ||
Expenses of the depositary | | Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) | ||
| Converting foreign currency to U.S. dollars | |||
Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes | | As necessary | ||
Any charges incurred by the depositary or its agents for servicing the deposited securities | | As necessary |
The Depositary may collect any of the fees by deduction from any cash distribution payable, or by selling a portion of any securities to be distributed, to holders that are obligated to pay those fees.
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Item 13. |
Defaults, Dividend Arrearages and Delinquencies |
This item is not applicable.
Item 14. |
Material Modifications to the Rights of Security Holders and the Use of Proceeds |
This item is not applicable.
Item 15. |
Controls and Procedures |
(a) Disclosure controls and procedures
At the end of the period covered by this Annual Report, the Companys management, with the participation of the Chief Executive Officer and the Director of Finance and Administration, evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the Companys Chief Executive Officer and the Director of Finance and Administration have concluded that the Companys disclosure controls and procedures are effective as of June 30, 2019.
(b) Managements annual report on internal controls over financial reporting
The management of Kazia Therapeutics Limited is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Director of Finance and Administration, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2019 based on the criteria set forth in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013). Based on our evaluation under the criteria set forth in Internal Control Integrated Framework, our management concluded that our internal control over financial reporting was effective as of June 30, 2019.
Kazia Therapeutics Limiteds internal control was designed to provide reasonable assurance to the Companys management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with managements authorization, assets are safeguarded, and financial records are reliable. Management also takes steps to ensure that information and communication flows are effective and monitor performance, including performance of internal control procedures.
Management assessed the effectiveness of the Companys internal control over financial reporting as of June 30, 2019. Based on this assessment, management concluded that the Companys internal control over financial reporting is effective as of June 30, 2019.
(c) Attestation Report of the Registered Public Accounting Firm
Not applicable. As an emerging growth company, we are not required to provide an attestation report of the Companys registered public accounting firm on our internal control over financial reporting.
(d) Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Item 16. |
[Reserved] |
Item 16A. |
Audit Committee Financial Expert |
The Board of Directors has determined that Steven Coffey, qualifies as an audit committee financial expert as that term is defined in Item 16A of Form 20-F. Steven Coffey meets the independence requirements of the NASDAQ Capital Market and SECs rules and regulations as he is a qualified Chartered Accountant and has spent over 30 years in public practice. He is also a registered company auditor.
Item 16B. |
Code of Ethics |
The Company has adopted a Code of Ethics and Business Conduct (the Code). The Code establishes a clear set of values that emphasise a culture encompassing strong corporate governance, sound business practices and good ethical conduct. The Code confirms the Companys belief in treating all individuals with respect and recognises that different skills and diversity are essential to enrich the Companys perspective, improve corporate performance, increase shareholder value and maximise the achievement and goals of the Company. The Code applies to all Company employees, including management and Directors. The Code is available on the Companys website www.kaziatherapeutics.com.
Item 16C. |
Principal Accounting Fees and Services |
Grant Thornton Audit Pty Ltd (GT) has audited the Companys annual financial statements acting as the independent registered public accounting firm for the fiscal years ended June 30, 2019, 2018 and 2017.
The table below set forth the total fees for services performed by GT in fiscal years 2019, 2018 and 2017, and summarizes these amounts by the category of service.
2019 A$000 |
2018
A$000 |
2017
A$000 |
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Audit fees - Grant Thornton Audit Pty Ltd |
120 | 131 | 132 | |||||||||
SEC Form F3 consent |
| 11 | | |||||||||
Tax fees |
| | 8 | |||||||||
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Total fees |
120 | 142 | 140 | |||||||||
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Audit fees
The audit fees include the aggregate fees incurred in fiscal years 2019 and 2018 for professional services rendered in connection with the audit of the Companys annual financial statements and for related services that are reasonably related to the performance of the audit or services that are normally provided by the auditor in connection with regulatory filings of engagements for those financial years (including review of the Companys Annual Report on Form 20-F, consents and other services related to SEC matters).
SEC Form F3 consent
Fees paid in respect of filing of SEC Form F-3 consent services, which relates to procedures required by the auditor to issue their consent in the document.
Other services
Tax fees
Tax fees billed in fiscal years 2017 were for tax compliance advisory services.
Pre-approval policies and procedures
The Audit Committee Charter sets forth the Companys policy regarding the appointment of independent auditors. The Audit Committee Charter also requires the Audit Committee to review and approve in advance the appointment of the independent auditors for the performance of 100% of all audit services and, after taking into account the opinion of management, 100% of lawfully permitted non-audit services. The Audit Committee may delegate authority to one or more members of the Audit Committee where appropriate, but no such delegation is permitted if the authority is required by law, regulation or listing standard to be exercised by the Audit Committee as a whole.
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In fiscal year 2019, the amount paid for services other than Audit fees, as approved by the audit committee, corresponded to 0% of the total paid to Grant Thornton.
Item 16D. |
Exemptions from the Listing Standards for Audit Committees |
This item is not applicable.
Item 16E. |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
This item is not applicable.
Item 16F. |
Changes in registrants Certifying Accountant |
This item is not applicable.
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Item 16G. |
Corporate Governance |
Implications of Being an Emerging Growth Company
Pursuant to The Jumpstart Our Business Startups Act of 2012 (the JOBS Act), we are classified as an Emerging Growth Company. Under the JOBS Act, Emerging Growth Companies are exempt from certain reporting requirements, including the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. Under this exemption, our auditor will not be required to attest to and report on our internal controls over financial reporting during a five-year transition period. We may avail ourselves of these disclosure exemptions until we are no longer an emerging growth company.
Pursuant to the JOBS Act, we will remain an Emerging Growth Company until the earliest of:
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the end of the fiscal year in which the fifth anniversary of completion of our initial resale registration statement in the United States occurs, or June 30, 2020; |
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the end of the first fiscal year in which the market value of our ordinary shares held by non-affiliates exceeds US$700 million as of the end of the second quarter of such fiscal year; |
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the end of the first fiscal year in which we have total annual gross revenues of at least US$1.0 billion; and |
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the date on which we have issued more than US$1.0 billion in non-convertible debt securities in any rolling three-year period. |
Implications of Being a Foreign Private Issuer
We are also considered a foreign private issuer. In our capacity as a foreign private issuer, we are exempt from certain rules under the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act), that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our ordinary shares. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information.
Exemptions from Certain Corporate Governance Rules of the NASDAQ Stock Market, LLC
Exemptions from the corporate governance standards of the NASDAQ Stock Market, LLC (NASDAQ) are available to foreign private issuers such as Kazia when those standards are contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuers country of domicile. In connection with Kazias National Market Listing Application, NASDAQ granted Kazia exemptions from certain corporate governance standards that were contrary to the laws, rules, regulations or generally accepted business practices of Australia. These exemptions and the practices followed by Kazia are described below:
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Kazia is exempt from NASDAQs quorum requirements applicable to meetings of ordinary shareholders. In keeping with the law of Australia and generally accepted business practices in Australia, Kazias Constitution requires a quorum of three shareholders for a shareholders meeting. |
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Kazia is exempt from NASDAQs requirement that each NASDAQ issuer shall require shareholder approval of a plan or arrangement in connection with the acquisition of the stock or assets of another company if any director, officer or substantial shareholder of the issuer has a 5 percent or greater interest (or such persons collectively have a 10 percent or greater interest), directly or indirectly, in the Company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common shares or voting power of 5 percent or more. |
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Kazia will rely on an exemption from the requirement that at least two members of a compensation committee be independent as defined in NASDAQ Rule 5605(a) (2). The ASX Listing Rules and Australian law do not require an Australian company to establish a compensation committee, known in Australia as a remuneration committee, which is comprised solely of non-executive directors if the company is not included in the S&P/ASX300 Index at the beginning of its financial year. Kazia was not included on the S&P/ASX300 Index at the beginning of its last financial year and, hence, is not required under ASX Listing Rules to have a remuneration (compensation) committee. The ASX Corporate Governance Principles and Recommendations contain a non-binding recommendation that all ASX-listed companies should have a remuneration committee comprised of at least three members, a majority of whom (including the chair) are independent. While these recommendations contain guidelines for assessing independence, ASX-listed entities are able to adopt their own definitions of an independent director for this purpose and is different from the definition in NASDAQ Rule 5605(a) (2). That being said, Kazia has, and expects to continue to have, a Remuneration and Nomination Committee consisting of three non-executive directors. |
53
Kazia is listed on the ASX and subject to Chapter 10 of the ASX listing rules which requires shareholder approval for an acquisition from or disposal to a related party (including a director) or substantial shareholder (who is entitled to at least 10% of the voting securities) of substantial assets. The Australian Corporations Act to which Kazia is also subject generally requires shareholder approval for a transaction with a director or director-controlled entity unless on arms length terms.
Item 16H. |
Mine Safety Disclosure |
This item is not applicable.
Item 17. |
Financial Statements |
Refer to Item 18 Financial Statements below
Item 18. |
Financial Statements |
The financial statements filed as part of this Annual Report commencing on page F-1.
Item 19. |
Exhibits |
(a) |
Exhibits |
54
55
SIGNATURES
The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
KAZIA THERAPEUTICS LIMITED |
/s/ James Garner |
Dr James Garner |
Chief Executive Officer |
Date: October 21, 2019 |
56
Page | ||||
Consolidated Financial Statements for June 30, 2019, 2018 and 2017 and the years then ended: |
||||
F-2 | ||||
Consolidated Statement of Profit or Loss and Other Comprehensive Income |
F-3 | |||
F-5 | ||||
F-6 | ||||
F-8 | ||||
F-10 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Kazia Therapeutics Limited
Opinion on the financial statements
We have audited the accompanying consolidated statements of financial position of Kazia Therapeutics Limited and subsidiaries (the Company) as of June 30, 2019 and 2018, the related consolidated statements of profit or loss and other comprehensive income, changes in equity, and cash flows for each of the three years in the period ended June 30, 2019 and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2019, in conformity with International Financial Reporting Standards, as issued by the International Accounting Standards Board.
Going concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 in the financial statements, the Company incurred a net loss of $10,270,264 during the year ended June 30, 2019, and had net operating cash outflows of $6,714,210. These events or conditions, along with other matters as set forth in Note 2, raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for opinion
These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ GRANT THORNTON AUDIT PTY LTD
We have served as the Companys auditor since 2012.
Sydney, Australia
October 21, 2019
F-2
Consolidated statements of profit or loss and other comprehensive income
For the year ended 30 June 2019
Note |
2019
A$000 |
2018
A$000 |
2017
A$000 |
|||||||||||||
Revenue from continuing operations |
5 | | 119 | 249 | ||||||||||||
Other income |
6 | 1,465 | 12,989 | 8,563 | ||||||||||||
Finance income bank interest |
100 | | | |||||||||||||
Expenses |
||||||||||||||||
Research and development expense |
(6,476 | ) | (9,774 | ) | (11,136 | ) | ||||||||||
General and administrative expense |
(3,786 | ) | (5,598 | ) | (8,529 | ) | ||||||||||
Loss on disposal of fixed assets |
(1 | ) | (137 | ) | (16 | ) | ||||||||||
Fair value losses on financial assets at fair value through profit or loss |
(1,809 | ) | (1,114 | ) | | |||||||||||
Loss on revaluation of contingent consideration |
(63 | ) | | | ||||||||||||
Impairment of financial assets |
| (2,830 | ) | | ||||||||||||
|
|
|
|
|
|
|||||||||||
Loss before income tax expense from continuing operations |
(10,568 | ) | (6,344 | ) | (10,869 | ) | ||||||||||
Income tax benefit |
8 | 298 | 305 | 199 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Loss after income tax expense for the year |
(10,270 | ) | (6,039 | ) | (10,670 | ) | ||||||||||
Other comprehensive income |
||||||||||||||||
Items that may be reclassified subsequently to profit or loss |
||||||||||||||||
Gain/(Loss) on the revaluation of available-for-sale financial assets, net of tax |
| | 9 | |||||||||||||
Net exchange difference on translation of financial statements of foreign controlled entities, net of tax |
(89 | ) | (251 | ) | 25 | |||||||||||
|
|
|
|
|
|
|||||||||||
Other comprehensive income for the year, net of tax |
(89 | ) | (251 | ) | 34 | |||||||||||
Total comprehensive income for the year |
(10,359 | ) | (6,290 | ) | (10,636 | ) | ||||||||||
Loss for the year is attributable to: |
||||||||||||||||
Owners of Kazia Therapeutics Limited |
(10,270 | ) | (6,039 | ) | (10,670 | ) | ||||||||||
|
|
|
|
|
|
|||||||||||
Total loss for the year |
(10,270 | ) | (6,039 | ) | (10,670 | ) | ||||||||||
Total comprehensive income for the year is attributable to: |
||||||||||||||||
Owners of Kazia Therapeutics Limited |
(10,359 | ) | (6,290 | ) | (10,636 | ) | ||||||||||
|
|
|
|
|
|
|||||||||||
Total comprehensive income for the year |
(10,359 | ) | (6,290 | ) | (10,636 | ) | ||||||||||
|
|
|
|
|
|
The above consolidated statements of profit or loss or other comprehensive income should be read with the accompanying notes
F-3
Consolidated statements of profit or loss and other comprehensive income (continued)
For the year ended 30 June 2019
Note | 2019 | 2018 | 2017 | |||||||||||||
A$ | A$ | A$ | ||||||||||||||
Cents | Cents | Cents | ||||||||||||||
Earnings per share for loss from continuing operations attributable to the owners of Kazia Therapeutics Limited |
||||||||||||||||
Basic earnings per share |
33 | (17.86 | ) | (12.48 | ) | (2.28 | ) | |||||||||
Diluted earnings per share |
33 | (17.86 | ) | (12.48 | ) | (2.28 | ) | |||||||||
2019 | 2018 | 2017 | ||||||||||||||
A$ | A$ | A$ | ||||||||||||||
Cents | Cents | Cents | ||||||||||||||
Earnings per share for loss attributable to the owners of Kazia Therapeutics Limited |
||||||||||||||||
Basic earnings per share |
33 | (17.86 | ) | (12.48 | ) | (2.28 | ) | |||||||||
Diluted earnings per share |
33 | (17.86 | ) | (12.48 | ) | (2.28 | ) |
F-4
Consolidated statements of financial position
As at 30 June 2019
The above consolidated statements of financial position should be read with the accompanying notes
F-5
Statements of changes in equity
For the year ended 30 June 2019
Contributed
equity A$000 |
Other
Contributed equity A$000 |
Reserves
A$000 |
Accumulated
Losses A$000 |
Non-
controlling Interest A$000 |
Total equity
A$000 |
|||||||||||||||||||
Balance at 1 July 2016 |
191,301 | 1,716 | 1,421 | (160,507 | ) | | 33,931 | |||||||||||||||||
Loss after income tax expense for the year |
| | | (10,670 | ) | | (10,670 | ) | ||||||||||||||||
Other comprehensive income for the year, net of tax |
| | 34 | | | 34 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive income for the year |
| | 34 | (10,670 | ) | | (10,636 | ) | ||||||||||||||||
Transactions with owners in their capacity as owners: |
||||||||||||||||||||||||
Share issue costs |
(18 | ) | | | | | (18 | ) | ||||||||||||||||
Transfers |
| (216 | ) | | 216 | | | |||||||||||||||||
Conversion of convertible note |
900 | (900 | ) | | | | | |||||||||||||||||
Employee share-based payment options |
| | 475 | | | 475 | ||||||||||||||||||
Share based payment |
1,586 | | | | | 1,586 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at 30 June 2017 |
193,769 | 600 | 1,930 | (170,961 | ) | | 25,338 | |||||||||||||||||
Contributed
equity A$000 |
Other
Contributed equity A$000 |
Reserves
A$000 |
Accumulated
Losses A$000 |
Non-
controlling Interest A$000 |
Total equity
A$000 |
|||||||||||||||||||
Balance at 1 July 2017 |
193,769 | 600 | 1,930 | (170,961 | ) | | 25,338 | |||||||||||||||||
Loss after income tax expense for the year |
| | | (6,039 | ) | | (6,039 | ) | ||||||||||||||||
Other comprehensive income for the year, net of tax |
| | (251 | ) | | | (251 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive income for the year |
| | (251 | ) | (6,039 | ) | | (6,290 | ) | |||||||||||||||
Transactions with owners in their capacity as owners: |
||||||||||||||||||||||||
Share issue costs |
| | | | | | ||||||||||||||||||
Transfers |
| | | | | | ||||||||||||||||||
Cancellation of share capital |
(162,223 | ) | | | 162,223 | | | |||||||||||||||||
Conversion of convertible note |
| (136 | ) | | 136 | | | |||||||||||||||||
Employee share-based payment options |
| | | | | | ||||||||||||||||||
Share based payment |
| | 165 | | | 165 | ||||||||||||||||||
Issue of shares |
30 | | | | | 30 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at 30 June 2018 |
31,576 | 464 | 1,843 | (14,641 | ) | | 19,242 |
F-6
Statements of changes in equity (continued)
For the year ended 30 June 2019
Contributed
equity A$000 |
Other
Contributed equity A$000 |
Reserves
A$000 |
Accumulated
Losses A$000 |
Non-
controlling Interest A$000 |
Total equity
A$000 |
|||||||||||||||||||
Balance at 1 July 2018 |
31,576 | 464 | 1,843 | (14,641 | ) | | 19,242 | |||||||||||||||||
Adjustment for change in accounting policy |
| | 37 | (37 | ) | | | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at 1 July 2018 - restated |
31,576 | 464 | 1,880 | (14,678 | ) | | 19,242 | |||||||||||||||||
Loss after income tax expense for the year |
| | | (10,270 | ) | | (10,270 | ) | ||||||||||||||||
Other comprehensive income for the year, net of tax |
| | (89 | ) | | | (89 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive income for the year |
| | (89 | ) | (10,270 | ) | | (10,359 | ) | |||||||||||||||
Transactions with owners in their capacity as owners: |
||||||||||||||||||||||||
Share issue costs |
(340 | ) | | | | | (340 | ) | ||||||||||||||||
Transfers |
| | | | | | ||||||||||||||||||
Share based payment |
| | 246 | | | 246 | ||||||||||||||||||
Issue of shares |
5,406 | | | | | 5,406 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at 30 June 2019 |
36,642 | 464 | 2,037 | (24,948 | ) | | 14,195 |
The above consolidated statements of changes in equity should be read with the accompanying notes
F-7
Consolidated statements of cash flows
For the year ended 30 June 2019
Note |
2019
A$000 |
2018
A$000 |
2017
A$000 |
|||||||||||
Cash flows from operating activities |
||||||||||||||
Loss before income tax expense for the year |
(10,270 | ) | (6,039 | ) | (10,670 | ) | ||||||||
Adjustments for: |
||||||||||||||
Depreciation and amortisation |
7 | 1,084 | 1,547 | 1,420 | ||||||||||
Net loss on disposal of non-current assets |
1 | 137 | 16 | |||||||||||
Impairment of property, plant and equipment |
1 | 143 | ||||||||||||
Share-based payments |
246 | 165 | 517 | |||||||||||
Foreign exchange differences |
| (251 | ) | 454 | ||||||||||
Shares issued for no consideration |
| 30 | | |||||||||||
Gain on legal settlement |
35 | | (8,411 | ) | | |||||||||
Make good credit and rental adjustment |
| | 15 | |||||||||||
(Gain)/loss on contingent consideration |
17 | 63 | (1,461 | ) | 764 | |||||||||
Fair value loss on financial assets |
1,809 | 3,944 | | |||||||||||
|
|
|
|
|
|
|||||||||
(7,067 | ) | (10,196 | ) | (7,484 | ) | |||||||||
Change in operating assets and liabilities: |
||||||||||||||
Decrease/(increase) in trade and other receivables |
825 | 1,724 | (3,968 | ) | ||||||||||
Decrease/(increase) in income tax refund due |
| | (1 | ) | ||||||||||
Decrease/(increase) in prepayments |
398 | (10 | ) | (325 | ) | |||||||||
Decrease/(increase) in trade and other payables |
(409 | ) | 88 | 573 | ||||||||||
Increase/(decrease) in other provisions |
(25 | ) | (58 | ) | 23 | |||||||||
(Decrease) in deposit paid |
| | (96 | ) | ||||||||||
Decrease in deferred tax liability |
(298 | ) | (305 | ) | (198 | ) | ||||||||
Decrease/(increase) in accrued revenue |
(138 | ) | 97 | 41 | ||||||||||
|
|
|
|
|
|
|||||||||
Net cash used in operating activities |
(6,714 | ) | (8,661 | ) | (11,435 | ) | ||||||||
|
|
|
|
|
|
F-8
Consolidated statements of cash flows (continued)
For the year ended 30 June 2019
Note |
2019
A$000 |
2018
A$000 |
2017
A$000 |
|||||||||||||
Cash flows from investing activities |
||||||||||||||||
Payment for purchase of business, net of cash acquired |
33 | | | (7,097 | ) | |||||||||||
Payments for property, plant and equipment |
| | (12 | ) | ||||||||||||
Payments for intangibles |
| | (8 | ) | ||||||||||||
Proceeds from legal settlement |
35 | | 150 | |||||||||||||
Proceeds from disposal of shares |
2,359 | | | |||||||||||||
|
|
|
|
|
|
|||||||||||
Net cash used in investing activities |
2,359 | 150 | (7,117 | ) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Cash flows from financing activities |
||||||||||||||||
Proceeds from issue of shares |
20 | 3,816 | | | ||||||||||||
Share issue transaction costs |
| | (18 | ) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Net cash from financing activities |
3,816 | | (18 | ) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Net decrease in cash and cash equivalents |
(539 | ) | (8,511 | ) | (18,570 | ) | ||||||||||
Cash and cash equivalents at the beginning of the financial year |
5,956 | 14,455 | 33,453 | |||||||||||||
Effects of exchange rate changes on cash |
17 | 12 | (428 | ) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Cash and cash equivalents at the end of the financial year |
9 | 5,434 | 5,956 | 14,455 | ||||||||||||
|
|
|
|
|
|
The above consolidated statements of changes in equity should be read with the accompanying notes
F-9
Notes to the financial statements
June 30, 2019
Note 1. General information
The financial statements cover Kazia Therapeutics Limited as a consolidated entity consisting of Kazia Therapeutics Limited and its subsidiaries. The financial statements are presented in Australian dollars, which is Kazia Therapeutics Limiteds functional and presentation currency.
Kazia Therapeutics Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:
Three International Towers
Level 24, 300 Barangaroo Avenue
Sydney NSW 2000
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 21 October 2019. The Directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the International Accounting Standards Board (IASB) 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.
Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
IFRS 9 Financial Instruments
IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement requirements. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an expected credit loss model for impairment of financial assets. When adopting IFRS 9, the Group has applied transitional relief and elected not to restate prior periods. Rather, differences arising from the adoption of IFRS 9 in relation to classification, measurement, and impairment are recognised in opening retained earnings as at 1 July 2018.
The impacts on the consolidated entity from the adoption of this accounting policy were as follows:
Listed equity investments - available-for-sale financial assets under IAS 39 included listed equity investments of $3,679,542 at 30 June 2018. These were reclassified to fair value through profit or loss (FVPL) under IFRS 9. The associated available-for-sale reserve, amounting to $36,824 at 1 July 2018, was reclassified to accumulated losses.
Trade and other receivables - these were classified as loans and receivables under IAS 39 and are now held at amortised cost under IFRS 9. The R&D tax refund forms the majority of this balance. There was no impact on the financial statements as a result of this change.
There was no change to financial liabilities.
F-10
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
IFRS 15 Revenue from Contracts with Customers
IFRS 15 replaces IAS 18 Revenue, IAS 11 Construction Contracts and several revenue-related Interpretations. The new Standard has been applied from 1 July 2018.
As the consolidated entity does not enter into contracts with customers, the adoption of this standard has not had any impact on the financial statements.
Going concern
The consolidated entity incurred a loss after income tax of $10,270,264 (2018: $6,039,242), was in a net current asset position of $5,273,710 (2018: net current asset position of $5,372,114) and had net cash outflows from operating activities of $6,714,210 (2018: $8,661,236) for the year ended 30 June 2019.
As at 30 June 2019 the consolidated entity had cash in hand and at bank of $5,433,868 and current assets of $7,514,175.
The financial statements have been prepared on a going concern basis, which contemplates continuity of normal activities and realisation of assets and settlement of liabilities in the normal course of business. As is often the case with drug development companies, the ability of the consolidated entity to continue its development activities as a going concern is dependent upon it deriving sufficient cash from investors, from licensing and partnering activities and from other sources of revenue such as grant funding.
The directors have considered the cash flow forecasts and the funding requirements of the business and continues to explore grant funding, licensing opportunities and equity investment opportunities in the Company. The directors are confident that these strategies are appropriate to generate sufficient funding to allow the consolidated entity to continue as a going concern.
Accordingly the directors have prepared the financial statements on a going concern basis. Should the above assumptions not prove to be appropriate, there is material uncertainty whether the consolidated entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in these financial statements.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).
The financial statements have been prepared on an accruals basis and under the historical cost conventions, except for listed equity investments which are carried at fair value.
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 entitys accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 31.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Kazia Therapeutics Limited (company or parent entity) as at 30 June 2019 and the results of all subsidiaries for the year then ended. Kazia Therapeutics Limited and its subsidiaries together are referred to in these financial statements as the consolidated entity.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
F-11
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference is between the consideration transferred and the book value.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the management approach, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (CODM). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. The CODM is considered to be the Board of Directors.
Foreign currency translation
The financial statements are presented in Australian dollars, which is the consolidated entitys 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.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rate at the date of the transaction, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation is disposed of.
Exchange differences arising on a monetary item that forms part of a reporting entitys net investment in a foreign operation shall be recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.
Financial Instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
F-12
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:
|
financial assets at amortised cost |
|
financial assets at fair value through profit or loss (FVPL) |
Classifications are determined by both:
|
The entitys business model for managing the financial asset |
|
The contractual cash flow characteristics of the financial assets |
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL):
|
they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows |
|
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding |
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Groups cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.
Financial assets at fair value through profit or loss (FVPL)
Financial assets that are held within a business model other than hold to collect or hold to collect and sell are categorised at fair value through profit and loss. Further, irrespective of business model, financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVPL. The Groups investments in equity instruments and derivatives fall under this category.
Impairment of financial assets
IFRS 9s new impairment model uses more forward looking information to recognize expected credit losses - the expected credit losses (ECL) model. The application of the new impairment model depends on whether there has been a significant increase in credit risk. The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
|
financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (Stage 1) and |
|
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (Stage 2). |
Stage 3 would cover financial assets that have objective evidence of impairment at the reporting date. 12-month expected credit losses are recognised for the first category while lifetime expected credit losses are recognised for the second category. Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.
F-13
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely unchanged from IAS 39, the Groups financial liabilities were not impacted by the adoption of IFRS 9. However, for completeness, the accounting policy is disclosed below.
The Groups financial liabilities comprise trade and other payables. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method.
All interest-related charges and, if applicable, changes in an instruments fair value that are reported in profit or loss are included within finance costs or finance income.
Investments and other financial assets (comparative period accounting policy)
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. 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.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets at fair value through profit or loss (FVTPL) include financial assets that are either classified as held for trading or that meet certain conditions and are designated at FVTPL upon initial recognition. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets, principally equity securities that are either designated as available-for-sale or not classified as any other category. After initial recognition, fair value movements are recognised in other comprehensive income through the available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The consolidated entity assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been recognised had the impairment not been made and is reversed to profit or loss.
Available-for-sale financial assets are considered impaired when there has been a significant or prolonged decline in value below initial cost. Subsequent increments in value are recognised in other comprehensive income through the available for-sale reserve.
Revenue recognition
Revenue from contracts with customers
The Group does not earn revenue from contracts with customers.
Finance Income
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Grant Income
The R&D Tax Incentive is a government program which helps to offset some of the incurred costs of R&D. Eligible expenditure incurred under the scheme in a financial year attracts an additional 43.5% tax deduction, and for a group earning income of less than $20 million, the cash value of the additional deduction is remitted to the taxpayer. In accordance with IAS 20, as the compensation relates to expenses already incurred, it is recognised in profit or loss of the period in which it becomes receivable. Accordingly the group accounts for the R&D Tax Incentive in the same year as the expenses to which it relates.
Income tax
The income tax expense or benefit for the period is the tax payable on that periods taxable income based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
|
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or |
|
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. |
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
F-14
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
Kazia Therapeutics Limited (the parent entity) and its wholly-owned Australian controlled entities have formed an income tax consolidated group under the tax consolidation regime. Kazia Therapeutics Limited as the parent entity discloses all of the deferred tax assets of the tax consolidated group in relation to tax losses carried forward (after elimination of inter-group transactions). The tax consolidated group has applied the separate taxpayer in the group allocation approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.
As the tax consolidation group continues to generate tax losses there has been no reason for the company to enter a tax funding agreement with members of the tax consolidation group.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Property, 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 from 2.5 to 10 years.
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, 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.
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.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
F-15
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
Leased assets acquired under a finance lease are depreciated over the assets useful life or over the shorter of the assets useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.
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 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.
Patents and trademarks
Significant costs associated with patents and intellectual property are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite useful life of 5 years.
Licensing agreement for GDC-0084
The Licensing Agreement asset was initially brought to account at fair value, and is being amortised on a straight-line basis over the period of its expected benefit, being the remaining life of the patent, which was 15 years from the date of acquisition.
Impairment of non-financial assets
Non-financial assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an assets fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Compound financial instruments
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest rate method, whereas the equity component is not remeasured. Interest, gains and losses relating to the financial liability are recognised in profit or loss. On conversion, the financial liability is reclassified to equity; no gain or loss is recognised on conversion.
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.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
F-16
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees under the terms of the Employee Share Option Plan (ESOP) and consultants as compensation for services performed.
Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
|
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period. |
|
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date. |
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred, including interest on short-term and long-term borrowings.
F-17
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options, including share based payments relating to the issue of shares are, shown in equity as a deduction, net of tax, from the proceeds.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Kazia Therapeutics Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax (GST) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
F-18
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2019. The consolidated entitys assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.
F-19
Notes to the financial statements
June 30, 2019
Note 2. Significant accounting policies (continued)
IFRS 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces IAS 17 Leases and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a right-of-use asset will be capitalised in the statement of financial position, measured as the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a right-of-use asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17. However EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under IFRS 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
The Standard will not have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 30 June 2020, because the group is not a party to any material leases.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed as follows:
Research and development expenses
The Directors do not consider the development programs to be sufficiently advanced to reliably determine the economic benefits and technical feasibility to justify capitalisation of development costs. These costs have been recognised as an expense when incurred.
Research and development expenses relate primarily to the cost of conducting human clinical and pre-clinical trials. Clinical development costs are a significant component of research and development expenses. Estimates have been used in determining the expense liability under certain clinical trial contracts where services have been performed but not yet invoiced. Generally the costs, and therefore estimates, associated with clinical trial contracts are based on the number of patients, drug administration cycles, the type of treatment and the outcome being measured. The length of time before actual amounts can be determined will vary depending on length of the patient cycles and the timing of the invoices by the clinical trial partners.
Clinical trial expenses
Estimates have been used in determining the expense liability under certain clinical trial contracts being performed but not yet invoiced.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes 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.
F-20
Notes to the financial statements
June 30, 2019
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.
Research and development tax rebate
The R&D Tax Incentive is recognised when a reliable estimate of the amounts receivable can be made. For the year ended 30 June 2019 the group has estimated the rebate which will be received in early 2020 and has accrued that amount as income in the statement of profit or loss and other comprehensive income.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. There have been no deferred tax assets recognised in the financial statements.
Business combinations
The consolidated entity entered into a business combination in a prior year. The transaction was complex, involving the licensing of an asset from one party and the purchase of a company from another party. Significant judgement was required in determining that the transaction was a business combination and in relation to the identification and valuation of assets and liabilities acquired.
Contingent consideration
The fair value of contingent consideration is dependent on the key assumptions including probability of milestones occurring, timing of settlement and discount rates.
Note 4. Operating segments
Identification of reportable operating segments
The consolidated entitys operating segment is based on the internal reports that are reviewed and used by the Board of Directors (being the Chief Operating Decision Makers (CODM)) in assessing performance and in determining the allocation of resources.
The consolidated entity operates in the pharmaceutical research and development business. There are no operating segments for which discrete financial information exists.
The information reported to the CODM, on at least a quarterly basis, is the consolidated results as shown in the statement of profit or loss and other comprehensive income and statement of financial position.
Major customers
During the current and prior financial year there were no major customers.
F-21
Notes to the financial statements
June 30, 2019
Note 5. Revenue
Consolidated | ||||||||||||
2019 A$000 |
2018 A$000 |
2017 A$000 |
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Revenue |
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Bank interest |
| 119 | 249 | |||||||||
|
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|
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|||||||
| 119 | 249 | ||||||||||
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Revenue from continuing operations |
| 119 | 249 | |||||||||
|
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|
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Note 6. Other income
Consolidated | ||||||||||||
2019 A$000 |
2018 A$000 |
2017 A$000 |
||||||||||
Net foreign exchange gain |
| 224 | | |||||||||
Payroll tax rebate |
| | 7 | |||||||||
Subsidies and grants |
9 | 685 | 130 | |||||||||
Gain on legal settlement |
| 8,411 | | |||||||||
Reimbursement of expenses |
25 | 8 | 17 | |||||||||
Research and development rebate |
1,431 | 2,200 | 8,409 | |||||||||
Other sundry income |
| 1,461 | | |||||||||
|
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|
|
|
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Other income |
1,465 | 12,989 | 8,563 | |||||||||
|
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F-22
Notes to the financial statements
June 30, 2019
Note 7. Expenses
Consolidated | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
A$000 | A$000 | A$000 | ||||||||||
Loss before income tax includes the following specific |
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Depreciation |
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Leasehold improvements |
| 192 | 52 | |||||||||
Property, plant and equipment |
| 19 | 47 | |||||||||
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Total depreciation |
| 211 | 99 | |||||||||
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Amortisation |
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Patents and intellectual property |
| 250 | 570 | |||||||||
Software |
| 2 | 5 | |||||||||
GDC licensing agreement |
1,084 | 1,084 | 745 | |||||||||
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Total amortisation |
1,084 | 1,336 | 1,320 | |||||||||
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Total depreciation and amortisation |
1,084 | 1,547 | 1,419 | |||||||||
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Impairment |
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Leasehold Improvements |
| 143 | | |||||||||
Finance costs |
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Interest and finance charges paid/payable |
| | 1 | |||||||||
Unwinding of the discount on contingent consideration |
| | 764 | |||||||||
|
|
|
|
|
|
|||||||
Finance costs expensed |
| | 765 | |||||||||
|
|
|
|
|
|
|||||||
Rental expense relating to operating leases |
||||||||||||
Minimum lease payments |
79 | 301 | 335 | |||||||||
Superannuation expense |
||||||||||||
Defined contribution superannuation expense |
128 | 170 | 288 | |||||||||
Employee benefits expense excluding superannuation |
||||||||||||
Employee benefits expense excluding superannuation |
1,396 | 2,213 | 4,078 | |||||||||
Other Expenses |
||||||||||||
Revaluation of contingent consideration |
63 | | |
F-23
Notes to the financial statements
June 30, 2019
Note 8. Income tax benefit
2019 | 2018 | 2017 | ||||||||||
A$000 | A$000 | A$000 | ||||||||||
Numerical reconciliation of income tax benefit and tax at the statutory rate |
||||||||||||
Loss before income tax benefit |
(10,568 | ) | (6,344 | ) | (10,869 | ) | ||||||
Tax at the statutory tax rate of 27.5% |
(2,906 | ) | (1,745 | ) | (2,989 | ) | ||||||
Tax effect amounts which are not deductible/(taxable) in calculating taxable income: |
| | | |||||||||
Impact of foreign tax rate differential |
||||||||||||
Research and Development claim |
394 | 605 | 1,282 | |||||||||
Capitalised expenses |
| | 234 | |||||||||
Employee option plan |
68 | 45 | 131 | |||||||||
Gain/loss on revaluation of contingent consideration |
17 | (402 | ) | 210 | ||||||||
Other non-deductible expenses |
| | 5 | |||||||||
(2,428 | ) | (1,496 | ) | (1,127 | ) | |||||||
|
|
|
|
|
|
|||||||
Prior year tax losses not recognised now recouped |
| | (1 | ) | ||||||||
Tax losses and timing differences not recognised |
2,130 | 1,191 | 930 | |||||||||
|
|
|
|
|
|
|||||||
Income tax benefit |
(298 | ) | (305 | ) | (199 | ) | ||||||
|
|
|
|
|
|
|||||||
2019 | 2018 | 2017 | ||||||||||
A$000 | A$000 | A$000 | ||||||||||
Tax losses not recognised |
||||||||||||
Unused tax losses for which no deferred tax asset has been recognised-Australia |
57,050 | 50,331 | 49,131 | |||||||||
Potential tax benefit @ 27.5% - Australia |
15,689 | 13,841 | 13,513 | |||||||||
Unused tax losses for which no deferred tax asset has been recognised-US |
2,366 | 2,525 | 2,173 | |||||||||
Potential tax benefit at statutory tax rates@21%-US |
497 | 530 | 456 |
Note 9. Current assets - cash and cash equivalents
2019 | 2018 | |||||||
A$000 | A$000 | |||||||
Cash at bank and on hand |
834 | 2,956 | ||||||
Short-term deposits |
4,600 | 3,000 | ||||||
|
|
|
|
|||||
5,434 | 5,956 | |||||||
|
|
|
|
F-24
Notes to the financial statements
June 30, 2019
Note 10. Current assets - trade and other receivables
2019 | 2018 | |||||||
A$000 | A$000 | |||||||
Trade receivables |
17 | 1 | ||||||
Less: Provision for impairment of receivables |
(17 | ) | | |||||
R&D tax rebate receivable |
1,440 | 2,200 | ||||||
|
|
|
|
|||||
1,440 | 2,201 | |||||||
|
|
|
|
|||||
Other receivables |
112 | 120 | ||||||
Deposits held |
564 | 609 | ||||||
Less: Provision for impairment of deposits held |
(405 | ) | (394 | ) | ||||
|
|
|
|
|||||
1,711 | 2,536 | |||||||
|
|
|
|
Deposits held included a guarantee to the value of 250,000 (A$387,657) for the APO Trend case. Please refer to note 28 for further information on deposits held.
Allowance for expected credit losses
The consolidated entity has recognised a A$16,767 (2018: loss of nil) in profit or loss in respect of impairment of receivables (excluding deposits held) for the year ended 30 June 2019.
The ageing of the impaired receivables provided for above are as follows:
2019 | 2018 | |||||||
A$000 | A$000 | |||||||
Trade receivables less than 6 months overdue |
17 | | ||||||
|
|
|
|
Note 11. Current assets - other
2019 | 2018 | |||||||
A$000 | A$000 | |||||||
Prepayments |
370 | 768 | ||||||
|
|
|
|
F-25
Notes to the financial statements
June 30, 2019
Note 12. Non-current assets - Financial assets
2019 | 2018 | |||||||
A$000 | A$000 | |||||||
Listed ordinary shares - FVTPL (2018: Available for sale) |
25 | 3,680 | ||||||
Unlisted shares and options - FVTPL |
143 | 655 | ||||||
|
|
|
|
|||||
168 | 4,335 | |||||||
|
|
|
|
Refer to note 25 for further information on fair value measurement.
Note 13. Non-current assets - property, plant and equipment
2019 | 2018 | |||||||
$000 | $000 | |||||||
Plant and equipment - at cost |
| 2 | ||||||
Less: Accumulated depreciation |
| (1 | ) | |||||
|
|
|
|
|||||
| 1 | |||||||
|
|
|
|
|||||
| 1 | |||||||
|
|
|
|
F-26
Notes to the financial statements
June 30, 2019
Note 13. Non-current assets - property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Leasehold
improvement A$000 |
Plant and
equipment A$000 |
Total
A$000 |
||||||||||
Balance at 1 July 2017 |
384 | 106 | 490 | |||||||||
Additions |
7 | 2 | 9 | |||||||||
Disposals |
(56 | ) | (88 | ) | (144 | ) | ||||||
Impairment of assets |
(143 | ) | | (143 | ) | |||||||
Depreciation expense |
(192 | ) | (19 | ) | (211 | ) | ||||||
|
|
|
|
|
|
|||||||
| 1 | 1 | ||||||||||
Balance at 1 July 2018 |
| 1 | 1 | |||||||||
Disposals |
| (1 | ) | (1 | ) | |||||||
Depreciation expense |
| | | |||||||||
|
|
|
|
|
|
|||||||
Balance at 30 June 2019 |
| | | |||||||||
|
|
|
|
|
|
Note 14. Non-current assets - intangibles
Consolidated | ||||||||
2019 | 2018 | |||||||
A$000 | A$000 | |||||||
Patents and intellectual property - at cost |
2,851 | 2,851 | ||||||
Less: Accumulated amortisation |
(2,851 | ) | (2,851 | ) | ||||
|
|
|
|
|||||
| | |||||||
Software - at cost |
| | ||||||
Less: Accumulated amortisation |
| | ||||||
|
|
|
|
|||||
| | |||||||
Licensing agreement - at acquired fair value |
16,408 | 16,408 | ||||||
Less: Accumulated amortisation |
(2,914 | ) | (1,829 | ) | ||||
|
|
|
|
|||||
13,494 | 14,579 | |||||||
13,494 | 14,579 | |||||||
|
|
|
|
F-27
Notes to the financial statements
June 30, 2019
Note 14. Non-current assets - intangibles (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Software
A$000 |
Patents and
intellectual A$000 |
GDC licensing
agreement A$000 |
Total
A$000 |
|||||||||||||
Balance at 1 July 2017 |
5 | 250 | 15,663 | 15,918 | ||||||||||||
Additions |
0 | |||||||||||||||
Disposals |
(3 | ) | (3 | ) | ||||||||||||
Amortisation expense |
(2 | ) | (250 | ) | (1,084 | ) | (1,336 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at 30 June 2018 |
| | 14,579 | 14,579 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Amortisation expense |
| | (1,084 | ) | (1,084 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at 30 June 2019 |
| | 13,494 | 13,494 | ||||||||||||
|
|
|
|
|
|
|
|
Note 15. Current liabilities - trade and other payables
2019 | 2018 | |||||||
A$000 | A$000 | |||||||
Trade payables |
1,050 | 1,407 | ||||||
Accrued payables |
714 | 576 | ||||||
Other current liability |
| 84 | ||||||
|
|
|
|
|||||
1,764 | 2,067 | |||||||
|
|
|
|
Refer to note 24 for further information on financial instruments.
F-28
Notes to the financial statements
June 30, 2019
Note 16. Current liabilities - provisions
2019 | 2018 | |||||||
A$000 | A$000 | |||||||
Employee benefits |
136 | 91 | ||||||
Lease make good |
| 71 | ||||||
|
|
|
|
|||||
136 | 162 | |||||||
|
|
|
|
Consolidated - 2019 | ||||
Carrying amount at the start of the year |
71 | |||
Unused amounts reversed |
(71 | ) | ||
|
|
|||
Carrying amount at the end of the year |
| |||
|
|
Note 17. Current liabilities - Contingent consideration
2019
A$000 |
2018
A$000 |
|||||||
Contingent consideration |
| 1,521 | ||||||
|
|
|
|
F-29
Notes to the financial statements
June 30, 2019
Note 18. Non-current liabilities - deferred tax
2019 | 2018 | |||||||
A$000 | A$000 | |||||||
Deferred tax liability associated with Licensing Agreement |
3,711 | 4,009 | ||||||
|
|
|
|
|||||
Amount expected to be settled within 12 months |
298 | 305 | ||||||
Amount expected to be settled after more than 12 months |
3,413 | 3,704 | ||||||
|
|
|
|
|||||
3,711 | 4,009 | |||||||
|
|
|
|
Note 19. Non-current liabilities - Contingent consideration
2019
A$000 |
2018
A$000 |
|||||||
Contingent consideration |
1,370 | 1,036 | ||||||
|
|
|
|
|||||
1,370 | 1,036 |
During the 2017 financial year, the consolidated entity acquired 100% of the issued shares in Glioblast Pty Ltd, a privately-held, neuro-oncology-focused Australian biotechnology company. On the same day, Kazia entered into a worldwide licensing agreement with Genentech to develop and commercialise GDC-0084.
The Glioblast acquisition contains four contingent milestone payments, the first two milestone payments are to be settled with Kazia shares, and the third and fourth milestone payments are to be settled with either cash or Kazia shares at the discretion of Kazia. Milestone 1 has now been paid out, and Milestone 3 has lapsed.
The Genentech Agreement comprises of one milestone payment payable on the first commercial licensed product sale.
The range of outcomes of contingent consideration are summarised below:
Milestone | Contingent Consideration | |||||||
Milestone 2 |
1,250,000 | 1,250,000 | ||||||
Milestone 4 |
4,199,000 | 3,400,000 | ||||||
Milestone 5 |
1,394,000 | 1,394,000 | ||||||
|
|
|
|
|||||
Total |
6,843,000 | 6,044,000 | ||||||
|
|
|
|
F-30
Notes to the financial statements
June 30, 2019
Note 19. Non-current liabilities - Contingent consideration (continued)
Each milestone payment is probability weighted for valuation purposes. The milestone payments are discounted to present value, using a discount rate of 35% per annum, if they are expected to be achieved more than 12 months after the valuation date. The contingent consideration was revalued at 30 June 2019 to take into account revised estimated probabilities and timelines of certain milestones being achieved, and a portion of the discount has unwound with the resultant loss on contingent consideration being recognised in profit and loss.
Kazia is also required to pay royalties to Genentech in relation to net sales. These payments are related to future financial performance, and are not considered as part of the consideration in relation to the Genentech Agreement.
F-31
Notes to the financial statements
June 30, 2019
Note 20. Equity - contributed equity
Consolidated | ||||||||||||||||
2019 Shares |
2018 Shares |
2019 A$ |
2018 A$ |
|||||||||||||
Ordinary shares - fully paid |
62,166,673 | 48,409,621 | 36,641,519 | 31,575,824 | ||||||||||||
|
|
|
|
|
|
|
|
Movements in ordinary share capital
Details | Date | Shares |
A$ Issue price |
$ | ||||||||||
Balance |
1 July 2017 | 483,287,914 | 193,769,409 | |||||||||||
Share consolidation - note 1 |
17 November 2017 | (434,958,293 | ) | $ | 0.000 | | ||||||||
Issue of shares to Scientific Advisory Board |
30 November 2017 | 80,000 | $ | 0.370 | 29,600 | |||||||||
Cancellation of share capital - note 2 |
31 December 2017 | | $ | 0.000 | (162,223,185 | ) | ||||||||
|
|
|
|
|||||||||||
Balance |
30 June 2018 | 48,409,621 | 31,575,824 | |||||||||||
Share placement |
24 October 2018 | 8,900,001 | $ | 0.380 | 3,382,000 | |||||||||
Milestone 1 shares issued in connection with purchase of Glioblast Pty Limited (GDC-0084) |
9 November 2018 | 2,820,824 | $ | 0.440 | 1,250,000 | |||||||||
Issued under Share Purchase Plan |
23 November 2018 | 2,036,227 | $ | 0.380 | 773,760 | |||||||||
Share issue transaction costs |
| $ | 0.000 | (340,065 | ) | |||||||||
|
|
|
|
|||||||||||
Balance |
30 June 2019 | 62,166,673 | 36,641,519 | |||||||||||
|
|
|
|
Ordinary shares
Note 1 - Share consolidation of 10 to 1, which was approved by the shareholders at the Annual General Meeting on 15 November 2017, occurred in the prior financial year.
Note 2 - Section 258F of the Corporations Act allows a company to reduce its share capital by cancelling any paid-up share capital which is lost or is not represented by available assets. The directors believe that $162,223,185 of the parent entitys share capital satisfies the criteria in Section 258F of the Corporations Act and accordingly this amount of the ordinary share capital was cancelled in the prior financial year.
The shares issued in connection with the purchase of Glioblast Pty Limited constituted a non-cash transaction, and accordingly this transaction is not reflected in the Statement of Cash Flows.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entitys objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.
The capital structure of the consolidated entity consists of cash and cash equivalents and equity attributable to equity holders. The overall strategy of the consolidated entity is to continue its drug development programs, which depends on raising sufficient funds, through a variety of sources including issuing of additional share capital, as may be required from time to time.
The capital risk management policy remains unchanged from the prior year.
F-32
Notes to the financial statements
June 30, 2019
Note 21. Equity - Other contributed equity
2019 | 2018 | |||||||
$ | $ | |||||||
Convertible note - Triaxial |
464,000 | 464,000 | ||||||
|
|
|
|
On 4 December 2014, the consolidated entity and the convertible note holder (Triaxial) signed a Convertible Note Deed Poll (Deed) which superseded the precedent Loan Agreement between Triaxial shareholders and the consolidated entity. The Deed extinguishes the liability created by the Loan Agreement and provides that the Convertible Notes will convert into a pre-determined number of ordinary shares on the achievement of defined milestones established in the schedule of the Deed. Accordingly the convertible note has been reclassified as an equity instrument rather than debt instrument.
During the Financial year ended 30 June 2017, the Company reached two milestones triggering the conversion of a portion of its convertible note as follows;
On 11 August 2016 the Company announced the submission of an IND application. On 10 September 2016, the Company received a letter from the FDA advising the study may proceed triggering conversion of 20,000,000 ordinary shares.
On 31 October 2016, the Company announced it had licensed a Phase II ready molecule triggering the conversion of 16,000,000 ordinary shares.
During the financial year ended 30 June 2018, a portion of the convertible notes was extinguished.
The remaining portion of the convertible note will be exercised at the holders discretion on completion of Phase II clinical trial or achieving Breakthrough Designation, and would convert to 1,856,000 ordinary shares if converted. Completion will be deemed to occur upon the receipt by the consolidated entity of a signed study report or notification of the designation. There is a possibility for an early conversion of the convertible notes if a third party acquires more than 50% of the issued capital of the consolidated entity.
Note 22. Equity - reserves
Foreign currency translation reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations to Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and executive directors as part of their remuneration, and other parties as part of their compensation for services.
Reserves comprise Share Based Payments reserve of A$2,489,121 (2018: Share Based Payments reserve of A$2,242,734 and Available for Sale reserve of A$(36,824)).
F-33
Notes to the financial statements
June 30, 2019
Note 23. Equity - dividends
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking credits
There were no franking credits available at the reporting date.
Note 24. Financial instruments
Financial risk management objectives
The consolidated entitys activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The consolidated entity uses different methods to measure and manage the different types of risks to which it is exposed. These methods include monitoring the levels of exposure to interest rates and foreign exchange, ageing analysis and monitoring of specific credit allowances to manage credit risk, and, rolling cash flow forecasts to manage liquidity risk.
Market risk
Foreign currency risk
The consolidated entity operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollars (USD). Foreign exchange risk arises from future transactions and recognised assets and liabilities denominated in a currency that is not the entitys functional currency and net investments in foreign operations.
As of 30 June 2019, the consolidated entity did not hold derivative financial instruments in managing its foreign currency, however, the consolidated entity may from time to time enter into hedging arrangements where circumstances are deemed appropriate. The consolidated entity used natural hedging to reduce the foreign currency risk, which involved processing USD payments from cash held in USD. Foreign subsidiaries with a functional currency of Australian Dollars (AUD) have exposure to the local currency of these subsidiaries and any other currency these subsidiaries trade in.
The carrying amount of the consolidated entitys foreign currency denominated financial assets and financial liabilities at the reporting date was as follows:
Assets | Liabilities | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
A$000 | A$000 | A$000 | A$000 | |||||||||||||
US dollars |
31 | 317 | 1,046 | 896 | ||||||||||||
Euros |
| | 1 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
31 | 317 | 1,047 | 896 | |||||||||||||
|
|
|
|
|
|
|
|
F-34
Notes to the financial statements
June 30, 2019
Note 24. Financial instruments (continued)
The consolidated entity had net assets denominated in foreign currencies of A$1,016,515 as at 30 June 2019 (2018: net assets A$578,937).
If the AUD had strengthened against the USD by 10% (2018: 10%) then this would have had the following impact:
AUD strengthened | AUD weakened | |||||||||||||||||||||||
Consolidated - 2019 | % change |
Effect on
A$000 |
Effect on
equity A$000 |
% change |
Effect on
A$000 |
Effect on
equity A$000 |
||||||||||||||||||
US dollars |
10 | % | 102 | 102 | (10 | %) | (102 | ) | (102 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
102 | 102 | (102 | ) | (102 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
AUD strengthened | AUD weakened | |||||||||||||||||||||||
Consolidated - 2018 | % change |
Effect on
A$000 |
Effect on
equity A$000 |
% change |
Effect on
A$000 |
Effect on
equity A$000 |
||||||||||||||||||
US dollars |
10 | % | 58 | 58 | (10 | %) | (58 | ) | (58 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The consolidated entitys exposure to market interest rates relate primarily to the investments of cash balances.
The consolidated entity has cash reserves held primarily in Australian dollars and United States dollars and places funds on deposit with financial institutions for periods generally not exceeding three months.
As at the reporting date, the consolidated entity had the following variable interest rate balances:
2019 | 2018 | |||||||||||||||
Weighted
average interest rate % |
Balance
A$000 |
Weighted
average interest rate % |
Balance
A$000 |
|||||||||||||
Cash at bank and in hand |
0.03 | % | 834 | 0.04 | % | 2,956 | ||||||||||
Short term deposits |
1.88 | % | 4,600 | 2.35 | % | 3,000 | ||||||||||
|
|
|
|
|||||||||||||
Net exposure to cash flow interest rate risk |
5,434 | 5,956 | ||||||||||||||
|
|
|
|
F-35
Notes to the financial statements
June 30, 2019
Note 24. Financial instruments (continued)
The consolidated entity has cash and cash equivalents totalling $5,433,868 (2018: $5,956,182). An official increase/decrease in interest rates of 100 basis points (2018: 100 basis points) would have a favourable/adverse effect on profit before tax and equity of $54,337 (2018: $59,562) per annum. The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The entity is not exposed to significant credit risk on receivables.
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the consolidated entity based on recent sales experience, historical collection rates and forward-looking information that is available.
The consolidated entity places its cash deposits with high credit quality financial institutions and by policy, limits the amount of credit exposure to any single counter-party. The consolidated entity is averse to principal loss and ensures the safety and preservation of its invested funds by limiting default risk, market risk, and reinvestment risk. The consolidated entity mitigates default risk by constantly positioning its portfolio to respond appropriately to a significant reduction in a credit rating of any financial institution.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year.
There are no significant concentrations of credit risk within the consolidated entity. The credit risk on liquid funds is limited as the counter parties are banks with high credit ratings.
Credit risk is managed by limiting the amount of credit exposure to any single counter-party for cash deposits.
Liquidity risk
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. In particular, contingent consideration may be satisfied either by payment of cash or by issue of shares, at the discretion of the entity.
F-36
Notes to the financial statements
June 30, 2019
Note 24. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the consolidated entitys 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.
2019 |
Weighted average
interest rate % |
1 year or less
A$000 |
Between 1
and 2 years A$000 |
Between 2
and 5 years A$000 |
Over 5
years A$000 |
Remaining
contractual maturities A$000 |
||||||||||||||||||
Non-derivatives |
||||||||||||||||||||||||
Non-interest bearing |
||||||||||||||||||||||||
Trade payables |
| 1,049 | | | | 1,049 | ||||||||||||||||||
Accrued payables |
| 714 | | | | 714 | ||||||||||||||||||
Contingent consideration |
| | | 5,194 | 1,394 | 6,588 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total non-derivatives |
1,763 | | 5,194 | 1,394 | 8,351 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
2018 |
Weighted average
interest rate % |
1 year or less
A$000 |
Between 1
and 2 years A$000 |
Between 2
and 5 years A$000 |
Over 5
years A$000 |
Remaining
contractual maturities A$000 |
||||||||||||||||||
Non-derivatives |
||||||||||||||||||||||||
Non-interest bearing |
||||||||||||||||||||||||
Trade payables |
| 1,407 | | | | 1,407 | ||||||||||||||||||
Accrued payables |
| 576 | | | | 576 | ||||||||||||||||||
Contingent consideration |
| 4,250 | | 4,650 | 1,394 | 10,294 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total non-derivatives |
6,233 | | 4,650 | 1,394 | 12,227 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Note 25. Fair value measurement
Fair value hierarchy
The following tables detail the consolidated entitys assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
F-37
Notes to the financial statements
June 30, 2019
Note 25. Fair value measurement (continued)
Consolidated - 2019 |
Level 1
A$000 |
Level 2
A$000 |
Level 3
A$000 |
Total
A$000 |
||||||||||||
Assets |
||||||||||||||||
Ordinary shares - listed |
25 | | | 25 | ||||||||||||
Contingent Consideration |
| | 143 | 143 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
25 | | 143 | 168 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Contingent Consideration |
| | 1,370 | 1,370 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
| | 1,370 | 1,370 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Consolidated - 2018 |
Level 1
A$000 |
Level 2
A$000 |
Level 3
A$000 |
Total
A$000 |
||||||||||||
Assets |
||||||||||||||||
Ordinary shares - listed |
3,680 | | | 3,680 | ||||||||||||
Unlisted options |
| | 656 | 656 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
3,680 | 656 | 4,336 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Contingent Consideration |
| | 2,558 | 2,558 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
| | 2,558 | 2,558 | ||||||||||||
|
|
|
|
|
|
|
|
There were no transfers between levels during the financial year.
The fair value of contingent consideration related to the acquisition of Glioblast Pty Ltd and the licence agreement is estimated by probability-weighting the expected future cash outflows, adjusting for risk and discounting.
The effects on the fair value of risk and uncertainty in the future cash flows are dealt with by adjusting the estimated cash flows rather than adjusting the discount rate. The estimated cashflows were adjusted based on the directors assessment of achieving contracted milestones as disclosed in Note 19. The probabilities used fell in the range of 35% to 55% and were informed by generally accepted industry probabilities of drugs achieving certain milestones in their progression towards registration.
F-38
Notes to the financial statements
June 30, 2019
Note 26. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel (KMP) of the consolidated entity is set out below:
2019
A$000 |
2018
A$000 |
2017
A$000 |
||||||||||
Short-term employee benefits |
1,176 | 1636 | 2,513 | |||||||||
Post-employment benefits |
84 | 90 | 155 | |||||||||
Long-term benefits |
| | | |||||||||
Termination benefits |
| | 315 | |||||||||
Share-based payments |
125 | 117 | 403 | |||||||||
|
|
|
|
|
|
|||||||
1,385 | 1,843 | 3,386 | ||||||||||
|
|
|
|
|
|
Please refer to Note 30 for other transactions with key management personnel and their related parties.
Note 27. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Grant Thornton Audit Pty Ltd, the auditor of the consolidated entity:
Consolidated | ||||||||||||
2019
A$000 |
2018 A$000 |
2017
A$000 |
||||||||||
Audit services - Grant Thornton Audit Pty Ltd |
||||||||||||
Audit or review of the financial statements |
120 | 131 | 132 | |||||||||
F3 consent |
| 11 | | |||||||||
Other services - Grant Thornton Audit Pty Ltd |
||||||||||||
Tax compliance services |
| | | |||||||||
|
|
|
|
|
|
|||||||
120 | 142 | 132 | ||||||||||
|
|
|
|
|
|
Note 28. Contingent liabilities
The consolidated entity is continuing to prosecute its Intellectual Property (IP) rights against an Austrian company, APOtrend. At 30 June 2019 the Austrian Supreme Court has rendered a final decision on the patent infringement. As a result, Kazia is entitled to make a claim against APOtrend in relation to two of the three products which were the subject of the claim, while for the third product, Kazias claim was denied. In respect of this third product, APOtrend is entitled to claim compensation for damages caused by a preliminary injunction. At the date of this report, no claim has been made by either party. Kazia is entitled to access APOtrends books to calculate a license fee/other payment claims against APOtrend. Kazia is currently trying to enforce this right in court.
The consolidated entity has provided a guarantee to the value of 250,000 (A$387,657) with the court to provide a security for potential damage claims raised by APOtrend (which is not limited to this amount, however). As at 30 June 2019, the receivable balance continues to be fully impaired on the basis that it is unlikely to be recovered.
F-39
Notes to the financial statements
June 30, 2019
Note 29. Commitments
Lease commitments comprise contracted amounts for leases of premises. The agreement has a duration less than 12 months from financial year end.
Note 30. Related party transactions
Parent entity
Kazia Therapeutics Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 32.
Key management personnel
Disclosures relating to key management personnel are set out in note 26 and the remuneration report included in the directors report.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated | ||||||||||||
2019
A$000 |
2018 A$000 |
2017
A$000 |
||||||||||
In addition to Directors fees, Consultancy fees for executive duties were paid to Kumara Inc., a corporation in which Mr Ian Phillips is a Director and has a beneficial interest |
| | 21 | |||||||||
In addition to Directors fees, Consultancy fees for executive duties Were paid to John OConnor |
| | 38 |
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
F-40
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018, except as detailed in note 28.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment at as 30 June 2019 and 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except for the following:
|
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. |
|
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. |
F-41
Notes to the financial statements
June 30, 2019
Note 31. Parent entity information
Set out below is the supplementary information about the parent entity.
Parent | ||||||||
2019
A$000 |
2018
A$000 |
|||||||
Statement of profit or loss and other comprehensive income | ||||||||
Loss after income tax |
(7,198 | ) | (5,378 | ) | ||||
|
|
|
|
|||||
Total comprehensive income |
(7,198 | ) | (5,378 | ) | ||||
|
|
|
|
|||||
2019
A$000 |
2018
A$000 |
|||||||
Statement of financial position | ||||||||
Total current assets |
7,015 | 7,902 | ||||||
Total assets |
20,677 | 26,818 | ||||||
Total current liabilities |
213 | 1,714 | ||||||
Total liabilities |
5,295 | 6,760 | ||||||
Equity |
||||||||
Contributed equity |
36,641 | 31,576 | ||||||
Other contributed equity |
464 | 464 | ||||||
Reserves |
2,489 | 2,206 | ||||||
Accumulated losses |
(24,212 | ) | (14,188 | ) | ||||
|
|
|
|
|||||
Total equity |
15,382 | 20,058 | ||||||
|
|
|
|
Note 32. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2:
Ownership interest | ||||||
Name |
Principal place of business /
Country of incorporation |
2019 % |
2018 % |
|||
Kazia Laboratories Pty Ltd |
Australia | 100.00% | 100.00% | |||
Kazia Research Pty Ltd |
Australia | 100.00% | 100.00% | |||
Kazia Therapeutics Inc. |
United States of America | 100.00% | 100.00% | |||
Glioblast Pty Ltd |
Australia | 100.00% | 100.00% |
F-42
Notes to the financial statements
June 30, 2019
Note 33. Earnings per share
2019 A$000 |
2018 A$000 |
2017 A$000 |
||||||||||
Loss after income tax attributable to the owners of Kazia Therapeutics Limited |
(10,270 | ) | (6,039 | ) | (10,670 | ) | ||||||
|
|
|
|
|
|
|||||||
Loss after income tax attributable to the owners of Kazia Therapeutics Limited |
(10,270 | ) | (6,039 | ) | (10,670 | ) | ||||||
|
|
|
|
|
|
|||||||
Number | Number | Number | ||||||||||
Weighted average number of ordinary shares used in calculating basic earnings per share |
57,503,555 | 48,376,525 | 467,833,849 | |||||||||
|
|
|
|
|
|
|||||||
Weighted average number of ordinary shares used in calculating Diluted earnings per share |
57,503,555 | 48,376,525 | 467,833,849 | |||||||||
|
|
|
|
|
|
|||||||
Cents | Cents | Cents | ||||||||||
Basic earnings per share |
(17.86 | ) | (12.48 | ) | (2.28 | ) | ||||||
Diluted earnings per share |
(17.86 | ) | (12.48 | ) | (2.28 | ) |
1,865,000 unlisted convertible notes with a face value of A$464,000, 5,048,266 unlisted options and 3,148,400 listed options have been excluded from the above calculations as they were antidilutive.
F-43
Notes to the financial statements
June 30, 2019
Note 34. Share-based payments
The options in tranches 1 - 3 in the table below have been issued as consideration for services rendered in relation to capital raising conducted during a previous year by the consolidated entity.
The options in tranches 4 - 14 in the table below have been issued to employees under the ESOP. In total, A$246,387 (2018: A$165.222) of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in profit or loss during the year and credited to share-based payment reserve.
2019
At the end of the period the following options were vested and exercisable:
- Options from Tranche 1 to Tranche 6, Tranches 8, 10 and 11 were vested and exercisable
- Options in Tranches 7 and 14 were unvested
- Options from Tranche 9 and 13 were vested and exercisable as to 50%
- Options from Tranche 12 were vested and exercisable as to 25%
All remaining options are expected to vest in future periods. No options have expired during the financial year.
The weighted average remaining contractual life of options outstanding at the 30 June 2019 is 2.36 years.
F-44
Notes to the financial statements
June 30, 2019
Note 34. Share-based payments (continued)
2018
Grant date | Expiry date |
A$ Exercise price |
Balance at the start of the year |
Granted | Exercised |
Forfeited on
cessation of employment |
Balance at
the end of the year |
|||||||||||||||||||||
04/03/2015 |
16/12/2019 | $ | 1.500 | 466,470 | | (419,823 | ) | | 46,647 | |||||||||||||||||||
04/03/2015 |
18/12/2019 | $ | 1.500 | 199,521 | | (179,569 | ) | | 19,952 | |||||||||||||||||||
24/06/2015 |
30/06/2020 | $ | 4.000 | 5,190,000 | | (4,671,000 | ) | | 519,000 | |||||||||||||||||||
15/11/2015 |
16/11/2020 | $ | 2.200 | 3,633,334 | | | (3,396,667 | ) | 236,667 | |||||||||||||||||||
18/03/2016 |
01/02/2021 | $ | 1.990 | 3,000,000 | | (2,700,000 | ) | | 300,000 | |||||||||||||||||||
18/03/2016 |
01/02/2021 | $ | 1.990 | 2,000,000 | | (1,800,000 | ) | | 200,000 | |||||||||||||||||||
18/03/2016 |
01/02/2021 | $ | 2.610 | 2,500,000 | | (2,250,000 | ) | | 250,000 | |||||||||||||||||||
05/09/2016 |
05/09/2021 | $ | 1.630 | 2,000,000 | | (1,800,000 | ) | (150,000 | ) | 50,000 | ||||||||||||||||||
12/10/2016 |
17/10/2021 | $ | 1.560 | 620,000 | | (558,000 | ) | | 62,000 | |||||||||||||||||||
31/10/2016 |
01/11/2021 | $ | 1.380 | 500,000 | | (450,000 | ) | (37,500 | ) | 12,500 | ||||||||||||||||||
21/11/2016 |
23/11/2021 | $ | 1.380 | 2,000,000 | | (1,800,000 | ) | (150,000 | ) | 50,000 | ||||||||||||||||||
07/08/2017 |
07/08/2022 | $ | 0.670 | | 224,000 | | | 224,000 | ||||||||||||||||||||
05/02/2018 |
05/02/2023 | $ | 0.780 | | 440,000 | | | 440,000 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||
22,109,325 | 664,000 | (16,628,392 | ) | (3,734,167 | ) | 2,410,766 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Weighted average exercise price |
|
A$ | 0.244 | A$ | 0.740 | A$ | 0.000 | A$ | 2.140 | A$ | 2.120 |
* |
Options from Tranche 1 to Tranche 6, Tranches 8, 10 and 11 listed above were vested and exercisable at the end of the period. |
Options from Tranche 9 listed above include 1/4 vested options at the end of the period.
All remaining options are expected to vest in future periods.
The weighted average remaining contractual life of options outstanding at the 30 June 2018 is 2.97 years.
Employee share options
During the year ended 30 June 2019, 250,000 options have been issued to the employees by the consolidated entity pursuant to the Companys Employee Share Option Plan.
|
Tranche 14 of 250,000 options vesting equally over 2 years in 6 monthly intervals |
An option will only vest if the option holder continues to be a full-time employee with the Company or an Associated Company during the vesting period relating to the option.
Conditions for an option to be exercised:
|
The option must have vested and a period of 1 year from the date the option was issued must have expired; |
|
Option holder must have provided the Company with an Exercise Notice and have paid the Exercise Price for the option. |
|
The Exercise Notice must be for the exercise of at least the Minimum Number of Options; |
|
The Exercise Notice must have been provided to the Company and Exercise Price paid before the expiry of 5 years from the date the Option is issued. |
Options Valuation
In order to obtain a fair valuation of these options, the following assumptions have been made:
The Black Scholes option valuation methodology has been used with the expectation that the majority of these options would be exercised towards the end of the option term. Inputs into the Black Scholes model includes the share price at grant date, exercise price, volatility, and the risk free rate of a five year Australian Government Bond on grant date.
Risk-free rate and grant date
For all tranches, the risk-free rate of a five-year Australian Government bond on grant date was used. Please refer to the table below for details.
F-45
Notes to the financial statements
June 30, 2019
Note 34. Share-based payments (continued)
Options in Tranches 4 to 14 have various vesting periods and exercising conditions. These options are unlisted as at 30 June 2019.
No dividends are expected to be declared or paid by the consolidated entity during the terms of the options.
The underlying expected volatility was determined by reference to historical data of the Companys shares over a period of time. No special features inherent to the options granted were incorporated into measurement of fair value.
Based on the above assumptions, the table below sets out the valuation for each tranche of options:
F-46
Notes to the financial statements
June 30, 2019
Note 35. Settlement of legal proceedings
In the prior financial year, the consolidated entity reached an agreement with another ASX listed company, Noxopharm Limited, in relation to that companys key asset, NOX66. Under this agreement, the consolidated entity has released Noxopharm Limited from any claims of ownership it believes it may have had of NOX66 or the IP and technology that underpins it. In return, the consolidated entity received the following:
1) 5,970,714 ordinary shares in Noxopharm Limited, held under voluntary escrow until 14 June 2018 (value at date of settlement: A$6,490,680);
2) 3,000,000 unlisted options in Noxopharm Limited, with an exercise price of $0.80, expiring 18 January 2020, unable to be exercised prior to 18 July 2018 (value at date of settlement: $1,770,000);
3) Extinguishment of certain convertible notes (book value: $136,000); and
4) a cash payment of $165,000 (including GST) from Noxopharm Limited.
Items 1,2 and 4, totalling $8,410,680 net of GST, have been reflected in the profit and loss as other income while item 3, representing $136,000, has been dealt with as a movement in equity in the 2018 financial year.
Note 36. Subsequent events
Since the end of the financial year the Company signed an agreement with Memorial Sloan Kettering Cancer Center (MSK) in New York, whereby MSK will investigate the potential use of Kazias investigational new drug, GDC-0084, in combination with radiotherapy in a phase I clinical trail for cancer that has spread to the brain (brain metastases and leptomeningeal metastases). This research will explore a new use of GDC-0084 and will run concurrently with other ongoing studies in different forms of brain cancer.
F-47
Exhibit 4.12
INVESTIGATOR INITIATED CLINICAL TRIAL AGREEMENT
This Investigator Initiated Clinical Trial Agreement (Agreement) is made as of the _I7* day of October. 20LS (Effective Date) between Kazia Therapeutics Ltd (ACN 063 259 754) a company incorporated in Australia with a principal place of business at 1.24, 300 Barangaroo Avenue, Sydney, NSW 2000, Australia (Company), and Dana-Farber/Partners Cancer Care, Inc., a collaboration among Dana-Farber Cancer Institute, The Brigham and Womens Hospital, Inc. and The General Hospital Corporation, d/b/a Massachusetts General Hospital, a not-for-profit tax-exempt corporation organized under the laws of the Commonwealth of Massachusetts with its principal place of business at 44 Binney Street, Boston, MA 02115 (Institution) each referred to herein individually as a Party and collectively as the Parties.
The Parties to this Agreement share a common mission of improving the public health by engaging in research for the purpose of discovering and making available to the public new and improved medical drugs, devices, procedures, and information. In connection with this mission. Company desires to have further clinical research conducted on its Drug described below. Institution, through .1. Pablo Leone, M.I). (Principal Investigator), having particular expertise and opportunity, desires to provide this research.
Accordingly, for good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:
Section I: Study Performance
I. I Conduct of Study in Accordance with Protocol: Priority of Terms. Subject to the initial and continuing approvals described in Section 1.2 below. Institution, through Principal Investigator, agrees to conduct a clinical study of GDC-0084 (Study Drug) in accordance with the study protocol entitled Phase II Trial of GDC-0084 in combination with Trastuzumab for Patients with HER2-Positive Breast Cancer Brain Metastases, attached to this Agreement as Exhibit A and herein incorporated by reference (Study). The Parties to this agree that the Study will be performed in strict accordance with the Study protocol entitled above, and any subsequent amendments thereto (the Protocol), applicable federal, state, and local laws, regulations and guidelines, and good clinical practices as required under FDA regulations (GCPs). In the event of any conflict between the Protocol and the provisions of the main body of this Agreement, the Protocol shall govern with respect to scientific. Study management and reporting and subject consent issues, and the provisions of the main body of this Agreement shall govern with respect to all other issues.
1.2 Study Review and Approvals. The Study shall be conducted by personnel, agents, vendors, or consultants of Institution under the direction of the Principal Investigator at Institution or additional facilities with the prior approval and ongoing review of all appropriate and necessary review authorities. Institution, through Principal Investigator, shall provide Company with written evidence of review and approval of this Study by Institutions Institutional Review Board (IRB) prior to the initiation of the Study and shall inform Company olThc IRBs continuing reviews of the Study promptly after each such review takes place, which shall be at least once per year. Initiation of the Study Protocol shall not begin until IRB approval is obtained. Institution may make any material amendment(s) to the informed consent form if Institution is so expressly Clinical Trial Agreement directed by Institutions IRB. A material amendment is any amendment to conform to Institutions obligations under 45 CFR Pt. 46.116 (a) (2) and 21 CFR Pt. 50.25. In accordance with the obligations under the Food and Drug Administration Amendment Act of 2007 (the ACT), Institution agrees to register this clinical trial with the public registry clinicaltrials.gov before enrollment of the first patient at Institution and comply with all of the Acts requirements thereafter. Additionally, Institution will be exclusively responsible for updating and/or amending such registration as appropriate. Institution is responsible for IND submission. Company will provide to Institution a Letter of Authorization (LoA) to cross-reference the Company GDC-0084 IND and Company requests the opportunity to review the Institution IND prior to FDA submission.
1.3 Completion of the Study. For purposes of this Agreement, Company and Institution shall consider the Study to be complete and concluded at all sites at such time as achievement of the primary endpoint is reached or as otherwise specified in the Protocol (Study Conclusion).
1.4 Provision and Use of Study Drug. Company shall be responsible for providing and delivering to the research pharmacy of each site of Institution, at no charge, sufficient quantities of the Study Drug (GDC-0084 15mg Capsules, bottled and identified with lot number) as may be required for the Study in accordance with the Study schedule. Institution, through Principal Investigator, will safeguard such Study Drug with the degree of care used for its own property and shall return or otherwise dispose of any remaining Study Drug at the Study Conclusion in accordance with Companys instructions and Institutions pharmacys Standard Operating Procedures (SOPs) for drug destruction. Institution and Principal Investigator shall not use any Study Drug for any purpose other than the Study, unless otherwise agreed. Company represents and warrants that it is in compliance with federal, state, and local laws and regulations relating to the manufacture and formulation of any investigational drug and to any other materials supplied, and with all applicable legal requirements. Responsibilities between the Parties are provided in Exhibit x
Section 2: Data and Safety Monitoring Plan and Reports; Material Subject Information
Company agrees to notify Principal Investigator in writing promptly (no later than 30 days) of information (such as Study Drug results or findings from other studies involving Study Drug), including results obtained for a period of two (2) years after completion or closure of the Study that could affect the safety or medical care of subjects who were at any point enrolled in the Study, influence the conduct of the Study, or alter the IRBs approval. Company and Institution shall comply with, and nothing herein shall limit, their respective reporting requirements to regulatory authorities, including, for example, the Food and Drug Administration, the Office for Human Research Protections, and others as required. Institution, through the Principal Investigator and/or IRB as appropriate, shall be responsible for informing subjects of the above important information they learn from Company in accordance with the IRB-approved informed consent form and Company shall not contact them. No other provision of this Agreement shall be construed to override the provisions of this Section 2.
In addition, Institution shall notify Company of any suspected unexpected serious adverse reactions (SUSARs) during the course of the Study within 24 hours of Institution receiving notification of their occurrence, so that Company may fulfil its regulatory reporting requirements. Institution shall reasonably support any necessary follow-up of SUSARs. In addition, Institution shall provide quarterly safety listings to Company, in a format mutually acceptable, for inclusion in its mandatory regulatory filings.
Section 3: Study Data/Results
3.1 Provision of Data/Results.
(a) A Clinical Study Report will be supplied to Company by Institution at the conclusion of the Study. Company shall have the right to use data produced in the performance of the Study (Data) for all lawful purposes in accordance with Section 3.2. If Company requests, full access to the case report forms and underlying data for the purpose of making any submission to the Food and Drug Administration and other foreign health authorities, Institution and Company shall arrange for further transfer at Companys expense. If Company wishes to file the Study Data with the FDA or other health authority at some time in the future, Institution agrees to provide reasonable assistance to Company for such activities, including responding to questions about the Study Data and Company and Institution shall negotiate a budget for payments to support the work necessary for Institution to provide the requested assistance/information to Company. Company acknowledges and agrees that in no event is Institution responsible for formatting or re-formatting the Data so as to be acceptable for submission to the FDA or other regulatory agencies, unless separately negotiated and agreed between Company and Institution.
(b) Institution shall own the data from its Study, its medical records and Institution- issued research notebooks.
3.2 Use of Data/Results. Institution shall comply in all material respects with all applicable federal, state and local laws and regulations regarding the privacy of individually identifiable health information (including its collection, use, storage, and disclosure), including, but not limited to Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the regulations promulgated thereunder, as may be amended from time to time. Company may receive individually identifiable health information subject data regarding serious adverse events and patients response to therapy. Therefore, Company agrees to use and disclose individually identifiable health information only in a manner consistent with applicable federal, state and local laws and regulations regarding the privacy of individually identifiable health information, including, but not limited to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the regulations promulgated thereunder, as may be amended from time to time and any applicable subject authorization, including the terms and conditions of the informed consent executed by the patient, or as otherwise may be required by applicable law. Company may use information that is not identifiable under any applicable U.S. laws for any research and development purpose. Company will use all reasonable efforts to protect the privacy and security of individually identifiable health information and will require its business partners to do so also. Company will not contact any Study subjects, unless permitted by the informed consent form. The Parties to this Agreement agree that all protections, ownership rights and use restrictions afforded by this Agreement to the health information and data of research subjects enrolled, in the Study will apply equally to any health information or other data collected from such research subjects pregnant partners, if any and regardless of when during the Study the partner becomes pregnant, whether or not a pregnant partner is formally recognized by the IRB as being a human research subject enrolled in the Study. No other provision in this Agreement shall be construed to override the provisions of this Section 3.2.
Section 4: Publication
4.1 Principal Investigator shall be free to publish the data/results of the Study subject only to the provisions of Section 8 regarding Companys Proprietary Information. The Institution shall require Principal Investigator to furnish Company with a copy of any proposed publication prior to submission for publication, at least thirty (30) days prior to submission for manuscripts and at least seven (7) days prior to submission for abstracts. Company shall be entitled to review such proposed publications solely for the purpose of identifying Company Proprietary Information, which shall be removed from the publication upon Companys request to the extent such deletion does not preclude the complete and accurate presentation and interpretation of the Study results; and to identify any patentable Inventions, which shall be addressed as described below; and to provide any other comments Company desires to provide, provided that Principal Investigator shall have no obligation to address any such additional comments. At the expiration of such thirty (30) day or seven (7) day period, Principal Investigator may proceed with submission for publication provided that any identified Company Proprietary Information has been removed; and provided further that upon notice by Company that Company reasonably believes a patent application claiming an Invention (as defined in Section 5) should be filed prior to such publication, in Institutions discretion such submission shall be delayed for up to an additional sixty (60) days or until any patent application or applications have been filed, whichever shall first occur. In no event shall the submission of such publication of results be delayed for more than ninety (90) days for manuscripts and for more than sixty-seven (67) days for abstracts from the date such proposed publication was provided to Company; at the end of said ninety (90) or sixty- seven (67) days, the Principal Investigator shall be free to publish such results as proposed.
4.2 Nothing herein shall be construed to restrict disclosure of results by Institution and Principal Investigator as necessary for patient and public safety concerns, to prevent an immediate hazard to the safety, rights or welfare of patients or the public and/or for regulatory compliance.
Section 5: Inventions/Intellectual Property
5.1 Invention. It is expressly agreed that neither Company nor Institution transfers by operation of this Agreement to the other party any patent right, copyright, or other proprietary right either party owns as of the Effective Date. Institution will promptly and fully disclose in writing to Company any inventions in the performance of the Study as outlined in the Protocol (Invention). Company Invention means Invention that relate to the Study Drug. Institution will promptly and fully disclose in writing to Company, Company Invention.
a. Option for Exclusive Commercialization License for Company Invention. Subject only to any non-exclusive license retained by the U.S. Government or any non-profit organization providing funding for the Study, Institution grants to Company an option to obtain an exclusive, royalty-bearing and sublicensable license to Institutions interests, if any, in any Company Invention conceived of within one (1) year of the Study Conclusion and Companys receipt of the final study report or draft manuscript, to use such Company Invention for research purposes and to make, use and sell (or otherwise commercialize) any such Company Invention or any products that are covered by patent rights that claim or that include any such Company Invention. This option is to be exercised by written notice to Institution during said three month period and the negotiation, during the three (3) months next following such notice, of a license agreement containing license terms standard for agreements between universities and industry including without limitation clauses providing for payment of reasonable royalties and other compensation to Institution, objective, time-limited due diligence provisions for the development, commercialization and marketing of a product embodying the Invention and product liability indemnification and insurance requirements which are acceptable to Institutions liability insurance carrier. In the absence of such notice by Company and agreement on license terms, Institution may grant a license to such Patent Rights to any other party b. Non-Exclusive Licenses. Institution grants to Company the following rights which Company may sublicense to its Invention and/or marketing collaborators:
(i) |
Improvements. A perpetual, non-exclusive, royalty-free license to Institutions interest in Invention which are improvements of the Study Drug(s). |
(ii) |
New Uses. A perpetual, non-exclusive, royalty-free license to Institutions interest in Invention which are new uses of the Study Drug(s). |
c. Patent Applications.
(i) Company Invention. Any patent applications necessary to protect the interests of the parties in any Company Invention made solely by Institution will be prepared, filed, and prosecuted by Institution. Any patent applications necessary to protect the interests of the parties in any Company Invention made jointly by Institution and Company or will be prepared, filed and prosecuted by Company All patent costs pertaining to any patent rights filed by mutual agreement of Company and Institution, including preparation, filing, prosecution, issuance and maintenance costs, shall be borne by Company.
5.2 All information given to Company by Institution in accordance with Section 5.1 will be held in confidence by Company so long as such information remains unpublished or publicly undisclosed by Institution.
Section 6: Use of Name
Except for disclosure by Institution of Companys support for the Study in publications, for purposes of recruitment/consent of Study subjects, and for purposes of meeting any applicable requirements for the registration of the Study or of Study results with a publicly accessible or other clinical trial registry, neither Party to this Agreement shall use the name of the other Party or of any staff member, employee, student, or agent of the other Party or any adaptation, acronym or name by which the other Party is commonly known, in any advertising, promotional or sales literature or in any publicity without the prior written approval of the Party or individual whose name is to be used.
Notwithstanding this, it is acknowledged that Company, as a publicly-listed company, may be required to disclose the existence of this agreement in mandatory filings to regulatory bodies, including, without limitation, the Securities and Exchanges Commission, NASDAQ, and the Australian Securities Exchange. Company shall make reasonable efforts to notify Institution in advance of any such disclosures wherever possible, and Institution shall have the right to request reasonable amendments or redactions to any such disclosures.
Section 7: Audits, Study Records
Any audits or on-site visits conducted by Company will be undertaken in conjunction with Institution, at reasonable times and with reasonable prior notice, and pursuant to guidelines established by Institution in order to assure patient confidentiality. If Company gains access to any protected health information of a Study subject that is not covered by the informed consent form, Company shall hold such information in the strictest confidence, shall not remove records containing such information from the Institution and, if inadvertently removed, shall return any records containing such information to the Institution as soon as practicable. If in connection with the Study or performance of this Agreement Company and/or any of its agents, employees, officers or representatives come into contact with individually identifiable health information relating to patients of Institution who are not Study subjects, Company agrees to, and agrees to ensure its agents, employees, officers or representatives agree to, maintain the strictest confidentiality of such information and not to use it for any purpose. All subject/patient medical records shall remain the property of Institution. Each of Company and Institution shall retain records of the Study, including in Institutions case either the original or a copy of all volunteer consent forms, in conformance with federal regulations applicable to it. Institution shall also make such records available upon request for review by representatives of the U.S. Food and Drug Administration. Company acknowledges that Company may not direct the manner in which Institution fulfills its obligations to permit inspection by governmental entities. It shall not be a breach of this Agreement for Institution to comply with the demands and requests of any governmental entity in accordance with Institutions judgment or to fail to inform and consult with Company before complying with any such demand or request.
Section 8: Confidential Information
8.1 Provision of Confidential Information. It is anticipated that in the performance of the Study Principal Investigator, Company and Institution may need to disclose to each other information, which is considered confidential and proprietary. A Party may provide Confidential Information Party (Discloser) to the other Party (Recipient); provided that Company shall only disclose Company Confidential Information to persons who are designated in writing by the Principal Investigator as being authorized to receive Confidential Information (collectively with the Principal investigator, the Institution Personnel). The rights and obligations of the Parties with respect to Confidential Information are as follows:
8.2 Definition. For the purposes of this Agreement, Confidential Information refers to information of any kind, other than data from or results of the Study, that satisfies all of the following: (i) such information is disclosed by Discloser to Recipient, (ii) such information by appropriate marking, is identified as confidential at the time of disclosure, and (iii) the disclosure of such information is necessary for a Party to exercise its rights or perform its obligations under this Agreement. In the event that Confidential Information must be provided visually or orally, obligations of confidence shall attach only to that information that is confirmed by Discloser in writing within ten (10) working days of provision as being confidential.
8.3 Period of Restriction. For a period of five (5) years after the Study Conclusion of this Agreement, Recipient agrees to use reasonable efforts, no less than the protection given its own confidential information, to use Confidential Information received from Discloser and accepted by Recipient only in accordance with this Section 8.
8.4 Use of Confidential Information. Institution agrees and shall require each member of the Institution Personnel to agree to use Company Confidential Information solely for the purposes of conducting the Study, obtaining any required review of the Study or its conduct, or ensuring proper medical treatment of any patient or subject. Company agrees and shall require any of its employees with whom such information is shared to agree, to use Institution Confidential Information solely to exercise Companys rights or perform Companys obligations hereunder. Company acknowledges and agrees that (i) Institution is an academic medical center in which the free exchange of information is actively encouraged among staff and researchers and (ii) Institutions obligations with respect to Company Confidential Information under this Section 8 (including subsections) shall apply only to disclosures thereof made to the applicable members of the Institution Personnel and not to disclosures thereof to any other person associated with Institution or any of its affiliates
8.5 Release of Confidential Information. Except as provided herein, Recipient agrees to keep all Confidential Information confidential unless Discloser gives specific written consent for release
8.6 Notice of Unauthorized Disclosure. Recipient shall notify Discloser of any disclosure not authorized hereunder of which it becomes aware. In such situations, Recipient shall take reasonable steps to prevent any further disclosure or unauthorized use.
8.7 Exclusions. No Recipient shall be required to treat any information as Confidential Information under this Agreement in the event:
(i) |
it is publicly available prior to the date of the Agreement or becomes publicly available thereafter through no wrongful act of any Recipient; |
(ii) |
it was known to any Recipient prior to the date of disclosure or becomes known to any Recipient thereafter from a third party having an apparent bona fide right to disclose the information; |
(iii) |
it is disclosed by any Recipient in accordance with the terms of Disclosers prior written approval; |
(iv) |
it is disclosed by Discloser without restriction on further disclosure; |
(v) |
it is independently developed by any Recipient; |
(vi) |
it is necessary to disclose for patient treatment, patient safety or to prevent imminent harm to the public or, |
(vii) |
any Recipient is obligated to produce it pursuant to a requirement of applicable law or an order of a court of competent jurisdiction or a facially valid administrative, Congressional or other subpoena, provided that the Recipient subject to the requirement or order or subpoena (A) promptly notifies Discloser and (B) cooperates reasonably with Disclosers efforts to contest or limit the scope of such disclosure. |
8.8 Each Party reserves the right, in its sole discretion and without prior notice to any other Party, to disclose its own Confidential Information to any third party for any purpose.
Section 9: Budget
9.1 General. Company agrees to support this Study with a research budget and payment schedule attached hereto as Exhibit B and incorporated by reference herein. Institution shall monitor expenditures, in accordance with its policies, to ensure that the funds provided by Company are spent in accordance with this Agreement and approved budgets. Institution agrees to use the funding provided under this Agreement solely for the purposes of carrying out the Study.
9.2 Budget. Checks shall be made payable to Dana Farber/Partners CancerCare, Inc. Federal Tax ID# 04-3320640, shall reference the name of the Principal Investigator, the Protocol number and shall be forwarded to:
Dana-Farber/Cancer Institute 450
Brookline Ave, BP317BP316
Boston, MA 02215 Attn: James R. Huse
9.3 Clinical Care Procedures. Company acknowledges that the budget for the Study has been negotiated in good faith and that any items and services specified in the Study Protocol that are for the clinical care of the Study subject (specifically, conventional care items and services as well as items and services to detect or prevent complications) are eligible for third party reimbursement. Company shall treat all patient specific billing information as individually identifiable health information subject to the HIPAA protections in Section 3.2. Further, Company shall treat all Institutional billing and financial information as Institutional Confidential Information subject to the protections in Section 8.
9.4 Compliance with Laws. The Parties shall comply with all applicable laws, rules and regulations, including the federal Anti-Kickback Statute at 42 U.S.C. 1320a-7(b) and all applicable conditions of participation in governmental health care programs. In furtherance thereof, the Parties hereto agree as follows:
(i) All services to be performed by Institution to or for the benefit of Company are and shall be as expressly set forth in this Agreement.
(ii) The aggregate compensation payable to Institution pursuant to this Agreement is and shall be determined as specifically set forth in this Agreement.
(iii) The rates of compensation for Institutions services are and shall be consistent with the fair market value of such services in the United States and have not been and shall not be determined in a manner which takes into account the volume or value of any referrals or business actually or potentially otherwise generated between Company and Institution or any of Institutions affiliates.
(iv) Nothing in this Agreement shall obligate Company or Institution to recommend or arrange for the products or services offered by any Party, any affiliate thereof or any third party.
No Party or its affiliates shall request that any other Party or its affiliates engage in any counseling or promotion of any business arrangement or other activity inconsistent with the requirements of applicable law.
(v) The services rendered by Institution shall be rendered solely to the extent reasonably necessary to address areas of genuine clinical and research concern for which there is a legitimate need and purpose.
(vi) The decision by Company to engage Institution to conduct the Study pursuant to this Agreement has been made by individuals qualified to evaluate the quality and integrity of Institution as a clinical trial site and without reference to the volume or value of any referrals or business otherwise actually or potentially generated between or among Company, Institution, the Institution Personnel, or any of their respective affiliates.
(vii) If any part of this Agreement is determined to violate, or to be likely to violate, federal, state, or local laws, rules, or regulations, the Parties agree to negotiate in good faith all reasonably necessary revisions to this Agreement to cure the violation or reduce the likelihood of the violation. If the Parties are unable to agree to new or modified terms as required to bring the entire Agreement into compliance, either Party may terminate this Agreement.
Section 10: Term and Termination
10.1 Term. The term of this Agreement shall be from the Effective Date until completion of the Parties substantive obligations under the Agreement in the performance of the Study, unless earlier terminated in accordance with Section 10.2.
10.2 Termination.
(a) Either Party hereto shall have the right to terminate the Study and this Agreement at any time upon thirty (30) days prior written notice thereof to the other Party. Either Party may terminate the Study and this Agreement at any time upon thirty (30) days prior written notice thereof to the other Party in the event of a material breach of the Agreement by the other Party, and except that either Party may terminate the Study and this Agreement immediately upon written notice to the other Party if necessary to protect the health, welfare or safety of any Study subject.
(b) If the Principal Investigator ceases to serve in such role during the term of the Agreement, Institution shall promptly notify Company. Institution may name a substitute principal investigator (who shall thereafter be referred to as Principal Investigator for purposes of this Agreement), subject to the approval of Company, which approval may be withheld in Companys sole discretion. If the Parties fail to reach agreement with respect to continuation of the Study and the Agreement within ninety (90) days following the date on which Institution notifies Company that the original Principal Investigator became unavailable, Company shall have the right to terminate the Study and this Agreement immediately upon written notice to Institution.
10.3 Continuation of Enrolled Patients. The Parties agree that if, at the time either Party receives notice of termination pursuant to this section, any patients are enrolled in the Study, and said patients shall complete the Study, at Companys expense, if completion is in the best interest of said patients.
10.4 Continuation of Grant. In the event of any termination other than a for-cause termination by Company for Institutions material breach, the amount of the research grant by Company to support the Study shall be appropriately prorated to allow Institution to recover reasonable costs and noncancellable commitments incurred, including without limitation, termination salary costs of any Institution personnel released as a result of such termination.
10.5 Survival. The obligations of the Parties under Sections 1, 2, 3, 4, 5, 6.1, 7.1, 8, 9, 10.3, 10.4, 11, 13.2, and 13.4-13.7 shall survive any termination or expiration of this Agreement.
Section 11: Subject Injury; Indemnification; and Insurance
11.1 Subject Injury.
(a) Company agrees to reimburse Institution for (or otherwise pay for) the costs of the care and treatment of any side effect, adverse reaction, illness, or injury to a subject resulting from a defect in the Study Drug.
(b) Companys subject injury commitment under (a) above shall not apply to any side effect, adverse reaction, illness, or injury to the extent it directly results from: (i) the negligence or reckless or intentional misconduct of, or violation of law by, Institution, Principal Investigator, or Institutions personnel; or (ii) failure of Institution, Principal Investigator, or Institutions personnel to adhere to the terms of the Protocol for the Study, provided, however, that emergency medical care shall not be deemed a violation of the Protocol.
11.2 Indemnification.
(a) Company will indemnify, defend and hold harmless, the Institution, its officers, agents, directors, trustees, subsidiaries, affiliates, employees, students and members of its IRB, and their respective heirs, successors and assigns (collectively, Institutional Indemnitees) from and against any and all liability, damage, judgment, loss or expense (including reasonable attorneys fees and costs) (Liability) that may be incurred by or imposed upon the Institutional Indemnitees or any of them in connection with any claim, suit, demand, action or judgment arising out of or relating to the following: (i) the design, production, manufacture, labeling and/or shipment of the Study Drug; (ii) Companys or Companys affiliates, trustees, officers, professional staff, employees or agents (Company Persons) use, non-use, interpretation, disclosure or publication of any of the Study Data, results and/or any intellectual property that results from or arises out of the Study; and (iii) any negligence or willful misconduct of Company or any Company Person
(b) Companys indemnification under (a) above shall not apply to any liability, damage, loss or expense to the extent that it is directly attributable to: (i) the negligence or reckless or intentional misconduct of, or violation of law by, the Indemnitees; or (ii) failure of the Indemnitees to adhere to the terms of the Protocol for the Study, provided, however, that emergency medical care shall not be deemed a violation of the protocol.
(c) Company agrees, at its own expense, to provide attorneys reasonably acceptable to Institution to defend against any actions brought or filed against any Party or individual indemnified hereunder with respect to the subject of the indemnity contained herein, whether or not such actions are rightfully brought
11.3 Insurance
(a) Company shall, at its sole cost and expense, procure and maintain policies of professional and general liability insurance in amounts not less than Three Million Dollars ($3,000,000) per occurrence or claim and Five Million Dollars ($5,000,000) annual aggregate covering its obligations under this Agreement, including contractual liability coverage for its subject injury and indemnification obligations.
(b) Company shall provide Institution at its request with written evidence of such insurance prior to the commencement of the Study. Company shall provide Institution with written notice at least thirty (30) days prior to the cancellation, non-renewal or material change, in such insurance; if Company does not obtain replacement insurance providing comparable coverage within such thirty (30) day period, Institution shall have the right to terminate this Agreement effective at the end of such thirty- (30) day period without notice of any additional waiting periods.
Section 12: Notices
12.1 Any written notices, reports, correspondences or other communications required under or pertaining to this Agreement shall be given by prepaid, first class, registered or certified mail or by an express/overnight delivery service provided by a commercial carrier, properly addressed as follows:
Institution:
Dana-Farber Cancer Institute Research
Administration 450 Brookline Ave, 10
BP319 Boston, MA 02215 Attn:
Christopher Canova, JD (T) 617-632-2428
ccanova1@partners.org
Company: Kazia Therapeutics Limited
L24, 300 Barangaroo Avenue,
Sydney, NSW 2000 Australia
Attn: Jeremy Simpson, PhD
(T) +61 400 410 974
Jeremy.Simpson@kaziatherapeutics.com
Section 13: Miscellaneous
13.1 Amendment. The terms of this Agreement can be modified only by a writing, which is signed by authorized representatives of Institution and Company.
13.2 Choice of Law; Jurisdiction and Venue. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts. Each Party agrees to submit to the exclusive jurisdiction of the Superior Court for Suffolk County, Massachusetts, and the United States District Court for the District of Massachusetts with respect to any claim, suit, or action in law or equity arising in any way out of this Agreement or the subject matter hereof.
13.3 Assignment. Neither Party to this Agreement may assign its obligations hereunder without the prior written consent of the other Party.
13.4 Entire Agreement. This Agreement, including any exhibits, attachments, and other documents that are incorporated by reference herein, constitutes the entire understanding and agreement between the Parties, and supersedes and replaces all prior agreements, understandings, writings and discussions between the Parties with respect to the subject matter of this Agreement.
13.5 Waiver. The failure of a Party in any instance to insist upon the strict performance of the terms of this Agreement shall not be construed to be a waiver or relinquishment of any of the terms of the Agreement, whether at the time of the Partys failure to insist upon strict performance or at any time in the future, and such term(s) shall continue in full force and effect.
13.6 Severability. Each clause of this Agreement is a distinct and severable clause and if any clause is deemed illegal, void, or unenforceable, the validity, legality, or enforceability of any other clause of this Agreement will not be affected thereby.
13.7. Titles. All the titles and headings contained in the Agreement are inserted only as a matter of convenience and reference and do not define, limit, extend, or describe the scope of this Agreement or the intent of any of its provisions.
13.8 Counterpart Signatures. This Agreement, and any subsequent amendment(s), may be executed in counterparts and the counterparts, together, shall constitute a single Agreement and shall become binding when any one or more counterparts hereof, individually or taken together, bears the signature of each of the parties hereto. A facsimile or e-mail delivery of a .pdf format data file of this Agreement signed by a partys duly authorized representative shall be legal and binding on all parties.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement through their duly authorized representatives as of the Effective Date written above.
KAZIA THERAPEUTICS LTD | DANA-FARBER/PARTNERS | |||||||||
DocuSigned by: | CANCERCARE, INC. | |||||||||
By: |
/s/ James Garner |
By: |
/s/ Christopher Canova |
|||||||
(duly authorized signatory) | (duly authorized signatory) | |||||||||
Name: | James Garner | Name: | Christopher Canova | |||||||
Title: | Chief Executive Officer | Title: | Clinical Trials Research Associate | |||||||
Date: | October 20, 2018 | Date: | ||||||||
READ AND ACKNOWLEDGED: PRINCIPAL INVESTIGATOR | ||||||||||
By: |
/s/ Pablo Leone |
|||||||||
Date: | October 17, 2018 |
Clinical Trial Agreement
EXHIBIT A
PROTOCOL
Final protocol to be appended.
EXHIBIT B
BUDGET AND PAYMENT SCHEDULE
Kazia Therapeutics Limited will provide up to xx% of the total budget figure below (that is $).
Kazia will be invoiced on a quarterly basis as of contract execution.
The funding for this study may be offset by independent grant support. This may be grant support of research organization alone of in collaboration with Kazia. In the latter case, the distribution of funds will be agreed at the time of grant award.
A phase II trial of GDC-084 + trastuzumab in patients with HER2+ breast brain metastases
Company | ||||||||||||
Protocol No | TBD | Name | Kazia | |||||||||
Duration of Study (months) | 36 | Overall Site | DFCI | |||||||||
Number of Patients | 47 | DFCI PI | Pablo Leone | |||||||||
RUC | RH34 | |||||||||||
PI Initiated Trial | Site PI | Pablo Leone | ||||||||||
BUDGET ITEMS |
Percent Effort | Study Costs | ||||||||||
PERSONNEL: |
||||||||||||
Study Oversight and Management |
% | $ | $ | |||||||||
Projects Manager |
% | $ | $ | |||||||||
Clinical Research Coordinator |
% | $ | $ | |||||||||
Data Manager(s) |
% | $ | $ | |||||||||
Reg Coordinator |
% | $ | $ | |||||||||
Research Nurse |
% | $ | $ | |||||||||
TOTAL PERSONNEL |
$ | $ | ||||||||||
OUTPATIENT CARE COSTS |
||||||||||||
Tests/Procedures, etc. |
$ | $ | ||||||||||
TOTAL PATIENT CARE |
$ | $ | ||||||||||
Clinical Research Sample Prep |
DFCI/MGH/Other | $ | $ | |||||||||
TOTAL CLINICAL RESEARCH SAMPLE PREP |
$ | $ | ||||||||||
OTHER EXPENSES |
||||||||||||
Supplies |
$ | |||||||||||
Shipping Costs |
$ | |||||||||||
Shared Resources (e.g., MDLab) |
$ | | ||||||||||
Storage fees |
$ | $ | ||||||||||
Research Laboratory Component |
$ | | $ | | ||||||||
TOTAL OTHER EXPENSES |
$ | $ | ||||||||||
TOTAL DIRECT COSTS: |
$ | $ | ||||||||||
Indirect Costs @30% Total Direct Costs |
$ | $ | ||||||||||
TOTAL COSTS PER PATIENT* |
$ | $ | ||||||||||
*DFCI and MGH participating |
||||||||||||
IRB Protocol Review and Renewals |
$ | |||||||||||
Pharmacy Fee ($2,500/site) |
$ | |||||||||||
Administrative Start-up |
$ | |||||||||||
DFHCC Administrative Fee |
$ | |||||||||||
Close-out Fee |
$ | |||||||||||
BioStats Fee |
|
Covered by Spore
Grant |
|
|||||||||
STUDY TOTAL |
$ |
Responsibilities - Phase 2 Clinical Study
GDC-0084 15mg Capsules
Background & Scope:
(i) |
Institution plans to Sponsor a Phase 2 clinical study with GMP responsibilities as indicated below. |
(ii) |
Company will supply to Institution GMP manufactured and primary packed Study Drug (Investigational Medicinal Product - IMP) for Phase 2 clinical trial use in the US under Dana-Farber Protocol. Company GMP responsibilities as indicated below. |
# |
Responsibility |
Company | Institution | |||
1 | IMP: Supply of GMP manufactured and primary packed (unlabeled) Study Drug (GDC-0084 15mg capsules, 35 capsules per bottle) in the agreed strengths (active only, no placebo), with supporting GMP documentation (e.g. manufacturers CoAs) | X | ||||
2 | IMP: Each bottle of Study Drug supplied will be identified (e.g. ink-jet printed) with unique lot number to prevent risk of mix-up | X | ||||
3 | Retest Date & Storage Conditions: Provision of retest date(s) and storage conditions for the Study Drug supplied | X | ||||
4 | IMP Ordering: Requests for Study Drug shipment will be provided to Company in writing | X | ||||
5 | Shipping: Will ship Study Drug to Institution accompanied by relevant paperwork (e.g. packing list) | X | ||||
6 | Receipt & Labelling: Receive, store and label Study Drug for clinical trial use | X | ||||
7 | Release of IMP: responsibility for release of labelled Study Drug for Phase 2 clinical trial use in US | X | ||||
8 | Product Defects / Product Complaints: will promptly notify the other party if a Product Quality Defect is observed or reported (e.g. damaged Study Drug capsules or primary packaging) | X | X | |||
9 | Product Recall: Company are overall responsible for any product recall decision. Company will notify Institution in the event of a Product Recall and both parties will work together as may be required to coordinate both the Recall activities and notifications to the relevant regulatory authorities as may be applicable [Note: Product Recall may also be referred to as stock recovery in certain territories (e.g. US) as the Sponsor exerts direct control over the drug]. | X | X | |||
10 |
Returns & Destruction: Responsibility for any returns and destruction rests with [Note: the process for destruction to be agreed with Company] |
X |
Exhibit 4.13
RESEARCH FUNDING AND SUPPLY AGREEMENT
This Agreement (the Agreement), effective as of _June 11, 2019 (the Effective Date), by and between Alliance for Clinical Trials in Oncology Foundation, an Illinois not-for-profit corporation, with its principal office at 125 S. Wacker Drive, Chicago, IL 60606 (Foundation) and Kazia Therapeutics Limited (ABN 37 063 259 754), a publicly-listed company with its principal office at L24, 300 Barangaroo Avenue, Sydney, NSW 2000, Australia (Kazia). Kazia and Foundation may be referred to as Party individually, and collectively as the Parties.
RECITALS
WHEREAS, Foundation is an Illinois not-for-profit corporation that was formed to facilitate and support the Alliance for Clinical Trials in Oncology (Alliance), a member of NCIs National Clinical Trials Network (NCTN) and a research base for the NCI Community Research Oncology Program (NCORP);
WHEREAS, The Alliance is comprised of academic and community institutions, statistics, data, and operations centers and their affiliates which conduct cancer treatment and cancer control/prevention studies and related research according to their policies and procedures and in accordance with all applicable federal, state and local laws and regulations including, without limitation, FDA regulations and guidelines for good clinical practice;
WHEREAS, Foundation shall facilitate and support the Study at each Participating Site by performing, in accordance with the provisions of this Agreement, the activities described in the SOW (Scope of Work) attached hereto as Exhibit A and incorporated into the Agreement by this reference;
WHEREAS, Kazia is a public company listed on the Australian Securities Exchange (ASX) and on NASDAQ, whose primary business is the discovery, development, and commercialization of new therapies for cancer;
WHEREAS, Kazia seeks to develop GDC-0084, a small molecule, orally available, selective inhibitor of the PI3K/Akt/mTOR pathway, for several forms of primary and secondary brain cancer.
WHEREAS, the Alliance, through the Foundation, wishes to undertake a clinical trial entitled: A071701 GENOMICALLY-GUIDED TRIAL IN BRAIN METASTASES, (the Study). Foundation and Kazia now wish to collaborate on the Study and Kazia has agreed to provide support through funding and through supplies of the Study Drug for the Study and to provide such information, advice, and assistance as may be required during the course of the Study and pursuant to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing and mutual covenants and promises set forth herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
1. |
DEFINITIONS |
For purposes of this Agreement:
1.1 |
Affiliate means, with respect to a Party, any corporation or other business entity controlled by, controlling or under common control with that party. Control for the purposes of this definition shall mean direct or indirect beneficial ownership of fifty percent (50%) or more of the voting interest in an entity, or such other relationship as, in fact, constitutes actual control. |
1.2 |
Applicable Law means all applicable local, state, and federal laws, rules and regulations and other governmental requirements relating to the performance of their respective responsibilities under this Agreement, that may be in effect from time to time, including, but not limited to, the Federal Food, Drug and Cosmetic Act of 1938, as amended (the Act), and all applicable regulations promulgated thereunder including regulations of the United States Food and Drug Administration or its foreign equivalent, including, without limitation, 21 C.F.R. Parts 50, 54, 56, and 312 (the regulations governing the protection of human subjects, financial disclosure of clinical investigators, Institutional Review Boards or its foreign equivalent, and investigational new drug applications), and including without limitation all applicable good practice quality guidelines and regulations encompassing internationally recognized standards (as adopted by the FDA and as related to guidance provided by NCI, NCORP, CTMB and OFIRP guidelines) such as Good Manufacturing Practice, Good Clinical Practice (as adopted by the FDA), Good Laboratory Practice, Good Distribution Practice and Good Review Practice (collectively, GxPs), FDA Form 1572 Statement of Investigator, the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b), and state and federal False Claims Acts, as well as all applicable data protection and medical privacy laws or regulations, including, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by Subtitle D of the Health Information Technology for Economic and Clinical Health Act (HITECH) and the Standards for Privacy of Individually Identifiable Health Information 45 C.F.R. Parts 160 and 164. |
1.3 |
Background IP of a Party means information, techniques, know-how, software and materials (regardless of the form or medium in which they are disclosed or stored) that are provided by or on behalf of that Party to the other for use in the Study (whether before or after the date of this Agreement), and all improvements and Intellectual Property in them prior to or on the Effective Date of this Agreement, but excludes the Study Data. For the avoidance of doubt, the Study Drug and all improvements and Intellectual Property in the Study Drug separate from any Intellectual Property developed under this Agreement and through the conduct of this Study, will be Kazias Background IP. Any Intellectual Property developed under this Agreement and through the conduct of the Study will be handled in accordance with Section 10 and Annex B. |
1.4 |
Budget means the budget set out in Annex A, as amended by the Parties from time to time. |
1.5 |
Biospecimens means blood serum, urine, stool, saliva, other bodily fluid, bone marrow, cells, or tissue samples/specimen collected from Subjects. The term Biospecimen further includes, without limitation, any tangible material directly or indirectly derived from such Biospecimens collected under the Protocol from Subjects, such as genes, gene fragments, gene sequences, proteins, protein fragments, protein sequences, DNA, RNA, and any subcellular structure. |
1.6 |
Intellectual Property means all present and future industrial and intellectual property rights, including without limitation: (i) inventions, patents, copyright, trade business, company or domain names, rights in relation to, registered designs, registered and unregistered trade marks, know how, trade secrets and the right to have confidential information kept confidential, and any and all other rights to intellectual property which may subsist anywhere in the world; and (ii) any application for or right to apply for registration of any of those rights. |
1.7 |
Investigator Brochure is a compilation of the clinical and non-clinical data on the Study Drug which is relevant to the study of the Study Drug in humans. |
1.8 |
NCI means the National Cancer Institute, a division of the National Institutes of Health, an agency of the U.S. Department of Health and Human Services; |
1.9 |
Protocol means the final protocol document, for the Study entitled A071701 Genomically-guided trial in brain metastases. The entire Protocol is incorporated into this Agreement by reference and is made a part of this Agreement as though fully set forth herein. In the event of any conflict or inconsistency between the terms and provisions of this Agreement and those of the Protocol, the terms and provisions of this Agreement shall control. |
1.10 |
Participating Investigator shall mean an investigator who conducts the Study at a Participating Site, as defined below. Alliance Participating Investigator shall mean a Participating Investigator conducting the Study at an Alliance Participating Site, as defined below. |
1.11 |
Participating Site means any hospital or similar institution, based or located in the United States, that is a member of an NCTN Cooperative Group and participating in the Study. Alliance Participating Site shall mean a Participating Site that is an Alliance member institution. |
1.12 |
Publishable Manuscript means a final report summarizing the findings of the Study that is in a form suitable for submission to a peer-reviewed journal. |
1.13 |
Sponsor, as that tennis defined in 21 C.F.R. § 312.3(b), refers to Alliance, through the Foundation, which is the party that is taking responsibility for, initiating and conducting the Study in accordance with the Protocol. Under no circumstances will Kazia be deemed the Sponsor of the Study. |
1.14 |
Study means the work performed in connection with the Protocol. |
1.15 |
Study Data means as defined in Section 5 of this Agreement. |
1.16 |
Study Results means as defined in Section 5 of this Agreement. |
1.17 |
Study Drug refers to GDC-0084, 15mg capsules, for oral administration, which will be supplied in labeled bottles. The bottle label text has been agreed between the parties, and includes the statement Limited by Federal (US) Law to Investigational Use. Study Drug responsibilities detailed further in Annex C. |
1.18 |
Study Staff means all employees, agents and/or authorized representatives of the Foundation or any Participating Site, engaged in the Study and includes, the Participating Investigator. |
1.19 |
Subject, as that term is defined in 21 C.F.R. § 312.3(b), means a human being who participates in the Study. |
2. |
STUDY CONDUCT |
The Parties understand and agree that Foundation shall facilitate and support the Study in accordance with the following:
2.1. |
The terms of this Agreement and all Applicable Laws |
2.2. |
the Protocol, as approved by NCI and the responsible Institutional Review Board (IRB). All substantial changes to the Protocol shall be submitted to NCI for written approval before implementation, excluding those immediately necessary to protect the safety, rights, or well being of the Subjects. All such amendments will be incorporated herein by reference. Foundation, on behalf of the Alliance, shall notify Kazia of any significant amendment made to the Protocol prior or during the conduct of the Study. A significant amendment to the Protocol shall be defined as any modification to the Protocol which may impact the overall conduct of the Study, the scientific value of the Study, the potential benefit of the patient or patient safety, including changes of Study objectives, patient population, and samples sizes. |
2.3. |
Before beginning the Study, Foundation, through the Alliance, shall have either an effective Investigational New Drug Application (IND) on file with the U.S. Food and Drug Administration (FDA), or a determination by the Alliance and NCI that the Study is exempt (within the meaning of 21 C.F.R. Sec. 312.2(b)) from the IND requirements of 21 C.F.R. Part 312. Kazia will provide a letter of cross reference to the FDA to its US IND, with a copy to Alliance for Alliance to include in its IND filing. |
2.4. |
Enrollment for the Study will begin when all NCTN requirements have been met and NCI and the responsible IRB have provided final approval for the Study. The Budget will provide enrollment payment milestones and invoicing instructions. Neither Foundation nor Participating Sites shall enroll a number of subjects into the Study that exceeds the then-current target number set by the Protocol without the prior written agreement of NCI. Foundation will communicate to all Participating Sites, through the Protocol, the predetermined enrollment period after initiation of the Study, unless otherwise agreed by the Parties. |
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Foundation will ensure that all Participating Sites and Investigators do not enroll any subjects (i) except as permitted by the Protocol; and (ii) following expiration of the enrollment period without written authorization from NCI.
2.5. |
Foundation, as well as each of the Participating Sites and any vendors or subcontractors used by Foundation to carry out any aspect of the Study, are expected to adhere to the NCTN guidelines, the Alliance Policies and Procedures, and the Protocol. Foundation shall use reasonable efforts to ensure that, Participating Sites, vendor and subcontractors are aware of their obligations regarding NCTN guidelines, the Alliance Policies and Procedures, and the Protocol and comply with NCTN guidelines, the Alliances Policies and Procedures, and the Protocol. |
2.6. |
Foundation, on behalf of Alliance, shall ensure that the Study and post Study Results are registered on ClinicalTrials.gov and/or any other Internet clinical trial registries in accordance and compliance with all Applicable Laws. Foundation shall ensure that each posting complies with all applicable requirements of this Agreement. |
2.7. |
The Study is to be completed and the Foundation must ensure that a final draft of a primary end point publication summarizing the findings of the Study (Publishable Manuscript), as further detailed in Section 9, is to be submitted to Kazia within 12 months of completion of the Study, assuming that the Data and Safety Monitoring Board (DSMB) has permitted data to be released in this time period, following completion of the Study (that is enrollment of all Study subjects and completion of Protocol requirements for the Study at all Participating Sites, and the achievement of adequate events for the analysis of the primary objective of the Study, in accordance with the Protocol), unless (i) a shorter period is mutually agreed between the Parties. The Publishable Manuscript shall summarize the results and interpretation of the Study, including, but not limited to the Study design, Study objectives, patient assessment, data analysis, results, safety and effectiveness. |
2.8. |
If the Study terminates early the Foundation, through the Alliance, may proceed to publish study results, dependent on the circumstances of the early termination with approval from the DSMB and NCI, and report study results to clinicaltrials.gov with in required regulatory timeframe. The Alliance may all prepare a final study summary to be published by the next Alliance Group Meeting. |
3. |
KAZIA OBLIGATIONS |
3.1. |
Kazia represents and certifies to Foundation that (i) it possesses the full legal right and authority to enter into this Agreement and enters this agreement willingly; (ii) to the best of its knowledge and information, it has no obligations to any third party which would conflict with its obligations hereunder; and (iii) the Study Drug has been manufactured, stored, shipped and delivered in accordance with all applicable laws, rules, and regulations. Kazia further represents that all Study Ding delivered under the Agreement complies at the time of delivery with the specifications for the Study Ding (which specifications shall be communicated to Foundation by Kazia prior to shipment of any Study Drug to Alliance or its designee). |
3.2. |
Kazia agrees to provide Foundation with an updated Investigators Brochure, any appropriate cross- referencing letters, and with appropriate and timely safety information related to the Study Drug. |
3.3. |
Kazia shall supply Foundation with funding for and with sufficient supplies of, the Study Drug to support the Study in accordance with the Budget and the Protocol and any amendments thereof. |
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4. |
FUNDING AND PAYMENT SCHEDULE |
4.1. |
Kazia has agreed to provide financial support for the Study and this funding will be provided to Foundation according to the Budget set out in the Funding and Payment Schedule (Exhibit A) attached hereto. The Parties agree that the amounts set forth in Exhibit A are based on the fair market value of the activities performed and provide an accurate breakdown of the cohort Study costs and expenses. Any funding provided under this Agreement is provided as an independent grant and is not conditioned in any way on any pre-existing or future business relationship between or among Foundation and Kazia. No amounts paid under this Agreement are intended to be for, nor shall they be construed as, an offer or payment made in exchange for any explicit or implicit agreement to purchase, prescribe, recommend, or provide a favorable formulary status for any Kazia product or service. |
4.2. |
Each milestone payment is contingent upon the receipt of an invoice, which will include detail regarding the milestone achieved, acceptable to Kazia, signifying the achievement of the related milestone. Foundation shall submit an invoice to Kazia once each milestone is achieved and becomes payable, and Kazia shall pay the applicable amount within thirty (30) days after its receipt of such invoice which will include detail regarding the milestone achieved. Foundation agrees to use the compensation provided under this Agreement solely for the purposes of facilitating and supporting the Study. All payments which are otherwise due and owing under this Agreement shall be paid by Kazia to, and only to, the Foundation. Foundation agrees to arrange payments due to Participating Sites for the performance of the Study hereunder. Kazia shall not be responsible for making payments directly to Participating Sites for any such Study costs and expenses. Any taxes (and any penalties thereon) imposed on any payment made by Kazia to Foundation shall be the responsibility of Foundation. |
4.3. |
ACH payments to be made to Foundation hereunder will be made payable to: |
Alliance For Clinical Trials in Oncology Foundation
125 S. Wacker Drive, Suite 1600 Chicago, IL 60606
Federal Tax ID# 02-0464400 Attn: Sylvia Hrbek
4.4. |
Kazia shall not be obligated to make any payments to Foundation in excess of the amount provided for under Exhibit A, unless such excess amount is agreed upon in writing and signed by the Parties. |
4.5. |
Foundation must promptly repay to Kazia: (a) subject to Section 12, any funds paid by Kazia to Foundation which are unspent from the study at termination of this Agreement; and (b) any funds paid by Kazia to Foundation which have been used for a purpose other than in accordance with this Agreement and the Budget. |
5. |
STUDY DATA, STUDY RESULTS AND BIOSPECIMENT RESEARCH |
For purposes of this Agreement, Study Data means the raw, non-aggregated data collected about each Study subject, including Biospecimen data, during the course of the Study. Study Results refers to aggregated or summarized Study Data and conclusions about the Study, as would be included in a study report or publication. All Study Data and Study Results generated from this Study are the property of Foundation, through the Alliance.
The Study Results related to the Study Drug will be provided to Kazia on completion or termination of the study, in a form no less detailed than would be required for Alliance to fulfil its obligation to publish the study as described in clause 2.7. Upon reasonable request by Kazia, Study Data related to the Study Drug may also be provided to Kazia by Alliance, at Kazias cost as detailed in an amendment to this agreement or separate data transfer agreement, which is subject to approval by Alliance leadership and the NCI, such approval not to be unreasonably withheld, and DSMB release of Study Data and Study Results.
Kazia shall be free to use Study data and results for all lawful purposes, including any submission to a health authority.
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Both Parties agree to comply with any and all laws relating to patient privacy which are applicable to such Party. Foundation, through the Alliance, will ensure all Study Data and Study Results are de-identified as appropriate prior to transferring such data to Kazia.
6. |
SAFETY REPORTING |
6.1. |
Foundation, through the Alliance, shall comply with all applicable safety reporting requirements involving the Study Drug, including the requirements set forth in 21 C.F.R. § 312.32. |
6.1.1. |
All suspected not unexpected serious adverse events are hereinafter SAEs. All suspected and unexpected serious adverse events are hereinafter SUSARs. |
6.1.2. |
Foundation shall be responsible for ensuring that adverse events and other relevant safety information are recorded as specified in the Protocol and appropriately reported to the relevant health authorities, ethics committees and Study investigators according to Applicable Laws. Foundation shall forward such safety information to Kazia at the same time it is provided to relevant govemment/regulatory authorities. |
6.1.3. |
Foundation shall ensure that any SUSARs, including initial and follow up reports, arising from the Study in Subjects exposed to the Study Drug, are forwarded within the applicable reporting timelines to the FDA, with a copy being sent to the Kazia at the same time and shall ensure that all non- SUSAR SAEs are forwarded to the Kazia on an approximately monthly basis. Foundation shall also provide Kazia with a copy of the 1ND Annual Safety Update submission to the FDA at the same time it is provided to the FDA. |
6.1.3.1. |
For each SUSAR report, arising from Subjects exposed to the Study Drug (both initial and follow-up reports), Foundation shall ensure that a CTEP AERS form completed with full information (as known at the time of forwarding) is forwarded to Kazia. |
6.2. |
Foundation, through the Alliance, shall provide Kazia with an accrual and adverse event summary report every six (6) months which will include aggregated toxicity/safety data, in a form mutually acceptable and agreed upon by the Parties, so that Kazia may fulfil its surveillance and reporting obligations to regulatory agencies. |
6.3. |
Both Parties acknowledge that the Foundation/Alliance, as a grantee of the NCI, uses NCIs electronic reporting system, the Cancer Therapy Evaluation Program Adverse Event Reporting System (CTEP AERS), for SAE reporting. |
6.4. |
Kazia will immediately notify Alliance of any changes to its contact information for reporting adverse events, in order for Alliance to fulfill its notification obligations. |
7. |
AGENCY INVESTIGATIONS |
7.1. |
Foundation represents that it has no knowledge of any pending for cause regulatory audit, investigation or proceeding involving Foundation or any Participating Investigator or Study Staff relating to compliance with laws regarding the conduct of any clinical research, and that neither Foundation nor any Participating Investigator or Study Staff has been debarred under 21 U.S.C. § 335a, nor disqualified under 21 C.F.R. § 312.70 or § 812.119. In the event that Foundation or any Participating Investigator or Study Staff receives notice of initiation of any debarment or disqualification proceeding by the FDA or notice of debarment or disqualification under the above-referenced statutes and Foundation learns of such notice, Foundation shall immediately notify Kazia in writing. |
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7.2. |
Unless otherwise prohibited from doing so by the FDA or other government agency, Foundation shall promptly notify NCI and Kazia in writing in the event Foundation receives, or becomes aware that a Participating Site has received, either (1) notice from the FDA or other government agency that such agency plans to conduct an investigation at Foundation, Alliance, or such Participating Site covering, in whole or in part, data or other activities relating to any study, or (2) an inquiry from the FDA or other government agency regarding, in whole or in part, data or other activities relating to any study. So that Kazia may assist Alliance with its Participating Sites investigation readiness, Foundation will endeavor to provide such notice within one (1) business day if possible, but in any event within three (3) business days. |
7.3. |
Outside of the limited contacts that may be required to respond to a Participating Sites investigation readiness for an audit by the FDA or other government agency, or as otherwise required by law, Kazia will not reach out to Participating Sites directly in connection with the Study, nor will Kazia participate in any Participating Site visits in connection with the Study. Communications with Participating Sites in the Alliance regarding the Study will be sent through Foundation to NCI and Kazia, as applicable or necessary. |
8. |
CONFIDENTIALITY |
8.1. |
Kazia Confidential Information and all tangible expressions, in any medium, of Kazia Confidential Information are the sole and exclusive property of Kazia. Foundation Confidential Information and all tangible expressions, in any medium, of Foundation Confidential Information are the sole and exclusive property of Foundation. |
8.2. |
Any confidential proprietary materials, data and/or information relating to business and/or technology of a Party (Confidential Information) disclosed by one Party (Disclosing Party) to the other Party (Receiving Party) shall be retained by the Receiving Party in confidence and shall not be disclosed to any Third Party, meaning an individual or entity other than an officer, director, employee or Affiliate of the Receiving Party, except as otherwise explicitly authorized in this Agreement or necessary to carry out the activities and obligations under this Agreement, for a period beginning on the date of disclosure and ending ten (10) years after the expiration or early termination of the applicable Study. Confidential Information shall be designated or identified in writing as confidential at the time of disclosure; provided however, if the nature of the Confidential Information being provided is such that a reasonable person familiar with the Study would understand that the Confidential Information should be treated as confidential from the context and circumstances of disclosure, the disclosure shall still be protected as Confidential Information under this Agreement even if such Confidential Information is not expressly designated or identified as confidential. |
8.3. |
All Confidential Information of a Disclosing Party shall remain the property of the Disclosing Party. Except as set out in this Agreement, no license or other intellectual property right to any Confidential Information of the Disclosing Party is created or granted to the receiving party by this Agreement, and disclosure of Confidential Information shall not create any obligation to grant the Receiving Party any right in and to said information. |
8.4. |
Upon the written request of the Disclosing Party, the Receiving Party shall immediately, in accordance with the instructions of the Disclosing Party and subject to Applicable Laws, either return or destroy all Confidential Information of the Disclosing Party, including all notes, summaries, and translations that have been made regarding such Information, and all copies of the foregoing, provided that: (i) the Receiving Partys legal counsel may retain one (1) copy of the Disclosing Partys Information in a secure location solely for purposes of identifying the Receiving Partys obligations hereunder; (ii) any Confidential Information contained in any board notes may be retained; and (iii) Receiving Party, and its Affiliates and/or designees required to meet the obligations under this Agreement, may retain a copy of the Confidential information for internal and regulatory reporting puiposes. In the event destruction is requested by the Disclosing Party, the Receiving Party shall certify such destruction in writing. |
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8.5. |
Foundation and the Alliance shall not use Kazia Confidential Information for its own benefit or for any puipose other than to conduct the Study. Foundation and the Alliance shall not disclose Kazia Confidential Information to Third Parties, other than NCI, except as necessary to conduct the Study and under an agreement by the Third Party to be bound by the obligations of this Section 8. Foundation will be responsible for any unauthorized disclosures of Kazia Confidential Information by a Third-Party, to which Foundation has provided Kazia Confidential Information under an agreement. Foundation shall maintain Kazia Confidential Information in strict trust and confidence and safeguard such information with the same standard of care that is used with Foundations own confidential information, but in no event less than reasonable care. |
8.6. |
The obligations of confidentiality and limited use under this Section 8 shall not extend to any information: |
8.6.1. |
which is or becomes publicly available, except through breach of this Agreement; |
8.6.2. |
which the Receiving Party can demonstrate by competent written proof that it possessed prior to, or developed independently from, disclosure by or on behalf of Disclosing Party or development under this Agreement; or |
8.6.3. |
which the Receiving Party receives from a third party which is not legally prohibited from disclosing such information. |
8.7. |
If the Receiving Party is required by Applicable Law to disclose the other Partys Confidential Information, that Receiving Party (as applicable) shall give reasonable advance notice of such disclosure and use reasonable efforts to limit such disclosure and maintain the confidentiality of such Confidential Information to the extent possible. In addition, the Parties shall cooperate if the Party whose Confidential Information is to be disclosed seeks a protective order or other confidential treatment for such Confidential Information by appropriate legal means. |
8.8. |
For the avoidance of doubt, nothing in this Section 8 will limit a Partys ability to publish and use the published manuscript detailed in Section 9. |
9. |
PUBLICATION |
9.1. |
Foundation, through the Alliance, will reasonably ensure that the publication of Study results (Publishable Manuscript) by Alliance shall be in accordance with Alliances Policies and Procedures. Foundation will ensure that Alliance provides a copy of the draft publishable manuscript to Kazia for review at least thirty (30) days prior to submission for publication. In the case of presentations or abstracts, the Foundation shall ensure Kazia receives a copy of the draft presentation or abstract as early as possible prior to the disclosure, but in no event will it be less than fifteen (15) days prior to submission for presentation. In the event that Kazia desires to seek patent or other intellectual property protection on information related to the Study Drug contained in the publication, Foundation may agree to delay submission of the publication for up to an additional forty-five (45) days upon written request or notice by Kazia, as necessary to preserve U.S. or foreign patent or other intellectual property rights. |
9.2. |
In accordance with National Cancer Institute (NCI) policy, Alliance maintains the full right to present and publish the Study data and results at such time and place as it sees fit; provided, however, Kazia shall have the right to require deletion of its Confidential Information, provided that: (i) the Foundation will limit use of Confidential Information to the extent reasonably practicable, and (ii) in no event will removal of Confidential Information by Kazia compromise the objective medical or scientific integrity of the disclosure, presentation or publication of the Study results. |
9.3. |
Once published Kazia will be able to copy and refer back to the provided manuscript/publication as needed for their business or regulatory purposes. |
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9.4 |
Publication includes presenting and publishing the Study data and results at symposia, national or regional professional meetings, in professional journals, or through other means. Foundation shall not be required to obtain Kazias permission to repeat any information that was previously publicly disclosed by Alliance in accordance with this Section. |
10. |
INTELLECTUAL PROPERTY AND INVENTIONS |
10.1. |
This Agreement does not affect the ownership of any Background IP. All Background IP shall remain the property of the Party or its Affiliate that provided it to the other Party for use in the Study. |
10.2. |
As between the Parties, any invention, discovery, or idea, whether patentable or not, other than the Background IP, (an Invention) made during the conduct of the Study generally is the property of the Investigator or Participating Institution with which he or she is affiliated. |
10.3. |
Foundation shall, no later than fifteen (15) business days upon becoming aware, notify Kazia of any discovery or Invention (i) generated from the use of its Study Drug; or (ii) conceived or first reduced into practice or writing related to the Study Drug in the course of the Study or the performance of obligations under this Agreement. |
10.4. |
The NCIs Cancer Therapy Evaluation Program Intellectual Property Option to Co-Collaborators terms of award shall apply to any Inventions made in the course of the Study, a copy of which has been attached as Annexure B. Kazia acknowledges that the Foundation, Alliance, Participating Sites, and Investigators are bound by these intellectual property obligations. For purposes of this Study, Kazia shall be considered a Collaborator within the meaning of the Option. The Parties agree that any Inventions made during the Study by Alliance and/or Other Investigators and/or Participating Sites will be subject to certain rights by Kazia and the other participating Collaborators as detailed in the Option. The Parties further agree that any and all updates to the Option effective during the term of this Agreement shall be applicable to any such Inventions made during the Study. |
11. |
TERM AND TERMINATION |
11.1. |
This Agreement shall take effect on the Effective Date and shall continue in full force and effect for a period of whichever is longer: a) five (5) years or b) the completion of the obligations of the Parties under this Agreement, unless earlier terminated in accordance with this Section 11. |
11.2. |
Either Foundation or Kazia may terminate this Agreement immediately upon written notice to the other Party if the other Party becomes insolvent, or if proceedings are instituted against the other Party for reorganization or other relief under any bankruptcy law, or if any substantial part of the other partys assets come under the jurisdiction of a receiver or trustee in an insolvency proceeding authorized by law. |
11.3. |
Either Party may terminate this Agreement at any time, in whole or in part, with or without cause, upon (a) giving at least thirty (30) days written notice to the other Party or (b) immediately giving written notice to the other Party if termination is for patient safety or regulatory reasons, including but not limited to a request from NCI, the FDA, or other regulatory authority. |
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11.4. |
Foundation may terminate this Agreement immediately upon written notice to Kazia if: (i) Foundation receives notice from the FDA or NCI that it requires that the corresponding Study be terminated; (ii) or if Foundation funding from the NCI is discontinued, reduced, denied, or otherwise unavailable. |
11.5. |
Foundation may terminate this Agreement if Kazia materially breaches this Agreement and fails to cure the breach within thirty (30) days after receipt of written notice from Foundation, such notice specifying in detail the nature of the breach. Kazia may terminate this Agreement if Foundation materially breaches this Agreement and fails to cure the breach within thirty (30) days after receipt of written notice from Kazia, such notice specifying in detail the nature of the breach. |
12. |
EFFECT OF TERMINATION |
12.1. |
Upon receipt of notice of termination of this Agreement from Kazia or provision of notice of termination by Foundation, Foundation and Participating Sites shall use reasonable efforts to avoid incurring any additional costs to Kazia in connection with the Study. Foundation shall be compensated in accordance with Section 4 for activities performed in accordance with this Agreement up to the effective date of termination. If, upon the effective date of termination, Kazia has advanced funds which have not been applied to any non-cancellable costs for the Study, Foundation shall repay such funds within sixty (60) days of the effective date of termination. Per the attached Exhibit A, Funding and Payment Schedule, both Parties recognize that advanced funds are limited herein to the upon contract execution milestone in Annex A. |
12.2. |
Upon termination or expiration of this Agreement, all unused Study Drag at Foundations designee, McKesson, shall be promptly returned to Kazias nominated US storage facility, at Kazias reasonable expense, or, at Kazias option, Foundation will arrange destruction and supply written confirmation of material destruction, including lot numbers and quantities destroyed. However, Foundation will retain sufficient Study Drug to treat all patients enrolled at the time of termination or expiration. After termination of this Agreement for any reason, all parties shall continue activities under this Agreement solely as deemed necessary by mutual agreement of the Parties and NCI based on reasonable medical judgment to protect the health and safety of the subjects participating in the Study. Kazia shall pay Foundation for any non-cancellable costs incurred prior to the date of termination. |
12.3. |
The obligations of any provisions, such as Confidentiality and Intellectual Property, that by their nature survive teimination or expiration of this Agreement shall survive any termination or expiration of this Agreement. |
13. |
INDEMNIFICATION |
13.1. |
Kazia will indemnify and hold harmless Foundation, the Alliance, and their respective directors, officers, employees, Alliance Participating Investigators and Participating Sites, agents, and volunteers (collectively, Alliance Indemnitees) from any and all liability, loss (including reasonable attorneys fees), costs or damage (collectively, Damages) they may suffer as the result of third party claims (provided that such third parties will not include any claim by an Alliance Indemnitee), demands or actions ( each a Claim) against them (i) to the extent such Damages arise out of defects in the design or manufacture of the Study Drug or the Study Drug not being in accordance with its specifications at the date of delivery to Foundations designee, or (ii) to the extent arising from Kazias breach of this Agreement, or (iii) to the extent arising from the negligence or willful misconduct or omissions of Kazia except to the extent any Damages arise from, or are alleged to arise from: |
13.1.1. |
the failure by Alliance Indemnitees, Participating Investigators or Participating Sites to use the Study Drag in accordance with the Protocol; or |
13.1.2. |
the failure of any Alliance Indemnitee, Participating Investigator or Participating Site to strictly adhere to the terms of the Protocol; or |
13.1.3. |
negligence or willful misconduct on the part of Alliance Indemnitees, Participating Investigators or Participating Sites; or |
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13.1.4. |
a breach of this Agreement or any applicable federal, state or local law by Alliance Indemnitees, Participating Investigators or Participating Sites; or |
13.1.5. |
a claim related to a drug or product other than Study Drug; or |
13.1.6. |
any other act or omission of the Alliance Indemnitees, Participating Investigators or Participating Sites |
13.2. |
The Foundation shall, and shall cause the Alliance to: (a) provide written notice to Kazia of any Claim arising out of the indemnified activities as soon as reasonably possible after the Alliance Indemnitee has knowledge of such Claim; (b) permit Kazia to assume responsibility to investigate, prepare for and defend against any such Claim; (c) assist Kazia, at Kazias reasonable expense, in the investigation of, preparation for and defense of any such Claim; and (d) not compromise or settle such Claim without Kazias written consent. Kazia shall not settle a Claim, in any manner without such Alliance Indemnitees prior written consent. |
13.3. |
Foundation will indemnify and hold harmless Kazia and its directors, officers, employees and agents, from any and all Damages they may suffer as the result of any Claim against them (i) to the extent such Damages arise out of conduct of the Study by any Alliance Indemnitee, or, (ii) to the extent arising from Foundations breach of this Agreement, or (iii) to the extent arising from the negligence or willful misconduct of Foundation, except to the extent any Damages arise from, or are alleged to arise from any act or omission of Kazia. |
14. |
INSURANCE |
Each Party hereto represents and warrants to the other that it currently carries and will continue to carry commercially reasonable levels of insurance to meet its obligations hereunder.
15. |
REPRESENTATIONS, WARRANTIES. AND COVENANTS |
15.1. |
Foundation and Kazia represent and warrant that that they are not individually a party to, and covenant that during the term of this Agreement it shall not enter into, any agreement to provide services to another party which would in any way materially impair its ability to complete their obligations under this Agreement in a timely fashion and in accordance with terms hereunder. |
15.2. |
Foundation represents and warrants that: (i) it is not currently involved in any litigation, and is unaware of any pending litigation proceedings, relating to Foundations role in the conduct of a clinical trial for any third party; and (ii) it has not received any warnings from the FDA (or any equivalent oversight body in a country other than the United States) relating to services it has provided to third parties during the conduct of a clinical trial. |
16. |
USE OF PARTIES NAMES; PUBLICITY |
No Party shall use (or have used on its behalf) another Partys name, or the names of another Partys employees, symbols, or trademarks in any advertising, sales promotional material, or press release without prior written permission of the other Party, except to the extent such disclosure is necessary for: (a) regulatory filings, including filings with the U.S. Securities and Exchange Commission or the FDA (or any equivalent oversight body in a country other than the United States); (b) prosecuting or defending litigation; (c) complying with Applicable Law; and (d) in publishing information regarding the existence of, or results of, the Study in compliance with Section 9 of this Agreement. Except as otherwise permitted under this Agreement, a Party shall not originate any publicity, news release or other public announcement, written or oral, whether to the public press or otherwise, relating to this Agreement, any Protocol, or any Study conducted hereunder without the other Partys prior written consent.
11
17. |
INDEPENDENT CONTRACTOR |
The relationship between Kazia and Foundation is that of independent contractors. Foundation is not the partner, joint venturer, or agent of Kazia and Foundation does not have the authority to make any statement, representation, commitment, or take action of any kind that purports to bind Kazia without Kazia prior written authorization. Kazia is not the partner, joint venturer, or agent of Foundation, and Kazia does not have the authority to make any statement, representation, commitment, or take action of any kind that purports to bind Foundation without their prior written authorization.
18. |
NOTICES |
All notices under this Agreement shall be deemed to be duly given and received: (a) upon personal delivery to the appropriate address(es) below; (b) ten (10) days after the date of mailing to the address(es) below when sent via registered or certified U.S. mail, return receipt requested, postage prepaid or by first-class mail. Notices pertaining to this Agreement shall be sent to:
IF TO FOUNDATION:
Alliance For Clinical Trials in Oncology Foundation Attn: Director - Contracts Administration Department
Address:125 S. Wacker Drive, Suite 1600 Chicago, TL 60606
IF TO KAZIA
Name: Dr Jeremy Simpson
Address: L24, Three International Towers, 300
Barangaroo Avenue,
Sydney, NSW 2000
19. |
ASSIGNMENT |
This Agreement may not be assigned by operation of law or otherwise, in whole or in part, by any Party to any third party (other than to an Affiliate) without the other Partys prior written consent. To the extent permitted above, this Agreement shall be binding upon and inure to the benefit of the Parties and their permitted successors and assigns. Any attempted assignment of this Agreement not in compliance with this Section 19 shall be null and void.
20. |
SEVERABILITY |
If any provision(s) of this Agreement should be held by a court of competent jurisdiction to be illegal or unenforceable in any respect, the legality and enforceability of the remaining provisions of this Agreement shall not be affected, to the extent consistent with the intent of the parties as evidenced by this Agreement as a whole. The parties shall make a good faith effort to replace any such provision with a valid and enforceable one such that the objectives contemplated by the parties when entering this Agreement may be realized.
21. |
WAIVER MODIFICATION OF AGREEMENT |
No waiver, amendment, or modification of any of the terms of this Agreement shall be valid unless in writing specifically referencing this Agreement and signed by authorized representatives of all Parties. Failure by a Party to enforce any rights under this Agreement shall not be construed as a waiver of such rights, nor shall a waiver by a Party in one or more instances be construed as constituting a continuing waiver or as a waiver in other instances.
22. |
FORCE MAJEURE |
A Party shall not be deemed to have breached this Agreement for failure to perform its obligations under this Agreement to the extent such failure results from any inclement weather, fire, flood, act of God, terrorist act, earthquake or any other cause which could not have been reasonably foreseen by such Party, was beyond the reasonable control of such Party, and which does not result from the negligence or willful misconduct of such Party. If a force majeure event occurs, the Party unable to perform shall promptly notify the other Party of the occurrence of such event, and, promptly thereafter, the Parties shall discuss the circumstances relating thereto. The Party unable to perform shall (i) provide reasonable status updates to the other Party from time to time, (ii) use commercially reasonable efforts to mitigate any adverse consequences arising out of its failure to perform and (iii) resume performance as promptly as possible. In the event of any such force majeure event, the Parties may, in their discretion, revise or amend this Agreement by changing the performance period and other provisions, as appropriate by mutual written agreement.
23. |
GOVERNING LAW |
This Agreement shall be governed by and interpreted in accordance with the laws of the State of Illinois without giving effect to any choice of law principles that would require the application of the laws of a different state. Any claim or controversy arising out of or related to this Agreement or any breach hereof shall be submitted to a court of applicable jurisdiction in the State of Illinois, and each Party hereby consents to the jurisdiction and venue of such court.
24. |
ENTIRE AGREEMENT |
This Agreement and any Exhibits hereto represent the entire and integrated agreement among the Parties and supersedes all prior negotiations, representations or agreements, either written or oral, regarding its subject matter.
25. |
COUNTERPARTS |
This Agreement may be executed in any two or more counterparts, each of which, when executed, will be deemed to be an original and all of which together will constitute one and the same document. Facsimile signatures and signatures transmitted via PDF will be treated as original signatures.
26. |
AUTHORITY |
The persons executing this Agreement on behalf of each Party represents that they have the full power and authority to enter into this Agreement on behalf of the persons or entities they are signing on behalf of. Faxed, docusigned, and scanned copies of original signatures shall be deemed as effective as original signatures.
27. |
MISCELLANEOUS |
Except where the context otherwise requires, wherever used, the singular will include the plural, the plural the singular, the use of any gender will be applicable to all genders, and the word or are used in the inclusive sense. When used in this Agreement, including means including without limitation. All section headings are for reference only and shall not be used to interpret this Agreement. The official text of this Agreement, any notice given or accounts or statements required by this Agreement, and any dispute proceeding related to or arising hereunder, will be in English. In the event of any dispute concerning the construction or meaning of this Agreement, reference will be made only to this Agreement as written in English and not to any other translation into any other language.
13
In Witness Whereof, the Parties have caused this Agreement to be executed in their names as their official acts by their respective representatives, each of whom is duly authorized to execute the same.
Alliance for Clinical Trials Foundation | ||
By: |
/s/ Trinidad Ajazi |
|
Title: | Foundation Secretary | |
Date: | June 26, 2019 |
Kazia Therapeutics Limited | ||
By: |
/s/ James Garner |
|
Title: | Director | |
Date: | June 26, 2019 |
By: |
/s/ Kate Hill |
|
Title: | Company Secretary | |
Date: | June 26, 2019 |
14
ANNEX A - SOW and BUDGET
Statement of Work
A071701
I. |
Scope |
This document constitutes a Statement of Work (SOW) for work to be performed by Massachusetts General Hospital Cancer Center and McKesson Clinical Research Services on behalf of the Alliance for Clinical Trials in Oncology Foundation.
Study: A071701 - Genomically-guided trial in brain metastases
Study Drug: GDC-0084
Planned Total Enrollment: 69 patients
II. |
Deliverables |
A. |
Massachusetts General Hospital Cancer Center: Massachusetts General Hospital personnel will conduct the snap assays on 190 patients for genotype screening. |
B. |
McKesson Clinical Research Services: McKesson will handle drug supply and distribution of the study drug. Fees include costs for project start-up, study drug storage & inventory management, study drug distribution & site communications, & project closeout. |
C. |
Non-Standard of Care Procedures: |
|
EKG: EKG/ECG tests will be performed by sites on all patients (estimated 7 per patient) at baseline visit, every 8 weeks (2 cycles) from start of treatment, and end of treatment totaling 483 tests. |
|
Cholesterol, serum or whole blood, total: Cholesterol tests will be performed by sites on all patients (estimated 4 per patient) at baseline visit and every 4 cycles totaling 276 tests. |
|
Triglycerides: Triglyceride tests will be performed by sites on all patients (estimated 4 per patient) at baseline visit and every 4 cycles totaling 276 tests. |
Budget and Milestone Payment Schedule
Budget
Study Number | A071701 | |||||
Study Title | Genomically-guided trial in brain metastases | |||||
Description |
Cost |
Assumptions |
||||
Alliance Screening (Massachusetts General Hospital Cancer Center) | ||||||
Snap assay for screening | Estimated 1 per patient (190 patients) | |||||
Drug Supply and Distribution (McKesson) | ||||||
Start up fee | ||||||
Storage/Inventory | Estimated 36 months. | |||||
Shipping | Estimated 2 per patient totaling 138 shipments. | |||||
Close out Fee | ||||||
Additional Procedures | ||||||
Electrocardiogram, routine ECG with at least 12 leads; with interpretation and report | Estimated 7 per patient (Baseline, every 8 weeks (2 cycles) from start of treatment, and end of treatment) totaling 483. | |||||
Cholesterol, serum or whole blood, total | Estimated 4 per patient (Baseline and every 4 cycles) totaling 276. | |||||
Triglycerides | Estimated 4 per patient (Baseline and every 4 cycles) totaling 276. | |||||
Total | ||||||
Sample Size Key |
||||||
Total N for screening W/10% screening buffer | 190 | |||||
N = | 69 |
Milestone Payment Schedule
Payment Milestone |
Payment | |||
Upon Contract Execution (Approx. 20% or equivalent to first 14 patients) |
||||
Per Quarterly Accrual (14th patient up to 69 patients); patient enrolled |
||||
Total Balance: |
ANNEX B - CTEP IP OPTION
A. The IP Option described in this Section A would apply to inventions that would be described in patent disclosures that claim the use and/or the composition of the Agent(s) and that are conceived or first actually reduced to practice pursuant to clinical or non-clinical studies utilizing the NCI CTEP provided Agent(s)(Section A Inventions):
Institution agrees to grant to Collaborator(s): (i) a royalty-free, worldwide, non-exclusive license for commercial purposes with the right to sub license to affiliates or collaborators working on behalf of Collaborator for Collaborators development purposes; and (ii) a time limited first option to negotiate an exclusive, or co-exclusive, if applicable, world-wide, royalty bearing license for commercial purposes, including the right to grant sub licenses, subject to any rights of the Government of the United States of America, on terms to be negotiated in good faith by the Collaborator(s) and Institution. If Collaborator accepts the non-exclusive commercial license, the Collaborator agrees to pay all out of pocket patent prosecution and maintenance costs which will be pro-rated and divided equally among all licensees. If Collaborator obtains an exclusive commercial license, in addition to any other agreed upon licensing arrangements such as royalties and due diligence requirements, the Collaborator agrees to pay all out of pocket patent prosecution and maintenance costs. Collaborator(s) will notify Institution, in writing, if it is interested in obtaining a commercial license to any Section A Invention within three (3) months of Collaborators receipt of a patent application or six (6) months of receipt of an invention report notification of such a section A invention. In the event that Collaborator fails to so notify Institution, or elects not to obtain an exclusive license, then Collaborators option expires with respect to that Section A Invention, and Institution will be free to dispose of its interests in accordance with its policies. If Institution and Collaborator fail to reach agreement within ninety (90) days, (or such additional period as Collaborator and Institution may agree) on the terms for an exclusive license for a particular Section A Invention, then for a period of three (3) months thereafter Institution agrees not to offer to license the Section A Invention to any third party on materially better terms than those last offered to Collaborator without first offering such terms to Collaborator, in which case Collaborator will have a period of thirty (30) days in which to accept or reject the offer. If Collaborator elects to negotiate an exclusive commercial license to a Section A Invention, then Institution agrees to file and prosecute patent application(s) diligently and in a timely manner and to give Collaborator an opportunity to comment on the preparation and filling of any such patent application(s). Notwithstanding the above, Institution is under no obligation to file or maintain patent prosecution for any Section A Invention.
For all Section A Inventions, regardless of Collaborators decision to seek a commercial license, Institution agrees to grant Collaborator a paid-up, nonexclusive, royalty-free, world-wide license for research purposes only. Institution retains the right to make and use any Section A Invention for all non-profit research, including for educational purposes and to permit other educational and non-profit institutions to do so.
B. The IP Option described in this Section B would apply to inventions not covered by Section A, but are nevertheless conceived or first actually reduced to practice pursuant to clinical or non-clinical studies utilizing the CTEP-provided Agent(s). It also applies to inventions that are conceived or first actually reduced to practice pursuant to NCI CTEP-approved studies that use non-publicly available clinical data or specimens from patients treated with the CTEP-provided Agent (including specimens obtained from NCI CTEP-funded tissue banks) (Section B Inventions):
Institution agrees to grant to Collaborator(s): (i) a paid-up nonexclusive, nontransferable, royalty-free, world-wide license to all Section B Inventions for research purposes only; and (ii) a nonexclusive, royalty-free, world-wide license to (a.) disclose Section B Inventions to a regulatory authority when seeking marketing authorization of the Agent, and (b.) disclose Section B Inventions on a product insert or other promotional material regarding the Agent after having obtained marketing authorization from a regulatory authority. Notwithstanding the above, Institution is under no obligation to file or maintain patent prosecution for any Section B Invention.
C. The IP Option described in this Section C would apply to inventions made by Institutions investigator(s) or any other employees or agents of Institution, which are or may be patentable or otherwise protectable, as a result of research utilizing the CTEP-provided Agent(s), unreleased or non-publicly available clinical data or Agent treated specimens outside the scope of approval granted by the NCI CTEP (Unauthorized Inventions):
Institution agrees, at Collaborators request and expense, to grant to Collaborator a royalty-free exclusive or co-exclusive license to Unauthorized Inventions. Institution will retain a non-exclusive, non-sub-licensable royalty free license to practice the invention for research use purposes.
17
D. Institution Notification
Institution agrees to promptly and confidentially notify NCI CTEP (NCICTEPpubs@mail.nih.gov) and Collaborator(s) in writing of any Section A Inventions, Section B Inventions, and Unauthorized Inventions upon the earlier of: (i) any submission of any invention disclosure to Institution of a Section A, Section B, or Unauthorized Invention, or (ii) the filing of any patent applications of a Section A, Section B, or Unauthorized Invention. Institution agrees to provide a copy of either the invention disclosure or the patent application to the Collaborator and to NCI CTEP which will treat it in accordance with 37 CFR Part 401. These requirements do not replace any applicable reporting requirements under the Bayh-Dole Act, 35 USC 200-212, and implementing regulations at 37 CFR Part 401.
ANNEX C - Study Drug Responsibilities
Study Drug Responsibilities GDC-0084 15mg Capsules - Phase 2 Clinical Study Use |
|
|||||||||
Background & Scope:
(i) Foundation plans to Sponsor a Phase 2 clinical study using GDC-0084 15mg capsules, with study drug responsibilities as indicated below.
(ii) Kazia will supply to the Foundations nominated US storage depot, GMP manufactured, primary packed and labelled study drug for Phase 2 clinical trial use in the US. Kazia responsibilities as indicated below. |
|
|||||||||
# |
Responsibility |
Kazia | Foundation | |||||||
1 |
Study Drug: Supply of GMP manufactured, primary packed and labeled GDC-0084 15mg capsules with supporting GMP documentation (e.g. manufacturers CoA). In addition to the labelling, each bottle of study drug is also identified with the lot number printed on the base of the bottle | X | ||||||||
2 |
Study Drug: the required study drug label text will be agreed between the parties | X | X | |||||||
3 |
Retest Date & Storage Conditions: Provision of retest date and storage conditions for the study drug supplied | X | ||||||||
4 |
Ordering: Requests for study drug will be provided to Kazia in writing | X | ||||||||
5 |
Shipping: Will ship study drug to the Foundation nominated US Depot, accompanied by relevant paperwork (e.g. packing list) | X | ||||||||
6 |
Receipt & Labeling: Foundations nominated US depot will receive and store study drug for clinical study use | X | ||||||||
7 |
Release & Distribution of Study Drug: Responsibility for release/distribution of labeled study drug for Phase 2 clinical use in the US | X | ||||||||
8 |
Product Defects / Product Complaints: will promptly notify the other party if a Quality Defect is observed or reported (e.g. damage to capsules or primary packaging) | X | X | |||||||
9 |
Product Recall: will notify Foundation in the event of a Product Recall and both parties will work together as may be required to coordinate the Recall and notify the relevant regulatory authorities [Note: Product Recall may also be referred to as stock recovery in US as the Sponsor exerts direct control over the drug]. | X | ||||||||
10 |
Returns & Destruction: The parties will liaise regarding the management of any drug stored at Foundations nominated US depot, McKesson, that is no longer required for the planned study. The anticipated options are (i) return the drug to Kazias nominated US depot (at Kazia expense) or (ii) Foundation, through its designated US depot, McKesson, manage destruction and provide Kazia with a destruction certificate detailing lot numbers and quantities of study drug destroyed. |
19
Exhibit 4.14
Master Clinical Trial
Agreement
Kazia Laboratories Pty Ltd
St. Jude Childrens Research Hospital, Inc.
Kazia Therapeuitcs Limited ABN 37 063 259754
PO Box 2333 Horns by Westfield1635 NSW Australia
T+61 29476 0344 F+61 2 9476 0388
www.kaziatherapeuitcs.com
Table of contents
1. |
Definitions and Interpretation | 3 | ||||
2. |
Appointment | 7 | ||||
3. |
Conduct of the Project | 8 | ||||
4. |
Modification of Services | 8 | ||||
5. |
Test Materials | 8 | ||||
6. |
Payment | 9 | ||||
7. |
Taxes | 10 | ||||
8. |
Warranties | 10 | ||||
9. |
ConfidentiaIity | 10 | ||||
10. |
Privacy | 12 | ||||
11. |
Retention of Records | 13 | ||||
12. |
Reporting Obligations | 13 | ||||
13. |
Access | 13 | ||||
14. |
Insurance | 14 | ||||
15. |
Intellectual Property | 14 | ||||
16. |
Data Use | 14 | ||||
17. |
Publications | 14 | ||||
18. |
Use of Name and Promotional Activities | 15 | ||||
19. |
Liability | 15 | ||||
20. |
Termination | 15 | ||||
21. |
Consequences of Expiry or Termination | 16 | ||||
22. |
Assignment | 16 | ||||
23. |
Independent Contractors | 17 | ||||
24. |
Notices | 17 | ||||
25. |
Dispute Resolution | 18 | ||||
26. |
Entire Agreement | 19 | ||||
27. |
Force Majeure | 19 | ||||
28. |
No Waiver | 19 | ||||
29. |
Severability | 19 |
30. | Survival of Provisions | 20 | ||||
31. | Choice of Law | 20 | ||||
Schedule 1 |
22 | |||||
Contract Details |
22 | |||||
Schedule 2 |
23 | |||||
List of Kazia and Subsidiaries |
23 | |||||
Schedule 3 |
24 | |||||
Template Work Order |
24 |
Title | Master Clinical Trial Agreement | |
Date | 19 November 2017 | |
Parties | Kazia Laboratories Pty Ltd (ABN 37 063 259 754) of Suite 502, Level 5, 20 George Street, Horns by, NSW 2077 (Kazia) | |
St. Jude Childrens Research Hospital, Inc. of 262 Danny Thomas Place, Memphis, TN 38002 (the Research Organisation) |
Recitals
A |
Kazia is a global biotechnology company engaged in the research and development of therapeutic products or devices for patients with cancer. |
B |
The Research Organisation provides scientific research services, including: basic pre-clinical research, clinical research and/or scientific consulting. |
C |
The Parties wish to agree to master terms to govern the relationship between them under which Kazia may, from time to time, request services from the Research Organisation and the Research Organisation may provide services to Kazia. |
D |
This Agreement sets out the master terms and conditions under which the Research Organisation will perform certain clinical trials. |
E |
An individual Work Order under this Master Services Agreement will describe the services to be provided by the Research Organisation to conduct specific Projects and Services. |
Operative provisions
1. |
Definitions and Interpretation |
Definitions
1.1 |
In this Agreement: |
Agreement means this Master Services Agreement, including all schedules, appendices and annexures.
Applicable Law means all applicable federal, state and local laws, regulations, guidelines and rules, applicable to the performance of a Project including without limitation all applicable laws and regulations related to import/ export control, use and distribution of tissue samples, anti-bribery and anti-terrorism.
Background Intellectual Property means, in respect of a Party, any Works provided by that Party in connection with this Agreement.
Biological Samples means diagnostic tests, data, and bodily fluids (e.g., blood, urine, saliva, tissue, sera), bone marrow, tumor samples, tissue biopsies, and other biological samples and materials derived therefrom.
3
Business Day means a day that is not a Saturday, Sunday or a public holiday or bank holiday in Sydney or the United States.
Claim means any claim made (whether in the form of an allegation, demand, suit, action or other proceeding of any kind) under or in connection with this Agreement or its subject matter, whether arising under contract (including under any warranty or indemnity or any other breach, actual or anticipatory including repudiation), in equity, in restitution, negligence or any other tort, strict liability, under statute or otherwise at all.
Commencement Date means the date set out in Schedule 1.
Confidential Information means all information related to the Project imparted by either Party to the other Party in the course of the performance of this Agreement, whether:
(a) |
oral, written, recorded or stored by electronic, magnetic, electromagnetic or other form, processed or otherwise or in a machine readable form; |
(b) |
any improvements, modifications or developments to Background Intellectual Property provided by a Party; or |
(c) |
translated from the original form, recompiled, made into a compilation, partially copied, modified, updated or otherwise altered, |
except to the extent that:
(a) |
the information is or becomes in the public domain otherwise than as a result of the default of the receiving Party; |
(b) |
the receiving Party can demonstrate that the information was known to it prior to the disclosure by the disclosing Party; |
(c) |
the information has been disclosed to the receiving Party without restriction by a third party and without any breach of confidentiality by the third party, to the best of the receiving Partys knowledge; or |
(d) |
the information is independently developed by the receiving Party without reference to the Confidential Information provided by the disclosing Party. |
Force Majeure Event means an event relating to a Party which:
(a) |
was not contemplated by that Party and could not have reasonably been foreseen by that Party at the Commencement Date; |
(b) |
is completely outside the control of that Party, or its Personnel; |
(c) |
is not an event or occurrence contemplated by, or referred to in, this Agreement; |
(d) |
is not caused by the other Party or its Personnel; and |
(e) |
is not a result of industrial action or strike. |
Human Subject means a living individual about whom an Investigator conducting research obtains:
(a) |
data through intervention or interaction with the individual; or |
(b) |
Identifiable Personal Information. |
4
Informed Consent means the informed consent form specific for each Proposal and prepared by the Research Organisation according to the requirements of Applicable Laws.
Intellectual Property includes all copyright and neighbouring rights (including rights in relation to phonograms and broadcasts), all rights in relation to inventions (including patent rights), plant varieties, registered and unregistered trade marks (including service marks), registered and unregistered designs, and circuit layouts, and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields including as defined in Article 2 of the Convention Establishing the World Intellectual Property Organisation of July 1967.
Identifiable Personal Information means Human Subject identifiable data no matter how obtained, including from medical records or attached to Human Subject specimens, to be obtained prospectively or from stored medical records, specimens or otherwise, that can be linked to individual human beings, either directly or indirectly through codes.
Institutional Review Board (IRB) means a body set up to review clinical investigations carried out by the Research Organisation.
Investigator means the person or entity responsible for the performance of the research or clinical trial at a trial site, except that if the research or clinical trial is performed by a team of individuals at a trial site, the investigator is the responsible leader of the team and may be called the principal investigator.
Party means a Party to this Agreement, and in relation to Kazia, includes any affiliate of Kazia listed in Schedule 2.
Permitted Purpose means the sole purpose of performing the Services under this Agreement and each Work Order.
Permitted Recipient means any third party, including employees and agents of the party receiving Confidential Information (the Receiving Party) to whom the Receiving Party discloses the disclosing Partys Confidential; provided however that Confidential Information shall only be disclosed to third parties with a need to know the information and all such third parties shall be informed of the confidential nature of the Confidential Information and shall be bound by obligations of confidentiality, non-use, and non-disclosure that are no less stringent than those contained herein.
Personnel means a Partys employees, contractors, guest researchers, students or other representatives.
Project means an individual study, project or consultation forming part of the Services and defined in a Work Order, including but not limited to a pre-clinical or clinical study, project or other scientific examination involving the collection of data.
Project Budget means the budget associated with a Project associated with a Project, as set out in a Work Order.
Proposal means a formal, detailed description of a Project setting out the objective, design, methodology, statistical considerations, and organization of that study or research.
Retained Samples means any remaining portions of already-collected Biological Samples, exclusive of the portion of Biological Samples required for the Clinical Trial.
Services means the tasks or services to be performed by the Research Organisation in accordance with this Agreement or in a Work Order.
5
Term means the term of this Agreement as set out in Schedule 1.
Test Materials in respect of a Project, means all compounds, devices, materials or other substances meeting relevant specifications that are necessary to enable the Research Organisation to perform the Project.
Work Order means a written order substantially in the form set out in Schedule 3 to this Agreement agreed between the Parties which:
(a) |
describes the nature and scope of the Services requested to be provided by the Research Organisation in respect of a particular Project performed by the Research Organisation for Kazia; |
(b) |
sets out the schedule of work to be performed or consulting Services to be provided during the course of a particular Project performed by the Research Organisation for Kazia; |
(c) |
specifies the price, fees and payment schedule for the requested Services, and |
(d) |
specifies any modifications of the terms of this Agreement that are applicable to the Services. |
Works means all drawings, specifications, processes, techniques, samples, specimens, prototypes, designs, research and development results, test results, and other technical and scientific information and Intellectual Property which is made available for the Project by a Party.
Interpretation
1.2 |
In this Agreement, unless the context requires another meaning, a reference: |
(a) |
to the singular includes the plural and vice versa; |
(b) |
to a gender includes all genders; |
(c) |
to a document (including this Agreement) is a reference to that document (including any schedules and annexures) as amended, consolidated, supplemented, novated or replaced; |
(d) |
to an agreement includes any undertaking, representation, deed, agreement or legally enforceable arrangement or understanding whether written or not; |
(e) |
to an item, recital, clause or Schedule is to an item, recital, clause or Schedule of or to this Agreement; |
(f) |
to a notice means a notice, approval, demand, request, nomination or other communication given by one Party to another under or in connection with this Agreement; |
(i) |
to a person (including a Party) includes: |
(ii) |
an individual, company, other body corporate, association, partnership, firm, joint venture, trust or government agency; |
(iii) |
the persons successors, permitted assigns, substitutes, executors and administrators; and |
6
(iv) |
a reference to the representative member of the GST group to which the person belongs to the extent that the representative member has assumed rights, entitlements, benefits, obligations and liabilities which would remain with the person if the person were not a member of a GST group; |
(g) |
to proceedings includes litigation, arbitration and investigation; |
(h) |
to a judgment includes an order, injunction, decree, determination or award of any court or tribunal; |
(i) |
to time is to US central daylight savings time; |
(j) |
to currency or $ is to US dollars; and |
(k) |
the words including or includes means including, but not limited to, or includes, without limitation respectively. |
1.3 |
Where a word or phrase is defined, its other grammatical forms have a corresponding meaning. |
1.4 |
Headings are for convenience only and do not affect interpretation of this Agreement. |
1.5 |
If a period will be calculated from, after or before a day or the day of an act or event, it will be calculated excluding that day. |
1.6 |
The Agreement may not be construed adversely to a Party only because that Party was responsible for preparing it. |
1.7 |
Except where expressly stated to the contrary, if there is an inconsistency between any one or more of documents comprising this Agreement the document listed higher in the following list will prevail to the extent of the inconsistency: |
(a) |
each Work Order; |
(b) |
the Schedules; and |
(c) |
the main body of this Agreement. |
2. |
Appointment |
2.1 |
Kazia appoints the Research Organisation on a non-exclusive basis to conduct the Projects as described in a Work Order. |
2.2 |
The Research Organisation agrees to provide the Services described in a Work Order and Kazia agrees to pay the Research Organisation for those Services as provided for in the Work Order and this Agreement. |
2.3 |
Upon agreement between the Parties of the terms of a Work Order, a Work Order is incorporated in and becomes part of this Agreement. |
2.4 |
This Agreement shall commence on the Commencement Date and continue for the Term unless otherwise terminated in accordance with this Agreement. |
2.5 |
Kazia and the Research Organisation shall each appoint a representative to serve as the contact point for the management and administration of this Agreement. Either Party can replace its representative at any time by notice in writing to the other Party. |
7
2.6 |
The Parties understand and agree that Work Orders may be entered into by any Affiliates of Kazia if explicit reference to this Agreement is made in the relevant Work Order and Affiliate will be entitled to all the benefits and subject to all the obligations of this Agreement. |
2.7 |
With Kazias prior written consent, affiliated research institutions may enter into a participating site agreement or a single study agreement with the Research Organisation to conduct the Services in accordance with the terms of the relevant Work Order. |
3. |
Conduct of the Project |
3.1 |
The Parties shall comply with all Applicable Laws in performing their obligations under this Agreement. |
3.2 |
The Research Organisation shall: |
(a) |
conduct the Project and Services pursuant to the terms of this Agreement and in strict adherence to the relevant Proposal; |
(b) |
ensure that the Project is not initiated until and unless all governing regulatory authorities agree to the conduct of the Project; and |
(c) |
conduct the Project and Services with all due care and skill, including exerting diligent efforts consistent with applicable professional and ethical standards and having due regard for the safety and protection of Project participants. |
4. |
Modification of Services |
4.1 |
A Work Order may be amended from time to time with the written agreement of both Parties. |
4.2 |
If an amendment requires the Research Organisation to undertake additional or different work materially beyond the scope of work already agreed between the Parties in a Work Order, the Research Organisation will notify Kazia of any additional costs associated with that additional or different work, and will not commence that work until the parties have executed an amended Work Order. |
4.3 |
The Research Organisation will not deviate from a Work Order without Kazias prior written approval unless in an emergency to protect the safety of Human Subjects participating in the Project and provided the Research Organisation has first used reasonable efforts to inform Kazia of the emergency and to consult with Kazia, if time permits, with regard to the deviation. Notwithstanding anything herein to the contrary, nothing in this Agreement shall be construed as a restriction on Research Organisations ability to deviate from the Protocol in order to protect the health or safety of Human Subjects; and Research Organisation shall retain final decision-making authority with regard to whether a deviation from the Protocol is necessary. |
5. |
Test Materials |
5.1 |
To the extent specified in a Work Order, Kazia will provide, at no cost to the Research Organisation, sufficient amounts of Test Materials for the purposes of the Project and will also provide data necessary to inform the Research Organisation of the stability, proper storage and safe handling requirements of the Test Materials. |
8
5.2 |
During and for a period of at least two years after the completion of each relevant Work Order, Kazia will promptly, but no later than ten (10) days, notify the Research Organisation of the emergence of information impacting the health and safety of past or current Project participants or which influences the conduct of the Proposal including but not limited to the safety results and information in site monitoring reports and data safety monitoring committee reports as required by the Proposal. In each case, the Research Organisation shall be free to communicate these findings to each Project participant and the IRB. |
5.3 |
Unless otherwise specified in the Work Order, Kazia will cause Test Materials to be shipped properly packaged and labelled directly to the Research Organisation or approved affiliated research institution. |
5.4 |
Kazia, for the purposes only of the Research Organisation providing the Services, represents and warrants: |
(a) |
that the Test Materials are manufactured and formulated, and pass control tests, in accordance with all applicable regulations; |
(b) |
that it has disclosed to Research Organisation and any applicable government authorities all material information concerning Test Material safety, use, efficacy, and drug experience; |
(c) |
that to the best of its knowledge after reasonable inquiry, use of the Test Material for the purposes contemplated hereunder will not infringe third party intellectual property rights; and |
(d) |
hazardous material packaging that it provides meets regulatory requirements for Research Organisation and other study sites use as contemplated hereunder. |
6. |
Payment |
6.1 |
The Parties will work in good faith to negotiate a payment schedule for each Work Order. |
6.2 |
Kazia will pay the Research Organisation as set out in the applicable Work Order and, unless otherwise agreed in the Work Order, all invoices are due and payable and will be paid by Kazia within thirty (30) days of the date of invoice. |
6.3 |
The Research Organisation must present its invoices in respect of the Project in accordance with the timeframes specified in each Work Order and associated Project Budget, and in a form reasonably required by Kazia. |
6.4 |
Kazia will reimburse for all pre-approved and reasonable travel and other reasonable out of pocket expenses (as identified in the Project Budget or Work Order) incurred by the Research Organisation or its Personnel in performance of the Project provided the expenses are approved beforehand in writing or form part of a pre-approved Project Budget or Work Order. |
6.5 |
If a dispute arises between the Parties in respect of any part of an invoice, Kazia: |
(a) |
must pay all undisputed parts of the invoice within the stipulated thirty (30) day period; |
(b) |
must notify the Research Organisation promptly in writing of the particulars of the dispute; |
9
(c) |
may withhold payment of the disputed part of the invoice provided that Kazia endeavours promptly and in good faith to resolve the dispute, and |
(d) |
if applicable and upon Kazias written request the Research Organisation may re-issue a new invoice to Kazia for the undisputed portion. |
7. |
Taxes |
7.1 |
All amounts payable under this Agreement are inclusive of all government taxes, levies, imposts, deductions, changes, duties or withholding which are assessed, levied or imposed in connection with the Services. |
8. |
Warranties |
8.1 |
The Research Organisation represents and warrants that: |
(a) |
all persons performing the Project are subject to appropriate confidentiality obligations to enable the Research Organisation to comply with its obligations under this Agreement; |
(b) |
the Services performed by it will conform to the nature and scope of Services as agreed in the Work Order and all Applicable Law; |
(c) |
the Services will be fit for purpose and be provided with all due care and skill; and |
(d) |
the performance of the Services by the Research Organisation will, to Research Organisations knowledge, not infringe the Intellectual Property of any third party. |
8.2 The Research Organisation is responsible for obtaining and maintaining during the term of the Project all approvals and licences necessary for the performance of the Services and as required by Applicable Laws.
9. |
Confidentiality |
9.1 |
The Parties shall: |
(a) |
treat as confidential and only access and use the disclosing Partys Confidential Information solely for the Permitted Purpose and not access, use, publish, disclose or permit the access, use, publication or disclosure of it for any other purpose or other than in accordance with this Agreement without the disclosing Partys prior written approval; |
(b) |
only allow the Permitted Recipients to access or use the disclosing Partys Confidential Information for the Permitted Purpose; |
(c) |
not use or exploit the disclosing Partys Confidential Information for its own benefit (except as expressly permitted by this Agreement) or to the competitive disadvantage of either Party or its affiliates; |
(d) |
not, without the disclosing Partys prior written consent, copy or reproduce any of the disclosing Partys Confidential Information for any purpose other than the Permitted Purpose. |
10
(e) |
ensure that confidentiality is maintained in relation to the Confidential Information. |
9.2 |
The Parties obligations under this Agreement do not apply to the extent that the disclosure of Confidential Information is required by: |
(a) |
law; |
(b) |
the requirements of any regulatory authority of competent jurisdiction; |
(c) |
the rules of any stock exchange; |
(d) |
any applicable accounting standards; or |
(e) |
order by any court. |
9.3 |
If clause 9.2 applies, the Parties shall, subject to clause 9.4, prior to disclosure of the Confidential Information: |
(a) |
notify the disclosing Party; |
(b) |
give the disclosing Party a reasonable opportunity to take steps to protect the confidentiality of the relevant Confidential Information; |
(c) |
consult with the disclosing Party with a view to agreeing in good faith on the form, content, timing and manner of disclosure or use, including taking into account any actual basis the disclosing Party may have to prevent or restrict disclosure or use, so as to ensure that as far as possible the extent of use or disclosure is strictly limited to that required, provided however that nothing in this Agreement shall be construed as a restriction on the receiving partys ability to respond to and comply a required disclosure under applicable law, rule, or regulation; and |
(d) |
immediately notify the person to whom the Confidential Information is to be disclosed or used by that it is Confidential Information and is therefore subject to the terms of this Agreement. |
9.4 |
If either Party is not permitted by law to notify the other Party prior to disclosure of the Confidential Information, the Party being asked to disclose the Confidential Information shall: |
(a) |
as soon as possible after disclosure and to the extent permitted by law, notify the other Party; |
(b) |
ensure that it only discloses Confidential Information to the extent necessary to comply with its obligations arising under any of clauses 9.2(a) to 9.2(e); and |
(c) |
immediately notify the person to whom the Confidential Information is to be disclosed or used by that it is Confidential Information and is therefore subject to the terms of this Agreement. |
9.5 |
The Parties shall: |
(a) |
establish and maintain effective security measures against unauthorised copying, use or disclosure of the Confidential Information and against damage to or destruction of the Confidential Information; |
(b) |
immediately notify the other Party of any actual or suspected unauthorised copying, use or disclosure of the Confidential Information; and |
11
(c) |
provide such assistance, as reasonably required by the disclosing Party, in relation to any proceedings that Party may take against any person for unauthorised copying, use or disclosure of the Confidential Information. |
9.6 |
Subject to compliance with clause 9.7, the Parties may disclose the Confidential Information to Permitted Recipients if the disclosure is necessary for the Permitted Purpose. |
9.7 |
Before disclosing any of the Confidential Information to any Permitted Recipient, the parties shall: |
(a) |
ensure that the Permitted Recipient agrees to be bound by, the obligations under this Agreement before the disclosure is made or access to Confidential Information is allowed. |
9.8 |
The rights and obligations under this clause 9 will have a duration of five (5) years from the expiry or termination of the last Work Order under this Agreement. For any Confidential Information that is still secret and confidential at the end of this period, if the disclosing Party requests and if the receiving Party concurs, this obligation of confidentiality shall be extended for up to an additional two (2) years. This clause 9.89.8 will survive the expiry or termination of this Agreement. |
10. |
Privacy |
10.1 |
The Research Organisation must obtain written consent of all Human Subjects for their participation in the Project only if identifiable health information will be shared. |
10.2 |
The Research Organisation must do the following in relation to any Identifiable Personal Information provided to it by Kazia under this Agreement or obtained in the course of performing the Services: |
(a) |
only process, use or disclose Identifiable Personal Information as required for the purpose of performing its obligations under the agreement; |
(b) |
in the course of performing its obligations under the agreement, comply with the Health Insurance Portability and Accountability Act (HIPAA) and the Privacy Act 1988 (Cth) and any privacy policy of Kazia as notified to the Research Organisation in writing (including amendments from time to time); |
(c) |
except as provided in clause 10.l (a) or as required by law, not disclose any Identifiable Personal Information without the written permission of Kazia; |
(d) |
take all reasonable steps to prevent the misuse or loss of and unauthorised use, modification, disclosure of and access to Identifiable Personal Information; |
(e) |
upon the expiry or termination of this agreement, either destroy or return to Kazia (at Kazias option and request) all Identifiable Personal Information (including any copies) and any record of the Identifiable Personal Information; and |
(f) |
provide full cooperation and assistance to Kazia in allowing individuals to whom any Identifiable Personal Information relates to have access to that information and exercise their rights to amend or make an annotation to the record of their Identifiable Personal Information. |
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10.3 |
Each Party must immediately notify the other Party on becoming aware of: |
(a) |
a complaint or an allegation of breach of applicable privacy laws by any person; or |
(b) |
an investigation or enforcement action by a regulatory authority, in connection with the Project or this Agreement (Data Issue). |
10.4 |
Each Party must cooperate reasonably with the other party in relation to any Data Issue, including providing all information and assistance reasonably requested by a Party. Each Party shall consult with the other Party and allow the other Party the right to make representations in connection with any Data Issue before responding to any Data Issue. |
11. |
Retention of Records |
11.1 |
Not with standing requirements under Applicable Laws to retain medical files, the Research Organisation shall retain all essential documents until at least 7 years after the expiry or termination of this Agreement, and shall not delete essential documents from its files without Kazias prior written consent. If Kazia requires record retention beyond seven (7) years, records will be stored at Kazias sole expense. |
12. |
Reporting Obligations |
12.1 |
The Research Organisation must provide Kazia with periodic reports relating to the Services on the date specified in the Work Orders. |
12.2 |
The periodic reports must include all matters specified in the Work Orders. |
13. |
Access |
13.1 |
The Research Organisation must keep true and accurate records including the scientific data produced during the conduct of the Project, expense records and time sheets (if required) in respect of all activities undertaken for the purposes of this Agreement. |
13.2 |
Unless specified in a Work Order, Kazia shall not have access to any Identifiable Personal Information. |
13.3 |
During the Term and for a period of one year thereafter , the Research Organisation agrees to allow Kazia, its Personnel, and authorized employees of any relevant regulatory body, access to the Project site (or any other location at which Services are being conducted), its Personnel and all records pertaining to the Project, audit records, documents and other data relating to the Project (other than Identifiable Personal Information) , which records may be redacted of any Confidential Information of other parties to whom Research Organisation owes an obligation of confidentiality (and provided that, in the event that the receiving party must redact third party Confidential Information, it will provide the disclosing party with a log containing a general, non-identifiable description of the redacted information) with reasonable advance notice and during normal business hours for the purpose of determining compliance with the terms of this Agreement and compliance with Applicable Laws. |
13.4 |
In the event that any regulatory authority carries out, or gives notice of its intention to carry out, an inspection of the Research Organisations facilities, or any other location at which the Project is being conducted or otherwise takes any action in relation to the Project , the Research Organisation shall immediately upon becoming aware of such inspection, notify Kazia in writing and shall specify in any such notice full details of any action taken or proposed by the relevant regulatory authority. The Research Organisation shall (so far as is consistent with Applicable Law) make any book, record, documents or information in relation to the Project available to the regulatory authority upon request and shall co-operate with the regulatory authority in connection with any such action, including by providing a duly authorized representative of the regulatory authority access to the Research Organisations facilities and/or any other location in which the Project is being conducted. |
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14. |
Insurance |
14.1 Each Party agrees to maintain a valid policy or program of insurance or self-insurance at levels and coverages sufficient to support its obligations assumed herein. Each Party shall provide a written documentation of such coverage upon request by other Party.
15. |
Intellectual Property |
15.1 |
Each Party acknowledges and agrees that Background Intellectual Property remains the property of the Party contributing that Background Intellectual Property. |
15.2 |
Each Party agrees to take all necessary steps to protect the Background Intellectual Property of the other Party and to give each other prompt notice of any infringement of the Background Intellectual Property which comes to their attention. Each Party agrees to give each other all assistance reasonably required to protect the Background Intellectual Property. The Party requiring the assistance shall meet any reasonable costs and expenses incurred by the Party providing the assistance. |
Research Organisation grants Kazia a royalty-free nonexclusive license to all data, discoveries or inventions developed or generated pursuant to this Agreement which relate to any information or materials, including the Test Materials, provided by Kazia under the Agreement and including new data, uses, processes or compositions directly relating to the information or materials provided by Kazia in connection with or related to the Services or a Project. Furthermore, Research Organisation grants to Kazia an exclusive option to obtain a royalty bearing, exclusive license under Research Organisations right to such data, discoveries or inventions.
16. |
Data Use |
16.1 |
Terms regarding the data to be provided by Research Organisation to Kazia shall be as negotiated in each study specific Work Order. |
17. |
Publications |
17.1 |
Kazia recognises that Research Organisation may wish to publish or otherwise publicly disclose the results of the Project. Research Organisation agrees to |
(a) |
submit all such intended publications or presentations to Kazia at least thirty (30) days prior to any intended submission or other public disclosure for Kazias review and comment; and |
(b) |
to delete any Confidential Information belonging to Kazia. |
14
17.2 |
During Kazias thirty (30) day review period, upon request from Kazia, Research Organisation agrees to delay submission for publication by up to ninety (90) days from the date an intended publication is provided to Kazia to allow Kazia to seek legal protection of Intellectual Property. |
17.3 |
No Party may use the name or indicia (including logos) of another Party without the prior written consent of that other Party. |
18. |
Use of Name and Promotional Activities |
18.1 |
Neither Party shall use the name or trademarks of the other Party or the names of current employees, affiliated physicians or faculty for publicity, advertising or other announcement purpose, except with the prior written consent of the other Party. By entering into this Agreement, the Research Organisation does not directly or indirectly endorse any product or service of Kazia or any third party that is or will be provided, whether directly or indirectly related to this Agreement. |
19. |
Liability |
19.1 |
Kazia and Research Organisation shall each be liable for its own negligence or wrongful misconduct and the negligence or wrongful misconduct of its respective officers, directors, employees and agents in connection with the Project. |
19.2 |
Neither Party will be liable to the other Party for penalties or liquidated damages or for special, indirect, consequential, punitive, exemplary or incidental damages of any kind regardless of whether any such losses or damages are characterized as arising from breach of contract, breach of warranty, tort, strict liability or otherwise, even if the other Party is advised of the possibility of such losses or damages, or if such losses or damages are foreseeable. |
19.3 |
The Parties liability under this Agreement or any Work Order is limited to the total amount paid for the Services performed by the Research Organisation in the twelve (12) months preceding the claim under all Work Orders in place under this Agreement. This provision does not apply to Claims relating to a breach of clause 9 or alleging death or personal injury caused by the negligence or intentional misconduct of a Party. |
20. |
Termination |
20.1 |
Either Party may terminate this Agreement or any Work Order by written notice to the other Party if any of the following events has occurred in respect of the other Party: |
(a) |
as necessary to protect the health, safety, or welfare of a subject participating in a study hereunder or under any applicable Work Order. |
(b) |
a material breach of any of its obligations under this Agreement which is capable of remedy and, the other Party fails to remedy that breach to the reasonable satisfaction of the first Party within 30 days after receipt of written notice from the notifying Party specifying the breach and requiring it to be remedied; or |
15
(c) |
a material breach of any of its obligations under this Agreement and the breach is not remediable. |
20.2 |
Either Party may terminate this Agreement or any Work Order upon 30 days written notice to the other Party. |
20.3 |
If notice of termination is given by either Party , the Parties agree to cooperate in respect of the transition of ongoing Services during the period of notice. |
20.4 |
If a Work Order is terminated under clause 20.3, the Research Organisation is entitled to be paid: |
(a) |
for all Services performed up to and including the date of termination, including any work in progress toward partially completed Services or incomplete units and milestones, and |
(b) |
any additional Services requested by Kazia in connection with the termination. |
20.5 |
Either Party may terminate this Agreement or any Work Order immediately on giving written notice to the other Party if that Party becomes insolvent, is dissolved or liquidated, makes a general assignment for the benefit of its creditors, or files or has filed against it a petition in bankruptcy, or has a receiver appointed for a substantial part of its assets. |
21. |
Consequences of Expiry or Termination |
21.1 |
If this Agreement is terminated or expires for any reason, then, in addition and without prejudice to any other rights or remedies available to either Party: |
(a) |
the Parties are immediately released from the obligations to continue to perform the Agreement except those obligations that by their nature survive termination; |
(b) |
the Research Organisation will return to Kazia all Test Materials and, where the Research Organisation terminates this Agreement under clause 20.2, will refund to Kazia any amounts paid in advance for Services not provided as at the effective date of termination; and |
(c) |
the Research Organisation shall use all reasonable efforts, upon the request of Kazia, to complete reports for all Human Subjects that have been entered into the Project as of the termination date of this Agreement. |
21.2 |
Unless specified in the relevant notice, termination of this Agreement will not affect any Work Orders in place at the effective date of termination. |
21.3 |
Termination of this Agreement shall not affect any rights or obligations which have accrued prior to that termination. |
22. |
Assignment |
22.1 |
Neither Party may assign nor otherwise transfer this Agreement or any of its rights or obligations hereunder to any third party without first obtaining the written consent of the other Party, such consent not to be unreasonably withheld. |
16
23. |
Independent Contractors |
23.1 |
For purposes of this Agreement, the relationship of the Parties to this Agreement is that of independent contractors and not agents of each other or joint venturers or partners. |
24. |
Notices |
24.1 |
All notices must be: |
(a) |
addressed to the person nominated and to the address or facsimile set out below or to any other address or facsimile number that a Party may notify to the other. |
if to the Research Organisation:
For Clinical Matters
Will be determined in each Work Order
For Administrative Matters
St. Jude Childrens Research Hospital
Attn: Contracts Coordinator
Address: 262 Danny Thomas Place, MS 720
Memphis, TN 38105
Facsimile: 901-525-9015
Email: sandra.fields@st jude.org or patricia.johnson@st jude.org
For Financial Matters
St. Jude Childrens Research Hospital
Attn: Rene Jooste
Address: 262 Danny Thomas Place, MS 720
Memphis, TN 38105
Facsimile: 901-525-9015
Email: rene.jooste@stjude.org
if to Kazia:
Attn: Chief Medical Officer
Address: Suite 502, 20 George Street, Hornsby, NSW 2077
Facsimile: +61-2-9476-0388
Email: gordon.hirsch@kaziatherapeutics .com
(b) |
signed by an authorized official of the Party; and |
(c) |
sent to the recipient by hand, email, prepaid post (airmail if to or from a place outside) or by facsimile. |
24.2 |
Without limiting any other means by which a Party may be able to prove that a notice has been received by other Party, a notice will be considered to have been received: |
(a) |
if sent by hand, when left at the address of the recipient; |
(b) |
if sent by pre-paid post, 3 days (if posted) or 10 days (if posted from one country to another) after the date of posting; or |
17
(c) |
if sent by facsimile, on receipt by the sender of an acknowledgment or transmission report generated by the senders machine indicating that the whole facsimile was sent to the recipients facsimile number; or |
(d) |
if sent by email, when the sender receives an automated message confirming delivery or four hours after the time the email is sent (as recorded on the device from which the sender sent the email) unless the sender receives an automated message that the email has not been delivered, whichever occurs first, but if a notice is served by hand or email, or is received by the recipients facsimile, on a day that is not a Business Day, or after 5:00 pm recipients local time on a Business Day, the notice will be considered to have been received by the recipient at 9.00 am on the next Business Day. |
25. |
Dispute Resolution |
25.1 |
A Party must not start arbitration or other legal proceedings about a dispute arising out of or in connection with this Agreement unless it first complies with this clause 25, except: |
(a) |
where a Party seeks urgent injunctive relief; or |
(b) |
where the dispute relates to compliance with this clause 25. |
25.2 |
Any dispute arising out of or in connection with this Agreement, including any dispute regarding the existence, validity or termination of this Agreement, must be referred by the Parties initially to their respective representatives as referred to in clause 2.5 for resolution. |
25.3 |
If the representatives of each Party are unable to resolve the dispute within five Business Days (or such other period agreed by the parties) after the dispute is referred to them, the dispute must be referred to senior managers of each Party. |
25.4 |
If the senior managers of each Party are unable to resolve the dispute within ten Business Days (or such other period agreed by the parties) after the dispute is referred to them, then either Party may refer the matter to arbitration to be heard by a sole arbitrator: |
(a) |
the arbitration will be conducted in accordance with the Arbitration Rules of the International Chamber of Commerce (ICC Rules); |
(b) |
the parties will use reasonable endeavours to agree, within a further five Business Days, on a suitably qualified professional who is not affiliated or engagedin any capacity with either Party to be engaged as the sole arbitrator; |
(c) |
if agreement is not reached for the appointment of the sole arbitrator within the period referred to in clause 25.4(a), either Party may request that the sole arbitrator be appointed in accordance with the ICC Rules; |
(d) |
the seat of the arbitration shall be New York; |
(e) |
the language of the arbitration shall be English; and |
(f) |
the Parties and the sole arbitrator shall at all times treat all matters relating to the proceedings and the award as confidential. |
18
26. |
Entire Agreement |
26.1 |
This Agreement (and the Schedules attached to it) represents the entire understanding of the Parties with respect to the subject matter hereof. Any modification, amendment or supplement to this Agreement attached hereto shall be in writing signed by an authorized representative of each Party. |
27. |
Force Majeure |
27.1 |
If a Partys ability to undertake its obligations under this Agreement is affected, or likely to be affected, by a Force Majeure Event: |
(a) |
that Party must promptly give to the other notice of that fact, including: |
(i) |
full particulars of the Force Majeure Event; |
(ii) |
an estimate of its likely duration; |
(iii) |
the obligations affected by it and the extent of its effect on those obligations; and |
(iv) |
the steps taken to rectify it; and |
(v) |
the obligations under this Agreement of the Party giving the notice are suspended to the extent to which they are affected by the Force Majeure Event as long as the Force Majeure Event continues. |
27.2 |
A Party claiming a Force Majeure Event must use its best endeavours to remove, overcome or minimise the effects of that Force Majeure Event as quickly as possible. |
27.3 |
If a Force Majeure Event continues for more than thirty days the Party not giving notice of the Force Majeure Event may immediately terminate this Agreement by written notice to the other. |
28. |
No Waiver |
28.1 |
Either Partys failure to require the other Party to comply with any provision of this Agreement shall not be deemed a waiver of such provision or any other provision of this Agreement. |
29. |
Severability |
29.1 |
If any of the provisions of, or a portion of any provision of, this Agreement is held to be unenforceable or invalid by a court of competent jurisdiction, the validity and enforceability of the other portion of such provision and/or the remaining provisions shall not be affected thereby. |
19
30. |
Survival of Provisions |
30.1 |
Notwithstanding expiration of this Agreement or termination for any reason, rights and obligations which are expressly stated or by their nature are intended to survive expiration or termination of this Agreement remain in full force and effect. |
31. |
Choice of Law |
This Agreement and all matters arising out of or relating to this Agreement shall be governed by the laws of the State of New York, without regard to choice of law principles.
32. |
Biological Samples |
31.1 |
Biological Samples shall be collected by the Research Organisation for the Project according to the Proposal, Work Order and the Informed Consent as approved by the applicable IRB. Biological Samples shall be used by the Research Organisation solely for purposes of the Proposal and only as specified in the Proposal Work Order, Informed Consent, and this Agreement; except that Research Organisation may collect Retained Samples. Research Organisation shall de-identify and store Retained Samples in an institutional bio-bank for use in compliance with applicable IRB approval, Informed Consent, and authorization forms. All identifiable Retained Samples must be destroyed at the Work Order completion. |
31.2 |
All information about the Retained Samples relating to the Test Materials, including whether or not the Project participant received the Test Material, shall be removed prior to release of Retained Samples to another investigator for other research. Biological Samples are property of the Research Organisation and shall not be used in any manner or for any purpose other than that described in the Proposal, Work Order and the terms and conditions of the Informed Consent signed by the Project participants or as otherwise authorized by the IRB. |
20
21
Schedule 1
Contract Details
1. |
Commencement Date |
1.1 |
This Agreement shall commence on November 17, 2017 |
2. |
Term |
2.1 |
Unless terminated earlier in accordance with the terms of this Agreement, the Term shall be for a period of five (S) years following the Commencement Date. |
22
Schedule 2
List of Kazia Affiliates and Subsidiaries
23
Schedule 3
Template Work Order
1. |
Parties |
The Parties to this Work Order are Kazia Therapeutics Limited (Kazia or Sponsor) and the Research Organisation (the Research Organisation).
2. |
Background |
Sponsor and the Research Organisation are [authorised Affiliates of] Parties to a Master Services Agreement dated DD MMM YYYY (MSA), the terms of which will govern the performance of this Work Order. Upon signature by Sponsor and by the Research Organisation, this Work Order is incorporated in and becomes part of the MSA.
3. |
Term and Termination |
This Work Order commences on DD MMM YYYY (Effective Date) and continues until the Services are completed or until this Work Order is terminated in accordance with the provisions of Clause 20 of the MSA.
4. |
Title of the Project |
The title of the Project is, TITLE with proposal number XXXXX (Proposal). The Project Proposal has been prepared under a separate cover and signed on behalf of the Parties for identification purposes.
5. |
Performance of Services by the Research Organisation |
The Research Organisation agrees to perform Services with respect to the Project as described in the Proposal and the Attachments to this Work Order.
6. |
Data |
7. |
Payment by Sponsor |
In consideration of the performance of Services under this Work Order, Sponsor will pay the Research Organisation in accordance with the Estimated Budget and the Schedule of Payments in Attachments C and D. [if applicable] the Research Organisation shall reference Sponsors purchase order No. [insert] on invoices for Services under this Work Order. Inquiries regarding payment under this Work Order shall be sent to the following Sponsor representative:
Sponsor Contact Name/Title:
Sponsor Contact Address:
Sponsor Contact e-mail/phone #:
24
8. |
Inconsistencies between this Work Order and the MSA |
If there should be any conflict or inconsistency between the MSA and this Work Order and any of its attachments, it is agreed that a specific provision of this Work Order will take precedence over and supersede the inconsistent or conflicting term of the MSA.
9. |
Attachments |
The following attachments to this Work Order form part of the Work Order:
Attachment A | Scope of Work and Transfer of Obligations | |||
Attachment B | Specifications, Assumptions and Estimated Timelines | |||
Attachment C | Estimated Budget | |||
Attachment D | Schedule of Payments and Terms | |||
Attachment E | Proposal |
Signed on behalf of | Signed on behalf of | |
The Research Organisation | Kazia Therapeutics Limited | |
By: | By: | |
Name: | Name: | |
Title: | Title: | |
Date: | Date: |
25
SJPl3K Work Order
1. |
Parties |
The Parties to this Work Order are Kazia Therapeutics Limited (Kazia) and St. Jude Childrens Research Hospital (the Research Organisation or Sponsor).
2. |
Background |
Kazia and the Research Organisation are Parties to a Master Services Agreement dated 17 November 2017 (MSA), the terms of which will govern the performance of this Work Order. Upon signature by Kazia and by the Research Organisation, this Work Order is incorporated in and becomes part of the MSA.
3. |
Term and Termination |
This Work Order commences on 30 June 2018 (Effective Date) and continues until the Services are completed or until this Work Order is terminated in accordance with the provisions of Clause 20 of the MSA.
4. |
Title of the Project |
The title of the Project is, PHASE 1 STUDY OF GDC-0084, A BRAIN-PENETRANT Pl3 KINASE/mTOR INHIBITOR, IN PEDIATRIC PATIENTS WITH NEWLY DIAGNOSED DIFFUSE INTRINSIC PONTINE GLIOMA OR OTHER DIFFUSE MIDLINE GLIOMAS AFTER RADIATION THERAPY (Protocol). The Project Protocol has been prepared under a separate cover and signed on behalf of the Parties for identification purposes.
5. |
Investigator |
Christopher Tinkle, MD, PhD, an employee of the Research Organisation acting within the scope of his/her employment shall serve as the principal investigator (Investigator) for the Project and has the necessary qualifications, training, knowledge and experience to conduct such a clinical trial.
Amar Gajjar, MD, an employee of the Research Organisation acting within the scope of his/her employment shall serve as the co-principal investigator (Co-lnvestigator) for the Project and has the necessary qualifications, training, knowledge and experience to conduct such a clinical trial.
6. |
Performance of Services by the Research Organisation |
The Research Organisation agrees to perform Services with respect to the Investigator initiated study Project as described in the Protocol and the Attachments to this Work Order.
1
7. |
Data |
In recognition of the importance of disseminating information relating to any novel or important observations or results related to the Study Drug and arising from the Protocol (Study Data ), the parties hereby agree to the following:
A. |
The Study Data and all copyrights therein shall be the property of the Research Organisation, subject to the right of Kazia as specified below. |
B. |
The Research Organisation shall ensure that the Study Data are kept in orderly, safe, and secure storage in accordance with regulatory requirements for document retention following the local archiving regulations for such data. |
C. |
The Research Organisation shall grant Kazia access to all Study Data generated for study primary objectives, secondary objectives, exploratory pharmacodynamic and pharmacogenetic objectives, and exploratory biology objectives as outlined in the Protocol in the course of the Study at no additional cost. Kazia shall have the right to make copies of these Study Data. Notwithstanding any other provision of the Agreement, Kazia and its Affiliates and their licenses or sublicenses shall have the right in perpetuity to use these Study Data for all purposes, including, but not limited to regulatory purposes (e.g. pediatric study plan (PSP), or paediatric investigation plan (PIP)), patent purposes, public information disclosure responsibilities, and publication reference purposes at no additional costs. |
D. |
The Research Organisation shall notify Kazia of any suspected unexpected serious adverse reactions (SUSARs) during the course of the Study within 24 hours of notification of their occurrence, so that Kazia may fulfil its regulatory reporting requirements. The Research Organisation shall reasonably support any necessary follow-up of SUSARs. In addition, the Research Organisation shall provide quarterly safety listings to Kazia for in clusion in its mandatory regulatory filings. |
E. |
The Research Organisation shall ensure that the patient informed consent identifies all anticipated purposes for the use of Study Data and shall ensure patient informed consent permits the sharing of Study Data generated for study primary objectives, secondary objectives, exploratory pharmacodynamic and pharmacogenetic objectives, and exploratory biology objectives as outlined in the Proposal with Kazia, its affiliates and any successors of either party, including those located outside the United States. In obtaining and documenting that patient informed consent, the Research Organization shall comply with the applicable regulatory requirement(s) and shall adhere to Good Clinical Practices as set forth in Title 21 of the U.S. Code of Federal Regulations and to the ethical principles as laid out in the Declaration of Helsinki. |
F. |
The Parties agree that Study Drug related research safety data generated during the course of the Study may be used fully by Kazia for any legitim ate businesspurpose without any additional payments being made to Institution. |
8. |
Disclosure |
The terms of this Work Order shall remain confidential between the Parties. Notwithst anding this, it is acknowledged that Kazia , as a publicly-listed company, may be obliged from time to time to make disclosures regarding the existence and progress of this Study.
2
9. |
Payment by Kazia |
In consideration of the performance of Services under this Work Order, Kazia will pay the Research Organisation in accordance with the Estimated Budget and the Schedule of Payments in Attachments C and D. [if applicable] the Research Organisation shall reference Kazias purchase order No. on invoices for Services under this Work Order. Inquiries regarding payment under this Work Order shall be sent to the following Kazia representative:
Kazia Contact Name/Title: Gabrielle Heaton, Director, Finance & Administration
Kazia Contact Address: Three International Towers, Sydney NSW 2000
Kazia Contact e-mail/ phone #: gabrielle.heaton@kaziatherapeutics.com / +61 (O) 418 532 393
10. |
Inconsistencies between this Work Order and the MSA |
If there should be any conflict or inconsistency between the MSA and this Work Order and any of its attachments, it is agreed that a specific provision of this Work Order will take precedence over and supersede the inconsistent or conflicting term of the MSA.
11. |
Attachments |
The following attachments to this Work Order form part of the Work Order:
Attachment A | Scope of Work and Transfer of Obligations | |||
Attachment B | Specifications, Assumptions and Estimated Timelines | |||
Attachment C | Budget | |||
Attachment D | Schedule of Payments and Terms | |||
Attachment E | Protocol | |||
Attachment F | GMP Responsibilities | |||
Attachment G | Shipment Request Form |
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
Signed on behalf of | Signed on behalf of | |||||||
The Research Organisation | Kazia Therapeutics Limited | |||||||
By: | /s/ Terrence Geiger | By: | /s/ James Garner | |||||
Name: | Terrence Geiger, MD, PhD | Name: | James Garner | |||||
Title: | SVP & Deputy Director for Academic | Title: | Chief Executive Officer | |||||
and Biomedical Operations | Date: | October 2, 2018 | ||||||
Date: | September 28, 2018 |
Read and Acknowledge | Read and Acknowledge | |||||||
By: | /s/ Christopher Tinkle | By: | /s/ Amar Gajjar | |||||
Name: | Christopher Tinkle, MD, PhD | Name: | Amar Gajjar, MD | |||||
Title: | Investigator | Title: | Co-Investigator | |||||
Date: | September 13, 2018 | Date: | September 12, 2018 |
4
ATTACHMENT A
SCOPE OF WORK AND TRANSFER OF OBLIGATIONS
The study to be performed under this agreement shall be performed in accordance with the terms of the final protoco,l including as it may be amended in accordance with the terms of this agreement for the study titled SJPl3K: Phase 1 Study of GDC-0084, A Brain Penetrant Pl3Kinas e/ mTOR Inhibitor, in Pediatric Patients with Newly Diagnosed Diffuse Intrinsic Pontine Gliomas or Other Diffuse Mid line Gliomas after Radiation Therapy (the Proposal), which is attached as Attachment E and incorporated into this work order as reference. Where St. Jude Childrens Research Hospital (the Research Organisation) is the study sponsor of this Investigator initiated study and Kazia Therapeutics Limited (Kazia) is providing financial support per Attachment C, study drug, and shipment of study drug.
The Research Organisation certifies that, to the best of its knowledge, its facilities and population are adequate to perform the Proposal , SJPl3K. The Research Organisation and the Principal Investigator agree that all aspects of the Proposal will be conducted in conformity with all applicable federal, state, local laws and regulations, and the principles of good clinical practice as laid down by ICH topic E6, Note for Guidance on Good Clinical Practice CPMP/ICH/135/95 (hereinafter referred to as GCP). The Research Organisation and the Principal Investigator further agree not to conduct any research activities with the Study Drug which are contract to the provision of the protocol our outside the scope of the Proposal. The Research Organisation will serve as the legal sponsor of the protocol and will fulfill the requisite sponsor duties and obligations in conducting the Proposal.
The clinical trials primary objectives are to: estimate the maximum tolerated dose (MTD) and/or recommended phase 2 dose (RP2D) of GDC-0084 in pediatric patients with newly diagnosed midline glioma, including diffuse intrinsic pontine glioma (DIPG); define and describe the to xicities associated with administering GDC-0084 after radiation therapy (RT) in a pediatric population; characterize the pharmacokinetics of GDC-0084 in a pediatric population.
The clinical trials secondary objectives are to: estimate the rate and duration of radiographic response in patients with newly diagnosed DIPG or other diffuse midline glioma treated with RT followed by GDC- 0084; estimate the progression-free survival (PFS) and overall survival (OS) distributions for patients with newly diagnosed DIPG or other diffuse midline glioma treated with RT followed by GDC-0084.
The clinical trials exploratory pharmacodynamic and pharmacogenetic objectives are to: explore the biologic activity of GDC-0084 by evaluating protein phosphorylation of AKT, S6, and 4EBP1 in peripheral blood mononuclear cells (PBMCs) before, during, and after treatment with GDC-0084; evaluate molecular markers of the Pl3K signaling pathway in archival tumor tissue when available; explore the association between specific polymorphisms (CYP3A/ 4/ 5, PgP, etc.) and the pharmacokinetics of GDC-0084.
The clinical trials exploratory biology objectives are to: identify characteristic alterations in diffuse midline glioma in cell-free DNA (cfDNA) in biologic samples (blood and, when available, CSF) as a novel,
5
non-invasive method of detecting and tracking changes in the status of diffuse midline glioma with therapy and to assess the correlation of cfDNA and mutations in archival tumor samples, when available; perform immune-cell profiling in serial blood samples and, when available, in CSF and archival tumor samples and to explore associations of these findings with ORR, PFS, and OS estimates; perform single-cell RNA sequencing on archival tumor samples, when available, and to characterize tumor subpopulations .
The clinical trials exploratory imaging objectives are to: assess intralesional changes induced by RT alone by using advanced MRI techniques (perfusion, diffusion, and spectroscopy), to investigate whether those changes are correlated with clinical response and/or survival outcomes, and to determine whether such metrics differentiate patients with pseudoprogression from those with true progressive disease after completion of RT; evaluate changes in tumor (18F]fluorod eoxyglucose(FDG) uptake as assessed by positron emission tomography (PET) during the first cycle of GDC-0084 administration; evaluate changes in tumor [11C]m ethionine (MET) uptake as assessed by PET imaging during the first three cycles of GDC-0084 administration and to determine whether MET-PET metrics differentiate patients with pseudoprogression from those with true progressive disease.
The clinical trials exploratory outcome objective is to explore the feasibility and interobserver variability of administering the modified Neurologic Assessment in Neuro-Oncology (NANO) scale test to pediatric patients with DIPG or other diffuse midline glioma.
To achieve these objectives, The Research Organisation and Kazia agree to perform the following study-related activities
Scope of Work by Party:
|
St. Jude Childrens Research Hospital (the Research Organization): |
|
IND Holder and Study Sponsor |
|
Regulatory Preparation, Submissions, and Reporting per Guidelines. Reporting to Kazia per SJPl3K Protocol. |
|
Clinical Trial Monitoring |
|
Clinical Trial Advertising |
|
Study Drug Labeling and Storage (Limited Supply), Distribution to Patients, and Destruction (per Kazia Requirements) |
|
Patient Recruitment, Consenting, and Enrollment |
|
Dose Level and Strata Assignment |
|
Patient Clinical Assessments |
|
All Research Exams |
|
Data Collection and Storage |
|
Sample Collection, Storage, Processing, and Analysis per Research Objectives |
|
Pharmacokinetic Sample Analysis and Modeling |
|
Biostatistical Analysis |
|
Provide Trial Funding per Attachment C |
6
|
Study Report Development |
|
Publication/Poster/Presentation Development |
|
Kazia Therapeutics Limited (Kazia): |
|
Provide Cross Reference Letter to Kazia IND for St. Jude IND Submission |
|
Notify St. Jude of GDC0084 Safety-Related Events in Adult Trials |
|
Provide latest and updated 1B |
|
Provide Study Drug, Shipment to St Jude, Instructions for Study Drug Destruction |
|
Provide Partial Trial Funding per Attachment C |
|
Review Protocol Amendments in a Timely Manner |
|
Review Publication/Poster/Presentations in a Timely Manner |
7
ATTACHMENT B
SPECIFICATIONS, ASSUMPTIONS AND ESTIMATED TIMELINES
Study Name: Phase 1 Study of GDC-0084, A Brain Penetrant Pl3Kinase / mTOR Inhibitor, in Pediatric Patient s with Newly Diagnosed Diffuse Intrinsic Pontine Gliomas or Other Diffuse Mid line Gliomas after Radiation Therapy (SJPl3K)
Study Site: St. Jude Childrens Research Hospital
Targeted Number of Study Subjects: Up to 41 Subjects
As the Rolling-6 design allows for up to six patients at each dose level, and given the relatively long period between enrollment and the end of the DLT observation period, we anticipate that we may enroll six patients per dose level for Stratum Al. Given that up to four dose levels will be studied and that the cohort at the MTD will be expanded to 12 patients, we anticipate a maximum enrollment of 30 evaluable patients for the dose-finding component. Taking into account the accrual of six additional patients for Stratum A2 after the completion of Stratum Al, we may enroll a total of 36 eligible and evaluable patients. It is typical to encounter eligible patients who enroll on a phase 1 trial but become unevaluable for toxicity assessmentas a result of their inability to complete the DLT observation period. Thus, we may enroll three to five additional patients to compensate for the loss to the study of patients due to in evaluability, for a total estimated sample size of 41 patients.
Estimated Recruitment Period: August 2018 - August 2021
We expect to enroll one or two patients per month. Thus, the MTD estimation should be completed within 2 years after study initiation, and we expect that up to 1 additional year may be needed to complete the expansion cohorts.
Principal Investigator Name: Chri stopher Tinkle, MD
Co-Principal Investigator Name : Amar Gajjar, MD
Address: St. Jude Childrens Research Hospital
262 Danny Thomas Place, MS 210
Memphis, TN 38105
Responsible Institutional Review Board (IRB): St. Jude Childrens Research Hospital In stitutional Review Board
8
Attachment C
SJPl3K Study Budget
Kazia
Activity | Unit Cost |
Max Possible Units (n) |
Activity Total (Max+ includes Overhead) | CPTCodes | ||||
All Subject to Overhead |
% overhead for all activities (not included with unit cost below)
|
|||||||
REQUIRED EXAMS |
||||||||
Contraception Counseling |
99211 | |||||||
Venipuncture |
36415 | |||||||
Pregnancy Test (urine or serum) |
81025 and 84702 | |||||||
Pharmacy Oral Dose - per course dispense per drug |
No CPT Code Standard Pharmacy Fee | |||||||
Pharmacokinetics Serum |
36415, 36591, 36592, 99000, 99001, 99195 |
|||||||
Matched Pharmacokinetics CSF and Serum |
36415, 36591, 36592, 99000, 99001, 99195 |
|||||||
OPTIONAL RESEARCH EXAMS |
||||||||
Pharmacodynamic Tissue Sample |
36415, 36S91, 36592, 99000, 99001, 99195 |
|||||||
Pharmacodynamic Serum PBMC |
36415, 36591, 36592, 99000, 99001, 99195 |
|||||||
Per Patient Costs Summary.. |
9
10
11
Per Patient Cost (assumes 28 patients receive RT + 26 courses of therapy) |
Patients Max |
St . Jude Per Pt Max: |
St. Jude Total :
St. Jude Total (with safety assessments for up to patients):
|
|||||
Administrative and Regulatory Fees
|
||||||||
Administrative Startup Fees (one time) | ||||||||
lnvestigational Pharmacy Startup (one time) | ||||||||
lnvestigational Pharmacy Storage Fee (annual) |
||||||||
Regulatory Prep (one time) | ||||||||
IRB Review (initial review first submission) |
||||||||
Record Storage/Archiving IRB records (onetime fee) |
||||||||
Budget/MCA Fee | ||||||||
Annual IRB Review (per occurrence) | ||||||||
Amendment (per occurrence) | ||||||||
Reconsent | ||||||||
IND (includes miscellaneous cost for institution to hold the IND) | ||||||||
Project Management | ||||||||
Translation Fees | ||||||||
Protocol Monitoring | ||||||||
EDC and eCRF development and testing |
12
|
Budget Summary |
||||||
Activity
|
St. Jude Childrens Research Hospital
|
Kazia
|
Total
|
|||
Patient Assessments (Max Possible)
|
||||||
Administrativeand Regulatory Fees
|
||||||
Pharmacoklnetic Research
|
||||||
Total
|
The funding for this study may be offset by independent grant support. This may be grant support of research organization alone of in collaboration with Kazla. In the latter case, the distribution of funds will be agreed at the time of grant award.
13
Attachment D
Schedule of Payments and Terms
Amount w/
overhead |
Expected
Payment Date |
Condition of
Payment |
Total w/overhead | |||
Invoiced | Patient costs for first patients (invoice monthly as patients are accrued) | |||||
Invoiced | SAE Reporting (total 15) | |||||
Invoiced |
Pharmacokinetic Start Up Fee |
|||||
Invoiced |
Pharmacokinetic CRA Analysis (3 years total) |
|||||
Invoiced | Pharmacokinetic Senior Research Tech (3 years total) | |||||
Invoiced | Pharmacokinetic Biomedical Modeler (3 years total) | |||||
Invoiced | Pharmacokinetic Analysis Start Up Fee and annual supplies (3 years total) | |||||
Kazia Total Budget
|
14
Attachment E
PROTOCOL
(Attached by reference)
15
Attachment F
GMP Responsibilities
GMP Responsibilities for Phase l Clinical Study Drug GDC-0084 Capsules
|
||||||
Background & Scope: (i) St. Jude Childrens Research Hospital plans to Sponsor a Phase 1 pediatric clinical study under clinical protocol SJPI3K with GMP responsibilities as indicated below. (ii) Kazia will supply to St Jude GMP manufactured and primary packed Study Drug (lnvestigational Medicinal Product - IMP) for Phase 1 clinical trial use in the US under St Jude clinical protocol SJPI3K. Kazia GMP responsibilities as indicated below. |
||||||
# | Responsibility | Kazia | St Jude | |||
I |
IMP: Supply of GMP manufactured and primary packed (unlabelled) Study Drug GDC-0084 capsules) in the agreed strengths (active only, no placebo), with suooorting GMP documentation (e.g. manufacturers CoAs) | X | ||||
r2 |
IMP: Each bottle of Study Drug supplied will be identified (either labelled or ink-jet orinted) with unique lot number to prevent risk of mix-up | X | ||||
3 |
Retest Date & Storage Conditions: Provision of retest date(s) and storage conditions for the Study Drug supplied |
X | ||||
IMP Ordering: Requests for Study Drug shipment will be provided to Kazia in !writing |
X | |||||
5 |
!Shipping: Will ship Study Drug to St Jude accompanied by relevant paperwork (e.g. !packing list) |
X | ||||
ki |
Receipt & Labelling: Receive, store and label Study Drug for clinical trial use |
X | ||||
7 |
Release of IMP: responsibility for release of labelled Study Drug for Phase I clinical !trial use in US |
X | ||||
8 |
Product Defects I Product Complaints: will promptly notify the other party if a Product Quality Defect is observed or reported (e.g. damaged Study Drug capsules or !Primary packaging) | X | X | |||
19 |
!Product Recall: Kazia are overall responsible for any product recall decision. Kazia i will notify St Jude in the event of a Product Recall and both parties will work together las may be required to coordinate both the Recall activities and notifications to the elevnt regulatory authorities as may be applicable [Note: Product Recall may also be referred to as stock recovery in certain territories (e.g. US) as the Sponsor exerts direct control over the drugl. | X | X | |||
10 |
Returns & Destruction: Responsibility for any returns and destruction rests with rNote: the process for destruction to be agreed with Kazial | X |
16
Attachment G
Shipment Request Form
17
AMENDMENT No. 1 to the
Work Order
This Amendment No. 1 (Amendment) is entered into as of May 15, 2019 (the Effective Date) by and between St. Jude Childrens Research Hospital, Inc., located at 262 Danny Thomas Place, Memphis, Tennessee 38105 (St. Jude or Sponsor ) and Kazia Therapeutics Limited (Kazia, located at Suite 502, Level 5, 20 George Street, Horns by, NSW 2077, for the Study entitled PHASE 1 STUDY OF GDC-0084, A BRAIN-PENETRANT Pl3 KINASE/mTOR INHIBITOR, IN PEDIATRIC PATIENTS WITH NEWLY DIAGNOSED DIFFUSE INTRINSIC PONTINE GLIOMA OR OTHER DIFFUSE MIDLINE GLIOMAS AFTER RADIATION THERAPY (Protocol).
RECITALS |
|
A. |
The Parties entered into a Master Agreement effective 17 November 2017. |
B. |
The Parties entered into a Work Order under that Master Agreement effective 30 June 2018. |
C. |
The Parties wish to amend the terms of the Work Order as set forth below. |
1. Change in Attachment D - Schedule of Payments and Terms. Attachment D is hereby deleted and replaced with the following
Attachment D
Schedule of Payment and Terms
Amountw/ overhead |
Expected Payment Date |
Condition of Payment | Total w/ overhead | |||
Invoiced | Patient costs for 28 patients (invoice monthly as patients are accrued) | |||||
Invoiced | SAE Reporting (total 15) | |||||
Invoiced | Pharmacokinetic Start Up Fee | |||||
Invoiced every 6 months starting 1st July 2018 until last payment on 1st January 2021. |
Pharmacokinetic CRA Analysis (3 years total) | |||||
Invoiced every 6 months |
Pharmacokinetic Senior Research Tech (3 years total) |
IN WITNESS WHEREOF, the parties agree to the above terms, have caused this Agreement to be executed and delivered by their authorized representatives, and acknowledge receipt of a copy of this Agreement.
ST. JUDE CHILDRENS RESEARCH HOSPITAL, INC.
By: | /s/ Terrence Geiger | |
Name: | Terrence Geiger, M.D., Ph.D. | |
Title: | SVP & Deputy Director for Academic & Biomedical Operations | |
Date: | June 18, 2019 |
KAZIA THERAPEUTICS LIMITED
By: | /s/ James Garner | |
Name: | James Garner | |
Title: | Chief Executive Officer | |
Date: | June 7, 2019 |
Read and Acknowledged By:
/s/ Christopher Tinkle | ||
Christopher Tinkle, MD, PhD, Investigator | ||
Date: | June 12, 2019 |
Read and Acknowledged By:
/s/ Amar Gajjar | ||
Amar Gajjar, MD, Co-Investigator | ||
Date: | June 12, 2019 |
Exhibit 12.1
Certification of the Chief Executive Officer as required by
Rule 13a-14(a) of the Securities Exchange Act of 1934
I, James Garner, certify that:
1. |
I have reviewed this Annual Report on Form 20-F for the fiscal year ended June 30, 2019 (Report) of Kazia Therapeutics Limited (the Company); |
2. |
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Report; |
4. |
The Companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) ) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f) for the Company and have: |
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) |
evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect the Companys internal control over financial reporting; and |
5. |
The Companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys Board of Directors (or persons performing the equivalent functions). |
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information; and |
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
/s/ James Garner |
James Garner |
Chief Executive Officer |
Date: October 21, 2019
Exhibit 12.2
Certification of the Director of Finance and Administration as required by
Rule 13a-14(a) of the Securities Exchange Act of 1934
I, Gabrielle Heaton, certify that:
1. |
I have reviewed this Annual Report on Form 20-F for the fiscal year ended June 30, 2019 (Report) of Kazia Therapeutics Limited (the Company); |
2. |
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Report; |
4. |
The Companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) ) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) |
evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect the Companys internal control over financial reporting; and |
5. |
The Companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys Board of Directors (or persons performing the equivalent functions). |
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information; and |
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
/s/ Gabrielle Heaton |
Gabrielle Heaton |
Director of Finance and Administration |
Date: October 21, 2019
Exhibit 13.1
Certification of the Chief Executive Officer and the Director of Finance and Administration as required by Rule 13a-14(b) of the Securities Exchange Act of 1934
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), James Garner, Chief Executive Officer, and Gabrielle Heaton, Director of Finance and Administration, of Kazia Therapeutics Limited, an Australian corporation (the Company), hereby certifies that:
(1) |
The Companys periodic report on Form 20-F for the period ended June 30, 2019 (the Form 20-F) fully complies with the requirements of section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 as amended; and |
(2) |
The information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company. |
* * *
Chief Executive Officer | Director of Finance and Administration | |||
/s/ James Garner |
/s/ Gabrielle Heaton |
|||
James Garner | Gabrielle Heaton | |||
Date: October 21, 2019 | Date: October 21, 2019 |
This certification accompanies the Form 20-F to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Kazia Therapeutics Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 20-F), irrespective of any general incorporation language contained in such filing.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We have issued our report dated October 21, 2019 with respect to the consolidated financial statements included in the Annual Report of Kazia Therapeutics Limited on Form 20-F for the year ended June 30, 2019.
We consent to the incorporation by reference of the said report in the Registration Statement of Kazia Therapeutics Limited on Form F-3 (File No. 333-226240).
/s/ Grant Thornton Audit Pty Ltd |
GRANT THORNTON AUDIT PTY LTD |
Sydney, Australia
October 21, 2019