SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Kazia Therapeutics Limited (Registrant)

Kate Hill

Kate Hill

Company Secretary

Date 24 March 2021

Dear Shareholder,

It is a pleasure to present you with the company’s report for the half-year to 31 December 2020. This has been a period in which our company has achieved some very significant milestones in its corporate growth, and I wanted to take this opportunity to summarise some of the important progress that has been made.

In financial terms, the cash balance as at 31 December 2020 was $19.4 million, versus $8.7 million at 30 June 2020. Our net assets were $31.7 million, up from $14.1 million as at 30 June 2020. We reported net outlays of $12.3 million to progress the company’s pipeline. In line with our ongoing focus on cost efficiency, over 90% of our expenditure in this period was invested directly in our R&D programs.

These summary figures both illustrate and disguise some important financial movements. In October 2020, we completed a fully underwritten, non-renounceable entitlement offer to eligible shareholders, which resulted in gross proceeds of just over $25 million. These funds are being applied directly to the GBM AGILE pivotal study for paxalisib. As this study moved into an operational phase during 4Q CY2020, we made material one-off payments to our partner, the Global Coalition for Adaptive Research. It has been, in that sense, an exceptional period from a financial perspective, but these cashflows illustrate a substantial step-change in the nature of the company’s business.

At the end of December 2020, the first site in GBM AGILE opened to the paxalisib arm, and recruitment is now well underway. The initial focus is on sites in the United States, with expansion to Canada, the EU, and China anticipated during CY2021.

To summarise these developments in just a few words, Kazia is now a ‘phase III company’. In the immensely challenging and competitive landscape of drug development, we have joined a rarefied group of organisations that has brought a potential new therapy to the cusp of commercialisation. Should paxalisib meet our hopes in the GBM AGILE study, we expect it to become a valuable new therapy for one of the most challenging cancers in modern medicine, and in so doing to claim a share of a market opportunity that is conservatively sized at US$ 1.5 billion per annum.

By crossing this threshold, our focus as a business has necessarily begun to change in subtle but fundamental ways. I have said before that any drug development company is measured by the scientific data it is able to generate. This remains true for Kazia, and we expect a rich flow of new information about our drug during the coming year. However, there is also a sense in which paxalisib’s potential is now clear. We know, as best we can, that the drug is active in patients with glioblastoma. Further data will no doubt teach us much more, but the critical decision to move into a pivotal study has already been made. As such, our focus now shifts to commercialisation, and to putting in place the plans and strategies necessary to make paxalisib available to patients as swiftly as possible, and to realise the maximum value for our shareholders.

We have said that we expect the commercialisation of paxalisib to occur in the context of a partnership with one or more larger companies. The Board is highly cognisant of the delicate balance between partnering early, which minimises risk and expenditure, and partnering late, which maximises value for the licensor. We envisage a staged approach for paxalisib, which will allow us to bring on board the right partners at the right time.

We are currently in discussion with several companies who may represent the first stage of that process, and we expect to share further detail in due course.

In the meantime, expanding broader interest in our asset continues to offer new opportunities to build on the work that has already been done. In 4Q CY2020, we announced two new clinical collaborations: a study at Dana Farber Cancer Institute in primary CNS lymphoma, and a study by the Pacific Pediatric Neuro-Oncology Consortium in DIPG. These new projects bring to a total of eight the number of ongoing studies of paxalisib in various forms of brain cancer. As I have previously remarked, this is a program whose breadth and quality would be the envy of a much larger company.

In January 2021, the fifth product in the PI3K inhibitor class was approved by FDA: Ukoniq (umbralisib), developed by TG Therapeutics (NASDAQ: TGTX) is indicated for refractory lymphomas. This approval, which was preceded by an award of breakthrough designation for the drug, illustrates the growing potential of the PI3K inhibitor class, and the sense in which this group of treatments have moved to the mainstream of cancer therapy since we licensed paxalisib from Genentech in 2016.

In line with our stated strategy to seek a partner for Cantrixil, a process is well underway, and has been driven by the recent positive data from the phase I study in ovarian cancer. We look forward to reporting progress as those discussions move forward.

On 30 June 2020, our share price on the ASX was $0.46 and by 31 December 2020, it had risen to $1.16, and is currently trading around $1.30 - $1.40. This represents a 150% increase in just six months. Underpinning this growth is a very much greater level of engagement from specialist, long-term institutional investors. Indeed, we estimate that approximately 50% of our stock is now in the hands of professional investors. We have worked hard to make Kazia into the highly investible company that it is today, and earning the support of these investors has been critical to our recent achievements.

Over the last 5 years Kazia has evolved from being a preclinical company with a market capitalisation of around $30 million to where it stands today as a late-stage clinical company, with over five times more valuable, and with substantial international interest from investors, partners, scientists, and clinicians.

As we look to the future, I believe that the pace of transformation in our company will only increase as we continue along the journey towards a commercial product. On behalf of my fellow directors, the CEO, and the management team, I want to thank all our shareholders for their continuing support of the company, and I look forward to sharing our further progress during the year ahead.

Yours sincerely,

/s/ Iain Ross

Iain Ross

Chairman of the Board

Kazia Therapeutics Limited

ABN 37 063 259 754

Half Yearly Report - 31 December 2020

Kazia Therapeutics Limited Directors’ report 31 December 2020

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of Kazia Therapeutics Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the half-year ended 31 December 2020.

Directors

The following persons were directors of Kazia Therapeutics Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

Iain Ross

Bryce Carmine

Steven Coffey

James Garner

Principal activities

During the financial year the principal continuing activity of the consolidated entity consisted of pharmaceutical research and development.

Review of operations

The loss for the consolidated entity after providing for income tax amounted to $6,363,560 (31 December 2019: $5,881,185).

The attached financial statements detail the performance and financial position of the consolidated entity for the half-year ended 31 December 2020.

Cash resources

At 31 December 2020, the consolidated entity had total funds of $19,366,073 comprising cash in hand and at bank of $11,366,073 and short term deposits of $8,000,000.

Impact of COVID-19

The directors have considered the impact of COVID-19 on the operations of the Company and make the following observations:

Research and development report

The lead R&D program for the consolidated entity is paxalisib (formerly known as GDC-0084), a small-molecule dual inhibitor of the phosphatidylinositide 3-kinase (PI3K) pathway and the mammalian target of rapamycin (mTOR), which was licensed from Genentech, Inc. in October 2016. The development candidate is distinguished from the majority of molecules in this class by its ability to cross to the blood-brain barrier, which has been demonstrated in multiple animal species and confirmed in human clinical data.

Paxalisib is protected by granted or pending composition-of-matter patents in all commercially relevant territories. Loss of exclusivity varies between territories, but is no earlier than 2030 in any territory. Paxalisib was granted Orphan Drug Designation for glioblastoma by the US FDA in February 2018, and for the broader indication of glioma in August 2020. In addition, paxalisib was granted Rare Pediatric Disease Designation for certain forms of childhood brain cancer by the US FDA in August 2020, and was also granted Fast Track Designation for glioblastoma in August 2020.

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Kazia Therapeutics Limited Directors’ report 31 December 2020

Paxalisib has completed a 47-patient phase I clinical study under Genentech in patients with progressive or recurrent high grade glioma (NCT01547546), which showed the drug to be generally safe and well-tolerated, and which provided pharmacodynamic proof of concept and signals of potential clinical activity. This study was published in Clinical Cancer Research, and a companion paper detailing a post hoc analysis of imaging data from the study has been published in the same journal.

In February 2020, the company completed recruitment to a phase II clinical trial of paxalisib in patients with newly-diagnosed glioblastoma and unmethylated MGMT promotor status (NCT03522298), which is the primary target commercial population. This study has reported several interim data read-outs during CY2020, showing a strong signal of potential clinical activity. The study remains ongoing in follow-up, and final data is anticipated during CY2021.

In October 2020, the company executed a definitive agreement with the Global Coalition for Adaptive Research (GCAR) to introduce paxalisib into the ongoing adaptive platform study, GBM AGILE (NCT03970447). This study is designed to provide substantial evidence for approval of new drugs in glioblastoma, and is intended to serve as the pivotal study for paxalisib in US, EU, China, and other markets. The first patient recruited by a site opened to the paxalisib arm occurred on 7 January 2021.

Four investigator-initiated studies continued to progress during the period: a phase I study with paxalisib in diffuse intrinsic pontine glioma (DIPG) at St Jude Children’s Research Hospital in Memphis, TN (NCT03696355), a phase II study with paxalisib in HER2+ breast cancer brain metastases at Dana-Farber Cancer Institute in Boston, MA (NCT03765983), a phase II multi-drug, genomically-guided study in brain metastases run by the Alliance for Clinical Trials in Oncology (NCT03994796), and a phase I study with paxalisib in combination with radiotherapy for brain metastases at Memorial Sloan Kettering Cancer Center in New York, NY (NCT04192981).

In September 2020, the company entered into an agreement with Dana-Farber Cancer Institute in Boston, MA to launch a new investigator-initiated study in primary CNS lymphoma. This study is expected to commence recruitment during 1H CY2021.

The consolidated entity is also developing Cantrixil (TRX-E-002-1), a small-molecule agent arising from an in-house discovery program. Through a collaboration with researchers at Yale University, Cantrixil has shown in vitro and in vivo activity against both differentiated cancer cells and cancer stem cells (sometimes referred to as tumour-initiating cells), which are believed to be an important contributor to chemotherapy resistance and disease recurrence. A phase I study of Cantrixil in patients with advanced recurrent epithelial ovarian cancer (NCT02903771) has been completed, and top-line data was announced in December 2020. The company expects a full study publication during 1H CY2021.

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the consolidated entity during the financial half-year.

Matters subsequent to the end of the financial half-year

No matter or circumstance has arisen since 31 December 2020 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years.

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors’ report.

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Kazia Therapeutics Limited Directors’ report 31 December 2020

This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the Directors

24 February 2021

Sydney

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Auditor’s Independence Declaration

To the Directors of Kazia Therapeutics Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Kazia Therapeutics Limited for the half year ended 31 December 2020, I declare that, to the best of my knowledge and belief, there have been:

Grant Thornton Audit Pty Ltd

Chartered Accountants

S M Coulton

Partner – Audit & Assurance

Sydney, 24 February 2021

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Kazia Therapeutics Limited Contents 31 December 2020

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Kazia Therapeutics Limited Statement of profit or loss and other comprehensive income For the half-year ended 31 December 2020

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

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Kazia Therapeutics Limited Statement of financial position As at 31 December 2020

The above statement of financial position should be read in conjunction with the accompanying notes

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Kazia Therapeutics Limited Statement of changes in equity For the half-year ended 31 December 2020

The above statement of changes in equity should be read in conjunction with the accompanying notes

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Kazia Therapeutics Limited Statement of cash flows For the half-year ended 31 December 2020

The above statement of cash flows should be read in conjunction with the accompanying notes

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Kazia Therapeutics Limited Notes to the financial statements 31 December 2020

Note 2. Critical accounting judgements, estimates and assumptions

When preparing the half-year financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management and will seldom equal the estimated results.

The judgments, estimates and assumptions applied in the half-year financial statements, including key sources of estimation uncertainty were the same as those applied in the Group’s last annual financial statements for the year ended 30 June 2020.

Note 3. Operating segments

Identification of reportable operating segments

The consolidated entity’s 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 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.

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Kazia Therapeutics Limited Notes to the financial statements 31 December 2020

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Kazia Therapeutics Limited Notes to the financial statements 31 December 2020

A portion of the discount applied to anticipated future payments has unwound, with the resultant loss on contingent consideration being recognised in profit and loss. At period end none of the remaining milestones are expected to be triggered within a 12 month period and accordingly only a non-current liability remains in respect of contingent consideration.

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Kazia Therapeutics Limited Notes to the financial statements 31 December 2020

Movements in ordinary share capital

Share buy-back

There is no current on-market share buy-back.

Note 14. Equity - dividends

There were no dividends paid, recommended or declared during the current or previous financial half-year.

Note 15. Events after the reporting period

No matter or circumstance has arisen since 31 December 2020 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years.

1,856,999 unlisted convertible notes with a face value of $464,000 and 4,435,500 unlisted options have been excluded from the above calculations as they were anti-dilutive.

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Kazia Therapeutics Limited Notes to the financial statements 31 December 2020

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Kazia Therapeutics Limited Directors’ declaration 31 December 2020

In the directors’ opinion:

Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the directors

24 February 2021

Sydney

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Directors’ responsibility for the half year financial report

The Directors of the Company are responsible for the preparation of the half year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the half year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2020 and its performance for the half year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Grant Thornton Audit Pty Ltd

Chartered Accountants

S M Coulton

Partner – Audit & Assurance

Sydney, 24 February 2021

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