UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of July, 2018
Commission File Number
Kazia Therapeutics Limited
(Translation of registrants name into English)
Three International Towers Level 24 300 Barangaroo Avenue Sydney NSW 2000
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☑ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrants home country), or under the rules of the home country exchange on which the registrants securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrants security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark if the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes ☐ No ☑
If yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b)
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 18 July 2018
Dear Shareholder,
It is a pleasure to share with you the Half-Yearly Report for the period to 31 December 2017. This is our first statutory report as Kazia Therapeutics Limited, following the transformation of the Company that was approved by shareholders at our Annual General Meeting in November 2017, and reflects many of the significant changes that the Company has been through over the past twelve months or more. Accordingly, I wanted to take this opportunity to draw your attention to some of the recent key developments in the business.
We announced in December 2017 that we had reached an agreement with Noxopharm (ASX: NOX), whereby Kazia agreed to provide certain technical information to support the development of their lead program, and released Noxopharm from future claims by Kazia against the intellectual property associated with that program. To be clear, this agreement does not affect any of Kazias current portfolio in any way. We believe this settlement is in the best interests of shareholders in both companies, and we commend the Noxopharm Board for working pragmatically towards a mutually beneficial outcome. As a result, Kazia now holds approximately 4.9% of the issued share capital of Noxopharm, with options over a further tranche of stock. As a fellow drug developer, and as a shareholder, we wish them every success in their future efforts.
As you will see from the accompanying financial statements, this settlement has been fully brought to account on our balance sheet. In principle, the additional assets significantly extend Kazias runway, and we are now fully-funded into calendar 2019, which is an important consideration as we turn our attention to the phase II clinical study of GDC-0084. We had intended to open the study for recruitment at the very end of last year, and all of the necessary steps required of the Company had been completed on schedule. Despite the assiduous planning, the first site initiation has been held up due to some unanticipated internal procedural requirements at the site. As a result, we now anticipate that the study will commence in late March or early April. Whilst this has been frustrating, given the Kazia team had worked so hard toward a December start, we nevertheless expect that it will have minimal impact on the overall timeline and costs of the study.
We liaised with our Scientific Advisory Board throughout the period and in November 2017 we held a two-day, face-to-face meeting in Sydney, where it was exciting to hear their thoughts on the longer-term trajectory for the GDC-0084 program. The four members of the SAB bring an incredible wealth of experience to the Company, and we are very much looking forward to putting some of their advice into practice over the coming year, and sharing with you our progress in due course.
Meanwhile, the ongoing study of Cantrixil in ovarian cancer continues to progress well. At the time of writing, the study is still in the dose escalation stage, which primarily aims to understand the safety and tolerability of the drug and to establish a maximum tolerated dose for further investigation. Given the open-ended design of such dose escalation studies, the exact completion is difficult to forecast, but we currently expect to be able to report data from this initial phase in the second quarter of calendar 2018. We are tremendously grateful to the clinicians and hospital staff who have been so diligently driving this study forward at each of the participating sites.
As you would expect, your Board remains highly attuned to the ongoing financial needs of the Company, and continues to consider appropriate channels to ensure that our work remains well funded. Whilst the Noxopharm settlement has strengthened our balance sheet significantly, we continue to explore grant funding, licensing opportunities, and equity investment opportunities in the Company. Your Board recognises that it is imperative to carefully balance the interests of our existing investors with the overarching obligation to deliver value-driving data across our key programs.
In line with our announcements regarding cost management in FY17, during the period we kept a tight control on our cost base and further reduced our operating expenses wherever possible. This strong focus on cost containment saw us make a number of changes in personnel and resulted in the relocation of our office to a more cost-effective site in Sydney, post the reporting period. For the time being we have suspended investment into discovery research, including the next generation ATM program, in order to more fully devote our resources to the GDC-0084 and Cantrixil clinical programs. Whilst we continue to be excited by our involvement in world-leading discovery science, it is high risk, costly and early-stage, and we believe that the two clinical programs represent a more near-term opportunity to provide value to patients and shareholders. Notwithstanding, we are working with our collaborators to find innovative alternatives to take this important discovery research forward.
In conclusion, I have spoken on many occasions about the transformation that our Company has been through over the past two years, which has been methodically implemented by the Board and Management team, and which culminated with the successful launch of our new identity as Kazia Therapeutics Limited at the end of last year. Suffice to say Kazia is now, in almost all respects, the Company that we have set out to build. No doubt we will continue to develop, change and improve, but I am confident enough in the work that has been done to declare that the rebuilding of the company is concluded.
Our task now is to deliver on the great promise of our portfolio, to execute world-class clinical trials, to produce high-quality data, and ultimately to bring forward new treatments for patients with cancer. There is much to be excited about in the coming year: data read-outs from the Cantrixil phase I study, commencement of the GDC-0084 phase II study, and the hopeful fruition of other projects and collaborations that the company continues to explore.
On behalf of our CEO, the Board & Management I can confirm that we are all invigorated by this challenge, and we continue to be grateful for the ongoing support of our shareholders
Yours sincerely,
/s/ Iain Ross
Iain Ross
Chairman of the Board
Kazia Therapeutics Limited (Formerly known as Novogen Limited) Appendix 4D Half-year report |
1. | Company details |
Name of entity: | Kazia Therapeutics Limited | |
ABN: | 37 063 259 754 | |
Reporting period: | For the half-year ended 31 December 2017 | |
Previous period: | For the half-year ended 31 December 2016 |
2. | Results for announcement to the market |
$ | ||||||||||
Revenues from ordinary activities |
down | 53.8 | % to | 66,227 | ||||||
Profit from ordinary activities after tax attributable to the owners of Kazia Therapeutics Limited |
up | 110.2 | % to | 424,779 | ||||||
Profit for the half-year attributable to the owners of Kazia Therapeutics Limited |
up | 110.2 | % to | 424,779 |
Dividends
There were no dividends paid, recommended or declared during the current financial period.
Comments
The profit for the consolidated entity after providing for income tax amounted to $424,779 (31 December 2016: loss of $4,182,556).
Operating revenue for the half year ended 31 December 2017 was $66,227 compared with $143,255 for the half year ended 31 December 2016 and operating expenses for the half year ended 31 December 2017 amounted to $3,806,734, compared with $3,969,579 in the previous corresponding period.
The profit for the half year ended 31 December 2017 includes Research and Development spending of $4,696,374 compared with $4,880,831 for the half year ended 31 December 2016.
The consolidated entitys current assets at 31 December 2017 were $14,752,740 (June 2017 $19,480,341), with current liabilities of $7,056,769 (June 2017 $5,384,107).
3. | Net tangible assets |
Reporting period Cents |
Previous period Cents |
|||||||
Net tangible assets per ordinary security |
22.00 | 21.00 | ||||||
|
|
|
|
During the period the Companys share capital was consolidated by a factor of 10. Accordingly, the comparative figure of net tangible assets per share has been adjusted by the same factor, to disclose the comparative figure as if the shares were also consolidated in the previous period.
4. | Control gained over entities |
Not applicable.
5. | Loss of control over entities |
Not applicable.
Kazia Therapeutics Limited (Formerly known as Novogen Limited) Appendix 4D Half-year report |
6. | Dividends |
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
7. | Dividend reinvestment plans |
Not applicable.
8. | Details of associates and joint venture entities |
Not applicable.
9. | Foreign entities |
Details of origin of accounting standards used in compiling the report:
Not applicable.
10. | Audit qualification or review |
Details of audit/review dispute or qualification (if any):
The financial statements were subject to a review by the auditors and the review report is attached as part of the Half Yearly Report.
11. | Attachments |
Details of attachments (if any):
The Half Yearly Report of Kazia Therapeutics Limited for the half-year ended 31 December 2017 is attached.
12. | Signed |
Signed |
/s/ Iain Ross |
Date: 21 February 2018 |
Kazia Therapeutics Limited
(Formerly known as Novogen Limited)
ABN 37 063 259 754
Half Yearly Report - 31 December 2017
Kazia Therapeutics Limited (Formerly known as Novogen Limited) Directors report 31 December 2017 |
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 2017.
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 profit for the consolidated entity after providing for income tax amounted to $424,779 (31 December 2016: loss of $4,182,556).
The attached financial statements detail the performance and financial position of the consolidated entity for the half-year ended 31 December 2017.
Cash resources
At 31 December 2017, the consolidated entity had total funds of $6,641,073 comprising cash in hand and at bank of $3,641,073 and short term deposits of $3,000,000.
The lead R&D program for the consolidated entity is 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. GDC-0084 has completed a 47-patient phase I clinical study under Genentech in patients with progressive or recurrent high grade glioma, which showed the drug to be generally safe and well-tolerated, and which provided signals of potential clinical activity. 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. The company convened an Advisory Board of experts in November 2017 to help in finalising the design of the Phase ll development of GDC-0084 and anticipates initiating a Phase II clinical trial early in calendar 2018.
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. Cantrixil commenced a phase I clinical trial in patients with recurrent or refractory ovarian cancer in December 2016, and this study is expected to provide data in calendar 2018.
Significant changes in the state of affairs
As settlement of an ongoing legal dispute on 22 December 2017 the consolidated entity reached an agreement with another ASX listed company, Noxopharm Limited, in relation to that companys key asset, NOX66. As part of this agreement, the consolidated entity has taken up shares and options in that listed entity at no financial cost. Further details are set out in Note 21.
On 13 November 2017 the consolidated entity entered into an agreement to license and assign certain pre-clinical assets to Heaton-Brown Life Sciences, LLC (HBLS), a privately-held start-up enterprise. The agreement provides for the licensing of Trilexium (TRX-E-009-1) and other superbenzopyran molecules, and assignment of the early-stage ad-het series of discovery leads. The consolidated entity retains all worldwide rights to Cantrixil (TRX-E-002-1), which is currently in a phase I clinical trial for ovarian cancer. In consideration for the licensed assets, the consolidated entity receives 10% of the equity in HBLS, along with milestone and royalty payments linked to successful development of the intellectual property. The equity in HBLS has been recorded in the financial statements at a carrying value of $1, reflecting the start up nature of that company.
1
Kazia Therapeutics Limited (Formerly known as Novogen Limited) Directors report 31 December 2017 |
There were no other 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 2017 that has significantly affected, or may significantly affect the consolidated entitys operations, the results of those operations, or the consolidated entitys state of affairs in future financial years.
Auditors independence declaration
A copy of the auditors independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors report.
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
/s/ Iain Ross
Iain Ross
Chairman
21 February 2018
Sydney
2
(Formerly known as Novogen Limited) Contents 31 December 2017 |
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
16 |
General information
The financial statements cover Kazia Therapeutics Limited as a consolidated entity consisting of Kazia Therapeutics Limited and the entities it controlled at the end of, or during, the half-year. 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
A description of the nature of the consolidated entitys operations and its principal activities are included in the directors report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 21 February 2018.
3
(Formerly known as Novogen Limited) Statement of profit or loss and other comprehensive income For the half-year ended 31 December 2017
|
Consolidated | ||||||||||||
Note | Dec 2017 $ |
Dec 2016 $ |
||||||||||
Revenue |
3 | 66,227 | 143,255 | |||||||||
Other income |
4 | 9,373,112 | 4,459,562 | |||||||||
Expenses |
||||||||||||
Research and development expense |
(4,696,374 | ) | (4,880,831 | ) | ||||||||
General and administrative expense |
(3,806,734 | ) | (3,969,579 | ) | ||||||||
Loss on disposal of fixed assets |
(5,333 | ) | | |||||||||
Finance costs |
5 | (649,855 | ) | | ||||||||
|
|
|
|
|||||||||
Profit/(loss) before income tax benefit |
281,043 | (4,247,593 | ) | |||||||||
Income tax benefit |
143,736 | 65,037 | ||||||||||
|
|
|
|
|||||||||
Profit/(loss) after income tax benefit for the half-year attributable to the owners of Kazia Therapeutics Limited |
424,779 | (4,182,556 | ) | |||||||||
Other comprehensive income |
||||||||||||
Items that may be reclassified subsequently to profit or loss |
||||||||||||
Net exchange difference on translation of financial statements of foreign controlled entities |
19,520 | (36,581 | ) | |||||||||
Gain on the revaluation of available-for-sale financial assets |
76,846 | 1,113 | ||||||||||
|
|
|
|
|||||||||
Other comprehensive income for the half-year |
96,366 | (35,468 | ) | |||||||||
|
|
|
|
|||||||||
Total comprehensive income for the half-year attributable to the owners of Kazia Therapeutics Limited |
521,145 | (4,218,024 | ) | |||||||||
|
|
|
|
|||||||||
Cents | Cents | |||||||||||
Basic earnings per share |
19 | 0.879 | (9.24 | ) | ||||||||
Diluted earnings per share |
19 | 0.879 | (9.24 | ) |
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
4
(Formerly known as Novogen Limited) Statement of financial position As at 31 December 2017 |
Consolidated | ||||||||||||
Note | Dec 2016 | Jun 2016 | ||||||||||
$ | $ | |||||||||||
Assets |
||||||||||||
Current assets |
||||||||||||
Cash and cash equivalents |
6 | 6,641,073 | 14,454,784 | |||||||||
Trade and other receivables |
7 | 5,539,336 | 4,262,512 | |||||||||
Income tax refund due |
4,894 | 4,963 | ||||||||||
Prepayments |
8 | 2,567,437 | 758,082 | |||||||||
|
|
|
|
|||||||||
Total current assets |
14,752,740 | 19,480,341 | ||||||||||
|
|
|
|
|||||||||
Non-current assets |
||||||||||||
Financial assets |
9 | 7,797,242 | 21,803 | |||||||||
Property, plant and equipment |
10 | 147,202 | 489,605 | |||||||||
Intangibles |
11 | 15,119,679 | 15,918,354 | |||||||||
|
|
|
|
|||||||||
Total non-current assets |
23,064,123 | 16,429,762 | ||||||||||
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|
|||||||||
Total assets |
37,816,863 | 35,910,103 | ||||||||||
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|
|||||||||
Liabilities |
||||||||||||
Current liabilities |
||||||||||||
Trade and other payables |
2,784,400 | 1,872,554 | ||||||||||
Provision |
237,064 | 155,149 | ||||||||||
Unearned Revenue |
183,818 | 41,003 | ||||||||||
Contingent consideration |
3,851,487 | 3,315,401 | ||||||||||
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|
|
|
|||||||||
Total current liabilities |
7,056,769 | 5,384,107 | ||||||||||
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|
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|
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Non-current liabilities |
||||||||||||
Deferred tax |
12 | 4,170,699 | 4,314,435 | |||||||||
Provisions |
| 63,878 | ||||||||||
Trade and other payables |
| 106,398 | ||||||||||
Deferred consideration |
817,370 | 703,599 | ||||||||||
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|
|||||||||
Total non-current liabilities |
4,988,069 | 5,188,310 | ||||||||||
|
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Total liabilities |
12,044,838 | 10,572,417 | ||||||||||
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|||||||||
Net assets |
25,772,025 | 25,337,686 | ||||||||||
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Equity |
||||||||||||
Contributed equity |
13 | 31,575,824 | 193,769,409 | |||||||||
Other contributed equity |
14 | 464,000 | 600,000 | |||||||||
Reserves |
15 | 2,045,298 | 1,929,338 | |||||||||
Accumulated losses |
16 | (8,313,097 | ) | (170,961,061 | ) | |||||||
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|
|||||||||
Total equity |
25,772,025 | 25,337,686 | ||||||||||
|
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|
The above statement of financial position should be read in conjunction with the accompanying notes
5
(Formerly known as Novogen Limited) Statement of changes in equity For the half-year ended 31 December 2017 |
Consolidated | Issued capital $ |
Other contributed equity $ |
Reserves $ |
Accumulated losses $ |
Total equity $ |
|||||||||||||||
Balance at 1 July 2016 |
191,301,217 | 1,716,101 | 1,420,392 | (160,506,785 | ) | 33,930,925 | ||||||||||||||
Loss after income tax benefit for the half-year |
| | | (4,182,556 | ) | (4,182,556 | ) | |||||||||||||
Other comprehensive income for the half-year, net of tax |
| | (35,468 | ) | | (35,468 | ) | |||||||||||||
|
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|
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Total comprehensive income for the half-year |
| | (35,468 | ) | (4,182,556 | ) | (4,218,024 | ) | ||||||||||||
Transactions with owners in their capacity as owners: |
||||||||||||||||||||
Contributions of equity, net of transaction costs |
(17,662 | ) | | | | (17,662 | ) | |||||||||||||
Transfers |
| (216,101 | ) | | 216,101 | | ||||||||||||||
Exercise of convertible note |
900,000 | (900,000 | ) | | | | ||||||||||||||
Employee share-based payment options |
| | 361,071 | | 361,071 | |||||||||||||||
Share-based payments |
1,585,854 | | | | 1,585,854 | |||||||||||||||
|
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|
|
|
|
|||||||||||
Balance at 31 December 2016 |
193,769,409 | 600,000 | 1,745,995 | (164,473,240 | ) | 31,642,164 | ||||||||||||||
|
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|
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|
|
|
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|
|
Consolidated | Issued capital $ |
Other contributed equity $ |
Reserves $ |
Retained profits $ |
Total equity $ |
|||||||||||||||
Balance at 1 July 2017 |
193,769,409 | 600,000 | 1,929,338 | (170,961,061 | ) | 25,337,686 | ||||||||||||||
Profit after income tax benefit for the half-year |
| | | 424,779 | 424,779 | |||||||||||||||
Other comprehensive income for the half-year, net of tax |
| | 96,366 | | 96,366 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income for the half-year |
| | 96,366 | 424,779 | 521,145 | |||||||||||||||
Transactions with owners in their capacity as owners: |
||||||||||||||||||||
Share-based payments |
29,600 | | 19,594 | | 49,194 | |||||||||||||||
Extinguishment of convertible note (Note 21) |
| (136,000 | ) | | | (136,000 | ) | |||||||||||||
Cancellation of share capital under Section 258F of the Corporations Act |
(162,223,185 | ) | | | 162,223,185 | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at 31 December 2017 |
31,575,824 | 464,000 | 2,045,298 | (8,313,097 | ) | 25,772,025 | ||||||||||||||
|
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|
|
|
|
|
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|
The above statement of changes in equity should be read in conjunction with the accompanying notes
6
(Formerly known as Novogen Limited) Statement of cash flows For the half-year ended 31 December 2017 |
Consolidated | ||||||||||||
Note | Dec 2017 $ |
Dec 2016 $ |
||||||||||
Cash flows from operating activities |
||||||||||||
Profit/(loss) before income tax benefit for the half-year |
424,779 | (4,182,556 | ) | |||||||||
Adjustments for: |
||||||||||||
Depreciation, amortization and impairment |
1,144,930 | 554,120 | ||||||||||
Share-based payments |
49,194 | 403,071 | ||||||||||
Foreign exchange differences |
(36,845 | ) | 1,104 | |||||||||
Gain on legal settlement (non-cash) |
(7,834,592 | ) | | |||||||||
Interest accrued |
| 298 | ||||||||||
|
|
|
|
|||||||||
(6,252,534 | ) | (3,223,963 | ) | |||||||||
Change in operating assets and liabilities: |
||||||||||||
Increase in trade and other receivables |
(1,276,824 | ) | (4,516,986 | ) | ||||||||
Increase in prepayments |
(1,809,355 | ) | (882,993 | ) | ||||||||
Increase in other operating assets |
| (94,891 | ) | |||||||||
Increase in trade and other payables |
815,294 | 1,068,678 | ||||||||||
Increase in employee benefits |
11,332 | 21,022 | ||||||||||
Increase in other provisions |
6,705 | 8,585 | ||||||||||
Increase in unearned revenue |
142,815 | | ||||||||||
Decrease in deferred tax liability |
(143,736 | ) | (65,037 | ) | ||||||||
Increase in contingent consideration |
649,857 | | ||||||||||
|
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|
|||||||||
Net cash used in operating activities |
(7,856,446 | ) | (7,685,585 | ) | ||||||||
|
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|
|||||||||
Cash flows from investing activities |
||||||||||||
Payment for purchase of business, net of cash acquired |
| (7,097,152 | ) | |||||||||
Payments for property, plant and equipment |
10 | (9,185 | ) | (9,328 | ) | |||||||
Payments for intangibles |
11 | | (8,445 | ) | ||||||||
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|||||||||
Net cash used in investing activities |
(9,185 | ) | (7,114,925 | ) | ||||||||
|
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|||||||||
Cash flows from financing activities |
||||||||||||
Share issue transaction costs |
| (17,662 | ) | |||||||||
|
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|
|||||||||
Net cash used in financing activities |
| (17,662 | ) | |||||||||
|
|
|
|
|||||||||
Net decrease in cash and cash equivalents |
(7,865,631 | ) | (14,818,172 | ) | ||||||||
Cash and cash equivalents at the beginning of the financial half-year |
14,454,784 | 33,453,140 | ||||||||||
Effects of exchange rate changes on cash and cash equivalents |
51,920 | (35,333 | ) | |||||||||
|
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|
|||||||||
Cash and cash equivalents at the end of the financial half-year |
6,641,073 | 18,599,635 | ||||||||||
|
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|
The above statement of cash flows should be read in conjunction with the accompanying notes
7
(Formerly known as Novogen Limited) Notes to the financial statements 31 December 2017 |
Note 1. Significant accounting policies
These general purpose financial statements for the interim half-year reporting period ended 31 December 2017 have been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting.
These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2017 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.
The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the policies stated below.
Estimates
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 judgements, estimates and assumptions applied in the half-year financial statements, including key sources of estimation uncertainty were the same as those applied in the Groups last annual financial statements for the year ended 30 June 2017.
Research and Development Tax Rebate Reliable Estimate
The R&D Tax Incentive is a government run program which helps to offset some of the costs of R&D. Annually, the consolidated entity claims a refundable tax offset and has disclosed this as other income in the statement of profit or loss and other comprehensive income. The group accounts for the R&D Tax Incentive when a reliable estimate of the amounts receivable can be made.
The Research and Development rebate accrual of $1,021,996 for the reporting period has been accrued based on the methodology used for the annual R&D tax rebate claim.
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 Australian Accounting Standards Board (AASB) 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.
Going Concern
As at 31 December 2017 the consolidated entity had cash in hand and at bank of $6,641,073. The consolidated entity had net cash outflows from operating activities of $7,856,446 for the six months ended 31 December 2017.
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 are confident that the strategies in place 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.
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Kazia Therapeutics Limited (Formerly known as Novogen Limited) Notes to the financial statements 31 December 2017 |
Note 2. 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 information reported to the CODM, on at least a monthly basis, is the consolidated results as shown in the statement of profit or loss and other comprehensive income and statement of financial position.
Note 3. Revenue
Consolidated | ||||||||
Dec 2017 | Dec 2016 | |||||||
$ | $ | |||||||
Bank interest |
66,227 | 143,255 | ||||||
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Note 4. Other income
Consolidated | ||||||||
Dec 2017 | Dec 2016 | |||||||
$ | $ | |||||||
Net foreign exchange gain |
| 8,331 | ||||||
Government grants |
| 7,000 | ||||||
Subsidies and grants |
361,072 | | ||||||
Reimbursement of expenses |
5,452 | 7,947 | ||||||
Research and development rebate |
1,021,996 | 4,436,284 | ||||||
Gain on legal settlement (Note 21) |
7,984,592 | | ||||||
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Other income |
9,373,112 | 4,459,562 | ||||||
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Kazia Therapeutics Limited (Formerly known as Novogen Limited) Notes to the financial statements 31 December 2017 |
Note 5. Expenses |
Consolidated | ||||||||
Dec 2017 | Dec 2016 | |||||||
$ | $ | |||||||
Profit/(loss) before income tax includes the following specific expenses: |
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Depreciation |
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Leasehold improvements |
187,490 | 26,065 | ||||||
Property, plant and equipment |
15,914 | 23,771 | ||||||
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Total depreciation |
203,404 | 49,836 | ||||||
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Amortisation |
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Patents and intellectual property |
249,907 | 501,843 | ||||||
Software |
2,139 | 2,441 | ||||||
GDC licensing agreement |
546,629 | | ||||||
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Total amortisation |
798,675 | 504,284 | ||||||
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Total depreciation and amortisation |
1,002,079 | 554,120 | ||||||
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Impairment |
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Leasehold improvements |
142,851 | | ||||||
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Finance costs |
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Unwinding of the discount on contingent consideration |
649,855 | | ||||||
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Rental expense relating to operating leases |
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Minimum lease payments |
215,742 | 157,774 | ||||||
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Superannuation expense |
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Defined contribution superannuation expense |
118,701 | 138,324 | ||||||
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Note 6. Current assets - cash and cash equivalents |
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Cash at bank and on hand |
3,641,073 | 8,454,784 | ||||||
Short-term deposits |
3,000,000 | 6,000,000 | ||||||
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6,641,073 | 14,454,784 | |||||||
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Kazia Therapeutics Limited (Formerly known as Novogen Limited) Notes to the financial statements 31 December 2017 |
Note 7. Current assets - trade and other receivables |
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Trade receivables |
202,272 | 231,065 | ||||||
R&D tax rebate receivable |
4,995,048 | 3,973,052 | ||||||
Less: Provision for impairment of receivables |
| (225,998 | ) | |||||
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5,197,320 | 3,978,119 | |||||||
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GST refundable |
138,002 | 77,207 | ||||||
Deposit paid |
586,862 | 578,657 | ||||||
Provision for impairment of deposit paid |
(382,848 | ) | (371,471 | ) | ||||
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5,539,336 | 4,262,512 | |||||||
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Note 8. Current assets - Prepayments |
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Prepayments |
2,567,437 | 758,082 | ||||||
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Note 9. Non-current assets - Financial assets |
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Available-for-sale shares held at fair value through OCI (Note 21) |
6,027,241 | 21,803 | ||||||
Share options held at fair value through P&L (Note 21) |
1,770,001 | | ||||||
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7,797,242 | 21,803 | |||||||
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Note 10. Non-current assets - property, plant and equipment |
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Leasehold improvements - at cost |
472,759 | 466,054 | ||||||
Less: Accumulated depreciation |
(269,930 | ) | (82,440 | ) | ||||
Less: Impairment |
(142,851 | ) | | |||||
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59,978 | 383,614 | |||||||
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Plant and equipment - at cost |
191,356 | 201,296 | ||||||
Less: Accumulated depreciation |
(104,132 | ) | (95,305 | ) | ||||
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87,224 | 105,991 | |||||||
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147,202 | 489,605 | |||||||
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Kazia Therapeutics Limited (Formerly known as Novogen Limited) Notes to the financial statements 31 December 2017 |
Note 10. Non-current assets - property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:
Leasehold Improvement |
Plant and equipment |
Total | ||||
Consolidated | $ | $ | $ | |||
Balance at 1 July 2017 |
383,614 | 105,991 | 489,605 | |||
Additions |
6,705 | 2,480 | 9,185 | |||
Disposals |
| (5,333) | (5,333) | |||
Impairment of assets |
(142,851) | | (142,851) | |||
Depreciation expense |
(187,490) | (15,914) | (203,404) | |||
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Balance at 31 December 2017 |
59,978 | 87,224 | 147,202 | |||
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Note 11. Non-current assets - intangibles |
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Patents and trademarks - at cost |
2,850,518 | 2,850,518 | ||||||
Less: Accumulated amortisation |
(2,850,518 | ) | (2,600,611 | ) | ||||
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| 249,907 | |||||||
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Software - at cost |
11,070 | 11,070 | ||||||
Less: Accumulated amortisation |
(7,937 | ) | (5,798 | ) | ||||
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3,133 | 5,272 | |||||||
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Licensing agreement - at acquired fair value |
16,407,788 | 16,407,788 | ||||||
Less: Accumulated amortisation |
(1,291,242 | ) | (744,613 | ) | ||||
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15,116,546 | 15,663,175 | |||||||
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15,119,679 | 15,918,354 | |||||||
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Reconciliations
Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:
Software | Patents and property |
GDC agreement |
Total | |||||||||||||
Consolidated | $ | $ | $ | $ | ||||||||||||
Balance at 1 July 2017 |
5,272 | 249,907 | 15,663,175 | 15,918,354 | ||||||||||||
Amortisation expense |
(2,139 | ) | (249,907 | ) | (546,629 | ) | (798,675 | ) | ||||||||
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Balance at 31 December 2017 |
3,133 | | 15,116,546 | 15,119,679 | ||||||||||||
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Kazia Therapeutics Limited (Formerly known as Novogen Limited) Notes to the financial statements 31 December 2017 |
Note 12. Non-current liabilities - deferred tax
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Deferred tax liability comprises temporary differences attributable to: |
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Amounts recognised in profit or loss: |
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Intangible assets |
4,170,699 | 4,314,435 | ||||||
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Deferred tax liability |
4,170,699 | 4,314,435 | ||||||
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Amount expected to be settled within 12 months |
275,630 | 285,129 | ||||||
Amount expected to be settled after more than 12 months |
3,895,069 | 4,029,306 | ||||||
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4,170,699 | 4,314,435 | |||||||
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Movements: |
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Opening balance |
4,314,435 | | ||||||
Credited to profit or loss |
(143,736 | ) | (197,707 | ) | ||||
Additions through business combinations |
| 4,512,142 | ||||||
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Closing balance |
4,170,699 | 4,314,435 | ||||||
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Note 13. Equity - contributed equity |
Consolidated | ||||||||||||||||
Dec 2017 Shares |
Jun 2017 Shares |
Dec 2017 $ |
Jun 2017 $ |
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Ordinary shares - fully paid |
48,409,621 | 483,287,914 | 31,575,824 | 193,769,409 | ||||||||||||
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Movements in ordinary share capital |
Details | Date | Shares | 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 - Note 2 |
30 November 2017 | 80,000 | $ | 0.000 | 29,600 | |||||||||
Cancellation of share capital - Note 3 |
31 December 2017 | | $ | 0.000 | (162,223,185 | ) | ||||||||
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Balance |
31 December 2017 | 48,409,621 | 31,575,824 | |||||||||||
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Note 1 - Share consolidation 10 to 1, which was approved by shareholders at the Annual General Meeting on 15 November 2017
Note 2 - Shares issued to the Companys Scientific Advisory Board in return for services
Note 3 - Section 258F of the Corporations Act allows a company to reduce its share capital by cancelling any paid-up share capital that is lost or is not represented by available assets. Given the long history of the consolidated entity and changes in the principal activity in recent years, 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 has been cancelled.
Share buy-back
There is no current on-market share buy-back.
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Kazia Therapeutics Limited (Formerly known as Novogen Limited) Notes to the financial statements 31 December 2017 |
Note 14. Equity - Other contributed equity |
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Convertible loan note - Triaxial |
464,000 | 600,000 | ||||||
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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, which previously allowed for a cash settlement and now allows Triaxial to convert their debt into ordinary shares, providing that the company achieves defined milestones established in the schedule of the Deed. Accordingly, the convertible note has been classified as an equity instrument rather than debt instrument.
The remaining portion of the convertible note may be exercised on completion of a Phase II clinical trial or achieving Breakthrough Designation. Completion will be deemed to occur upon 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 note if a third party acquires more than 50% of the issued share capital of the consolidated entity.
During the half year ended 31 December 2017, a portion of the convertible notes was extinguished (Note 21). The remaining convertible note at period end represents 1,856,000 ordinary shares in the consolidated entity and $464,000.
Note 15. Equity - reserves
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Available-for-sale reserve |
40,022 | (36,824 | ) | |||||
Foreign currency reserve |
(91,830 | ) | (111,350 | ) | ||||
Share-based payments reserve |
2,097,106 | 2,077,512 | ||||||
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2,045,298 | 1,929,338 | |||||||
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Share based payments reserve for Employee Share Option Plan
During the half year the company issued 261,500 options to employees of the Company pursuant to the Companys Employee Share Option Plan, which was re-approved by the Shareholders on 15 November 2017.
Note 16. Equity - accumulated losses
Consolidated | ||||||||
Dec 2017 | Jun 2017 | |||||||
$ | $ | |||||||
Accumulated losses at the beginning of the financial half-year |
(170,961,061 | ) | (160,506,785 | ) | ||||
Profit/(loss) after income tax benefit for the half-year |
424,779 | (10,670,377 | ) | |||||
Transfer from other contributed equity |
| 216,101 | ||||||
Reduction of share capital (Note 14) |
162,223,185 | | ||||||
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Accumulated losses at the end of the financial half-year |
(8,313,097 | ) | (170,961,061 | ) | ||||
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Note 17. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial half-year.
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Kazia Therapeutics Limited (Formerly known as Novogen Limited) Notes to the financial statements 31 December 2017 |
Note 18. Events after the reporting period
No matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may significantly affect the consolidated entitys operations, the results of those operations, or the consolidated entitys state of affairs in future financial years.
Note 19. Earnings per share
Consolidated | ||||||||
Dec 2017 | Dec 2016 | |||||||
$ | $ | |||||||
Profit/(loss) after income tax attributable to the owners of Kazia Therapeutics Limited |
424,779 | (4,182,556 | ) | |||||
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Number | Number | |||||||
Weighted average number of ordinary shares used in calculating basic earnings per share |
48,343,969 | 45,263,175 | ||||||
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Weighted average number of ordinary shares used in calculating diluted earnings per share |
48,343,969 | 45,263,175 | ||||||
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Cents | Cents | |||||||
Basic earnings per share |
0.879 | (9.24 | ) | |||||
Diluted earnings per share |
0.879 | (9.24 | ) |
1,856,000 unlisted convertible notes with a face value of $464,000, 4,582,432 unlisted options and 3,148,400 listed options have been excluded from the above calculations as they were antidilutive.
Note 20. Share-based payments
Employee share options
During the half year ended 31 December 2017, 261,500 options have been issued to the employees during the year by the consolidated entity pursuant to the Companys Employee Share Option Plan.
| Tranche 12 of 224,000 options vesting equally over 4 years |
| Tranche 13 of 37,500 options vesting equally over 4 years |
Note 21. Settlement of legal proceedings
On 22 December 2017 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 has received the following:
| 5,317,123 ordinary shares in Noxopharm Limited, held under voluntary escrow until 14 June 2018 (value at date of settlement: $5,928,592) |
| 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) |
| extinguishment of certain convertible notes (book value: $136,000) |
| a cash payment of $165,000 (including GST) from Noxopharm Limited |
These items have been reflected in the half year report.
15
(Formerly known as Novogen Limited) Directors declaration 31 December 2017 |
In the directors opinion:
| the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 Interim Financial Reporting, the Corporations Regulations 2001 and other mandatory professional reporting requirements; |
| the attached financial statements and notes give a true and fair view of the consolidated entitys financial position as at 31 December 2017 and of its performance for the financial half-year ended on that date; and |
| there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. |
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
/s/ Iain Ross
Iain Ross
Chairman
21 February 2018
Sydney
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