Kazia Therapeutics Ltd (ASX:KZA, NASDAQ:KZIA) will define its future success by commercialisation revenue, with US$323 million in potential milestone payments from outbound partnering deals awaiting its brain cancer drug paxalisib and legacy asset Cantrixil.
Kazia on Thursday released its annual report, capping off a “game-changing” 2021 financial year for the oncology drug developer in which it reported a maiden revenue of A$15.18 million.
That money came from licensing revenue - and it is the yardstick by which Kazia will measure its future success moving forward.
“There will be a great deal more (clinical trial) data to come over the next year or two of course, but our future success will more and more be measured in the delivery of milestones relating not to the drug’s exploration but to its commercialisation,” the company said in its colourful, cosmos-inspired annual report.
“In subtle but fundamental ways, the game has changed.”
Another “transformational” year
Kazia CEO Dr James Garner said the company had ended the 2021 financial year in the strongest position in its short history.
“It has become almost a cliché to describe each year in the young life of Kazia as transformative, but the word could hardly be more apt,” he said.
“In the last 12 months, our lead asset, paxalisib, has commenced a pivotal study for registration, we have completed a major financing round to the tune of A$24 million in gross proceeds, we have out-licensed the legacy Cantrixil asset, we have in-licensed an extremely promising new asset, EVT801, and we have begun the process of commercialising paxalisib through a substantial partnership with Simcere Pharmaceutical in China.
“In almost any other setting, one or two of these milestones would provide the cornerstones of an extremely successful year. For us, they simply represent the methodical delivery of the plan that we outlined some years ago.”
Paxalisib is Kazia’s flagship drug in development. Its aim is to treat glioblastoma, an extremely aggressive form of brain cancer that leads to death within 15 months for the majority of patients.
Currently, the main treatment for glioblastoma is surgery followed by radiation and the drug temozolomide; chemotherapy has little benefit.
The existing standard of care treatment has an overall survival time of 12.7 months, but in Kazia’s phase II study of paxalisib, overall survival increased to 17.5 months.
Paxalisib is currently being investigated for safety and efficacy across nine clinical trials for different indications at various stages of completion:
It is also part of a new, global trial dubbed GBM AGILE, which brings together more than 130 oncologists, statisticians, pathologists, neurosurgeons, imagers, advocates, researchers, and industry and government figures to enhance the way therapies are identified for glioblastoma.
GBM AGILE is an ‘adaptive trial’ that only recruits the number of patients needed to reach an answer and seeks to test a range of therapies at once, which makes it substantially faster and more cost-effective than conventional clinical trial approaches.
There are now up to 200 patients on paxalisib and it is operational in over 40 hospitals across the United States, with expansion to Canada, Europe and China this financial year.
“With the GBM AGILE study underway, we now find ourselves within just a few years of potentially commercialising a novel pharmaceutical product,” Dr Garner said.
“And not just any product – paxalisib may be the first new drug for glioblastoma in more than 20 years.
Kazia chairman Iain Ross, added that the board was “convinced” that the GBM AGILE trial was the best way to bring paxalisib forward to commercialisation.
“It represents a highly innovative approach to drug development,” he said.
“So far, our expectations have been exceeded in terms of the operational execution of the study and the extraordinary rate of recruitment.”
Kazia made significant progress with paxalisib in the 2021 financial year, with the US Food and Drug Administration (FDA) granting it Rare Pediatric Disease Designation (RPDD) and Fast Track Designation (FTD) status for different indications, permitting enhanced consultation with FDA and access to ‘rolling review’ NDA submission.
In November last year, new interim data from the company’s phase II glioblastoma study directionally confirmed earlier data, suggesting a survival benefit associated with the drug.
In June this year, key manufacturing patents were granted for paxalisib, with potential to protect the manufacturing process to 2036.
Kazia’s second drug - EVT801
With the commercialisation of paxalisib well underway, Kazia began to explore securing the rights to develop another drug, to increase value for shareholders.
After a long process, the company found just one that “excites us as much as paxalisib” - EVT801.
Acquired in April this year via a €300 million deal through Germany’s Evotec SE - €1 million of which was upfront - EVT801 is set to be used in a phase I clinical trial featuring as many as 96 patients by the end of this year.
EVT801 is a small-molecule inhibitor of the vascular endothelial growth factor receptor-3 (VEGFR3), which plays a role in angiogenesis - the formation of new blood vessels from old blood vessels.
Angiogenesis is a normal and crucial biological process, but it is also the mechanism through which tumours become malignant and cancerous. Thus, angiogenesis inhibitors are used in the treatment of cancer.
EVT801 has particularly excited Kazia because it targets VEGFR3 specifically, making it more targeted than existing treatments which documented negative associated impacts.
“Scientifically, EVT801 lies at the intersection of a well-established area of cancer treatment – angiogenesis – and a very new area of cancer treatment – immuno-oncology,” Dr Garner said.
“In practice, it has been taken through preclinical development by Evotec, one of the most respected companies in the business.
“And in terms of its potential to benefit patients and realise value for Kazia, it is every bit the equal of paxalisib. We could not be more thrilled to bring it into our portfolio.”
Taking care of business
On the operational front, Kazia had a robust FY21.
It has A$323 million in potential milestone payments awaiting it from outbound partnering deals.
It has equity of A$37.85 million, a 168% increase year-on-year, and cash holdings of A$27.59 million, up 215%.
Its maiden A$15.18 million revenue was generated through licensing deals, with two-thirds of that figure coming from China and the remaining third from Sweden.
Kazia also improved its bottom line, recording a loss of A$8.4 million, down significantly on the A$12.47 million loss in the 2020 financial year.
It signed three major cross-border licensing deals in FY21: a partnership with Sweden’s Oasmia Pharmaceutical to take Kazia’s Cantrixil legacy asset for US$4 million upfront and up to US$42 million in milestones; a paxalisib deal with China’s Simcere Pharmaceutical for US$11 million upfront and up to US$282 million in milestones; and the agreement with Evotec to secure EVT801.
Kazia also raised A$24 million in October and experienced significant market growth.
“We ended the previous financial year with a share price on the ASX of $0.46. On June 30, 2021, we closed at A$1.31, representing a 185% appreciation in 12 months,” Ross said.
“Those who participated in our October 2020 financing have made an annualised return of 93% to June 30, 2021.
“This progress is set against a backdrop of an exceptionally challenging second half for the global biotech industry.
“Since its highs near the beginning of calendar 2021, the NASDAQ small cap biotech index is down more than 20%, and Kazia has remained remarkably resilient in the context of this challenging market.”
Commercialisation and next steps
Kazia closed out FY21 ready for the next stage of its evolution, Ross said.
“We conclude this financial year substantially further along our journey than we were 12 months ago,” he said.
“Our lead program, paxalisib, is in a pivotal study for registration and has already begun to generate commercial revenue by virtue of a regional licensing transaction.
“The legacy Cantrixil asset has been successfully partnered to Oasmia, a company that is ideally placed to take it forward, as we foreshadowed in last year’s Annual Report.
“And our pipeline has been broadened and immeasurably enriched by the addition of an exceptionally promising new asset, EVT801, for which we have extremely high hopes.
“All in all, it has been a year of remarkable progress and a profound validation of Kazia’s efforts since 2016.”
- Daniel Paproth