Announcement PDF APPENDIX 4E Preliminary Final Report to the Australian Stock Exchange Name of Entity Paradigm Biopharmaceuticals Limited ABN (ABN 94 169 346 963) Year Ended 30 June 2023 Previous Corresponding Reporting 01 July 2021 to 30 June 2022 Period 1. Results for Announcement to the Market $ Revenue from continuing activities (Loss) from continuing activities after tax attributable to members Net (loss) for the period attributable to members Dividends (distributions) 8,580,939 $ and % increase/(decrease) over previous corresponding period 687,374 8.71% (51,910,013) 12,660,429 32.26% (51,910,013) 12,660,429 32.26% Amount per security Franked amount per security Final Dividend N/A N/A Interim Dividend N/A N/A Record date for determining entitlements to the dividends (if any) N/A Brief explanation of any of the figures reported above necessary to enable the figures to be understood: N/A 2. Key ratios Basic earnings per ordinary security (cents per share) Diluted earnings per ordinary security (cents per share) Net tangible asset backing per ordinary security (cents per share) Current Period Previous corresponding period (20.78) cents (16.87) cents (20.78) cents (16.87) cents 18.00 cents 16.92 cents 3. Control Gained Over Entities Having Material Effect Name of entity (or group of entities) N/A Date control gained N/A Profit / (loss) from ordinary activities after tax of the controlled entity since the date in the current period on N/A which control was acquired. Profit / (loss) from ordinary activities after tax of the controlled entity (or group of entities) for the whole of N/A the previous corresponding period. 4. Audit/Review Status This report is based on accounts to which one of the following applies: (Tick one) The accounts have been audited ✓ The accounts are in the process of being audited If the accounts are subject to audit dispute or qualification, a description of the dispute or qualification: N/A 5. Attachments Forming Part of Appendix 4E The Annual Report of Paradigm Biopharmaceuticals Limited for the year ended 30 June 2023 is attached. 6. Signed Signed in accordance with a resolution of the Directors. Signed ______________________________ Date: 25 August 2023 Paul Rennie Managing Director People. Science. Potential. Annual Report 2023 Paradigm Biopharmaceuticals Ltd. is a late-stage clinical development company. We are driven by a purpose to improve patients’ health and quality of life by discovering, developing, and delivering pharmaceutical therapies. Paradigm has a vision to be recognised as a global leader in the development and commercialisation of innovative pharmaceutical therapies. Paradigm’s values of innovation, transparency, adaptability, collaboration, respect, and accountability comprise the central pillars of the organisation and influence all activities and decisions. Contents Highlights 01 29 02 Consolidated Statement of Profit or Loss and Other Comprehensive Income Chairman and Managing Director’s Report Chief Medical Officer’s Report 06 Consolidated Statement of Financial Position 30 The Unmet Need in Osteoarthritis 10 31 Directors’ Report 13  onsolidated Statement C of Cash Flows Remuneration Report 21 Consolidated Statement of Changes in Equity 32 Auditor’s Independence Declaration 28 ABN 94 169 346 963 Paradigm Biopharmaceuticals Limited Annual Report 2023 Notes to the Consolidated Financial Statements 33 Directors’ Declaration 57 Independent Audit Report 58 Shareholder Information 62 Corporate Governance Statement 64 Corporate Directory 65 Highlights 900+ People treated with Paradigm’s iPPS globally since 2015 120 $7.4m AUD Clinical trial sites recruiting for the phase 3 OA program in 7 countries worldwide R&D tax rebate Global Clinical Trials OA Program Site Locations • Australia • Belgium • Canada • Czechia MPS Program • Poland Site Locations • United Kingdom • Australia • United States • Brazil Key Highlights from FY2023 Paradigm has continued to progress the development of PPS in the two focal clinical programs of osteoarthritis (OA) and the ultra-rare disease mucopolysaccharidosis (MPS). Below are several key successes from financial year 2023. ⟩ Oct 22 ⟩ Dec 22, Jun 23 ⟩ Jun 23 The double-blind, randomised, placebo-controlled phase 2 PARA_OA_008 clinical trial achieved its primary endpoint demonstrating changes in the synovial fluid molecular biomarkers from baseline in people with knee OA treated with iPPS compared to placebo. The double-blind, randomised, placebo-controlled phase 3 PARA_OA_002 clinical trial underwent two successful formal safety reviews by the data monitoring committee (DMC) with recommendations to proceed without modification. Primary and secondary endpoints met in open-label phase 2 MPS I clinical trial run in Adelaide, Australia. iPPS was well tolerated out to 73 weeks and patients reported meaningful improvements in pain, function, and activities of daily living. Paradigm Biopharmaceuticals Limited Annual Report 2023 01 Chairman and Managing Director’s Report Paul Rennie Paradigm continues to forge ahead and meet its milestones on the road to registering injectable pentosan polysulfate sodium (iPPS) as a treatment to alleviate pain and improve joint function in both knee osteoarthritis and the ultra-rare diseases of mucopolysaccharidosis types I and VI. As Chair and Managing Director, I’m delighted to share with you these clinical and operational updates as we move towards our goal of filing a New Drug Application (NDA) for iPPS to treat osteoarthritis. Dear Shareholders, I am pleased to report on the progress made by Paradigm Biopharmaceuticals Limited and its controlled entities (Paradigm) during the fiscal year 2023. Paradigm Biopharmaceuticals is an Australian-based, global late-stage drug development company driven by a purpose to improve patients’ health and quality of life by discovering, developing, and delivering pharmaceutical therapies. Paradigm’s current focus is developing pentosan polysulfate sodium (iPPS or brand name Zilosul®) for the treatment of diseases where inflammation plays a major pathogenic role, indicating a need for the anti-inflammatory and tissue regenerative properties of iPPS. The immediate commercial focus is for the treatment of pain and joint dysfunction associated with osteoarthritis (OA) and pain and arthropathy in patients with the rare genetic disorder mucopolysaccharidosis types I and VI (MPS). OA Clinical Program Highlights I am pleased to report that the Company has achieved significant progress in the last 12 months in both OA and MPS clinical assets. Paradigm has continued to achieve important milestones as we progress through the phase 3 OA clinical program. In December 2022, 02 Paradigm Biopharmaceuticals Limited the independent data monitoring committee (DMC) conducted the first formal safety review for the PARA_OA_002 phase 3 clinical trial, with a second formal safety review conducted in June 2023. The DMC is responsible for assessing safety risk, benefit, and feasibility during the conduct of Paradigm’s PARA_OA_002 study, as well as ensuring the validity and scientific merit of the trial. The DMC recommended that the clinical trial proceed without modification. The Paradigm team worked tirelessly throughout the 12-month period to achieve our goal of activating 120 clinical trial sites to ensure rapid recruitment of the PARA_OA_002 study. The global phase 3 clinical trial is now operating in seven countries following regulatory and ethics approvals from the key regulatory agencies in Europe, the United Kingdom (UK), and Canada during FY2023. Paradigm’s clinical sites screened participants in Australia, the US and Canada in North America, and the UK, Belgium, Poland, and Czechia in the EU. The significant progress and milestones achieved in the phase 3 clinical program during fiscal year 2023 have culminated in the identification of all participants needed for stage 1 of the PARA_OA_002 clinical trial. Stage 1, enrolling a total of 468 participants, aims to determine the optimal dose of iPPS compared to placebo. This dose Annual Report 2023 information will then be used to progress through to stage 2 of PARA_OA_002 and for the subsequent confirmatory PARA_OA_003 clinical trial. In addition to the phase 3 OA program focusing on the treatment indications of pain and joint dysfunction, we continued to explore the potential disease modifying properties of iPPS with the PARA_OA_008 study and in a canine model of naturally occurring OA. The exploratory phase 2 PARA_OA_008 study achieved two positive top-line data readouts at Day 56 and Day 168 during the fiscal year. The primary endpoint— a change in one or more synovial fluid biomarkers associated with OA disease progression—was achieved at Day 56. Pleasingly, significant changes from baseline in Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) pain, function, and stiffness values were also observed at Day 56 following twice-weekly iPPS treatment compared to placebo, despite the small patient groups. Furthermore, this study also produced strong signals of disease modifying potential at Day 168, showing structural improvement as measured by continued positive changes in synovial fluid, serum, and urine biomarkers and positive structural changes to the cartilage, subchondral bone marrow lesions and osteophytes following iPPS treatment versus placebo. $66m AUD Capital raise Capital raise in August 2022 comprising $45.7 million AUD institutional placement and a fully underwritten $20.3 million AUD entitlement offer. 7 New hires In FY2023, Paradigm expanded the employee base with new hires in operational, clinical, commercial, and administrative positions in Australia and the US. Paradigm has balanced gender representation including in senior leadership positions, from the Board to the Executive Leadership Team to employees. 100+ Patents OA Preclinical Program Highlights and OA Program Next Steps In conjunction with the PARA_OA_008 clinical trial, Paradigm also conducted a study in a canine model of naturally occurring OA to further explore the potential disease modifying properties of iPPS and to provide long-term durability data at 26 weeks in dogs, which is equivalent to a three-year period in humans. Data reported from the canine study at 26 weeks demonstrated positive trends with meaningful effect size on subjective measurements of pain, objective functional clinical outcomes, and objective measurements of cartilage volume and molecular biomarkers, following iPPS administration. The clinical, MRI, and molecular biomarker data produced from the phase 2 PARA_OA_008 clinical trial along with the data from the canine OA model will be presented to the US and EU regulatory authorities (FDA and EMA). The aim is to reach agreement on the regulatory pathway for a DMOAD label extension, which would add further commercial value to Paradigm’s OA asset. MPS Clinical Program Highlights The development of iPPS for MPS (where Paradigm has achieved designated orphan status for MPS I and MPS VI) continues, with two major phase 2 milestones achieved in FY23. In April 2023, we announced that Paradigm’s MPS VI phase 2 trial based in Brazil had completed enrolment of 13 participants. This placebo-controlled, double-blind, and randomised 24-week study compares iPPS to placebo, where the primary objective is to evaluate the safety and tolerability of iPPS. Secondary endpoints include iPPS effects on pain, function, and glycosaminoglycan (GAG) levels at 6, 12, and 24 weeks. Recruiting 13 participants in this ultra-rare disease is a fantastic achievement for the Company, and we look forward to reporting top-line data later this calendar year. In June 2023, the Company announced that the phase 2 open-label, single centre pilot study to evaluate iPPS treatment in subjects with MPS I met its primary and secondary endpoints. iPPS was well tolerated out to 73 weeks and subjects reported meaningful improvements in pain, function, and activities of daily living and an overall improvement in quality of life. GAG levels were also reduced with iPPS treatment. As of January 2023, Paradigm owns over 100 granted or pending patent applications related to novel uses for PPS. Paradigm Biopharmaceuticals Limited Annual Report 2023 03 Chairman and Managing Director’s Report continued I am sure most investors understand that drug development is a complex process, and it takes the dedication and persistence of highly experienced staff to bring a new drug to market. I am pleased to advise shareholders that there is a very professional and productive clinical, safety, and regulatory affairs team in place at Paradigm, and they remain very focused on preparing the necessary data to present to the US Food and Drug Administration and other regulatory agencies. Board Initiatives Following a vote against the Employee Share Plan (ESP) at the 2022 Paradigm AGM, the Board has worked diligently and sought feedback from key stakeholders to produce a new longterm incentive (LTI) plan designed to drive shareholder value and encourage participant behaviour towards achieving business success. The Plan involves employees being granted ‘Performance Rights’ each year. Each Performance Right converts to one ordinary share if performance-based vesting conditions are met at the end of a three-year vesting period. There are three performance hurdles which must be achieved before any performance-based rights can vest. (i) There must be a minimum shareholder return as measured by the compound annual growth rate (CAGR) of the share price, (ii) business goals must be met, and (iii) individual performance as measured by key performance indicators (KPIs) must also be met. We look forward to presenting the updated LTI plan to all shareholders in the near term. An LTI plan is an important tool for management to ensure Paradigm can continue to attract and retain the best talent necessary to drive the achievement of Company milestones and increase value for all stakeholders. I thank Paradigm’s independent Directors for the faith and trust they have again bestowed upon me to lead this Company as we navigate the complexities of an extensive clinical program on the way to registering PPS for multiple indications. Key Operational Aspects The View Ahead Much of the FY23 expenditure was focused on clinical development for the lead programs. Paradigm’s cash position was bolstered by a $66 million capital raise in August 2022. This comprised a $45.7 million institutional placement supported by existing and new domestic and international institutional investors, and a fully underwritten 1 for 15 pro-rata non renounceable entitlement offer of A$20.3 million at $1.30 per share. In July 2022, Paradigm engaged Plexus Ventures (USA) to assist with our global partnering activities. Plexus has more than 30 years’ experience in structuring and executing transactions and agreements among pharmaceutical and consumer healthcare companies worldwide. The experts from Plexus who are working with Paradigm have direct experience and wide networks within the global pharmaceutical sector. Plexus facilitates Paradigm’s discussions with potential partners and advises on deal strategy, timing, value and the strategic fit and capabilities of potential partners for Paradigm’s assets. Throughout FY23, Paradigm together with Plexus have attended multiple global conferences including JP Morgan Healthcare Conference, BIO International and BIO-Europe, and held numerous one-on-one meetings with potential global and regional licensing partners to introduce Paradigm and its late-stage assets and pursue discussions with interested parties. Throughout FY23, Paradigm welcomed seven new hires into the organisation to grow Paradigm’s global footprint, resulting in equal numbers of staff in Australia and the US. Marco Polizzi was appointed as Paradigm CEO in July 2022, and in November 2022, Marco’s employment with Paradigm ceased. The terms of the separation deed are confidential. I thank Paradigm’s independent Directors for the faith and trust they have again bestowed upon me to lead this Company as we navigate the complexities of an extensive clinical program on the way to registering PPS for multiple indications. Abby Macnish Niven joined Paradigm as interim CFO and Company Secretary, following the departure of CFO Justin Cahill in March 2023 and after the tragic passing of inaugural Paradigm Company Secretary Kevin Hollingsworth. Kevin was always a passionate contributor to Paradigm, a great friend and colleague. I would like to thank our shareholders for their continued support of Paradigm along our journey to a New Drug Application (NDA). We are extremely grateful for your investment, passion and commitment, which helps drive us to achieve our best. I would also like to thank the staff at Paradigm for their dedication, contributions, and achievements in FY23. I look forward to reporting further significant milestones in FY24. On behalf of the Directors, Paul Rennie Chairman and Managing Director Melbourne, Victoria 25 August 2023 04 Paradigm Biopharmaceuticals Limited Annual Report 2023 Paradigm Biopharmaceuticals Limited Annual Report 2023 05 Chief Medical Officer’s Report Donna Skerrett This year has seen impressive advances in the Company’s two major clinical and scientific programs of osteoarthritis and mucopolysaccharidosis. With these and future upcoming milestones, Paradigm is on track to develop iPPS into a registered product. Dear Shareholders, As Paradigm’s Chief Medical Officer, I’m pleased to report upon the Company’s clinical and scientific progress. Paradigm’s goal is to develop the full potential of underutilised molecules to address many of the unmet medical needs facing millions worldwide suffering from diseases characterised by inflammation. The Company’s current primary focus is the clinical development of an injectable version of the semisynthetic molecule pentosan polysulfate sodium, also known as PPS or iPPS. This molecule has been in use in oral form to treat bladder inflammation in humans for over 25 years. Based on more recent scientific research, we quickly understood that PPS had the excellent potential to reduce pain and improve function in diseases with strong inflammatory components such as osteoarthritis. This hypothesis was reinforced with early preclinical research results that have translated into highly exciting clinical trial results and real-world evidence from our managed access programs. Although the road to drug registration is long and complex, we are delighted with our continued progress in our R&D and clinical programs, as emphasised by the FDA Fast Track Designation granted a little over a year ago, and our continuing clinical milestone achievements. 06 Paradigm Biopharmaceuticals Limited Navigating Drug Development Our team of highly skilled clinical, research, medical, regulatory, logistics, and business experts understand that to successfully achieve approval, all facets of a new drug must be beyond reproach. Most importantly, these include clinical effect and safety, which are key metrics used at all stages of a drug development process. Drug development starts with laboratory and preclinical studies, which can then move into early testing in small groups of volunteers (20-80), known as phase 1 clinical trials. Phase 1 trials are focused on safety with continued checks for side effects (adverse events). Phase 1 studies may also evaluate the kinetics of a drug, i.e., understanding how much drug is in an individual and how long the drug stays in the circulation so a half-life can be calculated. Phase 2 clinical trials investigate efficacy and continue to monitor safety in larger studies, comparing response and tolerance in the drug-treated group with control subjects. When meaningful signs of efficacy and tolerance are established in phase 2, the program progresses to phase 3 trials, which are powered to demonstrate statistically significant and clinically meaningful treatment effects in treated compared to control subjects and often include hundreds of patients. Phase 3 trials compare the new investigational drug to an existing medication or the current standard of care if no comparable therapy exists. As with all studies, phase 3 continues to monitor for any adverse effects. Annual Report 2023 In addition to the safety and efficacy studies, further laboratory or preclinical studies may deepen understanding of the molecular mechanisms of action. Furthermore, the sponsoring company must ensure that the investigative drug can be manufactured consistently, and quality controlled to all necessary specifications, which means meeting all manufacturing, labelling, transport, and logistical planning requirements necessary to scale up production and deliver consistent drug for human use. Our team is ensuring that at every stage, we meet and pass all regulatory requirements on this drug development journey, to provide a well planned and executed registration program for commercialising iPPS for osteoarthritis and MPS. Clinical Trials – the Cornerstone of our iPPS Development Program As highlighted by Managing Director Paul Rennie, the last financial year has seen enormous progress in our pivotal phase 3 clinical trial for knee osteoarthritis. This global two-stage, adaptive, double-blinded, placebocontrolled clinical trial is active in seven countries, with over 120 clinical trial sites activated to date. Remotely managing the recruitment process for such a complex trial during the tail end of a global pandemic has been a massive logistical challenge, one that the Company has met with unflagging determination and dedication. We are delighted to report that the PARA_ OA_002 clinical trial has now identified all patients to be randomised for the first stage. Multiple different initiatives contributed to this success. The clinical team benefited from the Company’s partnership with NFL Alumni Health, resulting in an invitation for our Head of Clinical Osteoarthritis, Dr Mukesh Ahuja, to present at a health symposium during the NFL Draft in Kansas City. Furthermore, Paul Rennie, Dr Ahuja and I were invited to present to several different NFL Alumni chapter presidents, with a resulting positive increase in clinical trial interest. The Company also engaged the services of two well-respected and effective clinical trial recruitment enterprises, 1nHealth, and SubjectWell, which both use targeted patient-centric technologyenabled approaches to better identify potential participants. In Australia, a targeted radio ad campaign across several states, as well as a focused letterbox drop near clinical trial sites were tested to increase recruitment. Our core internal team works seamlessly and closely with our clinical, safety, and statistical contract research organisation (CRO) partner vendors to manage all aspects of patient care, monitoring, and data management. PARA_OA_002 stage 1 will provide information for selection of the lowest and best tolerated dose for proceeding to stage 2 to complete this phase 3 study, and to initiate the confirmatory phase 3 study. Following dose selection, the above-noted initiatives will support the ongoing recruitment for the subsequent second stage of this pivotal clinical trial, which when complete, will have seen over 900 volunteers randomised for the study. Our team is ensuring that at every stage, we meet and pass all regulatory requirements on this drug development journey, to provide a well planned and executed registration program for commercialising iPPS for osteoarthritis and MPS. 7 Countries Number of countries with study trial sites for both OA and MPS clinical programs 468 Patients Number of volunteers in the first stage of the double-blind, placebo-controlled, randomised phase 3 PARA_OA_002 study Paradigm Biopharmaceuticals Limited Annual Report 2023 07 Chief Medical Officer’s Report continued Harnessing the Potential Value for DMOAD in OA Right now, there are no OA treatments available classed as DMOADs—or disease-modifying OA drugs—for people suffering the debilitating effects of progressive OA. Currently available medications and therapies can help manage OA symptoms; however, they are unable to address the underlying bone dysfunction, and cannot slow, stop or reverse the degenerative bone disease process. Furthermore, many OA treatments require prolonged continual administration and are often not tolerated for long periods of administration. This year, we reported exciting results from two different studies, one aimed to examine the changes that occur in the knee joint space (synovial fluid or synovium) in a canine model that treated family owned dogs with naturally occurring osteoarthritis of the stifle (knee equivalent) and elbow joints. Although only exploratory (small numbers), this study provided a glimpse into the potential longer-term effects of iPPS treatment. This is because the six-month 08 Paradigm Biopharmaceuticals Limited Not only were clinical and functional measures showing encouraging effects compared to placebo, but further explorations into changes in the knee joint following iPPS treatment with the assessment of biomarkers, both molecular and structural, provided some evidence that iPPS may slow or halt OA disease progression. moderate to severe knee osteoarthritis at 56 days (two weeks after completing the six-week treatment course) and at 168 days (six-month timepoint). A number of trial participants will also be assessed for pain and function at the one-year timepoint. This PARA_OA_008 trial met the primary endpoint of changes in one or more synovial biomarkers at Day 56 and durable effects on pain and function were observed, with rescue medication use four times higher in the placebo group compared to one of the iPPS groups. Furthermore, an additional study provided convincing clinical evidence of iPPS DMOAD potential. This exploratory double-blinded, placebo-controlled, randomised controlled phase 2 clinical trial investigated iPPS in 61 people with These results provide encouraging data supporting DMOAD effects for iPPS. However, as no DMOAD has ever been successfully registered, no established registration pathways for such drugs exist. Given trial results and the Fast period that was investigated in the dogs is roughly equivalent to three years of bone deterioration in humans with OA. Not only were clinical and functional measures showing encouraging effects compared to placebo, but further explorations into changes in the knee joint following iPPS treatment with the assessment of biomarkers, both molecular and structural, provided some evidence that iPPS may slow or halt OA disease progression. Annual Report 2023 Track Designation, Paradigm intends to initiate working discussions with the FDA and EMA in order to develop and reach agreement on a novel DMOAD registration pathway. Paradigm considers DMOAD labelling a strategically valuable goal as independent market research conducted in 2021 demonstrated that physicians would consider Zilosul® much earlier in the therapeutic algorithm if it had a disease modifying indication. Subsequent analysis of US payers found that an annual cost of between $2,000 to $3,000 USD would be acceptable for Zilosul® as a therapy to reduce pain and improve function in knee OA, whereas an additional DMOAD label could be valued at $6,000 USD/year or higher. A Brief MPS Update Our MPS clinical program is a critical pillar in the development of iPPS. Once children born with the ultra-rare forms of lysosomal storage disease known as mucopolysaccharidosis or MPS have been diagnosed, they will be reliant on either bone marrow transplantation and/ or enzyme replacement therapy to keep the worst of the disease effects at bay. Despite these cutting-edge treatments, people with MPS still experience residual joint inflammation and pain, which can severely impact their day-to-day lives. The Company has progressed to phase 2 clinical trials in both MPS types I and VI. The open-label phase 2 MPS I trial was completed and is currently undergoing analysis. The placebo-controlled, doubleblind, randomised phase 2 MPS VI study completed participant enrolment and passed several safety reviews, enabling the inclusion of younger subjects. As analysis continues, we are planning further discussions with regulators to establish regulatory pathways for registration for iPPS for the treatment of this rare disease. An Exciting Stage of Development results indicating that DMOAD may well be within reach. Moving from clinically relevant pain relief and improvement in function, to potentially slowing, halting, or even reversing degenerative osteoarthritis will ensure that Zilosul® is at the forefront of decision-makers’ minds when considering reimbursement potential. I would like to personally thank Founder and Managing Director Paul Rennie, and the Board for their continued support throughout the year, as well as the entire dedicated Paradigm team, who have worked tirelessly to achieve excellent results this year, I can’t wait to see what the next few years bring. Donna Skerrett Chief Medical Officer New York City, New York This year, we’ve seen our OA clinical trial program progress in leaps and bounds with the continued meeting of targets with the global phase 3 trial and some highly positive phase 2 and nonclinical study Paradigm Biopharmaceuticals Limited Annual Report 2023 09 The Unmet Need in Osteoarthritis In combination with an ageing population, the lack of effective treatments for osteoarthritis is a global issue. Here, we delve into the reasons why developing a novel non-opioid treatment that can alleviate pain and improve mobility in osteoarthritis is so