pharmaceuticals
Improving the lives of people with
neurodevelopmental disabilities
N e u r e n P h a r m a c e u t i c a l s L i m i t e d
A N N U A L R E P O R T 2 0 2 1
Neuren Pharmaceuticals is developing new
therapies for debilitating neurodevelopmental
disorders that emerge in early childhood and
are characterised by impaired connections
and signalling between brain cells.
Incorporated in New Zealand and based in
Melbourne, Australia, Neuren is listed on the
ASX under the code NEU.
Contents
1 Neuren’s value proposition
2 Chair and CEO message
3 Operating Review
15 Board
16 Management Team
18 Corporate Governance
24 Directors’ Report
30 Consolidated Statement of Comprehensive Income
31 Consolidated Statement of Financial Position
32 Consolidated Statement of Changes in equity
33 Consolidated Statement of Cash Flows
34 Notes to the Consolidated Financial Statements
47 Independent Auditor’s Report
49 Additional Information
N E U R E N ’ S V A LU E P R O P O S I T I O N
Leading pipeline in neurodevelopmental disorders
Compound
Indication
Preclinical
Phase 1
Phase 2
Phase 3
Commercial Partner
Trofinetide
NNZ-2591
Rett syndrome1
Fragile X
syndrome1
Phelan-McDermid
syndrome2
Angelman
syndrome2
Pitt Hopkins
syndrome2
Prader-Willi
syndrome
(North America)
(North America)
Commence
H1 2022
Results
H1 2023
Commence
H2 2022
Results
H2 2023
1 Orphan Drug designation in US and EU, Fast Track designation in US
2 Orphan Drug designation in US and EU3 Orphan Drug designation in US
Three key drivers of future value
1
2
Realise Neuren’s share of
trofinetide value in the US
through Acadia’s New Drug
Application for Rett syndrome
Implement commercial
strategy for trofinetide ex-
North America, using US
data for registration
3
Confirm efficacy of
NNZ-2591 in Phase 2
trials for 4 valuable
indications
Key milestones in next 18 months
• NNZ-2591 Phase 2
trial results
• Approval of NDA for Rett
syndrome (Q1 2023)
• Commercial partnerships ex-
North America for Rett syndrome
• Commence Prader-Willi
syndrome Phase 2 trial
• Acadia New Drug Application (NDA)
for Rett syndrome (mid-2022)
• Commence Phase 2 trials in
Angelman, Phelan-McDermid
and Pitt Hopkins syndromes
1
Neuren Pharmaceuticals Limited Annual Report 2021
C H A I R A N D C E O M E S S A G E
PAT R I C K D A V I E S & J O N P I L C H E R
Dear Shareholders,
2021 was a very successful year
for Neuren, culminating in the
positive Phase 3 clinical trial results
for trofinetide in Rett syndrome,
announced in December by our US
partner Acadia Pharmaceuticals.
Given that the trial was conducted
entirely through the pandemic, it
was an outstanding achievement
by Acadia to complete it within the
envisaged timeline. Of course, this
was made possible by the remarkable
determination and resilience of the
Rett syndrome community in the
United States. Their unwavering
support has been critical throughout
this ground-breaking development
program.
The robustly positive trial results were
a very important value-accretive event
for Neuren, as evidenced by the large
increase in the share price against
the background of a bear market for
biotech stocks. However, the results
were also the gateway to much larger
value creation in the near term across
the three elements that Neuren is
pursuing. If all goes according to plan
for these three elements, we expect
to have a range of very attractive
strategic options for the Company.
Firstly, the results enable the New Drug
Application for trofinetide that Acadia
plans to submit to the US Food and
Drug Administration (FDA) in mid-2022.
Neuren will earn the first milestone
payment from Acadia of US$10 million
when the FDA accepts the application
for review, which is typically 60
days after filing. If the application is
approved, we expect further payments
in 2023 of US$73 million, as well as
double digit percentage royalties on
sales and the potential to earn future
sales milestone payments of up to
US$350 million.
Secondly, the results enable Neuren
to seek partners to commercialise
trofinetide outside North America,
using the data generated by the US
development program.
Thirdly, the trofinetide results further
increased our confidence in the
prospects of our second drug NNZ-
2591, which also targets the role of IGF-
1 in the brain and will involve similar
clinical trials. It is a very exciting
time for Neuren as we commence
multiple Phase 2 trials for NNZ-2591
following the great promise seen in all
the pre-clinical models. The number
of potential patients across the four
neurodevelopmental disorders we
are currently targeting in parallel is
more than five times the number for
Rett syndrome. We retain global rights
to NNZ-2591, which has the potential
to generate larger value for Neuren
shareholders than trofinetide.
We are grateful to the existing and
new shareholders that gave strong
support to the modest capital raising
we conducted in September 2021.
The raising ensured that our ambitious
plans for NNZ-2591 were fully funded,
independent of anticipated revenues
from trofinetide. This includes
accelerating the path to market
by laying the foundations that are
required for Phase 3 in parallel with
executing the Phase 2 trials. Our
increasing market capitalisation has
now led to broader media and investor
interest in Neuren, including brokers
that typically follow more mature and
larger healthcare companies. In time
this should result in a new and larger
audience for the Neuren story and we
remain very active in engaging with
investors and stakeholders to share
with them the strong prospects of your
company. Neuren was recently added
to the ASX All Ordinaries Index and
further growth may potentially lead
to inclusion in the ASX 300 Index.
We would like to thank the Neuren
team and Board, the patient
communities and our many industry
partners for their effort and skill over
the last year. The Neuren team remains
highly motivated and determined
to improve the lives of patients and
families around the world impacted
by neurodevelopmental disabilities.
We believe that there is a very exciting
time ahead for the Company.
Neuren’s
Values
We are passionate about making a difference
to the lives of patients and their families
We aim to earn the respect of everyone
we deal with
We are determined and creative to break
through barriers
We harness the power of collaboration
and different perspectives
We recognise the importance of all
stakeholders and endeavour to use
financial resources efficiently
2
Patrick Davies
Chair
Jon Pilcher
CEO
Neuren Pharmaceuticals Limited Annual Report 2021 O P E R AT I N G R E V I E W
Treating neurodevelopmental disorders
Rett
MECP2
Fragile X
Phelan-
McDermid
Angelman
Pitt Hopkins
Prader-Willi
FMR1
SHANK3
UBE3A
TCF4
15q11-q13
Impaired communication between
neurons, abnormal formation/pruning
of dendrites & chronic inflammation
Neuren’s drugs
target the critical
role of IGF-1 in this
upstream process,
using analogs of
peptides that can
be taken orally as
liquids
Severe impact on nearly every aspect of life
walking and balance issues
anxiety and hyperactivity
seizures
speech impairment
impaired hand use
intellectual disability
breathing irregularities
sleep disturbance
gastrointestinal problems
NEUREN’S GROUND -BRE AKING THER APIES
Neuren has two novel patented drugs, trofinetide and NNZ-
2591, which potentially have broad utility in the treatment
of neurological disorders. Both drugs can be administered
orally in a patient-friendly liquid dose. Each drug is in clinical
development to treat debilitating neurodevelopmental
disorders that emerge in early childhood and for which there
are currently no approved drug therapies. The disorders
stem from problems in brain development which lead to a
wide range of serious issues affecting nearly every aspect of
life, creating a severe life-long burden for the patients and
their families.
Each neurodevelopmental disorder is caused by a different
genetic mutation, but in many cases they share similar
symptoms and the common characteristic of impaired
connections and signalling between brain cells. Neuren’s
drugs, which are synthetic analogues of important
molecules that occur naturally in the brain, aim to improve
the impaired connections and signalling, meaning that
the drug’s target is to have a broad impact on the disorder
rather than aiming to treat one symptom.
A critical feature of Neuren’s work to develop therapies
for each of these disorders is close collaboration with the
leading specialist physicians and with the well-organised
patient advocacy organisations.
THE IMPORTANCE OF ORPHAN DRUG
DESIGNATION
Neuren has received Orphan Drug designation from the US
Food and Drug Administration (FDA) for trofinetide to treat
Rett syndrome and Fragile X syndrome and for NNZ-2591
to treat Phelan-McDermid syndrome, Angelman syndrome,
Pitt Hopkins syndrome and Prader-Willi syndrome. The
European Medicines Agency (EMA) has also granted Orphan
designation to all except Prader-Willi syndrome, for which
an application will be submitted in due course.
Orphan Drug designation is a special status that the
regulators may grant to a drug to treat a rare disease
or condition. Amongst other incentives, Orphan Drug
designation qualifies the sponsor of the drug for exclusivity
periods during which the regulators will not approve a
generic competitor product. These marketing exclusivity
periods are extremely valuable for the commercialisation
of Orphan Drugs. They provide additional protection, along
with patents, against generic competitors and potentially
can continue to provide protection after patent expiry.
The exclusivity periods after marketing authorisation of
products approved for pediatric use are 7.5 years in the US
and 12 years in the EU. Japan, South Korea and Taiwan also
have Orphan Drug programs.
3
Neuren Pharmaceuticals Limited Annual Report 2021 O P E R AT I N G R E V I E W
C O N T I N U E D
As well as the exclusivity periods, Orphan Drugs have many other commercial advantages compared with existing markets
that have apparently attractive large sales in which established products and companies have to be displaced. The serious and
urgent unmet need results in a more supportive regulatory and pricing environment and strong engagement from the patient
community and leading physicians. Historical data indicates a higher probability of achieving regulatory approval and the
potential for immediate access to known patients means that a large sales organisation is less important.
In short, the Orphan Drug business model targets a leadership position in markets with urgent need, at an attractive price and
with a higher probability of getting to market.
The neurodevelopmental disorders that Neuren is aiming to treat are “rare diseases”, however they are not “ultra-rare”, and
in each disorder there are tens of thousands of potential patients. Combined with Neuren’s strategy to develop treatments for
multiple disorders in parallel, this results in a substantial commercial opportunity.
COMMERCIAL EXCLUSIVIT Y
In addition to the primary protection of the important exclusivity periods from Orphan Drug designation explained above,
Neuren has additional commercial protection from issued patents, which extend as far as 2032 for trofinetide and 2034 for
NNZ-2591. Further international patent applications have been filed for both drugs which, if granted, will extend to 2040. Since
trofinetide and NNZ-2591 are new chemical entities, following the first marketing authorisation for each drug, the term of one
patent may potentially be extended by up to 5 years in many countries, including the United States, Europe and Japan.
TROFINETIDE FOR RETT SYNDROME
Successful Phase 3 clinical trial and pending NDA
In December 2021, Neuren’s partner for trofinetide in North America, Acadia Pharmaceuticals (Nasdaq: ACAD), announced
positive top-line results from the pivotal, Phase 3 Lavender™ clinical trial evaluating the efficacy and safety of trofinetide
in 187 girls and young women aged 5-20 years with Rett syndrome. The 12-week placebo-controlled study demonstrated
a statistically significant improvement over placebo for both co-primary endpoints. On the Rett Syndrome Behaviour
Questionnaire (RSBQ), change from baseline to week 12 was -5.1 vs. -1.7 (p=0.0175; effect size=0.37). The Clinical Global
Impression–Improvement (CGI-I) score at week 12 was 3.5 vs. 3.8 (p=0.0030; effect size=0.47). The RSBQ is a caregiver
assessment of the core symptoms of Rett syndrome and the CGI-I is a global physician assessment of worsening or improving
of Rett syndrome. Additionally, trofinetide demonstrated a statistically significant separation over placebo on the key
secondary endpoint, the Communication and Symbolic Behavior Scales Developmental Profile™ Infant-Toddler Checklist–
Social composite score (CSBS-DP-IT–Social) change from baseline to week 12 was -0.1 vs. -1.1 (p=0.0064; effect size=0.43).
Lavender™ positive top-line results
Disorder
Primary Endpoints:
Rett Syndrome Behaviour Questionnaire (RSBQ)
(Change from baseline to week 12)
p-value
Effect Size: Cohen’s d
Clinical Global Impression of Improvement (CGI-I)
(Score at week 12)
p-value
Effect Size: Cohen’s d
Key Secondary Endpoint:
CSBS-DP-IT Social Composite Score
(Change from baseline to week 12)
p-value
Effect Size: Cohen’s d
Placebo
Trofinetide
-1.7 (0.98)
-5.1 (1.38)
p=0.0175
0.37
3.8 (0.06)
3.5 (0.08)
p=0.0030
0.47
-1.1 (0.28)
-0.1 (0.28)
p=0.0064
0.43
Source: Acadia Lavender Study Top-Line Results Presentation https://ir.acadia-pharm.com/static-files/84457c64-60ab-4b2f-a166-edc1d465f4a8
4
Neuren Pharmaceuticals Limited Annual Report 2021 O P E R AT I N G R E V I E W
C O N T I N U E D
The trofinetide program has Orphan Drug, Fast Track and Rare Pediatric Disease designations from the FDA. Acadia plans to
submit a New Drug Application (NDA) to the FDA around mid-year 2022. A NDA with Orphan Drug Designation is eligible for
Priority Review in 6 months, compared with the standard review period of 10 months, which means potential for marketing
approval in the first quarter of 2023. The NDA will be based on pivotal efficacy from the positive Phase 3 trial, supportive
efficacy from Neuren’s positive Phase 2 trial and safety data from completed and ongoing studies, which include the Lilac™
open label extension trial and the Daffodil™ trial evaluating safety and pharmacokinetics in children aged 2 to 5 years. Acadia
has already conducted pre-NDA meetings with the FDA to discuss the clinical data package and the chemistry, manufacturing
and controls package for the NDA.
Neuren’s attractive economics from the Acadia partnership
Under the terms of the licence agreement with Acadia, the development and commercialisation of trofinetide in North America
is fully funded by Acadia and Neuren may receive potential milestone payments of up to US$455 million, plus double-digit
percentage royalties on net sales of trofinetide in North America, plus one third of the market value of a Rare Pediatric Disease
Priority Review Voucher if awarded by the FDA upon approval of a NDA for trofinetide. These vouchers are tradeable and
published sales since 2019 have fetched between US$95 million and US$110 million.
Neuren expects to receive revenue over 2022 and 2023 for Rett syndrome in the US alone of A$115 million plus double-digit
percentage royalties on net sales. The expected revenue in addition to the royalties comprises:
– A milestone payment in 2022 of US$10 million (A$14 million at assumed exchange rate of 0.72) following acceptance of the
NDA for review by the FDA;
– A milestone payment in 2023 of US$40 million (A$55 million), following the first commercial sale of trofinetide in the United
States; and
– US$33 million (A$46 million) in 2023 as Neuren’s one third share of the market value of a Priority Review Voucher, estimated
as US$100 million.
Neuren’s additional ongoing revenue from sales has two components:
– Double digit percentage royalties on sales of trofinetide in all indications. The annual sales are recorded in tiers and
an escalating percentage is applied to each successive tier. The potential peak annual net sales for trofinetide in Rett
syndrome has been estimated by Acadia as at least US$500 million.
– Payments of up to US$350 million (approximately A$486 million) on achievement of a series of 4 thresholds of total annual
sales for all indications.
No royalties or similar costs are payable by Neuren to third parties, which means that Neuren’s revenue from Acadia will flow
through to pre-tax profit.
A redacted version of the licence agreement between Neuren and Acadia was filed with the US Securities and Exchange
Commission as a material contract exhibit to Acadia’s 2018 10-K Annual Report, which is available to view via the SEC Filings
section of Acadia’s website.
Development and commercialisation outside North America
Acadia has exclusive rights to trofinetide in all indications for the United States, Canada and Mexico. Neuren retained all rights
to trofinetide for countries outside North America and has a fully paid-up, irrevocable licence for use in those countries to all
data generated by Acadia.
There is urgent unmet need for a treatment for Rett syndrome around the world, evidenced by communications received from
families, patient support groups and physicians. The estimated number of potential patients and currently identified patients
are shown in the table below. Neuren expects rates of diagnosis to increase with greater awareness and accelerate with the
availability of a treatment.
Rett Syndrome opportunity
Estimates
Potential patients1
Patients currently identified
US
Europe
Japan
China urban
Other Asia
10,000
5,000
13,000
4,000
3,000
1,000
28,000
2,000
6,000
‘00s
1 Potential patient estimates derived by applying the mid-point of the published prevalence estimate range to the populations under 60 years
5
Neuren Pharmaceuticals Limited Annual Report 2021 O P E R AT I N G R E V I E W
C O N T I N U E D
Neuren has received strong interest for potential commercial partnerships and the number of interested parties has increased
significantly since the Phase 3 results were announced. Discussions are now in progress under a process to secure the optimum
outcome for shareholders and for patients.
i
About Rett syndrome
Rett syndrome is a seriously debilitating and life-threatening neurological disorder, for which there are no
approved medicines. It is first recognized in infancy and seen predominantly in girls, but can occur very
rarely in boys. At diagnosis, Rett syndrome has often been misdiagnosed as autism, cerebral palsy, or non-
specific developmental delay. Most cases of Rett syndrome are caused by mutations on the X chromosome
on a gene called MECP2. Rett syndrome strikes all racial and ethnic groups and has been estimated to
occur worldwide in 1 of every 10,000 to 15,000 female births, causing problems in brain function that are
responsible for cognitive, sensory, emotional, motor and autonomic function. These problems can include
learning, speech, sensory sensations, mood, movement, breathing, cardiac function, and even chewing,
swallowing, and digestion. Rett syndrome symptoms appear after an early period of apparently normal or
near normal development until six to eighteen months of life, when there is a slowing down or stagnation of
skills. A period of regression then follows, with loss of communication skills and purposeful hand use, loss or
impairment of walking, and the onset of stereotypic hand movements. Other problems frequently include
seizures and erratic breathing patterns, an abnormal side-to-side curvature of the spine (scoliosis), and
sleep disturbances.
NNZ-2591 FOR MULTIPLE NEURODEVELOPMENTAL DISORDERS
Neuren recently received approval from the FDA for Investigational New Drug (IND) applications to commence Phase 2 clinical
trials of NNZ-2591 for each of Phelan-McDermid syndrome (PMS), Angelman syndrome (AS) and Pitt Hopkins syndrome (PTHS).
There are currently no approved therapies for these debilitating neurodevelopmental disorders. A fourth disorder, Prader-Willi
syndrome, was also added to the development pipeline in 2021 following excellent results in a model of the disorder and the
grant of Orphan Drug designation by the FDA.
The estimated number of potential patients being targeted across these four disorders is more than five times larger than Rett
syndrome. Neuren retains all global rights to NNZ-2591.
Five times larger opportunity for NNZ-2591
Disorder
Gene mutation Published prevalence estimates
Phelan-McDermid
SHANK3
1/8,000 to 1/15,000 males and females
UBE3A
TCF4
1/12,000 to 1/24,000 males and females
1/34,000 to 1/41,000 males and females
Angelman
Pitt Hopkins
Prader-Willi
Potential
patients
US1
Potential
patients
Europe1
Potential
patients
Other1, 2
22,000
14,000
7,000
28,000
18,000
9,000
81,000
52,000
25,000
47,000
15q11-q13
1/10,000 to 1/30,000 males and females
13,000
16,000
1 Estimates derived by applying the mid-point of the prevalence estimate range to the populations under 60 years
2 Other comprises Japan, Korea, Taiwan, Israel, Brazil and urban population of China
56,000
71,000
205,000
6
Neuren Pharmaceuticals Limited Annual Report 2021
O P E R AT I N G R E V I E W
C O N T I N U E D
Phase 2 trials in AS, PMS and PTHS – results expected in H1 2023
Following review of the originally submitted trial protocols, FDA requested enhancements to the safety monitoring in these
first trials of NNZ-2591 in pediatric patients. This required amendments to the protocols and re-submission of the applications,
which deferred the approvals of the IND applications by 5 months. This in turn moved the expected timing of top-line results
from H2 2022 to H1 2023.
The overall aim of these first trials is to expedite the generation of data that will enable the subsequent trials to be designed
as registration trials. Prioritising fast enrolment of subjects, the AS trial is being conducted in Australia, whilst the PMS and
PTHS trials are being conducted in the US. Up to 20 pediatric patients will be enrolled in each trial. All patients will receive drug
following a well-characterised baseline period, which will enable the change from baseline to be extensively analysed.
The primary aim is to confirm the safety and pharmacokinetics of NNZ-2591 in pediatric patients. However, each trial will also
assess the treatment impact across multiple efficacy measures to generate data to select the best primary efficacy endpoint
or endpoints for the registration trials. The trials maximise the opportunity to demonstrate effects by focusing on pediatric
patients and treating them for 13 weeks.
Preparation for Phase 3
In order to expedite the overall development plan, in parallel with conducting the Phase 2 trials Neuren is executing the
additional development work required to be ready for Phase 3 development. This includes non-clinical toxicity studies
to support longer clinical trials and commercial use of the product, as well as optimisation of the drug product and drug
substance manufacturing arrangements.
Strong foundations for Phase 2 trials
In designing and executing the NNZ-2591 development program, Neuren has been able to leverage the extensive and highly
relevant experience the management team has gained from the trofinetide Rett syndrome program across manufacturing,
non-clinical, clinical and regulatory. Neuren has meticulously built strong foundations in each of these areas to enable Phase 2
trials in multiple indications.
Clear and consistent efficacy in mouse models of all four disorders
The studies in these models compared normal mice (“wild type”) and mice with a disrupted gene (“knockout”). The knockout
mice exhibit behavioural and biochemical deficits that mimic each disorder in humans. The wild type mice and the knockout
mice were each treated with placebo and NNZ-2591. In all four models, treatment with NNZ-2591 for 6 weeks eliminated all the
deficits so that the knockout mice were indistinguishable from the wild type mice. Treatment had no impact on the wild type
mice which is important from a safety point of view.
Following review of the data from the mouse models and the mechanistic rationale for treatment, FDA granted Orphan Drug
designation for NNZ-2591 in each of the four disorders.
7
Neuren Pharmaceuticals Limited Annual Report 2021 EFFICACY IN MOUSE MODEL OF ANGELMAN
C O N T I N U E D
O P E R AT I N G R E V I E W
The charts below show the results in the Angelman syndrome, Pitt Hopkins and Prader-Willi syndrome models. In the
Angelman model, treatment also eliminated seizures in the knockout mice.
Efficacy in mouse model of Angelman (Ube3a)
Hypoactivity & anxiety
y
t
i
l
a
u
q
g
n
d
i
l
i
u
B
t
s
e
N
Daily living
)
5
o
t
1
e
d
a
r
g
(
6
4
2
0
i
)
n
(
g
n
y
r
u
b
e
b
r
a
M
l
Daily living
20
15
10
5
0
W T-vehicle
U be3a
m
-/p+ + vehicle
m -/p+ + N N Z 2591
W T + N N Z 2591
U b e3a
Sociability
-/p+ + vehicle
W T-vehicle
U be3a
m
m -/p+ + N N Z 2591
W T + N N Z 2591
U b e3a
80
Motor
-/p+ + vehicle
W T-vehicle
U be3a
m
m -/p+ + N N Z 2591
W T + N N Z 2591
U b e3a
8
Cognition
80
60
40
20
0
200
150
l
EFFICACY IN MOUSE MODEL OF PITT HOPKINS
EFFICACY IN MOUSE MODEL OF PITT HOPKINS
e
m
100
40
4
(
)
m
c
(
d
e
l
l
e
v
a
r
t
e
c
n
a
t
s
D
i
)
s
(
e
s
u
o
m
e
v
o
n
e
h
t
h
t
i
w
t
n
e
p
s
e
m
T
i
50
0
-/p+ + vehicle
W T-vehicle
U be3a
m
m -/p+ + N N Z 2591
W T + N N Z 2591
U b e3a
)
%
60
i
t
g
n
i
t
a
o
F
l
20
0
-/p+ + vehicle
W T-vehicle
U be3a
m
m -/p+ + N N Z 2591
W T + N N Z 2591
U b e3a
6
s
e
s
s
o
r
c
m
r
o
f
t
a
l
P
f
o
r
e
b
m
u
N
2
0
-/p+ + vehicle
W T-vehicle
U be3a
m
m -/p+ + N N Z 2591
W T + N N Z 2591
U b e3a
7
Efficacy in mouse model of Pitt Hopkins (Tcf4)
150
150
)
m
c
(
Hypoactivity
Hypoactivity
d
e
l
l
e
v
a
r
t
d
e
l
l
e
100
v
a
r
t
100
e
c
n
a
t
s
D
i
e
c
n
a
50
t
s
D
i
50
0
0
W T + V ehicle
W T + V ehicle
+/_ + V ehicle
+/_ + V ehicle
W T + N N Z 2591
W T + N N Z 2591
+/_ + N N Z 2591
+/_ + N N Z 2591
Tcf4
Tcf4
Tcf4
Tcf4
y
t
i
l
a
u
q
g
n
d
i
l
i
u
B
t
s
e
N
y
t
i
l
a
u
q
g
n
d
)
5
o
t
1
e
d
a
r
g
(
u
B
l
i
i
t
s
e
N
)
5
o
t
1
e
d
a
r
g
(
6
6
4
4
2
2
0
0
Daily living
Daily living
Learning & Memory
Learning & Memory
60
60
40
20
i
n
m
5
f
o
%
n
i
g
n
i
z
e
e
r
F
40
20
i
n
m
5
f
o
%
n
i
g
n
i
z
e
e
r
F
0
0
W T + V ehicle
W T + V ehicle
+/_ + V ehicle
+/_ + V ehicle
W T + N N Z 2591
W T + N N Z 2591
+/_ + N N Z 2591
+/_ + N N Z 2591
Tcf4
Tcf4
Tcf4
Tcf4
W T + V ehicle
W T + V ehicle
+/_ + V ehicle
+/_ + V ehicle
W T + N N Z 2591
W T + N N Z 2591
+/_ + N N Z 2591
+/_ + N N Z 2591
Tcf4
Tcf4
Tcf4
Tcf4
)
s
(
e
s
u
o
m
)
s
(
60
e
s
u
o
m
l
e
v
o
n
e
h
t
h
t
i
w
t
n
e
p
s
e
m
T
i
l
e
v
40
o
n
e
h
t
h
t
i
20
w
n
e
p
s
e
m
0
T
t
i
Sociability
Sociability
60
40
20
0
i
)
s
(
g
n
m
o
o
r
g
t
n
e
p
s
e
m
T
i
150
100
i
150
)
s
(
g
n
m
100
o
o
r
g
t
n
e
50
p
s
e
m
T
i
+/_ + V ehicle
+/_ + V ehicle
N _ W T + N N Z 2591
N _ W T + N N Z 2591
N _ W T + V ehicle
N _ W T + V ehicle
+/_ + N N Z 2591
+/_ + N N Z 2591
N _Tcf4
N _Tcf4
N _Tcf4
N _Tcf4
Repetitive behavior
Repetitive behavior
Motor performance
Motor performance
1.0
1.0
0.8
0.8
50
e
c
r
o
F
0
0
W T + V ehicle
W T + V ehicle
+/_ + V ehicle
+/_ + V ehicle
W T + N N Z 2591
W T + N N Z 2591
+/_ + N N Z 2591
+/_ + N N Z 2591
Tcf4
Tcf4
Tcf4
Tcf4
)
N
(
)
(
N
0.6
e
c
r
o
0.4
F
0.6
0.4
0.2
0.2
0.0
0.0
W T + V ehicle
W T + V ehicle
+/_ + V ehicle
+/_ + V ehicle
W T + N N Z 2591
W T + N N Z 2591
+/_ + N N Z 2591
+/_ + N N Z 2591
Tcf4
Tcf4
Tcf4
Tcf4
8
8
8
Neuren Pharmaceuticals Limited Annual Report 2021
O P E R AT I N G R E V I E W
C O N T I N U E D
Efficacy in mouse model of Prader-Willi (Magel2-null)
Prader-Willi is caused by mutations in the 15q11-q13 region of chromosome 15. In the Magel2-null mouse model, which
exhibits features of Prader-Willi in humans, wild type mice and knockout mice were treated with placebo (vehicle) or NNZ-2591
for 6 weeks. Treatment with NNZ-2591 normalized fat mass (obesity) insulin levels, IGF-1 levels and all the behavioral deficits in
the knockout mice and had no effect on the wild type mice.
Insulin levels (pM)
WT plus
vehicle
110
Magel2-null
plus vehicle
WT plus
NNZ-2591 low dose
Magel2-null plus
NNZ-2591 low dose
WT plus
NNZ-2591 high dose
Magel2-null plus
NNZ-2591 high dose
173
112
143
115
119
Obesity
Obesity
Circulating IGF-1 levels
Circulating IGF-1 levels
Cognition
Cognition
)
g
(
s
s
a
m
t
a
F
30
20
10
0
)
l
/
m
g
n
(
1
-
F
G
I
150
100
50
0
W T + V ehicle
M a g el2-n ull + V e hicle
W T + N N Z 2591 (lo w d o se)
W T + N N Z 2591 (hig h d o se)
M ag el2-n ull + N N Z 2591 (lo w d o se)
M ag el2-n ull + N N Z 2591 (hig h d o se)
W T + V ehicle
M a g el2-n ull + V e hicle
W T + N N Z 2591 (lo w d o se)
W T + N N Z 2591 (hig h d o se)
M ag el2-n ull + N N Z 2591 (lo w d o se)
M ag el2-n ull + N N Z 2591 (hig h d o se)
Hypoactivity
Hypoactivity
Hypoactivity (Open Field time spent active)
(Open Field distance travelled)
Hypoactivity (Open Field distance travelled)
(Open Field time spent active)
10000
8000
6000
4000
2000
0
)
S
(
e
m
T
i
800
600
400
200
0
W T + V ehicle
M a g el2-n ull + V e hicle
W T + N N Z 2591 (lo w d o se)
W T + N N Z 2591 (hig h d o se)
M ag el2-n ull + N N Z 2591 (lo w d o se)
M ag el2-n ull + N N Z 2591 (hig h d o se)
Social preference
W T + V ehicle
M a g el2-n ull + V e hicle
W T + N N Z 2591 (lo w d o se)
W T + N N Z 2591 (hig h d o se)
M ag el2-n ull + N N Z 2591 (lo w d o se)
M ag el2-n ull + N N Z 2591 (hig h d o se)
Social Interaction
Social preference
Social interaction
)
m
c
(
d
e
l
l
e
v
a
r
t
e
c
n
a
t
s
D
i
e
h
t
h
t
i
w
t
n
e
p
s
e
m
T
i
)
S
(
t
c
e
j
b
o
l
e
v
o
n
10
8
6
4
2
0
W T + V ehicle
M a g el2-n ull + V e hicle
W T + N N Z 2591 (lo w d o se)
W T + N N Z 2591 (hig h d o se)
M ag el2-n ull + N N Z 2591 (lo w d o se)
M ag el2-n ull + N N Z 2591 (hig h d o se)
Daily Living
Daily living
)
5
o
t
1
e
d
a
r
g
(
6
4
2
0
W T + V ehicle
M a g el2-n ull + V e hicle
W T + N N Z 2591 (lo w d o se)
W T + N N Z 2591 (hig h d o se)
M ag el2-n ull + N N Z 2591 (lo w d o se)
M ag el2-n ull + N N Z 2591 (hig h d o se)
Anxiety
Anxiety
y
t
i
l
a
u
q
g
n
d
i
l
i
u
B
t
s
e
N
e
h
t
h
t
i
w
t
n
e
p
s
e
m
T
i
)
S
(
e
s
u
o
m
150
100
50
0
)
n
(
s
t
n
e
v
e
g
n
i
f
f
i
n
S
100
80
60
40
20
0
)
S
(
e
m
T
i
200
150
100
50
0
W T + V ehicle
M a g el2-n ull + V e hicle
W T + N N Z 2591 (lo w d o se)
W T + N N Z 2591 (hig h d o se)
M ag el2-n ull + N N Z 2591 (lo w d o se)
M ag el2-n ull + N N Z 2591 (hig h d o se)
W T + V ehicle
M a g el2-n ull + V e hicle
W T + N N Z 2591 (lo w d o se)
W T + N N Z 2591 (hig h d o se)
M ag el2-n ull + N N Z 2591 (lo w d o se)
M ag el2-n ull + N N Z 2591 (hig h d o se)
9
W T + V ehicle
M a g el2-n ull + V e hicle
W T + N N Z 2591 (lo w d o se)
W T + N N Z 2591 (hig h d o se)
M ag el2-n ull + N N Z 2591 (lo w d o se)
M ag el2-n ull + N N Z 2591 (hig h d o se)
Neuren Pharmaceuticals Limited Annual Report 2021
MCDERMID
O P E R AT I N G R E V I E W
C O N T I N U E D
OPTIMUM DOSE IN MOUSE MODEL OF PHELAN-
OPTIMUM DOSE IN MOUSE MODEL OF PHELAN-
MCDERMID
Optimum dose identified
In the Phelan-McDermid syndrome model, the effect of four escalating dose levels was investigated. The results of this dose
ranging study are shown in the charts below. They were consistent across all 8 behavioral tests and the incidence of seizures,
demonstrating that the second highest dose was the optimum dose level in the mouse model. Comparison with human
pharmacokinetic data from the Phase 1 clinical trial has informed the equivalent human dose for the Phase 2 trials in patients.
A further observation was that the optimum dose in this 6-week study showed better efficacy than the same dose in an earlier
study for 3 weeks, indicating that efficacy increases with treatment duration. In the Phase 2 trials Neuren is testing treatment
with NNZ-2591 for 13 weeks.
OPTIMUM DOSE IN MOUSE MODEL OF PHELAN-
MCDERMID
OPTIMUM DOSE IN MOUSE MODEL OF PHELAN-
MCDERMID
Memory
Memory
Motor function
Learning
Motor function
Learning
Anxiety
Sociability
Repetitive behavior
Sociability
OPTIMUM DOSE IN MOUSE MODEL OF PHELAN-
MCDERMID
Repetitive behavior
Anxiety
OPTIMUM DOSE IN MOUSE MODEL OF PHELAN-
MCDERMID
OPTIMUM DOSE IN MOUSE MODEL OF PHELAN-
MCDERMID
Motor function
Motor function
Incidence of seizures
WT + vehicle
0%
KO + vehicle
60%
KO + x mg/kg
50%
WT + vehicle
0%
KO + 2x mg/kg
30%
Anxiety
Anxiety
Incidence of seizures
Memory
KO + 2x mg/kg
30%
KO + x mg/kg
50%
KO + 8x mg/kg
10%
Daily living
KO + vehicle
60%
KO + 4x mg/kg
Daily living
10%
Repetitive behavior
Repetitive behavior
Learning
Daily living
KO + 4x mg/kg
10%
Daily living
KO + 8x mg/kg
10%
9
Daily living
Daily living
Daily living
Daily living
Incidence of seizures
Sociability
9
10
10
KO + 4x mg/kg
10%
KO + 8x mg/kg
10%
KO + x mg/kg
WT +
50%
vehicle
KO +
vehicle
KO + 2x mg/kg
KO + x
30%
mg/kg
0%
60%
50%
KO + 2x
mg/kg
KO + 4x
mg/kg
KO + 8x
mg/kg
30%
10%
10%
10
10
9
WT + vehicle
0%
KO + vehicle
60%
10
Neuren Pharmaceuticals Limited Annual Report 2021 O P E R AT I N G R E V I E W
C O N T I N U E D
CORRECTING IMPAIRED SIGNALING IN NEURONS
Effects on biochemistry and brain cell structure confirmed
Biochemical testing in the Phelan-McDermid model showed that the abnormal length of dendritic spines between brain
cells, the excess activated ERK protein (pERK) and the depressed level of IGF-1 in the knockout mice were all normalised after
treatment with NNZ-2591, as shown in the charts below.
Correction of abnormal dendritic
spines in mouse models:
Left - Phelan-McDermid syndrome
(shank3)
Right - Fragile X syndrome (fmr1)
Abnormal dendrites in
shank3 knockout mice
Normalisation after
treatment with NNZ-2591
Blood-brain barrier penetration confirmed
Correction in fmr1 knockout mice after
treatment with trofinetide (NNZ-2566)
As well as very high oral bioavailability, good penetration of the blood-brain barrier by NNZ-2591 has been demonstrated in
a rodent study. A single dose was administered at 2 dose levels, with the high dose twice the low dose. The concentration of
NNZ-2591 in the blood and cerebrospinal fluid was determined after 1.5 hours and again after 4 hours. The amount in the brain
tissue was also measured after 4 hours. In each case the concentration was approximately proportional to the dose and after
4 hours the concentration in blood and brain tissue was approximately equivalent.
12
Large scale manufacturing process developed
Neuren has successfully developed a proprietary process for manufacturing drug substance at large scale with exceptional
purity and high yield. Manufacturing has been completed to supply all four Phase 2 trials.
Positive Phase 1 clinical trial results
In 2021, Neuren completed a Phase 1 clinical in Australia, in which twice daily oral dosing of NNZ-2591 for seven days was safe
and well tolerated in healthy volunteers at doses expected to be within the effective therapeutic range. This was an important
milestone for NNZ-2591 to be able to move forward to Phase 2 clinical trials in patients.
The primary objective was to evaluate safety and tolerability, with a secondary objective to evaluate pharmacokinetic
parameters. Two double-blind placebo-controlled cohorts of eight healthy adult volunteers were dosed orally twice per day for
seven days. Each cohort was titrated up to the target dose, with the target dose in the second cohort double the target dose in
the first cohort. These two cohorts were preceded by preliminary testing of single doses of NNZ-2591, which enabled modelling
of potential multiple dosing regimens.
11
Neuren Pharmaceuticals Limited Annual Report 2021 O P E R AT I N G R E V I E W
C O N T I N U E D
No Serious Adverse Events (SAEs) were reported. All reported Adverse Events (AEs) were mild or moderate and resolved during
the trial. There were no clinically significant findings from safety laboratory tests, vital signs, or cardiac tests. In the cohorts
dosed for seven days, the most common AE reported was drowsiness. In the higher dose cohort, only one of the reported AEs
was moderate, the remainder were mild. All subjects completed the scheduled dosing, apart from one of the eight subjects
in the lower dose cohort, who ceased dosing after receiving the first starting dose following moderate drowsiness and
incoordination.
IND-enabling program of non-clinical toxicology and CMC studies completed
An extensive program of non-clinical toxicology and manufacturing studies required to open an IND in the United States and
enable clinical trials for 13 weeks in pediatric patients has been completed.
To find out more about these disorders:
www.pmsf.org
www.pitthopkins.org
www.angelman.org
www.fpwr.org
THE SCIENCE BEHIND NEUREN’S PRODUCTS
Trofinetide (also known as NNZ-2566) and NNZ-2591 are synthetic analogues of glypromate (“GPE”) and cyclic glycine-proline (“cGP”)
respectively, each of which occurs naturally in the brain and is involved in the metabolism of IGF-1, which is a growth factor stimulated
by growth hormone. In the central nervous system, IGF-1 is produced by both of the major types of brain cells – neurons and glia. IGF-1
in the brain is critical both for normal development and to maintain or restore the biological balance required for normal functioning.
During development, the brain and the cells that comprise it change rapidly and in complex ways. IGF-1 and its metabolites play a
significant role in regulating these changes. In the mature brain, these molecules play an important role in responding to disease,
stress and injury.
Trofinetide and NNZ-2591 mimic the function of the natural molecules in the brain, however each drug is designed to have a longer
half-life in circulation, be suitable for use as an oral medication, more readily cross the blood brain barrier and have better stability
for longer and easier storage and shipping.
Whereas many drugs typically exert a specific effect on a specific target related to one symptom, trofinetide and NNZ-2591 exert
diverse effects which can help to control or normalise abnormal biological processes in the brain.
Many neurological conditions share four common, underlying pathological features:
1. Inflammation
Inflammation in the brain (neuroinflammation) is perhaps the most common pathological feature of neurological disorders.
Much of it is the result of excess production of molecules called inflammatory cytokines. These are prominent in brain injuries,
neurodevelopmental disorders such as Rett syndrome, neurodegenerative diseases like Alzheimer’s and even so-called
“normal” aging.
Neuroinflammation places significant stress on brain cells. Stress can disrupt normal cellular processes such as information
signalling, increase energy requirements beyond the ability of the cells to meet their metabolic needs, and disturb electrical
functions which can lead to seizures and other abnormalities and even result in premature cell death.
12
Neuren Pharmaceuticals Limited Annual Report 2021
O P E R AT I N G R E V I E W
C O N T I N U E D
2. Over-activation of microglia
Microglia are the resident immune cells in the brain. Once thought to serve primarily a sentinel function – responding to infection
and damaged cells by surrounding and removing them – it is now known that they play a central role in maintaining synapses during
development and in mature brains by pruning dendrites, the many small extensions of neurons that form synapses. Microglia are
also a key source of IGF-1. Due to this wide-ranging maintenance function, they have appropriately been referred to as the “constant
gardeners” of the brain.
Microglia are not only activated in response to infection and injury, they also are activated by inflammation. In this activated
state, they not only lose their ability to effectively perform their normal function in synaptic maintenance but also produce more
inflammatory cytokines which can further compound the damage to neurons and other brain cells.
Resting Microglial Cells
Activated Microglial Cells
3. Dysfunction of synapses
Neurons communicate with each other by chemical and electrical signals transmitted via synapses. Normal synaptic function is
essential for healthy brain function and underlies memory, cognition, behaviour and other brain activities. Normal synaptic function
requires that the dendrites (the branches on the neurons) which form synapses are appropriately formed as well as that excitatory
and inhibitory signals are kept in balance.
When dendritic structure and synaptic signalling are abnormal, virtually all brain activities can be negatively impacted. Synaptic
dysfunction has been identified as a core feature of many conditions including acute brain injury, neurodevelopmental disorders and
neurodegenerative diseases.
4. Reduced levels of IGF-1
IGF-1 levels in the brain have been reported to be depressed in a number of conditions, which means that the critical role of IGF-1 in
maintaining and repairing brain cells and synapses is impaired.
The aim of treatment with Neuren’s drugs is to restore the natural balance of brain function by:
– reducing inflammation
– restoring the normal functioning of microglia
– improving the dendritic structure of synapses
– normalising the levels of IGF-1 in the brain
13
Neuren Pharmaceuticals Limited Annual Report 2021
O P E R AT I N G R E V I E W
C O N T I N U E D
FINANCE
R&D Tax Incentive
Interest income
Other income (Government cash-flow boost)
Foreign exchange gain
Total income
Research & Development
Corporate & Administration
Foreign exchange loss
(Loss)/Profit after tax
Cash flow from operations
Cash flow from financing
Effect of exchange rates on cash balances
Cash at 31 December
2021
$’m
3.2
–
_
0.4
3.6
(9.5)
(1.9)
–
(7.8)
(10.0)
22.2
0.4
36.8
2020
$’m
0.7
0.1
0.1
–
0.9
(7.8)
(1.7)
(0.6)
(9.2)
(8.1)
19.1
(0.7)
24.2
The loss after tax for 2021 was $7.8 million compared with $9.2 million in 2020. This is mainly due to R&D Tax Incentive income
of $3.2 million (2020: $0.7 million) following AusIndustry’s approval of an Advance and Overseas finding for the development of
NNZ-2591 as a novel therapy for neurodevelopmental disorders. Research and development costs were $1.7 million higher, due
to an increase in expenditures in 2021 for the NNZ-2591 non-clinical studies, Phase 1 trial, Phase 2 trials and manufacture of
the required drug for the Phase 2 trials. In addition, foreign exchange gains were $0.4 million compared with foreign exchange
losses of $0.6 million in 2020. This is due to an increase in the carrying value in AUD of USD cash held to eliminate exchange risk
for USD expenditure, as a result of the strengthening of the USD against the AUD.
Cash reserves at 31 December 2021 were $36.8 million (2020: $24.2 million). Net cash used in operating activities was $10.0
million (2020: $8.1 million). The increase of $1.9 million was mainly in payments to other suppliers, due to higher research and
development expenditure of $3.5 million, which was partially offset by the receipt of $2.5 million under the R&D Tax Incentive
program (2020: $0.5 million). Financing provided cash of $22.2 million, received for the issue of new ordinary shares in the
capital raise and share purchase plan, compared with $19.1 million in 2020.
14
Neuren Pharmaceuticals Limited Annual Report 2021
B O A R D
PATRICK DAVIES
Non-Executive Chair
B EC, MBA
Patrick joined the Neuren Board in July 2018. He has held executive management roles in the Australian
and New Zealand healthcare industry for over twenty five years having performed successfully in senior
roles across many industry sectors including pharmacy, primary care, pharmaceutical and consumer
products. During his ten year period as Chief Executive Officer of EBOS Group Limited (and previously
Symbion), the enterprise value of the group achieved compound annual growth in enterprise value of
+20% (from circa $450M to in excess of $3.1B). He is a director on other corporate boards and provides
strategic advice to a range of healthcare businesses and investors.
JON PILCHER
Chief Executive Officer/Managing Director
BSc (Hons), FCA
Jon joined Neuren in August 2013 as CFO and was appointed CEO in May 2020. He has played a central
role in all aspects of Neuren’s R&D, commercial and corporate activities. Before joining Neuren he was
a member of the leadership team at Acrux (ASX: ACR) throughout a period that included Acrux’s IPO and
listing on the ASX, the development and FDA approval of three novel pharmaceutical products and a
transforming licensing deal with Eli Lilly in 2010. He formerly spent seven years in a series of executive
positions in the R&D and corporate functions of international pharmaceutical groups Medeva and
Celltech, which are now part of UCB. Jon is a Chartered Accountant and holds a degree in Biotechnology
from the University of Reading in the UK. He is a non-executive director of BTC Health Limited (ASX: BTC).
DR TREVOR SCOTT
Non-Executive Director
MNZM, LLD (Hon), BCom, FCA, FNZIM, DF Inst D
Trevor joined the Neuren Board in March 2002. He is the founder of T.D. Scott and Co., an accountancy
and consulting firm, which he formed in 1988. He is an experienced advisor to companies across a variety
of industries. Trevor serves on numerous corporate boards and is chairman of several.
DIANNE ANGUS
Non-Executive Director
BSc (Hons), Master of Biotechnology, IPTA
Dianne joined the Neuren Board in July 2018. She has worked as a senior executive and non-executive
director within the biotechnology, biopharmaceutical and agritech industries for over twenty-five years.
She has created numerous global industry partnerships which include Prana Biotechnology, Gerolymatos
International, Florigene, Suntory & Monsanto to yield novel and competitive medical, pharmaceutical
and agricultural products. Dianne has successfully forged strong partnerships with key medical opinion
leaders to create innovative clinical research programs and driven the development path for novel
neurological pre-clinical agents to late-stage clinical assets before the FDA and European regulators.
With over fifteen years’ experience in an ASX and NASDAQ listed company, she has expertise in business
development, capital raising, investor relations, regulatory affairs and intellectual property, together with
corporate governance and compliance capabilities. Dianne holds a Masters degree in biotechnology and
is a registered patent attorney.
DR JENNY HARRY
Non-Executive Director
BSc (Hons), PhD
Jenny joined the Neuren Board in 2018. She has 20 years’ experience in executive management of
companies in the biotechnology and biopharmaceutical industry. Jenny is an accomplished CEO and
Managing Director with experience in growing companies from start-up to commercialisation. She has
served on Board’s of a number of listed and unlisted companies and is currently a Non-Executive Director
of Aeris Environmental Limited (ASX:AEI) and on the Board’s IP sub-committee of the Children’s Medical
Research Institute. Jenny is a graduate of the Harvard Business School General Manager Program and
the Australian Institute of Company Directors.
15
Neuren Pharmaceuticals Limited Annual Report 2021 M A N A G E M E N T T E A M
JON PILCHER
Chief Executive Officer/Managing Director
BSc (Hons), FCA
Jon joined Neuren in August 2013 as CFO and was appointed CEO in May 2020. He has played a central
role in all aspects of Neuren’s R&D, commercial and corporate activities. Before joining Neuren he was
a member of the leadership team at Acrux (ASX: ACR) throughout a period that included Acrux’s IPO
and listing on the ASX, the development and FDA approval of three novel pharmaceutical products and a
transforming licensing deal with Eli Lilly in 2010. He formerly spent seven years in a series of executive positions
in the R&D and corporate functions of international pharmaceutical groups Medeva and Celltech, which
are now part of UCB. Jon is a Chartered Accountant and holds a degree in Biotechnology from the
University of Reading in the UK. He is a non-executive director of BTC Health Limited (ASX: BTC).
L ARRY GL A SS
Chief Science Officer
BA (Biology)
Larry joined Neuren in 2004 and was an Executive Director from 2012 to 2018. He directs Neuren’s
scientific and non-clinical development, as well as playing a leading role in clinical and regulatory
strategy. Larry has more than 30 years’ experience in the life sciences industry, including clinical trials,
basic and applied research, epidemiologic studies, diagnostics and pharmaceutical product development.
Before he joined Neuren, he worked as an independent consultant for a number of biotech companies in
the US and internationally provided management, strategic and business development services. Prior
to that, he was CEO of a contract research organisation that provided preclinical research and clinical
trials support for major pharmaceutical and biotechnology companies and the US government. For a
number of years, the CRO operated as a subsidiary of a NYSE-listed company and was subsequently sold
to a European biopharmaceutical enterprise which was then acquired by Johnson & Johnson. Larry is
a biologist with additional graduate training in epidemiology and biostatistics.
DR NANC Y JONES
Vice President, Clinical Development
PhD
Nancy joined Neuren in January 2013. She leads the design and implementation of Neuren’s clinical
studies in neurodevelopmental disorders. Prior to joining Neuren, Nancy held a senior position at Autism
Speaks, the largest science and advocacy organization in the US focused on autism spectrum and related
disorders. She was at Autism Speaks for 6 years, directing the overall operations of the Autism Treatment
Network, a network of hospitals and medical centers dedicated to improving access to comprehensive,
coordinated medical care for individuals with ASD. She also oversaw the Autism Clinical Trials Network,
a network developed to promote and expedite clinical trials in ASD, and played a lead role in an initiative
to enhance the development of syndrome-specific outcome measures for treatment trials in ASD. Nancy
received her Ph.D. in Applied Linguistics from the University of California, Los Angeles where she focused
on the neurobiology of language and developmental disorders.
JAMES SHAW
Vice President, Clinical & Regulatory Operations
BSc (Hons), MBA
James joined Neuren in August 2013, bringing twenty years of development and commercialisation
experience in the Pharmaceutical Industry, having worked for both large Pharma and Clinical Research
Organisations. He leads the clinical and regulatory execution of Neuren’s programs. Before joining Neuren,
James was CEO of a Clinical Research and Site Management Organisation providing full service clinical
trial support in ANZ. Prior to that he spent seven years with Quintiles in Sydney and Singapore working
across Business Development and Operational leadership roles. James brings a global focus to drug
development, having led product teams from Phase 2 through to FDA submission and commercialisation
during six years with AstraZeneca at their Global headquarters in the UK.
16
Neuren Pharmaceuticals Limited Annual Report 2021 M A N A G E M E N T T E A M
C O N T I N U E D
DR CLIVE BLOWER
Vice President, Product Development
BSc (Hons), PhD
Clive joined Neuren in August 2014, bringing over twenty years of global drug development experience.
He has led all aspects of CMC (Chemistry, Manufacturing and Controls) development of both trofinetide
and NNZ-2591. Before joining Neuren, Clive was at Acrux (ASX: ACR) for seven years as Director of Product
Development and Technical Affairs and then Chief Operating Officer. During this period he led the CMC
development of the company’s lead product through Phase 3 clinical trials, FDA approval and commercial
launch. Clive formerly served in senior management positions at Hospira Inc. (previously Faulding
Pharmaceuticals, then Mayne Pharma), including leading the Injectable Drug Development Group. He
earned a Doctorate in Chemistry from Monash University in 1992 and has experience in all stages of drug
development, from concept to commercialisation, having contributed to the development and launch
of more than 25 pharmaceutical products.
L AUREN FR A ZER
Chief Financial Officer & Company Secretary
BBus (Acc), CA
Lauren joined Neuren in March 2020 and brings over fifteen years of experience in accounting and finance.
Prior to joining Neuren, Lauren was at Boundary Bend, one of Australia’s leading agribusinesses and
owner of Australian olive oil brands Cobram Estate and Red Island. Lauren was at Boundary Bend for
ten years as Financial Controller and then Senior Manager of Accounting & Tax. Lauren is a Chartered
Accountant and began her career with Pitcher Partners.
GERRY ZHAO
Vice President, Corporate Development
B Com (Hons Finance), B Law (Hons)
Gerry has more than 16 years of global investment banking and financial services experience, with
approximately 12 years at Bank of America Merrill Lynch responsible for healthcare investment banking
coverage. He has advised numerous local and international corporations and private equity funds on
public and private mergers and acquisitions, capital management and financing. Since 2019, Gerry has
been consulting to several Australian and global biotech companies regarding strategic projects, including
successfully facilitating the A$400m strategic licence and commercial partnership between China Grand
Pharmaceutical and Healthcare Holdings and Telix Pharmaceuticals in November 2020.
VIRGINIE DUREZ
Senior Director, Product Development & Project Management
MSc, MBA, PMP®
Virginie joined Neuren in March 2021 and brings over twenty years of global pharmaceutical experience
ranging from product ideation to product launch. Prior to joining Neuren, she worked with Pfizer
for seventeen years through the legacy of Hospira and Mayne Pharma, in the Program Management,
Commercial and Early Stage Development Groups and most recently worked as the Pipeline Development
Lead for the Hospital Business Unit. Virginie has assessed, developed, and led over 100 global product
strategies (US, EU, CAN, ANZ, China and Japan) and launched 3 products to the market. She is focused
on bringing novel therapies that change patients’ lives. Virginie received her Master of Chemistry and
her Master of Chemical Engineering in France (University of Aix-Marseilles and Ecole Nationale Supérieure
de Chimie de Toulouse), earned an MBA from the Australian Graduate School of Entrepreneurship, and is
a PMP® practitioner.
17
Neuren Pharmaceuticals Limited Annual Report 2021 CO R P O R AT E G O V E R N A N C E
Neuren’s board of directors (“Board”) aims to ensure that
the Company and its subsidiaries (the “Group”) operates
with a corporate governance framework and practices that
promote an appropriate governance culture throughout
the organisation and that are relevant, practical and cost-
effective for the current size and stage of development of
the business.
This Statement provides a description of the framework
and practices, laid out under the structure of the
ASX Listing Rules and the Corporate Governance
Principles (the “Principles”) and Recommendations
(the “Recommendations”) 4th Edition.
PRINCIPLE 1. L AY SOLID FOUNDATIONS
FOR MANAGEMENT AND OVERSIGHT
The Board is responsible for the overall corporate
governance of the Group. The Board acts on behalf of and
is accountable to the shareholders. The Board seeks to
identify the expectations of shareholders as well as other
regulatory and ethical expectations and obligations. The
Board is responsible for identifying areas of significant
business risk and ensuring mechanisms are in place to
manage those risks adequately. In addition, the Board sets
the overall strategic goals and objectives, and monitors
achievement of goals.
The Board appoints the principal executive officer,
currently the Chief Executive Officer. The Board has
delegated the responsibility for the operation and
administration of the Group to the Chief Executive Officer
and senior management. The Board ensures that the
management team is appropriately qualified to discharge
its responsibilities.
The Board ensures management’s objectives and activities
are aligned with the expectations and risks identified by
the Board through a number of mechanisms including the
following:
– establishment of the overall strategic direction and
leadership of the Group;
– approving and monitoring the implementation by
management of the Group’s strategic plan to achieve
those objectives;
– reviewing performance against its stated objectives,
by receiving regular management reports on business
situation, opportunities and risks;
– monitoring and review of the Group’s controls and
systems including those concerned with regulatory
matters to ensure statutory compliance and the highest
ethical standards; and
– review and adoption of budgets and forecasts and
monitoring the results against stated targets.
The Board sets the corporate strategy and financial targets
with the aim of creating long-term value for shareholders.
In accordance with Recommendation 1.2, the Board
undertakes appropriate checks before appointing a new
director, or putting forward to shareholders a candidate
for election and provides shareholders with all material
information in its possession relevant to a decision on
whether or not to elect or re-elect a director.
The Group has a written agreement with each director and
senior executive, setting out the terms of their appointment,
in accordance with Recommendation 1.3. The Company
Secretary is accountable directly to the Board on all matters
to do with the proper functioning of the Board, in accordance
with Recommendation 1.4.
At this stage of the Group’s development, considering the
very small size of the workforce and the specialist nature
of most positions, the Board has chosen not to establish
a formal diversity policy or formal objectives for gender
diversity, as recommended in Recommendation 1.5. The
Group does not discriminate on the basis of age, ethnicity,
religion, gender or sexuality and when a position becomes
vacant the Group seeks to employ the best candidate
available for the position. Currently there are three male and
two female directors. Three of the eight senior executives
are female. The Group currently has eleven employees and
consultants, of which six are female.
In accordance with Recommendation 1.6, there is a process
to evaluate periodically the performance of the Board,
its committees and individual directors. Each director
completes a quantitative evaluation questionnaire and
is able to provide qualitative comments. The Company
Secretary collates the responses and reports back to
the board for discussion. A performance evaluation was
undertaken during 2021.
In accordance with Recommendation 1.7, there is a process
for the Board to evaluate periodically the performance of the
Chief Executive Officer and for the Chief Executive Officer to
evaluate periodically the performance of senior executives.
The evaluation of the Non-Executive Chair is part of the
board performance evaluation process. For the evaluation
of senior executives, an individual discussion is held after
each senior executive complete a qualitative questionnaire,
covering past individual and team achievements and
challenges, as well as forward-looking outcomes and areas
of personal focus. Performance evaluations were undertaken
during 2021.
18
Neuren Pharmaceuticals Limited Annual Report 2021 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
PRINCIPLE 2. STRUCTURE THE BOARD TO BE EFFECTIVE AND ADD VALUE
The Board has not considered it necessary or value-adding to establish a separate Nomination Committee (Recommendation
2.1). The selection, appointment and retirement of directors is considered by the full Board, within the framework of the skills
matrix described below. The Board may also engage an external consultant where appropriate to identify and assess suitable
candidates who meet the Board’s specifications. The composition of the board is discussed regularly and each director may
propose changes for discussion.
In accordance with Recommendation 2.2, the Company has a skills matrix setting out the mix of skills that the Board is looking
to achieve in its membership. The matrix is summarised in the table below.
Skill
Requirements Overview
Professional Director Skills
Risk & Compliance
Financial & Audit
Strategy
Policy Development
Executive Management
Previous Board Experience
Industry Specific Skills
Pharmaceutical product development
International pharmaceutical
commercialisation
Pharmaceutical partnering
Risk capital management
Intellectual property
Interpersonal Skills
Leadership
Ethics and Integrity
Contribution
Crisis Management
Identify key risks to the organisation related to each key area of operations.
Ability to monitor risk and compliance and knowledge of legal and
regulatory requirements.
Experience in accounting and finance to analyze statements, assess
financial viability, contribute to financial planning, oversee budgets and
oversee funding arrangements.
Ability to identify and critically assess strategic opportunities and threats
to the organization. Develop strategies in context to our policies and
business objectives.
Ability to identify key issues for the organisation and develop appropriate
policy parameters within which the organization should operate.
Experience in evaluating performance of senior management, and oversee
strategic human capital planning.
The board's directors should have director experience and have completed
formal training in governance and risk.
Experience in and/or understanding of the issues in clinical development,
interactions with international regulators and/or CMC development.
Experience in and/or understanding of the issues in entering international
pharmaceutical markets, including pricing, distribution and exclusivity.
Experience in and/or understanding of the issues in partnering transactions
and/or relevant contacts in international pharma companies.
Experience in raising funding from equity markets and/or relevant contacts
in relevant funds and/or investment banks.
Understanding of the importance and value of market exclusivity and
the various ways of protecting it across different jurisdictions, including
patents and data exclusivity.
Make decisions and take necessary actions in the best interest of the
organisation, and represent the organisation favourably. Analyse issues
and contribute at board level to solutions. Recognise the role of the board
versus the role of management.
Understand role as director and continue to self educate on legal
responsibility, ability to maintain board confidentiality, declare any
conflicts.
Ability to constructively contribute to board discussions and communicate
effectively with management and other directors.
Ability to constructively manage crises, provide leadership around
solutions and contribute to communications strategy with stakeholders.
19
Neuren Pharmaceuticals Limited Annual Report 2021 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
The Board is highly engaged in the oversight and direction of the business. Five members served during the year to
31 December 2021, as set out in the table below. Details of the relevant skills, experience and expertise of each Board
member are set out on page 15 of this report.
Appointment
Retirement
Role
Independent
Committees
Patrick Davies
Appointment
as director:
2018
Appointment
as Chair: 2020
Non-executive chair
Yes
Member of Audit Committee
and Remuneration Committee
Trevor Scott
2002
Non-executive director
Yes
Dianne Angus
2018
Non-executive director
Jenny Harry
2018
Non-executive director
Jon Pilcher
Appointment
as director:
14 June 2021
Chief Executive Officer
and Managing Director
1 Jon Pilcher is not considered independent due to his executive role.
Yes
Yes
No1
Chair of Audit Committee and
member of Remuneration
Committee
Member of Audit Committee
and Remuneration Committee
Member of Audit Committee
and Chair of Remuneration
Committee
There is a majority of independent directors in accordance with Recommendation 2.4. The chair has been independent and
the chair and chief executive officer roles are separate (Recommendation 2.5). The directors believe that the structure and
membership profile of the Board has provided and continues to provide the maximum value to the business at its stage of its
development.
In accordance with Recommendation 2.6, the Company has a program for inducting new directors and provides appropriate
professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform
their role as directors effectively.
PRINCIPLE 3.
In accordance with Recommendation 3.1, the Group has articulated its values, which are disclosed on the Company website
INSTIL A CULTURE OF ACTING L AWFULLY, ETHIC ALLY AND RESPONSIBLY
– We are passionate about making a difference to the lives of patients and their families
– We aim to earn the respect of everyone we deal with
– We are determined and creative to break through barriers
– We harness the power of collaboration and different perspectives
– We recognise the importance of all stakeholders and endeavour to use financial resources efficiently
The Board has established a Code of Conduct (Recommendation 3.2), which requires that Board members and executives:
– will act honestly, in good faith and in the best interests of the whole Company
– owe a fiduciary duty to the Company as a whole
– have a duty to use due care and diligence in fulfilling the functions of office and exercising the powers attached to that
office
– will undertake diligent analysis of all proposals placed before the Board
– will act with a level of skill expected from Directors and key executives of a publicly listed Company
– will use the powers of office for a proper purpose, in the best interests of the Company as a whole
– will demonstrate commercial reasonableness in decision-making
– will not make improper use of information acquired as Directors and key executives
– will not disclose non-public information except where disclosure is authorised or legally mandated
20
Neuren Pharmaceuticals Limited Annual Report 2021 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
– will keep confidential information received in the course
of the exercise of their duties and such information
remains the property of the Company from which it was
obtained and it is improper to disclose it, or allow it to
be disclosed, unless that disclosure has been authorised
by the person from whom the information is provided,
or required by law
– will not take improper advantage of the position of
Director or use the position for personal gain or to
compete with the Company
– will not take advantage of Company property or use
such property for personal gain or to compete with
the Company
– will protect and ensure the efficient use of the
Company’s assets for legitimate business purposes
– will not allow personal interests, or the interest of any
associated person, to conflict with the interests of the
Company
– have an obligation to be independent in judgement and
actions and Directors will take all reasonable steps to
be satisfied as to the soundness of all decisions of the
Board
– will make reasonable enquiries to ensure that the
Company is operating efficiently, effectively and legally,
towards achieving its goals
– will not engage in conduct likely to bring discredit upon
the Company
– will encourage fair dealing by all employees with the
Company’s customers, suppliers, competitors and other
employees
– will encourage the reporting of unlawful/unethical
behaviour and actively promote ethical behaviour and
protection for those who report violations in good faith
– will give their specific expertise generously to the
Company
– have an obligation, at all times, to comply with the spirit,
as well as the letter of the law and with the principles
of this Code of Conduct
Neuren is committed to the highest standards of conduct
and ethical behaviour in all business activities. The Group’s
Whistleblower Policy is available on the Company webiste
(Recommendation 3.3). Any material breaches of the
Whistleblower Policy are to be reported to the Board.
The Group’s Anti-bribery and Corruption is available on
the Company website (Recommendation 3.4). Any material
breaches of the Anti-bribery and Corruption Policy are to be
reported to the Board.
PRINCIPLE 4. SAFEGUARD INTEGRIT Y
OF CORPOR ATE REPORTS
The Board has an Audit Committee, which consists of
only independent non-executive directors, has at least
3 members and is chaired by an independent director as
suggested in Recommendation 4.1. The Committee met
twice during 2021, attended by all members.
The Committee operates under a charter approved by
the Board, a summary of which is available on the Neuren
website. It is responsible for undertaking a broad review of,
ensuring compliance with, and making recommendations in
respect of, the Group’s internal financial controls and legal
compliance obligations. In respect of financial reporting,
it is also responsible for:
– review of audit assessment of the adequacy and
effectiveness of internal controls over the Company’s
accounting and financial reporting systems, including
controls over computerised systems;
– review of the audit plans and recommendations of
the external auditors;
– evaluating the extent to which the planned scope of
the audit can be relied upon to detect weaknesses
in internal control, fraud and other illegal acts;
– review of the results of audits, any changes in
accounting practices or policies and subsequent effects
on the financial statements and make recommendations
to management where necessary and appropriate;
– review of the performance and fees of the external
auditor;
– audit of legal compliance including trade practices,
corporations law, occupational health and safety and
environmental statutory compliance , and compliance
with the Listing Rules of the ASX;
– supervision of special investigations when requested
by the Board;
In undertaking these tasks the Audit Committee meets
separately with management and external auditors where
required.
In accordance with Recommendation 4.2, the Board also,
before it approves the entity’s financial statements for a
financial period, receives a declaration in writing from the
Chief Executive Officer and the Chief Financial Officer that
the financial records of the company have been properly
maintained and that the financial statements are in
accordance with New Zealand Equivalents to International
21
Neuren Pharmaceuticals Limited Annual Report 2021 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
Financial Reporting Standards (NZ FRS) and present a
true and fair view, in all material respects, of the Group’s
financial position and performance and that this opinion
is founded on a sound system of risk management and
internal control that is operating effectively in all material
respects with regard to business and financial reporting
risks. The Board received those assurances for the annual
financial statements on 23 February 2022.
For other periodic corporate reports released to the
market that are not audited or reviewed by an external
auditor, processes are in place to ensure that the reports
are materially accurate, balanced and provide investors
with appropriate information to make informed investment
decisions (Recommendation 4.3). Reports are prepared
by the Chief Financial Officer and reviewed by the Chief
Executive Officer, or are prepared by the Chief Executive
Officer and reviewed by the Board. The Board receives a
declaration in writing from the Chief Financial Officer and
Chief Executive Officer regarding those reports.
PRINCIPLE 5. MAKE TIMELY
AND BAL ANCED DISCLOSURE
Neuren is required to comply with the continuous disclosure
requirements as set out in the ASX Listing Rules, disclosing
to the ASX any information that a reasonable person would
expect to have a material effect on the price or value of
Neuren’s securities, unless certain exemptions from the
obligation to disclose apply.
In accordance with Recommendation 5.1, the Board has
approved policies and procedures to ensure that it complies
with its disclosure obligations and that disclosure is timely,
factual, clear and objective. The Board has designated the
company secretary as the person primarily responsible
for implementing and monitoring those policies and
procedures. A summary of the policies and procedures is
available on the Neuren website. All information disclosed
to the ASX is placed on the Neuren website after it has been
published by the ASX, and the Board receives copies of all
material market announcements promptly after they have
been made (Recommendation 5.2).
All investor or analyst presentations with new information
are released on the ASX Market Announcements Platform
ahead of such presentations, in accordance with
Recommendation 5.3.
PRINCIPLE 6. RESPECT THE RIGHTS
OF SECURIT Y HOLDERS
The Board strives to communicate effectively with
shareholders, give them ready access to balanced and
understandable information about the business and make
it easy for them to participate in shareholder meetings.
In accordance with Recommendation 6.1, comprehensive
information about the Company and its governance
is provided via the website www.neurenpharma.com.
This includes information about the Board and senior
executives, as well as corporate governance policies. All
announcements, presentations, financial information and
meetings materials disclosed to the ASX are placed on the
website, so that current and historical information can
be accessed readily.
The Company’s investor relations program facilitates
effective two-way communication with investors
(Recommendation 6.2). Supported by the Non-Executive
Chair, the Chief Executive Officer interacts with institutional
investors, private investors, analysts and media on an ad
hoc basis, conducting meetings in person or by video/
teleconference and responding personally to enquiries.
The Board seeks practical and cost-effective ways to
promote informed participation at shareholder meetings
(Recommendation 6.3). This includes providing access to
clear and comprehensive meeting materials and electronic
proxy voting. The Annual Shareholders’ Meeting in 2021
was conducted as a virtual meeting, with participation
by electronic means.
All resolutions at the Company’s Annual
Shareholders’ Meeting in 2021 were decided by a poll
(Recommendation 6.4)
In accordance with Recommendation 6.5, shareholders are
provided with and encouraged to use electronic methods to
communicate with the Company and with the share registry.
PRINCIPLE 7. RECOGNISE AND MANAGE RISK
The Board has established policies for the oversight and
management of material business risks, a summary of which
is available on the Neuren website. The Board does not have
a separate committee to oversee risk, judging that the whole
Board is better able to conduct that function efficiently
and effectively, given the small size of the Board and the
specialised nature of the business (Recommendation 7.1).
22
Neuren Pharmaceuticals Limited Annual Report 2021 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
In accordance with Recommendation 7.2, the Board reviews
the Group’s risk management framework at least annually
to satisfy itself that it continues to be sound. A review was
conducted in 2021.
The size and complexity of the Group’s business is
not sufficient to warrant an internal audit function
(Recommendation 7.3). The risk management policy
is designed to involve the entire organisation in risk
management and to ensure that the effectiveness of the risk
management and internal control processes are continually
improved.
The Group does not have a material exposure to
economic, environmental or social sustainability risks
(Recommendation 7.4).
PRINCIPLE 8. REMUNER ATE FAIRLY
AND RESPONSIBLY
Neuren believes having highly skilled and motivated people
will allow the organisation to best pursue its mission
and achieve its goals for the benefit of shareholders and
stakeholders more broadly. The ability to attract and retain
the best people is critical to the Company’s future success.
The Board believes remuneration policies are a key part of
ensuring this success.
The Board has a Remuneration Committee, which consists
of only independent non-executive directors, has at least
three members and is chaired by an independent director
as suggested in Recommendation 8.1. The Committee met
once during 2021.
The Committee operates under a charter approved by
the Board, a summary of which is available on the Neuren
website. It is responsible for undertaking a broad review of,
ensuring compliance with, and making recommendations
in respect of, the Group’s remuneration policies. It is also
responsible for:
– setting and reviewing compensation policies and
practices of the Company;
– setting and reviewing all elements of remuneration of
the directors and members of the executive team; and
– setting and reviewing long term incentive plans for
employees and/or directors.
In undertaking these tasks the Remuneration Committee
meets separately with management where required.
The Group’s remuneration policies and practices
are summarised below, in accordance with
Recommendation 8.2.
The Remuneration Committee assesses the appropriateness
of the nature and amount of remuneration of executive
directors and senior executives on a regular basis by
reference to relevant employment market conditions, with
the overall objective of ensuring maximum shareholder
benefit from the retention of a high quality executive
team. To assist in achieving these objectives, the nature
and amount of executive remuneration is linked to the
Company’s performance. Remuneration consists of fixed
cash remuneration, including superannuation contributions
required by law, and equity-based remuneration. Fixed cash
remuneration takes into account labour market conditions,
as well as the scale and nature of the Group’s business.
Equity-based remuneration is provided by participation in
a share option plan, a loan funded share plan and equity
performance rights. These are designed to ensure that
key executives are aligned with shareholders through an
interest in the long-term growth and value of the Company.
Senior executive service agreements generally include a
requirement for 3 months’ notice of termination by the
executive or the Group. There are no other termination
payments. Termination for misconduct does not require
notice or payment.
Remuneration of non-executive directors comprises fixed
cash fees only. The fees are determined by the Board
within the aggregate limit for directors’ fees approved by
shareholders. Non-executive directors on payroll receive
retirement benefits as part of their fixed fee. All other non-
executive directors receive no retirement benefits.
Participants in equity based remuneration schemes
are not permitted to enter into transactions which
limit the economic risk of participating in the scheme
(Recommendation 8.3).
PRINCIPLE 9. ADDITIONAL RECOMMENDATIONS
Neuren is incorporated in New Zealand and ensures
meetings of security holders are held at a reasonable place
and time (Recommendation 9.2).
Since Neuren is incorporated in New Zealand and applies
New Zealand financial reporting standards, its auditor
is located in New Zealand. The Board has considered it
impractical and an unnecessary expense for the auditor
to travel to Australia to attend the annual general meeting
in person, as suggested in Recommendation 9.3. The
Company’s constitution enables the Board to convene
virtual shareholder meetings, with participation by
electronic means.
23
Neuren Pharmaceuticals Limited Annual Report 2021 D I R E C TO R S’ R E P O R T
PRINCIPAL ACTIVITIES
Neuren Pharmaceuticals Limited (Neuren or the Company,
and its subsidiaries, or the Group) is a publicly listed
biopharmaceutical company developing drugs for
neurological disorders.
REVIEW OF OPER ATIONS
Neuren is developing two new drug therapies to treat
multiple neurodevelopmental disorders that emerge in early
childhood and are characterized by impaired connection
and signalling between brain cells. No approved therapies
are currently available for these seriously debilitating
disorders. Neuren’s potential therapies utilize synthetic
analogs of neurotrophic peptides that occur naturally in
the brain.
During the year ended 31 December 2021, significant
progress was made in both the development of trofinetide
for Rett syndrome and the development of NNZ-2591 for
Phelan-McDermid syndrome, Angelman syndrome, Pitt
Hopkins syndrome and Prader-Willi syndrome.
In December 2021 Neuren’s partner for trofinetide in
North America, Acadia Pharmaceuticals (Nasdaq: ACAD),
announced positive top-line results from the pivotal, Phase
3 Lavender™ study evaluating the efficacy and safety of
trofinetide in 187 girls and young women aged 5-20 years
with Rett syndrome. The 12-week placebo-controlled
study demonstrated a statistically significant improvement
over placebo for both co-primary endpoints. On the Rett
Syndrome Behaviour Questionnaire (RSBQ), change from
baseline to week 12 was -5.1 vs. -1.7 (p=0.0175; effect
size=0.37). The Clinical Global Impression–Improvement
(CGI-I) score at week 12 was 3.5 vs. 3.8 (p=0.0030; effect
size=0.47). The RSBQ is a caregiver assessment of the
core symptoms of Rett syndrome and the CGI-I is a global
physician assessment of worsening or improving of
Rett syndrome. Additionally, trofinetide demonstrated
a statistically significant separation over placebo on
the key secondary endpoint, the Communication and
Symbolic Behavior Scales Developmental Profile™ Infant-
Toddler Checklist–Social composite score (CSBS-DP-IT–
Social) change from baseline to week 12 was -0.1 vs. -1.1
(p=0.0064; effect size=0.43).
The trofinetide program has Orphan Drug, Fast Track and
Rare Pediatric Disease designations from the US Food
and Drug Administration (FDA). Acadia plans to submit
a New Drug Application (NDA) to the US Food and Drug
Administration (FDA) around mid-year 2022. A NDA with
Orphan Drug Designation is eligible for Priority Review
in 6 months, compared with the standard review period
of 10 months, which means potential for approval in the
first quarter of 2023. Upon FDA approval of a NDA with
Rare Pediatric Disease designation, the sponsor may be
eligible to receive a Priority Review Voucher, which can be
used to obtain FDA review of a NDA for another product in
an expedited period of six months. The voucher may also
be sold for use by another company. In February 2022,
a voucher was sold for US$110 million.
Under the terms of the licence agreement with Acadia, the
development and commercialisation of trofinetide in North
America is fully funded by Acadia and Neuren may receive
potential milestone payments of up to US$455 million, plus
tiered escalating double-digit percentage royalties on net
sales of trofinetide in North America, plus one third of the
market value of a Rare Pediatric Disease Priority Review
Voucher if awarded by the FDA upon approval of a NDA for
trofinetide.
Neuren expects to receive revenue over 2022 and 2023 for
Rett syndrome in the US alone of A$115 million plus double-
digit percentage royalties on net sales. The expected
revenue in addition to royalties comprises:
– A milestone payment in 2022 of US$10 million
(A$14 million at assumed exchange rate of 0.72)
following acceptance of the NDA for review by the FDA;
– A milestone payment in 2023 of US$40 million
(A$55 million), following the first commercial sale
of trofinetide in the United States; and
– US$33 million (A$46 million) in 2023 as Neuren’s
estimated one third share of the market value of
a Priority Review Voucher.
Under the terms of the licence agreement with Acadia,
Neuren retained all rights to trofinetide outside North
America and has a fully paid-up, irrevocable licence to
all data for use in those countries. There is urgent unmet
need for a treatment for Rett syndrome around the
world. Neuren has received strong interest for potential
commercial partnerships and the number of interested
parties has increased significantly since the Phase 3 results
were announced. Discussions are now in progress under a
process to secure the best outcome for shareholders and for
patients.
Neuren is also preparing for Phase 2 clinical trials of its
second drug candidate NNZ-2591 for Phelan-McDermid
syndrome, Angelman syndrome and Pitt Hopkins syndrome.
Based on its mechanism of action and positive results
in animal models, NNZ-2591 has received Orphan Drug
designation in both the United States and the European
Union for each of these disorders.
24
Neuren Pharmaceuticals Limited Annual Report 2021 D I R E C TO R S’ R E P O R T
C O N T I N U E D
In February 2021, Neuren announced completion of a Phase
1 clinical trial in Australia, in which twice daily oral dosing
of NNZ-2591 for seven days was safe and well tolerated
in healthy volunteers at doses expected to be within the
effective therapeutic range. An extensive range of non-
clinical toxicology and manufacturing studies have also
been completed. In September 2021, Neuren submitted to
the FDA three Investigational New Drug (IND) applications
for review and clearance to start Phase 2 trials in each of
Phelan-McDermid syndrome, Angelman syndrome and
Pitt Hopkins syndrome. Following feedback from the FDA,
Neuren was required to add additional clinical assessments
to each trial protocol to enhance safety monitoring during
these first trials in pediatric patients. Neuren worked
with expert clinical advisors to address all the detailed
feedback that was received from the FDA and has recently
submitted all three protocols for FDA review. The programs
are supervised by the FDA Office of Neuroscience, with
Phelan-McDermid and Pitt Hopkins reviewed by the Division
of Neurology 1 and Angelman reviewed by the Division
of Psychiatry.
A fourth disorder, Prader-Willi syndrome was added to the
NNZ-2591 development pipeline in February 2021, when
Neuren announced positive results in the Magel2-null mouse
model of Prader-Willi syndrome, in which treatment with
NNZ-2591 for 6 weeks normalized fat mass, insulin levels,
IGF-1 levels and all behavioural defects. The FDA granted
Orphan Drug designation to NNZ-2591 for the treatment
of Prader-Willi syndrome in September 2021. Neuren is
planning to commence a Phase 2 clinical trial in Prader-Willi
syndrome in mid-2022.
The consolidated financial statements are presented on
pages 30 to 46. All amounts in the consolidated Financial
Statements are shown in Australian dollars unless
otherwise stated.
The Group’s loss after tax attributable to equity holders
of the Company for the year ended 31 December 2021
was $7.8 million compared with the Group’s loss after tax
of $9.2 million in 2020. This was mainly due to the R&D
Tax incentive income of $3.2 million (2020: $0.7 million)
following AusIndustry’s approval of an Advance and
Overseas finding for the development of NNZ-2591 as a
novel therapy for neurodevelopmental disorders. Research
and development costs were $1.7 million higher, due to an
increase in expenditures in 2021 for the NNZ-2591 non-
clinical studies, Phase 1 trial, Phase 2 trials and manufacture
of the required drug for the Phase 2 trials. In addition,
foreign exchange gains were $0.4 million compared with
foreign exchange losses of $0.6 million in 2020. This is due
to an increase in the carrying value in AUD of USD cash held
to eliminate exchange risk for USD expenditure, as a result
of the strengthening of the USD against the AUD. Prudent
control of expenditure continues to be an important
principle in the Group’s operations and financing.
The basic loss per share for 2021 was $0.066 (2020: earnings
of $0.086 per share), based on a weighted average number
of shares outstanding of 117,770,052 (2020: 107,057,317).
Cash reserves at 31 December 2021 were $36.8 million
(2020: $24.2 million). Net cash used in operating
activities was $10.0 million (2020: $8.1 million). The
increase of $1.9 million was mainly in payments to other
suppliers, due to higher research and development
expenditure of $3.5 million, which was partially offset by
the receipt of $2.5 million under the R&D Tax Incentive
program (2020: $0.5 million). Financing provided cash
of $22.2 million, received for the issue of new ordinary
shares in the capital raise and share purchase plan,
compared with $19.1 million in 2020.
In September 2021, the Group announced the successful
completion of a capital raise of $20 million. The Group
issued 9,756,098 fully paid ordinary shares at an issue price
of $2.05 per share to institutional investors in Australia and
overseas. In October, the Group announced the completion
of its Share Purchase Plan (SPP), raising $3.3m and issuing
1,601,470 new fully paid ordinary shares at $2.05 per share.
The funds will accelerate the development and increase the
value of NNZ-2591 for four neurodevelopmental disorders,
by enabling a Phase 2 clinical trial in Prader-Willi syndrome
and the foundational work for Phase 3 development across
Prader-Willi, Phelan-McDermid, Angelman and Pitt-Hopkins
syndromes.
No dividends were paid in the year, or in the prior year
and the Directors recommend none for the year.
25
Neuren Pharmaceuticals Limited Annual Report 2021 D I R E C TO R S’ R E P O R T
C O N T I N U E D
Dianne Angus BSc (Hons),
Master of Biotechnology, IPTA
(Non-Executive Director)
Dianne joined the Neuren Board in July 2018. She has
worked as a senior executive and non-executive director
within the biotechnology, biopharmaceutical and agritech
industries for over twenty-five years. She has created
numerous global industry partnerships which include
Prana Biotechnology, Gerolymatos International, Florigene,
Suntory & Monsanto to yield novel and competitive
medical, pharmaceutical and agricultural products.
Dianne has successfully forged strong partnerships with
key medical opinion leaders to create innovative clinical
research programs and driven the development path for
novel neurological pre-clinical agents to late-stage clinical
assets before the FDA and European regulators. With over
fifteen years’ experience in an ASX and NASDAQ listed
company, she has expertise in business development,
capital raising, investor relations, regulatory affairs and
intellectual property, together with corporate governance
and compliance capabilities. Dianne holds a Masters degree
in biotechnology and is a registered patent attorney.
Dr Jenny Harry BSc (Hons), PhD
(Non-Executive Director)
Jenny joined the Neuren Board in 2018. She has 20 years’
experience in executive management of companies in the
biotechnology and biopharmaceutical sectors. Jenny is an
accomplished CEO and Managing Director with experience
in growing companies from start-up to commercialisation.
She has served on the Boards of a number of listed and
unlisted companies and is currently a Non-Executive
Director of Aeris Environmental Limited (ASX:AEI) and on
the Board’s IP sub-committee of the Children’s Medical
Research Institute. Jenny is a graduate of the Harvard
Business School General Manager Program and the
Australian Institute of Company Directors.
DIRECTORS
Patrick Davies B EC, MBA
(Non-Executive Chair)
Patrick joined the Neuren Board in July 2018. He has held
executive management roles in the Australian and New
Zealand healthcare industry for over twenty five years
having performed successfully in senior roles across
many industry sectors including pharmacy, primary care,
pharmaceutical and consumer products. During his ten year
period as Chief Executive Officer of EBOS Group Limited
(and previously Symbion), the enterprise value of the group
achieved compound annual growth in enterprise value
of +20% (from circa $450M to in excess of $3.1B). He is a
director on other corporate boards and provides strategic
advice to a range of healthcare businesses and investors.
Jon Pilcher BSc (Hons), FCA
(Managing Director)
Jon joined Neuren in August 2013 as CFO and was
appointed CEO in May 2020. Jon was appointed to the
Board as Managing Director in June 2021. He has played
a central role in all aspects of Neuren’s R&D, commercial
and corporate activities. Before joining Neuren he was
a member of the leadership team at Acrux (ASX: ACR)
throughout a period that included Acrux’s IPO and listing
on the ASX, the development and FDA approval of three
novel pharmaceutical products and a transforming licensing
deal with Eli Lilly in 2010. He formerly spent seven years in a
series of senior financial positions in the R&D and corporate
functions of international pharmaceutical groups Medeva
and Celltech, which are now part of UCB. Jon is a Chartered
Accountant and holds a degree in Biotechnology from
the University of Reading in the UK. He is a non-executive
director of BTC Health (ASX:BTC).
Dr Trevor Scott, MNZM, LLD (Hon),
BCom, FCA, FNZIM, DF Inst D
(Non-Executive Director)
Trevor joined the Neuren Board in March 2002. He is
the founder of T.D. Scott and Co., an accountancy and
consulting firm, which he formed in 1988. He is an
experienced advisor to companies across a variety of
industries. Trevor serves on numerous corporate boards
and is chairman of several.
26
Neuren Pharmaceuticals Limited Annual Report 2021 D I R E C TO R S’ R E P O R T
C O N T I N U E D
BOARD AND COMMITTEE ATTENDANCE
The table below shows the number of Board and Committee meetings each Director was eligible to attend and attended during
the financial year ended 31 December 2021:
Director
Patrick Davies
Dr Trevor Scott
Dianne Angus
Dr Jenny Harry
Jonathan Pilcher (ii)
Board
Audit and Risk
Remuneration
Held (i)
Attended
Held (i)
Attended
Held (i)
Attended
11
11
11
11
7
11
11
11
11
7
2
2
2
2
–
2
2
2
2
–
1
1
1
1
–
1
1
1
1
–
(i) Number of meetings held during the time the Director was a member of the Board or Committee
(ii) Appointed to the Board on 14 June 2021.
INTERESTS REGISTER
The Company is required to maintain an interests register in which particulars of certain transactions and matters involving
Directors must be recorded. Details of the entries in this register for each of the Directors during and since the end of 2021 are
as follows:
Director
Jon Pilcher
Jon Pilcher
Patrick Davies
Patrick Davies
Dianne Angus
Dr Jenny Harry
Ordinary Shares
Purchased/(Sold)
Consideration
Paid/(Received)
Date of
Transaction
19,039
7,317
35,211
14,634
30,000
9,756
$25,000
$15,000
$50,175
$30,000
15 Jun 2021
08 Oct 2021
17 Feb 2021
08 Oct 2021
$59,316
15/18 Oct 2021
$20,000
08 Oct 2021
INFORMATION USED BY DIRECTORS
During the year the Board received no notices from Directors of the Company requesting to use Company information received
in their capacity as Directors, which would not otherwise have been available to them.
INDEMNIFIC ATION AND INSUR ANCE OF DIRECTORS AND OFFICERS
Neuren has entered into a deed of indemnity, insurance and access with Directors and Officers, which provides that Directors
and Officers generally will incur no monetary loss as a result of actions undertaken by them as Directors and Officers. The
indemnity does not cover criminal liability or liability in respect of a breach of a director’s duty to act in good faith and in
what the director believes to be the best interests of the Company or a breach of any fiduciary duty owed to the Company
or a subsidiary.
DONATIONS
No donations were made by the Company or its subsidiary companies during the year (2020: $nil).
27
Neuren Pharmaceuticals Limited Annual Report 2021 D I R E C TO R S’ R E P O R T
C O N T I N U E D
NON-EXECUTIVE DIRECTOR REMUNER ATION
Remuneration of Non-Executive Directors is shown in the table below:
Remuneration of Directors
Patrick Davies (appointed Chair May 2020)
Dr Trevor Scott
Dianne Angus
Dr Jenny Harry
2021
$
120,000
72,000
60,000
66,000
2020
$
95,000
72,000
60,000
60,000
EXECUTIVE DIRECTOR REMUNER ATION
The Managing Director, Jon Pilcher, receives remuneration and other benefits in his executive role as Chief Executive Officer
and, accordingly, does not receive a director fee. The table below shows the total remuneration for Jon Pilcher since his
appointment to Managing Director on 14 June 2021.
Director
2021
Jonathan Pilcher
2020
Fixed
remuneration
(including
superannuation)
$
Share based
payments
$
Total
Remuneration
$
203,125
229,123
432,248
Dr Richard Treagus (resigned May 2020)
146,000
–
146,000
EMPLOYEE REMUNER ATION
The number of employees, not being directors of the Company, who received remuneration and benefits in their capacity as
employees totalling NZ $100,000 or more during the year, shown in bands denominated in Australian dollars, was as follows:
Excluding shared based payments
2021
$’000
2020
$’000
$100,000 - $109,999
$160,000 - $169,999
$170,000 - $179,999
$250,000 - $259,999
$270,000 - $279,999
$280,000 - $289,999
$290,000 - $299,999
$340,000 - $349,999
–
1
2
–
1
–
1
–
1
–
–
1
–
1
–
1
28
Neuren Pharmaceuticals Limited Annual Report 2021
D I R E C TO R S’ R E P O R T
C O N T I N U E D
Including shared based payments
2021
$’000
2020
$’000
$100,000 - $109,999
$160,000 - $169,999
$170,000 - $179,999
$350,000 - $359,999
$360,000 - $369,999
$380,000 - $389,999
$480,000 - $489,999
$500,000 - $509,999
$540,000 - $549,999
–
1
1
–
1
–
1
1
–
1
–
–
1
–
1
–
–
1
AUDITORS
Grant Thornton New Zealand Audit Limited (‘Grant Thornton’) is the independent auditor of the Company. Audit fees in relation
to the annual and interim financial statements were $65,921 (2020: $57,759). Grant Thornton did not receive any other fees
in relation to other financial advice and services. No amounts were payable to an auditor by subsidiary companies in 2021
or 2020.
For and on behalf of the Board of Directors who authorised the issue of these consolidated financial statements on
23 February 2022.
Patrick Davies
Non-Executive Chair
Dr Trevor Scott
Director
29
Neuren Pharmaceuticals Limited Annual Report 2021
C O N S O L I D AT E D S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 1
Interest
Foreign exchange gain
Australian R&D tax incentive
Other income
Total income
Research and development costs
Corporate and administrative costs
Foreign exchange loss
Loss before income tax
Income tax
Loss after income tax
Other comprehensive loss, net of tax
Amounts which may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
Loss after tax attributable to Equity holders of the Company:
Total comprehensive loss attributable to Equity holders of the Company:
Basic loss per share
Diluted loss per share
The notes on pages 34 to 46 form part of these consolidated financial statements.
Note
5
6
6
2021
$’000
41
398
3,197
–
3,636
(9,516)
(1,914)
–
(7,794)
–
2020
$’000
147
–
717
100
964
(7,763)
(1,763)
(631)
(9,193)
–
(7,794)
(9,193)
(4)
(7,798)
(7,794)
(7,798)
($0.066)
($0.066)
11
(9,182)
(9,193)
(9,182)
($0.086)
($0.086)
30
Neuren Pharmaceuticals Limited Annual Report 2021 C O N S O L I D AT E D S TAT E M E N T O F F I N A N C I A L P O S I T I O N
A S AT 3 1 D E C E M B E R 2 0 2 1
ASSETS
Current Assets:
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets:
Property, plant and equipment
Total non-current assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current liabilities:
Trade and other payables
Total current liabilities
Total liabilities
EQUITY
Share capital
Other reserves
Accumulated deficit
Total equity attributable to equity holders
TOTAL LIABILITIES AND EQUITY
The notes on pages 34 to 46 form part of these consolidated financial statements.
Note
2021
$’000
2020
$’000
7
8
9
36,783
3,261
40,044
12
12
24,188
755
24,943
10
10
40,056
24,953
803
803
803
753
753
753
10
167,578
(9,448)
145,567
(10,284)
(118,877)
(111,083)
39,253
40,056
24,200
24,953
31
Neuren Pharmaceuticals Limited Annual Report 2021 C O N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 1
Equity as at 1 January 2020
Shares issued in capital raising
Shares issued in share purchase plan
Share issue costs
Transfer on expiry of options
Loan funded share payments
Transactions with owners
Loss after income tax
Other comprehensive loss
Total Comprehensive income for the year
Shares issued in capital raising
Shares issued in share purchase plan
Share issue costs
Loan funded share payments
Transactions with owners
Loss after income tax
Other comprehensive loss
Total Comprehensive loss for the year
Equity as at 31 December 2021
Share
Capital
$’000
126,426
20,000
216
(1,075)
–
–
–
–
–
(2,186)
394
19,141
(1,792)
–
–
–
–
–
–
Share
Option
Reserve
$’000
Currency
Translation
Reserve
$’000
Accumulated
Deficit
$’000
2,186
(10,689)
(104,076)
–
–
–
–
–
–
–
11
11
–
–
–
2,186
–
2,186
(9,193)
–
(9,193)
20,000
3,281
(1,270)
–
22,011
–
–
–
–
–
–
840
840
–
–
–
–
–
–
–
–
–
(4)
(4)
–
–
–
–
–
167,578
1,234
(10,682)
(118,877)
(7,794)
(7,794)
–
(7,794)
Total
Equity
$’000
13,847
20,000
216
(1,075)
–
394
19,535
(9,193)
11
(9,182)
24,200
20,000
3,281
(1,270)
840
22,851
(4)
(7,798)
39,253
Equity as at 31 December 2020
145,567
394
(10,678)
(111,083)
The notes on pages 34 to 46 form part of these consolidated financial statements.
32
Neuren Pharmaceuticals Limited Annual Report 2021 C O N S O L I D AT E D S TAT E M E N T O F C A S H F L O W S
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 1
Cash flows from operating activities:
Receipts from Australian R&D Tax Incentive
Interest received
GST refunded
Receipts from government cash flow boost
Payments for employees and directors
Payments to other suppliers
Net cash flow used in operating activities
Cash flows from investing activities:
Purchase of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from the issue of shares
Payment of share issue expenses
Net cash provided from financing activities
Net increase / (decrease) in cash
Effect of exchange rate changes on cash balances
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Reconciliation with loss after income tax:
(Loss) / Profit after income tax
Non-cash items requiring adjustment:
Depreciation of property, plant and equipment
Loan funded share payments expense
Foreign exchange (gain)/loss
Changes in working capital:
Trade and other receivables
Trade and other payables
Net cash used in operating activities
The notes on pages 34 to 46 form part of these consolidated financial statements.
Note
2021
$’000
2020
$’000
10
2,521
54
372
–
(1,756)
(11,161)
(9,970)
(10)
(10)
491
164
283
100
(1,480)
(7,636)
(8,078)
(6)
(6)
23,281
(1,106)
22,175
20,216
(1,075)
19,141
12,195
11,057
400
24,188
36,783
(713)
13,844
24,188
(7,794)
(9,193)
8
840
(404)
(2,506)
(114)
(9,970)
6
394
724
(203)
194
(8,078)
33
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 1
1. NATURE OF BUSINESS
Neuren Pharmaceuticals Limited (Neuren or the Company,
and its subsidiaries, or the Group) is a publicly listed
biopharmaceutical company developing drugs for
neurological disorders.
The Company is a limited liability company incorporated
in New Zealand. The address of its registered office in New
Zealand is at the offices of Lowndes Jordan, Level 15 HSBC
Tower, 188 Quay Street, Auckland 1141. Neuren ordinary
shares are listed on the Australian Securities Exchange
(ASX code: NEU).
These consolidated financial statements have been
approved for issue by the Board of Directors on
23 February 2022.
Material Uncertainties
– The Group’s research and development activities involve
inherent risks. These risks include, among others:
dependence on, and the Group’s ability to retain key
personnel; the Group’s ability to protect its intellectual
property and prevent other companies from using the
technology; the Group’s business is based on novel
and yet to be proven technology; the Group’s ability
to sufficiently complete the clinical trials process; and
technological developments by the Group’s competitors
could render its products obsolete.
– The Group’s revenue from licence agreements is
contingent on future events and will be intermittent
until product sales commence. The business plan
therefore may require expenditure in excess of revenue
and in the future the Group may need to raise further
financing through other public or private equity
financings, collaborations or other arrangements with
corporate sources, or other sources of financing to
fund operations. There can be no assurance that such
additional financing, if available, can be obtained on
terms reasonable to the Group.
2. SUMMARY OF SIGNIFIC ANT ACCOUNTING
POLICIES
These general-purpose consolidated financial statements
of the Group are for the year ended 31 December 2021
and have been prepared in accordance with and comply
with generally accepted accounting practice in New
Zealand (GAAP), New Zealand equivalents to International
Financial Reporting Standards (NZ IFRS) issued by the
New Zealand Accounting Standards Board which comply
with International Financial Reporting Standards, the
requirements of the Financial Markets Conduct Act 2013,
and other applicable Financial Reporting Standards as
appropriate for profit-oriented entities that fall into Tier 1 as
determined by the New Zealand External Reporting Board.
(a) Basis of preparation
Entities Reporting
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of the Group as at
31 December 2021 and the results of all subsidiaries for
the year then ended. Neuren Pharmaceuticals Limited and
its subsidiaries, which are designated as profit-oriented
entities for financial reporting purposes, together are
referred to in these financial statements as the Group.
Statutory Base
Neuren is registered under the New Zealand Companies
Act 1993. Neuren is also registered as a foreign company
under the Australian Corporations Act 2001.
Historical cost convention
These consolidated financial statements have been
prepared under the historical cost convention as modified
by certain policies below. Amounts are expressed in
Australian Dollars and are rounded to the nearest thousand,
except for earnings per share.
Critical accounting estimates
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires the
Group to exercise its judgement in the process of applying
the Group’s accounting policies. Actual results may differ
from those estimates. The areas involving a higher degree
of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements
are disclosed in Note 16.
Going concern basis
The directors monitor the Group’s cash position and
initiatives to ensure that adequate funding continues to
be available for the Group to meet its business objectives.
The Group recorded a loss after tax of $7.8 million for the
year ending 31 December 2021 and had negative operating
cash flows of $10.0 million for the year ended 31 December
2021. The Group had net assets at 31 December 2021 of
$39.3 million, including cash balances and receivables of
$40.0 million.
In September 2021, the Group announced the successful
completion of a capital raise of $20 million. The Group
issued 9,756,098 fully paid ordinary shares at an issue price
of $2.05 per share to institutional investors in Australia and
overseas. In October, the Group announced the completion
of its Share Purchase Plan (SPP), raising $3.3m and issuing
1,601,470 new fully paid ordinary shares at $2.05 per share.
It is the considered view of the Directors that the Group
will have access to adequate resources to meet its ongoing
obligations for at least a period of 12 months from the
date of signing these financial statements. On this basis,
the Directors have assessed it is appropriate to adopt the
going concern basis in preparing its consolidated financial
statements. The consolidated financial statements do not
include any adjustments that would result if the Group was
unable to continue as a going concern.
34
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
2. SUMMARY OF SIGNIFIC ANT ACCOUNTING
(c) Foreign Currency Translation
POLICIES (CONTINUED)
Impact of COVID-19 on our business
On March 11, 2020 the World Health Organization declared
a pandemic resulting from the disease known as COVID-19
caused by a novel strain of coronavirus, SARS-CoV-2. In an
effort to contain COVID-19 or slow its spread, state or federal
governments around the world have enacted various
measures, including orders to close businesses not deemed
“essential”, isolate residents to their homes or places of
residence, and practice social distancing when engaging
in essential activities. In certain jurisdictions, such orders
have been lifted, although subsequent trends in COVID-19
infections have led to the reinstatement of such orders in
various jurisdictions.
To date there has been no financial impact of COVID-19
on the Group. It is possible that clinical trials or other
research and development activities for NNZ-2591 could
be impacted in the future by COVID-19 restrictions or risks.
The Group is continuing to monitor the situation and may
take further actions affecting its business operations as
are deemed necessary.
Changes in accounting policies
There is no significant impact of changes in accounting
policies for the year ended 31 December 2021.
Standards, interpretations and amendments to published
standards that are not yet effective
Certain new standards, amendments and interpretations to
existing standards have been published that are mandatory
for later periods and which the Group has not adopted early.
None are expected to materially impact the Group.
(b) Principles of Consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the group has control. The group controls
an entity when the group is exposed to, or has rights to,
variable returns from its involvement with the entity and
has the ability to affect those returns through its power over
the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the group. They are deconsolidated
from the date that control ceases.
Inter-company transactions, balances and unrealised gains
on transactions between group companies are eliminated.
Unrealised losses are also eliminated. When necessary,
amounts reported by subsidiaries have been adjusted to
conform with the group’s accounting policies.
(i) Functional and Presentation Currency
The functional currency of the Company and the
presentation currency of the Group is Australian Dollars.
(ii) Transactions and Balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the Statement
of Comprehensive Income, except when deferred in
equity as qualifying cash flow hedges and qualifying
net investment hedges.
(iii) Foreign Operations
The results and financial position of foreign entities
(none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
– assets and liabilities for each statement of financial
position presented are translated at the closing rate
at the date of that statement of financial position;
– revenue and expenses for each Statement of
Comprehensive Income are translated at average
exchange rates; and
– all resulting exchange differences are recognised
as a separate component of equity.
Exchange differences arising from the translation of any
net investment in foreign entities, and of borrowings and
other currency instruments designated as hedges of such
investments, are taken to shareholders’ equity.
Goodwill and fair value adjustments arising on the
acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at
the closing rate.
(d) Revenue
Revenue arises mainly from grants received and interest.
Revenue is recognised either at a point in time or over time,
when (or as) the Group satisfies performance obligations
by transferring the promised goods or services to its
customers.
Grants
Grants received are recognised in profit or loss within the
Statement of Comprehensive Income over the periods in
which the related costs for which the grants are intended
to compensate are recognised as expenses and when the
requirements under the grant agreement have been met.
Any grants received for which the requirements under the
grant agreement have not been completed are carried as
liabilities until all the conditions have been fulfilled.
35
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses.
Current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly
in equity.
(g) Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment. All
non-financial assets are also reviewed whenever events or
changes in circumstances indicate that the carrying amount
of the assets may not be recoverable. The carrying amount
of a long-lived asset is considered impaired when the
recoverable amount from such asset is less than its carrying
value. In that event, a loss is recognised in the Statement of
Comprehensive Income based on the amount by which the
carrying amount exceeds the fair value less costs of disposal
and value in use of the long-lived asset. Fair market value is
determined using the anticipated cash flows discounted at a
rate commensurate with the risk involved.
(h) Goods and services tax (GST)
The financial statements have been prepared so that all
components are presented exclusive of GST. All items
in the statement of financial position are presented net
of GST, with the exception of receivables and payables,
which include GST invoiced.
(i) Cash and cash equivalents
Cash and cash equivalents comprises cash and demand
deposits held with established financial institutions and
highly liquid investments, which have maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value.
(j) Trade and other receivables
The Group makes use of a simplified approach in accounting
for trade and other receivables and records the loss
allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering
the potential for default at any point during the life of the
financial instrument. In calculating, the Group assesses
trade receivables on an individual basis, and uses its
historical experience, external indicators and forward-
looking information to calculate the expected credit losses.
(k) Property, plant and equipment
Property, plant and equipment are stated at historical cost
less depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
2. SUMMARY OF SIGNIFIC ANT ACCOUNTING
POLICIES (CONTINUED)
Interest income
Interest income is recognised on a time-proportion basis
using the effective interest method.
(e) Research and development
Research costs include direct and directly attributable
overhead expenses for drug discovery, research and pre-
clinical and clinical trials. Research costs are expensed
as incurred.
When a project reaches the stage where it is reasonably
certain that future expenditure can be recovered
through the process or products produced, development
expenditure is recognised as a development asset using the
following criteria:
– a product or process is clearly defined and the costs
attributable to the product or process can be identified
separately and measured reliably;
– the technical feasibility of the product or process can be
demonstrated;
– the existence of a market for the product or process can
be demonstrated and the Group intends to produce and
market the product or process;
– adequate resources exist, or their availability can be
reasonably demonstrated to complete the project and
market the product or process.
In such cases the asset is amortised from the
commencement of commercial production of the product
to which it relates on a straight-line basis over the years
of expected benefit. Research and development costs are
otherwise expensed as incurred.
(f) Income tax
The income tax expense for the period is the tax payable on
the period’s taxable income or loss using tax rates enacted
or substantively enacted at the reporting date and adjusted
by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled,
based on those tax rates which are enacted or substantively
enacted at the reporting date. The relevant tax rates are
applied to the cumulative amounts of deductible and
taxable temporary differences to measure the deferred tax
asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset
or a liability. No deferred tax asset or liability is recognised
in relation to these temporary differences if they arose in
a transaction, other than a business combination, that at
the time of the transaction did not affect either accounting
profit or taxable profit or loss.
36
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
2. SUMMARY OF SIGNIFIC ANT ACCOUNTING
POLICIES (CONTINUED)
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Group and
the cost of the item can be measured reliably. All other
repairs and maintenance are charged to the Statement of
Comprehensive Income during the financial period in which
they are incurred.
Depreciation is determined principally using the straight-
line method to allocate their cost, net of their residual
values, over their estimated useful lives, as follows:
Scientific equipment
Computer equipment
Office furniture, fixtures & fittings
4 years
2-10 years
3-4 years
(l) Intangible assets
Intellectual property
Costs in relation to protection and maintenance of
intellectual property are expensed as incurred unless the
project has yet to be recognised as commenced, in which
case the expense is deferred and recognised as contract
work in progress until the revenues and costs associated
with the project are recognised.
Acquired patents, trademarks and licences have finite useful
lives and are carried at cost less accumulated amortisation
and impairment losses. Amortisation is calculated using the
straight line method to allocate the cost over the anticipated
useful lives, which are aligned with the unexpired patent
term or agreement over trademarks and licences.
Acquired software
Acquired software licences are capitalised on the basis of
the costs incurred to acquire and bring to use the specific
software. These costs are amortised over their estimated
useful lives.
(m) Employee benefits
Wages and salaries, annual leave, long service leave and
superannuation
Liabilities for wages and salaries, bonuses, annual leave,
long service leave and superannuation expected to
be settled within 12 months of the reporting date are
recognised in accrued liabilities in respect of employees’
services up to the reporting date and are measured at
the amounts expected to be paid when the liabilities are
settled. Liabilities for non-accumulating personal leave are
recognised when the leave is taken and measured at the
rates paid or payable.
Contributions are made by the Group to employee
superannuation funds and are charged as expenses when
the obligation to pay them arises.
Share-based payments
Neuren has operated a loan funded share plan and equity
performance rights plan. Both plans are accounted for as
share options and the loan is not recognised as an asset. The
fair value of the services received in exchange for the grant
of the options or shares is recognised as an expense with
a corresponding increase in other reserve equity over the
vesting period. The total amount to be expensed over the
vesting period is determined by reference to the fair value of
the options or shares at grant date. At each reporting date,
except for options that are subject to a market condition for
vesting, the Company revises its estimates of the number of
options that are expected to vest and become exercisable.
It recognises the impact of the revision of original estimates,
if any, in the Statement of Comprehensive Income, and a
corresponding adjustment to equity over the remaining
vesting period.
When options are exercised, the proceeds received net of
any directly attributable transaction costs are credited to
share capital.
(n) Share issue costs
Costs associated with the issue of new shares which
are recognised in shareholders’ equity are treated as a
reduction of the amount collected per share.
(o) Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of
the financial instrument.
Financial assets are derecognised when the contractual
rights to the cash flows from the financial asset expire, or
when the financial asset and substantially all the risks and
rewards are transferred.
A financial liability is derecognised when it is extinguished,
discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a
significant financing component and are measured at the
transaction price in accordance with NZ IFRS 15 ‘Revenue
from contracts with customers’, all financial assets are
initially measured at fair value adjusted for transaction
costs (where applicable).
Financial assets, other than those designated and effective
as hedging instruments, are classified into the following
categories:
– amortised cost
– fair value through profit or loss (FVTPL)
– fair value through other comprehensive income (FVOCI).
37
Neuren Pharmaceuticals Limited Annual Report 2021
N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
2. SUMMARY OF SIGNIFIC ANT ACCOUNTING
POLICIES (CONTINUED)
In the periods presented the corporation does not have any
financial assets categorised as FVTPL or FVOCI.
(p) Financial liabilities
The Group’s financial liabilities include trade and other
payables. Financial liabilities are initially measured at fair
value, and, where applicable, adjusted for transaction costs.
Subsequently, financial liabilities are measured at
amortised cost using the effective interest method.
(q) Earnings per share
Basic and diluted earnings per share are calculated by
dividing the profit attributable to equity holders of the
Company by the weighted average number of ordinary
shares outstanding during the period.
3. SEGMENT INFORMATION
The Group operates as a single operating segment and
internal management reporting systems present financial
information as a single segment. The segment derives its
revenue and incurs expenses through the development
of pharmaceutical products. Grant income arises from
the Australian R&D Tax Incentive and revenue from
licence agreements is derived from the United States.
The Board of the Company has been identified as the
chief operating decision maker. The Board assesses the
financial performance and position of the group, and
makes strategic decisions.
The classification is determined by both:
– the entity’s business model for managing the
financial asset
– the contractual cash flow characteristics of the
financial asset.
All income and expenses relating to financial assets that
are recognised in profit or loss are presented within finance
costs, finance income or other financial items, except for
impairment of trade receivables which is presented within
other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if
the assets meet the following conditions (and are not
designated as FVTPL):
– they are held within a business model whose objective
is to hold the financial assets and collect its contractual
cash flows
– the contractual terms of the financial assets give rise
to cash flows that are solely payments of principal and
interest on the principal amount outstanding
After initial recognition, these are measured at amortised
cost using the effective interest method.
Discounting is omitted where the effect of discounting
is immaterial. The Group’s cash and cash equivalents,
trade and most other receivables fall into this category
of financial instruments.
38
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
4. EXPENSES
Loss / (Profit) before income tax includes the following expenses:
Depreciation – property, plant and equipment
Computer equipment
Total depreciation
Remuneration of auditors
Audit and review of financial statements (Grant Thornton NZ)
Total remuneration of auditors
Employee benefits expense
Short-term benefits
Post-employment benefits
Other employee benefits
Share based payments
Total employee benefits expenses
Directors’ compensation
Short-term benefits
Post-employment benefits
Share based payments
Total Directors' compensation
2021
$’000
2020
$’000
8
8
66
66
1,093
91
26
611
1,821
498
23
229
750
6
6
58
58
974
76
35
394
1,479
423
10
–
433
Jon Pilcher is included in Employee benefits until 14 June 2021, when he was appointed Managing Director. His remuneration
post 14 June 2021 is included in Director’s compensation.
5. INCOME TA X
Income tax
Current tax
Deferred tax
Numerical reconciliation of income tax to prima facie tax receivable:
(Loss) / Profit before income tax
Tax at applicable rates 26.0% (2020: 27.5%)
Non-taxable Australian R&D tax incentive income
Non deductible expenses for R&D incentive
Deductible temporary differences and tax losses for which no deferred tax asset was recognised
Income tax
2021
$’000
2020
$’000
–
–
–
(7,794)
(2,026)
(831)
1,973
884
–
–
–
–
(9,193)
(2,528)
(197)
454
2,271
–
Gross tax losses for which no deferred tax asset has been recognised (a)
110,750
107,065
(a) Of these gross tax losses, $63.3 million (2020: $62.9 million) relates to New Zealand tax losses, which are unlikely to be
utilised unless future taxable income is generated in New Zealand. The movement is due to the New Zealand tax losses
being translated at the closing foreign exchange rate at each reporting date.
39
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
6. E ARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the year attributable to the equity holders of the company by
the weighted average number of ordinary shares on issue during the year excluding shares held as treasury stock.
Diluted earnings per share is calculated by dividing the profit for the year attributable to the equity holders of the company by
the weighted average number of shares outstanding during the year plus the weighted average number of ordinary shares that
would be issued on conversion of any dilutive potential ordinary shares into ordinary shares.
The dilutive impact of loan funded shares has not been included in the weighted average number of ordinary shares for the
purposes of calculating diluted earnings per share, as it does not meet the requirements for inclusion in NZ IAS 33.
Loss after income tax attributable to equity holders (basic) - ($'000)
Weighted average shares outstanding (basic) - (No.)
Basic loss per share
Loss after income tax attributable to equity holders (diluted) - ($'000)
Weighted average shares outstanding (diluted) - (No.)
Diluted loss per share
7. C A SH AND C A SH EQUIVALENTS
Cash
Demand and short-term deposits
8. TR ADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Interest receivables
Prepayments
Australian R&D tax incentive
2021
2020
(7,794)
117,770,052
(9,193)
107,057,317
($0.066)
($0.086)
(7,794)
118,524,002
(9,193)
107,057,317
($0.066)
($0.086)
2021
$’000
6,912
29,871
36,783
2021
$’000
7
21
3
1,837
1,393
3,261
2020
$’000
229
23,959
24,188
2020
$’000
–
22
16
–
717
755
The Group applies the simplified model of recognising lifetime expected credit losses for all trade receivables as these items do
not have a significant financing component.
In measuring the expected credit losses, the trade receivables have been assessed on an individual basis due to the limited
number of receivables.
The expected loss rates are based on the payment profile of the individual receivable and other transactions with that debtor
over the past 12 months before 31 December 2021 as well as the corresponding historical credit losses during that period.
Trade receivables are written off (i.e. de-recognised) when there is no reasonable expectation of recovery. Failure to make
payments within 180 days from the invoice date and failure to engage with the Group on alternative payment arrangements
amongst others are considered indicators of no reasonable expectation of recovery. No credit losses have been determined for
the current year (2020: nil).
40
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
9. TR ADE AND OTHER PAYABLES
Trade payables
Accruals
Employee benefits
2021
$’000
245
209
349
803
2020
$’000
167
323
263
753
Trade payables and accruals relate to operating expenses, primarily research and development expenses. Trade payables
comprise amounts invoiced prior to the reporting date and accruals comprise the value of work done but not invoiced at each
reporting date.
10. SHARE C APITAL
Issued Share Capital
Ordinary shares on issue at beginning of year
Shares issued under Loan Funded Share Plan
Shares bought back under Loan Funded Share Plan
Shares issued in private placement
Share issued in Share Purchase Plan
Share issue expenses - issue costs
2021
Shares
2020
Shares
2021
$’000
2020
$’000
117,608,108
–
–
9,756,098
1,601,470
–
102,668,413
3,000,000
(2,500,000)
14,285,723
153,972
–
128,965,676
117,608,108
145,567
–
–
20,000
3,281
(1,270)
167,578
126,426
–
–
20,000
216
(1,075)
145,567
In September 2021, the Group issued 9,756,098 fully paid ordinary shares at an issue price of $2.05 per share in a placement
to institutional in Australia and overseas. In October 2021, the Group issued 1,601,470 fully paid ordinary shares at an issue
price of $2.05 in the Share Purchase Plan (SPP). The issue price of $2.05 per share for the placement and the SPP represented a
discount of 8.9% to the last closing price of $2.25 on 9 September 2021.
At 31 December 2021 3.0 million ordinary shares (31 December 2020: 3.0 million ordinary shares) were held as treasury stock in
respect of the Loan Funded Share Plan described below.
Ordinary Shares
The ordinary shares have no par value and all ordinary shares are fully paid-up and rank equally as to dividends and
liquidation, with one vote attached to each fully paid ordinary share.
Share based payments
No securities were issued under any share based payment plans in 2021 or 2020. There were no equity-settled share based
payments expensed in the Statement of Comprehensive Income in 2021 or 2020.
Loan funded shares
The Company has a Loan Funded Share Plan to support the achievement of the Company’s business strategy by linking
executive reward to improvements in the financial performance of the Company and aligning the interests of executives
with shareholders. Under the Loan Funded Share Plan, loan funded shares may be offered to employees or consultants
(“Participants”). The Company issues new ordinary shares, which are placed in a trust to hold the shares on behalf of the
Participant. The trustee issues a limited-recourse, interest-free loan to the participant, which is equal to the number of shares
multiplied by the issue price. A limited-recourse loan means that the repayment amount will be the lesser of the outstanding
loan and the market value of the shares that are subject to the loan. The trustee continues to hold the shares on behalf of
the Participant until all vesting conditions have been satisfied and the Participant chooses to settle the loan, at which point
ownership of the shares is transferred from the trust to the Participant. Any dividends paid by the Company while the shares
are held by the trust are applied as repayment of the loan at the after-tax value of the dividend. On request by the participant,
the Company may dispose of, or buy back, vested shares and utilise the proceeds to settle the outstanding loan. The directors
may apply vesting conditions to be satisfied before the shares can be transferred to the Participant. Before the loan can be
given, the New Zealand Companies Act requires the Company to disclose to shareholders the provision of financial assistance
to the Participant. The maximum loan term is 5 years.
41
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
10. SHARE C APITAL (CONTINUED)
All loan funded shares under the plan during the year ended 31 December 2021 are subject to the following vesting conditions:
i.
ii.
40% of the Loan Funded Shares shall vest on acceptance by the US Food and Drug Administration of the filing of a New Drug
Application for Trofinetide; and
40% of the Loan Funded Shares shall vest when the Company determines to progress NNZ-2591 to a Phase 2b or Phase 3
clinical trial following a positive Phase 2 clinical trial outcome, or executes a partnering transaction for NNZ-2591;
iii. 20% of the Loan Funded Shares shall vest when the Company executes a partnering transaction for trofinetide outside
North America, or submits a Marketing Authorisation Application for trofinetide in the European Union, the United
Kingdom, or Japan.
Each of these Vesting Conditions shall be tested separately from the other Vesting Conditions.
The estimated fair value of the shares has been determined using the Black-Scholes valuation model. The significant inputs
into the model were the share price on date of valuation, the estimated future volatility of the share price, a dividend yield of
0%, an expected life of 5 years, and an annual risk-free interest rate of 0.4%. The estimated future volatility of the share price
was derived by analysing the historic volatility of the share price during a relevant period.
Movements in the number of Loan Funded Shares were as follows:
Loan Funded
Shares
Weighted
Average
Exercise Price
Exercisable
Weighted
Average
Exercise Price
Outstanding at 31 December 2019
Expired and bought back
Issued
Outstanding at 31 December 2020
Expired and bought back
Issued
1,000,000
(1,000,000)
3,000,000
3,000,000
–
–
$1.76
$1.76
$1.84
$1.84
–
–
Outstanding at 31 December 2021
3,000,000
$1.84
The exercise price for 3.0 million unvested Loan Funded Shares is $1.84 per share.
–
–
–
–
–
–
–
–
–
–
11. SUBSIDIARIES
(a) Investment in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in Note 2(b).
Name of entity
Neuren Pharmaceuticals Inc.
Neuren Pharmaceuticals (Australia) Pty Ltd
Date of
incorporation
20-Aug-02
9-Nov-06
Principle activities
Interest
held
Domicile
Development services
Dormant
100%
100%
100%
USA
AUS
NZ
Neuren Trustee Limited
29-May-13
Holds loan funded shares
All subsidiaries have a reporting date of 31 December.
42
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
12. COMMITMENTS AND CONTINGENCIES
(a) Legal claims
The Group had no significant legal matter contingencies as at 31 December 2021 or at 31 December 2020.
(b) Commitments
The Group was not committed to the purchase of any property, plant or equipment or intangible assets as at 31 December 2021
(2020: nil).
At 31 December 2021, the Group had commitments under product development contracts amounting to approximately
$6.1 million, comprising approximately US$3.3 million, GBP 0.3 million and AU $0.9 million. At 31 December 2020, the Group
had commitments under product development contracts amounting to approximately $5.0 million, comprising approximately
US$2.6 million, GBP 0.4 million and AU $0.9 million.
(c) Contingent liabilities
The Group had no contingent liabilities at 31 December 2021 or at 31 December 2020 that require disclosure.
13. REL ATED PART Y TR ANSAC TIONS
(a) Key Management Personnel
The Key Management Personnel of the Group (KMP) include the directors of the Company and direct reports to the Managing
Director. Compensation for KMP was as follows:
Short-term benefits
Post-employment benefits
Other long-term benefits
Share based payment compensation
2021
$’000
1,340
83
26
840
2,289
2020
$’000
1,349
73
35
394
1,851
(b) Subsidiaries
The ultimate parent company in the Group is Neuren Pharmaceuticals Limited (“Parent”). The Parent funds the activities of the
subsidiaries throughout the year as needed. Interests in and amounts due from subsidiaries are set out in Note 11. All amounts
due between entities in the Group are payable on demand and bear no interest.
14. EVENTS AFTER REPORTING DATE
As at the date of these consolidated financial statements authorised for issue, there are no events arising since 31 December
2021 that require disclosure.
43
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(a) Categories of financial instruments
Financial assets
2021
Cash and cash equivalents
Trade and other receivables
Total financial assets
2020
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Amortised cost – Non-Interest Bearing:
Trade and other payables
Total financial liabilities
At amortised cost
At fair value
through
profit or loss
Floating
Interest Rate
$’000
Non-Interest
Bearing
$’000
Non-Interest
Bearing
$’000
7
8
7
8
36,783
–
36,783
24,188
–
24,188
–
30
30
–
37
37
9
Total
$’000
36,783
30
36,813
24,188
37
24,225
–
–
–
–
–
–
2021
$’000
2020
$’000
454
454
490
490
At 31 December 2021, the reporting value of all financial instruments approximated to the fair value.
(b) Risk management
The Group is subject to a number of financial risks which arise as a result of its activities.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return.
Currency risk
During the normal course of business the Group enters into contracts with overseas customers or suppliers or consultants that
are denominated in foreign currency. As a result of these transactions there is exposure to fluctuations in foreign exchange
rates. The Company also has a net investment in a foreign operation, whose net assets are exposed to foreign currency
translation risk.
The principle currency risk faced by the business is the exchange rate between the Australian dollar and the US dollar. The
Group holds cash denominated in US dollars and Australian dollars and has material expenditure in each of these currencies.
Where possible, the Group matches foreign currency income and foreign currency expenditure as a natural hedge, holding
foreign currency cash to facilitate this natural hedge. When foreign currency expenditure exceeds foreign currency revenue
and foreign currency cash, the group purchases foreign currency to meet anticipated requirements under spot and forward
contracts. The Group does not designate formal hedges. At 31 December 2021, there were no forward contracts outstanding
(2020: None).
During the year, the US dollar fluctuated against the Australian dollar. A foreign exchange gain of $398,000 is included in results
for the year ended 31 December 2021 (2020: loss $631,000). The majority of the gain relates to gains on the translation for
reporting purposes of the Group’s US dollar cash reserves into Australian dollars.
44
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
The carrying amounts of US dollar denominated financial assets and liabilities are as follows:
Assets
US dollars
Liabilities
US dollars
2021
$’000
2020
$’000
6,905
8,686
38
46
An increase of 10% in the cross rate of the US dollar against the Australian dollar as at the reporting date would have increased
the consolidated loss after income tax by $624,000 (2020: $785,000). A decrease of 10% in the cross rate of the US dollar against
the Australian dollar as at the reporting date would have decreased the consolidated loss after income tax by $763,000
(2020: $960,000).
Interest rate risk
The Group is exposed to changes in market interest rates as entities in the Group hold cash and cash equivalents.
The effective interest rates on financial assets are as follows:
Financial Assets
Cash and cash equivalents
Australian dollar cash deposits
Australian dollar interest rate
US dollar cash deposits
US dollar interest rate
2021
$’000
2020
$’000
29,888
0.17%
6,898
–%
15,502
0.48%
8,686
0.07%
The Company and Group do not have any interest-bearing financial liabilities. Trade and other receivables and payables do not
bear interest and are not interest rate sensitive.
A 10% change in average market interest rates would have changed reported loss after tax by approximately $5,100
(2020: $8,000).
Credit risk
The Group incurs credit risk from transactions with financial institutions. The total credit risk on cash and cash equivalents,
which have been recognised in the statement of financial position, is the carrying amount. The Company and its subsidiaries
do not retain any collateral or security to support transactions with financial institutions. Cash and cash equivalents are held
and transacted with National Australia Bank, Western Union and Primis bank.
Liquidity risk
The Group’s financial liabilities, comprising trade and other payables, are generally repayable within 1 – 2 months. The
maturity and availability of financial assets, comprising cash and cash equivalents and trade and other receivables, are
monitored and managed to ensure financial liabilities can be repaid when due.
Capital risk
The Group manages its capital, which is its equity, to ensure that the Group entities are able to meet their estimated
commitments as they fall due. In this regard, the Company raised additional equity capital during 2021, as described in
Note 10. Capital risk is impacted by the material uncertainties described in Note 1.
45
Neuren Pharmaceuticals Limited Annual Report 2021 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
16. CRITIC AL ACCOUNTING ESTIMATES AND A SSUMPTIONS
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing material
adjustment to the carrying amounts of assets and liabilities within the next financial year are as discussed below.
The Group’s research and development activities are eligible under the Australian R&D Tax Incentive. The Group has assessed
these activities and expenditure to determine which are likely to be eligible under the incentive scheme. For the period to
31 December 2021 the Group has recorded other revenue of $3.2 million (2020: $0.7 million).
The Group has assessed that all research and development expenditure to date does not meet the requirements for
capitalisation as an intangible asset because it is not yet probable that the expected future economic benefits that are
attributable to the asset will flow. The Group’s current assessment is that future expenditure will not meet that requirement
prior to the approval of a New Drug Application by the US Food and Drug Administration.
The Group is subject to income taxes in Australia because it is domiciled in that country. There are transactions and
calculations undertaken during the ordinary course of business for which the ultimate tax determination may be uncertain.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will
impact the current and deferred tax provisions in the period in which such determination is made.
Loan Funded Shares
The Group measures the fair value of loan funded shares with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The estimated fair value of the shares is determined using the Black-Scholes
valuation model, taking into account the terms and conditions upon which the instruments were granted. Some judgements
are made on the inputs into the valuation model, including the expected life and volatility.
46
Neuren Pharmaceuticals Limited Annual Report 2021 Independent Auditor’s Report
Grant Thornton New Zealand Audit Limited
L4, Grant Thornton House
152 Fanshawe Street
PO Box 1961
Auckland 1140
T +64 (09) 308 2570
www.grantthornton.co.nz
To the Shareholders of Neuren Pharmaceuticals Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Neuren Pharmaceuticals Limited (the “Company”) and its
subsidiaries (the “Group”) on pages 30 to 46 which comprise the consolidated statement of financial position as at
31 December 2021, and the consolidated statement of comprehensive income, consolidated statement of changes in
equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of the Group as at 31 December 2021 and of its financial performance and cash flows for the year then ended in accordance
with the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) issued by the New Zealand
Accounting Standards Board.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued by the New
Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current year. We have determined that there are no key audit matters to
communicate in our report.
Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
47
Neuren Pharmaceuticals Limited Annual Report 2021 Information Other than the Consolidated Financial Statements and Auditor’s Report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Directors’ Report (but does not include the consolidated financial statements and our auditor’s report thereon), which we
obtained prior to the date of this auditor’s report and the annual report which is expected to be made available to us after that
date.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
audit opinion or assurance conclusion thereon.
In connections with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements, or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Directors’ responsibilities for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial
statements in accordance with New Zealand equivalents to International Financial Reporting Standards issued by the New
Zealand Accounting Standards Board, and for such internal control as the Directors determine is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible on behalf of the Group for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs
(NZ) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the consolidated financial statements is located on the
External Reporting Board’s website at: https://www.xrb.govt.nz/standards/assurance-standards/auditing-standards/auditors-
responsibilities/audit-report-1/
Grant Thornton New Zealand Audit Limited
R Campbell
Auckland
23 February 2022
Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
48
Neuren Pharmaceuticals Limited Annual Report 2021
A D D I T I O N A L I N F O R M AT I O N
EQUIT Y SECURITIES HELD BY DIREC TORS A S AT 23 FEBRUARY 2022
Director
Trevor Scott
Dianne Angus
Patrick Davies
Jenny Harry
Jonathan Pilcher1
Interests in
Ordinary Shares
Interests in Loan
Funded Shares
Direct
Indirect
Indirect
1,000,000
2,589,784
30,000
–
–
–
–
220,940
29,663
398,207
1,500,000
–
–
–
–
1
Jon Pilcher has an interest in 1.5 million Loan Funded Shares held by Neuren Trustee Limited. As detailed in Note 10 to the
Financial Statements, the Loan Funded Shares are subject to vesting conditions and repayment of a loan amounting to
$1.84 per share before they can be transferred to Jon.
DIREC TORS OF SUBSIDIARY COMPANIES AT 31 DECEMBER 2021
Neuren Pharmaceuticals Inc.
Neuren Pharmaceuticals (Australia) Pty Ltd
Neuren Trustee Limited
Jon
Pilcher
Larry
Glass
Trevor
Scott
√
√
√
√
√
AUSTR ALIAN STOCK EXCHANGE DISCLOSURES
Neuren Pharmaceuticals Limited is incorporated in New Zealand under the Companies Act 1993.
The Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act, Australia, dealing with the acquisition
of shares (such as substantial holdings and takeovers).
Limitations on the acquisition of shares are imposed under New Zealand law are as follows:
(a) In general, securities in the Company are freely transferable and the only significant restrictions or limitations in relation
to the acquisition of securities are those imposed by New Zealand laws relating to takeovers and overseas investment.
(b) The New Zealand Takeovers Code creates a general rule under which the acquisition of 20% or more of the voting rights
in the Company or the increase of an existing holding of 20% or more of the voting rights of the Company can only occur
in certain permitted ways. These include a full takeover offer in accordance with the Takeovers Code, a partial takeover
in accordance with the Takeovers Code, an acquisition approved by an ordinary resolution, an allotment approved by an
ordinary resolution, a creeping acquisition (in certain circumstances), or compulsory acquisition of a shareholder holding
90% or more of the shares.
(c) The New Zealand Overseas Investment Act 2005 and Overseas Investment Regulations 2005 (New Zealand) regulate certain
investments in New Zealand by overseas interests. In general terms, the consent of the New Zealand Overseas Investment
Office may be required where an ‘overseas person’ acquires shares in the Company that amount to 25% or more of the
shares issued by the Company, or if the overseas person already holds 25% or more, the acquisition increases that holding.
49
Neuren Pharmaceuticals Limited Annual Report 2021 A D D I T I O N A L I N F O R M AT I O N
C O N T I N U E D
EQUIT Y SECURITIES INFORMATION
The Company has only one class of shares, being ordinary shares. Each ordinary share is entitled to one vote when a poll is
called; otherwise on a show of hands at a shareholder meeting every member present in person or by proxy has one vote.
There are no securities subject to escrow and there is no current on-market buy-back of securities.
The following information is based on share registry information processed up to and including 31 March 2022.
The number of ordinary shareholdings held in less than marketable parcels at 31 March 2022 was 405, holding 10,305
ordinary shares.
DISTRIBUTION OF SECURIT Y HOLDERS
Ordinary shares
Size of holding
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Number of
ordinary shares
90,071,999
26,035,247
4,316,199
4,619,890
922,341
%
71.51
20.67
3.43
3.67
0.73
125,965,676
100.00
Number
of holders
142
878
573
1,732
2,152
5,477
%
2.59
16.03
10.46
31.62
39.29
100.00
SUBSTANTIAL SECURIT Y HOLDERS
The following have filed substantial holding notifications:
Milford Asset Management Limited
Substantial holdings are based on the last notice lodged on the ASX.
Number held
Percentage
6,733,814
5.35%
50
Neuren Pharmaceuticals Limited Annual Report 2021 A D D I T I O N A L I N F O R M AT I O N
C O N T I N U E D
Twenty largest holders of ordinary shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
CAMERON RICHARD PTY LTD
STUART ANDREW PTY LTD
LINWIERIK SUPER PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ESSEX CASTLE LIMITED
SMITHLEY SUPER PTY LTD
HOBSON WEALTH CUSTODIANS LTD
MXB INVESTMENTS LLC
FIRST COLBYCO PTY LTD
SHARESIES NOMINEE LIMITED
DR TREVOR SCOTT
DR ROBIN LANCE CONGREVE
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
10 BOLIVIANOS PTY LTD
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
Total
Balance of share register
Total ordinary shares quoted on ASX
Unquoted loan funded shares held by Neuren Trustee Limited1
Total issued ordinary shares
Number of
ordinary shares
% of issued
share capital
14,473,054
12,475,013
9,417,997
5,432,260
2,667,146
2,639,643
2,592,919
2,367,144
2,148,000
1,595,901
1,330,000
1,032,854
1,011,875
1,000,000
991,637
926,986
913,170
821,336
754,116
631,525
65,222,576
60,743,100
125,965,676
3,000,000
128,965,676
11.49
9.90
7.48
4.31
2.12
2.10
2.06
1.88
1.71
1.27
1.06
0.82
0.80
0.79
0.79
0.74
0.72
0.65
0.60
0.50
51.78
48.22
100.00
1
Loan Funded Share Plan described in Note 10 to the Financial Statements.
UNLISTED SECURITIES
1,450,000 Employee Share Scheme options, with an exercise price of $3.46 and expiry date of 3 February 2026.
There are 4 holders of 100,001 and over.
51
Neuren Pharmaceuticals Limited Annual Report 2021 pharmaceuticals
NEUREN PHARMACEUTIC ALS LIMITED
Suite 201, 697 Burke Rd
Camberwell
Victoria 3124
Australia
Tel: +61 3 9092 0480
ABN: 72 111 496 130
ASX code: NEU
New Zealand Registered Office:
At the offices of Lowndes Jordan
Level 15 HSBC Tower
188 Quay Street
Auckland 1141
New Zealand
Share Registry:
Link Market Services Limited
Tower 4, 727 Collins Street
Docklands
Victoria 3008
Australia
Postal address:
Locked Bag A14
Sydney South NSW 1235
Tel: +61 1300 554 474
Fax: +61 2 9287 0303
www.neurenpharma.com