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 2
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
17 Board
18 Management Team
20 Corporate Governance
26 Consolidated Statement of Comprehensive Income
27 Consolidated Statement of Financial Position
28 Consolidated Statement of Changes in Equity
29 Consolidated Statement of Cash Flows
30 Notes to the Consolidated Financial Statements
45 Independent Auditor’s Report
48 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
Registration
Commercial rights
Trofinetide
NNZ-2591
Rett North
America
Rett Rest
of World
Fragile X
Phelan-
McDermid
Angelman
Pitt
Hopkins
Prader-Willi
NA:
RoW:
pharmaceuticals
pharmaceuticals
pharmaceuticals
Three key drivers of future value
1
2
Realise Neuren’s share of
trofinetide value in the
US through successful
commercialization of DAYBUE
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
Commercial
Transforming catalysts in 2023
✓ DAYBUE for Rett syndrome approved by FDA
✓ Priority Review Voucher awarded to Acadia
• First US commercial sale (end Apr 2023) - US$40m milestone payment
• Quarterly royalties on net sales
• Priority Review Voucher value one third share - estimated as US$33m
• Commercial partnerships ex-North America for Rett syndrome
Trofinetide
North
America
Trofinetide
Rest of World
• Initiate Prader-Willi syndrome Phase 2 trial
NNZ-2591
• Enrolment completion in Phelan-Mcdermid, Pitt Hopkins and
Angelman syndromes
• Phase 2 trial results, commencing with Phelan-Mcdermid syndrome
Development
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Neuren Pharmaceuticals Limited Annual Report 2022
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,
The recent approval by the US Food
and Drug Administration (FDA) of
DAYBUE™ as the first ever treatment for
Rett syndrome was the most important
milestone in Neuren’s history. As we
foreshadowed in our message to you
last year, the approval has transformed
our financial position and outlook,
placing us in a very strong position to
make the most of the opportunities
ahead as we strive to make a difference
to patients and families impacted by
neurodevelopmental disabilities.
Many people showed great
determination over the journey to
reach this historic milestone. The
greatest was shown by the Rett
syndrome community and we are
delighted for them. Ten years ago,
the Neuren team embarked on the
first ever multi-centre trial in Rett
syndrome and painstakingly created
the path forward with all stakeholders.
Our partner Acadia has done an
outstanding job executing the final
stage of development and the FDA
application and review process.
The broad approved label for DAYBUE
means that all people with Rett
syndrome aged 2 years and older can
be eligible for treatment. We are also
very pleased that Acadia is able to
launch DAYBUE so soon after approval,
made possible by the very extensive
preparations they made during the
FDA review process. We are confident
that they are very well placed for
successful commercialisation.
The next payment from Acadia is
US$40 million, payable following
the first commercial sale, which is
anticipated at the end of April 2023.
This will be followed by quarterly
royalties, plus potential milestone
payments of up to US$350 million
on achievement of a series of four
thresholds of total annual net sales,
plus Neuren’s one third share of the
market value of the Rare Pediatric
Disease Priority Review Voucher
awarded to Acadia by the FDA. In
the meantime, we are advancing
discussions with potential partners for
the registration and commercialisation
of trofinetide outside North America.
Our revenue from trofinetide partners
will flow through to pre-tax profit,
as no royalties or similar costs are
payable by Neuren.
The first in a series of results from
the Phase 2 trials of our second drug
NNZ-2591 in four neurodevelopmental
disorders are anticipated before the
end of 2023. The number of potential
patients targeted is more than five
times the number for Rett syndrome
and Neuren retains global rights,
which means NNZ-2591 has the
potential to generate larger value
for shareholders than trofinetide.
We are now carefully evaluating
all options to maximize this value,
preparing actively for Phase 3
studies while remaining receptive to
partnering alternatives.
Neuren’s market capitalisation at
31 March 2023 was 3.6 times higher
than at the end of 2021, against
the backdrop of a bear market for
healthcare stocks. This resulted in
promotion into the S&P/ASX 300 index
in September 2022, with the S&P/ASX
200 becoming a potential prospect
in the near term. The institutional
audience for our investor relations
activities is now much broader and
Neuren is now covered actively by 6
broker analysts.
The transformation of Neuren is
just beginning, and the Board is
committed to maximizing value for
our shareholders by maintaining
a robust balance sheet that can
facilitate the pursuit of all value-adding
opportunities to their fullest potential.
Finally, we would like to thank
the Neuren team and Board, the
patient communities and our many
development partners for their
dedication and achievements over the
last year. We anticipate that the coming
year can be even more productive.
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 2022 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 -BREAKING 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 stem from
problems in brain development which lead to a wide range
of serious issues affecting nearly every aspect of life. This
has a severe life-long impact on 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
The US Food and Drug Administration (FDA) and European
Medicines Agency (EMA) have both granted Orphan Drug
designation for trofinetide in Rett syndrome and Fragile X
syndrome and for NNZ-2591 in each of Phelan-McDermid,
Angelman and Pitt Hopkins syndromes. The FDA has also
granted orphan drug designation for Prader-Willi syndrome.
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.
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Neuren Pharmaceuticals Limited Annual Report 2022 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
FDA approval of DAYBUE™ (trofinetide)
In March 2023, Neuren’s partner for trofinetide in North
America, Acadia Pharmaceuticals (NASDAQ: ACAD), received
US Food and Drug Administration (FDA) approval of
DAYBUETM (trofinetide) for the treatment of Rett syndrome
in adult and pediatric patients two years of age and older.
Acadia expects DAYBUE to be available by the end of April
2023. DAYBUE is the first and only approved treatment for
Rett syndrome.
The FDA approval for DAYBUE was supported by pivotal
efficacy from the positive LavenderTM Phase 3 trial,
supportive safety and efficacy data from LilacTM open-
label extension trial, Neuren’s positive Phase 2 trial and
the DaffodilTM safety and pharmacokinetic trial in children
aged 2-5 years.
4
Neuren Pharmaceuticals Limited Annual Report 2022 O P E R AT I N G R E V I E W
C O N T I N U E D
Positive Lavender Phase 3 results
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
Sustained and continued improvement observed in Lilac
Sustained and continued improvement observed in Lilac
LAVENDER (12 weeks)
Placebo-controlled
LILAC (40 weeks)
Open-label extension
RSBQ
CGI-I
Dose Group
Trofinetide
Placebo
Dose Group
Trofinetide
Placebo
e
n
i
l
e
s
a
B
e
n
i
l
e
s
a
B
r
e
d
n
e
v
a
L
RSBQ mean change
(12 wks)
-5.1
-1.7
CGI-I Score
(at 12 wks)
3.5
3.8
e
n
i
l
e
s
a
B
c
a
l
i
L
w
e
N
Dose Group
Trofinetide
Trofinetide
Dose Group
Trofinetide
Trofinetide
RSBQ mean change from Lavender baseline
to end of Lilac (52 wks)
-7.3
n/a
-7.0
RSBQ scores improved
≥7 points from
Lavender baseline
CGI-I Score
(at 40 wks)
3.1
n/a
3.2
CGI-I improvements:
v Trofinetide group:
0.5 improvement in Lavender,
then 0.9 improvement in Lilac
v Trofinetide crossovers:
0.8 improvement in Lilac
Source: Acadia presentation (Acadia Corporate Presentation (4Q22 Earnings), Lavender Study Results (acadia.com))
RSBQ: n=161 for Lavender at 12 weeks; n=88 for Lilac at 40 weeks.
Source: Acadia presentation (Acadia Corporate Presentation (4Q22 Earnings), Lavender Study Results (acadia.com))
CGI-I: n=163 for Lavender at 12 weeks; n=91 for Lilac at 40 weeks. CGI-I uses a 7-point Likert scale; a score of 4 = no improvement; >4 = worsening and <4 = improvement.
RSBQ: n=161 for Lavender at 12 weeks; n=88 for Lilac at 40 weeks.
CGI-I: n=163 for Lavender at 12 weeks; n=91 for Lilac at 40 weeks. CGI-I uses a 7-point Likert scale; a score of 4 = no improvement; >4 = worsening
and <4 = improvement.
22
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Neuren Pharmaceuticals Limited Annual Report 2022
O P E R AT I N G R E V I E W
C O N T I N U E D
Consistent safety and tolerability findings
Consistent safety and tolerability findings
Diarrhea
Vomiting
LAVENDER (12 weeks)
Placebo-controlled
LILAC (40 weeks)
Open-label extension
Adverse Events (AEs) >10%
observed in Trofinetide group
80.7%
(97% Mild and Moderate)
27.0%
(96% Mild and Moderate)
Diarrhea
Vomiting
COVID-19
Adverse Events (AEs)
>10% observed in Lilac
74.7%
(96% Mild and Moderate)
28.6%
(100% Mild and Moderate)
11%
Discontinuations due to AE of diarrhea: 21%
No new safety or tolerability findings in Lilac
Source: Acadia presentation (Acadia Corporate Presentation (4Q22 Earnings), Lavender Study Results (acadia.com))
Further information about DAYBUE, including prescribing information can be accessed at www.DAYBUE.com
Source: Acadia presentation (Acadia Corporate Presentation (4Q22 Earnings), Lavender Study Results (acadia.com))
23
Neuren’s attractive economics from the Acadia partnership
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. Under the terms of the agreement, the development and commercialisation of trofinetide in
North America is fully funded by Acadia. In October 2022, Neuren received from Acadia a milestone payment of US$10 million
following the acceptance of the New Drug Application (NDA) for review by the FDA. The next milestone payment to Neuren is
US$40 million, payable following the first commercial sale of trofinetide in the United States, which is anticipated at the end of
April 2023.
Neuren is eligible to received ongoing royalties on net sales of trofinetide in North America, plus milestone payments of up to
US$350m on achievement of a series of four thresholds of total annual net sales, plus one third of the market value of the Rare
Pediatric Disease Priority Review Voucher that was awarded to Acadia by the FDA upon approval of the NDA, with one third
share estimated by Neuren as US$33 million.
No royalties or similar costs are payable by Neuren to third parties, which means Neuren’s revenue from Acadia will flow
through to pre-tax profit. The royalty rates and sales milestone payments are related to the total amount of annual net sales
in trofinetide in all indications, as set out in the following tables:
Tiered royalty rates (% of net sales)1
Sales Milestone payments1
Annual Net Sales
≤US$250m
>US$250m, ≤US$500m
>US$500m, ≤US$750m
>US$750m
Rates
Net Sales in one calendar year
US$m
10%
12%
14%
15%
≥US$250m
≥US$500m
≥US$750m
≥US$1bn
50
50
100
150
1
Royalty rates payable on the portion of annual net sales that fall within the applicable range. Each sales milestone payment is payable once only.
6
Neuren Pharmaceuticals Limited Annual Report 2022 O P E R AT I N G R E V I E W
C O N T I N U E D
Currently there are approximately 4,500 patients diagnosed with Rett syndrome in the US. Based on published prevalence
studies, Neuren estimates that the total number of potential patients in the US may be up to 10,000.
Acadia has projected that DAYBUE access will be covered by Medicaid for 60% of patients and by commercial health insurance
for 30% of patients. It is anticipated that there will be nominal or zero out-of-pocket expense for families. The list price of
DAYBUE will be $21.10 per mL and Acadia expects the average annual net realised cost per patient will be approximately
US$375,000. This includes assumptions for the average weight of the expected patient population, compliance rates to therapy
and mandatory government discounts.
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 Patients
Potential patients1
Patients currently identified
Europe
Japan
Israel
China urban
Other Asia
13,000
4,000
3,000
1,000
300
200
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
Neuren intends to pursue registration and commercialisation of trofinetide through partners and is currently advancing
discussions with a number of third parties.
i
About Rett syndrome
Rett syndrome is a seriously debilitating and life-threatening neurological disorder. 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.
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Neuren Pharmaceuticals Limited Annual Report 2022 O P E R AT I N G R E V I E W
C O N T I N U E D
NNZ-2591 FOR MULTIPLE NEURODEVELOPMENTAL DISORDERS
In July and August 2022, Neuren announced the commencement of Phase 2 clinical trials of its second drug candidate NNZ-
2591 for Phelan-McDermid syndrome (PMS), Angelman syndrome (AS) and Pitt Hopkins syndrome (PTHS) after receiving
in March 2022 approval from the FDA for Investigational New Drug (IND) applications to conduct the trials. In December
2022, Neuren submitted an IND application to the FDA for approval to proceed with a Phase 2 trial in Prader-Willi syndrome
(PWS) and received approval from the FDA in January 2023. There are currently no approved therapies for these debilitating
neurodevelopmental disorders, other than human growth hormone to treat some aspects of PWS.
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
US1
Europe1
Potential patients
Phelan-McDermid
SHANK3
1/8,000 to 1/15,000 males and females
Angelman
Pitt Hopkins
UBE3A
TCF4
1/12,000 to 1/24,000 males and females
1/34,000 to 1/41,000 males and females
Prader-Willi
15q11-q13
1/10,000 to 1/30,000 males and females
22,000
14,000
7,000
13,000
56,000
1
2
Estimates derived by applying the mid-point of the prevalence estimate range to the populations under 60 years
Asia comprises Japan, Korea, Taiwan, Israel and urban populations of China and Russia
28,000
18,000
9,000
16,000
Asia1, 2
81,000
52,000
25,000
47,000
71,000
205,000
Phase 2 trials in AS, PMS and PTHS – results expected from H2 2023
The open label Phase 2 trials are each enrolling up to 20 children to examine safety, tolerability, pharmacokinetics and efficacy
over 13 weeks of treatment with NNZ-2591. All subjects receive NNZ-2591 as an oral liquid dose daily, with escalation in two
stages up to the target dose during the first 6 weeks of treatment, subject to independent review of safety and tolerability data.
The trials are enrolling subjects in three age groups. Safety and tolerability data in the oldest age group must be independently
reviewed before proceeding with dosing in the second age group and then safety and tolerability data in the second age group
must be independently reviewed before proceeding with dosing in the youngest age group. The study begins with 4 weeks of
observation to thoroughly examine baseline characteristics prior to treatment, against which safety and efficacy are assessed
for each child. This is followed by the treatment period of 13 weeks. A follow-up assessment is made 2 weeks after the end
of treatment.
n subjects
Age range
Location
Angelman
Phelan-McDermid
Pitt Hopkins
Up to 20
3 to 17
Up to 20
3 to 12
Up to 20
3 to 17
(Sequential enrolment in three age groups following DSMC review)
Australia
US
US
Baseline observation
NNZ-2591 treatment
Follow-up
Up-titration
Week 0
Week 4
Week 10
Week 17
Week 19
Phase 3 preparation
Non-clinical toxicity studies and optimisation of drug product and drug substance manufacturing
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Neuren Pharmaceuticals Limited Annual Report 2022 O P E R AT I N G R E V I E W
C O N T I N U E D
In December 2022, Neuren announced that the first subject in the oldest age group had completed treatment in the AS trial
and in the PMS trial. Each subject was successfully escalated up to the target dose following safety and tolerability reviews
by an independent data and safety monitoring committee (DSMC). No serious adverse events were reported and no dose
modifications were required. Most of the adverse events reported were mild and not considered to be related to study drug.
There were no clinically relevant observations in safety laboratory measurements or cardiac tests.
A series of top-line results announcements from the trials are anticipated, commencing with Phelan-McDermid syndrome
in H2 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.
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.
9
Neuren Pharmaceuticals Limited Annual Report 2022 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
10
8
8
Neuren Pharmaceuticals Limited Annual Report 2022
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
30
)
g
(
s
s
a
m
t
a
F
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)
11
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 2022
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%
12
Neuren Pharmaceuticals Limited Annual Report 2022 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
Correction in fmr1 knockout mice after
treatment with trofinetide (NNZ-2566)
Blood-brain barrier penetration confirmed
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.
13
Neuren Pharmaceuticals Limited Annual Report 2022 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.
14
Neuren Pharmaceuticals Limited Annual Report 2022
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
15
Neuren Pharmaceuticals Limited Annual Report 2022
O P E R AT I N G R E V I E W
C O N T I N U E D
FINANCE
Summary Financials
Revenue from contracts with customers
R&D Tax Incentive
Interest income
Other income (Government cash-flow boost)
Foreign exchange gain
Total income
Research & Development
Corporate & Administration
Loss on financial derivatives measured at fair value
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
2022
$’m
14.5
0.9
0.4
–
1.2
17.0
(12.7)
(3.4)
(0.7)
–
0.2
3.6
–
(0.2)
40.2
2021
$’m
–
3.2
–
–
0.4
3.6
(9.5)
(1.9)
–
–
(7.8)
(10.0)
22.2
0.4
36.8
The consolidated financial statements are presented on pages 26 to 44. All amounts in the consolidated Financial Statements
are shown in Australian dollars unless otherwise stated.
The consolidated profit after tax attributable to equity holders of the Company for the year ended 31 December 2022 was
$0.2 million compared with a loss of $7.8 million in 2021. Revenue of $14.5 million was received under the licence agreement
with Acadia (2021: nil) and foreign exchange gains were $1.2 million (2021: $0.4 million). These were offset by an increase of
$3.2 million in research and development costs, due to higher expenditures in 2022 for the NNZ-2591 Phase 2 clinical trials
and the foundational work to prepare for Phase 3 development of NNZ-2591 across multiple indications. There was also an
increase in corporate and administrative costs of $1.5 million, mainly due to share-based payments and higher employee
benefits expense, reflecting some expansion for the NNZ-2591 program. In addition, a loss of $0.7 million on the fair value of
outstanding forward contracts to sell Australian dollars and buy US dollars was recognised at 31 December 2022. Prudent
control of expenditure continues to be an important principle in Neuren’s operations and financing.
The basic earnings per share for 2022 was $0.001 (2021: loss per share of $0.066), based on a weighted average number of
shares outstanding of 125,965,676 (2021: 117,770,052).
Cash reserves at 31 December 2022 were $40.2 million (2021: $36.8 million). Net cash received from operating activities was
$3.6 million, compared with net cash used in operating activities of $10.0 million in 2021. The increase of $13.6 million was due
to the receipt of the first milestone payment from Acadia of $15.9 million (2021: nil), offset by higher payments for employees
and directors of $2.8 million (2021: $1.8 million) and a lower receipt under the R&D Tax Incentive program of $1.4 million (2021:
$2.5 million). Net cash from financing activities for 31 December 2022 was $22.2 million lower than 2021, when $22.2 million
was received for the issue of new ordinary shares in a share placement and share purchase plan.
No dividends were paid in the year, or in the prior year and the Directors recommend none for the year.
16
Neuren Pharmaceuticals Limited Annual Report 2022
B O A R D
PATRICK DAVIES
Non-Executive Chair
B EC, MBA
Patrick joined the Neuren Board in 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 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 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 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.
MR JOE BA SILE
Non-Executive Director
FIPA, FFA
Joe joined the Neuren Board in March 2023. He has held a number of executive roles in the pharmaceutical industry for
over 30 years, most recently as Group CFO at iNova Pharmaceuticals based in Singapore and prior to that with Novartis
in senior Finance leadership and Commercial Sales leadership roles in Australia and Asia.
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JON PILCHER
Chief Executive Officer/Managing Director
BSc (Hons), FCA
Jon joined Neuren in 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.
LIZ A SQUIRES, M.D.
Chief Medical Officer
Liza joined Neuren in 2022 and has medical oversight of Neuren’s development programs, as well as a leading role in
clinical and regulatory strategy. Liza is a board certified physician in General Pediatrics and Neurology with Special
Competence in Child Neurology. Over the past 20 years, she has held positions of increasing responsibilities in
both early and late-stage drug development at Johnson and Johnson, Shire Pharmaceuticals, Lumos Pharma, Aevi
Genomic Medicine and Origin Biosciences. She has led and contributed to multiple New Drug Applications resulting in
global regulatory approvals and has extensive experience in orphan drug development. Liza received her B.S. from the
University of Michigan and M.D. from Michigan State University. She trained in general pediatrics at Yale University and
did her residency in Child Neurology at Massachusetts General Hospital.
DR NANC Y JONES
Vice President, Clinical Development
PhD
Nancy joined Neuren in 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.
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JAMES SHAW
Vice President, Clinical & Regulatory Operations
BSc (Hons), MBA
James joined Neuren in 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.
DR CLIVE BLOWER
Vice President, Product Development
BSc (Hons), PhD
Clive joined Neuren in 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 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 joined Neuren in 2022 and 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 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.
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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. At 31 December 2022 there were
three male and two female directors. Four of the nine senior
executives were female. The Group had fifteen employees
and consultants, of which ten were 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 2022.
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 2022.
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.
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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.
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The Board is highly engaged in the oversight and direction of the business. Five members served during the year to
31 December 2022, as set out in the table below. Details of the relevant skills, experience and expertise of each Board
member are set out on page 17 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
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 is 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. INSTIL A CULTURE OF ACTING L AWFULLY, ETHIC ALLY AND RESPONSIBLY
In accordance with Recommendation 3.1, the Group has articulated its values, which are disclosed on the Company website
– 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
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– 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 website
(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 2022, 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
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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 2023.
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). 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 2022
was conducted as a hybrid meeting, with participation
both in-person and by electronic means.
All resolutions at the Company’s Annual Shareholders’
Meeting in 2022 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).
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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 2022.
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
twice during 2022.
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 and/or a loan funded share plan. 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.
25
Neuren Pharmaceuticals Limited Annual Report 2022 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 2
Revenue from contracts with customers
Other income
Total income
Research and development costs
Corporate and administrative costs
Loss on financial derivatives measured at fair value through profit or loss
Profit/(loss) before income tax
Income tax
Profit/(loss) after income tax
Other comprehensive income, net of tax
Amounts which may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total comprehensive income/(loss) for the year
Profit/(loss) after tax attributable to Equity holders of the Company:
Total comprehensive income/(loss) attributable to Equity holders of the
Company:
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
The notes on pages 30 to 44 form part of these consolidated financial statements.
Note
4
4
6
7
7
2022
$’000
14,553
2,480
17,033
(12,712)
(3,437)
(700)
184
–
184
2
186
184
186
$0.001
$0.001
2021
$’000
–
3,636
3,636
(9,516)
(1,914)
–
(7,794)
–
(7,794)
(4)
(7,798)
(7,794)
(7,798)
($0.066)
($0.066)
26
Neuren Pharmaceuticals Limited Annual Report 2022 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 2
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
Derivative liabilities
Total current liabilities
Total liabilities
EQUITY
Share capital
Share option reserve
Currency translation reserve
Accumulated deficit
Total equity attributable to equity holders
TOTAL LIABILITIES AND EQUITY
The notes on pages 30 to 44 form part of these consolidated financial statements.
Note
2022
$’000
2021
$’000
8
9
10
11
40,180
3,066
43,246
21
21
36,783
3,261
40,044
12
12
43,267
40,056
978
700
1,678
1,678
803
–
803
803
12
167,740
3,222
(10,680)
167,578
1,234
(10,682)
(118,693)
(118,877)
41,589
43,267
39,253
40,056
For and on behalf of the Board of Directors who authorised the issue of these consolidated financial statements on 23 February
2023.
Patrick Davies
Non-Executive Chair
Dr Trevor Scott
Director
27
Neuren Pharmaceuticals Limited Annual Report 2022 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 2
Equity as at 1 January 2021
Shares issued in capital raising
Shares issued in share purchase plan
Share issue costs
Share based payments
Transactions with owners
Loss after income tax
Other comprehensive loss
Total Comprehensive income for the year
Share
Capital
$’000
Share
Option
Reserve
$’000
Currency
Translation
Reserve
$’000
Accumulated
Deficit
$’000
145,567
394
(10,678)
(111,083)
20,000
3,281
(1,270)
–
22,011
–
–
–
–
–
–
840
840
–
–
–
–
–
–
–
–
–
(4)
(4)
–
–
–
–
–
(7,794)
–
(7,794)
Equity as at 31 December 2021
167,578
1,234
(10,682)
(118,877)
Reversal of share issue costs
Share based payments
Transactions with owners
Profit after income tax
Other comprehensive income
Total Comprehensive income for the year
162
–
162
–
–
–
–
1,988
1,988
–
–
–
–
–
–
–
2
2
–
–
–
184
–
184
Total
Equity
$’000
24,200
20,000
3,281
(1,270)
840
22,851
(7,794)
(4)
(7,798)
39,253
162
1,988
2,150
184
2
186
Equity as at 31 December 2022
167,740
3,222
(10,680)
(118,693)
41,589
The notes on pages 30 to 44 form part of these consolidated financial statements.
28
Neuren Pharmaceuticals Limited Annual Report 2022 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 2
Cash flows from operating activities:
Receipts from licence agreement
Receipts from Australian R&D Tax Incentive
Interest received
GST refunded
Payments for employees and directors
Payments to other suppliers
Net cash flow received from/(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 flow received from/(used in) financing activities
Net increase 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:
Profit/(loss) after income tax
Non-cash items requiring adjustment:
Depreciation of property, plant and equipment
Loan funded share payments expense
Foreign exchange loss/(gain)
Loss on financial assets
Changes in working capital:
Trade and other receivables
Trade and other payables
Net cash received from/(used in) operating activities
The notes on pages 30 to 44 form part of these consolidated financial statements.
Note
2022
$’000
2021
$’000
12
15,921
1,393
188
252
(2,814)
(11,341)
3,599
(19)
(19)
–
(2)
(2)
3,578
(181)
36,783
40,180
–
2,521
54
372
(1,756)
(11,161)
(9,970)
(10)
(10)
23,281
(1,106)
22,175
12,195
400
24,188
36,783
184
(7,794)
10
1,988
184
700
194
339
3,599
8
840
(404)
–
(2,506)
(114)
(9,970)
29
Neuren Pharmaceuticals Limited Annual Report 2022 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 2
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 2023.
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 2022
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 2022 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 18.
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 profit after tax of
$0.2 million for the year ending 31 December 2022 and had
positive operating cash flows of $3.6 million for the year
ended 31 December 2022. The Group had net assets as at
31 December 2022 of $41.6 million, including cash balances
and receivables of $43.2 million.
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.
30
Neuren Pharmaceuticals Limited Annual Report 2022 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)
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 are no changes in accounting policies for the year
ended 31 December 2022.
Standards, interpretations and amendments
to published standards that are not yet effective
At the date of authorisation of these consolidated
financial statements, several new, but not yet effective,
Standards and amendments to existing Standards, and
Interpretations have been published by the IASB. None of
these Standards or amendments to existing Standards have
been adopted early by the Group. Management anticipates
that all relevant pronouncements will be adopted for
the first period beginning on or after the effective date of
the pronouncement. New Standards, amendments and
Interpretations not adopted in the current year have not
been disclosed as they are not expected to have a material
impact on the Group’s consolidated financial statements.
(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.
All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions
between members of the Group are eliminated in full on
consolidation. When necessary, amounts reported by
subsidiaries have been adjusted to conform with the group’s
accounting policies.
(c) Foreign Currency Translation
(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 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 a separate component of 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.
31
Neuren Pharmaceuticals Limited Annual Report 2022 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
(ii) Milestone payments – This is variable consideration that
POLICIES (CONTINUED)
(d) Revenue
NZ IFRS 15 establishes a five-step model to account for
revenue arising from contracts with customers and requires
that revenue be recognised at an amount that reflects the
consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer.
The five-step process is as follows:
– identify the contract(s) with a customer;
– identify the performance obligations in the contract(s);
– determine the transaction price;
– allocate the transaction price to the performance
obligations in the contract(s); and
– recognise revenue when (or as) the performance
obligations are satisfied.
Licence revenue
Licence revenues in connection with licensing of the Group’s
intellectual property to customers are recognised as a right
to use the entity’s intellectual property as it exists at the
point in time at which the licence is granted. This is because
the contracts for the licence of intellectual property
are distinct and do not require, nor does the customer
reasonably expect, that the Group will undertake further
activities that significantly affect the intellectual property
to which the customer has rights.
Although the Group is entitled to sales-based royalties from
any eventual sales of goods and services to third parties
using the intellectual property transferred, these royalty
arrangements do not of themselves indicate that the
customer would reasonably expect the Group to undertake
such activities, and no such activities are undertaken or
contracted in practice. Accordingly, the promise to provide
rights to the Group’s intellectual property is accounted for
as a performance obligation satisfied at a point in time.
The following consideration is received in exchange for
licences of intellectual property:
(i) Up-front payments - These are fixed amounts and are
recognised at the point in time when the Group transfers
the intellectual property to the customer.
is contingent on the customer reaching certain clinical,
regulatory or commercial targets in relation to the
intellectual property licenced. Variable consideration
is estimated using the most likely amount method,
variable consideration is constrained such that amounts
are only recognised when it is highly probable that
a significant reversal in the amount of cumulative
revenue recognised will not occur when the uncertainty
associated with the variable consideration (that is,
the customer meeting the conditions) is subsequently
resolved. Milestone payments that are not in control
of the Group, such as regulatory approvals, are not
considered highly probable of being achieved until those
approvals are received.
(iii) Sales-based royalties – Licenses of intellectual property
can include royalties, which are variable consideration
that are based on the sale of products that are produced
using the intellectual property. The specific exception
to the general requirements of estimating variable
consideration for sales or usage-based royalties
promised in a licence of intellectual property is applied.
The exception requires such revenue to be recognised
at the later of when (a) subsequent sales or usage occurs
and (b) the performance obligation to which some or
all of the sales-based or usage-based royalty has been
allocated is satisfied (or partially satisfied).
Grants
Grant income is 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 there is
reasonable assurance that the grant will be received and all
attached conditions will be complied with.
Research and development tax incentives
Other income from the Australian government Research
and Development tax incentive (RDTI) program is
recognised when there is reasonable assurance that the tax
incentive will be received and all attached conditions will be
complied with. The research and development activities and
expenditure are assessed to determine eligibility under the
RDTI program.
Interest income
Interest income is recognised as it is earned 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.
32
Neuren Pharmaceuticals Limited Annual Report 2022 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)
(f) Income tax
The income tax expense or benefit 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, adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and unused
tax losses.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to apply
when the assets are realised 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 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.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
the temporary differences will reverse in the foreseeable
future and 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 tested for impairment if an
indicator of impairment exists. 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 of the asset or the cash-generating unit to
which the asset belongs exceeds the recoverable amount,
being the higher of its fair value less costs of disposal and its
value in use.
(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.
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.
(l) 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.
33
Neuren Pharmaceuticals Limited Annual Report 2022 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)
Share-based payments
Neuren operates a loan funded share plan and share option
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 the share option reserve 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. It recognises the impact of
these revisions, 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.
(m) 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.
(n) 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 Group has transferred its rights to receive
cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material
delay to a third party under a ‘pass-through’ arrangement;
and either (a) the Group has transferred substantially all
the risks and rewards of the asset, or (b) the Group has
neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of
the asset.
When the Group has transferred its rights to receive cash
flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has
retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially
all of the risks and rewards of the asset, nor transferred
control of the asset, the Group continues to recognise
the transferred asset to the extent of its continuing
involvement. In that case, the Group also recognises
an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects
the rights and obligations that the Group has retained.
34
Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration that the Group could be required
to repay.
A financial liability is derecognised when it is extinguished,
i.e. the obligation is discharged, cancelled or expired.
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).
In the periods presented the corporation does not have any
financial assets categorised as FVTPL or FVOCI.
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
cost or finance income, 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
and trade receivables fall into this category of
financial instruments.
Neuren Pharmaceuticals Limited Annual Report 2022 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)
Trade and other payables
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.
Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into
and subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as
financial liabilities when the fair value is negative. Gains or losses on derivative financial instruments are recognised in the
profit or loss.
3. SEGMENT INFORMATION
The Group has a single reportable 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.
4. REVENUE
Disaggregation of revenue from contracts with customers
The Group derives revenue from the sale and transfer of goods and services at a point in time under the following major
business activities:
Revenue from contracts with customers
Licences of intellectual property - at a point in time
All revenue from licences of intellectual property is from the United States.
Other income
Interest income
Australian R&D tax incentive
Net foreign currency gains
Total other income
2022
$’000
2021
$’000
14,553
–
391
864
1,225
2,480
41
3,197
398
3,636
The net foreign currency gain of $1.2 million includes a $1.4 million gain on the milestone revenue from Acadia, offset by a loss
on the translation for reporting purposes of the Group’s US dollar cash balances into Australian dollars.
35
Neuren Pharmaceuticals Limited Annual Report 2022
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C O N T I N U E D
5. EXPENSES
Profit/(loss) 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
Other
Consultants - share based payments
2022
$’000
2021
$’000
10
10
70
70
1,607
153
34
868
2,662
732
38
126
896
8
8
66
66
1,093
91
26
611
1,821
498
23
229
750
994
–
In the comparative figures, 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.
6. INCOME TA X
Income tax expense
Current tax expense
Deferred tax expense
Numerical reconciliation of income tax to prima facie tax receivable:
Profit / (Loss) before income tax
Tax at applicable rates 25.0% (2021: 26.0%)
Non-taxable Australian R&D tax incentive income
Non-deductible expenses for R&D incentive
Non-deductible share option expenses
Non-deductible loss in fair value of derivative
Other non-assessable income
Utilisation of previously unrecognised tax losses
Deductible temporary differences and tax losses for which no deferred tax asset was recognised
Income tax expense
36
2022
$’000
2021
$’000
–
–
–
184
46
(216)
497
497
175
(68)
(946)
15
–
–
–
–
(7,794)
(2,026)
(831)
1,973
218
–
–
–
666
–
Neuren Pharmaceuticals Limited Annual Report 2022 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. INCOME TA X (CONTINUED)
Unrecognised deferred tax asset
Deferred tax is recognised on the basis there is probable realisation through future profits. The future income tax benefit of
tax losses and other deferred tax assets in relation to temporary timing differences, have therefore not been recognised at
31 December 2022.
2022
Patents
Capital raising costs
Employee benefits
Unrealised foreign exchange
Other temporary differences
Deferred tax not recognised
Net deferred tax asset
2021
Patents
Capital raising costs
Employee benefits
Other temporary differences
Deferred tax not recognised
Net deferred tax asset
Opening
balance
$’000
Recognised in
profit or loss
$’000
Closing
balance
$’000
(217)
(403)
(76)
–
(10)
(706)
706
–
(208)
(234)
(55)
(4)
(501)
501
–
34
127
(16)
(177)
47
15
(15)
–
(9)
(169)
(21)
(6)
(205)
205
–
(183)
(276)
(92)
(177)
37
(691)
691
–
(217)
(403)
(76)
(10)
(706)
706
–
2022
$’000
2021
$’000
Gross tax losses for which no deferred tax asset has been recognised (a)
106,115
110,750
(a) Of these gross tax losses, $62.6 million (2021: $63.3 million) relates to New Zealand tax losses, which are unlikely to be
utilised unless future taxable income is generated in New Zealand. The movement is due to the New Zealand tax losses
being translated at the closing foreign exchange rate at each reporting date.
There are no franking credits available for use as at 31 December 2022 (2021: nil).
7. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the year attributable to the equity holders of the company by
the weighted average number of ordinary shares on issue during the year excluding shares held as treasury stock.
Diluted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares
that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
Earnings/(loss) after income tax attributable to equity holders (basic) - ($'000)
Weighted average shares outstanding (basic) - (No.)
Basic earnings/(loss) per share
2022
2021
184
125,965,676
$0.001
(7,794)
117,770,052
($0.066)
Earnings/(loss) after income tax attributable to equity holders (diluted) - ($'000)
Weighted average shares outstanding (diluted) - (No.)
Diluted earnings/(loss) per share
184
128,908,995
$0.001
(7,794)
118,524,002
($0.066)
37
Neuren Pharmaceuticals Limited Annual Report 2022 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
8. C ASH AND C ASH EQUIVALENTS
Cash
Demand and short-term deposits
9. TR ADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Interest receivables
Prepayments
Australian R&D tax incentive
2022
$’000
2,304
37,876
40,180
2022
$’000
–
17
207
1,977
865
3,066
2021
$’000
6,912
29,871
36,783
2021
$’000
7
21
3
1,837
1,393
3,261
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 including historical experience, external
indicators and forward-looking information to calculate the expected credit losses.
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 (2021: nil).
10. TR ADE AND OTHER PAYABLES
Trade payables
Accruals
Employee benefits
2022
$’000
258
267
453
978
2021
$’000
245
209
349
803
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 goods or services received but not
invoiced at each reporting date.
11. DERIVATIVES
Current derivative liabilities
Forward exchange contracts
2022
$’000
2021
$’000
700
–
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Neuren Pharmaceuticals Limited Annual Report 2022 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. SHARE C APITAL
Issued Share Capital
Ordinary shares on issue at beginning of year
Shares issued in private placement
Share issued in Share Purchase Plan
Share issue expenses - issue costs
2022
Shares
2021
Shares
2022
$’000
2021
$’000
128,965,676
–
–
–
117,608,108
9,756,098
1,601,470
–
128,965,676
128,965,676
167,578
–
–
162
167,740
145,567
20,000
3,281
(1,270)
167,578
At 31 December 2022 125,965,676 ordinary shares are quoted on the ASX, and 3,000,000 unquoted ordinary shares
(31 December 2021: 3,000,000 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
During the year ended 31 December 2022 $2.0 million (31 December 2021: $0.8 million) was recognised in share-based
payments expense.
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.
All loan funded shares under the plan during the year ended 31 December 2022 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 first vesting condition (i)
was met in September 2022.
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 the relevant period.
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Neuren Pharmaceuticals Limited Annual Report 2022 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. SHARE C APITAL (CONTINUED)
Movements in the number of Loan Funded Shares were as follows:
Outstanding at 31 December 2021
Outstanding at 31 December 2022
Loan Funded
Shares
Weighted
Average
Exercise Price
Exercisable
Weighted
Average
Exercise Price
3,000,000
3,000,000
$1.84
$1.84
–
1,200,000
–
$1.84
The exercise price for 3.0 million Loan Funded Shares is $1.84 per share.
Options to acquire ordinary shares
During the year ended 31 December 2022, options to acquire 2,200,000 ordinary shares were issued to employees and
consultants. Options to acquire ordinary shares vest subject to remaining an employee or consultant if and when the following
non-market performance vesting conditions are met:
950,000 share
options
500,000 share
options
750,000 share
options
i.
ii.
on acceptance by the US Food and Drug Administration of the filing of a New
Drug Application for trofinetide
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. 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
–
40%
–
60%
40%
60%
40%
20%
40%
Each of these vesting conditions shall be tested separately from the other vesting conditions. The first vesting condition (i) was
met in September 2022.
The estimated fair value of the options to acquire ordinary 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, the risk-free interest rate, a dividend yield of 0% and an expected life of 2.75 years. The estimated future volatility
of the share price was derived by analysing the historic volatility of the share price on a daily basis during the two years prior
to the issue date, as this period is reflective of the anticipated volatility in the future.
Details of the options to acquire ordinary shares issued during the year ended 31 December 2022, the estimated fair value and
variable inputs into the valuation model are shown in the table below. The exercise price for the options to acquire ordinary shares
is the 5-day weighted average price at which the shares were traded on the ASX in the 5 days preceding the issue of the options.
Number of shares under option
Issue date
Exercise price per share option
Share price on date of valuation
Fair value per share option
Estimated future volatility
Annual risk-free interest rate
Movements in the number of Share Options were as follows:
Outstanding at 31 December 2021
Issued
Outstanding at 31 December 2022
1,450,000
3 February 2022
$3.46
$3.90
$2.03
77.58%
1.40%
750,000
8 July 2022
$3.83
$3.90
$1.79
68.20%
3.09%
Share Options
Weighted
Average
Exercise Price
Exercisable
Weighted
Average
Exercise Price
–
2,200,000
2,200,000
–
$3.59
$3.59
–
–
200,000
–
–
$3.46
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Neuren Pharmaceuticals Limited Annual Report 2022 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
13. 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.
14. COMMITMENTS AND CONTINGENCIES
(a) Legal claims
The Group had no significant legal matter contingencies as at 31 December 2022 or at 31 December 2021.
(b) Commitments
The Group was not committed to the purchase of any property, plant or equipment or intangible assets as at 31 December 2022
(2021: nil).
At 31 December 2022, the Group had commitments under product development contracts amounting to approximately
$6.0 million, comprising approximately US$3.9 million, GBP 0.1 million, EUR 0.1 million and AU $0.2 million. 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.
(c) Contingent liabilities
The Group had no contingent liabilities at 31 December 2022 or at 31 December 2021.
15. REL ATED PART Y TR ANSACTIONS
(a) Key Management Personnel
The Key Management Personnel of the Group (KMP) include the directors of the Company and employees who reporting
directly to the Managing Director. Compensation for KMP was as follows:
Short-term benefits
Post-employment benefits
Other long-term benefits
Share based payment compensation
2022
$’000
1,682
112
34
837
2,665
2021
$’000
1,340
83
26
840
2,289
(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. All amounts due between entities are payable on demand and bear no interest.
16. EVENTS AFTER REPORTING DATE
As at the date of these consolidated financial statements authorised for issue, there are no events arising since 31 December
2022 that require disclosure.
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C O N T I N U E D
17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(a) Categories of financial instruments
2022
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Derivative financial instruments - forward exchange
contracts
2021
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
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
Total
$’000
8
9
10
11
8
9
10
40,180
–
40,180
–
–
–
36,783
–
36,783
–
–
–
207
207
525
–
525
–
10
10
454
454
–
–
–
–
700
700
–
–
–
–
–
40,180
207
40,387
525
700
1,225
36,783
10
36,793
454
454
At 31 December 2022, the carrying value of all financial instruments approximated their 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 the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
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.
42
Neuren Pharmaceuticals Limited Annual Report 2022 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
17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
At 31 December 2022, there were two forward contracts to convert Australian dollars to US dollars outstanding. Adjustment
of these financial instruments to fair value as measured at 31 December 2022 resulted in a loss of $0.7 million. This fair value
measurement is categorised within Level 2 of the fair value hierarchy. A summary of the forward contracts outstanding at
31 December 2022 is as follows:
Buy USD
$'000
Sell AUD
$'000
Weighted
average
exchange rate
Term
Buy US dollar / sell AU dollar
7,873
12,323 3 months or less
0.6389
During the year, the US dollar fluctuated against the Australian dollar. A net foreign exchange gain of $1.2 million is included
in results for the year ended 31 December 2022 (2021: $0.4 million), this includes a $1.4 million gain on the milestone revenue
from Acadia, offset by a loss on the translation for reporting purposes of the Group’s US dollar cash balances into Australian
dollars.
The carrying amounts of US dollar denominated financial assets and liabilities are as follows:
Assets
US dollars
Liabilities
US dollars
2022
$’000
2021
$’000
2,104
6,905
803
38
An increase of 10% in the rate of the US dollar against the Australian dollar as at the reporting date would have increased the
consolidated loss after income tax by $1,238,107 (2021: $624,255). A decrease of 10% in the rate of the US dollar against the
Australian dollar as at the reporting date would have decreased the consolidated loss after income tax by $1,514,242 (2021:
$762,978). An increase of 10% in the rate of the US dollar against the Australian dollar as at the reporting date would have
decreased equity by $12,419 (2021: increase of $2,109). A decrease of 10% in the rate of the US dollar against the Australian
dollar as at the reporting date would have increased equity by $15,179 (2021: decrease of $2,578).
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
2022
$’000
2021
$’000
38,076
3.58%
2,104
–%
29,885
0.17%
6,898
–%
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 5% change in average market interest rates would have changed reported loss after tax by approximately $68,200 (2021:
$2,580). A 5% increase/decrease in the average market interest rates would have no impact on other components of equity.
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Neuren Pharmaceuticals Limited Annual Report 2022 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
17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
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 and derivatives, are generally repayable within
1 – 3 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 management
The Group monitors capital including share capital, retained earnings and reserves and the cash and cash equivalents
presented in the consolidated statement of financial position. The Group has no debt. The key objective of the Group when
managing its capital is to safeguard its ability to continue as a going concern, so that the Group can sustain the future
development of the research and development activities being performed by the Group.
18. CRITIC AL ACCOUNTING ESTIMATES AND ASSUMPTIONS
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 2022 the Group has recorded other revenue of $0.9 million (2021: $3.2 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.
Cash and cash equivalents include term deposits of $37.9 million with 3-month or less maturities which are held to meet
short-term cash commitments, rather than for investment or other purposes.
The Group measures the fair value of loan funded shares and options to acquire ordinary shares with employees and
consultants 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.
44
Neuren Pharmaceuticals Limited Annual Report 2022 I N D E P E N D E N T A U -
D I T O R ’ S R E P O R T
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 26 to 44 which comprise the consolidated statement of financial position as at 31
December 2022, 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 2022 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. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Why the audit matter is significant
How our audit addressed the key audit matter
Share Based Payments
During the year ended 31 December 2022, the Group issued
share options to key employees and contractors, which have
been accounted for as share based payments under IFRS 2:
Share-Based Payments.
Our procedures in relation to management’s valuation
include:
Evaluating management’s assessment of the valuation
and recognition of the options.
Obtaining an understanding of the key terms and
Share-based payments are a complex accounting area
including assumptions utilised in the fair value calculations
conditions of the share options by reviewing the
relevant agreements.
Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
45
Neuren Pharmaceuticals Limited Annual Report 2022 Why the audit matter is significant
How our audit addressed the key audit matter
and judgements regarding the options issued during the
year.
The fair value was determined using the Grant-Date Method
via a Black-Scholes Model as described in Note 12 in the
financial statements.
The valuation involved significant judgements and estimates
from management, including the estimated future volatility of
the share price, and an annual risk-free interest rate.
We included the valuation of the share options as a key audit
matter, due to the high estimation uncertainty within the
assumptions and the impact these have on the fair value of
the shares.
Engaged auditor’s valuation expert to assess
reasonability of key assumptions and methodology
used in the estimation of fair value of the share options.
Recalculating the estimated fair value of the share
options using the valuation methodology selected.
Performed a sensitivity analysis on key inputs on the
model and reviewed the impact on the fair value.
Reviewing the adequacy of the Company’s disclosures
in respect of the accounting treatment of share-based
payments in the financial statements, including
significant judgments involved and the accounting
policies adopted.
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 annual report. The annual report
is expected to be made available to us after the date of this report.
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 connection 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. When we read the annual report, if we
conclude that there is a material misstatement therein, we are required to report that fact.
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/assurance-standards/auditors-responsibilities/audit-report-1/
Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
46
Neuren Pharmaceuticals Limited Annual Report 2022
Restriction on use of our report
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might
state to the Company’s shareholders, as a body those matters which we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for the opinion we have
formed.
Grant Thornton New Zealand Audit Limited
Ryan Campbell
Partner
Auckland
23 February 2023
Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
47
Neuren Pharmaceuticals Limited Annual Report 2022 A D D I T I O N A L I N F O R M AT I O N
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 2022:
Director
Patrick Davies
Dr Trevor Scott
Dianne Angus
Dr Jenny Harry
Jonathan Pilcher
Board
Audit and Risk
Remuneration
Held (i)
Attended
Held (i)
Attended
Held (i)
Attended
10
10
10
10
10
10
10
10
10
10
2
2
2
2
-
2
2
2
2
-
2
2
2
2
-
2
2
2
2
-
(i) Number of meetings held during the time the Director was a member of the Board or Committee
INTERESTS REGISTER
The Company is required to maintain an interests register in which particulars of certain transactions and matters involving
Directors must be recorded. There were no entries in this register during and since the end of 2022.
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 (2021: $nil).
REMUNER ATION OF DIRECTORS
2022
Non-Executive Directors
Patrick Davies
Dr Trevor Scott
Dianne Angus
Dr Jenny Harry
Executive Directors
Jonathan Pilcher
Total
Salary/fees
$
Bonus
$
Super-
annuation
$
Share based
payments
$
Total
$
-
-
-
-
-
-
-
-
-
6,972
6,972
13,944
24,430
38,374
-
-
-
-
-
125,000
75,000
75,000
75,000
350,000
125,505
125,505
546,338
896,338
125,000
75,000
68,028
68,028
336,056
396,403
732,459
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Neuren Pharmaceuticals Limited Annual Report 2022 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
2021
Non-Executive Directors
Patrick Davies
Dr Trevor Scott
Dianne Angus
Dr Jenny Harry
Executive Directors
Jonathan Pilcher1
Total
Salary/fees
$
Bonus
$
Super-
annuation
$
Share based
payments
$
Total
$
120,000
72,000
54,670
60,094
306,764
190,437
497,201
-
-
-
-
-
-
-
-
-
5,330
5,906
11,236
-
-
-
-
-
120,000
72,000
60,000
66,000
318,000
12,688
23,924
229,123
229,123
432,248
750,248
1
The table for the year ended 31 December 2021 shows the total remuneration for Jon Pilcher since his appointment to Managing Director on 14 June 2021.
Loan Funded Shares
Jon Pilcher has an interest in 1,500,000 Loan Funded Shares held by Neuren Trustee Limited. As detailed in Note 12 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.
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 share based payments
$150,000 - $159,999
$160,000 - $169,999
$170,000 - $179,999
$190,000 - $199,999
$240,000 - $249,999
$270,000 - $279,999
$290,000 - $299,999
$300,000 - $309,999
Including share based payments
$150,000 - $159,999
$160,000 - $169,999
$170,000 - $179,999
$340,000 - $349,999
$360,000 - $369,999
$390,000 - $399,999
$400,000 - $409,999
$480,000 - $489,999
$500,000 - $509,999
$640,000 - $649,999
49
2022
$’000
2021
$’000
1
-
-
1
2
1
-
1
-
1
2
-
-
1
1
-
2022
$’000
2021
$’000
1
-
-
1
1
1
1
-
-
1
-
1
1
-
1
-
-
1
1
-
Neuren Pharmaceuticals Limited Annual Report 2022 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
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 $70,214 (2021: $65,921). 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 2022
or 2021.
EQUIT Y SECURITIES HELD BY DIRECTORS AS AT 24 MARCH 2023
Director
Dr 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
–
–
–
–
264,634
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 12 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.
DIRECTORS OF SUBSIDIARY COMPANIES AT 31 DECEMBER 2022
Neuren Pharmaceuticals Inc.
Neuren Pharmaceuticals (Australia) Pty Ltd
Neuren Trustee Limited
Jon Pilcher
Larry Glass
Dr 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.
50
Neuren Pharmaceuticals Limited Annual Report 2022 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 24 March 2023.
The number of ordinary shareholdings held in less than marketable parcels at 24 March 2023 was 381, holding 1,941
ordinary shares.
DISTRIBUTION OF SECURIT Y HOLDERS
Listed 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
91,443,978
24,371,857
4,449,073
4,862,294
1,138,474
%
72.42
19.30
3.52
3.85
0.90
126,265,676
100.00
Number
of holders
128
814
591
1,885
2,864
6,282
%
2.04
12.96
9.41
30.01
45.59
100.00
UNLISTED SECURITIES
2,700,00 Loan Funded Shares, held as treasury stock, with a weighted average exercise price of $1.84, have an expiry date of
13 July 2025. There are 3 holders of 100,001 and over.
2,200,000 Employee Share Scheme options, with a weighted average exercise price of $3.59, of which 1,450,000 have an expiry
date of 3 February 2026 and 750,000 have an expiry date of 8 July 2026. There are 5 holders of 100,001 and over.
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
6,561,977
5.088%
51
Neuren Pharmaceuticals Limited Annual Report 2022 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 quoted ordinary shares
1
2
3
4
5
6
7
8
9
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
CAMERON RICHARD PTY LTD
BNP PARIBAS NOMS PTY LTD
STUART ANDREW PTY LTD
ESSEX CASTLE LIMITED
10 SMITHLEY SUPER PTY LTD
11 LINWIERIK SUPER PTY LTD
12 SHARESIES NOMINEE LIMITED
13 MXB INVESTMENTS LLC
14 DR TREVOR SCOTT
15 FIRST COLBYCO PTY LTD
16 MJHFT PTY LTD
17 DR ROBIN LANCE CONGREVE
18 HOBSON WEALTH CUSTODIANS LTD
19 EMANCIPAYTE PTY LTD
20 BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
Total
Balance of share register
Total ordinary shares quoted on ASX
Number of
ordinary shares
% of issued
share capital
11,810,223
10,759,990
9,174,182
8,875,428
6,639,176
4,206,313
2,710,864
2,460,000
2,367,144
2,010,000
1,885,000
1,385,966
1,330,000
1,000,000
790,000
750,000
671,637
589,337
476,607
465,450
9.35
8.52
7.27
7.03
5.26
3.33
2.15
1.95
1.87
1.59
1.49
1.10
1.05
0.79
0.63
0.59
0.53
0.47
0.38
0.37
70,357,317
55,908,359
126,265,676
55.72
44.28
100.00
52
Neuren Pharmaceuticals Limited Annual Report 2022 53
Neuren Pharmaceuticals Limited Annual Report 2022 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