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 3
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
4 Operating Review
22 Board
23 Executive Team
24 Corporate Governance
30 Consolidated Statement of Comprehensive Income
31 Consolidated Statement of Financial Position
32 Consolidated Statement of Changes in Equity
33 Consolidated Statement of Cash Flows
34 Notes to the Consolidated Financial Statements
51 Independent Auditor’s Report
53 Additional Information
N E U R E N ’ S V A LU E P R O P O S I T I O N
Key achievements in 2023
A$157 million profit after tax for 2023
Approval and successful launch of DAYBUE™ (trofinetide) in the US as the first approved treatment
for Rett syndrome, with net sales for 2023 since launch in April of US$177 million
Expansion of DAYBUE™ (trofinetide) partnership with Acadia to include ex-North America,
delivering A$146 million up-front plus attractive future royalties and milestone payments
Highly encouraging positive results in Phase 2 trial of NNZ-2591 for Phelan-McDermid syndrome
Completion of enrolment in Phase 2 trials of NNZ-2591 for Pitt Hopkins and Angelman syndromes
Leading pipeline in neurodevelopmental disorders
Indication
Compound Geography
Preclinical
Phase 1
Phase 2
Phase 3
Registration
Commercial
rights
Trofinetide
NNZ-2591
Trofinetide
NNZ-2591
US
RoW
World
World
World
NNZ-2591
World
NNZ-2591
World
Rett
Fragile X
Phelan-
McDermid
Pitt
Hopkins
Angelman
NNZ-2591
World
Prader-
Willi
NNZ-2591
World
pharmaceuticals
Three key drivers transforming near term value
1
Realise Neuren’s share of trofinetide
value in the US through Acadia’s
successful commercialization of
2
Realise Neuren’s share of trofinetide
ex-US value through expanded global
partnership with Acadia
3
Confirm efficacy of NNZ-2591 in Phase 2 trials
for four valuable indications, with global
rights retained by Neuren
Positive top-line results for Phelan-McDermid
syndrome
• Top-line results for Pitt Hopkins and Angelman
syndromes in Q2 and Q3 2024
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Neuren Pharmaceuticals Limited Annual Report 2023 Neuren Pharmaceuticals Limited Annual Repor t 2023
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
Jon Pilcher
CEO
Patrick Davies
Chair
2023 was a transformational year for Neuren.
In all three areas of the business, we achieved
the key planned milestones that generated
very significant value for all stakeholders.
The approval of DAYBUE™ by the US Food and Drug
Administration (FDA) in March 2023 as the first ever
treatment for Rett syndrome was a proud moment for the
Neuren team. Our partner Acadia launched DAYBUE a month
later. In our message to you last year, we stated that we
were confident Acadia was very well placed for successful
commercialisation. The launch was indeed highly successful
and 2023 net sales of US$177 million in less than 9 months,
with Acadia’s guidance for net sales to more than double in
2024, is an outstanding outcome. We are very encouraged
by testimonials from families about the impact of treatment.
In July 2023 we expanded our partnership with Acadia
for DAYBUE from North America to worldwide, following
a competitive partnering process. Acadia is in a unique
position of being able to leverage knowledge of all aspects
of the development, marketing and distribution of DAYBUE.
The expanded agreement delivered to Neuren US$100
million up-front and very attractive future economics
linked to launches and sales in key territories.
In December 2023 we announced highly encouraging
results from our Phase 2 clinical trial of NNZ-2591 in
Phelan-McDermid syndrome. These results exceeded our
expectations, both in the consistency of the findings and
the magnitude of improvements seen across clinically
important aspects of Phelan-McDermid syndrome,
including communication, behaviour, cognition/learning
and socialisation. Neuren is currently leading the way in
striving to achieve the first approved treatment for Phelan-
McDermid syndrome and the team is very excited by
that prospect.
We have noted before that Neuren has no cost attached
to the royalty and milestone revenue we receive from
Acadia, which therefore flows straight into pre-tax profit.
The impact of this was evident in our financial results for
2023, the highlight of which was profit after tax of $157
million. This reflected revenue from Acadia of A$232 million,
comprising royalty of A$27 million, a milestone payment
of A$59 million and A$146 million from the expanded
worldwide agreement.
Neuren was promoted into the S&P/ASX 200 index in
September 2023 and was the best performing ASX 200
stock in 2023, with a share price increase of 214%. We
now have many more institutional shareholders and a
high level of interest and engagement from the financial
markets community. We continue to seek higher interest
and investment, both in Australia and overseas, assisted by
a wide range of intermediaries. In October 2023, Neuren was
presented with the 2023 Australian Growth Company of the
Year Award for Health and Life Sciences.
2
C H A I R A N D C E O M E S S A G E
C O N T I N U E D
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
NEUREN’S
VALUES
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 Neuren team is far from complacent following the
success of the last two years. We are acutely aware that
it follows, and has been built on, a ten-year journey since
our first clinical trial in Rett syndrome and that many loyal
and committed shareholders have accompanied us on that
journey. The experience we have gained on the ten-year
journey is extremely valuable. Everything we have learnt
from the development of trofinetide in Rett syndrome is
directly relevant to our development of NNZ-2591 in other
neurodevelopmental disorders, led by Phelan-McDermid
syndrome. We believe that this and the connection of both
drugs to IGF-1 enhances the risk profile of the NNZ-2591
programs.
There is so much more to achieve and 2024 is another very
important year for the business. We look forward to the
continued progress of DAYBUE, both in the US and in other
territories. We await the results of the Phase 2 trials of NNZ-
2591 for Pitt Hopkins syndrome in Q2 2024 and for Angelman
syndrome in Q3 2024. In the meantime, the team is highly
focused on advancing the Phelan-McDermid syndrome
program. We are diligently preparing for an End of Phase
2 Meeting with the FDA and are commencing manufacture
of the drug supplies that will be required for a Phase 3
program. We are also actively exploring further potential
indications for NNZ-2591 and will say more about this as our
assessment progresses.
Neuren is in a very strong financial position, with cash
and short-term investments of more than A$200 million
and the ongoing revenues from DAYBUE. This supports
our commitment to achieving the best outcome for
shareholders by pursuing value-adding opportunities to
their fullest potential. For NNZ-2591, we will continue to
evaluate all options to achieve this as the events of this
year unfold.
We are grateful to our shareholders, both longstanding
and new, and all the patient communities for the support
that is so critical for our success. We commend and thank
the Neuren team for their achievements and dedication,
assisted by a range of development partners.
Patrick Davies
Chair
Jon Pilcher
CEO
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Neuren Pharmaceuticals Limited Annual Report 2023 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
impaired communication
intellectual disability
impaired social interaction
impaired hand use
sleep disturbance
gastrointestinal problems
NEUREN’S GROUND -BREAKING THER APIES
Neuren focuses on developing treatments for 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. These neurodevelopmental disorders
have 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 currently has two novel patented drugs, trofinetide
and NNZ-2591, which potentially have broad utility in
the treatment of neurological disorders. Both drugs are
synthetic analogues of important molecules that occur
naturally in the brain, aiming 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. Both drugs can be administered
orally in a patient-friendly liquid dose.
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 NNZ-2591 in 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
United States and 12 years in the EMA region. Japan, South
Korea and Taiwan also have Orphan Drug programs.
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Neuren Pharmaceuticals Limited Annual Report 2023 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.
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 and pending patent applications, which
extend as far as 2041. Since trofinetide and NNZ-2591
are new chemical entities, following the first marketing
authorisation for each drug, the term of one patent
may potentially be extended by up to 5 years in many
countries, including the United States, Europe and Japan.
TROFINETIDE FOR RETT SYNDROME
Successful launch of DAYBUE™ (trofinetide)
in the United States
In March 2023, Neuren’s partner for trofinetide, 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.
On 17 April 2023, Acadia Pharmaceuticals launched
DAYBUE™ (trofinetide) in the United States as the first
approved treatment for Rett syndrome.
Adoption of DAYBUE in the diagnosed Rett syndrome
population has been faster than expected, with
approximately 860 patients on DAYBUE at the end of
February 2024. Caregivers and physicians have continued
to report meaningful improvements in patients and the
high demand has been well supported by access from
Medicaid and private health insurance payors. In the
United States there are approximately 5,000 diagnosed
Rett syndrome patients and prevalence studies suggest
the total number of patients may be 6,000 to 9,000.
Acadia reported net sales of US$177 million for 2023 and
has provided guidance for net sales in 2024 of between
US$370 million and US$420 million.
DAYBUE Net Sales (US$m)
Royalty and Sales Milestone to Neuren (A$m)
420
370
87
177
80-87.5
67
45-55
23
21-23
4
10
13
27
Q2 2023
Q3 2023
Q4 2023
CY2023
CY2024 Acadia
Guidance
Q2 2023
Q3 2023
Q4 2023
CY2023
Royalty only*
Royalty +
#
Historical Acadia guidance
2023 net sales of US$177m
2024E net sales of US$370 – 420m
2023E royalty of A$27m
2024E royalty of A$61 – 70m, plus A$77m sales milestone
Further information about DAYBUE, including prescribing
information can be accessed at www.DAYBUE.com
* Based on 10% of DAYBUE net sales up to US$250m and 12% of DAYBUE net sales between US$250m and
US$500m, and AUDUSD of 0.65
^ Neuren will be entitled to US$50m sales milestones (receivable in Q1 2025) if CY2024 DAYBUE net sales
reaches US$250m; assumes AUDUSD of 0.65
5
1
147
138
70
61
Sales
Milestone^
CY2024
Neuren Pharmaceuticals Limited Annual Report 2023 O P E R AT I N G R E V I E W
C O N T I N U E D
A characteristic of all long-term medicines is that not all patients who commence treatment will persist with treatment.
Furthermore, for patients and caregivers, adjusting to a novel treatment regimen can take time, especially when it is the first
treatment ever to become available. The number of patients commencing treatment and the proportion that persist with
treatment long-term are key factors in the sales outcome. Acadia has provided detailed metrics for real world persistency since
launch, which continues to outperform the clinical trial experience and has improved as new patient cohorts are added. The
chart below shows the data reported in Acadia’s Q4 earnings call presentation in February 2024. The real world persistency has
PPeerrssiisstteennccyy rraatteess iimmpprroovviinngg iinn nneeww ppaattiieenntt ccoohhoorrttss
consistently tracked at more than 10 percentage points above clinical experience and monthly cohort persistency rates are
trending up.
Persistency Rates1
(Based on confirmed discontinuations and patients who were 60 days past their scheduled refill)
80%
75%
76%
66%
64%
68%
70%
58%
63%
51%
Month 4
n.a.
Month 5
Month 6
n.a.
Month 7
Lilac-1 experience
Previously presented real world
Current real world
1 Acadia Fourth Quarter and Full Year 2023 Earnings Call presentation in Feb 2024
1 Acadia Fourth Quarter and Full Year 2023 Earnings Call presentation in Feb 2024
Growing sustainable income to Neuren
In June 2023, Neuren received from Acadia a milestone payment of US$40 million earned following the first commercial sale of
DAYBUE (trofinetide).
Neuren is eligible to receive 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 New Drug Application
(NDA)”, to be paid when Acadia sells or uses the voucher. Neuren estimates the value of its one third share 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 of
trofinetide in all indications in North America, as set out in the following tables:
14
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$1bn
50
50
100
150
1
Royalty rates payable on the portion of annual net sales that fall within the applicable range. Each sales milestone payment is payable
once only.
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Neuren Pharmaceuticals Limited Annual Report 2023 O P E R AT I N G R E V I E W
C O N T I N U E D
80-87.5
67
45-55
23
Q2 2023
Q3 2023
Historical Acadia guidance
21-23
#
DAYBUE Net Sales (US$m)
87
420
Net sales of US$177 million in 2023
delivered royalties of A$27 million to
Neuren. Assuming Acadia’s guidance
for 2024 is met and an exchange
370
rate of 0.65, Neuren anticipates
royalties of A$61-70 million (US$39-
45 million), plus A$77 million (US$50
million) from the first sales milestone
177
payment due for the first calendar
year in which net sales exceed
US$250 million. The milestone
payment would be earned as revenue
in 2024 and received in Q1 2025.
CY2024 Acadia
CY2023
Guidance
Acadia anticipates potential approval
of a New Drug Submission (NDS) filing
for trofinetide in Canada around
year-end 2024. There are currently
600 to 900 Rett patients in Canada.
Any net sales in Canada will be
included in the North America net
sales for the purpose of calculating
royalties and sales milestone
payments to Neuren.
Q4 2023
2023 net sales of US$177m
2024E net sales of US$370 – 420m
Royalty and Sales Milestone to Neuren (A$m)
70
61
4
10
13
27
Q2 2023
Q3 2023
Q4 2023
CY2023
Royalty only*
147
138
Royalty +
Sales
Milestone^
2023E royalty of A$27m
2024E royalty of A$61 – 70m, plus A$77m sales milestone
CY2024
*
Based on 10% of DAYBUE net sales up to US$250m and 12% of DAYBUE net sales
* Based on 10% of DAYBUE net sales up to US$250m and 12% of DAYBUE net sales between US$250m and
between US$250m and US$500m, and AUDUSD of 0.65
US$500m, and AUDUSD of 0.65
Neuren will be entitled to US$50m sales milestones (receivable in Q1 2025) if CY2024
^ Neuren will be entitled to US$50m sales milestones (receivable in Q1 2025) if CY2024 DAYBUE net sales
DAYBUE net sales reaches US$250m; assumes AUDUSD of 0.65
reaches US$250m; assumes AUDUSD of 0.65
^
1
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Neuren Pharmaceuticals Limited Annual Report 2023 O P E R AT I N G R E V I E W
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Development and commercialisation outside North America
In July 2023 Neuren and Acadia expanded their partnership for trofinetide from North America to worldwide. Neuren
received US$100 million up-front and is eligible to receive milestone payments and royalties related to development and
commercialization of trofinetide outside North America as set out in the table below.
Trofinetide
Upon 1st commercial sale for Rett in Europe
Upon 1st commercial sale for Rett in Japan
Upon 1st commercial sale for second indication in Europe
Upon 1st commercial sale for second indication in Japan
Total development milestones
Europe
Japan
Rest of World
Total sales milestones on achievement of escalating annual net sales thresholds
Tiered royalties on net sales
Payment
US$35m
US$15m
US$10m
US$4m
US$64m
Up to US$170m
Up to $110m
Up to US$83m
Up to US$363m
Mid-teen to low
twenties per cent
A redacted version of the expanded licence agreement between Neuren and Acadia was filed with the US Securities and
Exchange Commission as a material contract exhibit to Acadia’s 2023 10-K Annual Report, which is available to view via the
SEC Filings section of Acadia’s website.
Following the expansion of the partnership with Acadia for trofinetide to worldwide, Acadia is now advancing in key markets
outside North America.
For Europe, Acadia is engaging with the European Medicines Agency (EMA) in Q1 2024, with a potential Marketing Authorisation
Application filing in H1 2025. For Japan, Acadia is engaging with the regulator, Pharmaceuticals and Medical Devices Agency
(PMDA) in 2024.
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
is shown in the table below. Neuren expects rates of diagnosis to increase with greater awareness and accelerate with the
availability of a treatment.
Potential Rett patients
Currently identified Rett patients
Europe
Japan
9,000 – 14,0001
1,000 – 2,0001
~4,0002
~800 – 1,0002
Other
~30,0002
~2,0002
1 Acadia estimates
2 Neuren estimates based on prevalence studies and patient organisations
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 2023 O P E R AT I N G R E V I E W
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NNZ-2591 FOR MULTIPLE NEURODEVELOPMENTAL DISORDERS
Neuren is developing NNZ-2591 for four other serious neurodevelopmental disorders that emerge in early childhood and
have no or limited approved treatment options. The estimated number of potential patients being targeted across these four
disorders is more than five times larger than Rett syndrome.
Potential patients
Disorder
Gene mutation
Published prevalence estimates
US1
Europe1
RoW1, 2
Phelan-McDermid
SHANK3
1/8,000 to 1/15,000 males and females
Pitt Hopkins
Angelman
TCF4
UBE3A
1/34,000 to 1/41,000 males and females
1/10,000 to 1/20,000 males and females
Prader-Willi
15q11-q13
1/10,000 to 1/30,000 males and females
24,000
6,000
19,000
17,000
31,000
8,000
24,000
21,000
104,000
28,000
81,000
72,000
66,000
84,000
285,000
Estimates derived by applying the mid-point of the prevalence estimate range to the populations under 60 years
1
2 RoW comprises Japan, China (urban population), Brazil, Israel, South Korea, Australia and New Zealand
All four programs have been granted Orphan Drug designation by the US Food and Drug Administration (FDA) and are being
developed under Investigational New Drug (IND) applications. 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.
Phase 2 clinical trials
Phase 2 clinical trials are being conducted in all four indications. The open label 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 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.
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. In 2023 positive results were achieved in the Phelan-McDermid syndrome trial and enrolment was
completed in both the Pitt Hopkins and Angelman syndrome trials. Top-line results are anticipated for Pitt Hopkins in Q2 2024
and for Angelman in Q3 2024.
Phelan-McDermid
Pitt Hopkins
Angelman
Prader-Willi
n subjects
Age range
Location
Up to 20
3 to 12
US
Up to 20
3 to 17
US
Up to 20
3 to 17
Australia
Up to 20
4 to 12
US
Screening/Baseline
NNZ-2591 treatment
Follow-up
Up-titration to
12mg/kg BID
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 2023 O P E R AT I N G R E V I E W
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Positive results in Phelan-McDermid syndrome Phase 2 trial
In December 2023, Neuren announced positive top-line results from the Phase 2 clinical trial of NNZ-2591 in children with
Phelan-McDermid syndrome.
NNZ-2591 was well tolerated and demonstrated a good safety profile. There was only one serious treatment emergent adverse
event (TEAE) of gastroenteritis, which was not related to study drug and occurred during the safety follow-up period after
end of treatment. Three subjects discontinued due to TEAEs, two testing positive for COVID-19 and one due to seizures that
were not related to study drug. No clinically significant changes in laboratory values, electrocardiogram (ECG) or other safety
parameters were observed during treatment. TEAEs occurring in two or more subjects are listed in the following table:
Event
Constipation
Diarrhea
Nausea
Vomiting
COVID-19
Nasopharyngitis
Otitis Media
Psychomotor Hyperactivity
N=18
n (%)
2 (11.1)
2 (11.1)
2 (11.1)
2 (11.1)
3 (16.7)
2 (11.1)
2 (11.1)
4 (22.2)
Event
Somnolence
Pyrexia
Fatigue
Aggression
Insomnia
Decreased Appetite
Rhinorrhea
N=18
n (%)
3 (16.7)
3 (16.7)
2 (11.1)
2 (11.1)
2 (11.1)
3 (16.7)
2 (11.1)
Significant improvement was observed by both clinicians and caregivers from treatment, across multiple efficacy
measures. Improvements were consistently seen across many of the core PMS characteristics. The results for the global
efficacy measures rated by both clinicians and caregivers showed a level of improvement typically considered clinically
meaningful. 16 out of 18 children showed improvement measured by the Clinical Global Impression of Improvement (CGI-I),
an assessment by the clinician of the child’s overall status compared with baseline. The mean CGI-I score was 2.4. 10 children
received a score of either 1 (“very much improved”) or 2 (“much improved”). 15 out of 18 children showed improvement
measured by the Caregiver Overall Impression of Change (CIC), an assessment by the caregiver of the child’s overall status
compared with baseline. The mean CIC score was 2.7. Seven children received a score of either 1 (“very much improved”)
EEffffiiccaaccyy eennddppooiinnttss ssuummmmaarryy
or 2 (“much improved”). CGI-I and CIC are 7 point scales in which scores of 1, 2 or 3 indicate improvement.
Efficacy measures and p-values1 (Total/Overall scores)
Global
Behaviour
•
Statistically significant
improvement vs baseline in
10/14 efficacy
endpoints
• Mean CGI-I of 2.4
and Median of 2.0 with
p-value <0.0001
CGI-I
CIC
CGI-S
<0.0001
0.0003
0.0156
GI Health
GIHQ total frequency
0.0013
Quality of Life
• Mean CIC of 2.7 and
QL Inventory-
Disability total
Median of 3.0 with
p-value =0.0003
Impact of Childhood
Neurologic Disability
Sleep
0.0066
0.1094
1 Wilcoxon signed rank test
1 Wilcoxon signed rank test
CSHQ total
0.0191
10
Aberrant Behavior
Checklist-2 total
Behavior Problems
Inventory total frequency
Vineland Adaptive Behavior
Scales Composite
Symptom Specific
PMS Clinician Domain
Specific Rating Scale total
Caregiver Top 3 Concerns
total
Communication
0.0013
0.0326
0.1710
0.0156
0.0005
MB-CDI Total Vocabulary
ORCA T-Score
0.0647
0.0714
30
Neuren Pharmaceuticals Limited Annual Report 2023
SSiiggnniiffiiccaanntt iimmpprroovveemmeenntt aasssseesssseedd bbyy bbootthh cclliinniicciiaannss aanndd ccaarreeggiivveerrss
O P E R AT I N G R E V I E W
C O N T I N U E D
Clinician and caregiver global efficacy measures showed a level of improvement typically
considered clinically meaningful
Mean CGI-I score of 2.4 with 16 out of 18 children
Mean CGI-I score of 2.4 with 16 out of 18 children
showing improvement
showing improvement
Mean CIC score of 2.7 with 15 out of 18 children
showing improvement
Waterfall Plot of CGI-I Overall Score
ITT Population
1 - Very Much Improved
2- Much Improved
)
6
1
t
i
s
i
SSiiggnniiffiiccaanntt iimmpprroovveemmeenntt aasssseesssseedd bbyy bbootthh cclliinniicciiaannss aanndd ccaarreeggiivveerrss
5 - Minimally Worse
3 - Minimally Improved
4 - No Change
V
(
T
O
E
3
1
k
e
e
W
t
a
e
r
o
c
S
Clinician and caregiver global efficacy measures showed a level of improvement typically
considered clinically meaningful
7 - Very Much Worse
Individual Subjects
All subjects (n=18)
6 - Much Worse
Mean CGI-I score of 2.4 with 16 out of 18 children
showing improvement
Mean CIC score of 2.7 with 15 out of 18 children
Mean CIC score of 2.7 with 15 out of 18 children
showing improvement
showing improvement
Waterfall Plot of Caregiver Impressions of Change Score
ITT Population
31
)
6
1
t
i
s
i
V
(
T
O
E
3
1
k
e
e
W
t
a
e
r
o
c
S
1 - Very Much Improved
2- Much Improved
3 - Improved
4 - Unchanged
5 - Worse
6 - Much Worse
7 - Very Much Worse
Individual Subjects
All subjects (n=18)
Preparation for Phase 3
In order to expedite the overall development plan, in parallel with conducting the Phase 2 trials Neuren has been executing the
additional development work required to be ready for Phase 3 development. Non-clinical toxicity studies to support longer
clinical trials and commercial use of the product have been completed. Optimisation and scale-up of the drug product and
drug substance manufacturing arrangements are well advanced, with manufacturing of supplies for Phase 3 trials scheduled
in 2024.
31
Neuren plans to discuss proposals for Phase 3 development in Phelan-McDermid syndrome with the FDA during 2024.
11
Neuren Pharmaceuticals Limited Annual Report 2023
O P E R AT I N G R E V I E W
C O N T I N U E D
Phelan-McDermid syndrome has an overwhelming unmet medical need
Phelan-McDermid syndrome (PMS) is caused by a deletion or other change in the 22q13 region of chromosome 22, which
includes the SHANK3 gene, or a mutation of the gene. PMS is also known as 22q13 deletion syndrome. The SHANK3 gene codes
for the shank3 protein, which supports the structure of synapses between nerve cells in the brain. PMS has severe quality of life
impacts for those living with the syndrome, as well as parents and siblings. There are no approved treatments for PMS despite
its severely debilitating impact.
The estimated prevalence of PMS is 1% of people diagnosed with autism, or between 1 in 8,000 and 1 in 15,000 males and
females. It has historically been underdiagnosed, but this is changing with rising awareness and enhancement of genetic
testing technologies. In November 2022, an important Externally-Led Patient Focused Drug Development (EL-PFDD) Meeting
was held, in order for the FDA and other key stakeholders to hear directly from patients, their families, caregivers, and patient
advocates about the impact PMS has on patients’ daily lives. The meeting content was collated in a “Voice of the Patient”
report. In 2023 for the first time an International Classification of Disease (ICD) code was assigned to PMS.
From the Phelan-McDermid Syndrome Voice of the Patient Report:
“ PMS has an overwhelming unmet medical need. There are no FDA approved treatments for PMS despite
its severely debilitating manifestations. Parents and caregivers are open to trying almost anything to try
to relieve their child’s suffering; most have tried an incredibly high number of treatments and approaches
for symptom management, with very little success. Some received medications that caused more harm
than good.”
“ PMS has severe quality of life impacts on those living with the disease, as well as on parents and
siblings. Most activities of daily life, including communicating needs or wants, self-care (bathing, dressing,
toileting) and socializing with peers/siblings are affected. Most individuals living with PMS rely on their
parents and caregivers for all their daily needs, and many require 24-hour care.”
Strong foundations built for NNZ-2591
Neuren has meticulously built strong foundations to enable clinical development of NNZ-2591 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. In the Prader-Willi syndrome model,
treatment with NNZ-2591 also normalized fat mass (obesity), insulin levels and IGF-1 levels. 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.
12
Neuren Pharmaceuticals Limited Annual Report 2023
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
13
8
8
Neuren Pharmaceuticals Limited Annual Report 2023
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)
Insulin levels (pM)
WT plus
vehicle
110
Magel2-null
plus vehicle
WT plus
NNZ-2591 low dose
Magel2-null plus
NNZ-2591 low dose
WT plus
NNZ-2591 high dose
Magel2-null plus
NNZ-2591 high dose
173
112
143
115
119
Obesity
Obesity
Circulating IGF-1 levels
Circulating IGF-1 levels
Cognition
Cognition
)
g
(
s
s
a
m
t
a
F
30
20
10
0
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)
)
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)
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
(
e
s
u
o
m
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)
)
n
(
s
t
n
e
v
e
g
n
i
f
f
i
n
S
100
80
60
40
20
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)
14
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
OPTIMUM DOSE IN MOUSE MODEL OF PHELAN-
MCDERMID
Motor function
Anxiety
Repetitive behavior
y
t
i
l
a
u
q
g
n
d
i
l
i
u
B
t
s
e
N
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
)
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)
Daily living
Daily living
10
Neuren Pharmaceuticals Limited Annual Report 2023
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%
15
Neuren Pharmaceuticals Limited Annual Report 2023 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.
Positive Phase 1 clinical trial results
Neuren completed a Phase 1 clinical, 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. 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.
16
Neuren Pharmaceuticals Limited Annual Report 2023 O P E R AT I N G R E V I E W
C O N T I N U E D
To find out more about these syndromes:
www.pmsf.org
www.pitthopkins.org
www.angelman.org
www.fpwr.org
Other indications
The mechanism of action of NNZ-2591 is relevant for many other neurodevelopmental synaptopathies and potential additional
indications are currently being assessed.
As part of the expanded global partnership with Acadia signed in July 2023, Neuren granted Acadia exclusive worldwide
licence for NNZ-2591 solely in Rett syndrome and Fragile X syndrome, which enabled coordinated global development and
removed restrictions on Neuren for NNZ-2591 in those two indications. Neuren retains worldwide rights to NNZ-2591 in all other
indications.
Potential future payments to Neuren related to NNZ-2591 in Rett syndrome and Fragile X syndrome are identical to
the payments for trofinetide in each of North America and outside North America. Acadia is responsible for all costs of
development and commercialization in those two indications.
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 biology 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.
17
Neuren Pharmaceuticals Limited Annual Report 2023 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
18
Neuren Pharmaceuticals Limited Annual Report 2023
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
Interest income
Other income
Foreign exchange gain
Total income
Research & Development
Corporate & Administration
Loss on financial derivatives measured at fair value
Profit before tax
Income tax
Profit after tax
Cash flow received from operations
Cash flow used in investing
Cash flow received from financing
Effect of exchange rates on cash balances
Cash and short-term investments at 31 December
2023
$’m
231.9
5.7
–
2.4
240.0
(26.8)
(5.9)
(2.2)
205.1
(48.0)
157.1
184.9
(211.5)
3.6
(0.1)
228.5
2022
$’m
14.5
0.4
0.9
1.2
17.0
(12.7)
(3.4)
(0.7)
0.2
–
0.2
3.6
–
–
(0.2)
40.2
1
1 Cash and short-term investments
The consolidated financial statements are presented on pages 30 to 50. All amounts in the consolidated Financial Statements
are shown in Australian dollars unless otherwise stated.
19
FFiinnaanncciiaall ssttrreennggtthh ttoo mmaaxxiimmiissee ggrroowwtthh ooppppoorrttuunniittiieess740.226.859.4145.75.72.5-8.2-26.8-48.127.73.6228.5Dec 2022CashRoyaltyMilestoneex-NA upfrontInterestOther incomeOther expensesR&DTaxNon cash adjFinancing/investingDec 2023 Cash2023 Profit After TaxA$157.1mA$mNeuren Pharmaceuticals Limited Annual Report 2023 O P E R AT I N G R E V I E W
C O N T I N U E D
Financial commentary
The consolidated profit after tax attributable to equity
holders of the Company for the year ended 31 December
2023 was A$157.1 million compared with A$0.2 million
in 2022. Revenue of A$231.9 million was received under
the licence agreement with Acadia (2022: A$14.6 million).
This includes A$59.4 million for the first commercial sale
milestone, an upfront of A$145.7 million under the expanded
global licence agreement with Acadia and A$26.8 million
from quarterly royalty income. Other income includes
interest income of A$5.7 million (2022: A$0.4 million) and
foreign exchange gains of A$2.4 million (2022: A$1.2 million).
There was an increase of A$14.1 million in research and
development costs, due to higher expenditures in 2023 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 A$2.5 million, mainly
due to higher employee benefits and share-based payments
expense. In addition, a loss of A$2.2 million on the fair value
of outstanding forward contracts to sell Australian dollars
and buy US dollars was recognised at 31 December 2023
(2022: A$0.7 million).
The net income tax expense recognised for the year ended
31 December 2023 was A$48.1 million (2022: nil). After
utilising Australian carried forward tax losses and the
expectation of offsetting the 5% withholding tax paid to
the US Internal Revenue Service in relation to the milestone
payments, Neuren has recognised a current tax liability of
A$37.1 million.
Total cash and short-term investments at 31 December
2023 were A$228.5 million (2022: A$40.2 million). Net cash
received from operating activities was A$184.9 million (2022:
A$3.6 million). The increase of A$181.3 million was primarily
due to the receipt of A$221.0 million (2022: A$15.9 million)
from Acadia for the first commercial sale milestone payment
of US$40 million, the up-front payment of US$100 million
under the expanded global licence agreement for trofinetide
and receipt of quarterly royalty payments. This was offset by
higher payments to other suppliers of A$24.6 million (2022:
A$11.3 million) due to higher expenditures for the NNZ-2591
Phase 2 clinical trials and the foundational work to prepare
for Phase 3 development of NNZ-2591 across multiple
indications. Withholding tax of A$11.8 million was paid to
the US Internal Revenue Service by Acadia on Neuren’s
behalf. This will be offset against Neuren’s Australian tax
liability. Net cash from financing activities for 31 December
2023 was A$3.6 million (2022: nil), comprising proceeds
received on conversion of loan funded shares and exercise
of share options.
Following the receipt of the first commercial sale milestone,
up-front payment under the expanded global licence
agreement for trofinetide and quarterly royalty payments,
Neuren is holding more funds than are required to meet
currently forecast short-term cash commitments. As a
result, Neuren has classified A$211.4 million of short-term
deposits as Short-term Investments.
20
Neuren Pharmaceuticals Limited Annual Report 2023 21
Neuren Pharmaceuticals Limited Annual Report 2023 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 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.
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 extensive executive managerial and company director experience in
the biotechnology, biopharmaceutical, medical device, agritech and healthcare industries. Dianne has created numerous
global industry partnerships to yield innovative and competitive medical, pharmaceutical and agricultural products. She
has also successfully driven the development path for novel neurological pre-clinical agents to late-stage clinical assets
before the FDA and European regulators. With over twenty five years’ experience in ASX and NASDAQ listed companies,
she has expertise in business development, capital raising and investor relations together with corporate governance
and compliance capabilities. Her current roles include Non-Executive Chair of Argenica Therapeutics (ASX:AGN) and Non-
Executive Director of Cyclopharm (ASX: CYC), she is also a council member of Deakin University. Dianne is a registered
patent and trade mark attorney and is a member of Australian Institute of Company Directors (AICD).
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.
22
Neuren Pharmaceuticals Limited Annual Report 2023 E X E C U T I V E T E A M
JON PILCHER
Chief Executive Officer/Managing Director
BSc (Hons), FCA
Refer to page 22 for biography.
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.
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 leads the medical, clinical and regulatory aspects of Neuren’s development programs.
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 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 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.
23
Neuren Pharmaceuticals Limited Annual Report 2023 CO R P O R AT E G O V E R N A N C E
Neuren’s board of directors (“Board”) aims to ensure that
the Company and its subsidiaries (the “Group”) operates
with a corporate governance framework and practices that
promote an appropriate governance culture throughout
the organisation and that are relevant, practical and cost-
effective for the current size and stage of development of
the business.
This Statement has been approved by the Board and
provides a description of the framework and practices
that are in operation at the Reporting Date, laid out
under the structure of the ASX Listing Rules and the
Corporate Governance Principles (the “Principles”) and
Recommendations (the “Recommendations”) 4th Edition.
PRINCIPLE 1. L AY SOLID FOUNDATIONS
FOR MANAGEMENT AND OVERSIGHT
The Board is responsible for the overall corporate
governance of the Group. The Board acts on behalf of and
is accountable to the shareholders. The Board seeks to
identify the expectations of shareholders as well as other
regulatory and ethical expectations and obligations. The
Board is responsible for identifying areas of significant
business risk and ensuring mechanisms are in place to
manage those risks adequately. In addition, the Board sets
the overall strategic goals and objectives, and monitors
achievement of goals.
The Board appoints the principal executive officer,
currently the Chief Executive Officer. The Board has
delegated the responsibility for the operation and
administration of the Group to the Chief Executive Officer
and senior management. The Board ensures that the
management team is appropriately qualified to discharge
its responsibilities.
The Board ensures management’s objectives and activities
are aligned with the expectations and risks identified by
the Board through a number of mechanisms including the
following:
– establishment of the overall strategic direction and
leadership of the Group;
– approving and monitoring the implementation by
management of the Group’s strategic plan to achieve
those objectives;
– reviewing performance against its stated objectives,
by receiving regular management reports on business
situation, opportunities and risks;
– monitoring and review of the Group’s controls and
systems including those concerned with regulatory
matters to ensure statutory compliance and the highest
ethical standards; and
– review and adoption of budgets and forecasts and
monitoring the results against stated targets.
The Board sets the corporate strategy and financial targets
with the aim of creating long-term value for shareholders.
In accordance with Recommendation 1.2, the Board
undertakes appropriate checks before appointing a new
director, or putting forward to shareholders a candidate
for election and provides shareholders with all material
information in its possession relevant to a decision on
whether or not to elect or re-elect a director.
The Group has a written agreement with each director and
senior executive, setting out the terms of their appointment,
in accordance with Recommendation 1.3. The Company
Secretary is accountable directly to the Board on all matters
to do with the proper functioning of the Board, in accordance
with Recommendation 1.4.
At this stage of the Group’s development, considering the
very small size of the workforce and the specialist nature
of most positions, the Board has chosen not to establish
a formal diversity policy or formal objectives for gender
diversity, as recommended in Recommendation 1.5. The
Group does not discriminate on the basis of age, ethnicity,
religion, gender or sexuality and when a position becomes
vacant the Group seeks to employ the best candidate
available for the position. At 31 December 2023 there
were four male and two female directors. Five of the ten
senior executives were female. The Group had twenty-four
employees and consultants, of which thirteen 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. A performance
evaluation was undertaken by an independent external
party, with the process commencing during 2023. The final
report with recommendations was presented to the Board
in February 2024.
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 early 2024, in relation to the performance of the
senior executives in 2023. The performance evaluations
were postponed until after the announcement of top-line
results from the Phase 2 clinical trial of NNZ-2591 in Phelan-
McDermid syndrome in late December 2023, given the
importance of that milestone.
24
Neuren Pharmaceuticals Limited Annual Report 2023 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
PRINCIPLE 2. STRUCTURE THE BOARD TO BE EFFECTIVE AND ADD VALUE
The Board has not considered it necessary or value-adding to establish a separate Nomination Committee (Recommendation
2.1). The selection, appointment and retirement of directors is considered by the full Board, within the framework of the skills
matrix described below. The Board may also engage an external consultant where appropriate to identify and assess suitable
candidates who meet the Board’s specifications. The composition of the board is discussed regularly and each director may
propose changes for discussion.
In accordance with Recommendation 2.2, the Company has a skills matrix setting out the mix of skills that the Board is looking
to achieve in its membership. The matrix is summarised in the table below.
Skill
Requirements Overview
Professional Director Skills
Risk & Compliance
Financial & Audit
Strategy
Policy Development
Executive Management
Previous Board Experience
Industry Specific Skills
Pharmaceutical product development
International pharmaceutical
commercialisation
Pharmaceutical partnering
Risk capital management
Intellectual property
Interpersonal Skills
Leadership
Ethics and Integrity
Contribution
Crisis Management
Identify key risks to the organisation related to each key area of operations.
Ability to monitor risk and compliance and knowledge of legal and
regulatory requirements.
Experience in accounting and finance to analyze statements, assess
financial viability, contribute to financial planning, oversee budgets and
oversee funding arrangements.
Ability to identify and critically assess strategic opportunities and threats
to the organization. Develop strategies in context to our policies and
business objectives.
Ability to identify key issues for the organisation and develop appropriate
policy parameters within which the organization should operate.
Experience in evaluating performance of senior management, and oversee
strategic human capital planning.
The board's directors should have director experience and have completed
formal training in governance and risk.
Experience in and/or understanding of the issues in clinical development,
interactions with international regulators and/or CMC development.
Experience in and/or understanding of the issues in entering international
pharmaceutical markets, including pricing, distribution and exclusivity.
Experience in and/or understanding of the issues in partnering transactions
and/or relevant contacts in international pharma companies.
Experience in raising funding from equity markets and/or relevant contacts
in relevant funds and/or investment banks.
Understanding of the importance and value of market exclusivity and
the various ways of protecting it across different jurisdictions, including
patents and data exclusivity.
Make decisions and take necessary actions in the best interest of the
organisation, and represent the organisation favourably. Analyse issues
and contribute at board level to solutions. Recognise the role of the board
versus the role of management.
Understand role as director and continue to self educate on legal
responsibility, ability to maintain board confidentiality, declare any
conflicts.
Ability to constructively contribute to board discussions and communicate
effectively with management and other directors.
Ability to constructively manage crises, provide leadership around
solutions and contribute to communications strategy with stakeholders.
25
Neuren Pharmaceuticals Limited Annual Report 2023 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
The Board is highly engaged in the oversight and direction of the business. Six members served during the year to 31 December
2023, as set out in the table below. Details of the relevant skills, experience and expertise of each Board member are set out on
page 22 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
Yes1
Dianne Angus
2018
Non-executive director
Jenny Harry
2018
Non-executive director
Jon Pilcher
2021
Joe Basile
2023
Chief Executive Officer
and Managing Director
Non-executive director
Yes
Yes
No2
Yes
Member of Audit Committee
and Remuneration Committee
Member of Audit Committee
and Remuneration Committee
Member of Audit Committee
and Chair of Remuneration
Committee
Chair of Audit Committee
and member of Remuneration
Committee
1
2
Given the length of his tenure, in accordance with the Recommendations the Board has considered the nature of the relationships
of Trevor Scott with management and substantial shareholders and has concluded that he remains independent.
Jon Pilcher is not considered independent due to his executive role.
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
26
Neuren Pharmaceuticals Limited Annual Report 2023 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
– will 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
– 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.
27
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 2023, 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
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 29 February 2024.
Neuren Pharmaceuticals Limited Annual Report 2023 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
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 2023
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 2023 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).
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 2023.
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.
28
Neuren Pharmaceuticals Limited Annual Report 2023 CO R P O R AT E G O V E R N A N C E
C O N T I N U E D
The Board believes remuneration policies are a key part
of ensuring this success.
The Board has a Remuneration Committee, which consists
of only independent non-executive directors, has at least
three members and is chaired by an independent director
as suggested in Recommendation 8.1. The Committee met
once during 2023.
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. The Group
does not operate a short-term incentive plan, however
discretionary bonuses may be approved to recognise
exceptional achievement. Discretionary bonuses were
approved in 2023, the amount of which took into account
the value of the critical milestones achieved during the year
in each of the three value drivers of the business.
29
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.
ENVIRONMENTAL AND SOCIAL IMPACT
Neuren’s small workforce of 24 people all work from home
and no office or other facility is maintained. The incremental
environmental impact is therefore negligible.
Pharmaceutical development for international markets
necessarily requires some domestic and long-haul plane
travel for some people. However, the improved technology
and increased use of video meeting applications has
enabled the frequency to be reduced. The necessity of any
plane travel is always considered carefully before approval.
Neuren’s work to develop treatments for serious
neurodevelopmental disorders that have no approved
medicines and have a devastating impact on families has
a very high positive social impact, which is also highly
motivating for Neuren’s workforce. Neuren works closely
with the patient communities for each of the disorders and
provides financial support to events organised by patient
advocacy organisations.
Neuren aims to provide a positive and productive work
environment for its workforce. Working from home provides
people with high flexibility and enables optimum work/life
balance. The small size of the team facilitates opportunities
to experience and take responsibility for a broader range of
activities. Staff turnover was zero in 2023.
Neuren Pharmaceuticals Limited Annual Report 2023 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 3
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 before income tax
Income tax
Profit 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 for the year
Profit after tax attributable to Equity holders of the Company:
Total comprehensive income attributable to Equity holders of the Company:
Basic earnings per share
Diluted earnings per share
The notes on pages 34 to 50 form part of these consolidated financial statements.
Note
2023
$’000
2022
$’000
4
4
6
7
7
231,925
14,553
8,138
240,063
(26,751)
(5,946)
(2,226)
205,140
(48,059)
157,081
(10)
157,071
157,081
157,071
$1.236
$1.201
2,480
17,033
(12,712)
(3,437)
(700)
184
–
184
2
186
184
186
$0.001
$0.001
30
Neuren Pharmaceuticals Limited Annual Report 2023 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 3
ASSETS
Current Assets:
Cash and cash equivalents
Short-term investments
Trade and other receivables
Total current assets
Non-current assets:
Property, plant and equipment
Deferred tax asset
Total non-current assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current liabilities:
Trade and other payables
Derivative liabilities
Income tax payable
Total current liabilities
Total liabilities
EQUITY
Share capital
Share option reserve
Currency translation reserve
Accumulated surplus/(deficit)
Total equity attributable to equity holders
TOTAL LIABILITIES AND EQUITY
Note
2023
$’000
2022
$’000
8
9
10
6
11
12
6
13
13
17,094
211,445
18,617
247,156
43
771
814
40,180
–
3,066
43,246
21
–
21
247,970
43,267
3,418
2,226
37,119
42,763
42,763
173,127
4,382
(10,690)
38,388
205,207
247,970
978
700
–
1,678
1,678
167,740
3,222
(10,680)
(118,693)
41,589
43,267
The notes on pages 34 to 50 form part of these consolidated financial statements
For and on behalf of the Board of Directors who authorised the issue of these consolidated financial statements on 29 February
2024.
Patrick Davies
Non-Executive Chair
Joe Basile
Director
31
Neuren Pharmaceuticals Limited Annual Report 2023 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 3
Equity as at 1 January 2022
Reversal of share issue costs
Share based payments
Transactions with owners
Profit after income tax
Other comprehensive income
Total Comprehensive income for the year
Share
Capital
$’000
Share
Option
Reserve
$’000
Currency
Translation
Reserve
$’000
Accumulated
Surplus/
(Deficit)
$’000
Total
Equity
$’000
167,578
1,234
(10,682)
(118,877)
39,253
162
–
162
–
–
–
–
1,988
1,988
–
–
–
–
–
–
–
2
2
–
–
–
184
–
184
162
1,988
2,150
184
2
186
Equity as at 31 December 2022
167,740
3,222
(10,680)
(118,693)
41,589
Share issue costs
Loan funded shares converted
Transfer on conversion of loan funded shares
Share options exercised
Transfer on exercise of options
Share based payments
Transactions with owners
Profit after income tax
Other comprehensive loss
Total Comprehensive income for the year
(18)
1,104
420
2,533
1,348
–
5,387
–
–
–
–
–
(420)
–
(1,348)
2,928
1,160
–
–
–
–
–
–
–
–
–
–
–
(10)
(10)
–
–
–
–
–
–
–
(18)
1,104
–
2,533
–
2,928
6,547
157,081
157,081
–
(10)
157,081
157,071
Equity as at 31 December 2023
173,127
4,382
(10,690)
38,388
205,207
The notes on pages 34 to 50 form part of these consolidated financial statements.
32
Neuren Pharmaceuticals Limited Annual Report 2023 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 3
Cash flows from operating activities:
Receipts from licence agreement
Withholding tax paid
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 operating activities
Cash flows from investing activities:
Purchase of property, plant and equipment
Transfer of funds to short-term investments
Net cash flow (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 (decrease)/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 profit after income tax:
Profit after income tax
Non-cash items requiring adjustment:
Depreciation of property, plant and equipment
Share based payments expense
Foreign exchange loss
Loss on financial assets
Changes in working capital:
Trade and other receivables
Trade and other payables
Current and deferred taxes
Note
2023
$’000
2022
$’000
13
221,004
15,921
(11,840)
882
4,360
272
–
1,393
188
252
(5,161)
(2,814)
(24,592)
(11,341)
184,925
3,599
(40)
(211,445)
(211,485)
3,637
(18)
3,619
(22,941)
(145)
40,180
17,094
(19)
–
(19)
–
(2)
(2)
3,578
(181)
36,783
40,180
157,081
184
17
2,928
136
1,526
(15,551)
2,440
36,348
10
1,988
184
700
194
339
–
Net cash received from operating activities
184,925
3,599
The notes on pages 34 to 50 form part of these consolidated financial statements.
33
Neuren Pharmaceuticals Limited Annual Report 2023 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 3
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
29 February 2024.
Material Uncertainties
– The Group’s licensing and research and development
activities involve inherent risks. These risks include,
among others: dependence on the sales made by
licensees, 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;
part of 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 includes
quarterly royalty income contingent on the amount
of ongoing sales, whilst other milestone payments
are contingent on future sales and events and will be
intermittent. 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 MATERIAL ACCOUNTING
POLICIES
These general-purpose consolidated financial statements
of the Group are for the year ended 31 December 2023
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 2023 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 19.
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 $157.0 million
for the year ending 31 December 2023 and had positive
operating cash flows of $184.9 million for the year ended
31 December 2023. The Group had cash of $17.1 million and
short-term investments (term deposits) of $211.5 million at
31 December 2023.
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.
Changes in accounting policies
There are no changes in accounting policies for the year
ended 31 December 2023.
34
Neuren Pharmaceuticals Limited Annual Report 2023 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 MATERIAL ACCOUNTING
POLICIES (CONTINUED)
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.
(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.
35
Neuren Pharmaceuticals Limited Annual Report 2023 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 MATERIAL ACCOUNTING
POLICIES (CONTINUED)
Although the Group is entitled to sales-based royalties
from 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.
(ii) Milestone payments – This is variable consideration that
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
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. When Group revenue exceeds the
threshold of aggregated turnover of $20 million or more, a
non-refundable tax offset can be claimed. This is recognised
as a reduction in current tax liability.
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.
(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.
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Neuren Pharmaceuticals Limited Annual Report 2023 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 MATERIAL ACCOUNTING
POLICIES (CONTINUED)
(g) 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.
(h) 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. Cash and cash equivalents are held
to meet currently forecast short-term cash commitments.
(i) Short-term investments
Short-term investments comprise short-term deposits,
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.
When the Group is holding more short-term deposits than
are required to meet currently forecast short-term cash
commitments, these are held as short-term investments.
(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) Employee benefits
Wages and salaries, annual leave, long service leave and
superannuation
Liabilities for wages and salaries, bonuses, annual leave,
long service leave and superannuation expected to
be settled within 12 months of the reporting date are
recognised in accrued liabilities in respect of employees’
services up to the reporting date and are measured at
the amounts expected to be paid when the liabilities are
settled. Liabilities for non- accumulating personal leave are
recognised when the leave is taken and measured at the
rates paid or payable.
Contributions are made by the Group to employee
superannuation funds and are charged as expenses when
the obligation to pay them arises.
Share-based payments
Neuren 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.
(l) 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.
(m) 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.
37
Neuren Pharmaceuticals Limited Annual Report 2023 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 MATERIAL ACCOUNTING
Subsequent measurement of financial assets
POLICIES (CONTINUED)
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 company 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.
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,
short- term investments and trade receivables fall into this
category of financial instruments.
Classification and measurement of financial liabilities
The Group’s financial liabilities include trade and other
payables and derivative financial liabilities. Financial
liabilities are initially measured at fair value, and, where
applicable, adjusted for transaction costs.
Subsequently, trade and other payables are measured at
amortised cost using the effective interest method.
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.
38
Neuren Pharmaceuticals Limited Annual Report 2023 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
3. SEGMENT INFORMATION
The segment reporting reflects the way information is reported internally to the chief operating decision maker. The Board
of the Group has been identified as the chief operating decision maker. The Board assesses the financial performance and
position of the group and makes strategic decisions. The Group has two reportable operating segments, commercial products
and research and development.
Reportable
segment
Principal activities
Commercial products
Milestone and royalty revenue from licence of intellectual property.
Research & development
Development of pharmaceutical products for the treatment of neurodevelopmental disorders.
Commercial
products
Research &
Development
Corporate
2023
$’000
2022
$’000
2023
$’000
2022
$’000
2023
$’000
2022
$’000
Total
2023
$’000
Revenue
Total segment revenue
Research and development
costs
Interest income
Other income
Other expenses
231,925
231,925
14,553
14,553
–
–
–
–
(66)
–
–
–
(453)
–
–
–
(26,685)
–
–
–
(12,259)
–
–
–
–
–
–
5,687
2,451
(8,172)
–
–
231,925
231,925
–
391
2,089
(4,137)
(26,751)
5,687
2,451
(8,172)
Profit before income tax
231,858
14,100
(26,685)
(12,259)
(34)
(1,657)
205,140
Income tax expense
–
–
–
–
(48,059)
–
(48,059)
Profit after income tax
231,858
14,100
(26,685)
(12,259)
(48,093)
(1,657)
157,081
2022
$’000
14,553
14,553
(12,712)
391
2,089
(4,137)
184
–
184
All revenue from licences of intellectual property is from Acadia Pharmaceuticals Inc. (Acadia) and is from the United States.
Assets and liabilities are not allocated to segments and are therefore not reported.
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 - up-front payments
Licences of intellectual property - milestone payments
Licences of intellectual property - royalty income
2023
$’000
2022
$’000
145,711
59,434
26,780
231,925
–
14,553
–
14,553
All revenue from licences of intellectual property is from the United States. The revenue from licences of intellectual property
was earned by Neuren on the first commercial sale of DAYBUE by Acadia in the United States, and on signing the expanded
worldwide licence agreement with Acadia.
39
Neuren Pharmaceuticals Limited Annual Report 2023 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
4. REVENUE (CONTINUED)
Neuren is eligible to receive quarterly royalty income, calculated as a percentage of net sales of DAYBUE in North America and
is recognised in the period Acadia makes the sales of DAYBUE. Sales of DAYBUE commenced in April 2023. The royalty rate for
annual sales of less than or equal to US$250 million is 10%. The royalty rate then increases to 12% for annual net sales greater
than US$250 million but less than or equal to US$500 million.
Other income
Interest income
Australian R&D tax incentive
Net foreign currency gains
Total other income
5. EXPENSES
Profit/(loss) before income tax includes the following expenses:
Remuneration of auditors
Audit of financial statements (Grant Thornton New Zealand Audit Limited)
Review of financial statements (Grant Thornton New Zealand Audit Limited)
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
2023
$’000
2022
$’000
5,687
17
2,434
8,138
391
864
1,225
2,480
2023
$’000
2022
$’000
76
23
99
2,970
212
39
1,388
4,608
1,444
43
289
1,777
1,251
58
12
70
1,607
153
34
868
2,662
732
38
126
896
994
40
Neuren Pharmaceuticals Limited Annual Report 2023 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
Income tax expense
Current tax expense
Deferred tax benefit
Adjustment1
Numerical reconciliation of income tax to prima facie tax receivable:
Profit before income tax
Tax at applicable rates 30.0% (2022: 25.0%)2
Research and development incentives
Non-deductible share option expenses
Other non-deductible expenses/(non-assessable income)
Utilisation of previously unrecognised tax losses
Change in tax rates
Recognition of deferred tax asset for deductible temporary differences
Adjustment1
Difference in overseas tax rates
Income tax expense
Current tax
Current tax liabilities
Opening balance
Income tax
Witholding tax credits
2023
$’000
2022
$’000
48,102
(771)
728
48,059
205,140
61,542
(324)
879
99
(13,905)
(138)
(689)
728
(133)
48,059
–
48,102
(10,983)
37,119
–
–
–
–
184
46
281
497
122
(946)
–
–
–
–
–
–
–
–
–
1
2
The adjustment to tax expense relates to the utilisation of a foreign income tax offset rather than previously unrecognised tax losses in relation to the prior
year income tax return.
The tax rate of the Group changed from the base rate of 25.0% to the full company tax rate of 30.0% effective 1 January 2023. Neuren is not a base rate entity
for the year ended 31 December 2023 as its aggregated turnover for the year is greater than the aggregated turnover threshold of $50 million.
41
Neuren Pharmaceuticals Limited Annual Report 2023 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)
Deferred tax
2023
Patents
Capital raising costs
Employee benefits
Unrealised foreign exchange
Interest receivable
Other temporary differences
Deferred tax not recognised
Net deferred tax asset
2022
Patents
Capital raising costs
Employee benefits
Unrealised foreign exchange
Other temporary differences
Deferred tax not recognised
Net deferred tax asset
Gross tax losses for which no deferred tax asset has been recognised (a)
Opening
balance
$’000
Recognised in
profit or loss
$’000
Closing
balance
$’000
(183)
(276)
(92)
(177)
51
(14)
(691)
691
–
(217)
(403)
(76)
–
(10)
(706)
706
–
(14)
77
(47)
(491)
408
(13)
(80)
(691)
(771)
34
127
(16)
(177)
47
15
(15)
–
(197)
(199)
(139)
(668)
459
(27)
(771)
–
(771)
(183)
(276)
(92)
(177)
37
(691)
691
–
2023
$’000
2022
$’000
62,475
106,115
(a)
Of these gross tax losses, $62.5 million (2022: $62.6 million) relate to New Zealand tax losses, which are unlikely to be utilised unless future taxable income
is generated in New Zealand. The movement in New Zealand gross tax losses is due to the New Zealand tax losses being translated at the closing foreign
exchange rate at each reporting date. All previously unrecognised Australian tax losses have been utilised for the year ended 31 December 2023.
There are no franking credits or imputation credits available for use as at 31 December 2023 (2022: nil).
7. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the year attributable to the equity holders of the company by
the weighted average number of ordinary shares on issue during the year excluding shares held as treasury stock.
Diluted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares
that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
Earnings after income tax attributable to equity holders (basic) - ($'000)
Weighted average shares outstanding (basic) - (No.)
Basic earnings per share
Earnings after income tax attributable to equity holders (diluted) - ($'000)
Weighted average shares outstanding (diluted) - (No.)
Diluted earnings per share
42
2023
2022
157,081
127,069,512
$1.236
184
125,965,676
$0.001
157,081
130,768,487
$1.201
184
128,908,995
$0.001
Neuren Pharmaceuticals Limited Annual Report 2023 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. SHORT-TERM INVESTMENTS
Short-term investments
2023
$’000
17,094
–
17,094
2023
$’000
211,445
2022
$’000
2,304
37,876
40,180
2022
$’000
–
Following the receipt of the first commercial sale milestone payment and the upfront payment for the expansion of the
partnership with Acadia Pharmaceuticals for trofinetide to a worldwide exclusive licence, Neuren is holding more funds than
are required to meet currently forecast short-term cash commitments. As a result, the Company has classified short-term
deposits as short-term investments.
10. TR ADE AND OTHER RECEIVABLES
Royalty receivable
Other receivables
Interest receivables
Prepayments
Australian R&D tax incentive
2023
$’000
12,800
80
1,532
4,205
–
18,617
2022
$’000
–
17
207
1,977
865
3,066
The Group has not recognised any amounts receivable in relation to the R&D tax incentive for the year ended 31 December
2023, as a result of revenue exceeding the threshold of $20,000,000 in the financial year. As a result of exceeding this threshold,
eligible R&D expenditure qualifies for a non-refundable tax offset and is recognised as a reduction in current tax liability.
In 2022 the R&D tax incentive receivable was determined based on a combination of eligible domestic and international
expenditure of $1,988,057 at a rate of 43.5 cents tax incentive rebate per eligible R&D dollar spent. This amount was received in
cash during the financial year.
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 (2022: nil).
43
Neuren Pharmaceuticals Limited Annual Report 2023 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
11. TR ADE AND OTHER PAYABLES
Trade payables
Accruals
Employee benefits
2023
$’000
675
2,174
569
3,418
2022
$’000
258
267
453
978
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.
12. DERIVATIVES
Current derivative liabilities
Forward exchange contracts
13. SHARE C APITAL
2023
$’000
2022
$’000
2,226
700
Issued Share Capital
Ordinary shares on issue at beginning of year
Loan Funded Shares repaid and transferred to participant
Shares issued on exercise of options
Share issue expenses - issue costs
2023
Shares
2022
Shares
2023
$’000
2022
$’000
128,965,676
–
700,000
–
128,965,676
–
–
–
129,665,676
128,965,676
167,740
1,524
3,881
(18)
173,127
167,578
–
–
162
167,740
At 31 December 2023 127,265,676 ordinary shares are quoted on the ASX, and 2,400,000 unquoted ordinary shares
(31 December 2022: 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 2023 $2.9 million (31 December 2022: $2.0 million) was recognised in share- based
payments expense.
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Neuren Pharmaceuticals Limited Annual Report 2023 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. SHARE C APITAL (CONTINUED)
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 2023 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 and the third vesting condition (iii) was met in July 2023.
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.
Movements in the number of Loan Funded Shares were as follows:
Balance at 1 January
Granted during the year
Exercised during the year
Balance at 31 December
Vested and exercisable at 31 December
1 WAEP – weighted average exercise price
2023
Number
‘000
3,000
–
(600)
2,400
1,200
2023
$
WAEP1
1.84
–
1.84
1.84
1.84
2022
Number
‘000
3,000
–
–
3,000
1,200
2022
$
WAEP1
1.84
–
–
1.84
1.84
45
Neuren Pharmaceuticals Limited Annual Report 2023 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. SHARE C APITAL (CONTINUED)
Options to acquire ordinary shares
All options to acquire ordinary shares at 31 December 2023 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 and the third vesting condition (iii) was met in July 2023.
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.
Movements in the number of Share Options were as follows:
Balance at 1 January
Granted during the year
Exercised during the year
Balance at 31 December
Vested and exercisable at 31 December
1 WAEP – weighted average exercise price
2023
Number
‘000
2,200
–
(700)
1,500
280
2023
$
WAEP1
3.59
–
3.62
3.57
3.46
2022
Number
‘000
–
2,200
–
2,200
200
2022
$
WAEP1
–
3.59
–
3.59
3.46
During the year ended 31 December 2023, no additional options to acquire ordinary shares were issued to employees and
consultants.
14. 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.
46
Neuren Pharmaceuticals Limited Annual Report 2023 N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
C O N T I N U E D
15. COMMITMENTS AND CONTINGENCIES
(a) Legal claims
The Group had no significant legal matter contingencies as at 31 December 2023 or at 31 December 2022.
(b) Commitments
The Group was not committed to the purchase of any property, plant or equipment or intangible assets as at 31 December 2023
(2022: nil).
At 31 December 2023, the Group had commitments under product development contracts amounting to approximately
$7.4 million, including approximately US$4.4 million and AU$0.4 million. 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.
(c) Contingent liabilities
The Group had no contingent liabilities at 31 December 2023 or at 31 December 2022.
16. 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
2023
$’000
3,266
169
74
1,446
4,955
2022
$’000
1,682
112
34
837
2,665
(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.
17. EVENTS AFTER REPORTING DATE
As at the date of these consolidated financial statements authorised for issue, there are no events arising since 31 December
2023 that require disclosure.
47
Neuren Pharmaceuticals Limited Annual Report 2023 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
18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(a) Categories of financial instruments
2023
Financial assets
Cash and cash equivalents
Short-term investments
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Derivative financial instruments - forward exchange
contracts
2022
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Derivative - financial liability
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
12
8
10
11
12
17,094
211,445
–
228,539
–
–
–
40,180
–
40,180
–
–
–
–
–
14,332
14,332
2,849
–
2,849
–
207
207
525
–
525
–
–
–
–
–
2,226
2,226
–
–
–
–
700
700
17,094
211,445
14,332
242,871
2,849
2,226
5,075
40,180
207
40,387
525
700
1,225
At 31 December 2023, 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 revenue and 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.
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Neuren Pharmaceuticals Limited Annual Report 2023 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
18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
At 31 December 2023, there were three forward contracts to convert Australian dollars to US dollars outstanding. Adjustment
of these financial instruments to fair value as measured at 31 December 2023 resulted in a loss of $2.2 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 2023 is as follows:
Buy USD
$'000
Sell AUD
$'000
Weighted
average
exchange rate
Term
Buy US dollar / sell AU dollar
23,611
36,672 3 months or less
0.6439
During the year, the US dollar fluctuated against the Australian dollar. A net foreign exchange gain of $2.4 million is included
in results for the year ended 31 December 2023 (2022: $1.2 million), this includes a $1.9 million gain on the milestone revenue
from Acadia (2022: $1.4 million gain).
The carrying amounts of US dollar denominated financial assets and liabilities are as follows:
Assets
US dollars
Liabilities
US dollars
2023
$’000
2022
$’000
168,688
2,104
2,760
803
An increase of 10% in the rate of the US dollar against the Australian dollar as at the reporting date would have decreased the
consolidated profit after income tax by $18,418,196 (2022: $1,238,107). A decrease of 10% in the rate of the US dollar against the
Australian dollar as at the reporting date would have increased the consolidated profit after income tax by $22,511,129 (2022:
$1,514,242). 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 $51,743 (2022: decrease of $12,419). 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 $63,242 (2022: increase of $15,179).
Interest rate risk
The Group is exposed to changes in market interest rates as entities in the Group hold cash and cash equivalents and
short-term investments.
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
2023
$’000
2022
$’000
59,858
4.79%
168,688
4.67%
38,076
3.58%
2,104
–%
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 profit after tax by approximately $537,400 (2022:
$68,200). A 5% increase/decrease in the average market interest rates would have no impact on other components of equity.
49
Neuren Pharmaceuticals Limited Annual Report 2023 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
18. 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
and short-term investments, 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 and short-term are held and transacted with National Australia Bank, Commonwealth Bank, Westpac,
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, short-term investments
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 and
short-term investments 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.
19. 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 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.
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.
50
Neuren Pharmaceuticals Limited Annual Report 2023 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 30 to 50 which comprise the consolidated statement of financial position as at
31 December 2023, and the consolidated statement of comprehensive income, consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of the Group as at 31 December 2023 and of its financial performance and cash flows for the year then ended in accordance
with New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”) issued by the New Zealand
Accounting Standards Board and International Financial Reporting Standards (“IFRS”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (“ISAs (NZ)”) issued by the
New Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in
the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent
of the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current year. We have determined that there are no key audit matters to communicate
in our report.
Information Other than the Consolidated Financial Statements and Auditor’s Report thereon
The Directors are responsible for the other information. The other information comprises the information included in the annual
report but does not include the financial statements and our auditor’s report thereon. The annual report is expected to be made
available to us after the date of this auditor’s 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.
Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
51
Neuren Pharmaceuticals Limited Annual Report 2023 When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate
the matter to those charged with governance.
Directors’ responsibilities for the Consolidated Financial Statements
The Directors are responsible on behalf of the Company for the preparation and fair presentation of the consolidated financial
statements in accordance with NZ IFRS, 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 Company 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/
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
29th February 2024
Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
52
Neuren Pharmaceuticals Limited Annual Report 2023
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 2023:
Director
Patrick Davies
Dr Trevor Scott
Dianne Angus
Dr Jenny Harry
Jonathan Pilcher
Joe Basile
Board
Audit and Risk
Remuneration
Held (i)
Attended
Held (i)
Attended
Held (i)
Attended
11
11
11
11
11
9
11
11
11
11
11
9
2
2
2
2
–
1
2
2
2
2
–
1
1
1
1
1
–
1
1
1
1
1
–
1
(i) Number of meetings held during the time the Director was a member of the Board or Committee
INTERESTS REGISTER
The Company is required to maintain an interests register in which particulars of certain transactions and matters involving
Directors must be recorded. Details of the entries in this register for each of the Directors during and since the end of 2023 are
as follows:
Director
Trevor Scott
Joe Basile
Ordinary Shares
Purchased/(Sold)
Consideration
Paid/(Received)
Date of Transaction
(1,175,000)
($15,275,000)
14 June 2023
5,000
$59,950
13 September 2023
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 (2022: $nil).
53
Neuren Pharmaceuticals Limited Annual Report 2023 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
REMUNER ATION OF DIRECTORS
2023
Non–Executive Directors
Patrick Davies
Dr Trevor Scott
Dianne Angus
Dr Jenny Harry
Joe Basile
Executive Directors
Jon Pilcher
Total
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
$
125,000
75,000
67,720
67,720
60,124
395,564
–
–
–
–
–
–
548,654
500,000
944,219
500,000
–
–
7,280
7,280
2,376
16,935
26,346
43,280
–
–
–
–
–
–
125,000
75,000
75,000
75,000
62,500
412,499
289,404
1,364,404
289,404
1,776,903
Salary/fees
$
Bonus
$
Super–
annuation
$
Share based
payments
$
Total
$
125,000
75,000
68,028
68,028
336,056
396,403
732,459
–
–
–
–
–
–
–
–
–
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
Loan Funded Shares
Jon Pilcher has an interest in 1,500,000 Loan Funded Shares held by Neuren Trustee Limited. As detailed in Note 13 to the
Financial Statements, the Loan Funded Shares are subject to vesting conditions and repayment of a loan amounting to
$1.84 per share ($2,760,000) before they can be transferred to Jon.
54
Neuren Pharmaceuticals Limited Annual Report 2023 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
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
$190,000 – $199,999
$200,000 – $209,999
$220,000 – $229,999
$240,000 – $249,999
$270,000 – $279,999
$280,000 – $289,999
$300,000 – $309,999
$480,000 – $489,999
$510,000 – $519,999
$640,000 – $649,999
Including share based payments
$150,000 – $159,999
$190,000 – $199,999
$200,000 – $209,999
$220,000 – $229,999
$340,000 – $349,999
$360,000 – $369,999
$390,000 – $399,999
$400,000 – $409,999
$510,000 – $519,999
$590,000 – $599,999
$630,000 – $639,999
$640,000 – $649,999
$650,000 – $659,999
$1,200,000 – $1,209,999
2023
$’000
2022
$’000
–
1
1
1
–
–
1
1
1
1
1
1
1
–
–
2
1
–
1
–
–
–
2023
$’000
2022
$’000
–
1
1
1
–
–
–
–
1
1
1
–
1
1
1
–
–
–
1
1
1
1
–
–
–
1
–
–
AUDITORS
Grant Thornton New Zealand Audit Limited (‘Grant Thornton’) is the independent auditor of the Company. Audit fees in relation
to the annual and interim financial statements were $98,963 (2022: $70,214). 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 2023
or 2022.
55
Neuren Pharmaceuticals Limited Annual Report 2023 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 HELD BY DIRECTORS AS AT 22 MARCH 2024
Director
Dr Trevor Scott
Dianne Angus
Patrick Davies
Jenny Harry
Jonathan Pilcher1
Joe Basile
Interests in
Ordinary Shares
Interests in Loan
Funded Shares
Direct
Indirect
Indirect
27,106
2,387,678
30,000
–
–
–
–
264,634
29,663
398,207
10,000
–
–
–
–
–
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 13 to the Financial Statements, the Loan
Funded Shares are subject to vesting conditions and repayment of a loan amounting to $1.84 per share ($2,760,000) before they can be transferred to Jon.
DIRECTORS OF SUBSIDIARY COMPANIES AT 31 DECEMBER 2023
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 Chapter 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 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 interest. 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.
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, there were no on-market purchases of securities during the reporting period 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 22 March 2024.
The number of ordinary shareholdings held in less than marketable parcels at 22 March 2024 was 406, holding 3,296 ordinary
shares.
56
Neuren Pharmaceuticals Limited Annual Report 2023 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
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
92,527,908
23,600,151
4,360,478
5,436,028
1,571,111
%
72.57
18.51
3.42
4.26
1.23
127,495,676
100.00
Number
of holders
124
790
580
2,169
4,681
8,344
%
1.49
9.47
6.95
25.99
56.10
100.00
UNLISTED SECURITIES
2,250,000 Loan Funded Shares, held as treasury stock, with a weighted average exercise price of $1.84, with an expiry date of
13 July 2025. There are 3 holders of 100,001 and over.
2,120,000 Employee Share Scheme options, with a weighted average exercise price of $10.02, of which 970,000 have an expiry
date of 3 February 2026, 450,000 have an expiry date of 8 July 2026 and 700,000 have an expiry date of 7 February 2029. There
are 9 holders of 100,001 and over.
T WENT Y L ARGEST HOLDERS OF QUOTED ORDINARY SHARES
Number of
ordinary shares
% of issued
share capital
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
2
CITICORP NOMINEES PTY LIMITED
3
NATIONAL NOMINEES LIMITED
4
CAMERON RICHARD PTY LTD
5
BNP PARIBAS NOMS PTY LTD
6
STUART ANDREW PTY LTD
7
ESSEX CASTLE LIMITED
8
SMITHLEY SUPER PTY LTD
9
10 LINWIERIK SUPER PTY LTD
11 SHARESIES AUSTRALIA NOMINEE PTY LIMITED
12 BNP PARIBAS NOMINEES PTY LTD
13 FIRST COLBYCO PTY LTD
13 MJHFT PTY LTD
14 BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
15 DR ROBIN LANCE CONGREVE
16 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
17 EMANCIPAYTE PTY LTD
18 NETWEALTH INVESTMENTS LIMITED
19 MR HE ZHAO
20 PFIZER INC
Total
Balance of share register
Total ordinary shares quoted on ASX
22,507,287
12,099,419
11,687,108
4,166,698
4,123,084
3,584,206
2,633,787
2,387,678
1,870,000
1,761,385
1,435,555
796,367
750,000
750,000
745,279
671,637
499,399
470,756
421,309
405,000
404,072
74,170,026
53,325,650
127,495,676
17.65
9.49
9.17
3.27
3.23
2.81
2.07
1.87
1.47
1.38
1.13
0.62
0.59
0.59
0.58
0.53
0.39
0.37
0.33
0.32
0.32
58.17
41.83
100.00
SUBSTANTIAL SECURIT Y HOLDERS
The following have filed substantial holding notifications based on the last notice lodged on the ASX:
Milford Asset Management Limited
57
Number held
Percentage
6,561,977
5.088%
Neuren Pharmaceuticals Limited Annual Report 2023 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