Announcement PDF Neuren Pharmaceuticals Limited ABN 72 111 496 130 Appendix 4D Half year report Neuren Pharmaceuticals Limited Appendix 4D Half-Year Financial Report Name of entity 30 June 2023 Neuren Pharmaceuticals Limited ABN Half-year ended 72 111 496 130 30 June 2023 1. Reporting Period Neuren Pharmaceuticals Limited (“Neuren” or the “Company”) presents this financial report, including the interim consolidated financial statements, for the six months ended 30 June 2023, with the six months ended 30 June 2022 as the comparative period. 2. Results for announcement to the market 2.1 Total income 2.2 Profit/(loss) after tax from ordinary activities 2.3 Net profit/(loss) attributable to members 2.4 Dividends and franked amount per security 2.5 Dividend record date 30 June 2023 $’000 64,405 47,805 47,805 nil n/a 30 June 2022 $’000 283 (7,054) (7,054) nil n/a Movement % 22658% 778% 778% n/a n/a 2.6 Explanation of results: The Group’s net profit after income tax for the half-year ended 30 June 2023 was $47.8 million, compared with a net loss after tax of $7.0 million for the half-year ended 30 June 2022. Neuren recognised revenue from licence agreements of $59.4 million following the first commercial sale of DAYBUE by Acadia in April 2023. Royalty income of $3.5 million has been recognised in relation to the Q2 2023 net sales reported by Acadia. Research and development costs increased by $6.5 million, with the higher expenditure in 2023 due to the NNZ-2591 Phase 2 clinical trials and the foundational work to prepare for Phase 3 development of NNZ-2591 across multiple indications. The net income tax expense recognised for the half-year ended 30 June 2023 was $1.8 million (30 June 2022: nil). There was no income tax payable at 30 June 2023, due to the utilisation of 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 payment earned following the first commercial sale of DAYBUE by Acadia in April 2023. + See chapter 19 for defined terms. Appendix 4D Page 1 Appendix 4D Half year report Neuren Pharmaceuticals Limited ARBN 72 111 496 130 The basic earnings per share for the half-year to 30 June 2023 was $0.378 (half-year to 30 June 2022: loss per share $0.056). Total cash and short-term investments at 30 June 2023 were $85.7 million (31 December 2022: $40.2 million). Net cash generated from operating activities was $44.9 million (half-year to 30 June 2022: net cash used $5.8 million). A more detailed discussion of the activities undertaken in the period is set out in the Directors’ Report contained in the attached Interim Report. 3. Net Tangible Assets per Security Net tangible assets per share 4. June 2023 $ 0.7157 June 2022 $ 0.2659 Entities over which control has been gained or lost during the period: None. 5. Details of dividends Not applicable. 6. Details of dividend reinvestment plans Not applicable. 7. Details of associates and joint venture entities None. 8. Accounting standards The interim financial statements have been prepared in accordance with International Accounting Standard 34 and NZ IAS 34 Interim Financial Reporting. 9. Auditors review The interim financial statements have been subject to independent review by the Company’s auditors. The unqualified review report is included in the attached Interim Report. + See chapter 19 for defined terms. Appendix 4D Page 2 Neuren Pharmaceuticals Limited ABN 72 111 496 130 Incorporated in New Zealand Consolidated Interim Financial Report for the Half-Year ended 30 June 2023 Directors’ Report The Directors submit the interim financial report of Neuren Pharmaceuticals Limited for the half-year ended 30 June 2023. Directors’ details The names of Directors who held office during or since the end of the half-year are: Patrick Davies (Non-Executive Chair) Dr Trevor Scott (Non-Executive Director) Dianne Angus (Non-Executive Director) Dr Jenny Harry (Non-Executive Director) Joe Basile (Non-Executive Director) (Appointed 2 March 2023) Jonathan Pilcher (Managing Director) Review of Operations Neuren Pharmaceuticals Limited (“Neuren” or the “Company”), and its subsidiaries (collectively the “Group”) is a biopharmaceutical company, incorporated in New Zealand and listed on the Australian Securities Exchange (ASX: NEU). Neuren is developing two new drug therapies to treat multiple serious neurological disorders that emerge in early childhood. In March 2023, Neuren’s partner 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 or older. DAYBUE is the first and only approved treatment for Rett syndrome. In April, Acadia announced the commercial launch of DAYBUE in the United States. The first commercial sale earned Neuren a milestone payment of US$40 million (A$59.4). Neuren receives ongoing quarterly royalties of between 10% and 15% of DAYBUE net sales in North America, plus milestone payments of up to US$350 million on achievement of a series of four thresholds of total annual net sales. Acadia announced net sales of DAYBUE for the first partial quarter (Q2 2023) of US$23.2 million and provided guidance for net sales in Q3 2023 of US$45 to US$55 million. Upon FDA approval of the New Drug Application (NDA) with Rare Pediatric Disease designation, Acadia was awarded a Priority Review Voucher (PRV) by the FDA, which can be used to obtain FDA review of a NDA for another product in an expedited period of six months. The voucher may also be sold for use by another company. When Acadia use or sell the PRV, they must pay Neuren one third of the value. In July 2023, a voucher was sold for US$102 million. Neuren is also eligible to receive development and first commercial sales milestone payments of up to US$55 million if Acadia develops trofinetide for Fragile X syndrome. In July 2023, Neuren announced the expansion of its partnership with Acadia, with Acadia’s exclusive licence for trofinetide in North America expanded to a worldwide exclusive licence. This leverages Acadia’s unique knowledge and expertise from the successful development and commercialisation of DAYBUE in the United States. The existing milestone payments and royalties for trofinetide in North America remained unchanged, with additional payments related to the development and commercialisation outside North America. An up-front payment of US$100 million (A$145.7) was received by Neuren on 27 July 2023. Further development milestone payments of up to US$64 million in total may be received on the first commercial sale in Europe and Japan for each of Rett syndrome and a second indication. There are potential sales milestone payments of up to US$363 million on achievement of escalating annual net sales thresholds as well as mid-teen to low twenties per cent tiered royalties on net sales. Neuren is developing a second drug NNZ-2591 for four other seriously debilitating disorders that have no or limited approved treatment options. Phase 2 clinical trials are currently ongoing in children with each of Angelman, PhelanMcDermid, Pitt Hopkins and Prader-Willi syndrome. All four programs have been granted Orphan Drug designation by the FDA. The estimated number of patients being targeted across these four indications is more than five times larger than Rett syndrome. Neuren retains all global rights to these programs. In July and August 2022, Neuren announced the commencement of Phase 2 clinical trials of NNZ-2591 for PhelanMcDermid syndrome, Angelman syndrome and Pitt Hopkins syndrome, after receiving in March 2022 approval from the FDA for Investigational New Drug (IND) applications to conduct the trials. In June 2023, Neuren announced the commencement of its Phase 2 clinical trial of NNZ-2591 in Prader-Willi syndrome, after receiving approval for its IND application from the FDA in January 2023. In June 2023, Neuren announced that enrolment of subjects in the Phase 2 clinical trial of NNZ-2591 in PhelanMcDermid syndrome had been completed. Top-line results from the trial are expected to be available in December 2023. The four open label Phase 2 trials are each enrolling up to 20 children to examine safety, tolerability, pharmacokinetics and efficacy over 13 weeks of treatment with NNZ-2591. All subjects receive NNZ-2591 as an oral liquid dose twice daily, with escalation in two stages up to the target dose during the first 6 weeks of treatment, 1 Directors’ Report subject to independent review of safety and tolerability. The overall aim of these first clinical trials in patients is to expedite the generation of data that will enable the subsequent trials to be designed as registration trials. In order to expedite the overall development plan for NNZ-2591, in parallel with conducting the Phase 2 trials, Neuren is executing the additional development work required to be ready for Phase 3 development. This includes non-clinical toxicity studies to support longer clinical trials and commercial use of the product, as well as optimisation of the drug product and drug substance manufacturing arrangements. The consolidated interim financial statements for the half-year are presented on pages 4 to 12. All amounts in the Financial Statements are shown in Australian dollars unless otherwise stated. The Group’s net profit after income tax for the half-year ended 30 June 2023 was A$47.8 million, compared with a net loss after tax of A$7.0 million for the half-year ended 30 June 2022. Neuren recognised revenue from licence agreements of A$59.4 million following the first commercial sale of DAYBUE by Acadia in April 2023. Royalty income of A$3.5 million was recognised in relation to the Q2 2023 net sales reported by Acadia. Research and development costs increased by A$6.5 million, with the higher expenditure in 2023 due to the NNZ2591 Phase 2 clinical trials and the foundational work to prepare for Phase 3 development of NNZ-2591 across multiple indications. Corporate and administrative costs increased by A$1.1 million, mostly due to one-time bonus payments following the receipt of the first commercial sale milestone payment from Acadia. The net income tax expense recognised for the half-year ended 30 June 2023 was A$1.8 million (30 June 2022: nil). There was no income tax payable at 30 June 2023, due to the utilisation of 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 payment earned following the first commercial sale of DAYBUE by Acadia in April 2023. The basic earnings per share for the half-year to 30 June 2023 was A$0.378 (half-year to 30 June 2022: loss per share A$0.056) based on a weighted average number of shares outstanding of approximately 126.3 million (halfyear to 30 June 2022: 126.0 million). Total cash and short-term investments at 30 June 2023 were A$85.7 million (31 December 2022: A$40.2 million). Net cash generated from operating activities was A$44.9 million (half-year to 30 June 2022: net cash used A$5.8 million). Following the receipt of the first commercial sale milestone payment from Acadia, the Company is holding more funds than are required to meet currently forecast short-term cash commitments. As a result, the Company has classified A$47.3 million of cash held in short-term deposits as Short-term Investments. 2 Directors’ Report Directors’ declaration The Directors of Neuren Pharmaceuticals Limited ("Neuren") declare that: The accompanying condensed consolidated financial statements of Neuren and its subsidiaries for the half-year ended 30 June 2023 and the notes to those condensed consolidated financial statements: • comply with International Accounting Standard 34 and NZ IAS 34 Interim Financial Reporting; and • present fairly, in all material respects, the financial position as at 30 June 2023 and of the performance for the half-year ended on that date of Neuren and its subsidiaries. In the Directors’ opinion there are reasonable grounds to believe that Neuren will be able to pay its debts as and when they become due and payable. This report is signed and the declaration is made in accordance with a resolution of the Board of Directors dated 25 August 2023. On behalf of the Board Patrick Davies Non-Executive Chair Dr Trevor Scott Director 3 Neuren Pharmaceuticals Limited Consolidated Interim Statement of Comprehensive Income For the half-year ended 30 June 2023 Half-year ended Note Revenue from contracts with customers Other income 4 4 Jun 2023 Jun 2022 $’000 $’000 62,926 1,479 283 Total income 64,405 283 Research and development costs Corporate and administrative costs Share based payment expense (11,089) (2,659) (1,035) (4,610) (1,577) (1,150) Profit/(loss) before income tax 49,622 (7,054) Income tax expense (1,817) Profit/(loss) after income tax for the period 47,805 (7,054) (13) (17) Total comprehensive income/(loss) for the period 47,792 (7,071) Profit/(loss) after tax attributable to Equity holders of the Company 47,805 (7,054) Total comprehensive income/(loss) attributable to Equity holders of the Company 47,792 (7,071) - Other comprehensive expense, net of tax Amounts which may be reclassified to profit or loss: Exchange differences on translation of foreign operations Basic earnings/(loss) per share 3 $0.378 ($0.056) Diluted earnings/(loss) per share 3 $0.368 ($0.056) The accompanying notes form part of this financial statement. 4 Neuren Pharmaceuticals Limited Consolidated Interim Statement of Financial Position As at 30 June 2023 As at As at 30 Jun 2023 31 Dec 2022 $’000 $’000 Cash and cash equivalents 38,389 40,180 Short-term investments 47,286 - Trade and other receivables 10,592 3,066 ASSETS Current Assets: Derivative assets Total current assets 131 - 96,398 43,246 Non-current assets: Property, plant and equipment 32 21 Deferred tax asset 1,093 - Total non-current assets 1,125 21 TOTAL ASSETS 97,523 43,267 LIABILITIES AND EQUITY Current liabilities: Trade and other payables 3,100 978 Derivative liabilities - 700 Income tax payable 2,910 - Total current liabilities 6,010 1,678 Total liabilities 6,010 1,678 169,258 167,740 3,836 3,222 Currency translation reserve (10,693) (10,680) Accumulated deficit (70,888) (118,693) Total equity attributable to equity holders 91,513 41,589 TOTAL LIABILITIES AND EQUITY 97,523 43,267 EQUITY Share capital Share option reserve The accompanying notes form part of this financial statement. 5 Neuren Pharmaceuticals Limited Consolidated Interim Statement of Changes in Equity For the half-year ended 30 June 2023 Share Option Reserve $’000 Share Capital $’000 Equity as at 1 January 2022 Currency Translation Accumulated Reserve Deficit $’000 $’000 Total $’000 167,578 1,234 (10,682) (118,877) 39,253 162 162 - 1,150 1,150 - (17) (7,054) - 162 1,150 1,312 (7,054) (17) - - (17) (7,054) (7,071) Reversal of share issue costs Share based payments Transactions with owners Loss after income tax Other comprehensive expense Total comprehensive income/(loss) for the period Equity as at 30 June 2022 167,740 2,384 (10,699) (125,931) 33,494 Equity as at 1 January 2023 167,740 3,222 (10,680) (118,693) 41,589 1,104 - - - 1,104 (7) - - - (7) - 1,035 - - 1,035 421 (421) - - - 1,518 - 614 - (13) 47,805 - 2,132 47,805 (13) - - (13) 47,805 47,792 (10,693) (70,888) 91,513 Loan funded shares converted Issue costs on conversion of loan funded shares Share based payments Transfer on conversion of loan funded shares Transactions with owners Profit after income tax Other comprehensive expense Total comprehensive income/(loss) for the period Equity as at 30 June 2023 169,258 3,836 The accompanying notes form part of this financial statement. 6 Neuren Pharmaceuticals Limited Consolidated Interim Cash Flow Statement For the half-year ended 30 June 2023 Half-year ended Jun 2022 Jun 2023 $’000 $’000 Cash flows from operating activities: Receipts from licence agreement Withholding tax paid Interest received GST refunded Payments for employees and directors Payments to other suppliers Net cash from/(used in) operating activities Cash flows from investing activities: Purchase of property, plant and equipment Net cash used in investing activities Cash flows from financing activities: Proceeds from the issue of shares Payment of share issue expenses Net cash provided from/(used in) financing activities Net increase/(decrease) in cash Effect of exchange rate changes on cash balances Cash and cash equivalents at the beginning of the period Less cash transferred to short-term investments Cash and cash equivalents at the end of the period Reconciliation with profit/(loss) after income tax: Profit/(loss) after income tax Non-cash items requiring adjustment: Depreciation of property, plant and equipment Share based payments expense Foreign exchange loss Unrealised gain on financial assets Movements in working capital Net cash from/(used in) operating activities (i) 59,810 (2,910) 766 130 (2,993) (9,925) 44,878 33 132 (1,275) (4,706) (5,816) (18) (18) (10) (10) 1,104 (7) 1,097 (2) (2) 45,957 (462) 40,180 (47,286) 38,389 (5,828) 133 36,783 31,088 47,805 (7,054) 6 1,035 (250) (131) (3,587) 44,878 4 1,150 (149) 233 (5,816) (i) Following the receipt of the first commercial sale milestone payment from Acadia, the Company is holding more funds than are required to meet currently forecast short-term cash commitments. As a result, the Company has reclassified cash held in short-term deposits from Cash and Cash Equivalents to Short-term Investments. The accompanying notes form part of this financial statement. 7 Neuren Pharmaceuticals Limited Notes to the Consolidated Interim Financial Statements For the half-year ended 30 June 2023 1. Nature of the business Neuren Pharmaceuticals Limited (“Neuren” or the “Company”), and its subsidiaries (collectively the “Group”) is a biopharmaceutical company developing new drug therapies to treat multiple serious neurodevelopmental disorders with high unmet need. 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 operates in Australia and its ordinary shares are listed on the Australian Securities Exchange (ASX code: NEU). These consolidated interim financial statements were approved for issue by the Board of Directors on 25 August 2023. 2. Summary of significant accounting policies Basis of preparation These condensed consolidated interim financial statements are for the half-year ended 30 June 2023 and have been prepared in accordance with, and comply with International Accounting Standard 34 and NZ IAS 34 Interim Financial Reporting. The Group is a Tier 1 for-profit entity under the External Reporting Board Accounting Standards Framework in New Zealand. No new Standards were adopted in the current year. There have been no significant changes in accounting policies during the current period. The accounting policies that materially affect the measurement of the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows have been applied on a basis consistent with those used in the audited financial statements for the year ended 31 December 2022 and the unaudited interim financial statements for the half-year ended 30 June 2022. There is no cyclical seasonality of interim operations. The functional and presentation currency of the Group is Australian dollars. These interim financial statements do not include all the notes of the type normally included in an annual financial report. Accordingly, this interim report is to be read in conjunction with the annual report for the year ended 31 December 2022. Going concern assumption 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 $47.8 million for the period ended 30 June 2023 and had positive operating cash flows for the period of $44.9 million. The Group had cash of $38.4 million and short-term investments (term deposits) of $47.3 million at 30 June 2023. It is the considered view of the Directors that the group will have access to adequate resources to meet its ongoing obligations for at least a period of 12 months from the date of signing these financial statements. On this basis, the Directors have assessed it is appropriate to adopt the going concern basis in preparing the financial statements. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern. 8 Neuren Pharmaceuticals Limited Notes to the Consolidated Interim Financial Statements For the half-year ended 30 June 2023 3. Earnings per share Basic earnings per share is calculated by dividing the profit for the period attributable to the equity holders of the company by the weighted average number of ordinary shares on issue during the period excluding shares held as treasury stock. Diluted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. Jun-23 Jun-22 Consolidated Earnings/(loss) after income tax attributable to equity holders (basic) ($’000) Weighted average shares outstanding (basic) - (No.) Basic earnings/(loss) per share Earnings/(loss) after income tax attributable to equity holders (diluted) ($’000) Weighted average shares outstanding (diluted) - (No.) Diluted earnings/(loss) per share 4. 47,805 (7,054) 126,336,947 125,965,676 $0.378 ($0.056) 47,805 (7,054) 130,049,131 125,965,676 $0.368 ($0.056) Revenue Disaggregation of revenue from contracts with customers The Group derives revenue from the sale of goods and services at a point in time under the following major business activities: Revenue from contracts with customers Licences of intellectual property - at a point in time Royalty income Jun 2023 $’000 Jun 2022 $’000 59,434 3,492 - 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. 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 the Acadia makes the sales of DAYBUE. The royalty rate for ≤US$250 million of annual net sales is 10%. Other income Interest income Net foreign currency gains Gain on financial derivatives measured at fair value through profit or loss Total other income 684 664 131 1,479 55 228 283 9 Neuren Pharmaceuticals Limited Notes to the Consolidated Interim Financial Statements For the half-year ended 30 June 2023 5. Income tax Income tax expense is recognised based on management’s estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the half-year ended 30 June 2023 is 30%, compared with 25% for the year ended 31 December 2022. The tax rate was lower in 2022 as the Group was a base rate entity however will exceed the aggregated turnover thresholds in 2023. Current tax expense was $2.9 million, offset by a deferred tax benefit of $1.1 million, resulting in a net income tax expense recognised for the half-year ended 30 June 2023 of $1.8 million (30 June 2022: nil). There is no income tax payable at 30 June 2023, due to the utilisation of 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 payment earned following the first commercial sale of DAYBUE by Acadia in April 2023. At 30 June 2023, a $1.1 million deferred tax asset has been recognised in relation to the future income tax benefit of remaining Australian tax losses ($0.55 million) and other deferred tax assets ($0.55 million) in relation to temporary timing differences, on the basis there is probable realisation through future profits. The deferred tax asset recognised in relation to remaining tax losses is the tax effect amount of carried forward tax losses of $1.8 million. 6. Share capital Half-year Year Jun-23 Dec-22 Shares Shares Ordinary shares on issue at beginning of period 128,965,676 128,965,676 Ordinary shares on issue at end of period 128,965,676 128,965,676 Consolidated Issued share capital At 30 June 2023, 126,565,676 shares (31 December 2022: 125,965,676) are quoted on the ASX, and 2,400,000 unquoted ordinary shares (31 December 2022: 3,000,000) were held as treasury stock in respect of the Loan Funded Share plan. Share based payments During the half-year to 30 June 2023 $1.0 million (30 June 2022: $1.2 million) was recognised in sharebased payments expense. Loan funded shares At 30 June 2023 2.4 million Loan Funded Shares are held in trust for Key Management Personnel (KMP), of which 0.6 million were vested and 1.8 million were unvested. During the half-year ended 30 June 2023, 600,000 vested loan funded shares were converted to issued ordinary shares upon repayment of the loan. Movements in the number of Loan Funded Shares were as follows: Loan Funded Shares Weighted Average Exercise Price Exercisable Weighted Average Exercise Price 3,000,000 $1.84 1,200,000 $1.84 Loan repaid and shares transferred to participant (600,000) $1.84 (600,000) $1.84 Outstanding at 30 June 2023 2,400,000 $1.84 600,000 $1.84 Outstanding at 31 December 2022 The exercise price for the 2.4 million Loan Funded Shares is $1.84 per share. 10 Neuren Pharmaceuticals Limited Notes to the Consolidated Interim Financial Statements For the half-year ended 30 June 2023 Options to acquire ordinary shares At 30 June 2023, there are 2,200,000 options to acquire ordinary shares on issue to employees and consultants. There were no movements in the options to acquire ordinary shares on issue for the period ended 30 June 2023. Movements in the number of Share Options were as follows: Share Options Weighted Average Exercise Price Exercisable Weighted Average Exercise Price Outstanding at 31 December 2022 2,200,000 $3.59 200,000 $3.46 Outstanding at 30 June 2023 2,200,000 $3.59 200,000 $3.46 The weighted average exercise price for the options to acquire ordinary shares is $3.59. 7. Commitments and contingencies (a) Legal claims The Group had no significant legal matter contingencies at 30 June 2023 (30 June 2022: nil). (b) Commitments The Group was not committed to the purchase of any property, plant or equipment or intangible assets as at 30 June 2023 (30 June 2022: nil). As at 30 June 2023, the Group had commitments under product development contracts at the end of the reporting period but not recognised as liabilities amounting to approximately $11.1 million, comprising approximately US $7.0 million, £0.1 million and AU $0.3 million. (c) Contingent liabilities The Group had no contingent liabilities at 30 June 2023 (30 June 2022: nil) that require disclosure. 8. Key management personnel Key management personnel remuneration is disclosed in the annual financial report. During the half-year ended 30 June 2023, 600,000 vested loan funded shares were converted to issued ordinary shares upon repayment of the loan. There were no loan funded shares or share options issued to key management personnel in the half-year ended 30 June 2023. 9. Segment information The Group has a single reportable segment and internal management reporting systems present financial information as a single segment. The segment is involved in the development of pharmaceutical products. The Board of the Company has been identified as the chief operation decision maker. The Board assesses the financial performance and position of the Group and makes strategic decisions. 11 Neuren Pharmaceuticals Limited Notes to the Consolidated Interim Financial Statements For the half-year ended 30 June 2023 10. Events after balance date On 14 July 2023, the Group announced the expansion of its partnership with Acadia Pharmaceuticals for trofinetide (marketed in US as DAYBUETM). Acadia’s exclusive licence for trofinetide in North America was expanded to a worldwide exclusive licence. The existing milestone payments and royalties to Neuren for trofinetide in North America were unchanged, with additional payments related to development and commercialisation outside North America. Neuren received an up-front payment of US$100 million from Acadia on 27 July 2023. Further development milestone payments of up to US$64 million in total may be received on the first commercial sale in Europe and Japan for each of Rett syndrome and a second indication. There are potential sales milestones payments of up to US$363 million on achievement of escalating annual net sales thresholds as well as mid-teen to low twenties per cent tiered royalties on net sales. If Acadia sub-licenses trofinetide for any region outside North America within the first two years, Neuren is entitled to a share of any upfront and development milestones received by Acadia. Any such payment to Neuren will be credited against any future milestone and royalty payments payable to