13. SHARE CAPITAL (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. on acceptance by the US Food and Drug Administration of the filing of a New Drug Application for trofinetide – 40% – ii. 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 60% 40% 60% 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% 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: 2023 Number ‘000 2023 $ WAEP1 2022 Number ‘000 2022 $ WAEP1 Balance at 1 January 2,200 3.59 – – Granted during the year – – 2,200 3.59 Exercised during the year (700) 3.62 – – Balance at 31 December 1,500 3.57 2,200 3.59 Vested and exercisable at 31 December 280 3.46 200 3.46 1 WAEP – weighted average exercise price 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 Date of incorporation Principle activities Interest held Domicile Neuren Pharmaceuticals Inc. 20-Aug-02 Development services 100% USA Neuren Pharmaceuticals (Australia) Pty Ltd 9-Nov-06 Dormant 100% AUS Neuren Trustee Limited 29-May-13 Holds loan funded shares 100% NZ All subsidiaries have a reporting date of 31 December. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Neuren Pharmaceuticals Limited Annual Report 2023 46
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