Neuren Pharmaceuticals Limited ANNUAL REPORT 2024 Improving the lives of people with neurodevelopmental disabilities
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. 1 Neuren’s value proposition 2 Chair and CEO message 4 Operating Review 14 Board 15 Executive Team 16 Environmental, Social and Governance (ESG) 23 Directors’ Responsibilities Statement 24 Consolidated statement of Profit or Loss and Other Comprehensive Income 25 Consolidated Statement of Financial Position 26 Consolidated Statement of Changes in Equity 27 Consolidated Statement of Cash Flows 28 Notes to the Consolidated Financial Statements 48 Independent Auditor’s Report 51 Additional Information CONTENTS
NEUREN’S VALUE PROPOSITION arge potential upside for shareholders is enabled by financial strength 1 Maximise value of NNZ-2591 as a multiple indication platform Positive Phase 2 results for Phelan-McDermid syndrome Positive Phase 2 results for Pitt Hopkins syndrome Positive Phase 2 results for Angelman syndrome Long-term income growth from Acadia’s successful global commercialization of Value A$359 million pro-forma cash1 222 million cash and short-term investments at 31 December 2024, adjusted to include receipt in Q1 2025 of PRV sale proceeds, sales milestone and Q4 2024 royalty and payment in Q1 2025 of Q4 2024 tax Comprehensive income (CI) A$166m The 2024 numbers – a record year of income for shareholders 2 0.2 157.1 166.2 2022 2023 2024 Total comprehensive income (A$m) CI margin 73% NPAT A$142m FX gain A$24m Corporate & admin costs A$5m R&D investment in NNZ-2591 A$33m DAYBUE revenue 23 & 24 A$445m Pro-forma cash A$359m Comprehensive income (CI) A$166m CI margin 73% NPAT A$142m FX gain A$24m Corporate & admin costs A$5m R&D investment in NNZ-2591 A$33m DAYBUETM revenue 23 & 24 A$445m Pro-forma cash1 A$359m THE 2024 NUMBERS – A RECORD YEAR OF INCOME FOR SHAREHOLDERS 1 A$222 million cash and short-term investments at 31 December 2024, adjusted to include receipt in Q1 2025 of PRV sale proceeds, sales milestone and Q4 2024 royalty and payment in Q1 2025 of Q4 2024 tax. This is a non-IFRS measure and is relevant to illustrate the expected cash and short-term investments position, due to the large proportion of 2024 revenue being earned in Q4 2024 and received in Q1 2025. Neuren Pharmaceuticals Limited Annual Report 2024 1
CHAIR AND CEO MESSAGE PATRICK DAVIES & JON PILCHER 2024 was another highly successful year for the Neuren business, with record financial performance, record sales of DAYBUE™ and two more successful Phase 2 trial results for NNZ-2591. For the second year in succession Neuren received the Australian Growth Company of the Year Award for Health and Life Sciences. Across 2023 and 2024 our income from Acadia for DAYBUE was A$445 million at 100% pre-tax margin, which led to pro-forma cash of A$359 million at 31 December 2024. That cash has come from income and not from capital raising. This puts us in an enviable position to pursue the realisation of the value of NNZ-2591, which can potentially be many multiples of DAYBUE. Relative to our peers, we believe this provides a unique proposition for investors – a valuation backstop as well as the potential to add much more value using existing funds. Despite this progress and “buy” recommendations from all nine analysts that cover Neuren, the share price has fallen significantly from its peak, which is frustrating and disappointing. Neuren was the best performing ASX 200 stock in 2023, a year in which DAYBUE was approved and launched, together with a first positive Phase 2 trial result for NNZ-2591. In 2024 we were impacted negatively by momentum trading, initially triggered by a switch to negative sentiment about DAYBUE sales. In the early launch period with limited experience there was heavy focus in the investment community on quarterly sales rather than the long-term opportunity for Neuren. We continue to maintain that the launch has been very successful and better than comparators, with net sales reaching US$348 million in the first full year of sales. Acadia has committed substantial additional resources to expand DAYBUE in the USA and has forecast continued growth in 2025. More than 60% of patients currently on therapy have now been treated for more than 12 months. This provides a very stable base which means that sales have become much more predictable. There are still 70% of the expanding pool of diagnosed patients in the US who have not yet tried treatment. This, together with the coming expansion into Canada, Europe, Japan and potentially other countries, provides substantial upside and a long-term growth opportunity for Neuren. Acadia has done an impressive job so far and with new commercial leadership and initiatives in place is now in an even better position to maximise that global opportunity. Most importantly, the stories from families of benefits that children and adults with Rett syndrome are experiencing on DAYBUE are heartening and extremely motivating for the Neuren team. Patrick Davies Chair Jon Pilcher CEO For NNZ-2591, we were excited that during 2024 the positive Phase 2 trial results for Pitt Hopkins syndrome and Angelman syndrome were consistent with the Phelan-McDermid syndrome results, validating our thesis that NNZ-2591 can potentially have a broad impact on neurodevelopmental conditions. We were very pleased with the outcome of our End of Phase 2 Meeting with the FDA for Phelan-McDermid syndrome, enabling us to move straight to Phase 3 with a similar program to the successful DAYBUE program in Rett syndrome. Efficacy endpoints are always the most complex issue when you are leading the way as a first treatment and there is no precedent to follow. We went through a similar journey with FDA to align on efficacy endpoints for Rett syndrome. Overall, we believe that the success of DAYBUE de-risks the NNZ-2591 programs, given the similarities in clinical profile, scientific rationale, trial design and endpoints. Building on the Rett syndrome experience, we are eager to embark on the first ever Phase 3 trial in Phelan-McDermid syndrome, aiming to provide a first treatment option to that community. We are excited to also now be targeting hypoxic-ischemic encephalopathy (HIE), a devastating type of brain injury in newborns. We believe that NNZ-2591 can potentially provide a highly differentiated form of treatment continuing beyond acute treatment in the neonatal intensive care unit to target both the acute effects and the long term neurodevelopmental impairments resulting from HIE. During the past year we have been transitioning Neuren’s capabilities from Phase 2 development to Phase 3 development. That has required some changes in the skills and location of roles as well as a major focus on uplifting the sophistication of Neuren’s quality systems. We thank the Neuren team for their diligence through this transition and for all their many achievements during the year. We are also grateful to all our supportive shareholders and can assure you that we will continue to evaluate all options to maximise shareholder value. Last but not least, we thank the patient communities across the indications we are pursuing for their support, determination and courage, which is so critical to achieving the outcomes we are all striving for. Neuren Pharmaceuticals Limited Annual Report 2024 2
CHAIR AND CEO MESSAGE CONTINUED NEUREN’S VALUES We are passionate about making a difference to the lives of patients and their families We aim to earn the respect of everyone we deal with We are determined and creative to break through barriers We recognise the importance of all stakeholders and endeavour to use financial resources efficiently We harness the power of collaboration and different perspectives We apply a quality mindset to everything we do Jon Pilcher CEO Patrick Davies Chair Neuren Pharmaceuticals Limited Annual Report 2024 3
OPERATING REVIEW 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. This means that the target is to have a broad impact on the disorder rather than aiming to treat one symptom. An important feature is that 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. NEUREN’S GROUND-BREAKING THERAPIES 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 and are involved in the biology of IGF-1, 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. 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 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 Rett Fragile X PhelanMcDermid Angelman Pitt Hopkins Prader-Willi MECP2 FMR1 SHANK3 UBE3A TCF4 15q11-q13 Treating neurodevelopmental disorders Neuren Pharmaceuticals Limited Annual Report 2024 4
OPERATING REVIEW CONTINUED THE IMPORTANCE OF ORPHAN DRUG DESIGNATION The US Food and Drug Administration (FDA) and European Medicines Agency (EMA) have both granted Orphan Drug designation for trofinetide in Rett syndrome and Fragile X syndrome and for NNZ-2591 in each of Phelan-McDermid, Angelman and Pitt Hopkins syndromes. The FDA has also granted Orphan Drug designation for Prader-Willi syndrome. Orphan Drug designation is a special status that the regulators may grant to a drug to treat a rare disease or condition. Amongst other incentives, Orphan Drug designation qualifies the sponsor of the drug for exclusivity periods during which the regulators will not approve a generic competitor product. These marketing exclusivity periods are extremely valuable for the commercialisation of Orphan Drugs. They provide additional protection, along with patents, against generic competitors and potentially can continue to provide protection after patent expiry. The exclusivity periods after marketing authorisation of products approved for pediatric use are 7.5 years in the United States and 12 years in the EMA region. Japan, South Korea and Taiwan also have Orphan Drug programs. 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 around the world. COMMERCIAL EXCLUSIVITY 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 Growing, sustainable income to Neuren from DAYBUE™ (trofinetide) in the United States In March 2023, Neuren’s partner for trofinetide, Acadia Pharmaceuticals (NASDAQ: ACAD), received FDA approval of DAYBUE™ (trofinetide) for the treatment of Rett syndrome in adult and pediatric patients two years of age and older. On 17 April 2023, Acadia launched DAYBUE™ (trofinetide) in the United States as the first ever approved treatment for Rett syndrome. Access to DAYBUE has been well supported by Medicaid and private health insurance payors. 380 177 348 405 CY2023 (Apr- Dec) CY2024 CY2025 Acadia Guidance DAYBUE US NetSales (US$m) + 97% + 9-16% C 380 177 348 405 CY2023 (Apr- Dec) CY2024 CY2025 Acadia Guidance DAYBUE US NetSales (US$m) + 97% + 9-16% 62 27 56 67 CY2023 CY2024 CY2025E* US Royalty to Neuren(A$m) + 110% + 11-19% * Based on CY25 Acadia DAYBUE US Net Sales Guidance of US$380-405m, 10% of DAYBUE net sales up to US$250m and 12% of DAYBUE net sales between US$250m and US$500m, and AUDUSD of 0.65 380 177 348 405 CY2023 (Apr- Dec) CY2024 CY2025 Acadia Guidance DAYBUE US NetSales (US$m) + 97% + 9-16% 62 27 56 67 CY2023 CY2024 CY2025E* US Royalty to Neuren(A$m) + 110% + 11-19% Neuren Pharmaceuticals Limited Annual Report 2024 5
OPERATING REVIEW CONTINUED Net sales of DAYBUE in 2024 were US$348.4 million, with sequential growth in each quarter and record net sales of US$96.7 million in Q4 2024. These sales generated royalty income for Neuren in 2024 of A$56 million. 920 patients received DAYBUE in Q4 2024 and 62% of currently active patients had been on therapy for 12 months or longer. Acadia continues to collect and report realworld experience in the LOTUS study, with the majority of caregivers reporting meaningful improvements in patients. 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. That persistency rate in the real world has consistently tracked at more than 10 percentage points above the clinical trial experience and has been stable at approximately 50% after 12 months of treatment. In Q4 2024 discontinuations improved by approximately 15% compared with Q3. The LOTUS study indicates that initial dose titration improves tolerability, suggesting that the future persistence rate for new patients can be higher than the early experience after launch. The number of diagnosed Rett patients in the US has grown from approximately 4,500 at the launch of DAYBUE to between 5,500 and 5,800. Prevalence studies suggest the total number of patients may be 6,000 to 9,000. Acadia has provided guidance for growth in US net sales in 2025 to between US$380 million and US$405 million. Q1 2025 net sales will be lower than Q4 2024 due to seasonal impacts, which is consistent with the previous year. With 70% of the diagnosed patients yet to try DAYBUE, there is substantial potential for growth in the US. In January 2025, Acadia announced initiatives to accelerate adoption, in particular among the 65% of patients that are treated outside the Rett syndrome Centers of Excellence. Acadia is expanding its field force by approximately 30%, optimizing patient support, launching branded Direct-to-Consumer campaigns to showcase DAYBUE benefits and utilizing a range of communication channels to bring the DAYBUE clinical data to life for both physicians and families. Further information about DAYBUE, including prescribing information can be accessed at www.DAYBUE.com 23 67 87 76 85 91 97 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 US Net Sales (US$m) DAYBUE US Comparable Drug Launch (US)^ ^ For illustrative purposes only. Comparable Orphan Drug has different patient/clinician experience, approval and distribution/logistical dynamics 1. Latest stats based on Acadia 4Q and full year 2024 Earnings Presentation 26 February 2025 and 43rd Annual JP Morgan Healthcare Conference Presentation 14 January 2025 CY23 DAYBUE US$177m CY24 DAYBUE US$348m (up 97% y-o-y) ^ For illustrative purposes only. Comparable Orphan Drug has different patient/clinician experience, approval and distribution/logistical dynamics Neuren Pharmaceuticals Limited Annual Report 2024 6
US$10m upfront in 2018 US$10m in2022 followingacceptanceof NDAfor review US$40m in2023following1st commercialsalein the US US$50m In 2024 one third share of Priority Review Voucher awardedtoAcadia (soldfor US$150m) US$55m Milestone payments related to Fragile X U Tiered Royalty Rates (% of net sales) Annual Net Sales Rates ≤US$250m 10% >US$250m, ≤US$500m 12% >US$500m, ≤US$750m 14% >US$750m 15% Sales Milestones Net Salesin one calendar year US$m ≥US$250m 50 ≥US$500m 50 ≥US$750m 100 ≥US$1bn 150 U U North America US$100m upfront in 2023 US$35m following 1st commercial sale in Europe US$15m following 1st commercial sale in Japan US$10m following 1st commercial sale of a 2nd indication Europe US$4m following 1st commercial sale of a 2nd indication Japan Sales milestones On achievement of escalating annual net sales thresholds: Europe: up to US$170m Japan: up to US$110m RoW :upto US$83m Tiered royalties Mid- teens to low- 20s%of net sales Outside North America U U OPERATING REVIEW CONTINUED NEUREN’S ATTRACTIVE ECONOMICS FROM DAYBUE (TROFINETIDE) IN NORTH AMERICA In 2024, Neuren earned income from DAYBUE of A$213 million. In addition to royalties of A$56 million, Neuren received a sales milestone payment of A$80.5 million earned on achievement of the first in a series of four thresholds of total annual net sales of DAYBUE in North America, due to net sales for 2024 exceeding US$250 million. Neuren also earned A$76.5 million from Acadia, being one third of the market value of the Rare Pediatric Disease Priority Review Voucher (PRV) that was awarded to Acadia by the FDA upon marketing authorisation of DAYBUE. Acadia completed the sale of the PRV for US$150 million in December 2024. 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. No royalties or similar costs are payable by Neuren to third parties, which means Neuren’s revenue from Acadia flows 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: US$10m upfront in 2018 US$10m in2022 followingacceptanceof NDAfor review US$40m in2023following1st commercialsalein the US US$50m In 2024 one third share of Priority Review Voucher awardedtoAcadia (soldfor US$150m) US$55m Milestone payments related to Fragile X U Tiered Royalty Rates (% of net sales) Annual Net Sales Rates ≤US$250m 10% >US$250m, ≤US$500m 12% >US$500m, ≤US$750m 14% >US$750m 15% Sales Milestones Net Salesin one calendar year US$m ≥US$250m 50 ≥US$500m 50 ≥US$750m 100 ≥US$1bn 150 U U North America US$100m upfront in 2023 US$35m following 1st commercial sale in Europe US$15m following 1st commercial sale in Japan US$10m following 1st commercial sale of a 2nd indication Europe US$4m following 1st commercial sale of a 2nd indication Japan Sales milestones On achievement of escalating annual net sales thresholds: Europe: up to US$170m Japan: up to US$110m RoW :upto US$83m Tiered royalties Mid- teens to low- 20s%of net sales Outside North America U U In October 2024, Health Canada approved Acadia’s New Drug Submission for DAYBUE and Acadia anticipates first sales in Q3 2025, pending price negotiations. Canada net sales will be added to US net sales to give total net sales for calculation of Neuren’s North America royalties and sales milestone payments. In Canada, the prevalence of Rett Syndrome is estimated to be 600 to 900 patients. LONG TERM GROWTH OPPORTUNITY FOR TROFINETIDE THROUGH GLOBAL EXPANSION 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. 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. In January 2025, Acadia submitted a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for trofinetide for the treatment of Rett syndrome in adults and pediatric patients two years of age and older. Acadia anticipates potential approval in Q1 2026. If granted marketing authorization, trofinetide will be the first and only approved therapy for Rett syndrome in the European Union. In the meantime, Acadia anticipates initiating Managed Access Programs in Europe in Q2 2025, which will provide valuable real-world experience of treatment for European families and physicians in advance of full commercial launch. Neuren Pharmaceuticals Limited Annual Report 2024 7
US 6,000 - 9,000 Rett patients 1 Launched inApr 2023 Canada 600 - 900 Rett patients1 Approved in Oct 2024 First sales in Q3 2025 Europe 9,000 - 12,000 Rett patients 1 MAA filed with potential approval Q12026 Initiation of Managed Access Program Q2 2025 Acadia building EU leadership and launch teams Japan 1,000 - 2,000 Rett patients 1 PMDA discussions ongoing; clinicalstudy start by Q3 2025 to support marketing application 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. OPERATING REVIEW CONTINUED i For Japan, Acadia has had productive discussions with the regulatory agency (PMDA) and plans to initiate a small clinical study by Q3 2025 to support a marketing application. 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. Acadia is assessing a strategic approach to make DAYBUE available in select markets through named patient programs in 2025. 1 Acadia estimates Neuren Pharmaceuticals Limited Annual Report 2024 8
NNZ-2591 FOR MULTIPLE NEURODEVELOPMENTAL DISORDERS Neuren is developing NNZ-2591 for multiple serious neurodevelopmental disorders with different genetic origins that emerge in early childhood and have no or limited approved treatment options. The estimated number of potential patients being targeted across these disorders is more than five times larger than Rett syndrome. Neuren’s programs for Phelan-McDermid syndrome (PMS), Pitt Hopkins syndrome (PTHS), Angelman syndrome (AS) and Prader-Willi syndrome (PWS) have all been granted Orphan Drug designation by the 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 Neuren team has gained from the trofinetide Rett syndrome program across manufacturing, non-clinical, clinical and regulatory. The FDA has also granted Rare Pediatric disease Designation for NNZ-2591 in each of PMS, PTHS and AS. With this designation in place, Neuren may be awarded a PRV if the Rare Pediatric Disease PRV program is reauthorized by the US Congress and NNZ-2591 receives marketing authorisation for any of these indications by the FDA. The Rare Pediatric Disease PRV program is designed to incentivize drug development for serious rare pediatric diseases. If awarded, a PRV can be redeemed to receive priority review for a different product or sold to another sponsor. As noted above, Neuren’s partner Acadia received a PRV on marketing authorization of DAYBUE in Rett syndrome and sold the PRV for US$150 million. OPERATING REVIEW CONTINUED Successful Phase 2 clinical trials across three syndromes In May 2024, Neuren announced positive top-line results from the Phase 2 clinical trial of NNZ-2591 in children with PTHS. After treatment for 13 weeks, 9 out of 11 children showed improvement assessed by clinicians and significant improvement was observed by both clinicians and caregivers in clinically important aspects of PTHS, including communication, social interaction, cognition and motor abilities. NNZ-2591 was well tolerated and demonstrated a good safety profile. Neuren recently announced that the FDA has granted Fast Track designation for NNZ-2591 for the treatment of PTHS. Fast Track is designed to facilitate the development and expedite the review of drugs to treat serious conditions. In August 2024, Neuren announced positive top-line results from the Phase 2 clinical trial of NNZ-2591 in children with AS. After treatment for 13 weeks, 11 out of 13 children showed improvement assessed by clinicians, with improvements seen in clinically important aspects of AS. In the 3-12 years age group all 8 children showed improvement. The positive results of NNZ-2591 in PTHS and AS followed the announcement of positive top-line results from the Phase 2 clinical trial of NNZ-2591 in children with PMS. Phase 2 trial results validating multi-indication platform 1 # ' )Ҋ -($ .4) -*( җ Ҙ ۙрчѶ рт 2 &. $// *+&$). .4) -*( җ Ҙ ۙррѶ рт 2 &. )" '( ) .4) -*( җ Ҙ ۙртѶ рт 2 &. ! /4 о /*' - $'$/4 ! ) 2 '' /*' - / Ѷ 2$/# )* ( )$)"!0' /- ) . $) ' *- /*-4 1 '0 . *- */# - . ! /4 + - ( / -. 0-$)" /- /( )/ Efficacy All 3-12 years '$)$ $ ) '* ' (+- ..$*) *! (+-*1 ( )/ ( ) . *- җ ڿ *! + /$ )/. $(+-*1 Ҙ сѵу җчш ڿ Ҙ сѵх җчс ڿ Ҙ тѵп җчф ڿ Ҙ 2.8 (100%) - "$1 - (+- ..$*) *! # )" ( ) . *- җ ڿ *! + /$ )/. $(+-*1 Ҙ сѵц җчт ڿ Ҙ тѵп җцт ڿ Ҙ тѵс җхц ڿ Ҙ 2.6 (100%) ҿ + /$ )/. 2$/# '$)$ ' '* ' (+- ..$*) *! 1 -$/4 $(+-*1 ( )/ җ ڿ *! + /$ )/.Ҙ ц җтш ڿ Ҙ х җфф ڿ Ҙ у җтр ڿ Ҙ *).$./ )/ $(+-*1 ( )/ $) '$)$ ''4 $(+*-/ )/ .+ /. *((0)$ /$*)Ѷ # 1$*-Ѷ *")$/$*)Ѷ .* $ ' *((0)$ /$*)Ѷ .* $ 'Ѷ *")$/$*)Ѷ (*/*- *((0)$ /$*)Ѷ # 1$*-Ѷ *")$/$*)Ѷ (*/*- Phase 2 trial results validating multi-indication platform Neuren Pharmaceuticals Limited Annual Report 2024 9
OPERATING REVIEW CONTINUED Preparation for the first ever Phelan-McDermid syndrome Phase 3 program During 2024, at a Type B End of Phase 2 Meeting, Neuren achieved alignment with the FDA on key features of the Phase 3 clinical trial program for PMS. A single pivotal Phase 3 trial will be a randomised, double-blind, placebocontrolled trial of treatment for 13 weeks in children aged 3 to 12 years with PMS. Participants may continue into an open-label extension study continuing treatment until commercial launch. There will be one active treatment group versus placebo, with a target dose equivalent to the dose tested in the Phase 2 trial. Based on the safety data from the Phase 2 clinical trial, Neuren proposed a less burdensome safety monitoring plan for the Phase 3 and open label extension trials, which was considered reasonable by the FDA, subject to review of the final protocol. This study will be the first ever pivotal clinical trial in PMS, which means there is no precedent for efficacy assessment. This will be the subject of a further Type C Meeting with the FDA, scheduled in early April 2025, to seek alignment on the primary efficacy endpoints in the Phase 3 clinical trial. In parallel with the FDA interaction, Neuren is continuing the extensive preparations for the trial, planning for mid-2025 commencement. Phelan-McDermid syndrome has an overwhelming unmet medical need 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 (ELPFDD) 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. Other indications Neuren recently announced the initiation of development of NNZ-2591 to treat hypoxic-ischemic encephalopathy (HIE), a devastating type of brain injury caused when a baby’s brain does not receive enough oxygen or blood flow before or shortly after birth. About two to three in every 1,000 births in high income countries and 10-30 per 1,000 births in low- and middle-income countries will be affected by HIE, which means that many thousands of babies and children experience HIE every year. It is one of the leading causes of neonatal death and neurodevelopmental disability worldwide. Neuren believes that NNZ-2591 can potentially provide a highly differentiated form of treatment continuing beyond acute treatment in the neonatal intensive care unit to target both the acute effects and chronic impairments resulting from HIE. Neuren anticipates that NNZ-2591 in HIE will qualify for Orphan Drug and Rare Pediatric disease designations from the FDA. Leveraging the platform of clinical, non-clinical and manufacturing data that Neuren has built for NNZ-2591, a pre-IND meeting with the FDA is targeted in Q4 2025 before initiating a clinical trial in HIE patients. 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 NNZ2591 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. 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.” Neuren Pharmaceuticals Limited Annual Report 2024 10
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 trial, 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. Positive Phase 2 clinical trial results Neuren has completed three Phase 2 clinical trials, in Phelan-McDermid, Pitt Hopkins and Angleman syndromes. The trials examined safety, tolerability, pharmacokinetics and efficacy over the 13-week treatment period with NNZ2591. The data generated from these trials is used to inform the design of subsequent registration trials. OPERATING REVIEW CONTINUED 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. 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 NNZ2591 in each of the four disorders. 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 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 clinical 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. 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. 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. TO FIND OUT MORE ABOUT THESE SYNDROMES: www.pmsf.org www.angelman.org www.pitthopkins.org www.fpwr.org Neuren Pharmaceuticals Limited Annual Report 2024 11
OPERATING REVIEW CONTINUED The consolidated financial statements are presented on pages 24 to 47. All amounts in the consolidated Financial Statements are shown in Australian dollars unless otherwise stated. Total comprehensive income for shareholders was A$166.2 million, comprising A$142.0 million profit after tax and A$24.2 million foreign currency translation gain. In accordance with applicable Accounting Standards, effective 1 January 2024 the Company changed its functional currency from Australian dollars to US dollars, however the Group retained Australian dollars as its reporting currency. In a year in which the A$/US$ exchange rate fell from 0.68 at 31 December 2023 to 0.62 at 31 December 2024, the change in functional currency significantly impacted the Financial Statements compared with 2023. Profit before tax for 2024 includes A$7.2 million net foreign currency loss, mainly due to the translation of cash and short-term investments held in Australian dollars to the US dollars functional currency. However, the translation from the US dollars functional currency to the Australian dollars presentation currency resulted in a gain of A$24.2 million, which is included in Total Comprehensive Income and increased shareholders’ equity via the currency translation reserve. The gain in Comprehensive Income is mainly due to the translation to Australian dollars of the cash and short-term investments held in US dollars. FINANCE Summary Financials 2024 $’m 2023 $’m Revenue from contracts with customers 213.2 231.9 Interest income 11.0 5.7 Gain on financial derivatives measured at fair value 3.6 – Foreign exchange gain – 2.4 Total income 227.8 240.0 Research & Development (33.0) (26.8) Corporate & Administration (4.7) (5.9) Loss on financial derivatives measured at fair value – (2.2) Net foreign currency loss (7.2) – Profit before tax 182.9 205.1 Income tax (40.9) (48.0) Profit after tax 142.0 157.1 Other comprehensive income - foreign currency translation 24.2 – Total comprehensive income 166.2 157.1 Cash flow received from operations (11.3) 184.9 Cash flow used in investing 4.1 (211.5) Cash flow received from financing (8.8) 3.6 Effect of exchange rates on cash balances 2.0 (0.1) Cash and short-term investments at 31 December 222.2 228.5 Neuren Pharmaceuticals Limited Annual Report 2024 12
Total income of A$227.8 million in 2024 includes A$213.2 earned under the licence agreement with Acadia Pharmaceuticals. This comprised quarterly royalty income of A$56.2 million (2023: A$26.8 million), milestone revenue of A$80.5 million (2023: A$59.4 million) and A$76.5 million as Neuren’s one third share of the net proceeds of the Rare Disease Priority Review Voucher sold by Acadia. The milestone revenue for 2024 was earned on achievement of the first in a series of four thresholds of total annual net sales of DAYBUE, due to net sales for the year exceeding US$250 million, whilst the milestone payment for 2023 was for the first commercial sale of DAYBUE. Revenue for 2023 also included an upfront of A$145.7 million under the expanded global licence agreement with Acadia. Other income includes finance income of A$11.0 million (2023: A$5.7 million) and a gain of A$3.6 million on the fair value of outstanding forward contracts to sell Australian dollars and buy US dollars (2023: A$2.2 million loss). Research and development costs increased by A$6.2 million, due to higher expenditure relating to the NNZ-2591 Phase 2 clinical trials and the foundational work to prepare for Phase 3 development of NNZ-2591 across multiple indications. Corporate and administrative costs decreased by A$1.2 million, mainly due to bonuses paid in 2023 following the marketing authorisation of DAYBUE by the FDA. Income tax expense for 2024 was A$40.9 million (2023: A$48.1 million), reduced by the recognition of previously unrecognised New Zealand tax losses. The basic earnings per share for the year to 31 December 2024 was A$1.112 (2023: A$1.236) based on a weighted average number of shares outstanding of approximately 127.8 million (2023: 127.1 million). Total cash and short-term investments at 31 December 2024 were A$222.2 million (2023: A$228.5 million). As shown in the chart below, adjustments to include the receipt in Q1 2025 of the PRV sale proceeds, sales milestone payment and Q4 2024 royalty (all of which are included in 2024 income) and the payment in Q1 2025 of Q4 2024 tax, results in pro-forma cash and short-term investments of A$359.4 million2. 2024 $’m 2023 $’m Profit after tax adjusted to exclude FX translation impacts1 145.6 156.9 Gain/(loss) on revaluation of A$/US$ forward contracts 3.6 (2.2) Gain on translation to A$ functional currency n/a 2.4 Loss on translation to US$ functional currency (7.2) n/a Reported Profit after Tax 142.0 157.1 Gain on translation from US$ functional currency to A$ presentation currency 24.2 n/a Reported Total Comprehensive Income 166.2 157.1 A$/US$ exchange rate at 31 December 0.62 0.68 OPERATING REVIEW CONTINUED 1 This is a non-IFRS measure and is relevant to show comparable information for 2023 and 2024, due to the change in functional currency from Australian dollars to US dollars effective 1 January 2024. 2 This is a non-IFRS measure and is relevant to illustrate the expected cash and short-term investments position, due to the large proportion of 2024 revenue received in Q1 2025. * Includes US withholding tax on Q4 24 royalty and sales milestone payment. Record high cash reserve organically generated to fund growth 1 сссѵс цхѵф чпѵф рчѵц Ҋтчѵф тфшѵу .# / тр су ' . ($' ./*) у су -*4 '/4 у су / 3 + $ р сфҡ -*Ҋ!*-( .# .# ) -*Ҋ!*-( .# җ (ڦ Ҙ *Includes US withholding tax on Q4 24 royalty and sales milestone payment 2 Cash and Pro-forma Cash (A$m) Net cash used in operating activities was A$11.3 million compared with net cash generated of A$184.9 million for the year ended 31 December 2023. This is mainly due to the first sales milestone and sale of priority review voucher being earned in Q4 2024 and received in Q1 2025. Neuren made tax payments of A$37.2 million in 2024, which included A$34 million for 2023 tax, compared with nil payments made in 2023. Net cash used in financing activities for 31 December was A$8.8 million, comprising A$10.4 million of payments for the share buy-back, offset by A$1.7 million of proceeds received on conversion of loan funded shares and exercise of options. Neuren Pharmaceuticals Limited Annual Report 2024 13
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. 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 latestage 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 and is an accomplished CEO and Managing Director with experience in growing companies from start-up to commercialisation. She has served on Boards of a number of listed and unlisted companies and is currently a Non-Executive Director of Aeris Environmental Limited (ASX:AEI), Genetic Signatures Limited (ASX:GSS) and Lumitron Technologies Inc. Jenny is a graduate of the Harvard Business School General Manager Program and the Australian Institute of Company Directors. MR JOE BASILE 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. BOARD Neuren Pharmaceuticals Limited Annual Report 2024 14
EXECUTIVE TEAM JON PILCHER Chief Executive Officer/Managing Director BSc (Hons), FCA Refer to page 22 for biography. LARRY GLASS 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. LIZA 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 Chief Operations Officer 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. LAUREN FRAZER 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 Chief Business Officer 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. Neuren Pharmaceuticals Limited Annual Report 2024 15
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