16. SHARE CAPITAL (CONTINUED) All loan funded shares under the plan during the year ended 31 December 2024 vest subject to remaining an employee or consultant if and when the following non-market performance vesting conditions are met: Vesting conditions Date met i. 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 September 2022 ii. 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; February 2024 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. July 2023 Each of these vesting conditions shall be tested separately from the other vesting conditions. 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. At 31 December 2024, 2.25 million Loan Funded Shares are held in trust, of which all were vested. During the year ended 31 December 2024, 150,000 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 Outstanding at 31 December 2022 3,000,000 $1.84 Exercised during the year (600,000) $1.84 Outstanding at 31 December 2023 2,400,000 $1.84 Loan repaid and shares transferred to participant (150,000) $1.84 Outstanding at 31 December 2024 2,250,000 $1.84 Vested and exercisable at 31 December 2024 2,250,000 $1.84 The exercise price for the 2.25 million Loan Funded Shares is $1.84 per share. Options to acquire ordinary shares At 31 December 2024, there are 1,430,000 options to acquire ordinary shares on issue to employees and consultants. During the year ended 31 December 2024, 400,000 vested options to acquire ordinary shares were exercised, and 370,000 options to acquire ordinary shares were forfeited due to service conditions not being met. On 7 February 2024, options to acquire 700,000 ordinary shares were granted to employees and consultants. Options to acquire ordinary shares vest subject to remaining an employee or consultant if and when the following non-market performance vesting conditions are met: i. on the first dosing of a subject in a Phase 3 or Phase 2B clinical trial for NNZ-2591 33.33% ii. on the first dosing of a subject in a Phase 3 or Phase 2B clinical trial for a second indication for NNZ-2591 33.33% iii. on the last patient last visit in a Phase 3 or Phase 2B clinical trial for NNZ-2591 33.33% Each of these vesting conditions shall be tested separately from the other vesting conditions. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Neuren Pharmaceuticals Limited Annual Report 2024 41
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