Abliva — Annual Report 2013

Aug 20, 2014

ANNUAL REPORT

NEUROVIVE PHARMACEUTICAL AB (PUBL) 556595-6538

Table of contents

This is NeuroVive	3
A globally respected pharmaceutical company in research	4
CEO's statement	5
Our history	6
Strategy, business model and objectives	8
Research and development	10
Project portfolio	12
CICLOMULSION®—reduces injury in myocardial infarction	12
NeuroSTAT®—treatment for traumatic brain injury	14
NVP014—neuroprotection in stroke	16
NVP015—energy regulation in the mitochondria	17
NVP018—treatment of viral diseases using cyclophilin inhibitors	17
NVP019—next generation of cyclophilin inhibitors	18
The share	19
Financial summary	22
Statutory Administration Report	24
NeuroVive's project activities	24
Significant events in 2013	26
Post balance sheet events	31
Corporate Governance Report 2013	33
NeuroVive's corporate governance model	34
Annual General Meeting	35
Shareholders' meetings in 2013	36
Nomination Committee	36
The Board of Directors	37
Remuneration Committee	38
Audit Committee	38
CEO and other senior executives	38
Remuneration to the Board of Directors and senior executives	39
Auditors	40
Internal controls over financial reporting	41
Board of Directors	42
Management	44
Financial statements	46
Consolidated Statement of Comprehensive Income, Group	47
Consolidated Statement of Financial Position, Group	48
Consolidated Statement of Changes in Equity, Group	49
Consolidated Statement of Cash Flows, Group	50
Income Statement, Parent Company	51
Statement of Comprehensive Income, Parent Company	51
Company Balance Sheet, Parent Company	52
Company Balance Sheet, Parent Company (continued)	53
Statement of Changes in Equity, Parent Company	54
Consolidated Statement of Cash Flows, Parent company	55
Notes	56
Board of Directors' declaration	67
Audit Report	68
Glossary	69

This is NeuroVive

NeuroVive Pharmaceutical AB carries out research and development into pharmaceuticals that protect the mitochondria. The Company's drug development technology platform comprises cyclosporine-A and molecules with a different chemical structure that protect the mitochondria by inhibiting enzymes of the cyclophilin class. NeuroVive's project portfolio contains drug candidates that offer protection against reperfusion injury after myocardial infarction, neuroprotectants in connection with traumatic brain injury and substances that protect brain cells in stroke. In addition, NeuroVive is working on a number of other projects relating to neuroprotection and energy regulation in mitochondrial disease.

Significant events in 2013

First quarter

• n In March, NeuroVive acquired a portfolio of new cyclophilin inhibitors and associated intellectual property rights from UK biotech company Biotica Ltd.

• n On 22 March, NeuroVive announced that more than 600 patients had been enrolled in a clinical phase III multi-center study (CIRCUS) evaluating the effects of CicloMulsion® in treating reperfusion injury following myocardial infarction.

• n Over 800 of 972 patients were enrolled in the multinational phase III study on the company's drug CicloMulsion® (CIRCUS).

• n NeuroVive participated in the 18th Army Neurosurgery Annual Conference in Beijing, China, alongside its collaboration partner Sihuan.

Second quarter

• n NeuroVive was listed on NASDAQ OMX Small Cap under the NVP symbol on 10 April.
• n Patient number 700 of 972 was enrolled in the multinational phase III study on the company's drug CicloMulsion®.
• n The first patient was enrolled for a clinical phase IIa study on the company's drug NeuroSTAT® for the treatment of traumatic brain injury. The study comprises a total of 20 patients and is carried out at the neurosurgery clinic at Copenhagen University Hospital.
• n In June, NeuroVive signed a collaboration agreement with Isomerase Therapeutics relating to developing the molecules NeuroVive acquired from Biotica Ltd in March 2013. The collaboration has a dual focus on neuroprotection in traumatic brain injury and heart attack (NVP019) as well as the new antiviral indications product area through drug candidate NVP018.
• n NeuroVive's subsidiary in China, NeuroVive Pharmaceutical Asia Ltd, received its first milestone payment of SEK 5.3 m (RMB 5 m) from Chinese collabora-Third quarter tion partner Sihuan Pharmaceutical Ltd.

Fourth quarter

• n Over 900 of 972 patients were enrolled in the multinational phase III study on the company's drug CicloMulsion® (CIRCUS).
• n Catharina Jz Johansson was appointed new CFO and took up her position on 1 December.
• n NeuroVive's Extraordinary General Meeting resolved on a private placement and rights issue totaling some SEK 111 m, plus an overallocation option of SEK 10 m.
• n NeuroVive completed a SEK 35 m private placement in December.

A globally respected pharmaceutical company in research

NeuroVive is a pharmaceutical company that drives progress in the field of mitochondrial medicine and is considered a significant player in its field. NeuroVive is participating in a current phase III study in cardiac reperfusion injury, a collaboration with a world-leading research center in mitochondrial medicine, Hospices Civils de Lyon (HCL). NeuroVive's employees and Board of Directors have extensive collective experience of working in major pharmaceuticals companies which contributes

to the company's strong position. This is evidenced in the network of leading neurosurgeons the company has amassed in China, for example. NeuroVive was the only non-Chinese company to participate at two major conferences on neurotrauma during 2013. NeuroVive has also been invited to lecture at international research conferences such as the 3rd Annual Traumatic Brain Injury Conference in Washington, and the 8th International China Pharmaceutical R&D Summit in Shanghai. Academic

interest in NeuroVive's research is evidenced by industrial and academic collaborations including Lund University, Sweden, Lyon University Hospital, France, and the University of Pennsylvania in Philadelphia, USA. NeuroVive's researchers also continuously publish research findings in respected journals such as The Journal of Neurotrauma, The Journal of Neurochemistry, The Journal of Biological Chemistry and The Journal of Experimental Neurology.

CEO's statement

NeuroVive has gradually evolved into an international leader in mitochondrial medicine, and is now ready to take the next step. The news flow in 2013 demonstrated high activity, confirming that a new phase in NeuroVive's history has started.

After several years of intensive R&D work—set to continue in many of NeuroVive's ongoing projects—it's now time to look ahead and to start focusing on the commercialization of CicloMulsion, NeuroVive's first drug candidate, for treating reperfusion injury in vasodilation and vasoreinforcement following myocardial infarction. The ongoing phase III study in Europe recently treated its final patient, so the results of this study are scheduled for analysis and publication in 2015. In 2013, NeuroVive also started preparing the US market for CicloMulsion.

A number of events in 2013, such as NeuroVive's IPO on NASDAQ OMX Stockholm, its effective focus on market communication and two highly successful new issues (a private placement for institutional investors at the end of 2013 and an oversubscribed rights issue in early 2014), strengthen the commencement of the company's commercialization phase. NeuroVive's secure capital base is making a high level of activity possible, enabling drug candidates to come to the clinical phase, and potentially to market more quickly, stimulating already intense interest in NeuroVive as a pharmaceutical company and improving NeuroVive's potential to negotiate various types of deal.

In our work to develop new drug candidates for the treatment of acute conditions that affect the heart and brain, it's been important for me as CEO to create a balanced and broad-based product portfolio. In time, this strategy is a value creator with good potential for strong share price performance. Having access to several drug candidates means the lifecycle of marketed pharmaceuticals can be extended, either by introducing new and more effective compounds, or by expanding existing treatments to cover more patient groups. This, in turn, reduces the risk inherent in the development process while also reinforcing patent protection for specific drugs and indications.

The acquisition of the new chemistry platform from Biotica that includes antiviral and mitochondrial drug candidates, confirms that our focus on mitochondrial medicine has been, and remains, correct. NeuroVive's strategy, with two products in clinical phases (CicloMulsion in phase III and NeuroSTAT in phase II), as well as a portfolio of products in late as well as early pre-clinical development phases, allows us to manage our potential development risk effectively as new, alternative drug

candidates can be quickly highlighted, while also addressing the competitive situation, where a number of smaller and larger pharmaceutical companies have now made inroads into drug development for acute cardiac and brain conditions.

NeuroVive's focus on China and Asia continues, and the collaboration with Sihuan Pharmaceutical in China is focused on a clinical phase III study to ensure the launch of CicloMulsion on the Asian market. The geographical extension of NeuroVive's operations has made it easier to identify collaboration partners to share the risks and expenses associated with developing the company's products.

Finally, as NeuroVive's CEO, I'd like to thank all our investors, new as well as existing shareholders for the trust they have shown in the company in the recent share issues, demonstrating that we have the market's confidence to create shareholder value, while also having the important duty of generating human value for major patient groups with a substantial medical need.

Looking ahead, NeuroVive's new international collaboration partners, the strategic geographical scope of operations and a strengthened cash position and organizational structure, are allowing us to continue our journey towards becoming a profitable pharmaceutical company that continuously delivers new, leading mitochondrial drugs for the global market.

Mikael Brönnegård, CEO

Our history

While preparing his PhD thesis in the early 1990s, the physician Eskil Elmér and his colleagues made an interesting discovery when they found that the active compound cyclosporine-A contained in a well-known pharmaceutical had a protective effect on the brain and other powerful neuroprotectant characteristics. The discovery showed that the compound was able to reduce the risk of cell death by protecting the mitochondria, which act as the cells' engines.

Eskil Elmér patented his discovery in Sweden and the US, and in 2000 he and his colleagues incorporated NeuroVive

with the aim of commercializing the development of mitochondria-protecting pharmaceuticals. Since that time, NeuroVive has grown and now includes a number of promising drug candidates in its project portfolio. All are considered to be very important from a clinical perspective and have the potential to take significant market shares on major international markets. NeuroVive has been listed on NASDAQ OMX Stockholm since spring 2013.

Significant events in NeuroVive's history are outlined in the diagram on page 7.

Strategy, business model and objectives

NeuroVive conducts research and development in pharmaceuticals that protect the mitochondria. The focus is on clinical development of products with a known active mechanism. The technology platform for drug development primarily comprises cyclosporine-A and molecules with a different chemical structure that protect the mitochondria by inhibiting enzymes of the cyclophilin class. The generic term for pharmaceuticals of this type is cyclophilin inhibitors.

NeuroVive focuses on three areas: the treatment of reperfusion injury in myocardial infarction, traumatic brain injury (TBI) and energy-regulating preparations. NeuroVive's drug candidate CicloMulsion® has been included in a largely externally funded phase III study in the EU on reperfusion injury in connection with myocardial infarction. In parallel, the company is also conducting a phase IIa study on NeuroSTAT® aimed at limiting brain injury in connection with acute traumatic brain injury. NeuroVive's energy-regulating preparation NVP015 is

in the pre-clinical development phase. In addition, NeuroVive is working on a number of other projects relating to cell protection and products for the treatment of antiviral indications such as Hepatitis B/C.

NeuroVive's vision

NeuroVive will develop and launch pharmaceuticals that protect cells and that treat conditions where there is a substantial medical need, and thereby make a difference to patients' lives.

Strategy

NeuroVive's strategy adapts to existing conditions for taking a drug candidate from the discovery phase to finished product. By collaborating with academic institutions and other biotech companies and pharmas focusing on mitochondrial medicine, NeuroVive can evaluate projects in the early phase and identify potential drug candidates.

NeuroVive subsequently carries out an internal selection of the best drug candidates and subcontracts a substantial proportion of the pre-clinical work. This achieves a cost-effective platform for its clinical programs.

The strategy focuses on bringing a product to the conclusion of phase I or phase II, and subsequently identifying a partner to co-finance later clinical phases. This enables NeuroVive to retain a small organizational structure which contributes to its competitiveness. The company's extensive network generates flexibility and cost-efficiency, which contributes to reducing the risk profile. NeuroVive's experienced Board of Directors play an active role in NeuroVive's development.

Business model

NeuroVive anticipates a number of different approaches to commercializing its projects. One possibility is to out-license drugs to larger pharmaceuticals companies for registration,

marketing and sales. In such cases, the company's revenues would comprise fixed-fee compensation on out-licensing and on reaching milestones on the way to launch, plus ongoing royalty streams from sales of out-licensed pharmaceuticals.

In addition to the possibility of traditional out-licensing, NeuroVive's management evaluates different types of innovative collaborations with large pharmaceuticals companies and CRO-partners with the aim of generating a risk-reduced and cost-efficient business model. Strategic partnerships with CROs improve flexibility, reduce costs and utilize specific expertise more effectively. Such strategic partnerships are expected to increase efficiency, reduce the need for internal control systems, speed up the time to market, improve access to global patient populations and limit overhead costs. NeuroVive intends to utilize established commercial channels through selected partners to lay the foundation for the marketing and sales of future drugs. In this way, NeuroVive avoids establishing a proprietary marketing and sales structure and is able to maintain control over the products' commercialization phase and potentially access a larger share of future revenue.

By acquiring technologies and projects in the fields of cardiac, neuro and mitochondrial protection, as well as securing partnerships in technology and product development, NeuroVive aims to accumulate critical mass in its research areas. In the longer term, the acquisition and partnership strategy stands to benefit NeuroVive's potential to bring new drug candidates for prioritized indications to the market more quickly. This reduces the risks associated with lengthy development cycles for new pharmaceuticals.

NeuroVive aims to utilize the business model to secure a greater proportion of future revenue. Retaining control of the products' marketing also facilitates increasing the number of indications for existing products and introducing the next generation of drugs for existing and new indications on the market. Launching new pharmaceuticals will become significantly easier as marketing and sales resources are already in place, and the company is working with a collaboration partner that is familiar with the products.

Strategic partnerships boost organizational efficiency

The pharmaceuticals sector has undergone major changes resulting in drugs frequently being developed in accordance with entirely new business models. This trend has affected the sector as a whole regardless of the size of the companies involved. The sector is still undergoing change, and the trend has largely benefitted small to medium-sized companies. In the past, large pharmaceuticals conglomerates dominated the sector with a high proportion of research and development taking place in cost-heavy internal organizational structures.

Today, the sector is characterized by collaborations and flexible, cost-efficient networks of smaller companies, and NeuroVive is actively developing existing collaborations and seeking out new potential partnerships.

The traditional business model for in-licensing a drug candidate encompasses milestone payments plus royalties on future revenue. This model is now facing competition from partnerships between companies built on risk-spread considerations. Such collaborations frequently exclude milestone payments or royalties, instead focusing on utilizing combined resources to find the quickest route to market. This means that smaller companies retain control over product development and obtain a higher proportion of future sales revenue. Many small pharmaceuticals companies, including NeuroVive, have adapted operations to this new business model. This means that the expertise required to evaluate the potential inherent in early research and development projects is now largely located in small to medium-size pharmas such as NeuroVive.

Objectives

NeuroVive's primary objective is to conclude its current phase III study on CicloMulsion® for the treatment of reperfusion injury in myocardial infarction, and to obtain market approval in France for CicloMulsion® and then on selected national markets in the EU. In addition, the company intends to conclude the phase IIa study carried out at Copenhagen University Hospital and to initiate a phase IIb-/ III multi-center study on NeuroSTAT® for traumatic brain injury. NeuroVive is also investigating the potential for managing its antiviral pharmaceuticals acquired from Biotica Ltd in 2013. The company has initiated a dialogue with potential partners and some development is now underway to maximize the value of the project, which is being run in parallel with NVP019 (next generation cyclophilin inhibitors) that is undergoing development for myocardial infarction and brain injury. The projects share the same basic substance as well as critical parts of the production process, implying significant synergies in terms of development.

NeuroVive is also developing other drug candidates in parallel and its most imminent targets are indicated below. The objective of the various development phases is to actively pursue out-licensing partnerships for its drug candidates or enter strategic alliances for risk sharing and financing. In China, the objective is to secure permission to begin clinical studies on CicloMulsion® and NeuroSTAT® through its partnership with Sihuan. Provided that the objectives indicated below are met and NeuroVive adheres to its business plan, commercialization of CicloMulsion® is scheduled for 2016 on selected markets. More detailed targets for individual products are listed under the 'Project portfolio' heading on pages 12-18.

Research and development

During its period of incorporation, NeuroVive has carried out research and development into mitochondria-protecting drugs, focusing on clinical development of products with known active mechanisms. Eskil Elmér and his colleagues discovered that cyclosporine-A had neuroprotectant characteristics in connection with research into cell transplantation in 1993-1994.

Cyclosporine-A—a tried-and-tested compound

Cyclosporine-A has constituted the active compound in Novartis' drug Sandimmun since the early 1980s. Sandimmun is used as an immunosuppressant in order to prevent the rejection of transplanted organs. Accordingly, there is extensive safety data relating to the compound. Eskil Elmér's discovery triggered fundamental research in the area and the initial findings have been cited 176 times in different scientific journals in the fields of basic cellular research and brain-related conditions. Studies in animal models carried out by several international and independent research teams have confirmed cyclosporine-A's pronounced neuroprotectant characteristics in traumatic brain injury, stroke and brain damage following cardiac arrest.

What is a mitochondrion?

Mitochondria are present in all cells and act as the cells' engine and energy supply. Mitochondria are also critical to the cells' ability to withstand and repair damage. To simplify, it could be said that mitochondria transform the air we breathe and the food we eat into energy that the cell can then use. This means that mitochondria are critical to energy production and contribute to the cells' ability to withstand and repair damage.

When the nervous system sustains an injury such as a head injury, or when

the blood supply to the brain or heart is interrupted, oxygen and nutrient deprivation in the affected area increases the number of calcium ions in the cells. The mitochondria buffer and store calcium ions to protect cells from excessive calcium levels, which are extremely detrimental to cells. In more serious tissue damage, the mitochondria absorb excessive amounts of calcium, which gives rise to increased calcium permeability in the mitochondrial membranes. The process is known as mitochondrial membrane permeability transition (mPT), and instantly disables mitochondrial energy production and releases buffered calcium. With no energy and raised calcium levels, the cells' pumps and repair enzymes stop functioning, resulting in cell death.

Once the mPT process begins, the mitochondrias' ability to process damaging substances, free radicals, also reduces. The release of free radicals can trigger further cell damage and contribute to adjacent mitochondria undergoing mPT more readily, which triggers a negative spiral that can ultimately lead to cell death. NeuroVive develops what are known as cyclophilin inhibitors that effectively counteract the mPT process. Cyclophilin inhibitors preserve mitochondrial energy production and prevent the release of free radicals and stored calcium. This limits the extent of primary damage and more nerve and heart cells survive.

Mitochondrial medicine

Mitochondrial disease implies congenitally impaired mitochondrial function which in turn causes impaired cellular energy production. This refers to conditions and diseases where mitochondrial functioning is affected, influencing the progression of the disease.

In the course of events following a brain injury or restricted blood flow to the brain or heart, adjacent cells die off or are damaged as mitochondrial function is impaired. Research and studies have shown that defects in mitochondrial structure or function may be the cause of a far higher number of diseases and conditions than previously thought. Myocardial infarction,

acute and chronic brain injury, multiple organ failure and diabetes are examples of diseases and conditions that could stand to benefit from mitochondrial drugs.

NeuroVive's research into mitochondrial medicine

NeuroVive develops what are termed cyclophilin inhibitors that preserve

mitochondrial function and are potentially able to limit the extent of primary injury in the human body. NeuroVive focuses on preventing mitochondrial dysfunction in acute neurological conditions such as traumatic brain injury and reperfusion injury following myocardial infarction. The research demonstrates a possible correlation between defective mitochondria and the progression of a number of serious conditions for which there is currently no treatment, such as reperfusion injury following myocardial infarction. There are also a large number of primary genetic diseases that directly affect mitochondrial function and for which there is currently no treatment.

NeuroVive has begun intensive research aimed at identifying chemical compounds that increase the mitochondrias' ability to generate energy. This development program complements the cyclophilin program and has been made possible by an innovative evaluation method in human cells developed by researchers linked to NeuroVive. Successful development could generate pharmaceuticals for the treatment of a number of relatively uncommon childhood diseases with orphan drug status, and potentially also for major patient groups where the body could benefit from additional energy production, such as in extended surgery and intensive care.

Project portfolio

NeuroVive's project portfolio currently consists of six different candidate drugs in various development phases. Two of these, CicloMulsion® and NeuroSTAT®, are in the clinical development phase and have the potential to meet substantial medical needs in myocardial infarction and brain injury. The figure below indicates the phases NeuroVive's various projects are in and the phases to be completed before a pharmaceutical can be launched on the market.

*** Non Cyclosporin Cyclophilin Inhibiting Molecules.

CICLOMULSION®—reduces injury in myocardial infarction

CICLOMULSION®

Reperfusion injury in myocardial infarction

Acute treatment in connection with percutaneous coronary intervention (PCI)

Indication Existing treatment—guidelines Limitations of Existing Treatments, in the Judgment of NeuroVive's Board of Directors

No existing drugs that protect heart cells and reduce reperfusion

injury following PCI

Candidate, in the Judgment of NeuroVive's Board of Directors

Results of NeuroVive's Drug

CicloMulsion® reduces reperfusion injury following PCI and improves treatment outcomes in myocardial infarction

CicloMulsion® for reperfusion injury in myocardial infarction

Myocardial infarction patients often receive acute treatment in the form of percutaneous coronary intervention (PCI), generally known as angioplasty. The treatment involves a surgical procedure to remove blood clots from the coronary arteries using a catheter inserted through major blood vessels. Myocardial infarction causes tissue death and damage, but even after

the blood supply has been reinstated the damage continues to spread through what is termed reperfusion injury, with an associated risk of further tissue damage and more extensive myocardial infarction. CicloMulsion® is being developed to protect damaged tissue that would otherwise be at risk of dying off in connection with PCI. From a clinical perspective, drug development related to protecting heart tissue in connection with PCI is very urgent.

Ongoing clinical phase III study

CicloMulsion® is currently in a clinical phase III study. The study is largely externally funded and is being carried out in France, Belgium and Spain by Hospices Civils de Lyon. The study is randomized, placebo-controlled and double-blind, with patients receiving an injection of CicloMulsion® (or a placebo) prior to reperfusion treatment or angioplasty. All 972 patients included in the study have now been enrolled and treated, with the last patient receiving treatment in February 2014.

NeuroVive provides the participating hospitals with CicloMulsion®, the placebo and logistics support for pharmaceuticals distribution. Given a positive outcome of the study, and provided that it is deemed to constitute a suitable basis for registration, i.e. defined as pivotal with the aim of presenting evidence for the drug's market approval, NeuroVive plans to file an application with the French pharmaceuticals authority as the first step of the European launch. The collaboration with Sihuan in China means that clinical studies in CicloMulsion® in China complement the phase III study in Europe ahead of market approval on the Chinese market.

CicloMulsion® is manufactured in Austria by Fresenius Kabi, an internationally renowned healthcare company. NeuroVive has invested in part of a new production facility with Fresenius Kabi in order to enable commercial production when required.

Market potential for CicloMulsion®

The number of patients in the EU and US affected by acute coronary disease and who develop myocardial infarction is

estimated at some three million each year. The mortality rate is high (approximately 20%) in the first 24 hours following myocardial infarction. There are a number of different types of acute coronary disease related to ECG changes, and depending on the type of disease, PCI is administered to varying extents. On average, half of all patients undergo PCI with the objective of opening up the coronary arteries to improve oxygenation of the heart muscle and prevent new infarctions. What are known as thrombolytic pharmaceuticals are currently a key component of treatment, although these drugs don't protect the heart from reperfusion injury after PCI.

A majority of patients that undergo PCI/angioplasty develop what is known as reperfusion injury which increases the risk of more extensive myocardial infarction and heart arrhythmia. Similar complications arise in heart surgery. To NeuroVive's knowledge, there are no approved drugs that offer protection against reperfusion injury. This means that the development of pharmaceuticals that protect heart cells represents an extremely attractive opportunity to address a market for medical conditions where there is currently no effective treatment. NeuroVive estimates that the annual global market for CicloMulsion® is worth some SEK 5 bn, driven by an aging population and a dramatic increase in obesity. Destum Partners estimates CicloMulsion®'s total sales potential, four years after launch, at SEK 4.7 bn (approximately USD 700 m). Given market penetration of 30%, potential sales are an estimated SEK 1.5 bn (some USD 235 m) in the US and on the five largest markets in the EU (UK, Germany, Italy, France and Spain).

EU		China
2014 and beyond	n Safety evaluation	2014	n Application for clinical approval n Planned start of phase III study in China based on phase I and II data from the EU
	n Inclusion of patients in the external phase III study. Final patient (of 972) included in the CIRCUS phase III study.	2015 and beyond	n Results of phase III study in China presented n Application for market approval in China
	n Start of new follow-up study on patients in the phase III study and presentation of results of the external phase III study
	n Application for registration in France and, following

DEVELOPMENT PLAN AND OBJECTIVES FOR CICLOMULSION®

markets in the EU

approval on this market, in selected national

n Market approval in France and the EU

NeuroSTAT®—treatment for traumatic brain injury

NEUROSTAT®

Indication	Existing treatment—guidelines	Limitations of existing treatments, in the judgment of NeuroVive's Board of Directors	Results of NeuroVive's drug candidate, in the judgment of NeuroVive's Board of Directors
Traumatic brain injury	Intensive care, potentially initial surgery. Treatment of symptoms on the basis of initial clinical assessment according to the Glasgow Coma Scale (GCS), which describes the patient's condition at the time of injury. Clinical results according to Glasgow Outcome Scale (GOS), i.e. the patient's condition some time after the injury.	No existing neuroprotectant drugs available.	Treatment with NeuroSTAT® protects nerve cells, improves GOS, fewer bed days, improved rehabilitation and quality of life.

TBI (acute traumatic brain injury) is brain injury where nerve cells are damaged instantaneously. The injury continues to worsen several days after the accident, which often has a significant effect on the overall deleterious consequences. Researchers at Lund University, including NeuroVive's CSO, have shown that NeuroSTAT®'s active ingredient cyclosporine-A has pronounced neuroprotectant properties. By inhibiting the cyclophilin enzyme and stabilizing the mitochondria, NeuroSTAT® is expected to reduce the extent of brain injury.

Ongoing Phase II Study

A clinical phase IIa study where NeuroSTAT® is administered to patients with TBI began at Copenhagen University Hospital in 2013. The study is an open label study where two different dosages of the same drug are evaluated. The study's primary objective is to assess the safety and blood concentration of cyclosporine-A, and the secondary objective is to gather information on NeuroSTAT®'s ability to limit brain injury. The latter occurs through the study of markers of mitochondrial function (microdialysis) and other factors in brain injury.

NeuroVive is also preparing an international multi-center study (phase IIb-/III) in TBI to investigate whether NeuroSTAT® can act as a neuroprotectant and affect the prognosis and progression of the disease. NeuroVive has initiated a collaboration with leading neurosurgeons in Europe, the US and China to complete the clinical study. The ongoing phase IIa study in TBI is expected to be funded internally. Additional financing will be sought for the more extensive international phase IIb-/III study. The collaboration with Sihuan in China ensures clinical studies in NeuroSTAT® in collaboration with clinics in Europe and the US, or as independent phase II and phase III studies in China.

NeuroVive has obtained orphan drug designation for NeuroSTAT® in moderate and severe brain injury in the US and EU, which implies market exclusivity following market approval, even if patents have expired. Orphan drug designation confers exclusivity for seven years in the US and ten years in the EU, from the date of obtaining market approval.

Development plan and objectives for NeuroSTAT®

After evaluating new, customized methods for conducting clinical studies, NeuroVive has begun work on submitting an application for permission (IND) to conduct an international phase IIb/III study on NeuroSTAT® in the US, Europe and China. In connection with its regulatory discussions with the FDA, NeuroVive plans to contact the Department of Defense and the National Institute of Health to seek financial backing for the international study. The study will be blind (i.e. medical staff won't know whether a patient has received the drug or a placebo) and the plan is to adopt a customized method, which speeds up evaluation of data and potentially reduces the time to market compared to a traditional study. US researchers unconnected with NeuroVive have already completed a phase II study in cyclosporine-A in TBI patients, and a phase III study has been planned in the US for a number of years. Researchers have secured resources for the planning stage as well as what is known as a fundable score from the NIH, which increases the likelihood of raising the capital required. The physicians behind the planned study have previously expressed an interest in NeuroSTAT®. As already stated, the NIH's priorities and budget remain uncertain, which affects the anticipated completion of the study.

Market potential for NeuroSTAT®

TBI implies a significant burden to society, meaning that there is a substantial market for treatment of the condition. The absence of registered and approved pharmaceuticals, coupled with a substantial medical need suggest that market penetration could be significant. Based on data from the EU and the US, the annual global market for severe TBI is estimated to be worth some SEK 28 bn (including China and Japan). Destum Partners estimate NeuroSTAT®'s total sales potential, four years after launch, at SEK 3 bn (some USD 500 m) in the US and on the five major national markets in the EU (UK, Germany, Italy, France and Spain).

To NeuroVive's knowledge, there are no existing drugs that are able to improve the neurological and functional outcome following TBI. This means that the market is characterized by a substantial medical need. The health care costs to society are substantial and include acute care as well as rehabilitation following complications such as epilepsy and various psychiatric and psychological conditions. The total health care cost for a patient with severe TBI has been estimated at SEK 5-14 m. In the US, TBI costs the economy close to SEK 100 bn each year.1,2

The problems associated with acute head injuries and the shortage of effective neuroprotectant drugs have been highlighted by the emergence of new patient groups in recent years. In the US, soldiers returning from war zones, coupled with growing concerns relating to long-term effects such as Alzheimer's in this patient group, plus brain damage resulting from various contact sports, have increased the calls for new initiatives aimed at developing effective pharmaceuticals. In the EU and US, the direct costs for severe brain injuries, such as medical care and therapy, amount to over SEK 70 bn each year. The corresponding annual indirect costs relating to production losses are estimated at more than SEK 700 bn.3,4

More than three million patients are affected by TBI in the EU and US each year. The number of patients treated in hospital approaches 600,000, and 250,000 of these are expected to develop long-term disability as a result of their injuries.5

According to Centers for Disease Control (CDC) in the US, more than five million Americans (2% of the population) currently live with some form of disability caused by TBI. Traumatic brain injury can lead to a series of ensuing conditions such as functional impairment affecting mental activity, emotions, language and speech.

DEVELOPMENT PLAN AND OBJECTIVES FOR NEUROSTAT®

EU		US and China**
2014 -2015	n Results of phase IIa presented	2014-2015	n Start of combined phase IIb/III
	n Discussions with regulatory authorities*	2015 and beyond	n Results of phase IIb/III* presented
	n Start of combined phase IIb/III		n Application for marketing approval
2015 and beyond	n Results of phase IIb/III* presented

*Discussions with regulatory authorities and regulatory requirements determine the scope of phase IIb/III, and consequently the time required to complete the clinical study. This influences the timing of NeuroSTAT®'s market launch.

** Regulatory requirements in China ensure approval based on a phase III study in China alone, provided data from phase I and phase II is available from clinical studies in the EU or US (References: discussions with two pharmaceuticals companies in China and with BHR Pharma, Cochrane Review 2011, Progesterone for acute traumatic brain injury). Necessitates Chinese partnership

National Institutes of Health, 1999, Thurman et aL,1999

5 Datamonitor report 2011

J Neurology 2012,19;155-162

³ Datamonitor TBI report 2010

⁴ J Neurology 2012,19;155-162

Other projects

NVP014—neuroprotection in stroke

NVP014

Indication	Existing treatment—guidelines	Limitations of existing treatments, in the judgment of NeuroVive's Board of Directors
Stroke	American Heart Association— stabilize the patient, CAT scan and thrombolytic treatment (dissolve blood clots blocking a vessel).	Short treatment window for thrombolytic treatment. No existing neuroprotectant drugs that reduce injury after stroke.

Results of NeuroVive's drug candidate, in the judgment of NeuroVive's Board of Directors

Treatment with NVP014 improves outcome by reducing damage to nerve cells following stroke, meaning fewer bed days for patients.

Like in TBI, the blood-brain barrier is closed to certain pharmaceuticals during stroke. NeuroVive and Dutch biotech company to-BBB Technologies BV, which has developed a technology for transporting drugs across the blood-brain barrier, signed an agreement in October 2010 aimed at combining the two companies' technologies to develop pharmaceuticals against stroke and other acute neurological conditions.

NVP014 (currently co-owned with to-BBB Technologies BV) consists of cyclosporine surrounded by a coating of lipids and proteins forming what is known as a micelle. Micelles are comprised of droplets of fat with surface characteristics that facilitate the crossing of the blood-brain barrier to deliver cyclosporine to brain tissue.

NeuroVive intends to conduct a number of animal studies to confirm increased penetration across the blood-brain barrier and NVP014's efficacy in terms of mitochondrial damage and its neuroprotective characteristics. Given a positive outcome, the compound would enter a development phase in animals and other models with the aim of generating data relating to toxicology and dosage ahead of the first dose in humans. NeuroVive and to-BBB Technologies BV received Eureka Eurostar's award of EUR 1 m for its pre-clinical development program in 2011.

Market potential for NVP014

The annual global market for AIS (acute ischemic stroke) is currently valued at some SEK 20 bn and is expected to grow by 3-4% annually.6,7 However, only few drug candidates are

• 7 Market Report Destum Partners, USA,2012
• 8 Datamonitor Report 11
• 9 J Neurology 2012,19;155-162

10 Market Report Destum Partners, USA, 2012

Some two million patients are affected by stroke each year in the EU and US, of which 25% are under 65 years of age. Approximately 300,000 patients die following stroke, while one million require hospital care, of which 200,000 develop long-term or life-long disabilities. The annual direct health care costs currently exceed SEK 350 bn, and indirect costs relating to production losses (such as lost working hours and lost tax revenue) are estimated at SEK 200 bn. Destum Partners estimate the market potential for NVP014, four years after launch, to amount to SEK 1 bn (some USD 170 m) in the US and on the five major national markets in the EU (UK, Germany, Italy, France and Spain).8,9,10

in the clinical development phase. An ageing population and a dramatic increase in obesity are the biggest drivers behind market growth. Like the market for TBI, the global market for AIS

is significant and addresses a substantial medical need.

DEVELOPMENT PLAN AND OBJECTIVES FOR NVP014

EU

• 2014 and beyond n Continued in vivo animal testing and start of pre-clinical toxicology
• n Start of phase I study
• n Choice of strategic partner

⁶ Data Monitor Report 2011

NVP015—energy regulation in the mitochondria

NVP015 is NeuroVive's energy-regulating preparation for specific intravenous acute treatment of conditions where a cellular energy crisis arises. The objective is to generate pharmaceuticals for a series of relatively uncommon childhood diseases with orphan drug designation, and potentially for large patient groups where the body would benefit from additional energy production, such as in extended surgery and intensive care. NeuroVive has a dual focus on patients with congenital mitochondrial defects (primary mitochondrial disease) and conditions where normal mitochondria are affected by acute energy deficits as a central component of the condition (secondary mitochondrial disease). Primary mitochondrial conditions with potential for orphan drug designation include Leigh syndrome and MELAS. Apart from developing traditional pharmaceuticals, potential also exists for developing food supplements and specific nutritional products.

Market potential for NVP015

Primary mitochondrial diseases are rare, affecting 1-6 children in 100,000.11 This means that drugs for the treatment of primary mitochondrial diseases are given orphan drug designation, which improves the potential for obtaining market approval compared to traditional pharmaceuticals as a result of shorter clinical development programs and the substantial medical need. A review of drugs that have completed clinical studies indicates that 80% of pharmaceuticals with orphan drug designation were approved, against only 35% for traditional drugs. This means that the time to market for orphan drugs is shorter as a result of the potential to treat a large number of primary mitochondrial diseases such as Leigh syndrome and MELAS. The market for orphan drugs is worth several SEK billion, with the annual treatment cost for a single patient in the SEK 200,000 to SEK 1.5 m range.

DEVELOPMENT PLAN AND OBJECTIVES FOR NVP015

EU
2014	n Production and ongoing formulation work with developed drug candidates
	n Pre-clinical toxicology and proof of concept study in animal models
2015 and beyond	n Start of phase I study (dependent on outcome of animal studies and formulation work in 2014)
	n Application for orphan drug designation

11 Orphanet Report Series nov 2011 no 1

NVP018—treatment of viral diseases using cyclophilin inhibitors

Although research and development relating to antiviral pharmaceuticals is not directly related to mitochondrial medicine, viral diseases can potentially be treated with cyclophilin inhibitors. This means that NeuroVive is considering a range of alternatives in terms of capitalizing on the drug candidate. The business strategy involves using limited funds to maximize the value of the project. This is achieved by developing drug candidates up until the first dose in humans with the objective of demonstrating efficacy on viral diseases. In parallel, discussions are also underway with potential partners. The project stands to benefit as the same basic compounds and production process applies to NVP019 as for NVP018. This generates cost-saving synergies in terms of formulation work and in certain areas of pre-clinical development. The only difference between the preparations lies in the dosage form. NeuroVive intends to develop an intravenous formulation NVP019 and an oral formulation for NVP018.

Market potential for NVP018

Hepatitis B is caused by a blood-borne virus that causes both acute and chronic liver infection. According to the WHO, more than two billion people have come into contact with the Hepatitis B virus, and 240 million have developed chronic Hepatitis B. This means that the disease is one of the world's major medical challenges. The chronic form of the disease is estimated to cause more than 600,000 deaths annually as a result of advanced cirrhosis of the liver or primary liver cancer. Although the disease has global reach, it most commonly occurs in South East Asia, Eastern Europe and Africa, which have more than 8% of chronic carriers. In Western Europe and the US, the frequency is less than 1%.

There is currently no treatment for Hepatitis B, and the medical objective is to coax the disease into a quiet phase which reduces the risk of complications. The ultimate goal at present is a therapy that allows the body's own immune defenses to control the disease (seroconversion). The market for Hepatitis B is estimated to be worth some USD 3 bn and currently comprises interferon and nucleoside/ nucleotide analogues. Exclusive treatment with interferon can trigger seroconversion in a limited number of patients.

Interferon has to be administered as injections for a protracted period and causes problematic side effects, which mean that many patients fail to complete treatment. NVP018's characteristics include attacking the virus while cell assays have shown that this can induce cells to produce their own interferon. The development of a tablet-based treatment that produces results on a par with interferon would represent a significant advance.

● C ● O ● N ● H ● F

NVP019—next generation of cyclophilin inhibitors

NeuroVive's focus has been on finding the optimum follow-ups to its current drug candidates in clinical development. The company has been in discussions with several potential partners and evaluated a number of molecules via special agreements. Some of the molecules that have been evaluated are specific varieties of cyclosporine and other molecular structures that act as potent cyclophilin inhibitors and can potentially transit the blood-brain barrier. The aim is to develop new cyclophilin inhibitors, both for intravenous use and as oral preparations. The long-term objective is to ensure that the active compound in NeuroVive's current intravenous drug preparation, cyclosporine-A, is followed by more specific drugs with potentially wider applications, such as protecting nerve and heart cells. One such area is the treatment of chronic neurological conditions such as dementia, as a complement to the treatment of acute neurological conditions. The drug development process has identified several different drug candidates that protect the mitochondria, and which are to be evaluated further for potential in-licensing and development.

In line with NeuroVive's ambitions, the company acquired the rights to potent cyclophilin inhibitors from UK pharmaceutical company Biotica Ltd. in 2013. The purpose was to gain access to the next generation of cyclophilin inhibitors, which NeuroVive has termed NVP019. The acquisition also included projects in antiviral therapy such as a project relating to Hepatitis B/C (see separate section on NVP018).

NVP019 is being developed as the next generation of cyclophilin inhibitors, focusing on myocardial infarction and brain injury. The candidate drug has been shown to be more potent and with more specific efficacy than cyclosporine-A (the active compound in NeuroSTAT®/CicloMulsion®). The

drug candidate is also potentially more well tolerated than cyclosporine-A and has significantly longer patent protection than CicloMulsion®. The aim is to develop a follow-up to NeuroSTAT®/ CicloMulsion® for brain injury/reperfusion injury, but also to widen the application to encompass additional acute heart conditions and brain injury. NVP019 is currently in the early pre-clinical phase focusing on intravenous formulation work.

Market potential for NVP019

The development target for the next generation of cyclophilin inhibitors focusing on the treatment of acute cardiovascular disease and acute brain injury, is to develop follow-up preparations to CicloMulsion® and NeuroSTAT®. This would mean retaining and ultimately enhancing NeuroVive's market leadership. The objective is also to widen the applications for myocardial infarction and reperfusion injury to include acute heart and other conditions where general protection of the vital organs is a critical factor in the progression of the disease (approaches known as label extension and lifecycle management). These new indications and potential markets have not been evaluated as yet.

DEVELOPMENT PLAN AND OBJECTIVES FOR NVP015

EU
2014	n Continued pre-clinical evaluation and formulation work for intravenous preparation forms.
	n Pre-clinical studies in different animal models for heart disease and traumatic brain injury.
	n Formulation work and small-scale production.
2015	n Start of phase I/II studies in selected patient groups.

The share

The NeuroVive share was listed on NASDAQ OMX Stockholm in April 2013. The share is included in the Small Cap segment and the Health Care index. Before its NASDAQ OMX listing, NeuroVive was quoted on the Aktietorget marketplace. On 31 December 2013 NeuroVive had 2,780 shareholders.

Share price performance and turnover

Since year-end 2013, 9,548,530 shares have been turned over at a value of SEK 211,006,026. NeuroVive's share price was SEK 18.40 at the end of the year, representing an increase of 2.22%. The highest price paid for the year was SEK 34.50 on 3 April 2013 and the lowest price paid SEK 15 on 3 December 2013. Market capitalization was SEK 398,526,446 at the end of the year, compared to SEK 344,862,828 at the end of the previous year.

Share capital

NeuroVive had 21,659,046 shares on 31 December 2013 and the share capital amounted to SEK 1,082,952.30 with a quotient value of SEK 0.05. All shares have equal entitlement to dividends and each share has equal voting rights. Each share has one vote at the AGM. The new issue completed in January 2014 increased the number of shares to 27,788,093 and the share capital to SEK 1,389,404.65. The table on page 21 shows the development of the number of shares.

Ownership

NeuroVive had 2,780 shareholders registered on 31 December 2013.

Dividend

Against the background that NeuroVive does not have any pharmaceuticals on the market as yet, the Board of Directors proposes that no dividend be paid for 2013.

Shareholder value

NeuroVive continuously seeks to develop and improve the financial information provided about the company, with the aim of ensuring a sound basis for an accurate valuation by existing and future shareholders. This includes actively participating at meetings with investors, the media and analysts.

Shareholder information on NeuroVive's website

NeuroVive's website, www.neurovive.com, continuously publishes information on NeuroVive, progress of the NeuroVive share, financial reports and contact information. A rights issue was completed in January 2014. More information on the issue is on NeuroVive's website.

The Share

Marketplace	NASDAQ OMX Stockholm
Ticker symbol	NVP
Sector	Health care
ISIN code	SE0002575340
Highest price paid 2013	SEK 34.50
Lowest price paid 2013	SEK 15.00
Closing price 2013	SEK 18.40
Market capitalization 30 December 2013	SEK 398.5 m
Number of shares	21 659 046

NeuroVive's 10 largest shareholders as of 31 December 2013

Name	No. of shares	Votes and capital
E trade Clearing LLC, (registered holding on behalf of Maas Biolab, LLC and Marcus Keep and others with US domicile) *	5,034,057	23.24
Avanza Pension Försäkrings AB **	2,791,004	12.89
Baulos Capital Belgium SA (formerly Private Placement SPRL)	1,086,373	5.02
UBS AG Clients Account	791,160	3.65
Handelsbanken fonder AB REJPMEL	626,148	2.89
The Second Swedish National Pension Fund	536,000	2.47
Nordnet Pensionsförsäkring AB **	568,164	2.62
Eskil Elmér ***	487,348	2.25
SEB London - Luxemburg, (SICAV FOND)	357,000	1.65
Other owners (approx. 2,800 shareholders)	9,381,792	43.32
Total	21,659,046	100.00

* Maas Biolab, LLC ("Maas") and a majority of shareholders domiciled in the US relocated their holdings to Etrade Clearing LLC in summer 2012. This was due to regulatory changes governing foreign investments by US citizens. In NeuroVive's share register kept by Euroclear, these holdings have been registered under Etrade's name. Maas owned 4,233,736 shares in NeuroVive as of 31 December 2013 and Maas had 43 shareholders at that time. NeuroVive Board member Marcus Keep owns 49.35% of Maas, CSO Eskil Elmér 16.85% and Board member Helmuth von Moltke 5.09%. On the same date, Chairman Gregory Batcheller owned 1.96% of Maas.

** Fund manager, endowment insurance.

*** The information includes related parties (spouse and children).

Share price

20 T he share

Share capital history Division of shares as of 31 December 2013

Year	Event	Total No. of Shares	Total Share Capital	Shareholding	No. of Owners	No. of Shares	Holding, %	Votes, %
2000	Incorporation	1,000	100,000.00	1 – 500	1,067	246,022	1.14%	1.14%
2003	New issue	1,025	102,500.00	501 – 1,000	516	423,662	1.96%	1.96%
2004	New issue	1,100	110,000.00	1,001 – 5,000	838	2,066,888	9.54%	9.54%
2007	New issue	1,313	131,300.00	5,001 – 10,000	189	1,392,275	6.43%	6.43%
2007	New issue	1,433	143,300.00	10,001 – 15,000	53	653,109	3.02%	3.02%
2008	Offset issue	1,493	149,300.00	15,001 – 20,000	28	491,627	2.27%	2.27%
2008	New issue	1,576	157,600.00	20,001 –	89	16,385,463	75.65%	75.65%
2008	Bonus issue	1,576	591,000.00
2008	Share split	11,820,000	591,000.00
2008	New issue	13,075,000	653,750.00
2010	New issue	14,942,857	747,142.85
2012	New issue	19,159,046	957,952.30
2013	Private placement	21,659,046	1,082,952.30

Five largest national markets

	No. of share holders	Shareholders (%)	Holding	Holding (%)	Votes	Votes (%)	Market Value (KSEK)
Sweden	2,688	96.69%	12,850,160	59.33%	12,850,160	59.33%	236,443
Rest of Nordics	30	1.08%	122,146	0.56%	122,146	0.56%	2,247
Rest of Europe	40	1.44%	7,600,135	35.09%	7,600,135	35.09%	139,842
US	7	0.25%	846,348	3.91%	846,348	3.91%	15,573
Rest of world	15	0.54%	240,257	1.11%	240,257	1.11%	4,421

T he share 21

Financial summary

(SEK 000)
INCOME STATEMENT	2013	2012	2011	2010	2009*
Net sales	5,335	-	-	-	-
Capitalized development expenditure	-	-	-	-	4,433
Other operating income	1,598	1,328	440	108	-
Operating expenses	-29,132	-17,699	-10,057	-4,257	-5,943
Depreciation and amortization	-147	-128	-104	-23	-58
Operating income	-22,346	-16,499	-9,721	-4,172	-1,568
Net financial income/expense	220	596	441	-451	40
Profit/loss before tax	-22,126	-15,903	-9,280	-4,623	-1,528
Net profit for the year	-22,126	-15,903	-9,280	-4,623	-1,528
BALANCE SHEET	2013	2012	2011	2010	2009*
Intangible assets	47,119	32,705	20,798	14,253	7,819
Tangible assets	457	665	148	39	24
Other current assets	1,609	959	501	381	731
Cash and cash equivalents	39,992	37,177	12,795	27,753	2,716
Assets	89,177	71,506	34,242	42,426	11,290
Equity	74,643	63,043	32,585	41,449	10,168
Short-term liabilities	14,534	8,463	1,657	977	1,122
Equity and liabilities	89,177	71,506	34,242	42,426	11,290
CASH FLOW STATEMENT	2013	2012	2011	2010	2009*
Cash flow from operating activities
before changes in working capital	-21,966	-15,789	-9,207	-4,658	-1,471
Changes in working capital	2,876	3,567	596	-375	833
Cash flow from investing activities	-11,684	-9,718	-6,757	-5,717	-4,688
Cash flow from financing activities	33,595	46,322	410	35,787	-
Change in cash and cash equivalents	2,815	24,382	-14,958	25,037	-5,326
Cash and cash equivalents at beginning of year	37,177	12,795	27,753	2,716	8,041
Cash and cash equivalents at end of year	39,992	37,177	12,795	27,753	2,716
KEY RATIOS	2013	2012	2011	2010	2009*
Liquidity ratio (%)	286%	451%	802%	2880%	307%
Equity ratio (%)	84%	88%	95%	98%	90%
Adjusted equity (SEK)	74,643	63,043	32,585	41,449	10,168
Dividend (SEK)	-	-	-	-	-

*The figures for 2009 were prepared in accordance with the Swedish Annual Accounts Act and the Swedish Accounting Standards Board. For other years, the figures were prepared in accordance with IFRS.

Financial definitions:

Liquidity ratio: Current assets (excl. Inventories) divided by current liabilities Equity ratio: Shareholders' equity as a percentage of total assets

Statutory Administration Report

The Board of Directors and Chief Executive Officer of NeuroVive Pharmaceutical AB (publ), corporate identity number 556595-6538, hereby present the Annual Accounts and Consolidated Accounts for the financial year 1 January 2013 - 31 December 2013. The Company is registered in Sweden and has its registered office in Lund.

OPERATIONS

NeuroVive conducts research and development into pharmaceuticals that protect the mitochondria, preserve mitochondrial function or increase energy production, and thus potentially, may limit the progression of injury in various organs of the body. Cyclosporine A and molecules with a different chemical structure that protect mitochondria by inhibiting enzymes of the cyclophilin class represent the primary technology platform for the drug development process. This class of drug is known as cyclophilin inhibitors. In addition, NeuroVive is working on a number of other projects in cell protection and energy regulation in mitochondrial diseases.

THE GROUP

The group's legal structure consists of the parent company, whose operations include drug development and group-wide functions. The other group company is Hong Kong-registered subsidiary NeuroVive Pharmaceutical Asia Ltd. The primary duty of the subsidiary is to develop and commercialize NeuroVive's product portfolio in China. NeuroVive Pharmaceutical AB holds 70% of the subsidiary. The remaining 30% is held by NeuroVive's collaboration partner Foundation Asia Pacific Ltd.

NeuroVive's project activities

The science behind mitochondrial energy production

Mitochondria are present in every cell and serve as the cell's engine and energy supply. NeuroVive's focus is on mitochondrial dysfunction in acute neurological conditions, such as traumatic brain injury (TBI) and stroke. Research has also indicated a potential connection between defective mitochondria and the development of a number of serious conditions where no treatment is available at present, such as reperfusion injury after myocardial infarction. There are also many primary genetic

diseases that directly affect mitochondrial function that have no treatment available at present.

The mitochondria serve a completely critical function in terms of energy production, and accordingly contribute to cells' ability to resist and repair injury. If damage occurs to the nervous system, such as in traumatic brain injury or disruption of blood flow to the brain or heart (which results in the loss of oxygen and nutrients) the number of calcium ions in cells increase. Calcium ions are buffered and stored by the mitochondria to protect the cells from excessive calcium levels, which are very harmful to the cell.

By protecting the body's energy producing mitochondria, NeuroVive's project portfolio enables damaged tissue to be treated (increasing the probability of cell survival) and limits the spread of the primary injury (protection of adjacent healthy cells). The objective is for NeuroVive's drug candidates to achieve reduced cell death, improve organ function and accelerate clinical recovery. In the longer term, the objective is for pharmaceuticals that protect nerve and heart cells to improve individual patient prognoses with fewer days of care and more effective rehabilitation.

DEVELOPMENT PROJECTS

NeuroVive's product portfolio currently consists of six different drug candidates in various development phases. Two of them, CicloMulsion® and NeuroSTAT®, are in clinical development phases with the potential of satisfying a substantial medical need in myocardial infarction and cranial injury.

• n CicloMulsion—treating reperfusion injury in myocardial infarction
• n NeuroSTAT®—treating TBI
• n NVP014—neuroprotection in stroke
• n NVP015—mitochondrial energy regulation
• n NVP018—treating viral diseases with cyclophilin inhibitors
• n NVP019—next-generation cyclophilin inhibitors

CicloMulsion®

BACKGROUND

An estimated three (3) million patients in the EU and US suffer from severe coronary artery disease and develop myocardial infarction each year. Patients often undergo emergency treatment in the form of percutaneous coronary intervention (PCI), involving the insertion of a catheter via the major blood vessels, to dilate and remove blood clots from the coronary arteries. But even after blood flow is restored, the damage continues, through what is known as reperfusion injury, with the risk of further tissue damage and major heart attack. Accordingly, from a clinical perspective, the development of pharmaceuticals to protect heart tissue in PCI is very urgent. A previous external study published in the New England Journal of Medicine (NEJM, 2008 Jul 31;359(5):473-81) demonstrated that treatment with cyclosporine A can mitigate reperfusion injury when treating myocardial infarction. Cyclosporine A is the active compound in NeuroVive's product CicloMulsion®.

DEVELOPMENT PHASE—PHASE III STUDY

NeuroVive's previously completed phase I study opened an opportunity for participation in external clinical studies in Europe, the US and China. NeuroVive is currently participating in the largest part-externally funded French phase III study ("CIRCUS" study), where it is providing study centers in France, Belgium and Spain with CicloMulsion® (NeuroVive's lipid emulsion of cyclosporine A), placebo and logistics support for drug distribution. This multi-center study has enrolled 972 patients. The final patient was treated in February 2014. Given a positive outcome, and assuming that the trial proves pivotal, NeuroVive plans to file application with the French pharmaceutical regulator, as the first step in a European launch. The collaboration with Sihuan in China means that further studies will be conducted on CicloMulsion® in China, as complements to the European phase III study. Overall, this forms the foundation for CicloMulsion's® subsequent market approval in China.

NeuroSTAT®

BACKGROUND

Acute traumatic brain injury (TBI) is an injury to the brain, in which nerve cells suffer immediate injury. The injury deteriorates several days after the incident, which often has a significant

impact on the overall injurious effect. Researchers at the Mitochondrial Pathophysiology Unit at the University of Lund contracted by NeuroVive, have demonstrated that cyclosporine A, the active compound of NeuroSTAT®, is a substance with potent neuroprotective qualities.

As far as the Company is aware, there are no registered and approved pharmaceuticals on the market that have proved to protect against cell death in TBI in placebo-controlled studies. The pressing medical need and societal health care burden to this patient group means the market is substantial. In the US, TBI costs society nearly SEK 100 billion every year.

DEVELOPMENT PHASE—PHASE IIA STUDY

At the end of 2012, NeuroVive secured regulatory and ethical approval to commence a clinical phase IIa study. This study, involving patients with acute TBI, commenced in 2013, and is being conducted by the Copenhagen University Hospital to corroborate previous preclinical results and to study dosage and safety. The first five patients of a total 20 have been enrolled (March 2014). This open-label study is evaluating two different doses of the pharmaceutical. The primary objective is to evaluate safety and blood concentrations of cyclosporine A, with a secondary aim being to collate information on NeuroSTAT's® capacity to alleviate patient brain injury. This latter objective is being realized by studying markers of mitochondrial function (micro-dialysis) and brain injury. NeuroVive is also preparing a multinational multi-center study (phase IIb/III) in TBI to examine whether NeuroSTAT® can serve as a neuroprotective than make a difference in the progress of patient disease and prognoses. Collaborations have been established with leading neurosurgeons in Europe, the US and China for the execution of this clinical trial program. NeuroVive plans to fund the initial phase IIa study on TBI itself, while other funding sources are planned for the large-scale international phase IIb/III study. The collaboration with Sihuan in China is enabling the execution of clinical trials on NeuroSTAT® in partnership with clinical centers in Europe and the US, or as independent phase II and phase III studies in China.

NeuroVive has secured orphan drug designation for NeuroSTAT® for moderate and severe cranial injury in the US and EU, which means market exclusivity after market approval even if patents no longer apply. Orphan drug designation confers exclusivity for 7 years in the US and 10 years in the EU, front the date marketing authorization is obtained.

NVP014

BACKGROUND

In strokes, the blood-brain barrier is not open to certain pharmaceuticals in the same way as in TBI. NeuroVive and its Dutch collaboration partner to-BBB Technologies BV are jointly developing a pharmaceutical against stroke and other acute neurological conditions by combining the two companies' technologies.

NVP014 (currently jointly owned with to-BBB Technologies BV of the Netherlands) consists of cyclosporine surrounded by a sheath of lipids and proteins, which form a micelle. The micelles, developed jointly with to-BBB Technologies BV, consist of globules of fat with special surface characteristics which mean they may potentially transit the blood-brain barrier more easily, delivering cyclosporine to brain tissue to offer the desired neuroprotection.

Some two (2) million patients suffer a stroke every year in the EU and US. Some 200,000 surviving patients suffer long-term or permanent disability. This has a major impact on society, the affected patients and their relatives. The yearly direct healthcare costs currently exceed SEK 350 bn.

DEVELOPMENT PHASE—PRECLINICAL PHASE

NeuroVive intends to execute several animal trials to corroborate increased penetration across the blood-brain barrier and NVP014's effect on mitochondrial injury and neuroprotection. Given positive results, the compound will then enter a development phase on animals designed to generate toxicology and dose data to enable the first dose on humans to be administered, all of which is consistent with the authorities' regulatory structures. In 2011, NeuroVive and to-BBB Technologies secured a total grant of the EUR 1 m from Eureka Eurostar for this joint preclinical development program.

NVP015

BACKGROUND

This is a research and development project that NeuroVive is running jointly with other research teams. The objective is to generate pharmaceuticals for a number of fairly unusual pediatric diseases, and potentially, for larger patient groups where the body could benefit from additional energy production, in contexts including extended surgery, intensive care, etc.

DEVELOPMENT PHASE—PRECLINICAL PHASE

The project is in the preclinical phase.

NVP018

BACKGROUND

Research and development into anti-viral pharmaceuticals is not directly related to mitochondrial medicine, but potentially, viral diseases could be treated with cyclophilin inhibitors. Accordingly, NeuroVive is examining alternatives to capitalize on its drug candidate. The business strategy is to maximize the value of the project by developing drug candidates up to and including the first dose on humans with the objective of demonstrating efficacy on viral diseases, with limited funds. Discussions with potential partners are being conducted in tandem with this process.

DEVELOPMENT PHASE—PRECLINICAL PHASE

The project is in the preclinical phase.

NVP019

BACKGROUND

NVP019 is being developed as the next-generation cyclophilin inhibitor, focusing on myocardial infarction and cranial injury. This drug candidate has demonstrated itself as more potent and with more specific efficacy than cyclosporine A (the active compound in NeuroSTAT®/CicloMulsion®). Moreover, this drug candidate is potentially still more tolerable than cyclosporine A, and has significantly longer patent protection than CicloMulsion®. The aim is to develop a follow-up preparation for NeuroSTAT®/CicloMulsion® for cranial injury/reperfusion injury, but also, to extend the application to cover other acute cardiac conditions and brain injuries.

DEVELOPMENT PHASE—PRECLINICAL PHASE

The project is in the preclinical phase.

Significant events in 2013

DEVELOPMENT PROJECTS

In March, NeuroVive acquired a portfolio of new cyclophilin inhibitors and associated intellectual property from UK biotech enterprise Biotica Ltd.

The first patient was enrolled in a clinical phase IIa study on the Company's pharmaceutical NeuroSTAT® for treating TBI in June. This study will enroll a total of 20 patients and is being conducted at the Neurological Clinic of Copenhagen University Hospital.

In June, the Company signed a collaboration agreement with Isomerase Therapeutics (UK) to develop the molecules the Company acquired from Biotica Ltd. in March 2013. Recommend

changing to "The focus of this collaboration is cell protection in the TBI and myocardial infarction (NVP019) indications, and the new product area of anti-viral indications in the form of the new drug candidate NVP018.

At the end of the year, over 900 of the 972 patients had been enrolled in the multinational phase III study on the Company's pharmaceutical CicloMulsion® (CIRCUS study).

OTHER

On 10 April, NeuroVive was listed on NASDAQ OMX Small Cap with the ticker symbol NVP.

NeuroVive reported in June that its Chinese subsidiary, NeuroVive Pharmaceutical Asia Ltd., had received the first milestone payment of SEK 5.3 m (RMB 5 m) from Chinese collaboration partner Sihuan Pharmaceutical Ltd.

An Extraordinary General Meeting (EGM) of the Company approved a private placement and rights issue totaling some SEK 111 m plus an SEK 10 m overallocation option. The SEK 35 m private placement was executed in December.

CHANGES TO NEUROVIVE'S MANAGEMENT

Jan Nilsson joined NeuroVive's management as Chief Operating Officer (COO) in February. Catharina Jz Johansson took up position as Chief Financial Officer (CFO) effective 1 December.

REVENUE AND RESULTS OF OPERATIONS

Consolidated sales of SEK 5,335,000 (0) in 2013 consist of compensation received by 70%-owned Chinese subsidiary NeuroVive Pharmaceutical Asia Ltd., for milestones achieved pursuant to a collaboration agreement. The majority of the group's other income of SEK 1,598,000 (1,328,000) consists of EU subsidies received from the Swedish Governmental Agency for Innovation Systems. Otherwise, the Company has not started to generate revenue.

Operating expenses were SEK 29,279,000 (17,827,000) of which expensed research and development expenses were SEK 6,112,000 (1,662,000).

The SEK 11,452,000 increase in operating expenses is explained by the increases to other external expenses of SEK 22,629,000 (12,973,000). The Company incurred costs associated with its IPO on Nasdaq OMX, consulting expenses that were higher than the corresponding period a year previously and expenses for legal advisory services related to the ongoing arbitration procedure with CicloMulsion AG. The increase of personnel expenses to SEK 6,265,000 (4,565,000) is due to a higher number of employees compared to the previous year, because of intensified development expenses.

The consolidated operating profit/loss was SEK -22,346,000 (-16,499,000). Net financial income/ expense was SEK 220,000 (596,000). This amount is interest income on surplus capital

invested in fixed-income accounts at short maturity and expenses for bridge finance of SEK 4,000,000, which was repaid in February 2014. The profit/loss for the period was SEK -22,126,000 (-15,903,000).

FINANCIAL POSITION

Consolidated total assets were SEK 89,177,000 (71,506,000) of which intangible assets were SEK 47,199,000 (32,705,000). Cash and cash equivalents at year-end were SEK 39,992,000 (37,177,000), largely due to the private placement NeuroVive executed in December. A total of 2,500,000 new shares were issued, raising the Company SEK 33,595,000 after issue expenses of SEK 1,405,000. The subscription price was set at SEK 14.00 per share. The total number of shares after the issue is 21,659,046. Equity at year-end was SEK 74,643,000 (63,043,000), and share capital was SEK 1,083,000 (958,000). The equity ratio was 84% (88) at the end of the period. Equity per share was SEK 3.45 (3.29). The group has no interest-bearing liabilities but arranged bridge funding of SEK 4,000,000 at year-end 2013 for a fixed fee. This loan was repaid in February 2014.

CASH FLOW

Consolidated cash flow for the year was SEK 2,821,000 (24,382,000), with cash flow negatively affected by operating activities of SEK -19,090,000 (SEK -12,222,000) and from investments, of SEK -11,684,000 (-9,718,000). The positive cash flow from financing activities of SEK 33,595,000 (46,322,000) was wholly sourced from the private placement consummated in December 2013.

INVESTMENTS

Total fixed assets amounted to SEK 47,576,000 (33,370,000) as of 31 December 2013. Most of the increase of SEK 14,206,000 (12,424,000) is due to capitalized development expenditure from projects the Company is conducting, as well as patents. 28% (49) of the increase in development expenditure and patents relates to NeuroSTAT, some 28% (47) to CicloMulsion and some 35% (0) to Biotica. SEK 0 (232,000) of investments in capitalized developed expenses were funded through subsidies from the Swedish Governmental Agency for Innovation Systems. For a review of the development phases in which the intangible fixed assets lie, see note 16.

Investments of SEK 68,000 (665,000) were made in tangible fixed assets, the majority being equipment used in development projects.

PARENT COMPANY

Most of the Company's operations are conducted by parent company NeuroVive Pharmaceutical AB. During the year, the parent company had net sales of SEK 819,000 (797,000), which is a management fee to the subsidiary. Interest income includes internally accrued interest on loans to subsidiaries of SEK 130,000 (43,000).

The parent company has a receivable of SEK 4,625,000 (2,716,000) on the subsidiary, for short-term loans.

THE NEUROVIVE SHARE

NeuroVive's share has been listed on Nasdaq OMX since 10 April 2013 with the ticker symbol NVP. As of 31 December 2013, share capital was SEK 1,083,000, divided between 21,659,046 shares. Assuming that all share warrants in the incentive program implemented in 2011 are exercised to subscribe for new shares (164,000 shares) the Company's share capital would increase by SEK 8,200. At present, full exercise would imply a dilution effect of some 0.8% (0.9).

NeuroVive is not aware of any agreement between shareholders that could imply limitations on rights to transfer shares of the Company.

There is only one share class. Each share confers entitlement to one vote at the AGM and all shares have equal entitlement to participation in the Company's assets and profits. For more information on shareholders, see page 20.

RISK FACTORS

A research company like NeuroVive features high operational and financial risk, because the projects the Company is conducting are in preclinical and clinical phases. A number of parameters affect the likelihood of commercial success. The likelihood of a drug candidate reaching the market increases as the project passes the various defined development phases. The same applies to expenses, which rise markedly in later development phases. Accordingly, drug development is generally associated with very high risk, and this also applies to NeuroVive's drug development process.

NeuroVive is focused on developing new pharmaceuticals, but has yet to achieve any approved products for sale. Operations have been loss making to date, and NeuroVive judges that at present, commercialization of products on selected markets could occur no earlier than in 2016.

Clinical trials

Before a pharmaceutical can be launched on the market, its safety and efficacy on treating humans must be ensured for each individual indication, as demonstrated through preclinical studies, conducted on animals, and clinical trials, on humans. The pharmaceutical sector generally and clinical studies in particular are associated with great uncertainty and risks in terms of delays and the outcome of studies. The outcome of preclinical studies is not always consistent with those achieved in clinical studies. Nor are the results of early clinical studies

always consistent with the results of more extensive studies. There can be no guarantee that NeuroVive's planned clinical studies will reveal sufficient safety and efficacy for the Company to be able to attain the necessary regulatory permits later to enable pharmaceutical sales. If NeuroVive or its collaboration partners are not able to demonstrate that a pharmaceutical is safe and effective enough via clinical studies, NeuroVive may be negatively affected, which may mean regulatory approval is not forthcoming, and thus there is no commercialization, as well as reduced, or lost, cash flow.

Regulatory standards and political risk

NeuroVive holds all the requisite permits for conducting its operations. Operations are conducted in accordance with applicable laws, but also considering environmental and ethical standards. However, there can be no guarantee that new standards levied by the authorities may not hinder operations being conducted, or that permits in place at present will be renewed on the same terms as previously, or the insurance coverage the group currently considers adequate will prove sufficient.

Marketing and selling pharmaceuticals requires permits and registration with the relevant regulatory authority on each market. NeuroVive cannot guarantee that such approval is secured to the extent necessary to be able to achieve profitability or satisfy objectives for the future.

In its research and development work, NeuroVive is active in, and through, a large number of different countries and intends to conduct global sales of pharmaceuticals to protect the mitochondria jointly with, or via, collaboration partners. Risks may arise through changes to laws, taxation, customs duties, exchange rates and other terms affecting foreign companies. NeuroVive is also affected by political and economic uncertainty factors in such countries. The above may have negative consequences for NeuroVive's operations and results of operations.

Pharmaceuticals pricing

NeuroVive's business model includes out-licensing pharmaceuticals. The general progress of pricing of pharmaceuticals lies outside NeuroVive's control. If pharmaceuticals prices generally fall, there is a risk that this may affect NeuroVive's revenue potential adversely. In some countries, the pricing of certain types of pharmaceutical is regulated. In such cases, pricing lies outside NeuroVive's control. The lower the pricing of a pharmaceutical, the worse the revenue prospects for NeuroVive. Accordingly, there is a risk that pricing of mitochondrial medicines may be lower than what NeuroVive's Board of Directors estimates.

Royalties to CicloMulsion AG

In March 2013, CicloMulsion AG (Germany) initiated an arbitration procedure through which it intends to clarify the

implication of the agreement reached between CicloMulsion AG and NeuroVive. CicloMulsion AG wants to determine whether NeuroVive holds the rights to cancel the agreement between the parties, and how CicloMulsion AG's entitlement to receive royalties would be affected by such cancellation. CicloMulsion AG also intends to obtain information regarding NeuroVive's agreement with Sihuan for purposes including computing royalties. If the arbitration rules in CicloMulsion AG's favor, NeuroVive may be obliged to make future royalty payments without being able to cancel the agreement. Accordingly, NeuroVive may be compelled to pay royalties for 15 years after products are launched. There is a risk that CicloMulsion AG decides to extend the arbitration procedure to other areas of agreement, which may affect the Company's operations adversely.

Commercialization and collaboration

None of NeuroVive's projects have been commercialized to date, and may never be so. Nor can there be any guarantee that products will be well received or become commercial successes.

NeuroVive is now, and will remain in future, dependent on collaborations relating to the out-licensing of drug candidates for large-scale clinical studies and/or the marketing and sale of pharmaceuticals. In addition to prospects for traditional out-licensing, NeuroVive's management is evaluating various types of innovative collaboration with larger pharmaceutical companies and/or CRO partners. There can be no guarantee that agreements or collaborations are secured, nor that collaboration partners will fulfill their commitments successfully. If no collaboration agreements are secured, or collaboration partners are unsuccessful in their efforts to successfully launch pharmaceuticals on the market, this may result in reduced or lost revenues for NeuroVive.

Product liability

Given the nature of operations, it is relevant to consider NeuroVive's product liability arising as the Company develops and commercializes products. The Board judges that NeuroVive's current insurance coverage is satisfactory considering the nature and scope of its operations. However, for each planned clinical study, NeuroVive will need to review its insurance coverage, and in each future planned study, there are likely to be limitations in the scope and maximum claims of insurance coverage. Accordingly, there can be no guarantee that NeuroVive's insurance coverage would fully meet potential future legal claims, which could affect NeuroVive's operations and results of operations negatively.

Competitors

There is intense competition in the pharmaceutical sector. There are many companies, universities and research institutions

conducting drug research and development. If a competitor successfully develops and launches an effective and safe pharmaceutical to protect the mitochondria, this may imply risks in the form of deteriorated sales prospects for the Company. Additionally, a company with global operations that is currently working in an adjacent segment may decide to start up in NeuroVive's business segment. Greater competition may have negative impact on NeuroVive's sales and profits in the future.

Patents and other intellectual property

Patents, which are an important component of NeuroVive's assets, have finite lives. The Company cannot guarantee that existing and/or future patent portfolios and other intellectual property the Company holds may constitute fully satisfactory commercial protection. If NeuroVive is compelled to defend its patent rights against a competitor, this may cause substantial costs, which may affect the Company's operations, results of operations and financial position negatively. Additionally, there is always a risk in this type of operation that NeuroVive may, or may be alleged to, have infringed on patents held by third parties. Other parties' patents may also limit opportunities for one or more of the Company's future collaboration partners to use pharmaceuticals or production methods freely. The uncertainty associated with patent protection means that the outcome of such disputes is hard to predict.

Negative outcomes to disputes over intellectual property may result in lost protection, and prevention of continuing usage of the relevant rights or an obligation to pay damages claims. Moreover, the costs of the dispute, even given a positive outcome for the Company, may be significant, which could affect NeuroVive's results of operations and financial position negatively. The above could imply difficulties or delays in commercializing future pharmaceuticals, and accordingly, difficulties in generating revenues. The corresponding also applies for other intellectual property, such as trademarks and brands.

To some extent, NeuroVive is also dependent on know-how and commercial secrets, which are not protected by legislation in the same way as intellectual property. The Company utilizes non-disclosure agreements, and thus endeavors to secure far-reaching protection of sensitive information. However, complete protection against the unauthorized disclosure of information is not possible, which implies a risk that competitors may obtain, and benefit from, the know-how developed by the Company, to the detriment of NeuroVive.

Key individuals

NeuroVive is heavily dependent on the Company's senior executives and key individuals. If the Company were to lose any of its key employees, this could delay or cause discontinuation of development projects, or commercialization of the Company's drug candidates. The Company's ability to attract and retain qualified staff is critical to its future success. Even if NeuroVive intends to be able to attract and retain qualified staff, there can be no guarantee that this will be possible on satisfactory terms against the competition that exist from other pharmaceutical and biotech enterprises, universities and other institutions.

Financial risks

Through its operations, the group is exposed to various types of financial risk, such as market, liquidity and credit risks. Primarily, market risks consist of interest risk and currency risk. The Company's Board of Directors bears ultimate responsibility for the exposure, management and monitoring of the group's financial risks. The Board sets the guidelines that apply to the exposure, management and monitoring of financial risks, and these frameworks are evaluated and reviewed yearly. The Board of Directors can decide on temporary departures from these predetermined frameworks. For other information, see note 4.

Future capital requirements

Drug development in the life science sector is normally capital intensive and NeuroVive's planned clinical studies and development work imply significant costs. Accordingly, the Company is dependent on the ability to raise capital in future. Potential delays to clinical trials may involve cash flow being generated later than planned. Future capital requirements are also affected by whether the Company can secure partnership/co-financing. NeuroVive may need to raise further capital going forward depending on the scale of revenues it succeeds in generating in relation to its cost base. There can be no guarantee that the Company can raise further capital, secure partnerships or other co-financing. This may mean that development is temporarily discontinued or NeuroVive is compelled to conduct operations at a slower rate than desired, which may lead to delayed or lost commercialization and revenue.

ORGANIZATION

There was an average of 6 (4) employees of the group during the year, of which 3 (2) are women. The number of employees at year-end was 7 (6) part-time employees and 4 (3) full-time employees. Of the total of 11 (9) employees, 5 (3) were women and a total of 7 (6) were active in the Company's research and development operations. Staff have a high level of educational qualification, 3 holding PhDs in medical sciences and the other 8 employees being university graduates. In addition to its employees, NeuroVive has a number of consultants continuously associated to its operations.

REMUNERATION

The AGM resolves on remuneration to the Chairman of the Board and other Board members.

The AGM also resolves on guidelines for remunerating the CEO and other senior executives. For more information on remuneration in the year, see note 11 and the Corporate Governance Report on page 39.

The Board of Directors is proposing that remuneration for 2014 is resolved according to the same principles as for 2013.

INCENTIVE PROGRAM

The AGM on 10 June 2011 resolved on a share-related incentive program to senior executives and/or other employees through the issuance of a maximum of 164,000 share warrants. The options were subscribed at a price of SEK 2.50 per share warrant. NeuroVive paid net salary compensation with the additional tax and social security contributions to the Board and senior executives to part-fund option subscription.

Holders of share warrants are entitled to subscribe for one new NeuroVive share for each share warrant held at a subscription price of SEK 96.00 per share in the period 10 April 2014 to 10 June 2014. If all share warrants are exercised, share capital would increase by SEK 8,200, raising NeuroVive SEK 15,744,000.

Post balance sheet events

DEVELOPMENT PROJECTS

Expanded collaboration with inVentiv Health (USA) for the forthcoming market launch of CicloMulsion®.

The Company treated the last of 972 patients in the European phase III study on CicloMulsion® in February 2014.

OTHER

On 31 January, NeuroVive informed the market that its rights issue had been 270% oversubscribed. Simultaneously, NeuroVive announced the Board's decision to fully exercise the overallocation option. Recommend changing to "The rights issue would raise the Company some SEK 75.8 m and the overallocation option would raise SEK 10.0 m. Accordingly, NeuroVive raised some SEK 85.8 m before issue expenses, estimated at some SEK 9.1 m, of which some SEK 4 m consists of compensation for issue guarantees.

NeuroVive's subsidiary NeuroVive Pharmaceutical Asia Ltd. with its registered office in Hong Kong, signed a collaboration agreement with Yuanta Securities Co., Ltd., the Taiwanese leader in IPOs. This agreement is the first phase of a process with the objective of listing NeuroVive's subsidiary on the Taiwanese stock exchange within 2 to 3 years.

NeuroVive and A1 Pharma have initiated a research collaboration in mitochondrial medicine.

NeuroVive's antiviral pre-clinical program in NVP018 has generated unique data that shows that NVP018 has the potential to become an effective treatment alternative or a supplement to existing treatments for chronic Hepatitis B infection. The new data was presented at EASL's International Liver Congress in London in April 2014.

PROSPECTS FOR 2014

In the coming year, NeuroVive will be prioritizing three main drug development segments:

• n The European phase III study on CicloMulsion® for treating reperfusion injury in PCI post-myocardial infarction, and the planning of a phase III cardiac study in China;
• n Conclusion of the first part of the phase II low-dose study on NeuroSTAT® on TBI patients and discussions with the FDA, EMA and SFDA to commence an international multicentre study on NeuroSTAT® for TBI;
• n Preclinical development work with collaboration partners, primarily Isomerase Therapeutics, Mitopharm and to-BBB, with the aim of developing new cyclophilin inhibitors, anti-viral pharmaceuticals, pharmaceuticals to protect the mitochondria and drug candidates for treating stroke;

PROPOSED APPROPRIATION OF FUNDS

The following amounts in Swedish kronor (SEK) are at the disposal of the Annual General Meeting:

Total	74,421,196
Profit/loss for the year	-22,809,895
Accumulated profit	63,761,176
Share premium reserve	33,469,915

The Board of Directors is proposing that the funds at its disposal of SEK 74,421,196 are carried forward. Accordingly, no dividend is proposed.

Corporate Governance Report 2013

NeuroVive Pharmaceutical AB (publ) (NeuroVive or the Company) is a Swedish public limited company with corporate identity number 556595-6538. NeuroVive's registered office is in the Municipality of Lund and the Company is listed on NASDAQ OMX Stockholm.

This Corporate Governance Report has been prepared by NeuroVive's Board of Directors in compliance with the Annual Accounts Act and the Swedish Code of Corporate Governance (the Code). The Corporate Governance Report is part of the Statutory Administration Report and the Company's Auditors have conducted their statutory review of the Report.

Application of and Departure from the Swedish Code of Corporate Governance

The Code applies to all Swedish companies whose shares are listed on a regulated marketplace in Sweden and shall be applied fully at the first Annual General Meeting held following initial public offering. The Company is not obliged to adhere to all the regulations of the Code, and is free to adopt alternative solutions deemed more suitable to its circumstances, provided that potential departures are reported, the alternative solution described and the reasons explained (Comply or Explain principle) in the Corporate Governance Report.

NeuroVive has applied the Swedish Code of Corporate Governance from 8 June 2012 inclusive, at the Company's AGM, and has prepared this Corporate Governance Report in accordance with the Code. NeuroVive has departed from the Code only with regard to the incentive program introduced before the Code was applied.

According to regulation 9.8 of the Code, share-based incentive programs may not be shorter than three years from the start of the agreement until the shares can be acquired. Senior executives and/or employees entered a share-based incentive program in July 2011, where shares can be acquired between April and June 2014. This agreed period falls three months short of the three years stipulated by the Code. According to the Code, the incentive program may not address Board members that are not in the Company's employment. Chairman Greg Batcheller

has subscribed for share options under the incentive program. However, it should be noted that the incentive program was introduced before NeuroVive began to apply the Code. The Company intends to comply with the Code in any future sharebased incentive programs.

Organization of Corporate Governance

NeuroVive's internal controls and corporate governance are based on applicable legislation/regulations and on sector-specific parameters considered significant to the Company. The control system encompasses all applicable regulatory frameworks as well as the specific demands NeuroVive places on its operations.

The internal control and corporate governance tool provides overall control of all critical stages relating to the Company. This provides NeuroVive's Board of Directors and management with the conditions required to control and govern operations in order to satisfy the stringent demands of the Company, the market, the stock market, the shareholders and the authorities.

The following legislation/regulations as well as the Company's own constitutional documents form the basis of NeuroVive's corporate governance:

External Regulations

• n The Swedish Companies Act,
• n Applicable accounting legislation,
• n IFRS,
• n The Swedish Code of Corporate Governance,
• n NASDAQ OMX Stockholm's regulatory framework for issuers.

Internal constitutional documents

• n The Articles of Association,
• n Instructions and rules of procedure for the Board of Directors, Committees and CEO,
• n Guidelines for remuneration to senior executives,
• n Ethical guidelines,
• n Financial administration guidelines.

NeuroVive's corporate governance model

Ownership structure

NeuroVive had some 2,780 registered shareholders as of 31 December 2013. MAAS Biolab, LLC was the largest owner with a holding of 4,233,736 shares, corresponding to some 19.5% of the shares and votes. Avanza Pension Försäkring AB was the second biggest shareholder with 2,791,004 shares, corresponding to some 12.89% of the shares and votes. There were no other shareholders with a holding of more than one-tenth of the total number of shares and votes in the company at year-end.

Share capital and voting rights

NeuroVive's share capital totaled SEK 1,082,952.30 divided between 21,659,046 shares as of 31 December 2013. There is only a single share class. All shares have a quotient value of SEK 0.05 and one vote, and confer equal entitlement to the Company's assets and profits. NeuroVive's Articles of Association have no limitations regarding the number of votes each shareholder may cast at the AGM.

Annual General Meeting

The Annual General Meeting (AGM) is the chief decision-making body in a limited company and the shareholders exercise their decision-making rights at the AGM. The AGM is planned and held to enable shareholders to exercise their influence over the Company optimally. The invitation to the AGM and other information provided is designed to allow shareholders to reach well-founded decisions on the issues addressed at the AGM. Resolutions reached at the AGM shall adhere to the Swedish Companies Act's regulations on majority requirement. In accordance with the Articles of Association, the invitation to the AGM

and Extraordinary General Meetings are published in the Swedish Official Gazette and on the Company's website. An announcement that a Meeting has been convened is published in Swedish daily newspaper Svenska Dagbladet.

Entitlement to participate at the Annual General Meeting

All shareholders directly registered in the share register maintained by Euroclear Sweden AB five business days prior to the AGM, and who have informed NeuroVive of their intention to attend by no later than the date indicated in the invitation to the AGM, are entitled to participate in the AGM and to vote according to the number of shares held.

Initiatives from shareholders

Shareholders wishing to raise a matter at the AGM must submit a written request to the Board of Directors by no later than seven weeks prior to the AGM.

Given the Company's ownership structure and financial circumstances, NeuroVive does not consider simultaneous interpretation into other languages and translation of all of or part of the documentation relating to the AGM as justified.

NeuroVive's website contains information on the Company's previous AGMs as well as information on shareholders' rights to raise matters at the AGM and the cut-off date for NeuroVive receiving such requests.

Shareholders' meetings in 2013

The AGM was held on 8 March 2013, at Scheelevägen 2 in Lund, Sweden. 18 shareholders attended the AGM, in person or through representatives. These shareholders represented 34.64% of the shares and votes of NeuroVive. The CEO and all Board members attended the AGM.

The AGM 2013 adopted the following resolutions:

• n Adopted the Balance Sheet and Income Statement and Consolidated Balance Sheet and Income Statement,
• n Resolution regarding discharging the Board of Directors and CEO from liability,
• n Resolution regarding remuneration to the Board of Directors, Auditors and Committee members,
• n Elected the Board of Directors,
• n Adopted guidelines for remuneration to senior executives,
• n Adopted guidelines for the Nomination Committee.

The Extraordinary General Meeting was held on 13 December 2013 at Scheelevägen 2 in Lund, Sweden. 18 shareholders were present at the EGM, in person or through representatives. These shareholders represented 13.6% of the shares and votes in NeuroVive.

The Extraordinary General Meeting reached the following resolutions:

• n Adopted a resolution on a new issue waiving shareholders' preferential rights,
• n Adopted a resolution on a new issue with preferential rights for existing shareholders,
• n Adopted a resolution to sanction the Board of Directors to authorize further new issues waiving shareholders' preferential rights (overallocation option for rights issue).

The proposed resolutions were published in the invitation to the shareholders' meetings in order to give the Company's shareholders a clear understanding of the matters to be considered at shareholders' meetings. Complete proposed resolutions and the requisite documentation under the Swedish Companies Act were made available at the Company' offices and website in good time prior to shareholders' meetings.

Documentation relating to shareholders' meetings, such as invitations to meetings, minutes and the basis of decisions, is at NeuroVive's website, www.neurovive.se.

Annual General Meeting 2014

NeuroVive's AGM 2014 will be held on 9 May 2014, at 3 p.m. at Medicon Village, Scheelevägen 2, in Lund, Sweden. Shareholders wishing to attend the AGM must notify the Company in advance. Information on how to apply and how to raise a matter at the AGM is on the Company's website.

Nomination Committee

The Company shall have a Nomination Committee comprising one member of each the three largest shareholders in terms of voting rights based on ownership statistics maintained by Euroclear Sweden AB. The Chairman of the Board convenes the meetings and is co-opted to the Nomination Committee. Neither the CEO nor any other member of management is permitted to be members of the Nomination Committee, nor shall Board members be a majority of the Nomination Committee members. If a shareholder does not exercise its right to appoint a member, entitlement to appoint a member of the Nomination Committee shall transfer to that member who is the second largest shareholder in terms of voting rights. A majority of the Nomination Committee's members shall be non-affiliated to the Company and management, if more than one Board member is included in the Nomination Committee, a maximum of one can be affiliated to the Company's major shareholders. A minimum of one of the Nomination Committee's members shall be non-affiliated to the Company's largest shareholder or group of shareholders collaborating on the Company's administration. No remuneration is payable to any of the members of the Nomination Committee.

The Nomination Committee initiates the appraisal of the incumbent Board of Directors once it has been completed. The Committee's work shall feature openness and discussion, in order to ensure a well-balanced Board of Directors. The Nomination Committee then nominates members to NeuroVive's Board of Directors for the coming period of office, who are subsequently proposed to the AGM. The Nomination Committee's duty is to propose the Chairman of the AGM, the Chairman of the Board and Board members, the number of Board members, remuneration to Board members and Committee members as well as the election of, and remuneration to, the Auditors. The Nomination Committee also has the duty of proposing guidelines for appointing members of the Nomination Committee and the assignments of the Nomination Committee.

The composition of the Nomination Committee for the AGM 2014 was announced in a press release on 8 November 2013 and is as follows:

Michael Vickers	(Chairman of the Nomination Committee), Board member representing Maas Biolab LLC,
Anders Ermén	Board member representing Baulos Capital Belgium SA, and
	Tomas Hagström Board member representing Eskil Elmér.

The Board of Directors

Composition of the Board of Directors

The Board of Directors shall have a minimum of three and a maximum of eight members. Board members are appointed annually by the AGM and are elected for a period until the end of the next AGM. NeuroVive's AGM on 8 March 2013 re-elected Greg Batcheller, Arne Ferstad, Marcus Keep, Helena Levander and Helmuth von Moltke as Board members. Boel Flodgren and Anna Malm Bernsten were elected as Board members. Greg Batcheller was re-elected Chairman of the Board. None of the Board members are members of the Company's management, although Greg Batcheller works on the Company's management on a consulting basis through Stanbridge Corporation BVBA. The Board members' non-affiliation to the Company, the Company's management and the Company's major shareholders are indicated in the table below.

Chairman

The AGM appoints the Chairman. The Chairman represents the Board of Directors externally and internally. The Chairman leads the Board's work, monitors the work and assumes responsibility for the Board completing its duties according to applicable legislation, the Articles of Association, the Swedish Code of Corporate Governance and the Board of Director's rules of procedure.

The Chairman shall monitor the Company's progress through contact with the CEO, consult with the CEO on strategic matters and ensure that strategic considerations are recorded and addressed by the Board of Directors. The Chairman shall also ensure that the Board of Directors, through the CEO's agency, receives information on the Company on an ongoing basis in order to enable analysis of the Company's position.

As Greg Batcheller undertakes permanent assignments on behalf of the Company in addition to his role as Chairman, the division of responsibilities between the Chairman and CEO has been clarified in the Board of Directors' rules of procedure and the CEO's instructions.

The Board of Directors' duties and responsibilities

The Board of Directors is the highest administrative body at the AGM. The work of NeuroVive's Board of Directors is regulated by applicable legislation and recommendations, and by the Board of Directors' rules of procedure, which are adopted annually. The rules of procedure contain stipulations regulating the division of responsibilities between the Board of Directors and the CEO, financial reporting and audit matters. At the Board meeting following election, the Board of Directors adopts other requisite rules of procedure, policies and guidelines that form the basis for the Company's internal regulatory framework.

The Board of Directors' primary duty is to manage overall and long-term issues and matters of exceptional significance to the Company. The Board of Directors assumes overall responsibility for the Company's operations and management and for ensuring that the accounting and fund management are controlled satisfactorily. The Board of Directors is responsible for ensuring that the Company follows applicable legislation, stipulations and the Swedish Code of Corporate Governance and that the Company is subject to satisfactory internal control procedures and formalized routines that safeguard adherence to set principles for financial reporting and internal control.

According to the Board of Directors' rules of procedure, the Board of Directors normally meets on seven occasions annually, including the Board meeting following election. The Board of Directors held 12 meetings during the year. Regular Board meetings covered matters such as reviewing and adopting financial reports, the business plan, budget and funding as well as strategic issues. The Board of Directors also monitors the progress of the Company's current pharmaceutical projects and financial situa¬tion continuously. The final Board meeting of the year included an appraisal of the Board of Directors, the work of the Board and the CEO. Additional meetings during the year dealt with matters such as managing the Company's raising of capital and matters relating to the Company's initial public offering.

The Board members' non-affiliation and attendance are indicated in the table below. For a presentation of Board members, see pages 42-43 of the Annual Report.

Board members in 2013

Board member	Elected in	Remuneration Committee	Audit Committee	Non-affiliated to the Company and management	Non-affiliated to the Company's major shareholders	Attendance, Board of Directors	Attendance, Remuneration Committee	Attendance, Audit Committee
Greg Batcheller, Chairman	2000			NO	YES	12/12
Arne Ferstad*	2010		Board member	NO	YES	10/12	2/2	5/5
Boel Flodgren**	2013			YES	YES	9/9
Marcus Keep*	2000			NO	NO	12/12	2/2
Helena Levander	2012	Board member	Chairman	YES	YES	12/12	2/2	5/5
Anna Malm Bernsten**	2013	Chairman	Board member	YES	YES	8/9	2/2	2/3
Helmuth von Moltke	2005	Board member		YES	YES	11/12	4/4
Jan Nilsson***	2010			-	-	3/3	2/2	2/2

* Arne Ferstad and Marcus Keep resigned from the Remuneration Committee at the AGM on 8 March 2013.

** Boel Flodgren and Anna Malm Bernsten were elected new Board members at the AGM on 8 March 2013.

*** Jan Nilsson resigned from the Board of Directors, Audit Committee and Remuneration Committee at the AGM on 8 March 2013.

Remuneration Committee

The Board of Directors has established a Remuneration Committee to assist the Board on issues relating to salary and remuneration. The Remuneration Committee's duties include:

• n Consulting on the Board of Director's decisions on matters relating to remuneration principles, remuneration and other terms of employment of management,
• n monitoring and evaluating ongoing and concluded (during the year) programs for variable remuneration for the corporate management, and
• n monitoring and evaluating the application of guidelines for remuneration to senior executives that the AGM is legally obliged to resolve on, and applicable remuneration structures and remuneration levels in the Company.

After consultation within the Remuneration Committee, the Board of Directors takes decisions on remuneration.

For the current period, the Remuneration Committee members are Anna Malm Bernsten (Chairman), Helena Levander and Helmuth von Moltke.

Audit Committee

The members of the Audit Committee are appointed by the Company's Board of Directors at the Board meeting following election and shall consist of a minimum of three Board members. The Board of Directors appoints the Chairman of the Audit Committee, who may not be the Chairman of the Board. A majority of the Committee's members shall be non-affiliated to the Company and management. At least one member who is non-affiliated to the Company and management shall also be non-affiliated to the Company's major shareholders.

The Audit Committee has been established to facilitate the Board of Directors' supervisory responsibility. As a subcommittee of the Board of Directors, the Audit Committee has limited decision-making powers. The Committee's rules of procedure are adopted annually at the Board meeting following election. The Audit Committee reports its work to the Board of Directors on an ongoing basis at regular meetings and also reports its work and members' attendance at Audit Committee meetings to the Board of Directors once annually.

The Audit Committee shall contribute to sound financial reporting that maintains market confidence in the Company by specifically monitoring and controlling the Company's accounting principles, financial administration, risk management and the structure of internal control, resources, ongoing work and annual reporting. The Audit Committee also reviews the Auditor's non-affiliation to the Company.

The Committee shall consult on matters relating to the choice of Auditor and remuneration to external Auditors, and maintain close contact with the Nomination Committee for its proposals to the AGM relating to election of Auditors and determining the Audit fee. The Audit Committee's contact with the Nomination Committee is handled and maintained by the Chairman of the Audit Committee.

NeuroVive's Audit Committee is appointed at the Board meeting following election and comprises Helena Levander (Chairman), Arne Ferstad and Anna Malm Bernsten for the current period.

CEO and other senior executives

The CEO is appointed by the Board of Directors. The CEO's work follows the written instructions adopted annually by the Board of Directors at the Board meeting following election.

The instructions for the CEO regulates customary areas such as the CEO's undertaking in relation to the Company and the Board of Directors, including responsibility for presenting expedient reports to the Board of Directors relevant to the Board's completion of its evaluation of the Company. The CEO shall ensure that ongoing planning, including business plans and budgets, is completed and presented to the Board of Directors for resolution. The CEO shall exercise good leadership in the management of operations to ensure that the Company progresses according to plan and follows the strategies and policies adopted. When departure from these plans and special events of a significant nature are feared, the CEO must inform the Board of Directors through the Chairman immediately. The CEO shall ensure that the Company's operations, including its administration, are organized so that they satisfy market requirements, and shall ensure efficient and secure organizational control of operations.

Within the framework of the directives provided by the Board of Directors for the Company's operations, management deals with consultation regarding, and monitoring of, strategies and budgets, the distribution of resources, the monitoring of operations and preparation for Board meetings.

In the period, the members of management were NeuroVive's CEO Mikael Brönnegård, Greg Batcheller (as Executive Chairman), Eskil Elmér, Jan Nilsson and Christian Svensson (up until Nov 2013 inclusive), Catharina Jz Johansson (from Dec 2013 inclusive). Management meets every two weeks and minutes are taken at all meetings.

The Company also has a Clinical and Scientific Advisory Board that assists the Board of Directors and management in their work.

Remuneration to the Board of Directors and senior executives

Remuneration to Board members

The AGM 2013 resolved that fees of SEK 300,000 should be paid to the Board of Directors and SEK 150,000 to each of the remaining Board members. Chairman of the Board Greg Batcheller waived his Director's fee for the current term of office.

The AGM 2013 resolved on remuneration of SEK 100,000 to the Chairman of the Audit Committee and SEK 50,000 to each of the remaining members of the Audit Committee. Furthermore, a resolution was made regarding remuneration of SEK 40,000 to the Chairman of the Remuneration Committee and SEK 20,000 to each of the remaining members of the Remuneration Committee.

Remuneration to senior executives

Following a proposal from the Board of Directors, the AGM 2013 reached a resolution regarding guidelines for remuneration to senior executives.

The guidelines for remuneration and other terms of employment applying to management mainly imply that the Company shall offer its senior executives remuneration on market terms, that this remuneration shall be determined by a dedicated Remuneration Committee governed by the Board of Directors, and that the criteria for remuneration shall be based on the responsibilities, role, competence and position of the relevant senior executive. Remuneration to senior executives is decided by the Board of Directors, excluding any Board members affiliated to the Company and management. The guidelines shall apply to new agreements, or revisions to existing agreements reached with senior executives after the guidelines were determined, and until new or revised guidelines have become effective.

Senior executives shall be offered fixed compensation on market terms and based on the managers' responsibilities, role, competencies and position. Fixed compensation shall be reviewed annually.

From time to time, senior executives may be offered variable remuneration. Such variable remuneration shall be on market terms and be based on the outcome of predetermined financial and individual targets. The conditions and basis for calculating variable remuneration shall be determined for each operational year. Variable remuneration is paid out during the year after earning, and can be paid as salary or as a lump-sum pension premium. In the event of payment as a lump-sum pension premium, there is some indexation so the overall cost to NeuroVive is neutral. The basic principle is that the annual variable portion of pay may be a maximum of 30% of basic annual salary. Total variable remuneration to senior executives may not exceed SEK 1,200,000.

When determining variable remuneration to management payable in cash, the Board of Directors shall consider introducing restrictions that:

• n make payment of a portion of such remuneration conditional on the sustainability of the results on which the earnings are based, and
• n allow for the Company to reclaim compensation that has been paid on the basis of information that is later shown to be manifestly inaccurate.

Senior executives are entitled to pension solutions on market terms in accordance with collective agreements and/or with NeuroVive. All pension commitments shall be premium-based. Salary differentials can be utilized to increase pension provisions through lump-sum pension premiums, provided that the total cost to NeuroVive remains neutral.

The CEO has a maximum notice period of six months from NeuroVive's side and the maximum notice period for other senior executives is six months. The notice period is a minimum of six months from the CEO's side and the minimum notice period is three months for other senior executives.

The Board of Directors is entitled to depart from the above guidelines if the Board considers there are special reasons to justify such departure in individual cases.

Variable remuneration of SEK 592,600 was paid to senior executives in 2013, within the framework of the guidelines.

The Auditor has presented a statement to the AGM 2014 relating to whether the Board of Directors followed the adopted guidelines for remuneration to senior executives in 2013. The Auditor's statement concludes that NeuroVive followed the guidelines.

The Board of Directors proposes that remuneration for 2014 is resolved on the basis of the same principles as in 2013.

Share-based incentive program

The AGM 2011 introduced a warrant program for senior executives intended to promote the Company's long-term interests.

The warrants confer entitlement to subscribe for a total of 164,000 new share at an exercise price of SEK 96 per share. The warrants can be converted to shares during the utilization period, which runs from 10 April 2014 inclusive to 10 June 2014 inclusive. If all outstanding warrants are exercised, and on the basis of the Company's current share capital, this corresponds to dilution of some 0.8% of the shares and votes.

Auditors

The Auditors shall examine the Company's annual accounts and accounting records, and the Board of Directors' and CEO's administration. The Auditors shall present an Audit Report and a Consolidated Audit Report to the AGM at the end of each financial year. The Company's Auditors shall be appointed for a period of four years by the shareholders at the AGM.

The AGM 2012 appointed Mazars SET Revisionsbyrå AB as the Company's Auditors. Bengt Ekenberg is Auditor in Charge.

In order to ensure that the standards applying to the Board of Directors relating to information and control are satisfied, the Auditors regularly report to the Audit Committee on accounting matters and potential misstatements or suspected improprieties. In addition, the Auditors attend most of the Audit Committee's meetings and in Board meetings as required. At least once a year, the Auditors present a report to the Board of Directors

without the CEO or other members of the Company's operational management attending.

Remuneration to the Auditors

The AGM 2013 resolved on remuneration to the Auditors on the basis of approved account and customary debiting practice. Audit assignments are defined as reviewing the annual accounts an accounting records, as well as the Board of Directors' and CEO's administration, any other duties incumbent on the Company's Auditor and consultancy or other assistance arising from observations made in connection with such review or performance of other such duties.

During control activities in the year, the Audit Committee concluded that the Auditors are non-affiliated to the Company.

Information on Audit fees is in Note 9 on page 61. The Interim Report for the period January—September 2013 has been subject to a summary review by the Auditor.

Internal controls over financial reporting

The overall aim of internal controls is to ensure, to a reasonable extent, that the Company's operational strategies and targets are monitored and that the owners' investments are protected. Internal controls should also secure reasonable assurance that external financial reporting is accurate and has been prepared in accordance with generally accepted accounting practice, that applicable legislation and stipulations are followed and that requirements made on listed companies are satisfied. The internal control environment mainly comprises the following five components: control environment, risk assessment, control activities, information and communication and follow-up.

Control environment

NeuroVive's control environment includes its organizational structure, decision-paths, responsibilities and authorizations, which are clearly defined in a number of constitutional documents. The constitutional documents have been adopted by the Board of Directors to ensure an effective control environment.

The Company's control environment consist of collaborative initiatives between the Board of Directors, the Remuneration and Audit Committees, the CEO, the CFO, internally appointed staff and the Company's Auditor. Control is also exercised through the reporting procedures adopted in the Company's finance manual, including financial reporting to the Board of Directors, and a yearly report to the Board of Directors on completed internal control procedures.

Risk assessment

Risks assessment includes identifying risks that may arise if the fundamental standards of financial reporting in the group are not satisfied. A review takes place to ensure that the Company has an infrastructure that enables effective and expedient control, and an assessment of the Company's financial position and significant financial, legal and operational risks.

Pharmaceuticals development is associated with risks and is a capital-intensive process. The risk factors judged to be of particular significance to NeuroVive's future progress are the outcome of clinical studies, measures taken by regulatory authorities, competition and pricing, collaboration partners, liability risk, patents, key staff and future capital requirement.

Control activities

Control activities limit identified risks and ensure accurate and reliable financial reporting. The Audit Committee and the Board of Directors are responsible for the internal control and monitoring of management. This is achieved through internal and external control activities and by reviewing the Company's constitutional documents governing risk management. The results of internal controls are compiled and a report presented to the Board of Directors and the Audit Committee annually.

Information and communication

The Company has information and communication paths intended to promote the accuracy of financial reporting and ensure reporting and feedback from operations to the Board of Directors and management, through means including constitutional documents such as internal policies, guidelines and instructions relating to financial reporting being made available and presented to the relevant staff.

Monitoring

NeuroVive monitors the observance of the Company's constitutional documents and routines relating to internal controls. Management reports to the Audit Committee on internal controls at each meeting.

The Board of Directors is regularly updated on the Company's financial position and profit/loss against budget as well as on development projects in relation to the relevant project budgets. The CEO presents a written report at each regular Board meeting, or when the need arises, directly to the Board of Directors on the monitoring and status of the Company's ongoing projects and drug candidates.

Special evaluation of the requirement for internal audit

NeuroVive does not conduct an internal audit. The Board of Directors evaluates the need for this function annually and judges that, given the Company's size with relatively few employees and limited transactions, there is no need to institute a formal internal audit function.

Compliance with Swedish stock market regulations and accepted stock market practice

NeuroVive was not subject to any ruling by NASDAQ OMX Stockholm's disciplinary commission or statement from the Swedish Securities Council relating to any breach of NASDAQ OMX Stockholm's regulatory framework for issuers or accepted stock market practice in the financial year 2013.

Board of Directors

Gregory Batcheller

Chairman (2000)

Gregory Batcheller, born in 1957, is a corporate lawyer, business developer and project manager. Gregory has extensive experience of working in pharmaceuticals,

biotech and medtech, including CEO of Pulsetten AB which sold DuoCort Pharma AB to ViroPharma Inc. in 2011, as co-founder of Dermafol AB which develops folate treatments for indications in dermatology and tissue repair, Board member of AcuCort AB which develops treatments for acute allergic reactions and partner of PULS (Partners for Development Investments in Life Sciences), a virtual pharmaceutical company that supports development and investments in early Life Sciences projects through partnerships with research entrepreneurs to develop their ideas into commercial products. Gregory is also Chairman of A1M Pharma AB and Preelumina Diagnostics AB which develop diagnostics methods and treatments for pre-eclampsia, Chairman of Xintela AB which develops stem cell treatments for cartilage repairs, co-founder of Laccure AB which develops a treatment for bacterial vaginosis, and Chairman of Monocl AB. Gregory Batcheller has been on NeuroVive's Board since 2000 and has been NeuroVive's Chairman since 2008.

• n No. of shares: 288,426 privately owned (including family) and 1.96 % of Maas Biolab, LLC which owns 19.5% of NeuroVive
• n No. of warrants: 40,000

Arne Ferstad Board member (2010)

Arne Ferstad, born in 1950, was previously responsible for Baxter Healthcare's business in the Nordics and Benelux and President of EMEA Baxter Renal Division. Arne has also managed Baxters' Bioscience

business in Asia and held leading positions in R&D at Baxter. He was General Manager and Vice President at Pharmacia Corporation and has broad-based experience of the biotech sector, including business and pharmaceuticals development and marketing at international level. Arne is a Board member of AroCell AB (publ), Medfield Diagnostics AB (publ), Aggancio Research AB, Clinical Laserthermia System AB (publ) and CEO/ partner of Ankor Consultants BVBA. Arne Ferstad has been on NeuroVive's Board since 2010.

• n No. of shares: 3,466 privately owned (including family) and 50% (remaining 50% controlled by Arne Ferstad's wife) of Ankor Consultants BVBA which owns 4,533 shares in NeuroVive
• n No. of warrants: 0

Boel Flodgren Board member (2013)

Boel Flodgren, born in 1942, is Professor of Commercial Law and former Principal of Lund University. She has extensive experience of research and lecturing in the field of Business Law, including

positions at a number of universities internationally such as Stanford and Harvard. She holds Honorary Doctorates from the Hanken School of Economics, Helsinki, Finland, McGill University, Montreal, Canada and the University of Oslo, Norway. She also has extensive experience of Board positions in the private and public sector, where she has been a Board member of AB Industrivärden (publ) for a number of years and has previously held Board positions including at Brinova Fastigheter AB, Sparbanken Finn, Lund University, University of Copenhagen and the University of Oslo. Boel Flodgren has been on NeuroVive's Board since 2013.

• n No. of shares: 6,000 privately (incl. family)
• n No. of warrants: 0

Marcus Keep Board member (2000)

Marcus Keep, born in 1959, is a neurosurgeon at St. Joseph Medical Center in Reading, Pennsylvania, USA, and Associate Professor of neurosurgery at Penn State Hershey, Pennsylvania, USA.

Marcus is also CEO of Maas Biolab, LLC. He has previously been Associate Professor of neurosurgery at the University of Hawaii and the University of New Mexico. In 1994-1996 Marcus was a guest researcher at Lund University. Marcus Keep has been on NeuroVive's Board since 2000.

• n No. of shares: 391,929 privately owned (including family) and 49.35% of Maas Biolab, LLC which owns 19.5% of NeuroVive
• n No. of warrants: 0

Anna Malm Bernsten

Board member (2013)

Anna Malm Bernsten, born in 1961, has extensive experience of strategic marketing, product launch and business development in an international setting in

pharmaceuticals and biotech companies including Medivir, GE Healthcare and Pharmacia&Upjohn, and was formerly CEO and President of Carmeda AB. She has extensive experience of Board work in listed companies and Board positions include Nolato AB (publ), Cellavision AB (publ), Birdstep ASA (publ), Medivir AB (publ) and Fagerhult AB (publ). Anna holds a M.Sc. Eng. from the Royal Institute of Technology, Stockholm, Sweden. Anna Malm Bernsten has been on NeuroVive's Board since 2013.

• n No. of shares: 0
• n No. of warrants: 0

Helmuth von Moltke

Board member (2005)

Helmuth von Moltke, born in 1937, is a lawyer and venture capitalist, with minor holdings in a number of companies in Central and Eastern Europe. He has held

leading positions for a number of years with BASF AG and its subsidiaries in the US, Canada, UK and Australia. Helmuth is a Law graduate from The University of Oxford. Helmuth von Moltke has been on NeuroVive's Board since 2005.

• n No. of shares: 312,000 privately owned (including family) and 5.09% in Maas Biolab, LLC which owns 19.5% of NeuroVive
• n No. of warrants: 0

Helena Levander Board member 2012)

Helena Levander, born in 1957, is the founder and CEO of Nordic Investor Services AB. Helena has extensive experience of the stock market and asset management from SEB, Nordea and Odin Fonder.

Previous positions include CEO of Neonet Securities AB. Board positions include Uniflex Bemanning AB, Stampen AB and Collector AB. Previous experience of Board positions include Erik Penser Aktiebolag, SBAB, GANT AB, Allba Holding, Bure Equity AB, Mandator AB, Transatlantic AB, Svensk Exportkredit SEK and GEVEKO AB. Helena Levander has been on NeuroVive's Board since 2012.

• n No. of shares: 5,000
• n No. of warrants: 0

Management

Mikael Brönnegård CEO

Mikael Brönnegård, born in 1956, is a qualified pediatrician, Ph.D. and Associate Professor at the Karolinska Institute. Mikael has experience of various international positions in the pharmaceuticals industry, such

as research physician at Eli Lilly's marketing company in Sweden and Vice President and Head of Endocrinology and Metabolism at Pharmacia Corporation in the US. He has broad-based experience of the biotech and pharmaceuticals sectors. Mikael's previous positions include Investment Director of a venture capital company on whose behalf he completed a number of early stage investments in biotech and pharmaceuticals companies where Mikael held Board positions. He acted as Business Developer of a UK biotech company in Dundee, Scotland for one year. Mikael Brönnegård has been on NeuroVive's Board since May 2010.

• n No. of shares: 1,500 privately owned (including family)
• n No. of warrants: 40,000

Eskil Elmér CSO

Eskil Elmér, born in 1970, is a physician and Associate Professor of experimental neurology. Eskil is NeuroVive's CSO and has overall responsibility for the Company's research and development. He also works as a researcher and Associate Professor at

Wallenberg Neuroscience Center in Lund, at the department for clinical neurophysiology and as a physician at the clinic for neurophysiology at Skåne University Hospital, in Lund, Sweden. Eskil is one of NeuroVive's founders and held positions on NeuroVive's Board in 2000-2008 and 2010-2012. He was also previously the company's CEO.

Eskil Elmér has been NeuroVive's CSO since 2000.

• n No. of shares: 487,348 privately owned (including family) and 16.85% of Maas Biolab, LLC which owns 19.5% of NeuroVive
• n No. of warrants: 40,000

Jan Nilsson COO

Jan Nilsson, born in 1949, has extensive experience of pharmaceuticals and biotech companies. Jan was Vice President of the Nordic and Baltic Region at Schering-Plough with overall responsibility for the company's operations. He was

also assigned by Schering-Plough to participate in a number of global task forces addressing critical strategic issues for the group.

During his time at Schering-Plough, Jan was involved in a number of aspects of the pharmaceuticals development process, mainly in research and development, business development, marketing and sales. He was CEO of listed biotech company Tripep AB for several years, and his work in senior positions at minor and major pharmaceuticals companies means he has accumulated solid expertise in pharmaceuticals and business development. Jan Nilsson was on NeuroVive's Board between 2010 and the AGM in March 2013 and has been employed by NeuroVive since February 2013.

• n No. of shares: 0
• n No. of warrants: 0

Catharina Jz Johansson CFO

Catharina Jz Johansson, born in 1967, has experience of working with international medtech growth companies. Her experience and drive are an asset for NeuroVive's international collaborations and revenue streams.

Catharina Jz Johansson previous positions include deputy acting CFO at medtech company Cellavision which is listed on NASDAQ OMX Stockholm, and Head of Accounting at Bong and Alfa Laval Europe. She holds a B.Sc. Econ. and is based at Lund University, where NeuroVive's head offices are located. Catharina Jz Johansson was appointed NeuroVive's CFO at the end of 2013.

• n No. of shares: 0
• n No. of warrants: 0

All holdings of shares and warrants are as of 31 December 2013

Financial statements

Consolidated Statement of Comprehensive Income, Group

(SEK 000)	Note	2013	2012
Net sales	6	5,335	-
Other operating income	7	1,598	1,328
Operating expenses	9,10	-22,629	-12,973
Personnel cost	11	-6,265	-4,565
Depreciation and write-down of tangible and intangible assets		-147	-128
Other operating expenses	8	-238	-161
		-29,279	-17,827
Operating income	5	-22,346	-16,499
Profit/loss from financial items
Financial income	12	423	614
Financial costs	13	-203	-18
		220	596
Profit/loss before tax		-22,126	-15,903
Income tax	14	-	-
Profit/loss for the period		-22,126	-15,903
Other comprehensive income
Items that may be reclassified to profit or loss
Translation differences on foreign subsidiaries		131	39
Total other comprehensive income, net after tax		131	39
Total comprehensive income for the period		-21,995	-15,864
Loss for the period attributable to:
Parent company shareholders		-22,331	-14,873
Non-controlling interests		205	-1,030
		-22,126	-15,903
Total comprehensive income for the period
Parent company shareholders		-22,240	-14,846
Non-controlling interests		245	-1,018
		-21,995	-15,864
Earnings per share before and after dilution(SEK) based on average number of shares	15	-1.17	-0.85

Notes in page 56-66 are assumed to be fully integrated section of the consolidated financial report.

Consolidated Statement of Financial Position, Group

(SEK 000)	Note	31 Dec. 2013	31 Dec. 2012
ASSETS
Non-current assets
Intangible assets
Development costs	16	39,182	30,042
Patents	17	7,770	2,416
Software	18	167	247
		47,119	32,705
Tangible assets
Equipment	19	457	665
		457	665
Total non-current assets		47,576	33,370
Current assets
Other receivables		1,096	734
Prepaid expenses and accrued income	21	513	225
Cash and cash equivalents	22	39,992	37,177
		41,601	38,136
TOTAL ASSETS		89,177	71,506
EQUITY AND LIABILITIES
Equity attributable to the shareholders of the parent company
Share capital	23	1,083	958
Additional paid in capital	24	131,519	98,049
Translation reserve	25	118	27
Retained earnings	26	-57,264	-34,933
Total equity attributable to the shareholders of the parent		75,456	64,101
Non-controlling interests		-813	-1,058
Total equity		74,643	63,043
Short-term liabilities
Accounts payable		4,759	4,724
Other liabilities Accrued expenses and deferred income	27	5,614 4,161	1,103 2,636
		14,534	8,463
Total liabilities		14,534	8,463
TOTAL EQUITY AND LIABILITIES		89,177	71,506

Notes in page 56-66 are assumed to be fully integrated section of the consolidated financial report.

Consolidated Statement of Changes in Equity, Group

(SEK 000)	Equity attributable to the shareholders of the parent company
	Share capital	Additional paid-in capital	Translation reserve	Retained earnings	Total equity attributa ble to the shareholders of the parent company	Non-con trolling interests	Total equity*
Opening balance 1 January 2012	747	51,938	-	-20,060	32,625	-40	32,585
Comprehensive profit/loss for the period
Profit/loss for the period	-	-	-	-14,873	-14,873	-1,030	-15,903
Other comprehensive income
Translation differences	-	-	27	-	27	12	39
Other comprehensive profit/loss for the period, net after tax	-	-	27	-	27	12	39
Total comprehensive profit/loss	-	-	27	-14,873	-14,846	-1,018	-15,864
Transactions with shareholders
New share issue	211	46,111	-	-	46,322	-	46,322
Total transactions with shareholders	211	46,111	-	-	46,322	-	46,322
Closing balance, 31 December 2012	958	98,049	27	-34,933	64,101	-1,058	63,043
Opening balance, 1 January 2013	958	98,049	27	-34,933	64,101	-1,058	63,043
Comprehensive profit/loss for the period
Profit/loss for the period	-	-	-	-22,331	-22,331	205	-22,126
Other comprehensive income
Translation differences	-	-	91	-	91	40	131
Other comprehensive profit/loss for the period, net after tax	-	-	91	-	91	40	131
Total Comprehensive profit/loss	-	-	91	-22,331	-22,240	245	-21,995
Transactions with shareholders
New Share Issue	125	33,470	-	-	33,595	-	33,595
Total transactions with shareholders	125	33,470	-	-	33,595	-	33,595
Closing Balance, 31 December 2013	1,083	131,519	118	-57,264	75,456	-813	74,643

*Total equity includes funds from the in December completed private placement with 35,000,000 SEK less expenses 1,405,000 SEK.

Consolidated Statement of Cash Flows, Group

(SEK 000)	Note	1 Jan. 2013 31 Dec. 2013	1 Jan. 2012 31 Dec. 2012
Cash flow from operating activities
Operating income		-22,346	-16,499
Adjustments for non-cash items:
Depreciation		147	128
Currency differences on intercompany items		1	30
Interest received		423	570
Interest paid		-191	-18
Net cash from operating activities before changes in working capital		-21,966	-15,789
Changes in working capital
Increase/decrease of other current assets		-650	-414
Increase/decrease of other short-term liabilities		3,526	3,981
		2,876	3,567
Cash flow from operating activities		-19,090	-12,222
Investing activities
Acquisition of tangible assets		-68	-665
Acquisition of intangible assets		-11,616	-9,053
Cash flow from investing activities		-11,684	-9,718
Financing activities
New share issue		33,595	46,322
Cash flow from financing activities		33,595	46,322
Cash flow for the period		2,821	24,382
Cash and cash equivalents at the beginning of the period		37,177	12,795
Effect of exchange rate changes on cash		-6	0
Cash and cash equivalents at end of period		39,992	37,177

Income Statement, Parent Company

(SEK 000)	Note	1 Jan. 2013 31 Dec. 2013	1 Jan. 2012 31 Dec. 2012
Net sales	5	819	797
Other operating income	7	1,598	1,329
		2,417	2,126
Operating expenses
Other external expenses	9,10	-18,996	-10,422
Personnel cost	11	-6,265	-4,550
Depreciation and write-down of tangible and intangible assets		-147	-128
Other operating expenses	8	-234	-152
		-25,642	-15,252
Operating income	5	-23,225	-13,126
Profit/loss from financial items
Interest income and other similar profit items	12	423	614
Group interest income		130	43
Interest expenses and other similar loss items	13	-138	-2
		415	655
Profit/loss before tax		-22,810	-12,471
Income tax	14	-	-
Profit/loss for the period		-22,810	-12,471

Statement of Comprehensive Income, Parent Company

(SEK 000)	Note 1 Jan. 2013 31 Dec. 2013	1 Jan. 2012 31 Dec. 2012
Profit/loss for the period Other comprehensive income	-22,810 -	-12,471 -
Total comprehensive profit/loss for the period	-22,810	-12,471

Notes in page 56-66 are assumed to be fully integrated section of the annual report.

Company Balance Sheet, Parent Company

(SEK 000)	Note	31 Dec. 2013	31 Dec. 2012
ASSETS
Non-current assets
Intangible assets
Development costs	16	39,182	30,042
Patents	17	7,770	2,416
Software	18	167	247
		47,119	32,705
Tangible assets
Equipment	19	457	665
		457	665
Financial assets
Shares in subsidiaries	20	6	6
		6	6
Total non-current assets		47,582	33,376
Current assets
Short term receivables
Receivables from group companies		4,625	2,716
Other receivables		1,093	732
Prepaid expenses and accrued income	21	513	225
		6,231	3,673
Cash and bank balances	22	36,769	37,177
Total current assets		43,000	40,850
TOTAL ASSETS		90,582	74,226

Company Balance Sheet, Parent Company (continued)

(SEK 000)	Note	31 Dec. 2013	31 Dec. 2012
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital	23	1,083	958
Statutory reserve		1,856	1,856
		2,939	2,814
Unrestricted equity
Share premium reserve		33,470	46,111
Retained earnings		63,761	30,122
Profit/loss for the period		-22,810	-12,471
		74,421	63,762
Total equity		77,360	66,576
Short-term liabilities
Accounts payable		4,704	4,724
Liabilities to group companies		6	6
Other liabilities		4,351	284
Accrued expenses and deferred income	27	4,161	2,636
		13,222	7,650
TOTAL EQUITY AND LIABILITIES		90,582	74,226
PLEDGED AND CONTINGENT LIABILITIES
Pledged assets	28	Inga	Inga
Contingent liabilities	28	Inga	Inga

Notes in page 56-66 are assumed to be fully integrated section of the annual report.

Statement of Changes in Equity, Parent Company

(SEK 000)		Restricted Equity Unrestricted Equity
			Share premium
	Share capital	Statutory reserve	reserve	Retained earnings	Total Equity
Opening balance 1 January 2012	747	1,856	-	30,122	32,725
Comprehensive profit/loss for the period
Profit/loss for the period	-	-	-	-12,471	-12,471
Total comprehensive profit/loss	-	-	-	-12,471	-12,471
Transactions with shareholders
New share issue	211	-	46,111	-	46,322
Total transactions with shareholders	211	-	46,111	-	46,322
Closing balance, 31 December 2012	958	1,856	46,111	17,651	66,576
Opening balance 1 January 2013	958	1,856	46,111	17,651	66,576
Comprehensive profit/loss for the period
Disposition according to AGM	-	-	-46,111	46,111	-
Profit/loss for the period	-	-	-	-22,810	-22,810
Total comprehensive profit/loss	-	-	-	23,301	23,301
Transactions with shareholders
New share issue	125	-	33,470	-	33,595
Total transactions with shareholders	125	-	33,470	-	33,595
Closing balance, 31 December 2013	1,083	1,856	33,470	40,952	77,361

Consolidated Statement of Cash Flows, Parent company

(SEK 000)	Note 1 Jan. 2013 31 Dec. 2013	1 Jan. 2012 31 Dec. 2012
Cash flow from operating activities
Operating income	-23,225	-13,126
Adjustments for non-cash items:
Depreciation	147	128
	-23,078	-12,998
Interest received	553	613
Interest paid	-126	-2
Net cash from operating activities before changes in working capital	-22,651	-12,387
Changes in working capital
Increase/decrease of other current assets	-2,558	-3,031
Increase/decrease of other short-term liabilities	2,890	3,196
	332	165
Cash flow from operating activities	-22,319	-12,222
Investing activities
Acquisition of tangible assets	-68	-665
Acquisition of intangible assets	-11,616	-9,053
Cash flow from investing activities	-11,684	-9,718
Financing activities
New share issue	33,595	46,322
Cash flow from financing activities	33,595	46,322
Cash flow for the period	-408	24 382
Cash and cash equivalents at the beginning of the period	37,177	12,795
Cash and cash equivalents at end of period	36,769	37,177

Notes

General information

NeuroVive Pharmaceutical AB (publ), with corporate identity number 556595-6538, is a limited company registered in Sweden, with its registered office in Lund. The address of the head office is Medicon Village, Scheelevägen 2, 283 21 Lund, Sweden. The company and its subsidiary (the "group") conduct research and development into pharmaceuticals that protect the mitochondria and pharmaceuticals to promote more effective mitochondrial function. The drug development technology platform is cyclosporine A, versions of cyclosporine, and molecules with a similar structure, which together, constitute a new class of pharmaceutical called cyclophilin inhibitors. The project portfolio also includes drug candidates for cellular energy regulation.

The company has been quoted on Nasdaq OMX Stockholm since 10 April 2013. The company is an associated company of Maas Biolab, LLC of the US, which has registration number 94-3272179, which held 19.55% of the company at year-end.

"NeuroVive" or the "Company" means NeuroVive Pharmaceutical AB (publ).

1

Critical accounting policies

The consolidated accounts of NeuroVive have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU and interpretation statements by the IFRS Interpretations Committee. The group also adopts the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 1, Supplementary Accounting Rules for Groups.

Items are recognized at cost in the consolidated accounts. The group does not hold any financial instruments measured at fair value.

The accounting policies reviewed below have been applied consistently for all periods in these annual accounts and consolidated accounts and are unchanged compared to the previous year. The accounting policies have also been applied consistently for all companies in the group. All amounts in the group—and the annual accounts—have been rounded to the nearest thousand Swedish kronor (SEK 000) unless otherwise stated.

Revised assessment

A new policy for when development expenses can start to be capitalized was adopted effective the fourth quarter 2012. For more information, refer to the section on development expenses.

Essentially, non-current assets and non-current liabilities are amounts expected to be recovered or paid after more than 12 months from the reporting date. Essentially, current assets and current liabilities are amounts that are expected to be recovered or paid within 12 months of the reporting date.

New and amended standards and interpretation statements that have not yet come into effect

New and amended standards that are applied by the group

None of the IFRS or IFRIC interpretation statements that are mandatory for the first time for annual periods beginning 1 January 2013 have had any significant effect on the group. The following have affected disclosures:

Amendments to IAS 1 "Presentation of Financial Statements," regarding other comprehensive income (OCI). The main change in the amended IAS 1 is the requirement that those items reported under 'other comprehensive income' should be presented divided into two groups. The division is based on whether items are potentially reclassifiable to profit or loss (reclassification adjustments) or not. Accordingly, this amendment affects the presentation of OCI.

New standards, amendments and interpretation statements of existing standards that have not been applied prospectively by the group

A number of new standards and amendments of interpretation statements and existing standards become effective for annual periods beginning after 1 January 2013 and have not been applied in the preparation of the consolidated financial statements. None of these are expected to have any significant effect on the consolidated financial statements.

Consolidated accounts

The consolidated accounts include the parent company NeuroVive Pharmaceutical AB and those companies over which the parent company exerts a controlling influence directly or indirectly (subsidiaries). Controlling influence means the right to formulate strategies for a company with the aim of receiving economic benefits, directly or indirectly. When judging whether controlling influence exists, equity holders' agreements and shares conferring potential voting rights that can be exercised or converted without delay should be considered. Normally, controlling influence applies when the parent company holds shares representing more than 50% of the votes directly or indirectly.

Subsidiaries are consolidated from the time of acquisition and deconsolidated from the time when the controlling influence ceases.

The acquisition method is applied for recognizing the group's business combinations. The purchase price for acquiring a subsidiary consists of the fair value of transferred assets, liabilities that the group takes over from the previous owner of the acquired company, and those shares issued by the group. The purchase price also includes the fair value of all assets or liabilities that are a result of an agreement on conditional purchase price. Identifiable acquired assets and liabilities taken over in a business combination are initially recognized at fair value on the acquisition date. For each acquisition—i.e. acquisition by acquisition—the group decides whether non-controlling interests in the acquired companies should be recognized at fair value or at the holding's proportional share of the carrying amount of the acquired company's identifiable net assets. Acquisition-related costs are expensed immediately.

The group's profit or loss and components of other comprehensive income are attributable to the parent company's equity holders and to non-controlling interests, even if this results in a negative value of non-controlling interests.

The accounting policies of the subsidiary are adjusted as required for consistency with the group's accounting policies. All intragroup transactions, balances and unrealized gains and losses attributable to intra-group transactions are eliminated in the preparation of the consolidated accounts.

Transactions with non-controlling interests

Changes to parent company holdings in a subsidiary that do not cause a loss of controlling influence are recognized as equity transactions (i.e. transactions with the group's equity holders). Any difference between the amounts by which non-controlling interests are restated and the fair value of the compensation received or paid are recognized directly in equity and allocated to the parent company's equity holders.

Operating segments

An operating segment is a part of a Company that conducts business operations from which it can receive revenues or incur expenses, whose operating earnings are regularly reviewed by the Company's chief operating decision-maker, and for which there is independent financial information available. NeuroVive's reporting of operating segments is consistent with its internal reporting to the chief operating decision-maker. The chief operating decision-maker is that function that judges the profit or loss of operating segments and decides on the allocation of resources. NeuroVive's judgment is that the CEO is the chief operating decision-maker. Profit or loss for the group as a whole is stated in the regular internal reporting to the CEO. The CEO does not regularly review profit or loss at a lower level to take decisions on the allocation of resources or for judging the profit or loss of different parts of the group. Accordingly, the group is considered to consist of a single operating segment.

Non-current assets held for sale

Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts will be mainly recovered through sale and not through continuous usage. To satisfy this criterion it has to be very likely that the sale will occur and the asset (or disposal group) should be available for immediate sale in its current condition. Non-current assets (or disposal groups) classified as held for sale are recognized at the lower of carrying amount and fair value with a deduction for selling expenses. At present, the group does not have any non-current assets held for sale.

Revenue recognition

The Company's revenue principle is that revenues are the fair value of what will be received for goods and services sold in NeuroVive's operations. Revenues are recognized excluding value-added tax and with the elimination of intragroup sales. NeuroVive recognizes revenue when its amount can be measured reliably, it is likely that future economic benefits will flow to NeuroVive and when the essential risks and rewards have transferred to the buyer.

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Up-front payments

Up-front payments can be received on entering collaboration agreements and are not repayable. An up-front payment where there is a remaining obligation to render services on the Company's part are considered as advance payments. In such cases, the Company has not finished accruing revenues before the estimated or predetermined collaboration period expires. The amount is allocated on entering the agreement in accordance with the estimated or predetermined collaboration period.

If there is no reservation or other obstacle to receiving compensation and this does not relate to future performance on NeuroVive's part, the up-front payment from the counterparty will be recognized as revenue on entering the agreement.

Milestone payments

Any agreed milestone payments are recognized as revenues if and when the contract counterparty satisfies the agreed criteria and the agreement with the counterparty is secured. Such criteria may consist of study endpoints, registration of pharmaceuticals or sales achieved.

Royalties

Any future royalty revenues are recognized as revenue in accordance with the economic substance of agreements.

Revenue from sales of goods

Future sales of developed pharmaceuticals may also consist of sales of goods. These revenues will be recognized when the essential risks and rewards associated with ownership of goods as transferred to the buyer and when the revenue amount can be measured reliably.

Dividend and interest income

Dividend income is recognized when the shareholder's right to receive payment has been determined.

Interest income is recognized and allocated over its term by applying the effective interest method. Effective interest is the interest that makes the present value of all future payments made and received during the fixed-interest period equal to the carrying amount of the receivable.

Lease arrangements

A finance lease is an agreement by which the economic risks and rewards associated with ownership of an item are essentially transferred from the lessor to the lessee. Other lease arrangements are classified as operating leases. The group only has operating leases.

Lease payments in operating leases are expensed on a straight-line basis over the lease term, providing there is no systematic way to better reflect the user's economic benefit over time.

Foreign currency

Items recognized in the financial statements of the various units of the group are recognized in the currency used in the primary economic environment where each unit mainly conducts operations (functional currency). In the consolidated accounts, all amounts are translated to Swedish kronor (SEK) which is the parent company's functional currency and the group's reporting currency.

Transactions in foreign currency are translated in each unit to the functional currency of that unit at the rate of exchange ruling on the transaction date. Monetary items in foreign currency are translated at closing day rates. Non-monetary items, measured at fair value in a foreign currency, are translated at the rate of exchange ruling on the date when fair value is determined. Non-monetary items measured at historical cost in a foreign currency are not translated.

Exchange rate differences are recognized in profit or loss for the period when they occur. When preparing the consolidated accounts, foreign subsidiaries' assets and liabilities are translated to Swedish kronor at the closing day rate. Revenue and expense items are translated at average rates of exchange for the period, unless the rate of exchange fluctuated significantly in this period, when instead, the rate of exchange ruling on the transaction date is utilized. Potential translation differences arising are recognized in other comprehensive income and transferred to the group's translation reserve. When disposing of a foreign subsidiary, such translation differences are recognized in profit or loss as a part of the capital gain.

Borrowing costs

Borrowing costs Directly attributable to the purchase, construction or production of an asset that requires significant time for completion for intended use or sale are included in the cost of an asset until the time when the asset is completed for its intended usage or sale. Interest income from the temporary investment of borrowed funds for the aforementioned assets are deducted from the borrowing costs that may be included in the cost of the asset. Other borrowing costs are recognized in profit or loss in the period they arise.

Government grants

Government grants are recognized at fair value when it is reasonably certain that the Company will satisfy the conditions associated with the grant and the grant will be received. Government grants are recognized systematically in profit or loss over the same period as the grants are intended to compensate for. Grants that relate to purchases of assets are recognized as a reduction of the fair value of the assets, which means that the grant is recognized in profit or loss during the depreciable asset's useful life in the form of lower depreciation. Grants relating to profit or loss are recognized in other operating income in the Statement of Comprehensive Income.

Employee benefits

Employee benefits in the form of salaries, bonuses, vacation pay, paid sickness absence, etc. as well as pensions should be recognized as they are accrued. Pensions and other benefits after terminated employment are classified as defined contribution or defined benefit pension plans. The group has defined contribution pension plans only.

Defined contribution plans

For defined contribution plans, the Company pays predetermined fees to a separate independent legal entity and has no obligation to pay any further contributions. The group's profits or loss is charged for expenses as benefits accrue, which is normally coincident with the timing of when premiums are paid.

Share warrants

Share warrants granted to senior executives and other employees are measured at fair value at the grant date. The fair value of share warrants at the grant date has been determined using the Black-Scholes valuation model. For more information on measurement, see note 29. Senior managers and employees have paid a price that exceeds the fair value of the options, which means that they do not constitute share-based payment pursuant to IFRS 2, and accordingly, NeuroVive has not recognized any expense for these options.

Taxes

The tax expense is the total of current tax and deferred tax.

Current tax

Current tax is computed on taxable profit or loss for the period. Taxable profit differs from reported profit or loss in the Statement of Comprehensive Income because it has been restated for non-taxable income and non-deductible expenses and for revenue and expenses that are taxable or tax deductible in other periods. The group's current tax liability is computed using the tax rates that are enacted or substantively enacted on the reporting date.

Deferred tax

Deferred tax is recognized on temporary differences between the carrying amount of assets and liabilities in the financial statements and the taxable values used for computing taxable profit. Deferred tax is recognized in accordance with the balance sheet method. Deferred tax liabilities are recognized for basically all taxable temporary differences, and deferred tax receivables are recognized for basically all deductible temporary differences to the extent it is likely that these amounts can be utilized against future taxable surpluses. Deferred tax liabilities and tax receivables are not recognized if the temporary difference relates to goodwill or if it arises as a result of a transaction that is the first-time recognition of an asset or a liability (that is not a business combination), and which at the time of the transaction, neither affects reported nor taxable profit.

A deferred tax liability is recognized for the taxable temporary differences relating to investments in subsidiaries, apart from those cases the group can control the timing of reversal of the temporary differences and it is likely that such reversal would not occur within the foreseeable future. The deferred tax receivables that relate to deductible temporary differences regarding such investments should only be recognized to the extent it is likely that amounts can be used against future taxable surpluses, and it is likely that such usage will occur within the sustainable future.

The carrying amount of deferred tax receivables is tested at each reporting date and reduced to the extent it is no longer likely that sufficient taxable surpluses will be available to be used wholly or partly against the deferred tax receivable.

Deferred tax is computed using the tax rates expected to apply for the period when the asset is recovered or the liability is settled, based on the tax rates (and tax laws) enacted or substantively enacted on the reporting date.

Deferred tax assets and tax liabilities are offset when they relate to income taxes charged by the same authority, and when the group intends to settle the tax with a net amount.

Current and deferred tax for the period

Current and deferred tax is recognized as an expense or revenue in profit or loss, apart from when tax relates to transactions recognized in other comprehensive income or directly against equity. In such cases, tax should also be recognized in other comprehensive income, or directly against equity. In current and deferred tax arising on recognition of business combinations, the tax effect should be recognized in the acquisition analysis.

Tangible fixed assets

Tangible fixed assets are recognized at historical cost after deducting for accumulated depreciation and potential impairment.

Historical cost consists of the purchase price, expenditure directly related to the asset to bring it to the place and condition for use and estimated expenditure for disassembly and removal of the asset and restoration of the site of its location. Additional expenditure is only included in the asset or recognized as a separate asset if it is likely that future economic benefits that relate to the item will flow to the group and the historical cost for the item can be measured reliably. All other expenses for repairs and maintenance and additional expenditure is recognized in profit or loss in the period when it arises.

Depreciation of tangible fixed assets is expensed so that asset value less estimated residual value at the end of the useful life is depreciated on a straight-line basis over its estimated useful life, which is estimated at:

Equipment 3-5 yrs.

Estimated useful lives, residual values and depreciation methods are reconsidered at least at the end of each accounting period, with the effect of potential changed assessments recognized prospectively.

The carrying amount of a tangible fixed asset is de-recognized from the Statement of Financial Position on disposal or sale, or where there are no future economic benefits expected from usage or disposal/sale of the asset. The gain or loss arising on the disposal or sale of the asset consists of the difference between potential net revenues on sale and its carrying amount, recognized in profit or loss in the period when the asset is de-recognized from the Statement of Financial Position.

Intangible assets

Separately acquired intangible assets

Intangible assets with definite useful lives that are acquired separately are recognized at historical cost less deductions for accumulated amortization and potential accumulated impairment. Amortization is on a straight-line basis over the asset's estimated useful life. Estimated useful lives and amortization methods are reconsidered at least at the end of each financial year, with the effect of potential changed assessments recognized prospectively. Estimated useful lives of intangible assets are estimated at:

Patents	3-20 yrs.
Software	5 yrs.

Accounting policies for research and development

Since the fourth quarter of 2012, the Company has applied a new policy for capitalizing development expenses. The difference is that normally, first capitalization is when the development project

enters phase I. Accordingly, this amendment means a different judgment of the timing of capitalization. Previously, these expenses were capitalized at the start of projects. Because there is a new judgment, the amendment applies prospectively. The amendment means fourth-quarter profit or loss was negatively affected by SEK 251,000.

The revised assessment of capitalization of development expenses has not affected the measurement of the development expenses capitalized up to and including the third quarter of 2012. For information on which phase the accumulated development expenses lie in, refer to note 16.

Expenditure for research designed to obtain new scientific or technological knowledge is recognized as an expense when it arises.

Expenditure for development, where research results or other knowledge are applied to achieve new or improved products or processes, is recognized as an asset in the Statement of Financial Position only if the following conditions are satisfied:

• n It is technically possible to complete the intangible asset and use or sell it,
• n The Company intends to complete the intangible asset and use or sell it,
• n The conditions to use or sell the intangible asset are in place,
• n The Company demonstrates how the intangible asset will generate likely future economic benefits,
• n There are adequate technological, economic and other resources to complete development and to use or sell the intangible asset, and
• n The expenditure relating to the intangible asset during its development can be measured reliably

Because the period when the Company's research and development projects are expected to be registered as pharmaceuticals lies a long way in the future, it is highly uncertain when the probable future economic benefits will flow to the Company. The initial assumption for when all of the above criteria can be considered satisfied for NeuroVive's projects relating to pharmaceuticals is normally when development projects enter phase I.

Other development expenditure that does not satisfy these criteria is expensed when it arises. Development expenditure previously expensed is not recognized as an asset in subsequent periods.

Directly related expenditure that is capitalized mainly consists of expenditure from subcontractors and expenses for employees.

After first-time reporting, capitalized development expenditure is recognized at cost after deducting for accumulated amortization and potential accumulated impairment. Amortization of capitalized expenditure for product development has not yet commenced.

Disposal and sale

An intangible asset is de-recognized from the Statement of Financial Position on disposal or sale, or when no future economic benefits are expected from the use or disposal/sale of the asset. The gain or loss arising when an intangible asset is de-recognized from the Statement of Financial Position consists of the difference between the amount received on sale and the asset's carrying amount, and is recognized in profit or loss when the asset is de-recognized from the Statement of Financial Position.

Impairment of tangible fixed assets and intangible assets

The group analyses the carrying amounts of tangible and intangible assets at each reporting date to determine whether there is any indication that the value of these assets has decreased. If so, the asset's recoverable amount is computed to be able to determine the value of potential impairment. When it is not possible to compute the recoverable amount of an individual asset, the group computes the recoverable amount of the cash-generating unit that the asset belongs to.

Intangible assets with indefinite useful lives and intangible assets that are not yet ready for use should be tested for impairment yearly, or when there is an indication of impairment. Accordingly, capitalized expenditure for product development is subject to impairment tests at least yearly.

The recoverable amount is the greater of the fair value less selling expenses and value in use. When computing value in use, estimated future cash flow is discounted to present value using a discount rate before tax that reflects the current market estimate of the time value of money and the risks associated with the asset.

If the recoverable amount of an asset (or cash generating unit) is set at a lower value than the carrying amount, the carrying amount of the asset (or the cash-generating unit) is impaired to the recoverable amount. Impairment should be immediately expensed in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset (or cash-generating unit) is revalued to the recoverable amount, but the increased carrying amount may not exceed the carrying amount that would have been determined if no impairment had been made on the asset (the cash-generating unit) in previous years. A reversal of an impairment is recognized immediately in profit or loss.

Financial instruments

A financial asset or financial liability is recognized in the Balance Sheet when the Company becomes party to the instrument's contracted terms. A financial asset or part of a financial asset is de-recognized from the Balance Sheet when the rights in the agreement are realized, expire or the Company relinquishes control over it. All of a financial liability is de-recognized from the Balance Sheet when the obligations in the agreement are satisfied or extinguished in another way.

The Company evaluates whether there are objective indications that a financial asset or group of financial assets are impaired due to events that have occurred on each reporting date. Examples of such events are a significantly deteriorated financial position of the counterparty or payment defaults on due amounts.

Financial assets and financial liabilities that are not measured at fair value through profit or loss in subsequent reporting are reported at fair value on first-time recognition with supplements or deductions for transaction expenses. Financial assets and financial liabilities that are measured at fair value via profit or loss in subsequent reporting, are reported at fair value on first-time recognition. In subsequent reporting, financial instruments are measured at amortized cost or fair value depending on initial categorization pursuant to IAS 39.

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On first-time recognition, a financial asset or financial liability is categorized as one of the following:

Financial assets

• n Fair value through profit or loss
• n Loans receivable and accounts receivable
• n Investments held to maturity
• n Financial assets held for sale

Financial liabilities

• n Fair value through profit or loss
• n Other financial liabilities measured at amortized cost

NeuroVive's financial assets and financial liabilities are categorized as loans receivable and accounts receivable and other financial liabilities are measured at amortized cost.

The fair value of financial instruments

The fair values of financial assets and financial liabilities are measured as follows:

• n Fair values of financial assets and liabilities with standard terms traded on active marketplaces are measured based on quoted market prices.
• n The fair value of other financial assets and liabilities are measured using generally accepted valuation models and based on information obtained from observable relevant market transactions.
• n For all financial assets and liabilities, carrying amounts are judged as a close approximation of their fair value, unless otherwise specifically stated in the following notes.

Amortized cost

Amortized costs means the amount at which the asset or liability was initially reported less amortization, additions or deductions for accumulated accruals according to the effective interest method of the initial difference between the amount received/paid and the amount to be paid/received on maturity, and with deductions for impairment.

Effective interest is the interest that results in the initial carrying amount of the financial asset or financial liability after discounting all future expected cash flows over the expected term.

Offsetting financial assets and liabilities

Financial assets and liabilities are offset and recognized at a net amount in the Balance Sheet when there is a legal right to offset and when there is an intention to settle the items with a net amount or simultaneously realize the asset and settle the liability.

Cash and cash equivalents

Cash and cash equivalents include cash funds and bank balances and other short-term, liquid investments that can be readily converted to cash and are subject to an insignificant risk of value fluctuations. For classification as cash and cash equivalents, maturities may not exceed three months from the time of acquisition. Cash funds and bank balances are categorized as "loan receivables and accounts receivable," which means measurement at amortized cost. Because bank balances are payable on demand, amortized cost corresponds to nominal amount.

Other receivables

Other short-term receivables that are financial are characterized as "loan receivables and accounts receivable," which means measurement at amortized cost. However, the expected maturity of these receivables is short, and accordingly, they are recognized at nominal amount without discounting. There is a deduction for debt considered doubtful. Impairment of receivables is recognized in operating expenses.

Accounts payable

Accounts payable are categorized as "other financial liabilities," which means measurement at amortized cost. However, the expected maturity of accounts payable is short, so these liabilities are recognized at nominal amount without discounting.

Liabilities to credit institutions and other loan liabilities

Interest-bearing bank borrowings, overdraft facilities and other loans are categorized as "other financial liabilities" and measured at amortized cost according to the effective interest method. Any differences between the loan amount received (net of transaction expenses) and repayment or amortization of loans is recognized over the loan term in accordance with the group's accounting policy on borrowing costs (see above).

Provisions

Provisions are recognized when the group has an existing obligation (legal or informal) as a result of an event that has occurred, it is likely that an outflow of resources will be required to satisfy the obligation and the amount can be measured reliably.

The amount provisioned is the best estimate of the amount necessary to satisfied the existing obligation on the reporting date, considering the risks and uncertainties associated with the obligation. When a provision is computed by estimating the payments expected to be required to satisfy the obligation, the carrying amount should correspond to the present value of these payments.

When part or all of the amount necessary to settle a provision is expected to be replaced by a third party, this reimbursement should be recognized separately as an asset in the Statement of Financial Position when it is essentially certain that it will be received if the company satisfies the obligation and the amount can be measured reliably. NeuroVive is not reporting any provisions as of 31 December 2013 or 31 December 2012.

Equity

Transaction expenses directly attributable to the issue of new ordinary shares or options are reported in equity as a deduction from the issue proceeds, net of tax.

Accounting policies for the parent company

The parent company applies the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2, Accounting for Legal Entities. The application of RFR 2 means that as far as possible, the parent company applies all IFRS as endorsed by the EU within the auspices of the Swedish Annual Accounts Act and the Swedish Pension Obligations Vesting Act and considering the relationship between accounting and taxation. The differences between the parent company's and the group's accounting policies are reviewed below:

Classification and presentation

The parent company's Income Statement and Balance Sheet are presented in accordance with the Swedish Annual Account Act's format. The difference against IAS 1, Presentation of Financial Statements, applied on the presentation of the Consolidated Financial Statements, primarily relates to the recognition of financial revenues and expenses, non-current assets, equity and the incidence of provisions as a separate heading. The parent company also presents a separate Statement of Comprehensive Income, separately from the Income Statement.

Subsidiaries

Participations in subsidiaries are recognized at cost in the parent company's financial statements. Acquisition-related expenses for subsidiaries, which are expensed in the consolidated accounts, are part of the cost of participations in subsidiaries.

Financial instruments

The parent company does not apply IAS 39, Financial Instruments: Recognition and Measurement. The parent company applies a cost-based method, pursuant to the Swedish Annual Accounts Act.

Important sources of uncertainty and estimates

The most important assumptions regarding the future and other important sources of uncertainty estimates as of the reporting date that involve a significant risk of material restatements to carrying amounts of assets and liabilities in following financial years are reviewed below.

Impairment testing of intangible assets

Because amortization of the Company's capitalized expenditure on product development has not yet commenced, impairment testing of them is conducted at least yearly. Other intangible and tangible non-current assets are subject to impairment tests if there is any indication that they are impaired. Impairment tests are based on a review of recoverable amounts, which are estimated based on assets' value in use. Management computes future cash flows in accordance with internal business plans and forecasts. This review also uses estimates of

items including the discount rate and future growth rates beyond predetermined budgets and forecasts. The carrying amounts of intangible assets amount to SEK 47,119,000 (32,705,000), of which capitalized expenditure for product development represents SEK 39,182,000 (30,042,000). Changes to the assumptions made by management for impairment tests would have a significant impact on the Company's results of operations and financial position. Management does not consider that there was any impairment of the group's intangible assets as of 31 December 2013.

Critical judgments when applying the group's accounting policies

The following section reviews critical judgments, apart from those involving estimates (see above), made by management when applying the group's accounting policies, and that have the most significant effect on carrying amounts in the financial statements.

Timing of capitalization of expenditure for product development

Internally developed intangible assets such as capitalized expenditure for product development must satisfy a number of criteria for recognition in the Balance Sheet. These criteria are reviewed in accounting policies above. One of these criteria requires management to conduct an assessment of whether it is likely that the intangible asset will generate economic benefits. It is not until management can make this estimate that development expenditure on the project can start to be capitalized as an asset in the Balance Sheet.

NeuroVive conducts research into neuroprotective pharmaceuticals. The Company spawned from basic research that commenced back in 1993. The Company holds broad patents for a family of pharmaceuticals called cyclosporines and focuses on the topic of mitochondrial medicine. NeuroVive's development process is based on a well-known active compound for other registered purposes, and accordingly, the risk in the clinical phases and potential future market approval are significantly reduced. The Company is evaluating various innovative forms of collaboration with the intention of establishing a reduced-risk and cost-efficient business model. In this way, NeuroVive will be able to utilize selected partners' existing commercial channels to build future business areas such as the marketing and sale of future pharmaceuticals. The business model of strategic alliances with trade partners also enables various types of direct investment in Neuro-Vive as part of funding phase III studies and future straight marketing and sales activities. NeuroVive also intends to out-license pharmaceuticals to large pharmaceutical companies for registration, marketing and sale. The Company's revenues may consist of fixed fees on out-licensing and milestones on the route to launch, as well as ongoing royalty revenues and/or sales revenues.

Based on the above conditions, management judges that it is likely that the product development projects where expenditure has been capitalized will generate economic benefits for the Company.

Financial risk management and financial instruments

Through its operations, the group is exposed to various types of financial risks such as market, liquidity and credit risks. Market risks primarily consist of interest risk and currency risk. The Company's Board of Directors is ultimately responsible for the exposure, management and monitoring of the group's financial risks. The Board of Directors sets the framework that applies to the exposure, management and monitoring of the financial risks and this framework is evaluated and revised yearly. The Board can decide on temporary departures from its predetermined framework.

Market risks

Currency risks

Currency risks means the risk that the fair value of future cash flows fluctuate because of changed exchange rates. Exposure to currency risk is primarily sourced from payment flows in foreign currency, termed transaction exposure, and from the translation of balance sheet items in foreign currency, as well as upon the translation of foreign subsidiaries' income statements and balance sheets to the group's reporting currency, which is Swedish kronor, called balance exposure.

The group's outflows mainly consist of Swedish kronor and EUR, and some in USD, DKK, GBP and CAD. Currently, the group does not generate any inflows in foreign currency. Accordingly, the group's exposure to currency risk is limited. The group does not hedge its transaction exposure.

Foreign entities represent an insignificant share of the group's total assets, and accordingly, transaction exposure resulting from the translation of foreign entities is limited.

A 5% change in the exchange rate of the euro against the Swedish krona could affect profit or loss and equity by SEK 265,000 (53,000).

Interest risks

Interest risk means the risk that fair value or future cash flows fluctuates as a result of changed market interest rates. The group only has one

bridging loan (repaid in February 2014) for a fixed charge, and accordingly, any exposure to interest risk is limited.

A 1% change in the group's interest on bank balances would mean that profit or loss and equity would change by SEK 210,000 (234,000).

Liquidity and financing risk

Liquidity risk means the risk that the group encounters difficulties in satisfying commitments related to the group's financial liabilities. Financing risk means the risk that the group is unable to arrange sufficient finance for a reasonable cost. The group is financed through equity and has no financial borrowings. Current liabilities amount to SEK 14,534,000 (8,463,000) and mature within one year. The group's current receivables that become due within one year amount to SEK 1,609,000 (959,000). The group has cash and cash equivalents of SEK 39,992,000 (37,177,000).

Credit and counterparty risk

Credit risk means the risk that a counterparty in a transaction generates a loss for the group by being unable to satisfy its contracted obligations. The group's exposure to credit risk mainly relates to other current receivables, which are insignificant amounts, and accordingly any credit risk in other current receivables is limited.

Credit risk also arises when the Company's surplus liquidity is invested in various types of financial instrument. The Board of Directors' predetermined framework stipulates that surplus liquidity may be invested in interest-bearing bank accounts or fixed-income securities. The credit risk in investing surplus liquidity should be reduced by investing only with counterparties with very high credit ratings.

The group's and parent company's maximum exposure to credit risk is judged to correspond to the carrying amounts of all financial assets. Credit risk is judged as limited.

Categories of financial instrument

The carrying amount of financial assets and financial liabilities by measurement category in accordance with the IAS 39 is stated in the following table.

	Group		Parent company
	31 Dec. '13	31 Dec. '12	31 Dec. '13	31 Dec. '12
Financial assets
Loans receivable and accounts Receivable
Receivables from group companies	-	-	4,625	2,716
Other receivables	1,096	734	1,093	732
Cash and cash equivalents	39,992	37,177	36,769	37,177
Total financial assets	41,088	37,911	42,487	40,625
Financial liabilities
Other financial liabilities
Accounts payable	4,759	4,724	4,704	4,724
Liabilities to group companies	-	-	6	6
Other current liabilities	5,614	1,103	4,351	284
Total financial liabilities	10,373	5,827	9,061	5,014

There were no reclassifications between the above measurement categories in the period. Interest income on cash and cash equivalents is stated in note 12. Net gains/losses from other financial assets and liabilities are insignificant.

Measurements of financial instruments at fair value

Carrying amounts are considered a close approximation of the fair values of financial assets and financial liabilities due to their maturities and/or fixed-interest periods being short, which means discounting based on applicable current market conditions is not considered to have any significant effect.

Capital

The group's aim for managing its capital is to ensure the group's capacity to continue its operations to generate a reasonable return to shareholders and benefit other stakeholders. The group is funded through equity, which amounts to SEK 74,643,000 (63,043,000). The group's current policy is not to pay any dividend. A proposal on dividend to shareholders will not be possible until the Company achieves long-term profitability.

Intragroup transactions

Purchases within the same group amount to SEK 0 (0) and sales within the same group amount to SEK 819,000 (797,000), which are a management fee.

The parent company is reporting interest income of SEK 130,000 (43,000) for loans to the subsidiary.

Segment information

The financial information reported to the chief operating decision-maker (CEO), as a basis for allocating resources and judging the group's profit or loss, is not divided into different operating segments. Accordingly the group constitutes a single operating segment.

Revenues from major products and services and information on major customers The group's net sales consist of an up-front payment from a customer.

Revenues and non-current assets divided by geographical region

The group's sales relate to the group's subsidiary in Hong Kong.

The group conducts its operations in two main geographical regions—Sweden (the Company's domicile) and Hong Kong, China. All non-current assets are within the parent company in Sweden.

Other operating income

	Group		Parent company
	2013	2012	2013	2012
Subsidies from the Swedish
Governmental Agency for
Innovation Systems	1,491	1,113	1,491	1,113
Exchange rate gains relating
to operations	107	215	107	216
Debt written off	-	-	-	-
Total	1,598	1,328	1,598	1,329

NeuroVive has been granted a subsidy from the Swedish Governmental Agency for Innovation Systems for a development project within stroke. The subsidy from the Swedish Governmental Agency for Innovation Systems consists of 50% of expenses incurred on the project in the period 1 June 2011 - 31 December 2014. NeuroVive is eligible to receive a maximum of SEK 4,489,000 during this project term. Over and above the SEK 1,491,000 (1,113,000) recognized in other operating income, SEK 0 (232,000) was recognized as a reduction of capitalized development expenses, see note 16 capitalized development expenses.

8 Other operating expenses

Group Parent company 2013 2012 2013 2012 Exchange rate losses relating to operations 238 161 234 152 Total 238 161 234 152

9

Disclosure on audit fees and reimbursement

	Group		Parent company
	2013	2012	2013	2012
Mazars SET Revisionsbyrå AB
auditing	355	330	345	330
audit work in addition to
statutory audit	60	60	60	60
tax consulting	10	-	10	-
other	30	40	30	40
Ernst & Young AB
auditing	-	136	-	136
audit work in addition to
statutory audit	-	106	-	106
tax consulting	-	-	-	-
other	-	-	-	-
Total	455	672	445	672

Auditing means fees for the statutory audit, i.e. work necessary to present an Audit Report, and audit advisory services rendered coincident with auditing.

Other work in addition to the statutory audit of SEK 0 (106,000) for Ernst & Young AB in 2012 consists of expenses relating to the new share issue and has been reported against equity.

10

Lease arrangements

Operating leases

The expense for the year for operating leases amounts to SEK 238,000 (186,000) for the group and parent company.

On the reporting date, the parent company and group had outstanding commitments in the form of minimum lease payments in irrevocable operating leases with the following maturities:

	Group		Parent company
	2013	2012	2013	2012
Within one year	122	142	122	142
Between one and five years	-	-	-	-
After more than five years	-	-	-	-
Total	122	142	122	142

Operating leases are for premises rent.

	2013		2012
Average number of employees	No. of employees	Of which no. of men	No. of employees	Of which no. of men
Parent company, Sweden	6	3	4	2
Subsidiary, China	-	-	-	-
Total, group	6	3	4	2

11 Number of employees, salaries, other benefits and social security contributions		Division of	Group			Parent company
					senior executives on reporting date	31 Dec. '13	31 Dec. '12	31 Dec. '13	31 Dec. '12
	2013		2012		Board members	7	6	7	6
Average number of employees	No. of employees	Of which no. of men	No. of employees	Of which no. of men	of which men:	4	5	4	5
Parent company, Sweden	6	3	4	2	Other employees in management, incl. CEO	4	3	4	3
Subsidiary, China	-	-	-	-	of which men:	4	3	4	3
Total, group	6	3	4	2	Total	11	9	11	9

The group's and parent company's expense for defined contribution pension plans is SEK 460,000 (290,000).

Remuneration to senior executives and employees

Guidelines for remuneration for senior executives Fees for board and committee work are payable to the Chairman of the Board and Board members in accordance with AGM resolution. The Chairman of the Board waived his fees for 2013.

The AGM resolved on the following guidelines

for remuneration for senior executives:

Salary and other employment terms and potential share-related incentive programs should be on market terms. Senior executives should be offered basic salary on market terms based on responsibilities, roles, competence and position. Senior executives can be offered variable salary. Such variable salary should be on market terms and based on achievement of predetermined financial and individualized targets and constitute a maximum of 30% of basic annual salary, and a total maximum of SEK 1,200,000 to senior executives. The notice periods

of senior executives shall be a minimum of three months, and for the CEO, six months. The Board of Directors' Remuneration Committee evaluates the need for a share-related incentive program yearly, and where necessary, proposes that the Board submits a proposal for resolutions by the AGM for a well-judged share-related incentive program for senior executives and/or other employees.

Pension benefits and compensation in the form of financial instruments, etc to the CEO and other senior executives are payable as part of total compensation.

Salaries and benefits for the year—group and parent company

			Variable	Pension	Other	Social Security
2013	Directors' fee	Basic salary	remuneration	expense	benefits	contributions	Total
Gregory Batcheller, Chairman of the Board, COO	-	-		-	1,440	-	1,440
Arne Ferstad, Board member	200	-	-	-	361	-	561
Marcus Keep, Board member	150	-	-	-	-	47	197
Helena Levander, Board member	270	-	-	-	-	-	270
Helmuth von Moltke, Board member	170	-	-	-	-	-	170
Anna Malm Bernsten	240	-	-	-	-	-	240
Boel Flodgren, Board member	150	-	-	-	-	47	197
Mikael Brönnegård, CEO	-	1,214	364	187	1	496	2,262
Total, Board and CEO	1,180	1,214	364	187	1,802	590	5,337
Other senior executives	-	1,131	169	97	994	408	2,799
Total senior executives	1,180	2,345	533	284	2,796	999	8,137
Other employees	-	1,817	60	94	2	590	2,563
Total	1,180	4,162	593	378	2,798	1,588	10,699

Salaries and benefits for the year—group and parent company

			Variable	Pension	Other	Social Security
2012	Directors' fee	Basic salary	remuneration	expense	benefits	contributions	Total
Gregory Batcheller, Chairman of the Board, COO	-	-		-	1,374	-	1,374
Arne Ferstad, Board member	250	-	-	-	315	-	565
Marcus Keep, Board member	230	-	-	-	-	-	230
Helena Levander, Board member	250	-	-	-	-	79	329
Helmuth von Moltke, Board member	230	-	-	-	-	-	230
Jan Nilsson, Board member	270	-	-	-	255	85	610
Mikael Brönnegård, CEO	-	1,140	240	160	5	434	1,979
Total, Board and CEO	1,230	1,140	240	160	1,949	597	5,316
Other senior executives	-	361		9	553	114	1,037
Total senior executives	1,230	1,501	240	169	2,502	711	6,353
Other employees	-	1,147	-	122	-	360	1,629
Total	1,230	2,648	240	291	2,502	1,071	7,982

Apart from the Chairman of the board, all Directors' fees resolved by the AGM on 8 March were charged to profit or loss for 2013. The Chairman waived his fees for 2013.

In 2013 Gregory Batcheller served as Executive Chairman. He waved his Directors' fee as approved by the AGM, but through his own company, Stanbridge bvba, invoiced NeuroVive for services rendered in his capacity as Executive Chairman. The invoiced amount including reimbursement for expenses is stated in the other benefits column above.

In addition to his duties as a Board member, Arne Ferstad rendered executive consulting services to the Company, invoiced to NeuroVive fire his company Ankor Consultants bvba. These amounts are stated in the other benefits column above, and also relate to reimbursement for expenses.

Other senior executives:

There are three other senior executives, with the amount stated in the basic salary column corresponding to 1.1 full-time equivalents for 2013 and 0.4 full-time equivalents for 2012.

Jan Nilsson, COO, has been employed by the Company on a 60% basis since February 2013. In addition to his employment, Mr. Nilsson rendered executive consulting services to the Company, invoiced to NeuroVive via his company Jan Nilsson Konsult. The amount, SEK 451,000 (255,000) is included in the total for other senior executives and stated in the other benefits column.

Eskil Elmer, CSO, did not receive any other compensation apart from basic salary and variable compensation.

Christian Svensson, the former CFO, was employed by the Company in the period November 2012 - August 2013. Prior to this, and subsequently, Mr. Svensson invoiced rendered consulting services as CFO via his company, Verum Consulting AB. The expense for these services amounted to SEK 536,000 (553,000) and is included in the total for other senior executives and stated in the other benefits column.

Catharina Jz Johansson, CFO, was employed by the Company on 1 December 2013. Ms. Johansson did not receive any other compensation apart from basic salary, stated in the amount for other senior executives.

Other benefits include consulting fees and mileage allowance. Fees invoiced by closely related parties are recognized as other external expenses in the Income Statement.

Pensions

There is no contracted retirement age for the CEO. The pension premium for the CEO shall amount to 13.44% of pensionable salary. Pensionable salary means basic salary. For other senior executives, pension premiums are a maximum of 10% and there are no contracted retirement ages.

Severance pay

There is a mutual notice period of six months between the Company and the CEO. There is no contracted severance pay for the CEO. A mutual notice period of 3 to 6 months applies between the Company and other senior executives.

For disclosures on share warrants, see note 30, Share warrants for senior executives and other employees.

Transactions with other related parties

Renumeration for loan commitment 132,000 to Baulos Capital. (Owned by Fredrik Olsson, shareholder)

Financial income

	Group		Parent company
	2013	2012	2013	2012
Interest income	423	614	423	614
Exchange rate gains	-	-	-	-
Total financial income	423	614	423	614

All interest income relates to financial assets measured at amortized cost.

		Group		Parent company
	2013	2012	2013	2012
Interest costs	203	18	138	2
Total financial costs	203	18	138	2

All interest costs relate to financial liabilities measured at amortized cost.

Tax for the year	Group		Parent company
	2013	2012	2013	2012
Current tax on profit/loss
for the year	-	-	-	-
Deferred tax relating to
temporary differences	-	-	-	-
Total reported tax expense	-	-	-	-

Income tax in Sweden is computed at 22% (26.3) on taxable profits for the year. Tax in other jurisdictions is computed at the tax rates applying in each jurisdiction. A reconciliation between reported profit or loss and the year's tax expense follows:

Reconciliation of tax expense for the year
	Group		Parent company
	2013	2012	2013	2012
Profit/loss before tax	-22,126	-15,903	-22,810	-12,471
Tax revenue for the year
Tax computed at Swedish tax rate	4,868	4,182	5,018	3,280
Tax effect of non-deductible expenses	-97	-68	-97	-68
Tax effect of non-deductible revenues	-	-	-	-
Tax effect of deductible expenses and taxable revenues reported directly against equity	309	2,123	309	2,123
Difference in tax rates between Sweden and foreign subsidiary	-38	-336	-	-
Tax effect of deficits for which no deferred tax receivable is reported	-5,042	-5,901	-5,230	-5,335
Total	-	-	-	-
Adjustments recognized in the current year for previous year's current tax	-	-	-	-
Reported tax expense for the year	-	-	-	-

Deductible deficit

Because the Company is loss making, management cannot specify when tax loss carry-forwards may be utilized. Accordingly, deferred income taxes recoverable relating to loss carry-forwards have been reported to the extent they can be offset against deferred tax liabilities. Loss carry-forwards can be utilized without time limitation.

Both companies have accumulated loss carry-forwards that have no time limitation, and accordingly, may reduce future profits.

Loss carry-forwards	Group		Parent company
	31 Dec. '13	31 Dec. '12	31 Dec. '13	31 Dec. '12
Loss carry-forwards for which no deferred tax receivable has been recognized	72,468	49,377	69,576	45,802
Total loss carry-forwards	72,468	49,377	69,576	45,802

Earnings per share

Basic and diluted earnings per share

The following profit or loss and weighted average number of ordinary shares have been used to compute basic and diluted earnings per share:

	Group
	2013	2012
Profit/loss for the year attributable to equity holders of the parent (SEK)	-22,330,942	-14,873,787
Weighted average number of ordinary shares before dilution	19,159,046	17,402,301

Basic earnings per share, SEK -1,17 -0,85

Diluted earnings per share

Because there is a loss, there is no dilution effect.

The weighted average number of outstanding ordinary shares is adjusted when computing diluted earnings per share for the dilution effect of potential ordinary shares. NeuroVive has potential ordinary shares in the form of share warrants, which could create a dilution effect in future periods. See note 30 for more information on the Company's share warrants.

Capitalized product development expenditure

	Group		Parent company
	2013	2012	2013	2012
Opening cost	30,042	17,840	30,042	17,840
Capitalized expenditure for the year	9,140	12,434	9,140	12,434
Subsidies received	-	-232	-	-232
Closing accumulated cost	39,182	30,042	39,182	30,042
Closing carrying amount	39,182	30,042	39,182	30,042

Of total capitalized expenditure for product development, 57% (69) relates to NeuroSTAT, 38% (28) to CicloMulsion, 2% (2) to NeuroViveP014 and 3% (1) to other projects.

Amortization of capitalized expenditure on product development has not yet begun because usage of this intangible asset has not yet commenced in the manner management intends, i.e. it cannot yet start generating revenues. The Company will start amortizing capitalized expenditure for product development when development projects or finished products can start generating revenues.

Capitalized expenditure for product development is subject to impairment tests at least yearly. These tests compute the recoverable amount based on the value in use of the intangible asset, which is then compared to carrying amount. If carrying amount exceeds value in use, the impairment is taken in profit or loss. The impairment test as of 31 December 2013 indicated that there was no impairment. The discount rate before tax applied was 28% (28).

The total amount of expenditure for research and development expensed during the year was SEK 6,112,000 (1,662,000). Illustration on p. 12.

	Group		Parent company
	2013	2012	2013	2012
Purchases during the year	4,724	4,083	4,724	4,083
Purchases during the year	6,362	641	6,362	641
Closing accumulated cost	11,086	4,724	11,086	4,724
Opening amortization	-2,308	-1,452	-2,308	-1,452
Amortization for the year*	-1,008	-856	-1,008	-856
Closing accumulated	-3,316	-2,308	-3,316	-2,308
amortization
Closing carrying amount	7,770	2,416	7,770	2,416

* Amortization on patents is recognized as part of the cost of capitalized expenditure for product development because patents are used in development work.

18 Software

	Group		Parent company
	2013	2012	2013	2012
Opening cost	400	400	400	400
Purchases during the year	-	-	-	-
Closing accumulated cost	400	400	400	400
Opening amortization	-153	-73	-153	-73
Amortization for the year	-80	-80	-80	-80
Closing accumulated
amortization	-233	-153	-233	-153
Closing carrying amount	167	247	167	247

The software, acquired in 2011, is for compiling documentation for use in a future application for drug registration.

64 N otes

19 Equipment

	Group		Parent company
	2013	2012	2013	2012
Opening cost	946	281	946	281
Purchases during the year	68	665	68	665
Subsidies received	-	-	-	-
Closing accumulated cost	1,014	946	1,014	946
Opening depreciation	-281	-133	-281	-133
Depreciation for the year	-276	-148	-276	-148
Closing accumulated
depreciation	-557	-281	-557	-281
Closing carrying amount	457	665	457	665

Participations in subsidiaries

	Parent company
	2013	2012
Opening cost	6	6
Formation of NeuroVive Pharmaceutical Asia Ltd.	-	-
Closing cost	6	6

Subsidiary	Corporate ID no.	Registered office a	Share of equity, %	Share of vote, %	Book value
NeuroVive
Pharmaceutical		Hong Kong,
Asia Ltd	1,688,859	Kina	70%	70%	6
Total					6

Prepaid expenses and accrued income

	Group			Parent company
	31 Dec.	31 Dec.		31 Dec.
	'13	'12	'13	'12
Accrued interest income	-	44	-	44
Other prepaid expenses	513	181	513	181
Total	513	225	513	225
			31 Dec.

21

Cash and cash equivalents/cash and bank balances

	Group		Parent company
	31 Dec. '12	31 Dec. '12	31 Dec. '12	31 Dec. '12
Cash and bank balances	39,992	37,177	36,769	37,177
Total	39,992	37,177	36,769	37,177

Parent company and group No. of

	No. of shares	Quotient value, SEK	Share capital, SEK
Opening share capital, 1 January 2012	14,942,857	0.05	747,143
New share issue	4,216,189	0.05	210,809
Closing share capital,
31 December 2012	19,159,046	0.05	957,952
Opening share capital, 1 January 2013	19,159,046	0.05	957,952
New share issue	2,500,000	0.05	125,000
Closing share capital,
31 December 2013	21,659,046	0.05	1,082,952

All shares of the same class, are fully paid-up and are entitled to one vote. No shares are reserved to the transfer pursuant to option or other agreements.

A private placement, involving the issuance of 2,500,000 new shares and raising SEK 33,594,915 (after deducting issue expenses of SEK 1,405,085) was conducted in December 2013. The new share issue resulted in a SEK 125,000 increase in share capital, with the remaining amount of SEK 33,469,915 recognized against other paid up capital/share premium reserve.

A rights issue involving the issuance of 4,216,189 new shares and raising SEK 46,321,957 (after deducting issue expenses of SEK 8,488,500) was conducted in June 2012. This new issue resulted in a SEK 210,809 increase in share capital, with the remaining amount of SEK 46,111,148 recognized against other paid-up capital/share premium reserve.

Other paid-up capital—group

Other paid-up capital consists of the share premium reserve, amounts originally reported in the share premium reserve that were subsequently transferred to accumulated profit or loss, as well as the statutory reserve and shareholders' contributions.

The new share issue completed in December 2013 increased other paid-up capital by SEK 33,469,915 after deducting issue expenses of SEK 1,405,085.

Reserves—group

Reserves means the translation reserve, i.e. currency translation differences on translating foreign operations to SEK, which are recognized in other comprehensive income.

Retained earnings consist of accumulated profit or loss and comprehensive income for the year.

Accrued expenses and deferred income

	Group		Parent company
	31 Dec. '13	31 Dec. '12	31 Dec. '13	31 Dec. '12
Accrued salary including social security contributions	779	316	779	316
Accrued vacation pay liabil ity including social security contributions	281	418	281	418
Accrued Directors' fees incl. social security contributions	1,554	1,118	1,554	1,118
Accrued pension expenses	243	203	243	203
Other accrued expenses	1,304	437	1,304	437
Deferred subsidy income from the Swedish Govern mental Agency for Innova tion Systems	-	144	-	144
Total	4,161	2,636	4,161	2,636

Pledged assets and contingent liabilities

The group and parent company had no contingent liabilities or pledged assets.

29

28

27

Share warrants for senior executives and other employees

Group and parent company

The AGM on 10 June 2011 approved a share-related incentive program for senior executives and/or other employees in the form of the issuance of a maximum of 164,000 share warrants. The following people decided to subscribe for share warrants in the incentive program:

Name	No. of share warrants	Amount paid, SEK 000	Market value, SEK 000	Salary bo nus, gross, SEK 000
Gregory Batcheller, Execu
tive Chairman	40,000	100	7	50
Eskil Elmér, CSO	40,000	100	7	116
Mikael Brönnegård, CEO	40,000	100	7	116
Andreas Inghammar,
former Corporate manager	16,000	40	3	47
Christian Svensson, former CFO	16,000	40	3	47
Fredrik Sjövall,
former employee	4,000	10	1	10
Eleonor Åsander Frostner	4,000	10	1	7
Magnus Hansson	4,000	10	1	10
Summa	164,000	410	28	403

The share warrants were granted on 1 July 2011 and were purchased for a price of SEK 2.50 per share warrant. Payment was in cash. The fair value of share warrants at the grant date was computed at SEK 0.17. Because the share warrants were acquired at a price exceeding market value, they do not constitute share-related payments.

Holders of share warrants are entitled to subscribe for one new share of the Company at a subscription price of SEK 96 per share (exercise price) in the period 10 April 2014 to 10 June 2014. If all share warrants are exercised, the Company's share capital would increase by SEK 8,200.

The fair value of the share warrants at the grant date was determined using the Black-Scholes valuation model. Important input data used in the computation was: a share price of SEK 19.60 on the grant date, the above exercise price, volatility of 45%, expected dividend of SEK 0, expected term of options of 2.8 years and annual risk-free interest of 2.5%.

Each person subscribing for options received a net salary bonus up to SEK 2.50 multiplied by half the number of options the participant had subscribed for. The participant undertook to use this bonus to pay for share warrants that he/ she had subscribed for. The salary bonus and associated social security contributions has been recognized as a personnel expense in profit or loss.

30 Transactions with related parties

Transactions between the Company and its subsidiary, which is closely related to the Company, have been eliminated on consolidation and accordingly, disclosures on these transactions are not presented in this note. Disclosures on transactions between the group and other related parties are presented below.

Apart from the purchase of consulting services from senior executives and raising bridge finance, there has been no purchases or sales between the group and related parties. Disclosures on remuneration of senior executives and other related parties are presented in note 11. Disclosures on share warrants for senior executives are reviewed in note 29.

Outstanding receivables	Group		Parent company
from, and liabilities to, related parties	31 Dec. '13	31 Dec. '12	31 Dec. '13	31 Dec. '12
Liabilities
Stanbridge bvba (owned by Gregory Batcheller, Executive Chairman)	144	93	144	93
Ankor Consultants bvba (part-owned by Arne Ferstad, Board member)	63	58	63	58
Jan Nilsson Konsult sole proprietorship (owned by Jan Nilsson, Board member)	405	29	405	29
Verum Consulting AB (owned by Christian Svensson, CFO)	222	202	222	202
Baulos Capital (owned by Fredrik Olsson)	4,120	-	4,120	-
Total liabilities	4,954	382	4,954	382

Purchases of goods and services from related parties are on an arm's length basis.

31 Dividend

No dividend was paid in 2012 or 2013. No dividend will be proposed to the AGM on 9 May 2014.

Adoption of financial statements

These consolidated accounts and annual accounts were adopted by the Board of Directors for issuance on April 8, 2014.

Board of Directors' declaration

The Board of Directors and Chief Executive Officer declare that the consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU and give a true and fair view of the group's financial position and results of operations. The annual accounts have been prepared in accordance with generally accepted accounting principles, and give a true and fair view of the parent company's financial position and results of operations.

The Statutory Administration Report of the group and parent company gives a true and fair view of the progress of the group's and parent company's operations, financial position and results of operations, and states significant risks and uncertainty factors facing the parent company and the companies included in the group.

The Income Statements and Balance Sheets will be submitted to the Annual General Meeting on 9 May 2014 for adoption.

Greg Batcheller Boel Flodgren Chairman of the Board Board member

Arne Ferstad Marcus Keep Board member Board member

Helmuth von Moltke Anna Malm Bernsten

Board member Board member

Mikael Brönnegård Helena Levander Chief Executive Officer Board member

Lund, Sweden, 8 April 2014

Our Audit Report was presented on 8 April 2014

Bengt Ekenberg

Authorized Public Accountant Mazars SET Revisionsbyrå AB

Audit Report

To the Annual General Meeting of the Shareholders of NeuroVive Pharmaceutical AB (publ) Corporate identity number 556595-6538

Rapport om årsredovisningen och koncernredovisningen

We have audited the annual accounts and consolidated accounts of NeuroVive Pharmaceutical AB (publ) for 2013. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 24-66.

Responsibilities of the Board of Directors and the Chief Executive Officer for the Annual Accounts and Consolidated Accounts

The Board of Directors and the Chief Executive Officer are responsible for the preparation and fair presentation of these annual accounts and consolidated accounts in accordance with IFRS, International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Chief Executive Officer determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

Auditors' responsibility

Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Chief Executive Officer, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinions

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2013 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the Group as of 31 December 2013 and of their financial performance and cash flows for the year in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. A Corporate Governance Report has been prepared. The Statutory Administration Report and Corporate Governance Report are consistent with the remainder of the Annual Accounts.

We therefore recommend that the annual meeting of shareholders adopt the Income Statement and Balance Sheet for the parent company and the group.

Report on other legal and regulatory requirements

In addition to our audit of the annual accounts and consolidated accounts, we have examined the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Chief Executive Officer of NeuroVive Pharmaceutical AB (publ) for 2013.

Responsibilities of the Board of Directors and the Chief Executive Officer

The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the Chief Executive Officer are responsible for administration under the Companies Act.

Auditors' responsibility

Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.

As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss, we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the Chief Executive Officer. We also examined whether any board member or the Chief Executive Officer has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinions

We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Chief Executive Officer be discharged from liability for the financial year.

Helsingborg, Sweden, 8 April 2014

Mazars SET Revisionsbyrå AB

Bengt Ekenberg Authorized Public Accountant

Glossary

Active compound

A pharmaceutical active ingredient in a pharmaceutical product.

Animal model

A disease or other injury is brought about in animals to resemble a similar condition or disease in humans.

Bioequivalent

Equal efficacy in the body of two comparative pharmaceuticals with the same active compound.

Blood-brain barrier

The blood-brain barrier consists of very closely joined capillary walls in the blood vessels of the brain that reduce the availability of certain bloodborne substances to access brain tissue (nerve cells).

Clinical trial

The examination of healthy or unhealthy humans to study the safety and efficacy of a pharmaceutical or treatment method. Clinical trials are divided into different phases, termed phase I, phase II, phase III. Phase II is usually divided into an early phase (phase IIa) and a later phase (phase IIb). See also "phase (I, II and III)".

Cremophor

Polyoxyethylene castor oil. Cremophor is an ingredient of products including Novartis's intravenous pharmaceutical Sandimmune® that contains cyclosporine A, which has been reported to cause oversensitivity reactions, anaphylaxis in a small number of treated patients.

CRO

Clinical research organization.

Cyclophilin D

The recipient mitochondria that cyclosporine A and other cyclosporines bind to in all cells of the body.

Cyclosporine A

A natural active compound (cyclical molecule) produced by the fungus Tolypocladium inflatum. Cyclosporine A is now produced by artificial or chemical methods. Cyclosporine A is a well-known clinically applied cyclosporine that has been demonstrated as potently protective of the brain in animal models of brain injury, where cyclosporine A has transited the blood-brain barrier and entered the brain.

Drug candidate

A specific compound designated during the preclinical phase. The drug candidate is the compound that is then studied on humans in clinical trials.

EMA

The European Medicines Agency.

Eureka Eurostars

European research and development collaboration designed to stimulate small and medium-sized enterprises to undertake international research work and innovation projects through access to support and funding. An agreement with the Commission formalizes the funding terms.

Phase (I, II and III)

The various stages of trials on the efficacy of a pharmaceutical in humans. See also "clinical trial." Phase I examines the safety on healthy human subjects, phase II examines efficacy in patients with the relevant disease and phase III is a large-scale trial that verifies previously achieved results. In the development of new pharmaceuticals, different doses are trialed and safety is evaluated in patients with relevant disease, phase II is often divided between phase IIa and phase IIb. In phase IIa, which is open, different doses of the pharmaceutical are tested without comparison against placebo and focusing on the pharmaceutical's metabolism in the body, as well as safety. Then in phase IIb, studies of efficacy of a selected dose(es) against placebo is studied, which is then termed "blind."

FDA

The US Food and Drug Administration.

Immunosuppression

Suppression of the immune system. Pharmaceuticals that work to inhibit or suppress the activity of the immune system are primarily used when it is necessary to lower the body's natural defenses to a foreign agent—such as after organ transplantation.

IND

Investigational New Drug. An IND means permission to commence clinical trials on humans. The application for an IND is filed with the US regulatory authority.

Indication

A disease condition that requires treatment, such as traumatic brain injury, reperfusion injury after myocardial infarction and stroke.

In vivo

Scientific experiments or clinical trials on living humans or animals. This, in contrast to analysis and experiments conducted outside the living body, in test tubes, for example.

Leigh's syndrome

Leigh's syndrome is a serious condition with characteristic changes to the brain that usually affects small children. This disease is caused by faults in energy-producing mitochondria and is also known as subacute (fast onset) necrotizing (tissue destroying) encephalomyopathy (a disease of the brain and spinal cord).

Lipid emulsion

The carrier medium of drug candidate NeuroSTAT® is a lipid emulsion that consists of small fat globules. It is a version of the well-known lipid emulsion Intralipid® that is administered intravenously in patients that require nutrition and is used as a carrier medium for common pharmaceuticals such as the anesthetic Propofol.

Melas

MELAS is an acronym of mitochondrial encephalomyopathy (brain disease) with lactic acidosis (increased lactic acid levels in the blood) and strokelike episodes.

Mitochondria

That part of each cell that provides effective energy production in the form of conversion of oxygen and nutrients in the body into chemical energy.

Mitochondrial medicine

Field of research and development of pharmaceuticals that protect the mitochondria.

NCCIM

Non Cyclosporine Cyclophilin Inhibiting Molecules. Non-cyclosporine-based compounds (third-generation cyclophilin inhibitor).

Necrosis

Non-programmed cell death. Cell death occurring from severe injury to the central nervous system (and other organs). May occur coincident with injury (primary necrosis) but also delayed (secondary necrosis).

Neuroprotection

Synonymous with nerve cell protection. Treatment intended to prevent cell death in the central nervous system.

NIH

The National Institutes of Health, the American equivalent of the Swedish Research Council.

Pharmaceuticals that protect the mitochondria

Pharmaceuticals that protect mitochondrial function and thus promote cell survival.

Percutaneous coronary intervention (PCI)

PCI is the collective term for procedures in the coronary arteries conducted using a catheter, which is introduced into a major blood vessel, usually via the groin. Angioplasty is often conducted during PCI, a treatment method used when coronary arteries have become obstructed by hardening of the arteries. Coincident with angioplasty, a stent is then introduced to restore the diameter of the vessel after angioplasty. The stent is a pipe-shaped metallic mesh made of various alloys.

Per oral

Intake of a substance via the mouth.

Preclinical

That stage of drug development that occurs before a drug candidate is trialed on humans.

R&D

Research & development.

Reperfusion injury

The removal of blood clots in heart vessels is one type of treatment for myocardial infarction. This involves the restoration of blood flow in the vessel, but coincident with this procedure, there is a risk of further tissue damage and a larger myocardial infarction, known as reperfusion injury.

Spinal cord injury

The cells of the spinal cord are damaged in a spinal cord injury in a manner similar to cells of the brain in traumatic brain injury.

Stroke

There are two types of stroke; ischemic and hemorrhagic (bleeding). In this document, "stroke" means ischemic stroke. Ischemic stroke is caused by an obstruction to one of the blood vessels of the brain with the resulting oxygen deprivation in the surrounding tissue.

Traumatic brain injury (TBI)

TBI is an injury to the brain where the nerve cells are subjected to immediate damage. The injury then continues to exacerbate several days after the incident, which often significantly impacts on the overall damage.

This Annual Report is published in Swedish and English. In the event of any difference between the English version and the Swedish original, the Swedish version shall prevail

Production: Laika Consulting AB

NEUROVIVE PHARMACEUTICAL AB

Medicon Village Scheelevägen 2 223 81, Lund Sweden www.neurovive.se