The purpose of the arrangements is to attract and retain the best available personnel and to provide participants with additional incentive to increase their efforts on behalf and in the best interest of the Company and its subsidiaries. The reference to “Common Shares” refers to shares in MoonLake AG.

MoonLake AG's compensation plans are settled with its Common Shares and with a number of Class C Ordinary Shares of the Company, determined by multiplying the number of Common Shares by the Exchange Ratio. The owners of Common Shares have the right to exchange their Common Shares for a number of Class A Ordinary Shares derived using the Exchange Ratio. In the event MoonLake AG shareholders elect to exchange their Common Shares, such MoonLake AG shareholder forfeits a number of Class C Ordinary Shares equal to the number of Class A Ordinary Shares issued (refer to Note 12 — Shareholders’ Equity - Class C Ordinary Shares).

As of January 1, 2024, the Company executed the conversion of the majority of the outstanding ESOP awards into an equivalent number of Equity Incentive Plan option awards that are settled with Class A Ordinary Shares, thereby eliminating the intermediary right to the exchange step noted above. From an accounting perspective, there is no underlying modification to the economic, control or legal rights of the awards, including vesting terms and conditions, exercise price and accounting classification. This is purely an administrative change as opposed to an accounting modification whereby the plan issuer is amended from MoonLake AG to MoonLake Immunotherapeutics. Consequently, there is no incremental fair value generated following the conversion and therefore no incremental expense recorded. Any remaining unvested compensation expense will be recorded over the remaining vesting period of the original awards, thereby resulting in no change to the consolidated financial statements if the conversion had not occurred.

As a result of this administrative conversion, the two main plans which remain active as of March 31, 2025 are the ESPP and Equity Incentive Plan, whereas the Restricted Founder Shares and ESOP are fully vested as of April 2023 and January 2024, respectively.

For the three months ended March 31, 2025, the Company has recognized an increase in equity in the condensed consolidated balance sheet, and share-based compensation expense in the condensed consolidated statements of operations and comprehensive loss of $2.3 million. The share-based compensation expense was driven by the aforementioned two main active share-based compensation plans and programs:


(in thousands)

Compensation Plan	Three Months Ended March 31, 2025		Three Months Ended March 31, 2024
ESPP	725		717


ESOP	(18)		—


MoonLake Immunotherapeutics 2022 Equity Incentive Plan	1,583		960
Total share-based compensation expense	$	2,290	$	1,677
Of which: included in research and development expense	627		417
Of which: included in general and administrative expense	1,663		1,260

We expect that all future employee awards will be made under the Equity Incentive Plan. As of March 31, 2025, 2,831,466 Class A Ordinary Shares from the authorized pool of 4,353,948 Class A Ordinary Shares remain available for future grants, and 1,188,813 Class A Ordinary Shares are reserved for issuance upon exercise of stock options granted under the Equity Incentive Plan.

On April 28, 2021, the shareholders’ agreement between the co-founders, the Series A investors and MoonLake AG imposed a reverse vesting condition on 90% of the total 110,000 Common Shares (the equivalent of 3,700,257 Class C Ordinary Shares) held by each of the three co-founders. Therefore, 99,000 Common Shares (the equivalent of 3,330,231 Class C Ordinary Shares) held by each of the co-founders were subject to these restrictions and considered unvested (the “Restricted Founder Shares”). The Restricted Founder Shares vested on the 28th of each month at a rate of 4.166% over a period of two years until April 28, 2023. In the event of termination of the contractual relationship of the relevant co-founder before the end of the vesting period, MoonLake AG in first priority, or any third party designated by it, and the other shareholders in second priority pro rata to their shareholdings, had an option to purchase all or a pro rata portion of the leaver shares that remained unvested on the effective day of the termination at nominal value of CHF 0.10.

The ESPP grants will vest 25% on each anniversary of the grant date. In the event of a termination of contractual relationship between the Company and the entitled employee, the awards can be deemed forfeited by MoonLake AG if certain conditions are met. Awards feature an accelerated vesting condition linked to a “Change of Control”, defined as any transfer of shares that results in the proposed acquirer holding more than 50% of the then issued share capital of MoonLake AG or the Company, as the case may be, where all the outstanding awards (whether currently outstanding or granted in the future) will be deemed fully vested.


ESPP	Number of Shares	Weighted-Average Grant Date Fair Value
Awards unvested as of January 1, 2025	319,769	10.00
Awards vested for the three months ended March 31, 2025	(73,467)	10.00
Awards unvested as of March 31, 2025	246,302	10.00

The ESOP grants will vest 25% on each anniversary of the grant date. In the event of a termination of the contractual relationship between the Company and the entitled employee, options can be deemed forfeited by MoonLake AG if certain conditions are met. Awards feature an accelerated vesting condition linked to a “Change of Control”, defined as any transfer of shares that results in the proposed acquirer holding more than 50% of the then issued share capital of MoonLake AG or the Company, as the case may be, where all the outstanding awards (whether currently outstanding or granted in the future) will be deemed fully vested.


ESOP	Number of Options	Weighted-Average Exercise Price	Aggregate Intrinsic Value (in thousands)	Weighted-Average Remaining Contractual Term (in years)
Awards outstanding as of January 1, 2025	98,393	1.50	5,180	6.73
Awards exercised for the three months ended March 31, 2025	(93,347)	1.30
Awards forfeited for the three months ended March 31, 2025	(5,046)	5.25
Awards outstanding as of March 31, 2025	—	—	—	—
Awards exercisable as of March 31, 2025	—	—	—	—

On April 5, 2022 (the “Effective Date”), the Company created the Equity Incentive Plan to promote and closely align the interests of employees, officers, non-employee directors and other service providers of MoonLake Immunotherapeutics and its shareholders by providing share-based compensation and other performance-based compensation.

The Equity Incentive Plan provides for the grant of options, stock appreciation rights, restricted stock units, restricted stock and other share-based awards and for incentive bonuses, which may be paid in cash, Common Shares or a combination thereof, as determined by the compensation committee of the board of directors or such other committee as designated by the board of directors to administer the Equity Incentive Plan. The Equity Incentive Plan shall remain available for the grant of awards until the 10th anniversary of the Effective Date.


Equity Incentive Plan (Options)	Number of Options	Weighted-Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted-Average Remaining Contractual Term (in years)
Awards outstanding as of January 1, 2025	972,476	$	24.94	$	28,588	8.18
Awards granted for the three months ended March 31, 2025	229,228	$	43.11

Awards forfeited for the three months ended March 31, 2025	(12,891)	$	49.01
Awards outstanding as of March 31, 2025	1,188,813	$	28.19	$	17,161	8.28
Awards exercisable as of March 31, 2025	431,267	$	13.97	$	11,398	7.27


Weighted average assumptions for the awards issued during the three months ended March 31, 2025
Estimated fair value of the option on the grant date using Black-Scholes model ($)			29.64
Exercise price ($)			43.11
Expected term of the award on the grant date (years) (1)			6
Expected volatility of the share price (2)			75%
Risk-free interest rate (3)			4.4%
Expected dividend rate			—%
(1) The expected term represents the period that share-based awards are expected to be outstanding. (2) The expected volatility was derived from the historical stock volatilities of comparable peer public companies within the Company’s industry. (3) The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the measurement date with maturities approximately equal to the expected term.


Weighted average assumptions for the awards issued during the three months ended March 31, 2024
Estimated fair value of the option on the grant date using Black-Scholes model ($)			36.92
Exercise price ($)			53.54
Expected term of the award on the grant date (years) (1)			6
Expected volatility of the share price (2)			75%
Risk-free interest rate (3)			4.6%
Expected dividend rate			—%
(1) The expected term represents the period that share-based awards are expected to be outstanding. (2) The expected volatility was derived from the historical stock volatilities of comparable peer public companies within the Company’s industry. (3) The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the measurement date with maturities approximately equal to the expected term.


Equity Incentive Plan (Restricted Stock Awards)	Number of Shares	Weighted-Average Grant Date Fair Value
Awards unvested as of January 1, 2025	—	$	—
Awards granted for the three months ended March 31, 2025	191,526	41.77
Awards forfeited for the three months ended March 31, 2025	—	—
Awards vested for the three months ended March 31, 2025	—	—
Awards unvested as of March 31, 2025	191,526	$	41.77