Addex Therapeutics Q3 2024 Earnings Report

Addex Therapeutics EPS Results

• Actual EPS: -$2.77
• Consensus EPS: -$1.40
• Beat/Miss: Missed by -$1.37
• One Year Ago EPS: N/A

Addex Therapeutics Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Addex Therapeutics Announcement Details

• Quarter: Q3 2024
• Date: 11/22/2024
• Time: Before Market Opens
• Conference Call Date: Friday, November 22, 2024
• Conference Call Time: 10:00AM ET

Addex Therapeutics (NASDAQ:ADXN) SA is a clinical-stage biopharmaceutical company specializing in the discovery and development of small-molecule allosteric modulators for central nervous system disorders. Founded in 1999 and headquartered in Geneva, Switzerland, with a U.S. research presence in Cambridge, Massachusetts, the company focuses on targeting metabotropic glutamate (mGlu) receptors and GABAB receptors to address unmet medical needs in neurology and psychiatry.

The company’s lead candidate, dipraglurant (ADX48621), is an mGlu5 negative allosteric modulator in clinical development for levodopa-induced dyskinesia in Parkinson’s disease. Additional programs include ADX71149, an mGlu2 positive allosteric modulator being investigated for mood and anxiety disorders, and early-stage GABAB receptor modulators. Addex employs proprietary drug discovery platforms to optimize targeting, selectivity and pharmacokinetic profiles, advancing multiple candidates through preclinical and clinical stages.

Addex Therapeutics serves global markets through strategic collaborations with pharmaceutical partners to co-develop and potentially commercialize its pipeline. The company’s integrated R&D operations in Europe and North America support translational research and clinical studies. Led by a management team with deep experience in neuroscience drug development, Addex seeks to bring innovative allosteric therapies to patients with debilitating neurological and psychiatric conditions.

Addex Therapeutics Q3 2024 Earnings Call Transcript

Key Takeaways

• GABAB PAM partnership: Indivior selected a compound for substance use disorders and has initiated IND-enabling studies under a deal worth up to $330 million in milestones plus royalties.
• Chronic cough program: Adex exercised its rights to advance its own GABAB PAM candidate for chronic cough, demonstrating robust preclinical efficacy, a >30-fold safety margin, and planning IND-enabling studies in H1 2025 pending financing.
• Epilepsy program delay: Following disappointing results with ADX-71149, Adex and partner Janssen are evaluating the development path forward, delaying progress in this asset.
• NeuroAsterix spin-out progress: The company’s spin-out, NeuroAsterix, started IND-enabling studies for its M4 PAM program in Q3 2024, and Adex expects minimal near-term dilution risk with €63 million in capital.
• Q3 2024 financials: Continuing operations revenue was CHF 0.1 million versus CHF 0.3 million last year, R&D and G&A expenses declined, and cash stood at CHF 3.3 million as of September 30, 2024.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Addex Therapeutics third quarter 2024 financial results and corporate update conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question-and-answer session. To ask a question during the session, you need to press *11 on your telephone keypads. You will then hear an automated message advising your hand is raised. To withdraw a question, please press *11 again. Alternatively, you can submit your questions via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Tim Dyer. Please go ahead.

[Tim Dyer, CEO at Addex Therapeutics]

Thank you. Hello, everyone. I would like to thank you all for attending our third quarter 2024 financial results conference call. I'm here with Mikhail Kalinichev, our head of translational science, who will provide an update on our R&D programs. I draw your attention to the press release and the financial statements issued earlier today, which are available on our website. I also draw your attention to our disclaimers. We will be making certain forward-looking statements that are based on the knowledge we have today. I will start this conference call by giving a quick overview of our recent activities and achievements before reviewing our pipeline. I will then hand over to Misha, who will review in more detail our GABA-B PAM preclinical program. I will then review our third quarter 2024 financial results. Following that, we will open the call for questions.

[Tim Dyer, CEO at Addex Therapeutics]

So we have made excellent progress in our GABA-B positive allosteric modulator program with the completion of the R&D phase delivering multiple drug candidates. Our partner, Indivior, has selected a compound for development in substance use disorder and has started IND-enabling studies. Under the terms of the agreement, Addex is eligible for payment of up to $330 million on successful achievement of pre-specified regulatory clinical and commercial milestones, as well as shared royalties on the level of net sales from high single digits up to low double digits. Also, under the terms of the agreement, we have the right to select compounds for development in a pre-defined list of reserved indications. We have selected a compound to advance our own independent GABA-B PAM program for the treatment of chronic cough. We have some exciting data in cough, which Misha will be sharing with you later in the presentation.

[Tim Dyer, CEO at Addex Therapeutics]

So now, for a quick review of our pipeline. We continue to believe in dipraglurant and are executing our plans to reposition the development for brain injury recovery. Following the disappointing results in epilepsy with ADX71149, we are working with our partner, Janssen, to evaluate a path forward for this program. As mentioned, our partner, Indivior, has selected a drug candidate for development in substance use disorders and has started IND-enabling studies. We are advancing an independent GABA-B PAM program for chronic cough and expect to start IND-enabling studies in 2025, subject to securing financing. Our spin-out company, Neurosterix, has made excellent progress in advancing its pipeline, including starting IND-enabling studies with its M4 PAM program. Now I will hand over to Misha, who will give you some more details about our exciting portfolio.

[Mikhail Kalinichev, Head of Translational Science at Addex Therapeutics]

Thanks, Tim. Hello, everyone. Let me now speak about our GABA-B positive allosteric modulator program, which is partnered with Indivior. The aim of this collaboration is to deliver a better baclofen for substance use disorders. As a reminder, GABA-B receptor activation has been clinically validated in a number of disease areas using baclofen, a GABA-B orthosteric agonist. Baclofen is FDA-approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including substance use disorder. However, baclofen has a short half-life and comes with significant side effects, hampering its wider use. Thus, there is a strong need for a better baclofen. We believe this can be achieved with positive allosteric modulators and their differentiated pharmacology, having the efficacy of baclofen, but longer half-life and improved side effect profile.

[Mikhail Kalinichev, Head of Translational Science at Addex Therapeutics]

Our partner, Indivior, has selected a GABA-B PAM drug candidate for development in substance use disorders and expects to start IND-enabling studies in H1 2025. As part of our agreement with Indivior, Addex has exercised its right to select a compound to advance its own independent GABA-B PAM program for the treatment of chronic cough. I will now present this exciting opportunity. There is a strong rationale for developing GABA-B PAMs for chronic cough. Chronic cough is a persistent cough that lasts more than eight weeks and can be caused by a variety of factors, including respiratory infections, asthma, allergies, and acid reflux, but also possibly by overactive cough reflex. There is a large unmet medical need in novel antitussive drugs, as current standards of care are ineffective in 30% of patients or only moderately effective in up to 60% of patients.

[Mikhail Kalinichev, Head of Translational Science at Addex Therapeutics]

In addition, the current treatments carry risks of serious side effects. On the next slide, we show that GABA-B PAMs are likely to have a superior tolerability profile in comparison to the current standard of care and show no taste-related side effects, as seen with a newly approved P2X3 inhibitor, gefapixant. Support for using GABA-B PAM in treatment of chronic cough comes from the clinical evidence that baclofen, a GABA-B agonist, is used off-label in cough patients and from the anatomical evidence that GABA-B receptors are strongly expressed in airways and in the neuronal pathway regulating cough. Therefore, we believe that GABA-B PAMs could offer superior efficacy in cough patients. The pre-IND activities, including in vivo proof of concept, non-GLP tox, and CMC, have been completed, and our clinical candidate has shown favorable efficacy, tolerability, and developability profiles.

[Mikhail Kalinichev, Head of Translational Science at Addex Therapeutics]

Our clinical candidate has demonstrated a consistent minimum effective dose of one mcg per kg and ED50 of six mcg per kg in cough frequency. No signs of tolerance were seen after subchronic dosing, and more than 30-fold safety margin was demonstrated based on tolerability biomarkers. The IND-enabling studies are planned to start in 2025. The next set of slides describes the in vivo proof of concept studies in models of cough. In a model of citric acid-induced cough in guinea pigs, acutely administered Compound A delivered a robust antitussive activity profile, reducing the cough number and increasing the latency to first cough. The antitussive profile of baclofen in the same model was more modest, as cough latency remained largely unchanged.

[Mikhail Kalinichev, Head of Translational Science at Addex Therapeutics]

In the same experiment, compound A was better tolerated than baclofen, as there were no marked changes in respiratory rate, body temperature, and plasma concentration of growth hormone at up to 60 mcg per kg. In contrast, baclofen suppressed respiratory rate, reduced body temperature by near two degrees Celsius, and increased growth hormone concentration in plasma starting at three mcg per kg dose. Thus, we believe we achieved our goal to discover a better baclofen for cough. In a model of citric acid-induced cough in guinea pigs, subchronically administered compound A showed signs of improved efficacy and potency and no signs of tolerance in comparison to an acute treatment. As expected, signs related to safety and tolerability of compound A remain largely unchanged under subchronic versus acute treatment regimens.

[Mikhail Kalinichev, Head of Translational Science at Addex Therapeutics]

In the model of ATP-potentiated citric acid cough in guinea pigs, in a head-to-head comparison experiment, acutely administered Compound A and a P2X3 inhibitor had similar efficacy and tolerability profiles. In summary, we have selected a clinical candidate for chronic cough with a robust reproducible antitussive efficacy of one mcg per kg and a good PK/PD. The compound showed a favorable developability profile in non-GLP tox studies performed in rats, dogs, and non-human primates. We are on track to start IND-enabling studies early H1 2025. This concludes our prepared remarks on the progress of our R&D programs. Now I hand it back to Tim.

[Tim Dyer, CEO at Addex Therapeutics]

Now for a review of our Q3 2024 financials. Following the Neurosterix transaction, we were required under the IFRS to identify continuing operations related to our retained business and continued operations related to the divested business sold to Neurosterix. All income and expense items related to the discontinued operations have been reclassed under a specific line of comprehensive loss called net profit or loss from discontinued operations. So starting with the income statement, which relates to continuing operations, we recognized CHF 0.1 million of income in Q3 2024 compared to CHF 0.3 million in Q3 2023. The primary source of revenue is research funding from our collaboration with Indivior, which is recognized as the associated research costs are incurred.

[Tim Dyer, CEO at Addex Therapeutics]

Continuing R&D expenses of CHF 0.2 million primarily relate to our GABA-B PAM program and decreased by CHF 0.3 million in Q3 2024 compared to Q3 2023, mainly due to completion of the research phase in June of this year. Continuing G&A expenses of CHF 0.5 million primarily relate to corporate development activities and decreased by CHF 0.1 million in Q3 2024 compared to Q3 2023. The finance result in Q3 is primarily related to foreign exchange losses on U.S. dollar cash balances. The share of net loss of associates is CHF 0.9 million and relates to our investment in Neurosterix. Under IFRS, we are required to recognize our share of their results. So now to the balance sheet. Our assets are primarily held in cash, and we completed Q3 2024 with CHF 3.3 million of cash held in Swiss francs and U.S. dollars.

[Tim Dyer, CEO at Addex Therapeutics]

Other current assets amount to CHF 0.7 million, primarily related to prepaid retirement benefit obligations annually paid at the beginning of the year. Due to Neurosterix transaction, we expect CHF 0.4 million to be reimbursed in the short term. Current liabilities of CHF 0.9 million as of September 30, 2024, decreased by CHF 2 million compared to December 31, 2023, and primarily relate to CRO-related accruals and payables. Non-current liabilities of CHF 0.2 million as of 30 September decreased by CHF 0.4 million compared to December 31, 2023, primarily due to staff transferred to Neurosterix. Now to summarize, we have made excellent progress in our GABA-B PAM program with our partner, Indivior, selecting a compound for development in substance use disorders and starting IND-enabling studies in H2 of this year. Neurosterix has made excellent progress with their lead M4 PAM drug candidate, starting IND-enabling studies in Q3 of this year.

[Tim Dyer, CEO at Addex Therapeutics]

Dipraglurant is ready to restart clinical development for brain injury recovery. Our GABA-B PAM cough program has demonstrated excellent preclinical efficacy and tolerability with IND-enabling studies ready to start. We are validating partnerships with industry, supportive investors, and a strong balance sheet, which puts us in a solid position to deliver on our strategic objectives. This concludes the presentation, and we will now open the call for questions.

[Operator]

Thank you, dear participants. As a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 11 again. Alternatively, you can submit your questions via the webcast. And now we're going to take our first question over the phone. And it comes from the line of Laurent Flamme from Zürcher Kantonalbank. Your line is open. Please ask your question.

[Laurent Flammer, Analyst at Zürcher Kantonalbank]

Yes, good afternoon. So two financial questions. The first relates to the milestones from Indivior. Could you tell us what would be the next key triggers for these milestones? So in other words, should we expect any trigger preclinical and for the clinical stage, anything after completion of phase one? The second question relates to Neurosterix. We see the losses of Neurosterix increasing on a quarterly basis, quarter on quarter, which is not unusual considering the phasing of the R&D expense at Neurosterix. What would be the cash autonomy for Neurosterix considering the $63 million they have got on inception? Thank you.

[Tim Dyer, CEO at Addex Therapeutics]

Thanks for the questions. So starting off with Indivior, so we're not at liberty to disclose the details around the milestones. What I can say is they are pre-specified. There are clinical milestones, and there are commercial milestones in the 330. What I have indicated in the past is they are roughly 50/50 between clinical and commercial milestones. Now, on to the second question for Neurosterix. So as you rightly point out, Neurosterix is capitalized with $63 million in financing. You correctly point out that we are recognizing under the accounting rules our share of their net loss. Neurosterix is moving forward a portfolio of very exciting programs, and its cash burn is ramping up as those programs move forward into, well, later stages of preclinical development and then into the clinic. And as I've indicated, the M4 positive allosteric modulator program has started IND-enabling studies.

[Tim Dyer, CEO at Addex Therapeutics]

Fingers crossed, we will be filing an IND and moving that program into the clinic in the coming 12 months. Now, the cash autonomy of Neurosterix, Addex is a passive shareholder, and therefore Addex is not at liberty to disclose information about or details about the financials of the private entity Neurosterix.

[Laurent Flammer, Analyst at Zürcher Kantonalbank]

If I may, maybe a related question. Do you see a risk for Addex to be diluted over the coming three, four years in Neurosterix?

[Tim Dyer, CEO at Addex Therapeutics]

Do I see Addex being diluted? Well, clearly, as Neurosterix moves its programs forward into later stage clinical development, should it need to raise additional capital, then as a private entity, Addex would be free to participate in any capital increase as it felt fit, and if it decided not to participate, then it would clearly be diluted, but with CHF 63 million on the balance sheet of Neurosterix, I don't see Addex being subjected to a dilution risk in the near future.

[Laurent Flammer, Analyst at Zürcher Kantonalbank]

Thank you.

[Operator]

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad. Alternatively, you can submit your questions via the webcast. Dear speakers, we will just give a moment to our participants to press star 11 or just write down any questions. Just give us a moment. Thank you. Thank you, ladies and gentlemen. This brings the main part of our conference to a close, and I would now like to hand back to Tim Dyer for closing remarks.

[Tim Dyer, CEO at Addex Therapeutics]

Thank you, everyone, for attending our third quarter 2024 conference call, and we look forward to speaking to you all again soon.

[Operator]

That does conclude our conference for today. Thank you for participating. You are now all disconnected.

Participants

Executives

• Tim Dyer, CEO
• Mikhail Kalinichev, Head of Translational Science

Analysts

• Laurent Flammer, Analyst at Zürcher Kantonalbank