Addex Therapeutics Q1 2024 Earnings Call Transcript

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Provided by Quartr
June 6, 2024

There are 4 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the Adex Therapeutics First Quarter 20 24 Financial Results and Corporate Update Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be the question and answer session. Alternatively, you can submit your questions via the webcast.

Operator

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tim Dyer. Please go ahead.

Speaker 1

Hello, everyone. I'd like to thank you all for attending our Q1 2024 Financial Results conference call. I am here with Misha Kalynichev, our Head of Translational Science, who will provide an update on our R and 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.

Speaker 1

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 some of our clinical and preclinical programs. I will then speak about the recent launch of Neurasterix before reviewing the Q1 2024 full year financial results. Following that, we will open the call for Q and A.

Speaker 1

We've made great progress in our GABAA, the positive allosterate modulator program, which is funded by our partner, Indivior, and are on track for Indivior to select a drug candidate for advancing into IND enabling studies at the end of this month. As a reminder, under the agreement with Indivior, we have the right to select our own drug candidate after they have selected their candidate and to develop it in 8 reserve disease areas where INDIVIO is precluded from developing their candidate. We have selected chronic cough and expect to complete preclinical characterization in the second half of 2024. We launched Neurosterics with a Series A financing round of $63,000,000 led by Percepta Advisors. This is an innovative financing transaction that provides us with the resources needed to advance our preclinical portfolio without diluting our shareholders' interest in our clinical stage asset and partner programs.

Speaker 1

As part of the transaction, we received CHF5 1,000,000 and a 20% equity interest in Neurosterics, securing the balance sheet and retaining significant upside in the programs for our shareholders. I will speak more about this innovative financing transaction later in the presentation. Our partner, Janssen, completed the Phase II epilepsy study evaluating adjunctive ADX-seventy one-fourteen-nine administration in patients with focal onset seizures with suboptimal response to levetiracetam or riviteracetam. We reported top line data in May and unfortunately the study did not achieve statistical significance for the primary endpoint of time for patients to reach baseline seizure count when ADX-seven thousand one hundred and fourteen or nine was added to standard of care. We expect the full data set from the study in the second half of this year and we'll work with our partners to determine next steps for the program.

Speaker 1

Now for a quick review of our pipeline. As mentioned, 71,149 has reported top line data, and we are expecting full data set in the second half of this year. We continue to believe in dipoglarone and executing our plans to commence development in both dyskinesia, so you're with Parkinson's disease as well as preparing DIPICRON for a Phase 2 proof of concept study in post stroke recovery. As mentioned, our GABOBE PAM collaboration is coming to the end of the discovery phase with drug candidates on track to start IND enabling studies later this year. Indivior is executing the substance use disorder program, and we are preparing our candidate for development in chronic cough.

Speaker 1

Now I will hand over to Misha, who will give you some more details about our exciting portfolio. Thanks, Tim. Hello, everyone.

Speaker 2

I will start by speaking about depragulant and our plans for development in brain injury recovery. Following termination of the development of depragulant in PD LIT, we embarked on a detailed evaluation of a number of potential indications of interest for future development, including substance use disorder, migraine and other forms of pain. We have completed this exercise and have identified brain injury recovery as an interesting indication for the future development of teprabenorant. We believe the differentiated profile of teprabenorant makes it particularly suitable for enhancing the impact of rehabilitation in traumatic brain injury and stroke patients. There is a large unmet medical need in post stroke recovery and rehabilitation.

Speaker 2

Stroke is among leading causes of chronic often lifelong disability as it leads to motor sensory cognitive impairment and multiple comorbidities. There are over 100,000,000 stroke survivors worldwide and the number is growing at the annual rate of 12,000,000. A variety of rehabilitation therapies are used with post stroke patients, but the recovery is slow and often inadequate. There is an urgent need for pharmacological agents that can facilitate the recovery stimulated by rehabilitation therapies. Amplify receptor is a suitable target to address post stroke recovery as it is densely expressed in the brain, involved in neuroplasticity and modulate excitatory inhibitor equilibrium.

Speaker 2

In fact, activation of AMGARA5 has been observed in a range of neurological disorders, including stroke, where it plays a role in so called maladaptive rewiring of the brain following stroke. Inhibition of MGD5, on the other hand, can facilitate adaptive rewiring of the brain, promoting neuroplasticity and creating of new functional pathways, moving the neural network towards a pre lesion state. Exciting new evidence recently published in the journal BRAIN suggests that the negative allosteric modulator of mGlor5, MTEP administered daily IFRS following stroke results in a sustained and growing improvement in sensory motor function in comparison to vehicle treatment. Similar improvement in sensory motor function was observed in animals treated daily with our Mgraf V non depregnant. MRI imaging of the resting state functional connectivity in post stroke rodents shows that daily administration of MTEP also stimulates intra and interhemispheric connectivity in the brain disrupted by stroke.

Speaker 2

It's important to note that improvement in brain connectivity after stroke is known to correlate with functional recovery and is observed across species. The pravaglutide is ideally suited to be used in tandem with rehabilitation therapies in post stroke patients as it has a fast onset of action and short half life. It has shown good tolerability in healthy subjects and in Parkinsonian patients showing only mild to moderate CNS related adverse effects. We have a drug product ready and a strong patent position and believe diprogrone can become a 1st in class drug to facilitate post stroke recovery. We can also speculate that diprogrone mediated adaptive rewiring and facilitation of recovery following brain damage can also be seen in traumatic brain injury patients.

Speaker 2

Let me now switch to GABAA B Positive Ulcerate Modulator Preclinical Program, which is partners with Indivior. The aim of this collaboration is to deliver a new treatment for substance use disorders. Indivior is supporting the research at ADEX and have recently committed an additional CHF2.7 million funding for us to complete clinical candidate selection activities, in addition to CHF13.8 million total funding so far.

Speaker 1

As a

Speaker 2

reminder, GABAA B receptor activation has been clinically validated in a number of disease areas including using baclofen, a GABAA B autosteric 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 ulcerative modulators and their differentiated pharmacology, having the efficacy of Baclofen, but longer half life and improved side effect profile.

Speaker 2

We are well on our way to meeting this objective with multiple novel drug candidates, rapidly advancing through candidate selection phase with the aim to nominate drug candidates ready to enter IND enabling studies in H2 2024. As part of our agreement with Indivior, we have the right to select drug candidates from the funded research activities for our own independent Gavavipam program. We have selected to focus our independent program on COF and therefore I will present this exciting opportunity. There is a strong rationale for developing wpam for chronic cough. Chronic cough is a persistent cough that lasts for more than 8 weeks and can be caused by a variety of factors, including respiratory infections, asthma, allergies and acid reflux, but also possibly by an overactive cough reflex.

Speaker 2

There is a large unmet medical need in novel anti chewed drugs as current standards of care are ineffective in 30% of patients or only moderately effective in up to 60% of patients. In addition, the current treatments carry risks of serious side effects. On the next slide, we show that cabavipans are likely to have a superior tolerability profile in comparison to the current standard of care and showed no taste related side effects as seen with a newly approved P2X3 inhibitor gefapixant. Support for using gabavipam in treatment of chronic cough comes from the clinical evidence that bacofen, a GABOB agonist, is used off label in cough patients and from anatomical evidence that GABOB receptors are strongly expressed in airways and in the neuronal pathway regulating coughs. Therefore, we believe that GABA B PAMs could offer superior efficacy in coughs patients.

Speaker 2

Thus, we believe that GABA B PAMs could be an innovative new treatment of chronic cough administered once daily via oral dosing and offering improved efficacy and tolerability with fewer nonrespondent patients suitable for chronic dosing, therefore significantly improving patients' quality of life. We are working with multiple compounds progressing in late clinical candidate selection phase and we expect to move into IND enabling studies in H2 2024 in parallel to delivering compounds for our partner Indivior. This concludes our prepared remarks on the progress of our R and D programs. Now I hand it back to Tim.

Speaker 1

Thanks, Misha. Now before I move on to the financials, I would like to spend a few moments to speak about the Neuasterix transaction. Due to the excellent progress made by our R and D team in advancing our unpartnered preclinical portfolio. Our M4 PAM, our mGLA7 NAM and mGLA2 NAM programs reached a stage of development where they now need significant amounts of financing to progress into the clinic. Unfortunately, given the low market capitalization of Addex, raising the amount of capital needed would have been extremely challenging and highly diluted to our shareholders.

Speaker 1

So we decided to spin out these programs and our platform into a new private company and raise the necessary capital directly into the new private company. We believe this is an excellent transaction for AddEX shareholders as it has secured $5,000,000 for AddEX and removed the financing overhang on the AddEX stock. We have retained 20% interest in Neurosterics, so we can benefit from the upside from advancing the programs into the clinic, which is now secured by the $63,000,000 capital from a high quality investor syndicate led by Percepta Advisors. As part of the transaction, we have divested our allosteric modulator technology platform, including the majority of our staff, however we have retained however we have entered into a service agreement with NeuroStarx to ensure that we can access the skills needed to execute on our business strategy. Now for the review of Q1, 2024 financials.

Speaker 1

Following NeuroStarx transaction, we were required under the IFRS standards to identify continuing operations related to the retained programs and discontinued operations related to the operations and programs that were sold to Neristerix. All income and expense items related to discontinuing operations have been reclassed under a specific line of the comprehensive loss called net loss from discontinued operations. Starting with the income statement, which relates to continuing operations, we recognized €200,000 of income in Q1 2024 compared to €500,000 in Q1 2023. The primary source of revenue is research funding from our collaboration with Indivior, which is recognized as the associated research costs are incurred. Continuing R and D expenses primarily relate to our GABABPAM program and remain stable at €300,000 in Q1 compared to Q1 2023.

Speaker 1

Continuing operations in G and A expenses were $800,000 compared to $600,000 in Q1 2023. The increase of $200,000 is primarily due to legal fees related to the Neuromancerics transaction. The finance results in Q1 2024 is primarily related to foreign exchange gains on cash held in U. S. Dollars and to a lesser extent to interest income of the U.

Speaker 1

S. Dollar cash deposits. Now to the balance sheet. Our assets are primarily held in cash, and we completed Q1 with CHF 1,600,000 of cash held in Swiss francs and U. S.

Speaker 1

Dollars. Gross proceeds of €5,000,000 from the NeuroStarix transaction have been received in April 2024, so are not included in this figure. Other current assets amount of €800,000 primarily related to prepaid retirement benefits annually paid at the beginning of the year. Due to the NeuroStarix transaction, we expect €600,000 of this amount to be reimbursed in Q2 of this year. Current liabilities of £3,300,000 as of March 31, 2024, increased by £400,000 compared to a like period a like date previous year and primarily relate to CRO related accruals and payables.

Speaker 1

Non current liabilities of €100,000 decreased by €500,000 compared to December 31, 20 23, primarily due to the staff transfer to Neuro Asterix. Now to summarize, I hope you have understood how transformative the Neuro Asterix deal is for Adex. We have strengthened the balance sheet and secured the financing to execute on the development of our preclinical portfolio, including the M4 PAM program for schizophrenia into the clinic and our partnership with Indivior is on track to deliver clinical candidates ready to find DNA going studies by the end of June of this year. Diproglorn is ready to restart clinical development and the subject of a number of partnering discussions. Our independent GABAA B COF program is also on track to start IND enabling studies.

Speaker 1

We're validating partnerships with industry, supportive investors and strong balance sheet, which puts us on a solid position to deliver on our strategic objectives. This concludes the presentation and we will now open the call for questions. Thank

Operator

you. And now we're going to take our first question. And it comes from the line of Leonilde Delgado from Baader Helvea. Your line is open. Please ask your question.

Speaker 3

Hi, good afternoon. Thanks for taking my questions. A couple of questions from my side. In addition to the €35,000,000 upfront payment, should we expect more upside for Adex when it comes to Neostatics? And so when would AddEX be able to capitalize on 30% equity interest?

Speaker 3

And so how big would the opportunity be?

Speaker 1

Okay. Thanks for the question. Yes. So the $5,000,000 yes, is being received in it's been received in Q2. Addix has retained its 20% interest in NeuroStarx.

Speaker 1

NeuroStarx has got $60,000,000 on its balance sheet and the post money valuation of Neurosterics is basically just south of $100,000,000 So the value at the date of the transaction of the 20% is about $20,000,000 Now regarding upside, there was a sale of the carved out entity, and there are no milestones and royalties on any of the products that were divested into NeuroStarx. So the upside for Adex is in its equity interest in NeuroStarx. And I mean, I'm there's a number of recent deals around the Muscarinic M4. For example, Amphi bought Cerrobel for 8,700,000,000 dollars BMS bought Karuna at the end of last year for 14,000,000,000 I think the most relevant comparator is that Cerevel had an M4 PAM. The M4 PAM had just started Phase II.

Speaker 1

And what's interesting for Neurosterics is the cash that's on the Neurosterics balance sheet finances the M4 PAM all the way through to a stage very close to where Ceribell was with their M4 PAM program. So I wouldn't want to speculate about the value upside, but I think you can make your own conclusions that there is significant upside for AdX in that 20% of Neuro Asterix because Neuro Asterix is well funded and financed to meet some very significant value inflection points, being the advancing of 1 or 2 programs into the clinic and through Phase I. I hope that answers your questions.

Speaker 3

Answers, thanks a lot. Maybe one final question. On the epilepsy program, when do you think Janssen will communicate plans for the ADX-seventy one-one hundred and forty nine?

Speaker 1

Yes. So as mentioned, we've seen the top line results. Unfortunately, the primary endpoint was not met. We are now doing a full analysis or Janssen are doing a full analysis of the full data set. And we are expecting to receive the full data set and the full analysis and have discussions with them about it.

Speaker 1

I mean, we're talking about H2. We're very hopeful come earlier in H2. Given the time lines to do this, it should come in Q3, we would have thought. And then we will work with Janssen to work out how best to move the program forward. Now clearly, one option, which is reasonably possible is that the collaboration gets terminated and AddEX receives back the molecule and all the backup molecules as well.

Speaker 1

So this is one of the, I would say, reasonably probable outcome once the full data set has been reviewed. But again, until we see the full data set, we can't really fully understand whether there is a way forward in epilepsy or not. Okay. Thank you.

Operator

Thank 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.

Speaker 1

Well, thank you very much everyone for attending the Q1 2024 conference call. And we look forward to speaking to you again soon. Have a very nice day.

Operator

That does conclude our conference for today. Thank you for your participation. You may now all disconnect. Have a nice day.

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Key Takeaways

  • Addex’s collaboration with Indivior on a GABAB positive allosteric modulator is completing its discovery phase, with Indivior set to pick a candidate for IND‐enabling studies by the end of June and Addex’s own chronic cough candidate on track for preclinical wrap‐up in H2 2024.
  • The spin-out of preclinical programs into Neurosterics raised $63 million in Series A financing led by Percepta, delivering CHF 5 million to Addex and a 20% equity stake that secures future upside without further shareholder dilution.
  • The Phase II epilepsy study of ADX-7149 as adjunctive therapy did not meet its primary endpoint; full data are expected in H2 2024 and Addex will work with Janssen to determine next steps, which may include reacquisition of the program.
  • Addex has reprioritized teprabenorant (“diprogrone”) towards post-stroke recovery based on preclinical mGluR5 negative allosteric modulation data showing improved neuroplasticity and functional connectivity in animal models.
  • In Q1 2024, Addex reported €0.2 million in revenue, R&D expenses of €0.3 million and G&A of €0.8 million, and closed the quarter with approximately CHF 16 million in cash (excluding CHF 5 million from the Neurosterics deal), underpinning its near-term pipeline plans.
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