Addex Therapeutics Ltd (ADXN) 2023 Q4 法說會逐字稿

Hello, everyone. I'd like to thank you all for attending our 2023 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. Throw 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 disclaimer, 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 the 2023 activities and recent achievements. Before reviewing our pipeline, I will then hand over to Mikhail, who will review our more detail some of the clinical and preclinical programs. I will then speak about the recent launch of Neurosterix. Before reviewing our 2023 full year financial results. Following that, we will open the call for Q&A.

To start with the highlights. Our partner Janssen has completed the Phase 2 epilepsy clinical study, and we are now expecting to report data from the study by mid May this year. I'd like to remind you that an independent interim review committee established by Janssen to review the unblinded data from Part one of cohort one made its recommendation to continue the study this recommendation.

And the decision of Janssen to continue the study is very encouraging and suggests ADX71149 is safe and well tolerated and may be having a positive impact on this patient population. We continue to believe there is value in Dipraglurant and have substantially completed our evaluation of future development for Dyskinesia in Parkinson’s Disease.

We have worked with experts on a new trial design, which we believe will overcome the recruitment challenges we encountered in the past. However, our preferred strategy for this indication is to secure a partner prior to restarting development. We've also identified post-stroke recovery as an interesting area for future development Dipraglurant and are currently profiling Dipraglurant in preclinical models of post-stroke recovery.

Furthermore, preclinical data was recently published in the journal brain, which strongly supports the rationale for inhibition of mGlu5 receptor as a treatment for post-stroke recovery we are pursuing discussions with potential funding sources, including industry partners for this interesting potential future development path Dipraglurant.

In 2023, we announced the extension of our GABAB PAM collaboration through until June 2024 with CHF2.7 million of additional research funding. With this additional R&D funding, we have made excellent progress and advance multiple drug candidates through clinical candidate selection phase. As a reminder, Indivior's primary interest is in substance use disorder.

And under the agreement, we have retained the rights to select drug candidates for development and certain exclusive reserved indication. We are focusing our independent program on cough. During 2023 we demonstrated robust efficacy with multiple drug candidates in preclinical models, of substance use disorder and cough, and are therefore well on track to deliver drug candidates Indivior and for our own independent cough program.

We expect Indivior and ourselves to select compounds to advance into IND-enabling studies in the second half of 2024. We led a consultium that was awarded a EUR4 million grant from the Eurostars grant program to advance our mGlu2 Negative Allosteric Modulator program through to delivery of clinical candidates. This is an exciting program for mild neurocognitive disorders that is currently in lead optimization.

Last but by no means least, we're very recently announced the launch of Neurosterix with a series A financing round of $63 million led by Perceptive Advisors. This is an innovative financing transaction that provides us with the resources needed to advance our preclinical portfolio without diluting our shareholders' interests in our clinical-stage assets and partnered programs. I will speak more about this innovative financing transaction later in the presentation.

Now for a quick review of our pipeline. As mentioned, we are excited to see the Phase 2 data from our epilepsy program, which is being executed by Janssen. We continue to believe in Dipraglurant and are executing our plans to recommence development in both Dyskinesia in Parkinson’s Disease as well as preparing Dipraglurant for a Phase 2 proof-of-concept study in post-stroke recovery.

Our GABAB PAM collaboration is coming to the end of the discovery phase with candidates on track to start IND-enabling studies later this year. Indivior is executing the substance use Dipraglurant and we are preparing for candidates for development in cough.

Now I will hand over to Mikhail, who will give you more details about our exciting portfolio.

Thanks, Tim, and hello, everyone. I will start by speaking about our Phase 2 epilepsy study with ADX71149, which has been completed recently by Janssen. Epilepsy is a large multibillion-dollar market opportunity where despite several available treatment options, many patients are still in need of improved therapies to treat the seizures.

As a reminder, ADX71149 is a metabotropic glutamate receptor sub-type 2 or mGlu2 Positive Allosteric Modulator discovered in partnership with Janssen using Addex's proprietary allosteric modulation platform. ADX71149 has demonstrated both stand-alone efficacy and a strong synergistic effect in combination with inhibition of SV2A such as Keppra and Briviact.

ADX71149 has also been thoroughly profiled in preclinical and clinical studies by Janssen, demonstrating its good safety and tolerability profile in healthy volunteers and patients. Janssen responsible for development have just completed both the Phase 2 study and an open-label extension study in epilepsy patients. Results are expected by mid May of this year.

We have significant economics in our deal with Janssen with pre-launch milestones of EUR109 million, low double digit royalties on net sales and Janssen is responsible for all development costs. To illustrate the synergistic effect seen with the combination of ADX71149 and levetiracetam, same active molecule in Keppra.

Here are the data obtained in this six cycles of seizure models widely recognized as having high translational value to characterize the efficacy of anti-epilepsy drugs. As a reminder, ADX71149 given the low in this model produces a robust protection against 6 hertz induced seizures with an ED50 of approximately 20 mgs per kg.

In combination studies with varying doses of levetiracetam as fixed dose of ADX71149, increase the potency of levetiracetam leading to approximately 35-fold shift in it's ED50 values. Conversely, using a fixed dose of levetiracetam with varying doses of ADX71149, it increased the potency of ADX71149, leading to approximately 14-fold shift in it's ED50, suggesting a positive pharmacodynamic relationship or strong synergistic effect for the two molecules when given the combination.

This extraordinary effect of a combination of an mGlu2 PAM with an SV2A antagonist has been patented, offering a strong protection for this program until 2035 without additional extension. This is the Phase 2 study design. The study is a double-blind, placebo-controlled proof-of-concept study enrolling patients with focal onset seizures.

We'll have suboptimal response to treatment with levetiracetam, Keppra or brivaracetam, Briviact in this Phase 2 study design patients established in 28 day seizure count over a 56 day baseline period, prior to being randomized to receive ADX71149 or matching placebo. The primary endpoint in this time taken to return to their monthly baseline seizure counts.

The study has two parts, Part 1 being the four week acute efficacy phase and Part 2 being an eight week maintenance phase of efficacy phase, Part 2 include patients who did not reach their baseline seizure time during Part 1 on study and continue on their randomize drug or placebo, an open-label extension study was ongoing in parallel offering all patients the opportunity to get treated with ADX71149 in combination with levetiracetam or brivaracetam.

As previously announced last year, an independent interim review committee convened by our collaboration partner, recommended to continue the study following review of unblinded data from Part 1 of patient Cohort 1. This was encouraging news suggesting that ADX71149 is safe and well tolerated and potentially offering benefits to epilepsy patients.

We look forward to sharing the top line data, of course, for Cohorts 1 and 2 in mid-May this year. Following termination of the development of the Dipraglurant in PD-LID, we embarked on a detailed evaluation of a number of potential indications of interest for future development, including substance abuse disorder, migraine and other forms of pain.

We have completed this exercise and have identified post-stroke recovery as an interesting indication for the future development of the Dipraglurant, what we believe the differentiated profile of Dipraglurant makes it particularly suitable for post-stroke recovery. There is a large unmet medical need in post-stroke recovery and rehabilitation.

Stroke is among the leading causes of chronic, often lifelong disability, as it leads to motor sensory cognitive impairment and multiple comorbidities. They are over 100 million stroke survivors worldwide, and the number is growing at the annual rate of 12 million. A variety of rehabilitation therapies are used with post- stroke patients, but the recovery is slower and often inadequate.

There is an urgent need for pharmacological agents that can facilitate the recovery stimulated by rehabilitation therapist. mGlu5 receptor is a suitable target to address post-stroke recovery, as it is densely expressed in the brain involving neuroplasticity involved in and modulates excitatory inhibitor equilibrium. In fact, activation of mGlu5 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 mGlu5 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-lesions state. Exciting new evidence recently published in the journal brain suggests that negative allosteric modulator of mGlu5 untapped administered daily rates 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 with our mGlu5 NAM Dipraglurant. MRI imaging of the resting state functional connectivity in post-stroke broadens shows that daily administration of MTEP also stimulated intra and inter hemispheric connectivity in the brain disrupted by stroke.

It is important to note that improvement in brain connectivity after stroke is known to correlate functional recovery is observed across species. It probably around 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 Dipraglurant can become a first in class drug to facilitate our stroke recovery. We can also speculate that the prevalent mediated adaptive rewiring and facilitation of recovery following brain damage can also be seen in traumatic brain injury patients.

Let me now switch to cover the positive allosteric modulator preclinical program, which is partnered with Indivior. The aim of this collaboration is to deliver a new treatment for substance use disorder. Indivior is supporting the research at others and has 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. As a reminder, GABAB receptor activation has been clinically validated in a number of disease areas using Buckwalter. At GABAB orthosteric agonist, Baclofen is FDA approved for treatment of orthosteric and is widely used off-label to treat numerous diseases, including substance use disorder.

However, Baclofen has a short half-life and comes to the significant side effects hampering its wider use. Thus, there is a strong need for a better box office. We believe this can be achieved with positive allosteric modulators and their differentiated pharmacology, having the efficacy of Baclofen, but longer half-life, an improved side-effect profile.

We are well on our way to meeting this objective with multiple novel drug candidates rapidly advance through clinical candidate selection phase. They aim to nominate drug candidate 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 cover the PAM program.

We have selected to focus our independent program on calls, and therefore, I will present this exciting opportunity. There is a strong rationale for developing GABAB PAMs for chronic cough. Chronic cough is a persistent cough that lasts for 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 an overactive cover reflex.

There is a large unmet medical need in novel anti-tusive drugs has current standards of care are ineffective in 30% of patients and 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 GABAG PAMs are likely to have a superior tolerability profile in comparison to the current standards of care and show no case related side effects as seen with a newly approved P2X3 inhibitor. Support for using GABAB PAMs in treatment of chronic cough comes from the clinical evidence that baclofen GABAB agonist is used off-label in cough patients.

And from anatomical evidence of GABAB receptors are strongly expressing their ways in the neuronal pathways regulating costs. Therefore, we believe that GABAB PAMs could offer superior efficacy in cough patients. Therefore, we believe that GABAB PAMs could be an innovative new treatment of chronic cough administered once daily via oral dosing and offering improved efficacy and tolerability with fewer non-responder 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.

Now I hand it over back to Tim.

Thanks, Mikhail. Now before I move on to the financials, I would like to spend a few moments to speak about the Neurosterix transaction. Due to the excellent progress made by our R&D team and advancing our un-partnered preclinical portfolio. Our M4 PAM mGlu7 NAM, and mGlu2 NAM programs reached a stage of development where they now need significant amounts 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 dilutive for our shareholders. So we decided to spin out these programs and our platform into a new private company and raise the necessary capital into the new private entity.

We believe this is an excellent transaction for Addex shareholders, as it has secured CHF5 million for Addex and remove the financing overhang on the Addex stock. We have retained a 20% interest in Neurosterix, so we can benefit from the upside from advancing the programs into the clinic, which is now secured by the $63 million capital from a high quality investor syndicate led by Perceptive Advisors.

As part of the transaction, we have divested our anesthetic modulation technology platform, including the majority of our staff and significantly reduced our cash burn going forward. However, we have entered into a service agreement with Neurosterix to ensure that we can access the skills needed to execute on our business strategy.

Now for a review of our 2023 financial results, starting with the income statement, we recognized CHF1.6 million of income in 2023 compared to CHF1.4 million in 2022. Primary source of revenues research funding from our collaboration with individuals, which is recognized as years associated research costs are incurred.

In terms of expenses, R&D expenses were CHF7 million in 2023 compared to CHF14.7 million in 2022, the decrease of CHF7.7 million, primarily due to the termination of debt procurement development in dyskinesia associated with Parkinson's disease and the disbanding of our US clinical team in 2022.

G&A expenses were CHF5 million in 2023 compared to CHF7.3 million in 2022. The decrease of CHF2.3 million is primarily due to reduced share-based service costs and decreased D&O insurance costs the finance results. This primarily relates to foreign exchange losses on cash held in US dollars, partially offset by interest income on US cash deposits, which we hold to hedge against near term US dollar denominated costs.

Now to the balance sheet, our assets are primarily held in cash and we completed 2023 with CHF3.9 million of cash held in Swiss francs and US dollars. Other current assets amounted to CHF0.4 million, primarily related to R&D, prepayments and trade receivables that mainly relate to our agreement with Indivior current liabilities of CHF2.9 million as at the end of December 2023 decreased by CHF0.4 million compared to the same time in 2022 and primarily relate to R&D payables and accruals.

Noncurrent liabilities of CHF0.6 million increase by CHF0.5 million compared to December 31, 2022 primary rate to retirement benefit obligations. Now to the cash flow statement, we started the year with CHF7 million. We raised net proceeds of CHF4.5 million in an equity offering executed in April 2023. We received CHF1.2 million from the sale of treasury shares and received CHF1.9 million research funding from Indivior. We spent CHF9.9 million on our operations. We have an unrealized gain of CHF0.4 million on ForEx and US dollar cash balances are converted to Swiss francs, resulting in CHF3.9 million of cash at the end of the year.

Now to summarize, I hope you have understood how transformative the Neurosterix daily trading. We've strengthened the balance sheet and secured the financing to execute on the development of our preclinical portfolio, including advancing the very exciting M4 PAM program for schizophrenia and the clinic, I guess from the partnership is poised to deliver Phase 2 data in epilepsy by mid-May this year, which will be an important value inflection point for the program.

And the company and our partnership with Indivior is on track to deliver clinical candidates ready for IND-enabling studies by the end of June. As this year, Dipraglurant is ready to restart clinical development on the subject of a number of partnering discussions are independent GABAB PAM cost program is on track to file IND-enabling studies. Also, we are validating partnerships with industry supportive investors and strong balance sheet 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.

(Operator Instructions)

Joanne Lee, Maxim Group.

Hi, this is Joanne speaking. Thanks for taking the question. And firstly, congratulations on the Neurosterix deal. So now that, you secured some funding through that deal, what are the upcoming actions specifically, which program. Are you prioritizing for advancement?

Yeah. So we continue to execute on the Indivior collaboration. So our primary focus is to deliver the clinical candidate. So that Indivior can make their selection by the end of June, because under the deal we have the right to then select second choice. They have third choice. We have fourth choice. So that's really our priority because once Indivior are able to select, it means we can also select. And that will then give us the candidate that we can advance into the IND-enabling studies for the cost program.

Got you. So I'm getting that the priority would be the GABAB program and Indivior. So I'm aware that you guys have been releasing some positive preclinical data and are currently in the candidate selection phase. I wanted to ask what specific criteria are you considering when evaluating potential candidates for this program?

And as a follow-up additionally, regarding the collaboration with Indivior is currently set to continuing to the end of June, are you considering independently moving the assay into the clinic? Or are those discussions underway to extend that collaboration further? Thank you.

So in addition to the gap, but the program, we also have typically we've done a lot of work to design a new study in PD-LID. And we've also and we are currently completing preclinical work in the stroke recovery area. Now Addex has continued to dialogue with potential partners, and we continue to have discussions not only around Dipraglurant in PD-LID, but different launch and post-stroke recovery.

And but also we have started to identify some potential partners. And for the GABAB, the cost program. However, you can imagine we are not going to -- we are not free to disclose much information about the GABAB candidates and until Indivior has exercised their selection because at the moment, while we have a good idea of which candidates they will select and which candidates we will select until they have formally selected and they have first choice. So they could select any of the candidates, which means we are not at liberty to disclose any information about the candidates.

And to your question about, you know, how we are characterizing and what the target product profile would look like of the different candidates. And we know that's a confidential information and we're not at liberty to disclose it. So I'm sorry about that.

Got a lot. That's very helpful. I'm really exciting stuff ahead, and thanks again for taking the questions.

Raghuram Selvaraju, H.C. Wainwright & Co.

Thanks very much for taking my questions and congratulations on all the progress, the Neurosterix transaction in particular, just wanted to ask first of all, with respect to the M4 program can you give us a sense, Tim, of what some of the recent precedent transactions or comparators might be in this space and what implications that could have for Neurosterix as well as Addex stake in Neurosterix going forward, especially if you continue to have development success with work regarding that specific target?

Yes, hello, Ram. Thank you very much for the question. And yes, the back end of last year, [Sarah though], which is leading the field in muscarinic M4 positive allosteric modulators with them rapidly and they're in Phase 2, they were purchased for a bit a little south of $9 billion by ADX. And so that's, a very nice comparator where we believe our program is about 2.5 years behind this.

And clearly and that M&A activity and I would say sharpen the interest of perceptive and the investor syndicate that let's put the $63 million behind Neurosterix and then coming pretty quickly after the center of our M&A BMS purchase car and Corona, which has filed for registration with a product called KarXT. Now KarXT is in M4, M1 preferring agonist.

And so again, much of the efficacy that's been seen in the Phase 3 program of KarXT is coming from the in schizophrenia, I should say is coming from its M4 agonist activity, which is a very strong validation, again of the M4 PAM approach in schizophrenia. Now again, we are some way off from filing for registration. However, we have CHF60 million on the balance sheet of nearest direct. We are owning 20% of it and so you can imagine we have got the capital to advance the M4 PAM program and through Phase 1 development.

And also, can you just clarify two other points? The first is with respect to the other programs that Neurosterix plans to advance, maybe give us a flavor of what the target indications might be beyond schizophrenia or adjunctive therapy in schizophrenia, which probably would be the most appropriate application of the M4 pathway modulator. As well as if there are likely to be any future targets that Addex could conceivably retain the right to pursue using the original Addex technology platform or if these are all going to ultimately be taken forward by Neurosterix? Thank you.

Yeah, the technology platform and all the preclinical programs except for the GABAB PAM are all now in Neurosterix. And therefore, Addex interest in these is through our equity interest and which we plan to protect going forward. So the other targets which are being financed the mGlu7. And here, this is the negative allosteric modulator program for stress related disorders.

And there are a number of very interesting and indications in neuropsychiatry, but we're not at liberty to disclose those. And then there's the mGlu2 negative modulator program and which has gone across to Neurosterix along with the Eurostar grant that was secured last year. So this has in addition to the of course, some of the CHF60 million that's sitting in Neurosterix has the Eurostar consortium grant, which is driving that program rapidly forward with the consortium to the clinical candidate selection, but currently in lead optimization.

And again, this program is cognition and cognition is a medical need across a number of neurodegenerative disorders, sorry. And and again, we're not at liberty to disclose the details of some of those indications that we'll be going after. And there is another program on an undisclosed neurological target. And we certainly have the plans within Neurosterix too, definitely leverage the platform. But again, I'm not at liberty to disclose details of those activities at current time.

Thank you very much. And just one quick housekeeping item, if I may. Can you tell us whether the equity stake that Addex has in Neurosterix, is it any way preferred and or if Addex might in the future, have the ability or the option or at least would not be restricted in any way from investing in Neurosterix and future funding rounds in order to maintain that 20% equity holding? Thank you.

Addex has the same rights as the investors and Addex has the right to participate pro rata in all future financing. And our intention is to protect our 20% interest in Neurosterix going forward. But as you can imagine -- so as you can imagine, with CHF60 million on its balance sheet, we don't expect to have to participate in a future fundraising for quite some time.

Great. Thank you.

(Operator Instructions)

Michael Okunewitch, Maxim Group.

Hey, there. Good morning or good afternoon, everyone. Thank you for taking my questions and congrats on all the progress this quarter. So I guess I'd like to ask just on the epilepsy program. Given that data is approaching, could you remind us of the criteria that the IRC were using to determine whether or not to proceed with that?

Yeah. So we haven't actually disclosed the criteria. However, there were some criteria. And so what we know today is that the independent review committee must have seen at least a signal in Cohort 1 for Part 1. So the first four week acute efficacy period in Cohort 1. So that was 60 patients after four weeks, we know that they must have seen at least the signal.

Otherwise they would not have recommended to continue. They also would not have seen any safety and tolerability issues. So those are the two things we know because we're not that -- we don't actually know what the criteria were, but we know that's the details that we know and that's what we're allowed to disclose. I'm sorry.

Thank you for that. And I would like are you at liberty to discuss any of the -- any more granularity on the pre-launch milestone structure for that program and in particular, if any, are attached to that Phase 2 data?

Right. So if you look through the previous disclosure, I mean, Addex received a milestone when J&J dosed first patient in Phase 1. We also received a milestone when J&J dosed the first patient in Phase 2, and we were also at liberty to disclose that the EUR1.9 million of milestones are all development and regulatory. So there's no sales milestones included in that amount.

So I think you can sort of work out. And if you look at the amount of the phase 1 and phase 2 milestones, you could probably work out when the next milestone is coming and you can probably work out, but it's pretty back-ended. So we're not relying on any cash inflows from this partnership finance Addex for some time.

All right. Thank you. And that actually leads into my last question, just more of a, I guess, modeling and financial angle question. I just wanted to see if you could help me understand what assumptions are going into your runway projection? And then how much of the previous burn rate was dedicated to staff and programs that are now being handled at Neurosterix?

Yeah, we have significantly removed the operating burn of Addex. So now what is not included in our guidance of into 2026 is the cash required to fund a clinical development of Dipraglurant, for example, and we have not included the costs required to develop the cost program. What we have included there is the costs of operating Addex.

And so operating being a public company operating in IR business development finance activity and some preclinical work and on the launch for the stroke indication and some clinical activities to prepare the development plans for Dipraglurant in stroke, adding this in the dyskinesia in Parkinson's and plus some money to finish off and the preparation and the CMC for the gap of the cost program.

All right. Thank you very much for taking my questions today. And once again, congrats on the fantastic progress.

Thank you.

And now we will proceed to any written questions. Just give us a moment a few questions from the webcast.

The first question comes from the line of Michael Hoffman and his question is how high the first stone payment is too big expected?

I'm sorry, but we're not at liberty to disclose that information. As I pointed out in the response to one of the previous questions. And that was a publicly disclosed Phase 1 milestone and a public disclosed Phase 2 start milestone. But we're not at liberty to guide on the next milestone I'm afraid.

We have another question from Michael Hoffman, what will be the forecasted expenses in 2024 do they dropped significant and it from which month?

Yes. So we're not disclosing the details of the forecast. And however, I mean, if you look at the expenses of 2023 and will be significantly reduced and because all the facilities all these the majority of the staff have moved to Neurosterix, and that is effective the March 1.

We have another question from Michael Hoffman, why no number can be named of these milestones payments there are for short contracts and the amount of written down. How much is the next milestone payments to be expected? I expect a clear number.

Well, you'll need to talk to J&J because J&J have not authorized us to give any granularity around the economics of the contract with them. We have a contract and we have confidentiality clauses in the contract and we respect the confidentiality that we've signed up to and I hope Mr. Hoffer can respect that position.

(Operator Instructions)

There are no further questions. I would now like to hand the conference over to Tim Dyer for any closing remarks.

Well, thank you, everyone, for attending our 2023 conference call and thank you very much for your questions and we look forward to speaking to you again soon. Have a very nice day.