Addex Therapeutics Ltd (ADXN) 2024 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Addex Therapeutics full-year 2024 financial results and corporate update conference call. (Operator Instructions) 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.

Thank you. Hello, everyone. I would like to thank you all for attending our 2024 full-year 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 mGluR5 negative allosteric modulator program for brain injury recovery and our GABAB positive allosteric modulator preclinical program for cough. I will then review our 2024 full-year financial results. Following that, we will open the call for Q&A.

In 2024, we launched Neurosterix with a USD65 million Series A financing led by Perceptive Advisors and secured financing for our platform and preclinical portfolio. As part of this transaction, we received CHF5 million in cash and a 20% equity interest in Neurosterix.

We have made excellent progress in our GABAB PAM 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 disorders and has started IND-enabling studies. We expect to be able to announce results from these studies soon.

Under the terms of the agreement, Addex is eligible for payment of up to USD330 million on successful achievement of prespecified regulatory, clinical and commercial milestones as well as tiered royalties on the level of net sales from high single digits up to low double digit. Also, under the terms of the agreement, we have the right to select compounds for development in a predefined list of reserved indications. We have selected a compound to advance our own independent GABAB PAM program for the treatment of chronic cough. We have substantially completed the preclinical profiling of our compound for chronic cough and are currently working to secure funding to advance this program into the IND-enabling studies. Misha will be sharing some of this data with you later in our presentation.

We have repositioned dipraglurant, our mGluR5 negative allosteric modulator for brain injury recovery and are currently completing negotiations to access intellectual property covering the use of mGluR5 inhibitors in this interesting therapeutic indication. Misha will also talk more about this exciting program later in the presentation.

Following the decision last year by our partner, Johnson & Johnson, to terminate development of ADX71149, we have regained the rights to this Phase II asset with a high-value data set and significant materials. We have completed the year with CHF3.3 million of cash, which provides us with the cash runway through mid-2026. I'd like to highlight that the cash burn has been significantly reduced following the Neurosterix spinout transaction. However, current cash does not fund the progression of our unpartnered programs into the clinic.

Now, on to the pipeline, we continue to believe in dipraglurant and executing our plans to reposition the development for brain injury recovery, as mentioned. And our partner, Indivior has selected a GABAB PAM drug candidate for development in substance use disorders and started IND-enabling studies. We're advancing an independent GABAB PAM program for chronic cough and expect to start IND-enabling studies this year, subject to securing financing. And 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.

Thanks, Tim. Hello, everyone. I will start by speaking about dipraglurant and our plans for development in brain injury recovery. Following termination of the development of dipraglurant in PD-LID, we embarked on a detailed evaluation of a number of potential indications of interest for future development. We have completed this exercise and have identified brain injury recovery as an interesting indication for the future development. We believe the differentiated profile of dipraglurant 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. 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 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 slow and often inadequate. There is an urgent need for pharmacological agents that can facilitate the recovery stimulated by rehabilitation therapies. mGluR5 receptor is a suitable target to address post-stroke recovery as it is densely expressed in the brain, involved in neuroplasticity and modulates excitatory inhibitor equilibrium.

In fact, activation of mGluR5 has been observed in a range of neurological disorders, including stroke, where it plays a role in maladaptive rewiring of the brain following stroke. Inhibition of mGluR5, 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 mGluR5 MTEP, administered daily in red 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 mGluR5 NAM dipraglurant.

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. It is important to note that improvement in brain connectivity after stroke is known to correlate with functional recovery and is observed across species.

Dipraglurant 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 post-stroke recovery. We can also speculate that dipraglurant mediated adaptive rewiring and facilitation of recovery following brain damage would also be seen in traumatic brain injury patients.

Let me now switch to our GABAB 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, GABAB receptor activation has been clinically validated in a number of disease areas using baclofen, a GABAB orthosteric agonist. Baclofen is an FDA-approved drug for treatment of spasticity and is widely used off-label to treat numerous diseases, including substance use disorders and others. 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 modulator approach and their differentiated pharmacology, having the efficacy of baclofen but longer half-life and improved side effect profile. Our partner, Indivior, has selected GABAB PAM drug candidate for development in substance use disorders and started IND-enabling studies.

As part of our agreement with Indivior, Addex has exercised its right to select a compound to advance its own independent GABAB program for the treatment of chronic cough. I will now 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 cough reflux.

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. In addition, the current treatments carry risks of serious side effects.

On the next slide, we show that GABAB 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 the newly approved P2X3 inhibitor, Gefapixant. Support for using GABAB PAM in treatment of chronic cough comes from the clinical evidence that Baclofen is used off-label in cough patients and from the anatomical evidence that GABAB receptors are strongly expressed in airways and in the neural pathway regulating cough. Therefore, we believe that GABAB PAMs could offer superior efficacy in cough patients.

The pre-ID 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. Our clinical candidate has demonstrated a consistent minimum effective dose of 1 mg per kg and ED50 of 6 mg 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 this year.

The next set of slides describes the in vivo proof-of-concept studies in models of cough. In the 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.

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 mg per kg. In contrast, baclofen suppressed respiratory rate, reduced body temperature by near 2 degrees Celsius and increased growth hormone concentration in plasma starting 3 mg 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 remained largely unchanged on the subchronic versus acute treatment regimens. In the model of ATP potentiated citric acid cough in guinea pig in a head-to-head comparison experiment, acutely administered compound A and the 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 1 mg per kg and good PK/PD. The compound showed a favorable developability profile in non-GLP tox studies performed in rats, dogs and nonhuman primates. We are on track to start IND-enabling studies this year.

This concludes our prepared remarks on the progress of our RNA programs. Now, I hand it back to Tim.

Thanks, Misha. 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 in advancing our unpartnered preclinical portfolio, our M4 PAM, mGluR7 NAM and mGluR2 negative allosteric modulator programs reached a stage of development where they needed 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 dilutive to our shareholders. 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 was -- has secured CHF5 million for Addex and removed 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 $65 million capital from a high-quality investor syndicate led by sector advisers. As part of the transaction, we have divested our allosteric modulator technology platform, including the majority of our staff. And we have entered into a service agreement with Neurosterix to ensure that we can access skills needed to execute on our business strategy.

Now, for a review of the 2024 financials, following the Neurosterix transaction, we were required under IFRS to identify continuing operations related to our retained business and discontinued operations related to the divested business sold to Neurosterix. All income and expense items related to the discontinuing operations have been reclassed under a specific line of the comprehensive loss called net profit or loss from discontinued operations.

Starting with the income statement, which related to continuing operations, we recognized CHF400,000 of income in 2024 compared to CHF1.6 million in 2023. The decrease is primarily due to the completion of the funded research phase of our collaboration with Indivior in June of 2024.

Continuing R&D expenses of CHF0.9 million (sic) [CHF0.8 million] primarily relate to our GABAB PAM program and decreased by CHF0.2 million in 2024 compared to 2023, mainly due to the completion of the research phase of the Indivior collaboration.

Continuing R&D -- sorry, continuing G&A expenses of CHF2.3 million primarily relate to corporate development activities and decreased by CHF0.4 million in 2024 compared to 2023, primarily due to the reduced D&O costs.

The finance result loss in '23 has turned to a small gain primarily due to a significant reduction in ForEx exposure as we are now holding most of our cash in Swiss francs. The share of the net loss of associates of CHF2.2 million relates to the 20% equity interest received as part of the consideration for the divestment of the part of our business to Neurosterix, which is being accounted for using the equity method under IFRS 12. Under IFRS, we are required to recognize our share of their results.

Now to the balance sheet, our assets are primarily held in cash, and we completed 2024 with CHF3.3 million of cash held in Swiss francs and US dollars. Other current assets amounted to CHF0.2 million primarily related to prepaid R&D costs. Our noncurrent assets of CHF7.1 million as of December 31, 2024, primarily relate to the 20% equity interest in Neurosterix Group recorded on the balance sheet under the equity method of accounting for associates.

Current liabilities of CHF0.8 million as of December 31, 2024, decreased by CHF2.1 million compared to December 31, 2023, and primarily relate to R&D-related accruals and payables. Noncurrent liabilities of CHF0.2 million as of December 31, 2024, decreased by CHF0.4 million compared to December 31, 2023, primarily due to the reduction in retirement benefit obligations following the transfer of staff to Neurosterix.

Now to the cash flow statement, at the end of 2024, the cash balance amounted to CHF3.3 million and decreased by CHF0.6 million compared to the beginning of the year. The CHF5 million gross proceeds received as part of the consideration received from the divestment of part of our business was offset by the operating costs of continuing activities.

Now to summarize, we have made excellent progress in our GABAB PAM program with our partner, Indivior, selecting a compound for development in substance use disorders and starting IND-enabling studies in the second half of 2024. Neurosterix has made excellent progress with their lead M4 PAM drug candidate starting IND-enabling studies in Q3 of 2024.

Dipraglurant is ready to restart clinical development for brain injury recovery. Our independent GABAB PAM cough program has demonstrated excellent preclinical efficacy and tolerability with IND-enabling studies ready to start. We're validating partnerships with industry, investors and a 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.

(Operator Instructions) Raghuram Selvaraju, H.C. Wainwright & Co.

My apologies, Raghuram. We could not hear you.

(Operator Instructions) [Peter Aleg, A Consult].

I would like to know about Neurosterix. I think that's a new company. Do they have other projects other than what you now sold to them? Did you hear me?

Yes. Thank you very much for your question. Yes. So Neurosterix was actually founded by Addex as a spin-out company. So we packaged up our platform, including facilities, people, and we put it into a new Swiss company, which we then sold to a US LLC, which had been capitalized with cash and a capital commitment of $65 million from a syndicate of US investors led by Perceptive Advisors. And the transaction involved buying the Swiss subsidiary for a mix of cash and equity. So Addex received a 20% interest in the US LLC plus CHF5 million of cash. And the rest of the CHF60 million is being deployed into the portfolio that was contributed into the Neurosterix Swiss sub.

And there are four programs. The lead program is a muscarinic M4 PAM, and then there is an mGluR7 negative modulator program and also an mGluR2 negative allosteric modulator program. And then another program, which is undisclosed at the very early stages of discovery. And they're all focused on neuropsychiatry, schizophrenia, mood disorders and cognition and an undisclosed CNS indication. Does that answer your question?

It does. But I guess that means that you have a lot of additional work just to sort of control the activities of Neurosterix and of your 20% investment there. Is that correct?

Well, Neurosterix has its own team. And most of -- in fact, Neurosterix has most of the old Addex team plus new employees that have been recruited. And my -- I am currently the CEO of Neurosterix and the CEO of Addex. And my role as CEO of Addex is under a service agreement between Neurosterix and Addex.

Raghuram Selvaraju, H.C. Wainwright & Co.

I wanted to ask if it could be possible for you to enumerate how you're seeing the strategic environment essentially evolving for dipraglurant, particularly within the context of neuro rehabilitation. And if you could also comment on the potential ability to deploy dipraglurant in neuro rehabilitation context not involving post-stroke recovery?

Misha, would you like to take this question?

Yes, absolutely. We are -- as dipraglurant is our clinical asset and has shown very good tolerability both in healthy subjects and in patients with Parkinson's disease. It gives us an opportunity to perform a number of small clinical pharmacology studies aiming to assess improvement and modulation of plasticity in human subjects. We will probably start with healthy volunteers and look at multiple sites of potential plasticity from motor cortex to sensory to mid-brain to spinal cord, also evaluate what type of treatment conditions is suitable and ideal for modulation and then move forward with a similar study but performed in post-stroke patients.

So this will be, as we see two clinical pharmacology studies with specific questions very much focused on neuroplasticity. And we believe these studies will first confirm the modulation of plasticity in humans, in particular, in post-stroke patients and will help us in designing proper Phase IIa study on rehabilitation approaches. So that's a very overall summary of our clinical strategy.

And then secondly, if I may, I was wondering if you could comment on the recent developments in the neuropsych field, perhaps most notably the failure of the Phase III trial of Cobenfy as adjunctive treatment in schizophrenia and what implications this may have for future directions you pursue with one or more of the Neurosterix lead assets?

Yes. Yes, we saw the news, of course. And we believe that it has minimal, if any, impact on our strategy. And we are pursuing the strategy of monotherapy. We have -- we believe in the target.

We believe in the relevance of muscarinic M4 for psychosis. So it's not going to alter our plans at all.

And then lastly, Tim, I don't know if you are in a position to comment on this at this time, but I was wondering if you could offer us some idea of what, if anything, you plan to do with the compound that was returned to Addex from J&J? And if you see any future development path for that asset?

Yes. We are -- I mean, we're already discussing with a number of interested parties. We are doing our own evaluation. As you can imagine, this is a 20-year development in the hands of J&J. It's a very, very high-quality compound with a lot of data, a lot of material, about 280 kilograms of API has been transferred to us.

And this is a significant material for us to play with. So we're definitely looking to enter a number of collaborations to explore areas that could be pursued with the compound.

(Operator Instructions) Thank you, ladies and gentlemen. This brings the main part of our conference to close, and I would like to hand back to Tim Dyer for closing remarks.

Well, thank you, everyone, for attending the 2024 full-year results conference call. And I wish you all a very nice day, and we look forward to speaking to you again soon.

This concludes today's conference call. Thank you for participating. You may now disconnect. Have a nice day.