Addex Therapeutics Ltd (ADXN) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Addex Therapeutics Half Year 2024 Financial Results and Corporate Update Conference Call. [Operator Instructions]. Dear participants due to the technical issues today, please use the download button to the presentation from the download menu and follow it. Thank you so much. And now I would like to hand over the conference to your speaker today, Tim Dyer. Please go ahead.

Hello, everyone. I would like to thank you all for standing by and attending our half year 2024 financial results conference call. I'm here with Misha Kalinichev, our Head of Translational Science, who will be providing 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. Unfortunately, there has been a technical issue with loading the presentation to the webcast system, so please use the download button in order to download the presentation. We will be indicating slide numbers so that you will be able to follow, hopefully. So on to Slide 3, the disclaimer slide. 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 some of our clinical and preclinical programs. I will then speak about the recent launch of neurosterix before reviewing our half year 2024 financial results. Following that, we will open the call for Q&A. So moving to Slide 4, highlights. We launched Neurosterix with a Series A of $63 million, led by Perceptive Advisors. This is an innovative financing transaction, it provides us with the resources needed to advance our preclinical portfolio without diluting our shareholders' interest in our clinical stage assets and partnered programs. As part of the transaction, we received CHF 5 million and the 20% equity interest in Neurosterix, 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. We have made excellent progress in our GABAB PAM program, and our partner Indivior, has selected a compound for development in substance use disorders and we'll now take over operational responsibility for development. As a reminder, under the terms of the agreement, Addex is eligible for payments of up to $330 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-digit up to low-double-digit. Under the terms of the agreement, we have exercised our right to select an independent compound to advance our own GABAB PAM program for the treatment of chronic cough. We have some exciting data in cough with our lead compound, which Misha will be sharing with you later in our presentation. Janssen Pharmaceuticals discontinued development of ADX-71149 in epilepsy, our partnership remains ongoing, while the full data set from the Phase II study as an adjunctive epileptic treatment is analyzed. Now moving on to Slide 5, the pipeline side. Now for a quick review of our pipeline. As mentioned, our partner Indivior has selected a GABAB PAM drug candidate for development in substance-use disorders and expect to start IND-enabling studies in the first half of 2025. We are advancing an independent GABAB PAM program for chronic cough and expect to start IND-enabling studies in 2025, subject to securing financing. We continue to believe in Dipraglurant are executing our plans to reposition the development for brain injury recovery. 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 the Dipraglurant in our plans for development in brain injury recovery. Following termination of the development of the Dipraglurant in PD-LID, we embarked on the 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 the Dipraglurant makes it particularly suitable for enhancing the impact of rehabilitation in traumatic brain injury and stroke patients. Please move to Slide 7. 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 strokes 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. Slide 8. mGlu5 receptor is a suitable target to address post-stroke recovery as it is densely expressed in the brain involved in neuroplasticity and modulate excitatory-inhibitory equilibrium. In fact, activation of mGlu5 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 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 prelesion state. Slide 9. Exciting new evidence recently published in the Journal Brain suggests that the negative allosteric modulator of mGlu5 MTEP administered daily in rats 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. Please move to Slide 10. MRI imaging of the resting state functional connectivity in post-stroke rodents shows that daily administration of MTEP also stimulate intra and interhemispheric connectivity in the brain disrupted by stroke. It is important to note that improvements in brain connectivity after stroke is known to correlate with functional recovery and is observed across species. Slide 11. Dipraglurant is ideally suited to be used in tandem with rehabilitation therapies in post-stroke patients as it has a fast onsets 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 the dipraglurant-mediated adaptive rewiring and facilitation of recovery following brain damage would also be seen in traumatic brain injury patients. Please move to Slide 12. 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. Slide 13. As a reminder, GABAB receptor activation has been clinically validated in a number of disease areas, including baclofen, a GABAB orthosteric agonist. Baclofen is FDA approved for treatment of plasticity and is widely used off-label to treat numerous diseases, including substance use disorders. However, baclofen has a short half-life and comes with significant side effects, hampering its wider use. Thus, there is a strong need for 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. Our partner, Indivior, has selected a GABAB PAM drug candidate for development in substance use disorders and expects to start IND-enabling studies in H1 2025. Please move to Slide 14. As part of our agreement with Indivior, Addex has exercised its right to select a compound to advance its own independent GABAB PAM program for the treatment of chronic cough. I will now present this exciting opportunity. Slide 15. There is a strong rationale for developing GABAB PAM 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 overactive cough reflex. There is a large unmet medical need in novel anti-tussive 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. Slide 16. On the next slide, we show that GABAB PAM are likely to have a superior tolerability profile in comparison to the current standards of care and show no taste related side effects as seen with newly approved P2X3 inhibitor, Gefapixant. Please move to Slide 17. Support for using GABAB PAM in treatment of chronic cough comes from the clinical evidence that baclofen a GABAB agonist is used off label in cough patients. And from anatomical evidence in GABAB receptors are strongly expressed in airways and in the neuronal pathway regulating cough. Therefore, we believe that GABAB PAM could offer superior efficacy in cough patients. Slide 11, the pre-R&D activities, including Indivior 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 850 or 6 mg per kg in cough frequency. Noise signs of tolerance were seen after subchronic dosing and a tenfold safety margin was demonstrated based on tolerability biomarkers. The IND-enabling studies are planned to start in 2025. Slide 19. The next set of slides describe the in vivo proof-of-concept studies in models of cost. 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 the first cough. The antitussive profile of baclofen is same model was more modest as cough latency remains largely unchanged. Slide 20. 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 16 mgs per kg. In contrast, baclofen suppress respiratory rate, reduce body temperature by near 2 degrees Celsius and increased growth hormone concentration in plasma starting at 3 mgs per kg dose. Thus, we believe we achieved our goal to discover a better baclofen for chronic cough. Please move to Slide 21. 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. Slide 22. As expected, signs related to safety and tolerability of compound A remained largely unchanged on the subchronic versus acute treatment regimen. Slide 23. In the model of ATP potentiated citric acid cough in guinea pigs in a head-to-head comparison experiment acutely administered compound A and the P2X3 inhibitor had similar efficacy and tolerability profile. Please move to Slide 24. In summary, we have selected a clinical candidate for chronic cough with a robust reproducible antitussive efficacy of 1 mg per kg and the good PK/PD. The compound showed a favorable developability profile in non-GLP toxicity studies performed in rats, dogs and nonhuman 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.

Thanks, Misha. So the slide 25, now before I move on to the financials, I would like to spend a few moments to speak about the Neurosterix transaction. Slide 26, due to the excellent progress made by our R&D team in advancing our own partner preclinical portfolio, our M4 PAM mGlu7 NAM, mGlu2 NAM 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 amounts 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 a new private company. We believe this is an excellent transaction for Addex shareholders as it has secured $5 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 $63 million of capital from a high-quality investor syndicate led by Perceptive advisers. As part of the transaction, we have divested our allosteric modulator technology platform, including the majority of our staff. 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 moving on to Slide 27, financials. Now for a review of our half year and Q2, 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 of 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 of loss -- sorry, net profit or loss from discontinued operations. Slide 28, starting with the income statement, which related to continuing operations, we continue -- we recognize $0.1 million of income in Q2 2024 compared to $0.6 million in Q2 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&D expenses primarily relate to our GABAB PAM program and remained stable at $0.3 million in Q2 compared to Q2 2023. Continuing operations and G&A expenses, primary rate to corporate development activities have remained stable at $0.7 million in Q2 2024, compared to Q2 2023. The finance result in Q2 2024 is primarily related to foreign exchange losses and to a lesser extent, interest income on USD cash deposits. Slide 29. Now to the balance sheet. Our assets are primarily held in cash, and we completed Q2 2024 with CHF 3.8 million of cash held in Swiss francs and U.S. dollars. Other current assets amounted to $0.9 million, primarily related to prepaid retirement benefit annually paid at the beginning of each year due to the Neurosterix transaction, we expect $0.6 million to be reimbursed in the short term. Current liabilities of $0.9 million as of June 30, 2024, decreased by $1.9 million compared to June 30, 2023, primarily relate to accruals and payables related to clinical research organizations and other outsourced service providers. Noncurrent liabilities of $0.1 million decreased by $0.5 million compared to December 31, 2023, primarily due to staffs transferred to Neurosterix. Now on to Slide 20 -- sorry, Slide 30. To summarize, I hope you have understood how transformative the Neurosterix deal is for Addex. We have strengthened the balance sheet and secured the financing to execute on the development of our preclinical portfolio, including the very exciting M4 positive allosteric modulator program for schizophrenia. We've made excellent progress in our GABAB PAM program with our partner Indivior selecting a compound for development in substance use disorders with IND-enabling studies expected to start in the first half of next year. Dipraglurant is ready to restart clinical development for brain injury recovery and our independent GABAB PAM cough program has demonstrated excellent preclinical efficacy and tolerability with IND-enabling studies ready to start. We are validating partnership with industry, supporting 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] And now we're going to take our first question, and it comes from the line of Raghuram Selvaraju from H.C Wainwright & Co.

Congratulations on all the progress on so many fronts. Firstly, I wanted to ask if you have some sense of the specific clinical indications in which you expect the chronic cough program to proceed with highest probability. Clearly, Chronic cough is a serious symptomatic hallmark of many different respiratory, pulmonary and inflammatory diseases. But I wanted to know which ones you consider to be particularly attractive and what we might expect to be the clinical path forward. For example, would you be considering advancement in COPD or sarcoidosis or related indications, please?

We have not finalized the clinical patient population to aim at. Currently, we are considering refractory and unexplained chronic cough as 1 possibility, but we are open to the ideas of also aiming at COPD or IPF-related chronic cough. So this is still being discussed.

Also just from a clarificatory standpoint, I wanted to know whether you use the terms MED and ED50 interchangeably or not.

No. MED has been a minimum effective dose and ED50 is effective -- is a dose that reaches 50% of the effect. The confusion stems from the fact that sometimes they use the MED abbreviation to mean median effective dose, which is the same as ED50. But if you use it as a minimum effective dose, and that explains how you are using those terms. Also, I wanted to see if you had any commentary regarding what you expect to be the most appropriate comparator or competitor molecules that have historically been tested clinically in chronic cough that you would look to be the benchmark for your chronic cough program in the clinical context. We can consider baclofen and Lesogaberan those 2 have been tested in the clinic, they are clinical studies, and they are GABAB agonists, so would like to achieve similar, if not better, efficacy with improved tolerability. So that will be our aim.

But not Camlipixant. Is that correct?

Well, I think clearly, we're expecting Camlipixant to be standard of care by the time we get to later-stage development. So we will be definitely looking to compare our compound with Camlipixant absolutely.

And we aim to achieve efficacy in a broader population of patients. As you know, up to 25% of patients do not respond to Camlipixant and we'll be aiming to have a higher percentage of responders based on the mechanism that we are using.

Yes. And I think probably many of the folks, who are listening today will remember last year's transaction in which the developer of Camlipixant was acquired for $2 billion. So clearly, if you show broader efficacy than Camlipixant, that's potentially a very high-value program. Just wanted to ask also about some recent developments in the neurology neuropsychiatry space that may have applicability to the prospects of the Neurosterix spin-out. In particular, the label that was granted to Cobenfy, formerly known as KarXT, which was developed by Karuna Therapeutics and which subsequently was acquired by Bristol. So I was wondering if there are any takeaways you got from looking at the label for Cobenfy that may provide more of an opportunity within the schizophrenia context, particularly with regard to the prospects for the M4 positive allosteric modulator.

Well, we haven't yet had a chance to have a good look through the label -- but what we do know is that it is quite a broad label, and therefore, this bodes very well for other M4 compounds that are going to come up for regulatory approval.

And in that context, you -- I believe, have also previously indicated that the pharmacophore and question that you folks are working on with regard to M4 modulation is distinct from the Emraclidine Pharmacophore is it not?

Yes, correct. It's a novel chemistry completely different from any described M4 chemistry that's out there, whether it's the Emraclidine program or any of the other M4 PAM programs without our chemistry is different. Yes.

Can you just refresh my memory with respect to when you anticipate the first of the neurosterix portfolio compounds to potentially complete IND-enabling studies?

Yes. So we're on track to complete the IND-enabling studies in the middle of next year and rapidly file the IND so that we can move into Phase I at the -- in the second half of 2025.

Not sure if you're in a position to speculate at this juncture regarding the prospects for a public listing of Neurosterix itself.

I am certainly not at liberty to talk about the strategy of Neurosterix on this conference call. I'm afraid.

[Operator Instructions] 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.

So thank you, everyone, for attending our half year 2024 conference call, and we look forward to speaking to you again soon.

That does conclude our conference for today. Thank you for participating. You may now all disconnect.