Addex Therapeutics Ltd (ADXN) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Addex Therapeutics Third Quarter 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 your first speaker today, Tim Dyer. Please go ahead.

Thank you. Hello, everyone. I would like to thank you all for attending our third quarter 2024 financial results conference call. I'm here with Mikhail Kalinichev, our Head of Translational Science, who will provide an update on our R&D programs. I draw your attention to the press release and the financial statements issued earlier today, which are available on our website. I also draw your attention to our disclaimers. We will be making certain forward-looking statements that are based on the knowledge we have today. I will start this conference call by giving a quick overview of our recent activities and achievements before reviewing our pipeline. I will then hand over to Misha, who will review in more detail our GABAB PAM preclinical program. I will then review our third quarter 2024 financial results. Following that, we will open the call for questions. So we have made excellent progress in our GABAB positive allosteric modulator program with the completion of the R&D phase delivering multiple drug candidates. Our partner, Indivior, has selected the compound for development in substance use disorder and has started IND-enabling studies. Under the terms of the agreement, Addex is eligible for payment of up to USD 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 digits up to low double digits. 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 some exciting data in cough, which Misha will be sharing with you later in the presentation. So now for a quick review of our pipeline. We continue to believe in dipraglurant and are executing our plans to reposition the development for brain injury recovery following the disappointing results in epilepsy with ADX71149. We are working with our partner, Janssen to evaluate a path forward for this program. As mentioned, our partner Indivior has selected a drug candidate for development in substance use disorders and has started IND-enabling studies, we are advancing an independent GABAB PAM program for chronic cough and expect to start IND-enabling studies in 2025, subject to securing financing. Our spin-out company, Neurosterix, has made excellent progress in advancing its pipeline, including starting IND-enabling studies with its M4 PAM program. Now I will hand over to Misha, who will give you some more details about our exciting portfolio.

Thanks, Tim. Hello, everyone. Let me now speak about 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 FDA approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including substance use disorder. However, baclofen has a short half-life and comes with significant side effects hampering its wider use. Thus, there is a strong need for a better baclofen. We believe this can be achieved with positive allosteric modulators and their differentiated pharmacology having the efficacy of baclofen but longer half-life and improved side effect profile. Our partner, Indivior, has selected a GABAB PAM drug candidate for development in substance use disorders and expect to start IND-enabling studies in H1 2025. As part of our agreement with Indivior, Addex has exercised its right to select a compound to advance its own independent GABAB PAM 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 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. 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 and GABAB agonist is used off-label in cough patients and from the anatomical evidence that GABAB receptors are strongly expressed in airways and in the neuronal pathway regulating cough. Therefore, we believe that GABAB PAMs could offer superior efficacy in cough patients. The pre-IND activities, including in vivo proof-of-concept, non-GLP tox and CMC have been completed, and our clinical candidate has shown favorable efficacy, tolerability and developability profiles. 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 in 2025. The next set of slides describe 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 anti 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, both the 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-degree 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 in this 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 under subchronic versus acute treatment regimes. In the model of ATP potentiated citric acid cough in guinea pigs in a head-to-head comparison experiment, acutely administered compound A and a P2X3 inhibitor had similar efficacy and tolerability profile. 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 tox 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.

Now for a review of our Q3 2024 financials. Following the Neurosterix transaction, we were required under the IFRS to identify continuing operations related to our retained business and continued operations related to the divested business sold to Neurosterix. All income and expense items related to the discontinuing operations have been re-classed under a specific line comprehensive loss called Net Profit or Loss from Discontinued Operations. So starting with the income statement, which relates to continuing operations. We recognized CHF 0.1 million of income in Q3 2024 compared to CHF 0.3 million in Q3 2023. The primary source of revenue is research funding from our collaboration with Indivior, which is recognized as the associated research costs are incurred. Continuing R&D expenses of CHF 0.2 million primarily relate to our GABAB PAM program and decreased by CHF 0.3 million in Q3 2024 compared to Q3 2023, mainly due to completion of the research phase in June of this year. Continuing G&A expenses of CHF 0.5 million primarily relate to corporate development activities and decreased by CHF 0.1 million in Q3 '24 compared to Q3 2023. The finance result in Q3 is primarily related to foreign exchange losses on U.S. dollar cash balances. The share of net loss of associates is CHF 0.9 million and relates to our investment in Neurosterix Group. Under IFRS, we are required to recognize our share of their results. So now to the balance sheet. Our assets are primarily held in cash, and we completed Q3 2024 with CHF 3.3 million of cash held in Swiss francs and U.S. dollars. Other current assets amount to CHF 0.7 million, primarily related to prepaid retirement benefit obligations annually paid at the beginning of the year. Due to Neurosterix transaction, we expect CHF 0.4 million to be reimbursed in the short term. Current liabilities of CHF 0.9 million as of September 30, 2024, decreased by CHF 2 million compared to December 31, 2023, and primarily relate to CRO-related accruals and payables. Noncurrent liabilities of CHF 0.2 million as of 30th September, decreased by CHF 0.4 million compared to December 31, '23, primarily due to staff transferred to Neurosterix. 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 H2 of this year. Neurosterix has made excellent progress with their lead M4 PAM drug candidates starting IND-enabling studies in Q3 of this year. Dipraglurant is ready to restart clinical development for brain injury recovery. Our GABAB PAM Cough program has demonstrated excellent preclinical efficacy and tolerability with IND-enabling studies ready to start. We are validating partnerships with industry supported investors and a strong balance sheet, which puts us in a solid position to deliver on our strategic objectives. This concludes the presentation, and we will now open the call for questions.

[Operator Instructions] And it comes from the line of Laurent Flamme from Zürcher Kantonalbank.

So 2 financial questions. The first relates to the milestones from Indivior. Could you tell us what would be the next key triggers for these milestones? So in other words, should we expect any trigger preclinical? And for the clinical stage, anything after completion of Phase I? The second question relates to Neurosterix. We see the losses of Neurosterix increasing on a quarterly basis, quarter-on-quarter, which is not unusual considering the phasing of the R&D expense at Neurosterix. What would be the cash autonomy for Neurosterix considering the $63 million they have got on inception?

Thanks for the questions. So starting off with Indivior. So we're not at liberty to disclose the details around the milestones. What I can say is they are prespecified, and there are clinical milestones and there are commercial milestones in the $330 million. And what I have indicated in the past is they are roughly 50-50 between clinical and commercial milestones. Now on the second question for Neurosterix. So as you rightly point out, Neurosterix is capitalized with $63 million in financing. You correctly point out that we are recognizing under the accounting rules, our share of their net loss. Neurosterix is moving forward a portfolio of very exciting programs. And its cash burn is ramping up as those programs move forward into, well, later stages of preclinical development and then into the clinic. And as I've indicated, the M4 positive allosteric modulator program has started IND-enabling studies. And fingers crossed, we will be filing an IND and moving that program into the clinic in the coming 12 months. Now the cash autonomy of Neurosterix, Addex is a passive shareholder, and therefore, Addex is not at liberty to disclose information about or details about the financials of the private entity in Neurosterix.

If I may, maybe a related question, do you see risks for Addex to be diluted over the coming 3, 4 years in Neurosterix?

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

[Operator Instructions] 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.

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

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