Addex Therapeutics Ltd

I'd like to thank you all for joining our Q3 2022 Financial Results Conference call. I'm here with Robert Lugens, our Head of Discovery Biology, and Misha Kalin-Chef, our Head of Translational Science. 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 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 our recent achievements before handing over to Robert and Nisha, who will review our clinical and preclinical pipeline. I will then review our third quarter financial results. Following that, we will open the call for questions. Our partner Janssen Pharmaceuticals continues to make significant progress in executing their global phase two study in epilepsy patients and are on track to complete part one of the study in Q1 2023. We continue to be excited by our preclinical pipeline which has made excellent progress with multiple clinical candidates rapidly advancing towards IND enabling studies. Previously, we announced the extension of our strategic collaboration on GABA-B positive allosteric modulators with Indivio and their commitment of an additional $900,000 of research funding to advance drug cancer through to the start of IND and aging studies. As a reminder, Indivio's primary interest is in substance use disorder, and under the agreement, we have retained the right to select drug cancers for development in certain exclusive reserved indications. I'll gather the pound funded research effort has progressed to late clinical candidate selection phase and multiple candidates being profiles and secondary disease relevant model. We expect to give you an ourselves select compound in 2023 to advance into and enabling studies plans to develop our independent program and chocolate Mary to 20 year opposite chronic cough and pain. We've also made great progress in our NUR7, negative allosteric modulator program for stress-related disorders, and successfully identified a compound which is now ready to enter iron-deionating studies. In addition, we continue to advance the selection of differentiated backup compounds to relate clinical cancer selection phase. Our N2R2 NAMM program for mild neurocognitive disorders associated with Alzheimer's disease, Parkinson's disease, and depression is in clinical candidate selection phase. And last but not least, our M4PAM program is advancing rapidly through lead optimization. M4PAM is a particularly exciting target for schizophrenia, especially following the recent positive phase three data from Karuna. On the financing side, 4.6 million equity financing complete in July has increased our cash reserves to 10.4 million at the end of September, providing us with cash runway through Q2 of 2023. Now I will hand over to Robert, who will give you some more details about our exciting pipeline.

Thanks, Tim. Hello, everyone. I'd like to start by speaking about our epilepsy program, followed by this program, before handing over to ADX71149 is an N-group 2 positive out-of-state modulator discovered in partnership with Janssen Pharmaceuticals, a Johnson & Johnson company. Our two companies collaborated for the discovery of this compound and Janssen is responsible for its progression in clinical development. Alex initially identified the chemical starting point using its unique L-Stack modulation platform, and the two teams worked together to optimize compounds until delivering ADX71149. The compound then completed nine Phase I studies and two proof-of-concept studies in schizophrenia and anxiety, showing that ADX71149 is a well-tolerated drug. It was then demonstrated that ADX71149 showed anti-PCS preclinical models of epilepsy, but also that when administered in combination with most commonly used anti-epileptic therapy, the active molecule in Keppra, the effect is dramatically enhanced. I will show this in the next slide. But first, let me talk about the opportunity in epilepsy. Today, even though the treatment options are multiple, epilepsy is still a large or met medical need. that many patients are in need for alternative or improved treatments for their CV. Capra, an Sb2a antagonist, while being largely sold as a generic, is still leading the market of antiepileptics, estimated at close to $20 billion sales revenue per year. Following the strong preclinical validation of the ADX-7149 models, our partner decided to move ADX-7149 into Phase II studies evaluating to treat patients with partial onset seizures when administered in combination with Levitiracetam. In May, an open-label attention study was announced, allowing patients on placebo drugs to gain access to ADX71149, and in September, inclusion criteria were extended to include patients on Levitiracetam, a second-generation LD2A antigen. Let's see. This phase two study is now well in its way, and we're expecting Janssen to receive results for part one in T1-2030. As a reminder, Janssen is covering all costs of development, and we have significant pre-launch milestones of 109 million euros and double-digit royalties on that data. Here is the compelling data obtained by our Janssen colleagues on the six-thirds model, a highly-predicted model of F-list. with a combination of ADX71149 and Keppra, and which has been instrumental in the decision taken by Janssen to move this program into epilepsy. The left graph shows how the effect of Levitiracetam is dramatically increased in presence of a low dose of ADX71149, producing a 35-fold shift in epilepsy. And the right graph shows the results obtained when the paradigm is reversed, where a low dose of Keppra induces take home message here is that we see a strong anti-epileptic effect with a combination of low doses of ADX71149 and Keppra similar to the one obtained with a full dose of Keppra and I should mention that this combination is the result of a true synergistic effect not just an additive or pharmacokinetic as it was demonstrated using a method called isoblastic analysis. This is the hypothesis being currently tested in patients. And what we saw in the preclinical models translate into patients, then our approach could become an important novel treatment for this patient's population. A few words on the study design. This is a Phase II double-blind, placebo-controlled, proof-of-concept study, and is an enrolling patient or . Patients will establish a 28-day seizure count over a 66-day baseline period prior to being randomized to receive either PDX7149 at 15 weeks, BID, or matching . The primary endpoint is the time taken to return to their monthly baseline seizure period. The study will have two parts, part one being four weeks eight-week maintenance. Part two will include patients who did not return to their baseline monthly seizure rate during part one of the study. And they will continue on their randomized drug . Results from part one of this study are expected in Q1. And now a quick update on depragograms, or MP5-negative allostep modulators. Depragograms have significantly potential in a number of disease areas, including PD-Lib substance use disorder, pain, stroke recovery, and neurodevelopmental disorders. The program has completed phase one and a phase two proof of concept study in PD-Lib patients, demonstrating safety and validity. Despite the recruitment challenges we experienced earlier this year in our pivotal PD-Lib program, we strongly believe in the potential Furthermore, Diprogrant has been awarded for drug designation procedures in the U.S., where there are approximately 200,000 patients, making this a significant commercial opportunity. We are currently pursuing multiple business discussions related to Diprogrant for multiple indications. I will now hand over to Misha, who will present the update on our preclinical program.

Thank you, Robert. Hello, everyone. We have made significant progress in advancing our preclinical program. As a reminder, all our programs were identified in-house from our proprietary out-of-staring modulation discovery platform. The success of our platform is driven by the combination of our unique small molecule chemical library and tailor-made proprietary biological screening tools and methods, which we deploy to identify the initial hits and support lead optimization. Today, I would like to share with you the progress that we have made for our most advanced preclinical program. the GABA-B positive ulcer modulator program, mGlu7 and mGlu2 negative ulcer modulator program, and muscarinic M4 positive ulcer modulator program. Let me start with GABA-B, which is in our partnering with Indivio. The aim of this collaboration is to deliver a new treatment for substance use disorders. Inhebio is supporting the research at AVEX and have recently committed additional funding for us to complete clinical candidate selection activities. As a reminder, GABA-B receptor activation has been clinically validated in a number of disease areas using Baclofen and GABA-B orthosteric agonists. Baclofen is FDA approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including alcohol use disorder, gastroesophageal reflux disease, or GERD, and various conditions of pain. However, Baclofen has a short supply 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 buclofen, but longer half-life and improved side effects profile. We are well on our way to meeting this objective with multiple global drug candidates, rapidly advancing through clinical candidate selection stage. We are currently profiling several drug candidates in non-GLT studies with the aim to nominate drug candidates for IND-enabling studies in 2023. As mentioned earlier, we have the right to select drug candidates from the Indivio-funded research activities for our own independent GABA-B PAM program. I will now speak about the indications we plan to pursue. CMT1A or Charcot-Marie-Tooth 1A disorder, a type of inherited neurological disorder that affects peripheral nerves. People with this disease experience weaknesses and wasting of their muscles of the low limbs starting early adolescence. Later, they can also have hand weaknesses and sensory loss, resulting in a significant reduction in their quality of life. CMT1A is caused by having an extra copy or duplication of the PMP22G, which is inherited in an autosomal dominant manner. There is currently no approved drug to treat CMT1A. However, bupropen has shown beneficial effects in patients. In addition, we have collected robust clinical data with a governing hand in highly translational models of CMT1A. In the studies, we have demonstrated positive effects of chronic treatment on both biomarkers and behavioral measures, suggesting Agavavipam has the potential to slow or even stop the progression of this disease. We are currently completing clinical profiling of our proprietary drug candidate. in advanced disease-relevant models. We are conducting these activities in collaboration with American Charcot-Marie-Tooth Association. Secondly, there is a strong rationale for developing GABA-B PAM for chronic cough based on off-label use of Baclofen in several categories of chronic cough and the role of GABA-B receptors in the neuronal pathway involved in cough. We believe that GABA-BPAMs could be an innovative new treatment of chronic cough offering improved efficacy, fewer non-responder patients, and lack of gustatory side effects in comparison to P2X3 inhibitors. We are currently profiling our proprietary GABA-BPAMs in disease development models of chronic cough. Thirdly, there is also a strong rationale for developing gabavipam for various types of pain, including telling pain, such as bladder pain, cancer pain, and pain associated with trigeminal neuralgia. Current medication is largely based on opioids, gabapentin and predabalin, non-steroidal anti-inflammatory drugs for bladder pain or carbamazepine and other anti-epileptic drugs for trigeminal neuralgia. These medications are suboptimal as they leave a significant proportion of patients without adequate or any benefit and carry risk of significant side effects. Again, the GABA-B receptor target has been well-validated by Baclofen, which has shown efficacy in patients with cancer pain and is used off-label in patients with bladder pain and trigeminal neurology. Now to the status of the program. We have identified multiple novel chemical series with potential for robust novel intellectual property and multiple compounds are in late clinical candidate selection phase, completely non-GLB preparatory studies. We expect to deliver multiple drug candidates for Indivior and in parallel, multiple differentiated drug candidates for our independent program for progression into IND enabling studies in 2023. We have made significant progress with our mGluR7 negative allosteric modulator program for stress-related disorders, including post-traumatic stress disorder, or PTSD, as we have selected a clinical candidate drug to enter IND-enabling studies. PTSD is a psychiatric disorder affecting approximately 3.5% of the population worldwide. and may occur in people who have experienced or witnessed a traumatic, often life-threatening event, such as serious accidents, natural disaster, or war. Current treatments are mostly relying on behavioral therapy, as most pharmacological treatments, such as anxiolytics or antidepressants, show insufficient benefits. Based on established knowledge around the NVR-7 target, such as the reduced anxiety in mGluR7 knockout animals and unsealed decline profile of mGluR7 inhibitors in multiple in vivo models of the disease, we have a very strong rationale to progress this project towards the clinic. Our clinical candidate drug ready to enter IND-enabling studies, and in addition, multiple chemical theories are identified as backups. On to our NUR2, negative ulcerative modulator program for mild neurocognitive disorders, or MNNCD, and depression. MNNCD is the stage between expected cognitive decline of normal aging and more serious decline related to dementia. Besides being potentially the earliest sign of Alzheimer's disease, MNNCD is also often experienced by patients suffering from depression. Developing MPLU2-NAM offers the exciting opportunity to treat cognitive impairment while also addressing symptoms of depression. Both pro-competitive and anti-depressant effects have been demonstrated in relevant preclinical models with our mBu2 negative ulcerative modulator candidate compounds. We believe that Merck have initiated a phase two proof of concept study with their mGlu2-negative australian modulator compound. And they're currently running a drug-dog interaction study with Donepezo, suggesting they prepare a study in an NCD patient with a combination with a compound and Ariset. We aim to be a fast follower to them in their approach with our well-differentiated compounds. We are completing lead optimization and have begun clinical candidate selection phase with multiple compounds with the aim to start IV meddling studies in the second half of 2023. And finally, a few words about our mascarinic M4 positive out-study program for treatment of schizophrenia and other types of psychosis. As you probably know, psychosis has been treated with the same mechanism of action for the last 50 years, with limited efficacy and significant tolerability issues, often leading to treatment discontinuation and relapse. The big news in this field came from Carola Therapeutics, who published the positive results of their phase three study of their CAR-XT compound in schizophrenia patients. and who are on track to submit new drug application to FDA in 2023. CAR-XT is a combination of Xenomalin, a muscarinic M1 and M4 receptor agonist, and Trostein, a peripherally restricted muscarinic antagonist. This combination allows to selectively activate muscarinic receptors in the brain while blocking the off-target effects of Xenomalin. This is a perfect validation of the M4 receptor target and of our positive allosteric modulator approach as we are aiming at identifying highly selective and brain penetrant molecules. In summary, our drug discovery engine has achieved great progress with multiple drug candidates advancing towards IND-enabled studies. The renewed commitment of our partner, Indivior, The delivery of a candidate ready to start IMD-enabling studies in the EMBOOS 7 program are further validation of the quality and productivity of our monetary modulation plan. This concludes my prepared remarks, and I hand it back to Tim.

Thank you, Nisha. I'll now switch to an overview of the financials. Starting with the income statement, we recognize 0.4 million of income in Q3 2022 compared to 0.8 million in Q3 2021. Primary source of revenue is research funding from our collaboration with Indivio, which we expect to reduce in 2022 as drug candidates move to late stage clinical candidate selection and our partners take over more of the operational execution of the development. In terms of expenses, R&D expenses were 2.8 million in Q3 2022 compared to 2.4 nine million in Q3 of 2021. The decrease of 0.1 million is primarily due to reduced difficult development activities. DNA expenses were 1.8 million in the third quarter compared to 1.5 million in the equivalent quarter in 2021. The increase of 0.3 million is primarily due to increased share-based compensation costs. The finance gain of 60,000 in Q3 2022 relate primarily to exchange gains due to the strengthening of the US dollar over the period. Now to the balance sheet. Our assets are primarily held in cash and we completed Q3 with 10.4 million Swiss francs of cash held in Swiss francs and US dollars. Other current assets, 1.3 million relate primarily to prepaid insurance and retirement benefits. The decrease relates to reductions in prepayments to CROs. Current liabilities of 4.1 million are consistent with prior years and relate primarily to R&D payables and accruals. Non-current liabilities of 2.2 million at the end of Q3 relate primarily to lease liabilities. The decrease compared to last year is driven by an increase in the discount rate applied in the calculation of the retirement benefit obligations resulting in retirement benefit obligations calculated under IFRS becoming a small asset. Now, to summarise, our partner Janssen is on track to complete part one of the phase two epilepsy clinical study with results expected in Q1 2023. We are putting plans together for future development of the grant in parallel to pursuing a number of licensing discussions with objectives to secure a partner prior to restarting development activities. We continue to make good progress in advancing our preclinical programs towards the clinic and are entering multiple partnering discussions across the portfolio. As a reminder, our portfolio was discovered in-house from our pioneering out-of-state modulator discovery platform, and consequently we have significant intellectual property on all programs. We have a track record of securing partnerships at the preclinical stage and supportive top-tier investors. We recognize Our stock performance and current market capitalization of $10 million is very disappointing. However, we strongly believe that if we are successful at executing our near-term partnering strategy, our stock price should move to recognize the value of our portfolio. This concludes the presentation, and we will now open the call for questions.

Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad and wait for a name to be announced. Alternatively, if you wish to ask a question via the webcast, please use the Q&A box available on the webcast link. This will take a few moments. Now we're going to take the first question. And the first question comes from the line of Leonildo Delgado from Baade Haver. Your line is open. Please ask your question.

Leonildo Delgado I would like to know this, Leonildo. Thanks for taking our questions. A couple of questions. The first one, could you provide more details on your big efforts and more specifically, how optimistic are you on closing a deal? And if yes, possible timeline and the earliest a deal might be closed. Second question is, can you shed light on the main goal of the part one of the epilepsy study and what follows after part one? Thanks.

Yeah, thanks very much for the question.

So on the BD effort, I don't think it would be prudent of me to enter into discussions or details. What I can say is that we have a portfolio of programs and a number of those programs are not partners. DIP Procurement is a mGluR5 negative allosteric modulator. Been into the clinic, it's demonstrated a safe and good tolerability, and we have entered into discussions with multiple potential partners for its development. Different partners have different indication priorities, and we are pursuing these discussions in parallel. We believe in the assets, but we also believe that restarting development makes sense with a partner on board. Are we confident about getting a deal done this year? We are moderately confident about getting something done by the middle of next year. Now on the rest of the portfolio, I mean, GABA-B is partnered or partly partnered with Indivio. However, because we're still at the R&D stage and development candidates have not been selected by Indivio, it's very challenging to enter into partnership discussions on our part of the GABA-B program. And therefore, the GABA-B is less advanced in partnering discussions with third parties. MGR7, there is a nominated candidate, well-profiled, ready to go into IND enabling studies. This program is attracting the interest of multiple parties, and we are pursuing discussion on the program. The MGR4, due to the M4, Due to the data that was in phase three from Karuna, this is attracting some interest. But again, this is indeed optimization. So there are multiple theories being advanced. And again, this is a much earlier program and an earlier stage discussion. And then on the MGR2-NAM, another a compound where there is a fair amount of validation. And again, this is incognition, which is a very interesting area. It's again attracting some interest from multiple parties. I hope that helps give you a little bit more detail. Now with respect to the epilepsy. So there is part one. So you have 60 patients, two to one randomized. between active and placebo, and it's a four-week period, and the endpoint of part one is the difference between the active group and the placebo group with respect to time to baseline seizure counts. This data is expected to be delivered to our partner in Q1 of 2023. And our partner will then take certain decisions around the program. Now, part two, patients, the way the study is designed is that the patients within part one And we'll move into part two, assuming that they did not reach their baseline procedure count. And then the data from that eight-week period will report out later in 2023. And that's really all we can say about the program at this time.

Thank you. Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad. Alternatively, you can use the Q&A box available on the webcast. There are no further questions at this time. I would now like to hand the conference over to Tim Dyer for closing remarks.

Well, thank you everyone for attending the Q3 conference call. We very much look forward to keeping you updated on our progress through regular press releases and we look forward to speaking to you on our next conference call which will be in 2023. I wish you a very nice day.

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