Addex Therapeutics Ltd

23 financial results and corporate update at this time all participants are in a listen only mode after the speaker's presentation there will be a question and answer session to ask a question during the session you will need to press star 1 1 on your telephone you will then hear an automated message advising your hand is raised to withdraw your question please press star 1 1 again to ask a question via the webcast please access the ask a question tab please be advised that today's conference is being recorded I would now like to hand the conference over to your speaker today, Tim Dyer.

Hello, everyone. I would like to thank you all for attending our first quarter 2023 financial results conference call. I'm here with Robert Lugens, our head of discovery biology. 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 then review our Q1 2023 financial results. Following that, we will

call for questions.

Our partner Janssen continues to make excellent progress in executing their global phase two study in epilepsy patients with ADX 71149. Cohort one of 60 patients has completed part one of the study and progressed to part two An independent interim review committee has been established by Janssen to review the unblinded data from Part 1 and recently made its recommendation to continue the study. The recommendation of the independent interim review committee and the decision of our partner Janssen to continue the study is very encouraging and suggests ADX 71149 is potentially safe and well-tolerated and may have a positive impact on this patient population. We look forward to providing further updates on the progression of this important clinical study in the second half of this year. We continue to believe there is value in diproclorant and have substantially completed our evaluations of future development. We have identified post-stroke recovery and pain as interesting areas for future development in addition to PD-LID. However, we are currently pursuing collaborative arrangements with multiple clinical candidates rapidly advancing towards ING-enabling studies. We have selected a drug candidate in our mGluR7 negative allosteric modulator program for stress-related disorders, including post-traumatic stress disorder, and are progressing this drug candidate into IND-enabling studies. We expect to start dosing in these studies in the second half of this year. We also continue to progress several backup compounds from differentiating chemical series through clinical candidate selection phase. We've made substantial progress in our collaboration with Indivior, in advancing several GABA-B-PAM compounds into clinical candidate selection. As a reminder, in Divio, primary interest is in substance use disorder. Under the agreement, we have retained the right to select drug candidates for development in certain exclusive reserved indications, including Charcot-Marie-Tooth, 1A neuropathy, chronic pain, sorry, chronic cough and pain. During the first quarter, we have been focused on preclinical profiling compounds in chronic cough. We expect Indivia and ourselves to select compounds to advance into RNA-enabling studies in 2024. And last but not least, our M4PAM program for schizophrenia continues to make progress through lead optimization. M4PAM is a particularly exciting target for schizophrenia, especially following the recent positive phase three data from Karuna. We continue to support discussions across the board. We made a total of $5.1 million funding year-to-date through the sale of treasury shares to our Kepler ATM facility, and in April completed an offering to a single U.S. investor of $4.5 million. We continue to focus on conserving cash and prioritizing activities that can bring value to our programs in the short term. These cost control measures have significantly reduced our monthly cash burn going forward. And as of today, we estimate that our cash reserves provide us with a runway into 2024. Now I will hand over to Robert, who will give you some more details about our exciting pipeline.

Thanks, Tim. Hello, everyone. As mentioned by Tim, we communicated yesterday on the progress our partner, Janssen, has made in advancing our epilepsy program currently in phase 2. I will focus on this update today and also present the latest on the rest of our portfolio afterwards. As an introduction to this program, for those who are not aware of the details, ADX71149 is a metabotopic glutamate receptor subtype 2, or mGlu2, positive allosteric modulator discovered in partnership with Janssen using ADX's proprietary allosteric modulation platform. Janssen have extensively profiled ADX71149 in preclinical models of epilepsy and has demonstrated both standalone efficacy and a strong synergistic effect in combination with inhibitors of SV2A such as Acra and Briviact. Epilepsy is a large multi-billion dollar market opportunity where despite several available treatment options, many patients are still in need of improved therapies to treat their seizures. Interestingly, Keppra, while being largely sold as a generic, is still leading the market of anti-epileptics with close to $1 billion sales revenue per year. Over 2 million patients are taking Keppra, but many experience breakthrough seizures or a suboptimal response, demonstrating the need for improved treatment options. ADX 71149 has been thoroughly profiled in preclinical and clinical studies by Janssen, demonstrating its good safety and tolerability profile in healthy volunteers and patients. Janssen are responsible for the development of the compound and are currently running both a Phase II study and an open-label extension in epilepsy patients. It is important to note that we have significant economic In our deal with Janssen, we have pre-launch milestones of 109 million euros, low double-digit royalties on net sales, and Janssen are responsible for all costs. Now, I would like to show you some of the preclinical data. We've shown this data in the past, but let me remind you of the main take-home message, which is the strong synergistic effect obtained when ADX71149 is given in combination with levetiracetam, the active molecule in Keppra. These preclinical studies were performed in the 6 Hertz model, which is widely recognized as being a model with high translational value to characterize the efficacy of anti-epileptic drugs. The left graph shows how the effect of levetiracetam is dramatically increased in people with a low dose of ADX71149. producing a 35-fold shift in its efficacy. And the right graph shows the result obtained when the paradigm was reversed, where a low dose of Keppra induces a 14-fold increase in efficacy of ADX71149. In other words, we obtained an anti-epileptic effect with this combination of low doses of ADX71149 and Keppra that was similar to the one obtained with a full dose of Keppra. We hypothesize this synergistic effect is due to the strong colocalization and similar neurotransmitter classical release control function of mGlu2 receptors and SV2A proteins. Taken together, these findings have been instrumental in the decision taken by Ansem to initiate the study of ADX7149 in combination with levothyroxetam in epilepsy. This is a phase two double-blind placebo-controlled proof-of-concept study enrolling patients with vocal onset seizures who have a five-step optimal response to treatment with Levitiracetam or Capra or Briviracetam . Janssen plans to recruit up to 160 patients with up to three cohorts to test multiple doses. Cohort one is partly completed, and cohort two has started recruiting patients. In this phase two study design, the patient established a 28-day seizure count over a 56-day baseline period prior to being randomized to receive either ADX71149 or matching placebo. The primary endpoint is the time taken to return to their monthly baseline seizure count. The study has two parts, part one being the four-week acute efficacy phase and part two being an eight-week maintenance of efficacy phase. Part two includes patients who did not reach their baseline seizure counts during part one of the study and continue on their randomized drug of placebo. Cohort one with 60 patients has completed part one of the study while part two will complete by end of May and part one of cohort two has started recruiting patients. Data obtained in part one for cohort one was sent to an independent interim review committee to avoid unbinding of study who gave the recommendation to continue the study. This is encouraging news, suggesting ADX71149 is safe and well tolerated, with potential benefit to epilepsy patients. We look forward to be able to update you with the progress of this study later in the year. Based on the hypotheses forged in preclinical models, If the synergistic effects seen with a combination of ADX71149 with Levitiracetam translates into patients, then we see a huge opportunity to turn our approach into probably the most important novel treatment for epilepsy patients suffering from focal onset. And now to Dupreglurant, our mGlu5 negative allosteric modulator. While several indications such as substance use disorder or trigeminal neuralgia could be interesting for DIPRGNRT, we believe the differentiated profile of DIPRGNRT makes it particularly suitable for dyskinesia associated with Parkinson's disease and post-stroke recovery. We are continuing our exploration with key opinion leaders to establish the future development plans in PD-LID and post-stroke recovery. In parallel, we are pursuing collaborative arrangements to implement these future clinical plans. The program is a Phase II ready compound with a profound intellectual property protection until 2034 and with significant API and drug product supply to start a new clinical trial as soon as we will be ready to launch it. Let me now update you on our preclinical programs. We continue making significant progress in advancing our preclinical programs. Let me remind you that all our programs have been identified in-house from our proprietary allosteric modulation discovery platform. The success of our platform is driven by the powerful 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 to support lead optimization. I would like to share with you the progress we have made in our GERB-B-PAM, Mglu7-Nam, and M4-PAM preclinical programs, where we see considerable near-term value creation. Starting with our positive allostatic modulator program, which is partnered with Indivio. The aim of this collaboration is to deliver a new treatment for substance use disorders. Indivio is supporting the research ADHEC and have recently committed additional funding for us to complete clinical candidate selection activities, reaching 13.8 million Swiss francs total funding so far. As a reminder, GABA-B receptor activation has been clinically validated in a number of disease areas using baclofen, a GABA-B orthosteric antagonist. Baclofen is FDA approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including alcohol use disorder, chronic cough, CMT1A, and various types of pain. However, baclofen is a half-life and comes with significant side effects hampering its wider use. Thus, there's a strong need for a better baclofen. We believe this can be achieved with positive isoplate modulators and their differentiated pharmacology, having the efficacy of baclofen but longer half-life and improved side effect profile. We are well on our way to meeting this objective with multiple novel drug candidates, rapidly advancing through clinical candidate selection phase, with the aim to nominate drug candidates ready to enter IND-enabling studies in 2024 for our partnerships with Indivio. As part of our agreement with Indivio, we have the right to select drug candidates from the funded research activities for our own independent GABA-BPAM program. There are several possible indications to explore, validated in man by off-label use of Baclofen, such as Charcot-Marie-Tooth disease type 1A, chronic cough, or pain. We have generated data with our GARB PAMs in preclinical models of CMQ1A and pain, and have been focused on preclinical profiling compounds for chronic cough in Q1 2023. Let me today focus on this opportunity. There's a strong rationale for developing gababipams 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 because of an overactive cough reflex. Support for this approach comes from validation with Baclofen, used off-label in several categories of chronic cough, and from GA-B receptors, strong expression in the neuronal pathway involved in cough. Therefore, we believe that GA-B PAMs 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 the P2X3 inhibitors. We are working with multiple compounds, progressing in late clinical candidate selection phase, and we expect to move into IND-enabling studies in 2024 in parallel to delivering compounds for a partner in DIVIO. Onto our MDU7-Hallispec modulator program for stress-related disorders, including post-traumatic stress disorder. The program has delivered one clinical candidate drug ready to enter IND-enabling studies, as well as several differentiated backup compounds. We have established a robust intellectual property position with five patent applications covering our lead and backup compounds, guaranteeing a strong protection for our program. PTSD is a psychiatric disorder affecting approximately 3.5% of the population and may occur in people who have experienced or witnessed a traumatic, often life-threatening event such as a serious accident, natural disaster, or war. Current treatments rely mostly on behavioral therapy, as most pharmacological treatments, such as anxiolytics and antidepressants, show insufficient benefit. The rationale for inhibiting mGlu7Nam as an approach for treating stress-related disorders, including PTSD, is based on a wide body of preclinical evidence from the anxiolytic profile of mGlu7 knockout or knockdown animals. two studies using mGlu7 negative allostatic modulators performed at ADHECS, as well as by many other groups. We have completed a robust preclinical package with our lead drug candidates and are now moving into IND labeling studies and expect to enter phase one studies in second half of 2024. And finally, a few words about muscarinic M4-positive allostatic modulator program for treatment of schizophrenia and other types of psychosis. 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. This is now about to change the event of a completely novel approach based on activation of M4 receptors. The recent positive readout of a third Phase III registrational study of CAR-XT and the expected FDA approval strongly validates the M4 approach and our positive allosteric modulation 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-enabling studies. The renewed commitment of our partner in Divio, the delivery of a candidate starting IND-enabling studies in the MD7 program, and the significant progress achieved in our other preclinical programs are further validation of the quality and productivity of our RLSTEC modulation platform. And with this, I hand it back to you, Tim.

Thanks, Robert. I'll now switch to an overview of the financials. Starting with the income statement, we recognized 0.5 of 2022. The primary source of revenue is our research funding from our collaboration with Indivio. In terms of expenses, R&D expenses were 1.7 million in Q1 2023 compared to 3.8 million in Q1 2022. The significant decrease of 2.1 million is primarily due to decreased diproclorant-related external research and development activities. The finance results It's primarily related to positive interest on U.S. dollar cash deposits. Now to the balance sheet. Our assets are primarily held in cash, and we completed Q1 with 5.6 million Swiss francs of cash held in Swiss francs and U.S. dollars. Other current assets amount to 1.3 million and primarily relate to prepayment. of retirement benefits as well as trade receivables that mainly relate to research agreement within DVR. Current liabilities of 2.2 million stable and primarily relate to R&D payables and accruals. Non-current liabilities relate to lease liabilities. Now, to summarize, the development of 10.1.149 in epilepsy is going well with Cohort 2 recruiting patients. And we are encouraged by the recommendation of the Independent Interim Review Committee to continue this study. We continue to believe in the value of Dipraglurant and are evaluating its future development with a focus on post-stroke recovery. In parallel, we are pursuing collaborative arrangements to advance development and look forward to sharing more information in the future. Our preclinical program will continue to make solid progress towards delivering drug candidates for future clinical studies. in important therapeutic areas, including stress-related disorders, chronic cough, cognition. We have significant intellectual property in all programs. We have a track record of securing partnerships at pre-clinical stage and supportive top-tier investors. We recognize that 2023 stock performance and current market stabilization is very disappointing. However, we are having multiple business discussions across our portfolio and strongly believe that if we are successful at executing our near-term partnering strategy, then 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. Please stand by for your first question. Your first question comes from Bubalan Pachayapan from HC Wainwright.

Bubalan, your line is open. Please go ahead.

Hi, this is Bubalan. I'm dialing in for Ram Silvaraju, and thanks for taking our questions. So two from us. Firstly, how does the recommendation to continue the Phase II trial of ADX71149 potentially increase the likelihood of a positive spinal outcome?

Yeah, thanks for the question.

So Jane, Janssen has established an independent review committee to look at part one, the unblinded part one data from cohort one. Now, if you've been following this study, I mean, the study was originally established just to have one cohort, and then it was modified to have up to three cohorts looking at multiple doses. with 160 patients. Now, they do not want to unblind the study, so this is why they've established this committee. Now, the remit of the committee was to really give a go, no-go decision, recommendation, I should say, for Janssen then to take a decision. So, what we know is that the committee has made a recommendation to continue this study. This suggests that they must be seeing something positive from the data they looked at. Now, based on the recommendation, Janssen have then decided to continue the study, which we, again, see as very positive. And we certainly believe that it gives us more, I would say, increases the probability of a successful outcome of the study. But again, this is a clinical study, and I think we all know that lots of things can go wrong in clinical studies. And this is only the data from part one of cohort one. So this is 60 patients, which were two to one randomized. And it's the data from the first four-week period.

All right, thanks for the detailed color. And secondly, in addition to what is stated in your prepared remarks, has there been any progress in your efforts to identify a potential collaboration partner or maybe licensee for Dipla Glurant? Thanks.

Yeah, so we continue to have discussions with multiple potential partners across the portfolio. You know, we know when we start the discussion, very difficult to predict where we end the discussion. We continue to advance the programs. We continue to generate interesting data, and we continue to have, you know, .

All right.

Thanks again for taking our questions, and congrats on the progress.

Hi, good afternoon. This is Lionel speaking. So thanks a lot for taking our questions. With the current burn rate, it looks to me that cash will only take you through 3Q23, but you mentioned 2024 in your opening remarks. Does it mean that you're going to stop all the R&D activities, including the R&D enabling studies, or should we expect rather a personal reduction?

We have no plans to restructure the company. I'm not quite sure where you get your position around Q3. We finished Q4 with $5.6 million and we've raised $4.5 million. And I think what you have to realize, if you look at the cash burn in 2022, because remember we had a an ongoing phase three study with an open label study. And so this got closed out. We continue to have certain costs related to the closing out of the Dipaglurant PD lid development in Q1. And so R&D expenses are continuing to come down. So is that we have cash through into 2024.

Okay, thank you. So does the positive opinion on the epilepsy study facilitate, in your view, some of the partnering conversations? And so do you have something concrete, for example, term sheets on the table? Could you maybe provide some details there? Thank you.

Look, we have multiple discussions with multiple parties across the portfolio.

You know, we are not giving this sort of granularity around our business discussions. But I think, you know, if you look at the portfolio, if you look at the programs, you know, we have a track record of doing deals at the preclinical stage. We have some very exciting first-in-class programs. The MGlass 7, we have a clinical candidate. We have multiple backups. We have a very, very young IP portfolio. in an exciting area. This is first in class. We have an M4PAM program on an extremely exciting target. The GABA-B chronic cough program is particularly interesting. We're very close to having a molecule that's going to be ready to go into IND-enabling studies. We recently saw the takeout of Bellus for $2 billion. by GSK in development within the ADEX portfolio.

Thank you. Thank you.

As a reminder, if you do have a question via the telephone, please press star 1 1 on your keypad. If you have a question via the webcast, please use the ask a question tab. We currently have no further telephone questions.

Just to confirm, we currently have no telephone questions. I'll now hand back to you for any web questions.

Yeah, so we have a web question about the expected readout of data from J&J. So as I said, Part 1 of Cohort 1 has completed patients in Part 2. We're expecting them to complete quite soon. We know that Cohort 2 is recruiting patients, and we're expecting Cohort 2 to recruit in the coming months. And then it will go into, they'll be in part one and then they'll move into part two. So we would expect cohort two to be completed probably around the end of the year. But we're not giving any firm guidance on when data will be reading out because if you read clinicaltrials.gov, you'll see that J&J are ready to go up to three cohorts. And certainly if they introduce a third cohort after cohort two has completed recruitment, then the reporting of data will be pushed out until cohort three is completed. So I think you can appreciate that it would be extremely unwise to try and speculate on when the data will be read out or when we will be able to read out the data from J&J.

There are no more telephone questions in the queue. Thank you. That ends today's call. Please feel free to disconnect speakers, please.