Addex Therapeutics Ltd

Hello everyone. I'd like to thank you all for attending our half-year 2023 financial results conference call. I'm here with Robert Lugens, our Head of Discovery Biology, and Mikhail Kalinichev, 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 disclaimers. We will be making certain forward-looking statements that are based on the knowledge we have today. I'll start this conference call by giving a quick overview of our recent achievements before handing over to Robert and Misha, who will be reviewing our clinical and preclinical pipeline. I will then review our half-year 2023 financial results Following that, we will open the call for questions. So starting with the highlights, our partner Janssen continued to make excellent progress in executing their global phase two study in epilepsy patients with ADX 71149. Cohort one of 60 patients has completed the study, and cohort two of 50 patients is currently recruiting. an independent interim review committee established by Janssen to review the unblinded data from part one of cohort one recently made its recommendation to continue the study. This recommendation and the decision of Janssen to continue the study is very encouraging and suggests ADX71149 is potentially safe and well tolerated and may have a positive impact on this patient population. Recruitment of cohort two is going well, and we look forward to providing further updates on this important clinical study later this year, including providing guidance on when we can expect to report data. We continue to believe there is value in dipreglurant and have substantially completed our evaluations of future development. We have identified post-stroke recovery as an interesting area for future development and are currently profiling dipreglurant in preclinical models of post-stroke recovery and look forward to reporting this data. They're in parallel pursuing discussions with potential partners to advance future development. We continue to be excited by our preclinical pipeline, which has made excellent progress with multiple clinical candidates rapidly advancing toward bi- and de-enabling studies. We have made substantial progress in our collaboration with our partner, Indivior, in advancing several novel GABA-B PAM compounds into clinical candidate selection. As a reminder, Indivio's primary interest is in substance use disorder, and under the agreement, we have retained the right to select drug candidates for development in certain exclusive reserved indications. We are focusing our independent program on cough. During Q2 2023, we've continued to advance compounds through clinical candidate selection with multiple compounds showing excellent efficacy in multiple preclinical models of cough. We recently announced extensions of our collaborations through June 24, with 2.7 million Swiss francs of additional research funding committed by Indivio. We expect Indivio and ourselves to select compounds to advance into IND-enabling studies in 2024. We've selected a drug candidate in our mGluR7 NAM program for stress-related disorders, including post-traumatic stress disorder, and are ready to start IND-enabling studies. Due to cash constraints, We are currently pursuing collaborative arrangements to advance future development. And last but not least, our M4 PAM program for schizophrenia, which is now a priority program for us, continues to make rapid progress through lead optimization. At the end of Q2, we entered a compound into clinical candidate selection phase and are therefore on track to start IMD enabling studies in H2 2024. From a financial perspective, we raised a total of 5.7 million funding year to date through capital raising activities and continue to pursue discussions with potential partners across the portfolio. We've also implemented a number of cost-cutting measures, which 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. I will start by speaking about our phase two epilepsy study with ADX 71149, which is being executed by Janssen. Janssen is making excellent progress with cohort one of 60 patients completed and cohort two of 50 patients currently recruiting well. An independent interim review committee established by Janssen reviewed the unblinded data from part one of cohort one and recently made its recommendation to continue the study. This recommendation and the decision of Janssen to continue the study is very encouraging. As an introduction to this program, for those of you who are not aware of the details, ADX71149 is a metabotoric glutamate receptor subtype 2, or Mglu2 positive type 1 modulator, discovered in partnership with Janssen using ADEX'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 Keppra and Briviact. Epilepsy is a large, multibillion-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 antiepileptics 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 2 study and an open label extension study in epilepsy patients. It is important to note we have significant economics 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 have shown 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 levatiracetam, 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 presence of 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 hypothesized that this synergistic effect is due to the strong collocalization and similar neurotransmitter vesicle release control function of mGlu2 receptors and SV2A proteins. Taken together, these findings have been instrumental in the decision taken by Janssen to initiate the study of 71149 in combination with Levitiracetam in epilepsy. This is a phase 2 double-blind placebo-controlled proof-of-concept study enrolling patients with focal onset seizures who have suboptimal response to treatment with Levitiracetam or Keppra or Briviracetam, Briviac. Janssen planned to recruit up to 160 patients with up to three cohorts to test multiple doses. Cohort one is completed and cohort two has made significant progress in recruiting patients. Unblinded data obtained in part one for cohort one was reviewed by an independent interim review committee earlier this year who gave the recommendation to continue the study. In this phase two study design, patients 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 count during part one of the study and continue on their randomized drug or placebo. An open label extension study is ongoing in parallel, offering all patients the opportunity to get treated with ADX71149 in combination with Levetiracetam or Brivaracetam. This will help gathering important information about safety and tolerability of ADX71149 in long-term day-to-day use. This is encouraging news, suggesting ADX 71149 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. I now pass it over to Mickaël, who will update you on the Debrecourant and Garrabee PAN programs.

Thank you, Robert. Following termination of the development of depragnurant in PD-LEAD, we embarked on the detailed evaluation of a number of potential indications of interest for future development, including substance use disorder, migraine, and the other forms of pain. We have completed this exercise and have identified post-stroke recovery as an interesting indication for the future development of depragnurant. We believe that the differentiated profile of the program makes it particularly suitable for post-stroke recovery. There is large unmet medical need in post-stroke recovery and rehabilitation. Stroke is a common cause of chronic, often lifelong disability, as it is associated with 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 5.7 million. There are a variety of physiotherapies used with post-stroke patients, but the recovery is slow. and typically mild to moderate. There is an urgent need for pharmacological agents that can facilitate the recovery stimulated by physiotherapies. mGluR5 receptor is a suitable target to address post-stroke recovery, as it is densely expressed in the brain, involved in neural plasticity, and modulates excitatory-inhibitory equilibrium. In fact, activation of MGR5 has been observed in a range of neurological disorders, including stroke, where it plays a role in so-called maladaptive rewiring of the brain following stroke. Inhibition of MGR5, on the other hand, can facilitate adaptive rewiring of the brain, promoting plasticity and creating of new functional pathways moving the neural network towards the pre-lesion state. Exciting new evidence suggests that negative allosteric modulator of the MULR5 receptor, MTEP, administered daily in rats following stroke causes a sustained and growing improvement in sensory motor function in comparison to vehicle treatment. Similar improvement can be seen with mGOR5-NAM depraglurant. Depraglurant is ideally suited to be used in tandem with physiotherapy 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 drug product ready and a strong patent position and believe that dipraglurant can become a first-in-class drug to facilitate post-stroke recovery. Let me now switch to our preclinical program, starting with our GABA-B positive allosteric modulator program, which is partnered with Indivior. The aim of this collaboration is to deliver a new treatment for substance use disorders. Indivior is supporting the research at ADEX and have recently committed an additional 2.7 million Swiss francs following funding for us to complete clinical candidate selection activities, in addition to 13.8 million Swiss francs total funded so far. As a reminder, GABA-B receptor activation has been clinically validated in a number of disease areas using Baclofen, a GABA-B autosteric agonist. Baclofen is FDA-approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including substance use disorders. However, Buclofen has a short half-life and comes with significant side effects hampering its wider use. Thus, there is a strong need for a better Buclofen. 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 effect profile. We are 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. As part of our agreement with Indivior, we have the right to select drug candidates from the funded research activities for our own independent GABA-B PAM program. We have selected to focus our independent program on cough, and therefore I will present this exciting opportunity. There is a strong rationale for developing GABA-B 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 reflex. There is a large unmet medical need in novel anti-QCIP 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. Support for using GABA-B pans in treatment of chronic cough comes from the clinical evidence that The agonist is used off-label in COV patients and from the anatomical evidence that GABA-B receptors are strongly expressed in the neuronal pathway involved in COV. Therefore, we believe that GABA-B PAMs could offer superior efficacy in COV patients. On the next slide, we showed that GABA-B PAMs 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 of Gafapixone. Therefore, we believe that Gabapipam could be an innovative new treatment of chronic cough administered once daily via oral dosing and offering improved efficacy and tolerability with fewer non-responder patients, also suitable for chronic doses, therefore significantly improving patients' quality of life. 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 our partner in DPR. Now I'll pass it back to Robert for an update on our other preclinical programs.

Thank you, Michael. Let me start with an update on our M4 PAM program as a potential novel treatment of schizophrenia and other psychosis. Schizophrenia affects approximately 1% of the world population and patients have been treated with the same mechanism of action for the last 50 years with limited efficacy and significant durability issues, often leading to treatment discontinuation and relapse. This space is seeing a major breakthrough with the advent of a completely novel approach based on activation of muscarinic M4 acetylcholine receptors. The recent positive readout of a third phase III registrational study of CAR-XT, a combination of xenomenine, a non-selective M1, M4 agonist, and a peripherally restricted panmuscarinic antagonist, strongly validates the M4 receptor activation approach. In addition, a phase 1B testing of M-raclidine and M4-PAM developed by Cerevel in schizophrenia patients showed an antipsychotic effect, paving the way for our M4-PAM program. Without going into too much detail, the mechanism of action of muscarinic M4 acetylcholine receptors allows to reduce striatal dopamine tone without directly blocking the dopamine receptors. the strategy used by current antipsychotic agents. This allows to retain a therapeutic effect without the side effects of typical and atypical antipsychotics. Standard-of-care antipsychotics, as well as non-selective muscarinic agents, suffer from significant side effects, leading to high treatment discontinuation rate. CAR-XT and emraclidine are significant steps up in the realm of schizophrenia treatment. but selectivity issues may still result in suboptimal tolerability. We are therefore, in our M4 positive allostatic modulation program, aiming at identifying highly selective and brain-penetrant molecules, offering potential best-in-class efficacy and tolerability. We are currently working on highly differentiated and novel chemical theories identified from our proprietary chemical library of small molecules with our specific allosteric modulation biological assays. We have made great progress in optimizing compounds, identifying highly M4-selective compounds, demonstrating an effect in preclinical models of schizophrenia for several lead compounds, and having entered into clinical candidate selection phase, aiming to identify drug candidates ready to enter IND-enabling studies in 2024. Onto our mGlu7 negative allostatic modulator program for stress-related disorders, including post-traumatic stress disorder. The program has delivered multiple drug candidates, and we have selected one to advance into IND-enabling studies. 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 events 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, leading to a high relapse rate. Novel approaches using psychedelic drugs such as ketamine, MDMA, or psilocybin show promise, but are hampered by restricted access and possible serious side effects. Based on the evidence accumulated so far, we believe our mGlu7 NAM has the potential to become a PTSD treatment with better efficacy and tolerability. The rationale for inhibiting mGlu7 receptors as an approach for treating stress-related disorders including PTSD is based on a wide body of preclinical evidence from the axolytic profile of mGlu7 knockout or knockdown animals to studies using mGlu7 negative allostatic modulators performed at edX as well as by many other groups. The specific mechanism of our mGlu7 NAN is through modulating specifically the traumatic memory while not affecting other aspects of memory. Our program has identified a lead drug candidate with a profile suitable for once per day chronic treatment. 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. We have completed the preclinical package for our lead drug candidate, which pending funding is ready to enter IND Enabling Studies. 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 significant progress achieved in our GRB-PAM and M4-PAM programs towards identifying clinical candidate compounds, as well as the delivery of an mGlu7-NAM candidate ready to start R&D enabling studies, offer the validation of the quality and productivity of our R-State modulation platform. This concludes our prepared remarks on the progress of our R&D programs and now handed back to Tim.

Thanks, Robert. I'll now switch to an overview of the financials. Starting with the income statement, we recognised 0.6 million of income in Q2 compared to 0.2 million in Q2 of 2022. The primary source of revenue continues to be the research funding from our collaboration partner, Indivior. In terms of expenses, R&D expenses were 1.9 million in Q2 compared to the 5.8 million in Q2 of 2022. The significant decrease of $3.9 million is primarily due to the termination of different grant development in PDLID in June of 2022 and the winding up of all the costs related to this study. G&A expenses were $1.3 million in Q2 compared to $1.5 million in Q2 of 2022. The decrease of $0.2 million is primarily driven by reduced costs of D&O insurance. The finance result is primarily related to foreign exchange losses on US dollar cash deposits. Now onto the balance sheet. Our assets are primarily held in cash and we completed Q2 with 7.2 million Swiss francs of cash held in Swiss francs and in US dollars. Other current assets amount to 1.5 million and primarily relate to prepayments in DNO insurance premiums and retirement benefits. as well as trade receivables that mainly relate to the research agreement with Indivior. Current liabilities of 2.7 million decreased compared to the end of 2022 and primarily relate to R&D payables and accruals. Non-current liabilities relate mainly to retirement benefit obligations. Now to summarise, the development of 71149 in epilepsy is ongoing with Cohort 2 recruiting patients and we are encouraged by the recommendation of the Independent Review Committee to continue the study. We continue to believe in the value of Diproclorant and completing preclinical profiling in post-stroke recovery. In parallel, we are pursuing collaborative arrangements to advance development and look forward to sharing more information on this subject in the future. Our preclinical programs continue to make solid progress towards delivering drug candidates for future clinical development and important therapeutic areas, including stress-related disorders, chronic cough, cognition, and schizophrenia. As a reminder, our portfolio was discovered in-house from our pioneering Allostate-modulated drug discovery platform. And consequently, we have significant intellectual property in all programs. We have a track record of securing partnerships at the preclinical stage and supportive top-tier investors. We recognize that 2023 stock performance and current market capitalization is very disappointing. However, we are having multiple business discussions across our portfolio, and we strongly believe that if we are successful in 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. 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. To withdraw your question, please press star 11 again. To ask a question via the webcast, please access the Ask a Question tab. This will take a few moments.

Now we're going to take our first question.

And the first question comes from the line of Bubalan Pachayapan from HC Wainwright. Your line is open. Please ask your question.

Good morning, team. This is Bubalan dialing in for Ram Silvaraju. Thanks for taking our questions. Firstly, with respect to the proof of concept epilepsy trials being conducted by Janssen, I'm curious when the top-line data will be released.

Yes, excellent question. So as we pointed out, cohort one of 60 patients is completed. Cohort two has been recruiting for some time, so it's well on its way to be recruited. Now, if you look on clinicaltrials.gov, Janssen are guiding the completion for April 2024. They're also talking about recruiting up to 160 patients in three cohorts. So at the moment we are having discussions with Janssen about being able to give some guidance on the answer to your question. So at the moment, we are not able to tell you when results are going to come out, but it very much depends on whether Janssen move into a third cohort. as you can imagine. If you look at what we've said and you look at what's in clinicaltrials.gov, you can imagine that that is all dependent. So as soon as we have information from Janssen and we are authorized to communicate, we'll be communicating publicly. And I'm hoping to be able to do that before the end of the year. So I'm sorry I can't give you a better answer than that, but Now you know where we stand.

That's fair enough. And then secondly, with respect to the in DVR collaboration, then might a candidate be advanced into the clinic?

Yeah, so this discovery program has received significant financial resources from Indivior. I mean, another 2.7 million of commitment added to the 13.8 that's already been spent. It's been very, very successful. There are multiple drug candidates. Indivior are spoilt for choice. They are profiling many candidates in parallel. We are also profiling a separate set of candidates for chronic cough. And I think we're in a very, very good shape to be able to select a compound by the end of the year, beginning of next year, with the ideal profile. I would like to give you more detail about what the ideal profile is. But unfortunately, at the moment, we We are keeping that, you know, confidential.

That's clear. And then thirdly, do you have any updates on the initiative to unlock value from depraglurant?

Sorry, can you repeat your question? I didn't quite hear that.

Do you have any updates on the initiative to unlock value from depraglurant?

Yeah, so as Misha said, we've wrapped up the PD-LID development. We still believe in PD-LID, but we believe there are some significant challenges about running clinical studies in PD-LID. So we have decided, following a detailed analysis, to go into post-stroke recovery. And we've secured an option to license a use patent of mGluR5 in post-stroke recovery. And we are now working with a group, a third party, to profile diproglurant in preclinical models of stroke and post-stroke recovery. And if the data from that preclinical evaluation comes out successfully, we will be moving the compound into post-stroke recovery. In parallel, we are having discussions with multiple partners who have some interest in post-stroke recovery, but also have interest in diprogluron for some of the other disease areas where there's some significant validation. We know where these discussions start, we just never know where they end.

Great. And then one final question from us. Can you discuss your cash runway guidance?

Yeah, so as you can see, we've significantly reduced the cash burn. Many of the activities we've spoken about are being funded through non-dilutive funding and are not being funded by our balance sheet. I mean, the Janssen Collaboration is funded by Janssen. The whole GABA-B program is being funded by Indivior. The Dip Proclorant Stroke is not being funded by us either. So we've managed to, even as a dual-listed public company, really reduce our cash burn um 7.2 million um on the balance sheet the end of june we're burning well under a million a month um you can see that the gna is uh is becoming a significant part of the overall cash runway um because as we spend less and less of our balance sheet actually on the r d But we're guiding today in our best estimate based on what we're planning to achieve is that we will have cash through into 2024. And if we further cut back on activities, we can probably extend it for even longer.

Thanks so much for taking our question.

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 ask a question via the webcast and please access the Ask a Question tab. There are no further questions at this time, and I would like now to hand our conference over to Tim Dyer for any closing remarks.

Thank you. Well, thank you, everyone, for attending our Q2 first half results conference call. We very much look forward to speaking to you again soon and being able to update you on the progress we're making. I wish you all a very nice day.