Addex Therapeutics Ltd

Hello, everyone. I'd like to thank you all for attending our 2023 Financial Results Conference call. I'm here with Mikhail Kalinchev, 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 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 the 2023 activities and recent achievements before reviewing our pipeline. I will then hand over to Mikael, who will review in more detail some of the clinical and preclinical programs. I will then speak about the recent launch of NeuroSterics before reviewing our 2023 full-year financial results. Following that, we will open the call for Q&A. So, to start with the highlights. Our partner, Janssen, has completed the Phase 2 Epilepsy Clinical Study, and we are now expecting to report data from the study by mid-May this year. I'd like to remind you that an independent interim review committee established by Janssen to review the unblinded data from part one of cohort one 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 safe and well tolerated and may be having a positive impact on this patient population. We continue to believe there is value in Dipragluron and have substantially completed our evaluations of future development. For dyskinesia and Parkinson's disease, we have worked with experts on a new trial design which we believe will overcome the recruitment challenges we encountered in the past. However, our preferred strategy for this indication is to secure a partner prior to restarting development. We've also identified post-stroke recovery as an interesting area for future development for Dipragluron and are currently profiling Dipragluron preclinical models of post-stroke recovery. Furthermore, preclinical data was recently published in the journal Brain, which strongly supports the rationale for inhibition of MgluR5 receptor as a treatment for post-stroke recovery. We are pursuing discussions with potential funding sources, including industry partners, for this interesting potential future development path for dipragluron. In 2023, we announced the extension of our GABA-B PAM Indivio collaboration through until June 2024 with 2.7 million Swiss francs of additional research funding. With this additional R&D funding, we have made excellent progress and advanced multiple drug candidates through clinical candidate selection phase. 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 indication. We are focusing our independent program on cough. During 2023, we demonstrated robust efficacy with multiple drug candidates in preclinical models of substance use disorder and cough, and are therefore well on track to delivering drug candidates for Indivio and for our own independent cough program. We expect Indivio and ourselves to select compounds to advance into IND-enabling studies in the second half of 2024. We led a consortium that was awarded a 4 million euro grant from the Eurostars grant program to advance our mGluR2 negative allostatic modulator program through to delivery of clinical candidates. This is an exciting program for mild neurocognitive disorders that is currently in lead optimization. Last but by no means least, we very recently announced the launch of NeuroSterics, with a Series A financing round of $63 million, led by Perceptive Advisors. This is an innovative financing transaction that provides us with the resources needed to advance our preclinical portfolio without diluting our shareholders' interest in our clinical stage assets and partner program. I will speak more about this innovative financing transaction later in the presentation. Now for a quick review of our pipeline. As mentioned, we are excited to see the Phase 2 data from our epilepsy program, which is being executed by Janssen. We continue to believe in DIPP Proclorant and are executing our plans to recommence development in both dyskinesia-associated Parkinson's disease, as well as preparing DIPP Proclorant for a Phase 2 proof of concept study in post-stroke recovery. Our GABA-B-PAM collaboration is coming to the end of the discovery phase with candidates on track to start IND-enabling studies later this year. Indivio is executing the substance use disorder program, and we are preparing for candidates for development in COF. Now I will hand over to Misha, who will give you more details about our exciting portfolio.

Thanks, Tim. Hello, everyone. I will start by speaking about our Phase II epilepsy study with ADEX 71149, which has been completed recently by Janssen. 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. As a reminder, ADHEC 71149 is a metabotropic glutamate receptor subtype 2, or mGlu2 positive allosteric modulator, discovered in partnership with Janssen using ADEX's proprietary allosteric modulation platform. ADEX 71149 has demonstrated both standalone efficacy and a strong synergistic effect in combination with inhibition of SV2A, such as Keppra and Previac. ADHEC 71149 has also been thoroughly profiled in preclinical and clinical studies by Janssen, demonstrating its good safety and tolerability profile in healthy volunteers and patients. Janssen, responsible for development, have just completed both the Phase II study and an open-label extension study in epilepsy patients. Results are expected by mid-May this year. We have significant economics in our deal with Janssen, with pre-launch milestones of 109 million euros, low double-digit royalties on net sales, and Janssen is responsible for all development costs. To illustrate the synergistic effect seen with the combination of ADEC 71149 and levatiracetam, the active molecule in Capra, Here are the data obtained in this 6 Hz psychotomotor seizure model, widely recognized as having high transpassional value to characterize the efficacy of anti-epileptic drugs. As a reminder, ADEX 71149, given alone in this model, produces a robust protection against 6 Hz induced seizures with an ED50 of approximately 20 mSg per kick. In combination studies with varying doses of levatiracetam, a fixed dose of ADEX7149 increased the potency of levatiracetam, leading to approximately 35-fold shift in its ED50 values. Conversely, using a fixed dose of levatiracetam with varying doses of ADEX7149, it increased the potency of ADEX7149, leading to approximately 14-fold shift in its ED50, suggesting a positive pharmacodynamic relationship or strong synergistic effect for the two molecules when given in combination. This extraordinary effect of a combination of an NGlu2PAM with an SV2A antagonist has been patented. offering a strong protection for this program until 2035 without additional extensions. This is the Phase II study design. The study is a double-blind, placebo-controlled proof-of-concept study enrolling patients with focal-onset seizures who have suboptimal response to treatment with levatiracetam, CAPRA, or privaracetam, Priviac. In this phase 2 study design, patients established a 28-day seizure count over a 56-day baseline period prior to being randomized to receive either ADEC 71149 or matching placebo. The primary endpoint in this 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 phase of efficacy phase. Part two includes patients who did not reach their baseline incision count during part one of the study and continue on their randomized drug or placebo. An open-label extension study was ongoing in parallel offering all patients the opportunity to get treated with ADEX 71149 in combination with levotiracetam or privaracetam. As previously announced last year, an independent interim review committee convened by our collaboration partner recommended to continue the study following review of unblinded data from Part 1 of Patient Cohort 1. This was encouraging news, suggesting that ADHEC 71149 is safe and well-tolerated, and potentially offering benefit to epilepsy patients. We look forward to sharing the top-line data of cohorts one and two in mid-May this year. Following termination of the development of Dibravirant in PDELIT, we embarked on a detailed evaluation of a number of potential indications of interest for future development, including substance abuse disorder, migraine, and other forms of pain. We have completed this exercise and have identified post-stroke recovery as an interesting indication for the future development of the background. We believe the differentiated profile of the background makes it particularly suitable for post-stroke recovery. 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 stroke 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. Englu5 receptor is a suitable target to address post-stroke recovery. as it is densely expressed in the brain, involved in neuroplasticity, and modulates excitatory-inhibitor equilibrium. In fact, activation of NGOR5 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 NGOR5, on the other hand, can facilitate adaptive rewiring of the brain, promoting neuroplasticity and creating of new functional pathways, moving the neural network towards a pre-lesion state. Exciting new evidence recently published in the journal Brain, suggests that negative allosteric modulator of MGLU5, M-TEP, 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 depragular. MRI imaging of the resting state functional connectivity in post-stroke rodents shows that daily administration of MTEP also stimulated intra- and inter-hemispheric connectivity in the brain disrupted by stroke. It is important to note that improvement in brain connectivity after stroke is known to correlate with functional recovery and is observed across species. Depravirant is ideally suited to be used in tandem with rehabilitation therapies 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 a drug product ready and a strong patent position and believe dipragluron can become a first-in-class drug to facilitate post-stroke recovery. We can also speculate that dipragluron-mediated adaptive rewiring and facilitation of recovery following brain damage can also be seen in traumatic brain injury patients. Let me now switch to GABA-B positive allosteric modulator preclinical 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 has recently committed an additional 2.7 million Swiss francs funding for us to complete clinical candidate selection activities, in addition to 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 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. 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 H2 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 COF, And therefore, I will present this exciting opportunity. There is a strong rationale for developing gabapipams 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 antitrusive drugs as current standards of care are ineffective in 30% of patients and 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 gababepams 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 a newly approved P2X3 inhibitor, Kefapaxone. Support for using GabaV PAMs in treatment of chronic cough comes from the clinical evidence that Baclofen, a GabaV agonist, is used off-label in COF patients and from anatomical evidence that GABA-B receptors are strongly expressed in airways and in the neuronal pathway regulating COF. Therefore, we believe that GABA-B PAMs could offer superior efficacy in COF patients. Therefore, we believe that GABA-B PAMs could be an innovative new treatment of chronic cough administered once daily via oral dosing and offering improved efficacy and tolerability with pure non-responder patients suitable for chronic dosing, 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 H2 2024 in parallel to delivering compounds for our partner in DVR. Now, I hand it over back to Tim.

Thanks, Misha. Now, before I move on to the financials, I would like to spend a few moments to speak about the new Asterix transaction. Due to the excellent progress made by our R&D team in advancing our unpartnered preclinical portfolio, our M4PAM, MGLU-R7 NAM, and MGLU-R2 NAM programs reached a stage of development where they now need significant amounts of financing to progress into the clinic. Unfortunately, given the low market capitalization of ADEX, raising the amount of capital needed would have been extremely challenging and highly dilutive for our shareholders. So we decided to spin out these programs and our platform into a new private company and raise the necessary capital into the new private entity. We believe this is an excellent transaction for ADEX shareholders as it has secured $5 million for ADEX and removed the financing overhang on the ADEX stock. We have retained a 20% interest in NeuroSteric so we can benefit from the upside from advancing the programs into the clinic, which is now secured by the $63 million capital from a high-quality investor syndicate led by perceptive advisors. As part of the transaction, we have divested our allosteric modulation technology platform, including the majority of our staff, and significantly reduced our cash burn going forward. However, we have entered into a service agreement with NeuroSterics to ensure that we can access the skills needed to execute on our business strategy. Now for a view of our 2023 financial results. Starting with the income statement, we recognize 1.6 million of income in 2023 compared to 1.4 million in 2022. The primary source of revenue is research funding from our collaboration with Indivio, which is recognized as the associated research costs are incurred. In terms of expenses, R&D expenses were $7 million in 2023 compared to $14.7 million in 2022. The decrease of $7.7 million is primarily due to the termination of diproclorant development in dyskinesia associated with Parkinson's disease and the disbanding of our US clinical team in 2022. G&A expenses were $5 million in 2023 compared to $7.3 million in 2022. The decrease of 2.3 million is primarily due to reduced share-based service costs and decreased D&O insurance costs. The finance results is primarily related to foreign exchange losses on cash held in U.S. dollars, partially offset by interest income on U.S. cash deposits, which we hold to hedge against near-term U.S. dollar denominated costs. Now to the balance sheet. Our assets are primarily held in cash, and we completed 2023 with 3.9 million Swiss francs of cash held in Swiss francs and US dollars. Other current assets amount to 0.4 million, primarily rate to R&D prepayments and trade receivables that mainly relate to our agreement with Indivior. Current liabilities of 2.9 million as at the end of December 2023 decreased by 0.4 million compared to the same time in 2022 and primarily relate to R&D payables and accruals. Non-current liabilities of 0.6 million increased by 0.5 million Swiss franc compared to December 31, 2022 and primarily related to retirement benefit obligations. Now to the cash flow statements. We started the year with 7 million. We raised net proceeds of 4.5 million in an equity offering executed in April 2023. We received 1.2 million from the sale of treasury shares and received 1.9 million research funding from Indivio. We spent 9.9 million on our operations. We have an unrealized gain of 0.4 million on Forex and US dollar cash balances are converted to Swiss francs, resulting in 3.9 million of cash at the end of the year. Now, to summarize, I hope you have understood how transformative the NeuroSterix deal is for addicts. We've strengthened the balance sheet and secured the financing to execute on the development of our preclinical portfolio, including advancing the very exciting M4 PAM program for schizophrenia into the clinic. Our Janssen partnership is poised to deliver phase two data in epilepsy by mid-May this year, which will be an important value inflection point for the program. and the company, and our partnership with Indivior is on track to deliver clinical candidates ready for IND-enabling studies by the end of June of this year. Dip Progleron is ready to restart clinical development and the subject of a number of partnering discussions. Our independent GABA-B PAM-COF program is on track to start IND-enabling studies also. We are validating partnerships with industry, supportive investors, and strong balance sheets 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.