Addex Therapeutics Ltd

Hello, everyone. I would like to thank you all for attending our third quarter 2024 Financial Results Conference call. I'm here with Mikhail Kalinichev, our Head of Translational Science, who will provide an update on our R&D programs. I draw your attention to the press release and the financial statements issued earlier today, which are available on our website. I also draw your attention to our disclaimers. We will be making certain forward-looking statements that are based on the knowledge we have today. I will start this conference call by giving a quick overview of our recent activities and achievements before reviewing our pipeline. I will then hand over to Misha, who will review in more detail our GABA-B PAM preclinical program. I will then review our third quarter 2024 financial results. Following that, we will open the call for questions. So we have made excellent progress in our GABA-B positive allosteric modulator program with the completion of the R&D phase delivering multiple drug candidates. Our partner, Indivior, has selected a compound for development in substance use disorder and has started R&D enabling studies. Under the terms of the agreement, ADEX is eligible for payment of up to US dollar $330 million on successful achievement of pre-specified regulatory, clinical, and commercial milestones, as well as shared royalties on the level of net sales from high single digits up to low double digits. Also under the terms of the agreement, we have the right to select compounds for development in a predefined list of reserved indications. We have selected a compound to advance our own independent GABA-B PAM program for the treatment of chronic COTS. We have some exciting data in COFF, which Misha will be sharing with you later in the presentation. So now for a quick review of our pipeline. We continue to believe in DIPRAGLORANT and are executing our plans to reposition the development for brain injury recovery. Following the disappointing results in epilepsy with ADX71149, we are working with our partner Janssen to evaluate a path forward for this program. As mentioned, our partner, Indivia, has selected a drug candidate for development in substance use disorders and has started IND-enabling studies. We are advancing an independent GABA-BPAM program for chronic cough and expect to start IND-enabling studies in 2025, subject to securing financing. Our spin-out company, NeuroSterix, has made excellent progress in advancing its pipeline, including starting IND-enabling studies with its M4PAM program. Now I will hand over to Misha, who will give you some more details about our exciting portfolio. Thanks, Tim.

Hello, everyone. Let me now speak about our GABA-B positive allosteric modulator program, which is partnered with Indivior. The aim of this collaboration is to deliver a better baclofen for substance use disorders. As a reminder, GABA-B receptor activation has been clinically validated in a number of disease areas using baclofen, a GABA-B autosteric agonist. Buclofen is FDA-approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including substance use disorder. However, bucclofen has a short half-life and comes with significant side effects hampering its wider use. Thus, there is a strong need for a better bucclofen. We believe this can be achieved with positive ulcerative modulators and their differentiated pharmacology, having the efficacy of Buclofen, but longer half-life and improved side effect profile. Our partner, Indivior, has selected a GABA-B-PAM drug candidate for development in substance use disorders, and expects to start INI-enabling studies in H1 2025. As part of our agreement with Indivior, ADDx has exercised its right to select a compound to advance its own independent GABA-BPAM program for the treatment of chronic cough. I will now present this exciting opportunity. There is a strong rationale for developing GABA-BPAMs for chronic cough. Chronic cough is a persistent cold that lasts 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 overactive cough reflex. There is a large unmet medical need in novel antidepressant drugs as current standards of care are ineffective in 30% of patients or only moderately effective in up to 60% of patients. In addition, the current treatments carry risks of serious side effects. On the next slide, we show that GABA-B PAMs are likely to have a superior tolerability profile in comparison to the current standard of care and show no taste-related side effects, as seen with a newly approved P2X3 inhibitor, gefabixant. Support for using GABA-B PAM in treatment of chronic cough comes from the clinical evidence that baclofen and GABA-B is used off-label in COV patients and from the anatomical evidence that GABA-B receptors are strongly expressed in airways and in the neuronal pathway regulating COV. Therefore, we believe that GABA-B PAMs could offer superior efficacy in COV patients. The pre-IND activities, including in vivo proof-of-concept, non-GLP talks, and CMC have been completed, and our clinical candidate has shown favorable efficacy, tolerability, and developability profiles. Our clinical candidate has demonstrated a consistent minimum effective dose of 1 mcg per kg and ED50 of 6 mcg per kg in cough frequency. No signs of tolerance were seen after subchronic dosing, and more than 30-fold safety margin was demonstrated based on tolerability biomarkers. The IND-enabling studies are planned to start in 2025. The next set of slides describe the in-vego proof-of-concept studies in models of cough. In a model of citric acid-induced cough in guinea pigs, acutely administered compound A delivered a robust antitrusive activity profile, reducing the cough number and increasing the latency to first cough. The antitrusive profile of baclofen in the same model was more modest as cough latency remained largely unchanged. In the same experiment, compound A was better tolerated than baclofen as there were no marked changes in respiratory rate, body temperature and plasma concentration of gross hormone at up to 60 mgs per kick. In contrast, Buclofen suppressed respiratory rate, reduced body temperature by near 2 degrees Celsius, and increased gross hormone concentration and plasma starting 3 mgs per kick dose. Thus, we believe we achieved our goal to discover a better Buclofen for cough. In a model of citric acid in this cough in guinea pigs, subchronically administered compound A showed signs of improved efficacy and potency and no signs of tolerance in comparison to an acute treatment. As expected, signs related to safety and tolerability of compound A remained largely unchanged under subchronic versus acute treatment regimen. And the model of ATP-potentiated citric acid cough in guinea pigs in a head-to-head comparison experiment, acutely administered compound A and a P2X3 inhibitor had similar efficacy and tolerability profiles. In summary, we have selected a clinical candidate for chronic cough with a robust, reproducible, antitrusive efficacy of 1 mg per kg and a good PK-PD. The compound showed a favorable developability profile in non-GLP TOC studies performed in rats, dogs, and non-human primates. We are on track to start IND-enabling studies early H1 2025. This concludes our prepared remarks on the progress of our R&D programs. Now I hand it back to Tim.

Now for a review of our Q3 2024 financials. Following the Nearest Derrick transaction, we were required under the IFRS to identify continuing operations related to our retained business and continued operations related to the divested business sold to Nearest Derrick. All income and expense items related to the discontinued operations have been reclassed under a specific line of comprehensive loss called net profit or loss from discontinued operations. So starting with the income statement, which relates to continuing operations, we recognized 0.1 million of income in Q3 2024 compared to 0.3 million in Q3 2023. The primary source of revenue is research funding from our collaboration with Indivio, which is recognized as the associated research costs are incurred. Continuing R&D expenses of 0.2 million primarily relate to our GABA B-PAM programme and decreased by 0.3 million in Q3 2024 compared to Q3 2023, mainly due to completion of the research phase in June of this year. Continuing G&A expenses of 0.5 million primarily relate to corporate development activities and decreased by 0.1 million in Q3 2024 compared to Q3 2023. The finance result in Q3 is primarily related to foreign exchange losses on US dollar cash balances. The share of net loss of associates is 0.9 million and relates to our investment in Eurostarix Group. Under IFRS, we are required to recognize our share of their results. So now to the balance sheet. Our assets are primarily held in cash, and we completed Q3 2024 with 3.3 million Swiss francs of cash held in Swiss francs and US dollars. Other current assets amount to 0.7 million, primarily related to prepaid retirement benefit obligations annually paid at the beginning of the year. Due to Neurostax transaction, we expect 0.4 million to be reimbursed in the short term. Current liabilities of 0.9 million as of September 30, 2024 decreased by 2 million compared to December 31, 2023, and primarily relate to CRO-related accruals and payables. Non-current liabilities of 0.2 million as of 30 September decreased by 0.4 million compared to December 31st, 23, primarily due to staff transfers to near hysterics. Now, to summarize, we have made excellent progress in our GABA-BPAM program with our partner in Divio selecting compounds for development in substance use disorders and starting IND-enabling studies in H2 of this year. NeuroSterics has made excellent progress with their lead M4PAM drug candidates starting IND enabling studies in Q3 of this year. Dipclorant is ready to restart clinical development for brain injury recovery. Our GABA-B PAM COFF program has demonstrated excellent preclinical efficacy and tolerability with IND enabling studies ready to start. We have validating partnerships with industry supported investors and a strong balance sheet 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.

Thank you, dear participants. As a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 11 again.

Alternatively, you can submit your questions via the webcast. And now we're going to take our first question over the phone.

and it comes from the land of Laurent Flamme from Zucke Cantonal Bank. Your line is open. Please ask your question.

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

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

If I may, maybe a related question. Do you see a risk for ADEX to be diluted over the coming three, four years in neurosterics?

Do I see ADEX being diluted?

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

Thank you.

Thank you.

Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad. Alternatively, you can submit your questions via the webcast. Dear speakers, we will just give a moment to our participants to press star 11 or just write down any questions. Just give us a moment. Thank you. Thank you, ladies and gentlemen. This brings the main part of our conference to a close, and I would now like to hand back to Tim Dyer for closing remarks.

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