Addex Therapeutics Ltd

Good day and thank you for standing by. Welcome to the ADECS Therapeutics full year 2024 financial results and corporate update conference call. At this time all participants are in listen only mode. After this speaker's presentation, there will be the question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone keypad. You will not hear an automated message advising your hand is raised. To withdraw a question, please press star 1-1 again. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link at any time during the conference. Please be advised that this conference is being recorded. I would now like to hand the conference over to our first speaker today, Tim Dyer. Please go ahead.

Thank you. Hello everyone. I would like to thank you all for attending our 2024 full year financial results conference call. I'm here with Mikhail Kalinichev, our head of translational science. We 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 MGLU R5 negative allostatic modulator program for brain injury recovery, and our GABA B positive allostatic modulator pre-clinical program for COF. I will then review our 2024 full year financial results. Following that, we will open the call for Q&A. In 2024, we launched NeuroSterics with a 65 million US dollar series A financing led by perceptual advisors and secured financing for our platform and pre-clinical portfolio. As part of this transaction, we received five million Swiss francs in cash and a 20% equity interest in NeuroSterics. We have made excellent progress in our GABA B PAM program with the completion of the R&D phase delivering multiple drug candidates. Our partner in Divio has selected a compound for development in substance use disorders and has started IND enabling studies. We expect to be able to announce results from these studies soon. Under the terms of the agreement, ADEX is eligible for payment of up to 330 million US dollars on successful achievement of pre-specified regulatory, clinical and commercial milestones as well as tiered 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 COF. We have substantially completed the pre-clinical profiling of our compound for chronic COF and are currently working to secure funding to advance this program into the IND enabling studies. Misha will be sharing some of this data with you later in our presentation. We've repositioned DIP-regulant, our MgloR5 negative-alpha modulator for brain injury recovery and currently completing negotiations to access intellectual property covering the use of MgloR5 inhibitors in this interesting therapeutic indication. Misha will also talk more about this exciting program later in the presentation. Following the decision last year by our partner Johnson & Johnson to terminate development of ADX 71149, we have regained the rights to this phase two asset with a high value data set and significant materials. We have completed the year with 3.3 million Swiss francs of cash, which provides us with the cash runway through mid-2026. I'd like to highlight that the cash burn has been significantly reduced following the NeuroSteric spin-out transaction. However, current cash does not fund the progression of our under-partnered programs into the clinic. Now onto the pipeline. We continue to believe in DIP-regulant and executing our plans to reposition the development for brain injury recovery, as mentioned. Our partner in Divio has selected a -B-PAM, Drug Candidate for Development in Substance Use Disorders and started IND Enabling Studies. We're advancing an independent -B-PAM program for chronic cough and expect to start IND Enabling Studies this year, subject to securing financing. And NeuroSterics has made excellent progress in advancing its pipeline, including starting IND Enabling Studies with its M4-PAM program. Now I will hand over to Misha, who will give you some more details about our exciting portfolio.

Thanks, Tim. Hello, everyone. I will start by speaking about DIP-regulant and our plans for development in brain injury recovery. Following termination of the development of DIP-regulant in PD-LID, we embarked on a detailed evaluation of a number of potential indications of interest for future development. We have completed this exercise and have identified brain injury recovery as an interesting indication for the future development. We believe the differentiated profile of DIP-regulant makes it particularly suitable for enhancing the impact of rehabilitation in traumatic brain injury and stroke patients. 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 survivals 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. M-GluR5 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 M-GluR5 has been observed in a range of neurological disorders, including stroke, where it plays a role in maladaptive rewiring of the brain following stroke. Inhibition of M-GluR5, on the other hand, can facilitate adaptive rewiring of the brain, promoting neuroplasticity and creating of new functional pathways, moving the neural network towards the pre-lesion state. Exciting new evidence recently published in the journal Brain, suggest that the negative allosteric modulator of M-GluR5 M-TEP, administered daily in red following stroke, results in a sustained and growing improvement in sensorimotor function, in comparison to vehicle treatment. Similar improvement in sensorimotor function was observed in animals treated with our M-GluR5 now depraved. MRI imaging of the resting state functional connectivity in post-stroke rodents, shows that daily administration of M-TEP also stimulates intra and interhemispheric 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. Depraved Lurant 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 pattern position and believe Depraved Lurant can become a first in class drug to facilitate post-stroke recovery. We can also speculate that Depraved Lurant mediated adaptive rewiring and facilitation of recovery following brain damage would also be seen in traumatic brain injury patients. Let me now switch to our GabaB positive allosteric modulator program, which is partnered with DVR. The aim of this collaboration is to deliver a better baclofen for substance use disorders. As a reminder, GabaB receptor activation has been clinically validated in a number of disease areas using baclofen, a GabaB allosteric agonist. Baclofen is an FDA approved drug for treatment of spasticity and is widely used off label to treat numerous diseases, including substance use disorders and others. 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 modulator approach and their differentiated pharmacology, having the efficacy of baclofen, but longer half-life and improved side effect profile. Our partner in DVR has selected a GabaB PAMTRA candidate for development in substance use disorders and started ID enabling studies. As part of our agreement with DVR, ADEX has exercised its right to select a compound to advance its own independent GabaB program for the treatment of chronic cough. I will now present this exciting opportunity. There is a strong rationale for developing GabaB PAMTS 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 and met medical need in novel antitussive 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 GabaB PAMTS 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 the newly approved P2X3 inhibitor, Kefapixalt. Support for using GabaB PAMTS in treatment of chronic cough comes from the clinical evidence that Baclofen is used off label in cough patients and from the anatomical evidence that GabaB receptors are strongly expressed in airways and in the neural pathway regulating cough. Therefore, we believe that GabaB PAMTS could offer superior efficacy in cough patients. The pre-ID activities, including in vivo proof of concepts, 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 one mic per kick and ED50 of six mic per kick 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 this year. The next set of slides describes the vivo proof of concepts studies in models of cough. In a model of citric acid induced cough in guinea pigs, acutely administered compound A delivered a robust actinusive activity profile, reducing the cough number and increasing the latency to first cough. The actinusive profile of Baklophen and the same model was more modest as cough latency remained largely unchanged. In the same experiment, compound A was better tolerated than Baklophen as there were no marked changes in respiratory rate, body temperature and plasma concentration of growth hormone at up to 60 mic per kick. In contrast, Baklophen suppressed respiratory rate, reduced body temperature by near two degrees Celsius and increased growth hormone concentration in plasma starting three mic per kick dose. Thus, we believe we achieved our goal to discover a better Baklophen for cough. In a model of citric acid induced cough in guinea pigs, sub chronically 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 on the sub chronic versus acute treatment regimens. In the model of ATP potentiated citric acid cough in guinea pigs in a head to head comparison experiment, acutely administered compound A and the P2X3 inhibitor had similar efficacy and tolerability profiles. In summary, we have selected a clinical candidate for chronic cough with a robust reproducible antigen efficacy of one mic per kick and good PKPD. The compound showed a favorable developability profile in non-GLP tox studies performed in rats, dogs, and non-human primates. We are on track to start ID enabling studies this year. This concludes our prepared demands of the progress of our R&D programs. Now I hand it 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 NeuroSterics transaction. Due to the excellent progress made by our R&D team in advancing our own part in the pre-clinical portfolio, our M4PAM, MDR7NAM, and MDR2 negative antistatic modulator programs reached a stage of doing where they needed significant amounts of financing to progress into the clinic. Unfortunately, given the low market capitalization of ADECS, raising the amount of capital needed would have been extremely challenging and highly diluted to our shareholders. So we decided to spin out these programs and our platform into a new private company and raise the necessary capital directly into the new private company. We believe this is an excellent transaction for ADECS shareholders as it has secured five million Swiss francs for ADECS and removed the financing overhang on the ADECS stock. We have retained a 20% interest in NeuroSterics so we can benefit from the upside from advancing the programs into the clinic which is now secured by the $65 million capital from a high quality investor syndicate led by sector advisors. As part of the transaction, we have divested our LSteric modular technology platform including the majority of our stock have we have entered into a service agreement with NeuroSteric to ensure that we can access skills needed to execute on our business strategy. Now for a review of the 2024 financials. Following the NeuroSteric transaction, we were required under IFRS to identify continuing operations related to our retained business and discontinued operations related to the divested business solves NeuroSterics. All income and expense items related to the discontinuing operations have been reclassed under a specific line of the comprehensive loss called net profit or loss from discontinued operations. Starting with the income statements which related to continuing operations, we recognize 400,000 of income in 2024 compared to 1.6 million in 2023. The decrease is primarily due to the completion of the funded research phase of our collaboration with Indivior in June of 2024. Continuing R&D expenses of 0.9 million remain primarily relate to our gather B-PAM program decreased by 0.2 million in 2024 compared to 2023 mainly due to the completion of the research phase of the Indivior collaboration. Continuing R&D, sorry, continuing GNA expenses of 2.3 million primarily relate to corporate development activities decreased by 0.4 million Swiss francs in 2024 compared to 2023 primarily due to the reduced GNO costs. The finance result loss in 23 has turned to a small gain primarily due to a significant reduction in Forex exposure as we are now holding most of our cash in Swiss francs. The share of the net loss of associates of 2.2 million relates to the 20% equity interest received as part of the consideration for the divestment of part of our business to Neuris Derricks which is being accounted for using the equity method under IFRS 12. Under IFRS we are required to recognize our share of their results. Now for the balance sheet. Our assets are primarily held in cash and we completed 2024 with 3.3 million Swiss francs of cash held in Swiss francs in US dollars. Other current assets amounts to 0.2 million primarily rate prepaid R&D costs. Our non-current assets of 7.1 million as of December 31, 2024 primarily relate to the 20% equity interest in Neuris Derricks Group recorded on the balance sheet under the equity method of accounting for associates. Current liabilities of 0.8 million as of December 31, 2024 decreased by 2.1 million compared to December 31, 2023 and primarily relate to R&D related accruals and payables. Non-current liabilities of 0.2 million as of December 31, 2024 decreased by 0.4 million compared to December 31, 2023 primarily due to the reduction in retirement benefit obligations following the transfer of staff to Neuris Derricks. Now for the cash flow statement. At the end of 2024 the cash balance amounts to 3.3 million and decreased by 0.6 million compared to the beginning of the year. The 5 million gross proceeds received as part of the consideration received from the divestment or part of our business was offset by the operating costs of continuing activities. Now to summarize, we have made excellent progress in our GABA-V PAM program with our partner in Divior, selecting a compound for development and substance use disorders and starting IND enabling studies in the second half of 2024. Neuris Derricks has made excellent progress with their lead M4 PAM drug candidate starting IND enabling studies in Q3 of 2024. Dipre Blanc is ready to restart clinical development, brain injury recovery. Our independent GABA-V PAM COST program has demonstrated excellent preclinical efficacy and tolerability with IND enabling studies ready to start. We're validating partnerships with industry, supported investors and 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 over the phone, please press star 1-1 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 1-1 again. Alternatively, you can submit your questions via the webcast. Please don't bother with the compiled OCR and Roster. This will take a few moments. And now we're going to take our first question. And it comes from Raghuram Selvaraju from HC Wayne Wright & Co. Your line is open,

please ask your question. Excuse me, Raghuram, can you hear us? Your line is open for questions. Dear participants,

once again, if you wish to ask a question, please press star 1-1 on your telephone keypad and wait for a name to be announced. Alternatively, you can submit your questions via

the webcast. And we have on the line Raghuram Selvaraju from HC Wayne Wright & Co. Your line is open, please ask your question. My apologies, Raghuram, we cannot hear you. Dear speakers, we'll just give a moment

for our participants to submit questions. And now we have another analyst. Just give us a moment. And the question comes from Peter A. Lake from A-Consult. Your line is open, please ask your question.

Good afternoon. I would like to know about NeuroStereics. I think that's a new company. Do they have other projects other than what you now sold to them? Thank you for an answer.

Did

you hear me?

Yes, thank you very much for your question. And, yeah, so NeuroStereics was actually founded by ADEX as a spin-out company. So we packaged up our platform, including facilities, people, and we put it into a new Swiss company, which we then sold to a US LLC, which had been capitalized with cash and a capital commitment of 65 million from a syndicate of US investors led by perceptual advisors. And the transaction involved buying the Swiss subsidiary for a mix of cash and equity. So ADEX received a 20% interest in the US LLC plus five million of cash, and the rest of the 60 million is being deployed into the portfolio that was contributed into the NeuroStereics Swiss sub. And there are four programs. The lead program is a muscarinic M4 PAM, and then there is an MGLU-R7 negative modulator program, and also an MGLU-R2 negative ulceric modulator program. And then another program, which is undisclosed at the very early stages of discovery. And they're all focused on neuropsychiatry, schizophrenia, mood disorders, and cognition, and an undisclosed CNS indication. Does that answer your question?

It does, but I guess that means that you have a lot of additional work just to sort of control the activities of NeuroStereics and of your 20% investment there, is that correct?

Well, NeuroStereics has its own team, and most of, in fact, NeuroStereics has most of the old ADEX team, plus new employees that have been recruited. And I am currently the CEO of NeuroStereics and the CEO of ADEX. And my role as CEO of ADEX is under a service agreement between NeuroStereics and ADEX.

Okay, that explains it. Thank you very much, Tim.

You're

welcome,

thank you, Peter.

Thank you. Now we'll proceed with other questions, and it comes to the line of Raghuram Selvaraj, from HC, Wainwright and Co. Your line is open, please ask your question.

Thanks for taking my question. I wanted to ask if it would be possible for you to enumerate how you are seeing the strategic environment and essentially evolving for DIPRA-GluRANT, particularly within the context of neurorehabilitation, and if you could also comment on the potential ability to deploy DIPRA-GluRANT in neurorehabilitation contexts, not involving post-stroke recovery. Thank you.

Nisha, would you like to take this question? Yes, absolutely. Okay.

We are, as DIPRA-GluRANT is our clinical asset that has shown very good tolerability, both in healthy subjects and in patients with Parkinson's disease, it gives us an opportunity to perform a number of small clinical pharmacology studies aiming to assess improvement and modulational plasticity in human subjects. We'll probably start with healthy volunteers and look at multiple sites of potential plasticity from motor cortex to sensory to midbrain to spinal cord. Also evaluate what type of treatment conditions is suitable and ideal for modulation, and then move forward with a similar study but performed in post-stroke patients. So this will be, as we see, two clinical pharmacology studies with specific questions, very much focused on neuroplasticity. And we believe these studies will first confirm the modulation of plasticity in humans, in particular in post-stroke patients, and will help us in designing proper phase 2A study on rehabilitation approaches. So that's a very overall summary of

our clinical strategy.

And then secondly, if I may, I was wondering if you could comment on the recent developments in the neuropsych field, perhaps most notably the failure of the phase three trial of CoBENFIE as adjunctive treatment in schizophrenia, and what implications this may have for future directions you pursue with one or more of the neurosterics lead assets. Thank you.

Yeah, yes, we saw the news, of course, and we believe that it has minimally any impact on our strategy. We are pursuing the strategy of monotherapy. We believe in the target, we believe in the relevance of muscorenic M4 for psychosis, so it's not going to alter our plans at all.

And then lastly, Tim, I don't know if you are in a position to comment on this at this time, but I was wondering if you could offer us some idea of what, if anything, you plan to do with the compound that was returned to ADECS from J&J, and if you see any future development path for that asset. Thank you.

Yes, we are, I mean, we're already discussing with a number of interested people and interested parties. We're doing our own evaluation. As you can imagine, this is a 20-year development in the hands of J&J. It's a very, very high quality compound with a lot of data, a lot of material, about 280 kilograms of API has been transferred to us and this is significant material for us to play with. So we're definitely looking to enter a number of collaborations to explore areas that could be pursued with the compound.

Thank

you very much.

Thank

you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad. Alternatively, you can submit your questions via the webcast. Dear speakers, we'll just give a moment to our analysts

to submit any questions. Thank you, ladies and gentlemen. This

brings the main part of our conference to close and I would like to hand back to Tim Dyer for closing remarks.

Well, thank you everyone for attending the 2024 full year results conference call and I wish you all a very nice day and we look forward to speaking to you again soon.

This concludes today's conference call. Thank you for participating. You may now disconnect. Have a nice day.