Addex Therapeutics - Earnings Call - Q1 2025

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the Addex Therapeutics First Quarter 2025 Financial Results and Corporate Update Conference Call and Webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question-and-answer session. To ask a question during the session, you need to press *11* on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw a question, please press *11* 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, CEO. Please go ahead.

Tim Dyer (CEO)

Hello, everyone. I'd like to thank you all for attending our Q1 2025 Financial Results Conference Call. I'm here with Mikhail Kalinichev, our Head of Translational Science, who will provide an update on our R&D program. 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 mGlu5 modulator program for brain injury recovery, and I'll cover the positive allosteric modulation for the clinical program for chronic cough.

I will then review our Q1 2025 financial results. Following that, we will open the call for Q&A. Moving on to the highlights. We have had a great start to the year with several significant value-creating achievements in our pipeline. We have made excellent progress in our GABA-B positive allosteric modulator program with our partner, Indivior, who successfully completed IND-enabling studies with their selected drug candidate for substance use disorders. As a reminder, under the terms of the agreement, Addex is eligible for payments of up to $330 million 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 cough. We have substantially completed pre-clinical profiling of our selected drug candidate and recently published robust anti-tussive data in multiple pre-clinical models of cough. Misha will speak about this exciting data later in our presentation. We also regained rights to our mGlu2 positive allosteric modulator program, including the phase two asset ADX71149 from our partner, Johnson & Johnson. We're currently evaluating a number of therapeutic indications for the future development of this program. We have repositioned dipraglurant, our mGlu5 negative allosteric modulator program, for brain injury recovery and recently entered into an option agreement giving us access to an exclusive license to intellectual property covering the use of mGlu5 inhibitors in this interesting therapeutic indication. Misha will talk about this exciting program later in the presentation.

On the financial side, we completed the year with $2.8 million cash, which provides us with a cash runway through mid-2026. I'd like to highlight that the cash burn has been significantly reduced following the Neurosterix spin-out transaction. However, current cash does not fund the progress or the progression of our partnered unpartnered programs into the clinic. Now, for a quick review of our pipeline. We continue to believe in dipraglurant and are executing our plans to reposition and develop in brain injury recovery. As mentioned, our partner, Indivior, has selected a GABA-B PAM drug candidate for development in substance use disorders and has successfully completed IND-enabling studies to advancing our independent GABA-B program for chronic cough and expects to start IND-enabling studies this year as subject to securing financing.

Neurosterix has made excellent progress in advancing its pipeline, including starting R&D enabling studies—sorry, completing R&D 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.

Mikhail Kalinichev (Head of Translational Science)

Thanks, Tim. Hello, everyone. I will start by speaking about Dipraglurant and our plans for development in brain injury recovery. Following termination of the development of Dipraglurant in TdLID, we embarked on the 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 Dipraglurant makes it particularly suitable for enhancing the impact of rehabilitation in traumatic brain injury and stroke patients. There is a large number, large 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. mGlu5 receptor is a suitable target to address post-stroke recovery, as it is densely expressed in the brain, involved in neuroplasticity, and modulates excitatory inhibitory equilibrium. In fact, activation of mGlu5 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 mGlu5, on the other hand, can facilitate adaptive rewiring of the brain, promoting neuroplasticity and creating new functional pathways, moving the neural network towards the pre-lesion state.

Excited new evidence recently published in the journal Brain suggests that the negative allosteric modulator of mGlu5, MTEP, 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 Dipraglurant. MRI imaging of the resting state functional connectivity in post-stroke rodents shows that daily administration of MTEP 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. Dipraglurant 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 dipraglurant can become a first-in-class drug to facilitate post-stroke recovery. We can also speculate that dipraglurant-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 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 allosteric agonist. Baclofen is FDA-approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including substance use disorders.

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 that this can be achieved with positive allosteric modulators and their differentiated pharmacology, having the efficacy that is similar or better than that of baclofen, 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 has started IND-enabling studies in H2 2024. As part of our agreement with Indivior, Addex has exercised its right to select a compound to advance its own independent GABA-B PAM program for the treatment of chronic cough. I will now 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 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 GABA-B PAMs are likely to have a superior tolerability profile in comparison to current standards of care and show no taste-related side effects, as seen with a newly approved P2X3 inhibitor, Gefapixant.

Support for using GABA-B PAMs in treatment of chronic cough comes from the clinical evidence that baclofen, a GABA-B agonist, is used off-label in cough patients, and from the anatomical evidence that GABA-B receptors are strongly expressed in airways and in the neural pathway regulating cough. Therefore, we believe that GABA-B PAMs could offer superior efficacy in cough patients. The pre-IND activities, including Indivior proof-of-concept studies, non-GLP-tox, and CMC, have been completed. Our clinical candidate has shown favorable efficacy, tolerability, and developability profile. The compound has demonstrated a consistent minimum effective dose of 1 mg/kg and ED50 of 6 mg/kg in models of cough Indivior. No signs of tolerance were seen after subchronic dosing, and more than 60-fold safety margin was demonstrated based on respiratory depression as sedation biomarker. The IND-enabling studies are planned to start this year.

The next set of slides describes the Indivior proof-of-concept studies in models of cough, where we evaluated efficacy and tolerability of our clinical candidate compound A and also characterized clinically active antitussive drugs, Nalbuphine, Baclofen, Codeine, and the P2X3 inhibitor in the same model. In the model of citric acid-induced cough, acutely administered compound A delivered a robust antitussive efficacy, reducing the cough number dose-dependently and achieving 70% reductions at the maximal doses. The antitussive profile of compound A was similar to that of Nalbuphine, Baclofen, and Codeine. Compound A also increased the latency to first cough dose-dependently, thus delaying the onset of cough. The antitussive profile of compound A in delaying cough onset was similar or better than that of reference trials. In the same experiment, compound A appeared well tolerated, as there were no marked changes in respiratory rate at up to 60 mg/kg.

In contrast, Nalbuphine, Baclofen, and Codeine resulted in robust reduction of respiratory rate at their highest doses, indicative of sedative-like effects. When evaluation of the antitussive efficacy across compounds was done at the respective highest doses free from respiratory effects, compound A was shown to be superior to reference drugs in both cough number and cough latency measures. In the chronically administered compound, A showed signs of improved efficacy and potency, and no signs of tolerance in comparison to an acute treatment. In the model of ATP-potentiated citric acid cough, Indivior, in a head-to-head comparison experiment, acutely administered compound A exhibited a trend of better efficacy and potency in comparison to that of P2X3 inhibitor, while showing signs of similar tolerability. In summary, we have selected a clinical candidate for chronic cough with a robust reproducible antitussive efficacy of 1 mg/kg and good PK/PD.

The compound has the potential to have the best disease efficacy and tolerability profile and broad application in cough patients. The compound showed a favorable developability profile in non-GLP-tox studies performed in rats and non-human primates. We are on track to start IND-enabling studies this year. This concludes our prepared remarks on the progress of our R&D program. Now, I hand it back to Tim.

Tim Dyer (CEO)

Thanks, Misha. Now, for review of our Q1 2025 financials. Following the Neuraxpharm transaction, we were required under the IFRS to identify continuing operations related to our retained business and discontinued operations related to the divested business sold to Neuraxpharm. All income and expense items related to the discontinued operations have been reclassed under a specific line of the consolidated loss called net loss from discontinued operations. Now, starting with the income statement, which related to the continuing operations, we recognize CHF 0.1 million of income in Q1 2025 compared to CHF 0.2 million in Q1 2024. The decrease is primarily due to the completion of the funded research phase of our collaboration with Indivior in June of last year.

Continuing R&D expenses of CHF 0.1 million primarily related to our GABA-B PAM program and decreased by CHF 0.1 million in Q1 2025 compared to Q1 2024, and again, mainly due to the completion of the research phase of our collaboration with Indivior. Continuing G&A expenses of CHF 0.5 million primarily related to corporate development activities and decreased by CHF 0.3 million in Q1 2025 compared to Q1 2024, primarily due to decreased legal fees. The finance result loss in Q1 2025 primarily relates to US dollar currency exchange differences. The share of net loss of associates of CHF 0.8 million relates to the 20% equity interest received as part of the consideration for the divestment of a part of our business to Neurosterix, which is being accounted for using the equity method. Under IFRS, we are required to recognize our share of their results. Now, to the balance sheet.

Our assets are primarily held in cash, and we completed Q1 2025 with CHF 2.8 million of cash held in Swiss francs and US dollars. Other current assets amount to CHF 0.4 million, primarily related to prepaid R&D and G&A costs. Our non-current assets of CHF 6.3 million as of 31 March 2025, primarily related to the 20% equity interest in Neurosterix recorded on the balance sheet under the equity method of accounting for associates. Current liabilities of CHF 1.1 million as of March 31, decreased by CHF 0.3 million compared to December 31, 2024, and primarily relates to accrued expenses and payables for the R&D and professional fees. Non-current liabilities of CHF 0.1 million as of March 31, 2025, decreased to CHF 0.1 million compared to December 31, 2024, primarily due to the reduction in retirement benefit obligations following changes in the financial assumptions. Now, to the cash flow statement.

On March 31, 2025, the cash balance amounted to CHF 0.8 million and decreased by CHF 0.5 million compared to the beginning of the year, primarily due to the operating costs of continuing operations.Now, to summarize, we've made excellent progress in our GABA-B program with our partner, Indivior, successfully completing IND-enabling studies with their select compound for development in substance use disorders. Neurosterix has made excellent progress with their lead M4 PAM candidates, successfully completing IND-enabling studies in Q3 2024. We have strengthened the IP in our mGlu5 NAM program, and Dipraglurant is ready to start clinical development for brain injury recovery. Our GABA-B PAM program has demonstrated excellent pre-clinical efficacy and tolerability with the IND-enabling studies ready to start. We have validated partnerships with industry-supported investors and a strong balance sheet, which puts us in a solid position to deliver on our strategic objectives.

This concludes the presentation, and we will now open the call for questions.

Operator (participant)

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star one one again. Alternatively, you can submit your questions via the webcast. Now, we are going to take the first question on the line. The question comes from the line of Raghuram Selvaraju from HC Wainwright. Your line is open. Please ask your question.

Raghuram Selvaraju (Managing Director of Equity Research)

Hi, thanks very much for taking my questions. I was wondering if you could provide us with your updated thoughts on the current competitive landscape in chronic cough, and in particular, if you could comment on the relevance of preceding programs in terms of guiding what you expect to be the clinical development pathway for your asset in this indication.

Mikhail Kalinichev (Head of Translational Science)

Yeah. Yes, of course. There are a number of compounds that are in development currently. One that I can mention in particular is Nalbuphine, and that was actually the reason we wanted to benchmark it against our compound. So Nalbuphine has shown a very promising efficacy profile in patients with IPF-related cough. By the same time, there were clear signs that were indicative of central immediate installation. That tolerability profile will be challenging once you move into the patient population that has refractory chronic coughs that are markedly younger and overall healthy in their early to mid-50s instead of early to mid-70s, as in IPF. Their level of tolerability is very different. That is where we see a significant opportunity to deliver similar efficacy with markedly improved tolerability profile and have a compound that can be applied both to IPF-related cough and refractory chronic cough.

That would be my answer to your first part of the question. In terms of our plans for development, we are planning to perform SAD and MAD in healthy volunteers and quickly go and perform a so-called challenge study, which can be done both in healthy controls and in chronic cough patients. That can be done even at the end of SAD or at the end of MAD as 1B. This offers an opportunity to have a quick and straightforward efficacy readout relatively early in development. This will, of course, be followed by a phase two study in chronic cough patients. This will be a refractory chronic cough patient. We are also considering having a more in-depth evaluation of chronic cough in these patients using more advanced technologies that are now being developed and already approved by FDA that allow 24/7 monitoring of cough.

That gives an opportunity for much more precise monitoring of cough but also better selection of chronic cough patients. That will be another innovation on our side. That is the answer to your question.

Tim Dyer (CEO)

Maybe I can just add a little bit to what Misha just said.

Raghuram Selvaraju (Managing Director of Equity Research)

Can you? Yes. Sorry. Can you also comment on? Go ahead. Please.

Tim Dyer (CEO)

Yeah. I just want to add to what Misha was saying, Ram. I think what is so exciting about this program of ours is that we know that P2X3 inhibitors, which are peripherally restricted, are showing about a 30% reduction in chronic cough. What was really exciting about the Nalbuphine data that came out from Trevi is that there were over 50% reduction in cough in chronic cough patients. This really supports our hypothesis that you need to have a molecule that is both central and peripheral. That is what we have with our compound, our GABA-B positive allosteric modulator. What you can clearly see from the data that we have generated pre-clinically is we have a much better therapeutic margin. We have reason to believe that we are going to see more than 50%.

We'll see a sort of an efficacy readout more similar to Nalbuphine, but a tolerability profile closer to P2X3 inhibitors, which will give us a very, very clear competitive advantage over not only standard of care today, but what's coming through in the pipeline.

Raghuram Selvaraju (Managing Director of Equity Research)

Can you also comment on the potential applicability of this agent to treatment of chronic painful cough in indications outside of IPF, particularly pulmonary sarcoidosis?

Tim Dyer (CEO)

Actually, painful cough would be another indication, in particular based on the large body of evidence suggesting that GABA-B activation reduces pain across multiple pain conditions, including chronic pain. This could be absolutely one of the very suitable indications for chronic cough reduction with GABA-B PAM.

Yeah. We are thinking about that indication as potentially a path forward in the phase two.

Raghuram Selvaraju (Managing Director of Equity Research)

With respect to Dipraglurant, specifically in the post-stroke rehabilitation context, can you give us a little bit more detail on two aspects? The first would be what an appropriate control arm would look like in a potential registration quality study in this setting, what patients in the control arm would likely be receiving in terms of therapy, whether behavioral or physical or otherwise. Secondly, if you could talk a little bit about what the efficacy bar might look like in this indication, given the fact that, as far as I'm aware, there are no pharmacotherapies currently approved in this context.

Tim Dyer (CEO)

Yeah. Yeah. It's a very good question. The way we see it now, we are planning to use Dipraglurant in tandem with physiotherapy. Because of its short half-life, it can be given multiple times per day and be well tolerated. We are thinking that we need to perform a few studies, including clinical pharmacology studies, to learn more about how Dipraglurant modulates plasticity in both healthy to start with and then in patients with stroke. This will really help us in better designing the proper phase two study. This is what we are planning, performing to evaluating measures of plasticity in sensory motor cortex, in the midbrain and spinal cord. We are also interested in exploring whether it's best to give the compound before the exercise or immediately after.

There are a few components of the design that can be explored in a dedicated clinical pharmacology study before we move forward into a phase two.

Raghuram Selvaraju (Managing Director of Equity Research)

Thank you.

Operator (participant)

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 one moment to our participants to submit any questions on the webcast or to press star one one. Dear speakers, there are no further questions for today. Thank you, ladies and gentlemen. This brings our main part of the conference to a close. I would like now to hand back to Tim Dyer for any closing remarks.

Tim Dyer (CEO)

Thank you very much, everyone, for attending the conference call today. We look forward to speaking to you again soon and wish you a very nice day.

Operator (participant)

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