Earnings Call Transcript - ADXN Q3 2025

Timothy Dyer, CEO

Thank you. Hello, everyone. I'd like to thank you all for attending our third quarter 2025 financial results conference call. I'm here with Misha Kalinichev, our Head of Translational Science, who will be providing 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 dipraglurant post-stroke recovery program and GABAB PAM preclinical program for cough. I will then review our Q3 2025 financial results. Following that, we will open the call for Q&A. The third quarter of 2025 has seen several important achievements across our pipeline. We've made excellent progress in our GABAB PAM program. We continue to complete preclinical characterization of our selected compound. We've also selected a backup compound for this important program. As a reminder, our partner, Indivior, successfully completed IND-enabling studies with their selected drug candidate for substance use disorders. Under the terms of the agreement, Addex is eligible for payments of up to USD 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. As mentioned, we have selected a compound and are advancing its development for chronic cough. We have repositioned dipraglurant, our mGlu5 negative allosteric modulator for brain injury recovery and have made good progress in preparing the program for clinical studies. As a reminder, earlier this year, we 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. Included in this agreement is a research collaboration in which we are working with Sinntaxis and the University of Lund to complete preclinical profiling of dipraglurant and prepare the clinical studies. Our spin-out company, Neurosterix, is making excellent progress in advancing its portfolio of preclinical programs, including a potentially best-in-class M4 PAM schizophrenia. In June, we invested in Stalicla, a private clinical stage neurodevelopmental disorders focused company. Stalicla has developed a proprietary precision medicine patient stratification technology platform, which allows the company to select patients based on the biological dysregulation rather than behavioral phenotype. Proof-of-concept platform has been demonstrated by applying the technologies to identify and develop drugs in subpopulations of patients suffering from autism spectrum disorders. Stalicla has made excellent progress in advancing its patient stratification study in autism as well as advancing discussions with pharma to apply its technology more broadly in neuropsychiatric disorders. We completed the third quarter with CHF 2.2 million of 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 spinout transaction; however, current cash does not fund progression of our 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 the development of brain injury recovery. As mentioned, our partner, Indivior has selected the GABAB PAM drug candidate for development in substance use disorders and we successfully completed IND-enabling studies. We are advancing an independent GABAB PAM program for chronic cough and are ready to start IND-enabling studies subject to securing financing. Neurosterix made excellent progress advancing its pipeline, including completing IND-enabling studies for their M4 PAM program. Program is on track to dose patients this year, and we expect to be able to announce further progress in the coming months. 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. Dipraglurant is an orally available, highly selective mGlu5 negative allosteric modulator, which we believe could improve the outcome of rehabilitation for patients suffering from traumatic brain injury or stroke. The mechanism of action of dipraglurant targets neuroplasticity early in rehabilitation to promote rebuilding of neuronal connections and sensory motor recovery. There is large unmet medical need in post-stroke recovery and rehabilitation. Stroke is among the 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 promote the recovery stimulated by rehabilitation therapy. 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 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. Exciting new evidence recently published in the Journal Brain suggests that the negative allosteric modulator of mGlu5, MPEP 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 events. 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 turn to GABAB program and the exciting opportunity that it offers to the chronic cough patients. There is a strong rationale for developing GABAB PAM for chronic cough. Chronic cough is a persistent cough that lasts for more than 8 weeks and can be caused by a variety of factors, including respiratory infections, asthma, allergies, and acid reflux, but also by cough hypersensitivity syndrome. There is a large unmet medical need in novel antitussive 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. Support for using GABAB positive allosteric modulators in treatment of chronic cough comes from the clinical evidence that baclofen GABAB agonist is used off-label in cough patients and from the anatomical evidence that GABAB receptors are strongly expressed in airways and in the neuronal pathway regulating cough. Therefore, we believe that GABAB PAMs could offer superior efficacy in cough patients. The pre-IND activities, including in vivo proof-of-concept studies, non-GLP toxicity, and CMC have been completed. Our clinical candidate has shown favorable efficacy, tolerability, and developability profiles. The compound has demonstrated a consistent minimum effective dose of 1 mg per kg and ED50 of 6 mg per kg in models of cough in vivo. No signs of tolerance were seen after subchronic dosing and more than 60-fold safety margin was demonstrated based on respiratory depression, a sedation biomarker. The IND-enabling studies are planned and ready to start subject to securing financing. In the model of citric acid-induced cough in guinea pigs, 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, Orvepitant, Baclofen, and Codeine. Compound A 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 drugs. In the same experiment, compound A appeared well tolerated as there were no marked changes in respiratory rate at up to 60 mg per kg. In contrast, Nalbuphine, Orvepitant, Baclofen, and Codeine resulted in robust reductions in respiratory rate at their highest doses, indicative of sedative-like effects. When evaluation of the antitussive efficacy across compounds was done at the respective high doses free from respiratory effects, compound A was shown to be superior to Nalbuphine, Orvepitant, Baclofen, and Codeine in both cough number and cough latency measures. In the model of ATP potentiated citric acid cough in guinea pig 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 per kg and good PK/PD. The compound has the potential to have the best-in-class efficacy and tolerability profile and broad application in cough patients. The compound showed a favorable developability profile in non-GLP toxicity studies performed in rats, dogs, and nonhuman primates. Subject to raising financing, we are ready to start the IND-enabling studies. This concludes our prepared remarks on the progress of our R&D. Now I'll hand it back to Tim.

Timothy Dyer, CEO

Thanks, Misha. Now let’s review the Q3 2025 financials, starting with the income statement. Income for Q3 2025 is similar to Q3 2024, reaching CHF 0.1 million, primarily from the maintenance of patents licensed to Indivior, which they are funding, and the fair value of services from the Neurosterix Group at no cost. R&D expenses for Q3 2025 are CHF 0.2 million, mainly related to our GABAB PAM program, consistent with Q3 2024. G&A expenses of CHF 0.5 million for Q3 2025 have remained stable compared to Q3 2024. We account for our investment in Neurosterix using the equity method, thus we recognized our share of the net loss at CHF 0.9 million for Q3 2025, similar to Q3 2024. Moving on to the balance sheet, our assets are mainly in cash, with CHF 2.2 million at the end of Q3 2025 held in Swiss francs and U.S. dollars. Other current assets total CHF 0.2 million, primarily for prepaid R&D and G&A costs. Our noncurrent assets are CHF 5 million as of September 30, 2025, mainly related to our 20% equity interest in the Neurosterix Group, noted on the balance sheet under the equity method, and our investment in Stalicla. Current liabilities at the end of September increased by CHF 0.4 million to CHF 1.2 million compared to December 31, 2024, mainly due to higher payables for professional services. Noncurrent liabilities at CHF 0.2 million at the end of Q3 match the amounts at the end of December 2024, primarily due to retirement benefit obligations. In summary, we have made significant progress with our GABAB PAM program for cough and our dipraglurant post-stroke recovery program. Our spin-out company, Neurosterix, is advancing its portfolio with the M4 PAM program set to begin Phase I this year. We are very pleased with the progress Stalicla is making in its business strategy and pipeline. We look forward to completing our evaluation of potential indications for our mGlu2 PAM program, which we received from J&J, and continuing to advance our portfolio toward clinical studies. This concludes the presentation, and we will now open the call for questions.

Raghuram Selvaraju, Analyst

Four quick ones. Firstly, I was wondering if you could comment on the commercial outlook for a potential therapeutic intervention in chronic refractory cough, particularly in the context of the fact that gefapixant doesn't appear to now be a factor in the United States market. Secondly, I wanted to ask about ultimately, what you expect the next funding catalyst for Stalicla to be and what the outlook might be for Stalicla to pursue a path to a public listing, if that's something you can comment on at this time. Thirdly, I wanted to see if you could give us some context around competitive clinical development in the post-stroke recovery space, particularly as this pertains to CCR5 receptor modulators and especially the ongoing clinical programs with maraviroc, which was originally approved as an anti-HIV medication. And if you could perhaps give us a sense of how those trials, particularly the CAMAROS trial might provide important learnings for future development of a candidate in post-stroke recovery like dipraglurant. And lastly, maybe you can give us a sense of what Indivior is looking for next in your ongoing collaboration and what catalysts you expect over the course of 2026?

Timothy Dyer, CEO

The first question was about the commercial outlook for cough treatments. You're correct that Gefapixant isn't performing particularly well. One reason Camlipixant, which was acquired by GSK along with BELLUS for CHF 2 billion, has more potential is that it doesn't have the same taste disturbance issues as Gefapixant. We anticipate data from the Phase III trial of Camlipixant will be available soon. While we haven't shared our specific views on the commercial opportunity in cough, we recognize it as a significant unmet medical need. Conversations with key opinion leaders indicate that baclofen is effective for cough patients, but its limited use stems from the requirement to dose it around five times a day and its sedative effects, which prevent patients from driving. This makes it a last resort option. According to KOLs, nearly 50% of cough patients using P2X3 inhibitors or gefapixant either stop treatment or do not respond. We still need to analyze how many of these are nonresponders versus those discontinuing due to side effects. Misha, do you have anything to add?

Mikhail Kalinichev, Head of Translational Science

Yes. I just wanted to mention that recent evaluation of responders to gefapixant shows that there are up to 50% of patients that have no benefit from this mechanism, which is higher than was initially predicted, which was around 30%. It's not surprising considering that P2X3 inhibitor really captures only single mechanism, peripheral mechanism that is responsible for chronic cough. There are multiple other peripheral mechanisms leading to chronic cough. And importantly, there are central mechanisms that remain to be addressed. And the advantage of the approach that we are taking is that centrally acting GABAB PAM will be able to address needs of all these patients.

Timothy Dyer, CEO

So regarding the progress of Stalicla, we are pleased with what they are achieving. They are continuing their warehousing study, focusing on recruiting patients for a nonpharmacological intervention study to differentiate them into the various phenotypes they have identified. Concerning fundraising, they are currently engaged in a private company effort, specifically pursuing Series C financing to support two Phase II clinical programs targeting distinct subpopulations within autism spectrum disorders. Additionally, they are concurrently working on out-licensing an asset, mavoglurant, which they obtained from Novartis. This is the most advanced mGlu5 negative allosteric modulator, showing promising results in a Phase II study for cocaine use disorder. They are attracting interest from various pharmaceutical companies for this out-licensing deal. We are optimistic that one or both of these initiatives will come to fruition. Regarding the IPO question, private firms often consider IPOs, particularly when there is a strong capital requirement. Given the current market conditions, Stalicla is certainly exploring this option as a potential funding source. Number three, regarding stroke, thank you for bringing up the CAMAROS trial. Two weeks ago, we were in Sweden discussing this with our partner, Sinntaxis, and Lund University. We had the pleasure of meeting Sean Dukelow, the lead investigator of that study. We plan to collaborate with him and others involved in the study, as there are many insights we can gain that will benefit our planning for the dipraglurant study. Misha, would you like to add?

Mikhail Kalinichev, Head of Translational Science

Yes, happy to follow up on this topic. Of course, we follow this story since it was first shared by Science magazine a few years back and then a series of very elegant experiments published in the cell journal and now a clinical trial. We follow this with interest and excitement. We believe that it shows that there is a potential for improvement in post-stroke recovery via adding a pharmacological agent exactly as we proposed with mGlu5. We are not surprised as there are multiple overlapping and redundant mechanisms in the brain and identifying yet another mechanism that follows a very similar path kind of supports our hypothesis. Very much like mGlu5, CCR5 is upregulated after stroke. Its inhibition in the animal either genetically or pharmacologically facilitates recovery exactly like what happens with mGlu5. Both receptors are GPCRs. And both receptors are upregulated after stroke. So there are multiple parallels, and we are very excited. For sure, there will be many learnings for us at the end of this CAMAROS clinical trial, in particular, to understand how one can address sensory versus motor recovery readouts, and the CAMAROS study is heavily leaning towards more motor. And in our discussion with clinical experts, we will put as much emphasis on sensory readouts as the motor ones. So for sure, there's a lot to learn, but we are very much in tune with this approach and looking forward to the outcome of this clinical trial.

Timothy Dyer, CEO

Thanks. So on to the fourth question regarding Indivior. I mean Indivior, as I said, they've successfully completed the IND-enabling studies, and they are currently preparing to move the program forward. Unfortunately, I cannot give any more information on that at this stage. But again, we are still happy with the progress they are making to move the study forward. Are there any other questions? So I'd like to thank you all for attending, and we look forward to speaking to you again soon. I wish you all a great day.