Earnings Call Transcript - ADXN Q1 2025

Operator, Operator

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. 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.

Timothy 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 top line. I will then hand over to Misha who will review in more detail our mGluR5 negative allosteric modulator program for brain injury recovery and our GABAB positive allosteric modulation preclinical program for 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've made excellent progress in our GABAB positive allosteric modulator program with our partner Indivior. We successfully completed IND-enabling studies with the selective drug candidates for substance use disorders. As a reminder, under the terms of the agreement, Addex is eligible for payment of up to USD 330 million on successful achievement of prespecified 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 GABAB PAM program for the treatment of chronic cough. We've substantially completed the preclinical profiling of our selected drug candidate and recently published robust antitussive data from multiple preclinical models of cough. Misha will speak about this exciting data later in our presentation. We also regained rights to our mGluR2 positive allosteric modulator program, including the Phase II asset ADX71149 from our partner Johnson & Johnson. We are currently evaluating a number of therapeutic indications for the future development of this program. We've repositioned dipraglurant, our mGluR5 negative allosteric modulator program for brain injury recovery and recently entered into an option agreement with Sinntaxis for an exclusive license to intellectual property covering the use of mGluR5 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 CHF 2.8 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 spin-out transaction. However, current cash does not fund the progression of our unpartnered programs into the clinic. Now a quick review of our pipeline. We continue to believe in dipraglurant and are executing our plans to reposition the development in brain injury recovery. We've mentioned our partner, Indivior has selected a GABAB PAM drug candidate for development in substance use disorders and have successfully completed IND-enabling studies. We're advancing our independent GABAB program for chronic cough and expect to start IND-enabling studies this year, subject to securing financing. Neurosterix 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.

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 PD-LID, we embarked on the detailed evaluation of a number of potential indications for future development. We have completed this exercise and have identified brain injury recovery as an interesting indication for 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 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 an 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 therapists. The mGluR5 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 mGluR5 has been observed in a range of neurological disorders, including stroke, where it plays a role in what is called maladaptive rewiring of the brain following stroke. Inhibition of mGluR5, 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 mGluR5, MTEP, administered daily in rats following stroke results in a sustained and growing improvement in sensory motor function in comparison to standard treatment. Similar improvements in sensory motor function were observed in animals treated with our mGluR5 NAM dipraglurant. MRI imaging of the resting state functional connectivity in post-stroke rodents shows that the daily administration of MTEP also stimulates 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. 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 a 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 GABAB 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, GABAB receptor activation has been clinically validated in a number of disease areas using baclofen, a GABAB 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 that this can be achieved with positive allosteric modulators and their differentiated pharmacology, having the efficacy that is similar to or better than that of baclofen but with a longer half-life and improved side effect profile. Our partner Indivior has selected a GABAB 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 GABAB PAM program for the treatment of chronic cough. I will now present this exciting opportunity. There is a strong rationale for developing GABAB 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 unmet 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 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 GABAB PAM in the treatment of chronic cough comes from the clinical evidence that baclofen, a 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 neural 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 tox, and CMC have been completed. Our clinical candidate has shown a 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 sub-chronic dosing, and more than 60 mg/kg safety margin was demonstrated based on respiratory depression as a sedation biomarker. The IND-enabling studies are planned to start this year. The next set of slides describes the in vivo proof-of-concept study in models of cough in guinea pigs where we evaluated the 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 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 dose. The antitussive profile of Compound A was similar to that of nalbuphine, baclofen, and codeine. Compound A also increased the latency to first cough in a dose-dependent manner, thus delaying the onset of cough. The antitussive profile of Compound A in delaying cough onset was similar to 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/kg. In contrast, nalbuphine, baclofen, and codeine resulted in a robust reduction of respiratory rate at their highest dose, indicative of sedative-like effects. When the evaluation of antitussive efficacy across compounds was done at the respective high 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, signs of improved efficacy and potency were seen with no signs of tolerance in comparison to the acute administration. In the model of ATP potentiated citric acid cough in guinea pigs, in a head-to-head comparison experiment, acutely administered Compound A exhibited a trend of better efficacy and potency in comparison to that of the 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-in-disease efficacy and tolerability profile and broad applications in cough patients. The compound showed a favorable developability profile in non-GLP toxicology studies performed in rats, dogs, 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.

Timothy Dyer, CEO

Thanks, Misha. Now for a review of our Q1 2025 financials. Following the Neurosterix transaction, we were required under IFRS to identify continuing operations related to our retained business and discontinued operations related to the divested business source Neurosterix. All income and expense items related to the discontinuing operations have been reclassified under a specific line of the compounded loss called net loss from discontinued operations. Now starting with the income statement, which relates to the continuing operations, we recognize CHF 0.1 million 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 GABAB PAM program and decreased by CHF 0.1 million in Q1 2025 compared to Q1 2024, 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 loan activities 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 '25 finally relates to U.S. 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 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 U.S. dollars. Other current assets amounted 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 March 31, 2025, primarily related to the 20% equity interest in Neurosterix group recorded on the balance sheet under the equity method of accounting for associates. Current liabilities were CHF 1.1 million as of March 31, 2025, decreased by CHF 0.3 million compared to December 31, 2024, and it primarily relates to accrued expenses and payables beyond the R&D and professional fees. Non-current liabilities of CHF 0.1 million as of March 31, 2025, decreased by CHF 0.1 million compared to December 31, 2024, primarily due to the reduction in retirement benefits obligations following changes in the financial functions. Now to the cash flow statement on March 31, 2025, the cash balance amounted to CHF 2.8 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 GABAB program with our partner, Indivior, successfully completing IND-enabling studies with their selected compound for development in substance use disorders. Neurosterix has made excellent progress with their lead M4 PAM drug candidate successfully completing IND-enabling study in Q3 '24. We have strengthened the intellectual property in our mGluR5 NAM program, and dipraglurant is ready to start clinical programs in brain injury recovery. Our GABAB PAM cough program has demonstrated excellent preclinical efficacy and tolerability with IND-enabling studies ready to start. We are validating partnerships with industry that supports 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, Operator

And the question comes from the line of Raghuram Selvaraju from H.C. Wainwright.

Raghuram Selvaraju, Analyst

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 proceeding programs in terms of guiding what you expect to be in the clinical development pathway for your asset in this indication?

Mikhail Kalinichev, Head of Translational Science

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. But at the same time, there were clear signs that were indicative of centrally-mediated side effects. So that tolerability profile will be challenging once you move into the patient population that has refractory chronic coughs that are primarily younger with overall health in their early to mid-50s instead of early to mid-70s as in IPF. Their level of tolerability is very different. So that's where we see a significant opportunity to deliver similar efficacy with a remarkably improved tolerability profile and have a compound that can be applied to both IPF-related cough and refractory chronic cough. So 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 part of a Phase 1B study. This offers an opportunity to have quick and straightforward efficacy readouts relatively early in development. This will, of course, be followed by a Phase II study in chronic cough patients. We are also considering a more in-depth evaluation of chronic cough in these patients using more advanced technologies that are now being developed and already approved by the FDA that allow 24/7 monitoring of cough, which gives an opportunity for much more precise monitoring of cough but also better selection of chronic cough patients. So that will be another innovation on our side. So that's the answer to your question.

Timothy Dyer, CEO

So maybe I can just add a little bit to what Misha was saying, Ram. I think what is so exciting about this program is that we know that P2X3 inhibitors, which are peripherally restricted, are showing about a 30% reduction in chronic cough, and what was really exciting about the nalbuphine data that came out from Trevi is that there was over a 50% reduction in chronic cough patients. This really supports our hypothesis that you need to have a molecule that's both central and peripheral, and that's what we have with our compound A, our GABAB positive allosteric modulator. What you can clearly see from the data that we've generated preclinically is we have a much better therapy with a wider margin. So we have reason to believe that we're going to see more than 60% efficacy. 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, Analyst

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

Timothy Dyer, CEO

Painful coughs could be another indication, particularly given the significant evidence indicating that GABAB activation may be effective across various pain conditions, including chronic pain. Therefore, this could be a very appropriate indication for chronic cough related to the reduction of GABAB PAM.

Mikhail Kalinichev, Head of Translational Science

Yes, we are considering that indication as potentially a path forward in Phase II.

Raghuram Selvaraju, Analyst

And then 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.

Timothy Dyer, CEO

Yes, 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 both in healthy subjects and then in patients with stroke. This will really help us in better designing the proper Phase II study. So this is what we are planning, performing, to evaluate measures of plasticity in the sensorimotor cortex in the mid-brain and the spinal cord. We are also interested in exploring whether it's best to use the compounds before the exercise or immediately after. So 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 II.

Operator, Operator

Dear speakers, there are no further questions for today. Thank you, ladies and gentlemen. This concludes the main part of the conference. I would now like to hand back to Tim Dyer for any closing remarks.

Timothy Dyer, CEO

Well, thank you very much, everyone, for attending the conference call today, and we look forward to speaking to you again soon. I wish you a very nice day.

Operator, Operator

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