Addex Therapeutics Ltd. Q3 2024 earnings call

Thank you. 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 IND-enabling studies. Under the terms of the agreement, Addex is eligible for payment of up to $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 pre-defined 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 some exciting data in cough, 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 dipraglurant 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, Indivior, has selected a drug candidate for development in substance use disorders and has started IND-enabling studies. We are advancing an independent GABA-B PAM 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 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. 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 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 this can be achieved with positive allosteric modulators and their differentiated pharmacology, having the efficacy 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 expects to start IND-enabling studies in H1 2025. 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 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 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 the current standard of care and show no taste-related side effects, as seen with a newly approved P2X3 inhibitor, gefapixant. Support for using GABA-B PAM 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 neuronal pathway regulating cough. Therefore, we believe that GABA-B PAMs could offer superior efficacy in cough patients. The pre-IND activities, including in vivo proof of concept, non-GLP tox, 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 mcg per kg and ED50 of six 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 describes the in vivo 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 antitussive activity profile, reducing the cough number and increasing the latency to first cough. The antitussive 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 growth hormone at up to 60 mcg per kg. In contrast, baclofen suppressed respiratory rate, reduced body temperature by near two degrees Celsius, and increased growth hormone concentration in plasma starting at three mcg per kg dose. Thus, we believe we achieved our goal to discover a better baclofen for cough. In a model of citric acid-induced 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 remain largely unchanged under subchronic 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 a P2X3 inhibitor had similar efficacy and tolerability profiles. In summary, we have selected a clinical candidate for chronic cough with a robust reproducible antitussive efficacy of one mcg per kg and a good PK/PD. 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 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 Neurosterix 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 Neurosterix. 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 CHF 0.1 million of income in Q3 2024 compared to CHF 0.3 million in Q3 2023. The primary source of revenue is research funding from our collaboration with Indivior, which is recognized as the associated research costs are incurred.

Continuing R&D expenses of CHF 0.2 million primarily relate to our GABA-B PAM program and decreased by CHF 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 CHF 0.5 million primarily relate to corporate development activities and decreased by CHF 0.1 million in Q3 2024 compared to Q3 2023. The finance result in Q3 is primarily related to foreign exchange losses on U.S. dollar cash balances. The share of net loss of associates is CHF 0.9 million and relates to our investment in Neurosterix. 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 CHF 3.3 million of cash held in Swiss francs and U.S. dollars.

Other current assets amount to CHF 0.7 million, primarily related to prepaid retirement benefit obligations annually paid at the beginning of the year. Due to Neurosterix transaction, we expect CHF 0.4 million to be reimbursed in the short term. Current liabilities of CHF 0.9 million as of September 30, 2024, decreased by CHF 2 million compared to December 31, 2023, and primarily relate to CRO-related accruals and payables. Non-current liabilities of CHF 0.2 million as of 30 September decreased by CHF 0.4 million compared to December 31, 2023, primarily due to staff transferred to Neurosterix. Now to summarize, we have made excellent progress in our GABA-B PAM program with our partner, Indivior, selecting a compound for development in substance use disorders and starting IND-enabling studies in H2 of this year. Neurosterix has made excellent progress with their lead M4 PAM drug candidate, starting IND-enabling studies in Q3 of this year.

Dipraglurant is ready to restart clinical development for brain injury recovery. Our GABA-B PAM cough program has demonstrated excellent preclinical efficacy and tolerability with IND-enabling studies ready to start. We are validating partnerships with industry, supportive 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.