Addex Therapeutics Ltd
Q3 2022 Earnings Call Transcript

Published: 11 Nov 2022

[Tim Dyer:]

Hello, everyone. I'd like to thank you all for joining our Quarter Three 2022 Financial Results Conference Call. I'm here with Robert Lutjens, our Head of Discovery, Biology; and Mikhail Kalinichev, our Head of Translational Science. I draw your attention to the press release and the financial statements issued earlier today, which are available on our website. I'll also draw your attention to our disclaimer. 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 achievements before handing over to Robert and Mikhail, who will review our clinical and preclinical pipeline. I will then review our third quarter financial results. Following that, we will open the call for questions. Our partner, Janssen Pharmaceuticals, continues to make significant progress in executing their global Phase 2 study in epilepsy patients and are on track to complete Part 1 of the study in Q1 2023. We continue to be excited by our preclinical pipeline, which has made excellent progress with multiple clinical candidates rapidly advancing towards IND-enabling studies. Previously, we announced the extension of our strategic collaboration on GABAB positive allosteric modulators with Indivior and their commitment of an additional $900,000 of research funding to advance drug candidates through to the start of IND-enabling studies. As a reminder, Indivior's primary interest is in substance use disorder. And under the agreement, we have retained the right to select drug candidates for development in certain exclusive reserved indications. Our GABAB PAM funded research effort has progressed to late clinical candidate selection phase with multiple candidates being profiled in secondary disease relevant model. We expect Indivior and ourselves to select compounds in 2023 to advance into IND-enabling studies. We plan to develop our independent program in Charcot-Marie-Tooth 1A neuropathy, chronic cough and pain. We've also made great progress in our mGluR7 negative allosteric modulator program for stress related disorder, and successfully identified a compound which is now ready to enter IND-enabling studies. In addition, we continue to advance the selection of differentiated backup compound to late clinical candidate selection phase. Our mGluR2 NAM program for mild neurocognitive disorders associated with Alzheimer’s disease, Parkinson’s disease and depression is in clinical candidate selection phase. And last but not least, our M4 PAM program is advancing rapidly through lead optimization. M4 PAM is a particularly exciting target for schizophrenia, especially following the recent positive Phase 3 data from Karuna. On the financing side, CHF4.6 million equity financing completed in July has increased our cash reserves to CHF10.4 million at the end of September, providing us with cash runway through Q2 of 2023. Now, I will hand over to Robert, who will give you some more details about our exciting pipeline.

[Robert Lutjens:]

Thanks, Tim. Hello, everyone. I would like to start by speaking about our epilepsy program, followed by [indiscernible] before handing over to Mikhail. ADX71149 is an mGlu2 positive allosteric modulators discovered in partnership with Janssen Pharmaceuticals at Johnson & Johnson Company. Our two companies collaborated for the discovery of this compound and Janssen is responsible for its progression in clinical development. Addex initially identified the chemical starting point using its unique allosteric modulation platform and the two teams work together to optimize compounds until delivery of ADX71149. The compound then completed nine Phase 1 studies and two proof of concept studies in [indiscernible], showing that ADX71149 is a well-tolerated drug. It was then demonstrated that ADX71149 showed antiepileptic effects in preclinical models of epilepsy, but also that when administered in combination with most commonly used anti-epileptic levetiracetam, the active molecule in Keppra, the effect is dramatically enhanced. I will show this in the next slide. But first, let me talk about the opportunity we have in epilepsy. Today, even though the treatment options are multiple, epilepsy is still large unmet medical need, as many patients are in need for alternative or improved treatments for their seizure. Keppra, an SV2A antagonist, while being largely sold as a generic, is still leading the market for anti-epilepsy, estimated at close to $20 billion sales revenue. Following the strong preclinical validation in [indiscernible] epilepsy models, our partner decided to move ADX71149 into a Phase 2 study, evaluating its potential to treat patients with partial onset seizures when administered in combination with levetiracetam. In May, an open label extension study was announced, allowing patients on placebo [indiscernible] access to ADX71149 and, in September, inclusion criteria were extended to include patients on levetiracetam, a second generation SV2A antagonist. This Phase 2 study is now well on its way and we're expecting now to receive results for Part 1 in Q1 2023. As a reminder, Janssen is covering all costs of the development, and we have significant prelaunch milestones of €109 million and double-digit royalties on net sales. Here is the compelling data obtained by Janssen colleagues in the 6Hz model, a highly predictive model of epilepsy, with a combination of ADX71149 and Keppra, and which has been instrumental in the decision taken by Janssen to move this program into epilepsy. The left graph shows how the effects of levetiracetam has dramatically increased in presence of a low dose of ADX71149, producing a 35-fold shift in efficacy. And the right graph shows the results obtained when the paradigm is reversed, where a low dose of Keppra induces a 14-fold increase in efficacy of ADX71149. Take-home message here is that we see a strong anti-epileptic effect with a combination of low doses of ADX71149 and Keppra, similar to the one obtained with the full dose of Keppra. And I should mention that this combination is a result of a true synergistic effect, not just an additive or pharmacokinetic effect, as it was demonstrated using a method called [indiscernible] analysis. This is the hypothesis being currently tested in patients. And what we saw in the preclinical models translate into patients then our approach could [counted in] (ph) for the novel treatment for the patient public. A few words on the study design. This is a Phase 2 double-blind placebo-controlled proof of concept study and is enrolling patients with focal onset seizures who have suboptimal response to treatment with levetiracetam or brivaracetam. Patients will establish a 28-day seizure count over a 56-day baseline period, prior to being randomized to receive either ADX71149 at 50mg bid or matching placebo. The primary endpoint is the time taken to return to their monthly baseline seizure rate. The study will have two parts; Part 1 being four-week acute efficacy phase and Part 2 being an eight-week maintenance phase. Part 2 will include patients who did not return to their baseline monthly seizure rate during Part 1 of the study, and they will continue on their randomized drug. Results from Part 1 of the study are expected in Q1. And now a quick update on dipraglurant or mGlu5 negative allosteric modulators. Dipraglurant has significant potential in a number of disease areas, including PD-LID, substance use disorder, pain, stroke recovery, and neurodevelopmental disorders. The program has completed Phase 1 and a Phase 2 proof of concept study in PD-LID patients, demonstrating safety and tolerability. Despite the recruitment challenges we experienced earlier this year in our pivotal PD-LID program, we strongly believe the potential of dipraglurant to bring significant benefit to these patients. Furthermore, the program has been awarded orphan drug designation for PD-LID in the U.S. where there are approximately 200,000 patients, making this a significant commercial opportunity. We are currently pursuing multiple business discussions related to dipraglurant for multiple indications and plan to restart development once the [indiscernible]. I will now hand over to Mikhail, who will give an update on our preclinical program.

[Mikhail Kalinichev:]

Thank you, Robert. Hello, everyone. We have made significant progress in advancing our preclinical programs. As a reminder, all our programs were identified in-house from our proprietary allosteric modulation discovery platform. The success of our platform is driven by the combination of our unique small molecule, chemical library and tailor-made proprietary biological screening tools and methods, which we deploy to identify the initial hits and support lead optimization. Today, I would like to share with you the progress that we have made in four of our most advanced preclinical programs

[Tim Dyer:]

Thank you, Mikhail. I’ll now switch to an overview of the financials. Starting with the income statement. We recognized CHF0.4 million of income in Q3 2022 compared to CHF0.8 million in Q3 2021. Primary source of revenue is research funding from our collaboration with Indivior, which we expect to reduce in 2022 as drug candidates move to late-stage clinical candidate selection and our partner takes over more of the operational execution of the development. In terms of expenses, R&D expenses were CHF2.8 million in Q3 2022 compared to CHF2.9 million in Q3 of 2021. The decrease of CHF0.1 million is primarily due to reduced dipraglurant development activities. G&A expenses were CHF1.8 million in the third quarter compared to CHF1.5 million in the equivalent quarter in 2021. The increase of CHF0.3 million was primarily due to increased share-based compensation costs. The finance gain of CHF60,000 in Q3 2022 relates primarily to exchange gains due to the strengthening of the U.S. dollar at the period. Now, to the balance sheet. Our assets are primarily held in cash and we completed Q3 with CHF10.4 million of cash held in Swiss francs and U.S. dollars. Other current assets CHF1.3 million relate primarily to prepaid insurance and retirement benefits. The decrease relates to reductions in prepayments to CROs. Current liabilities of CHF4.1 million are consistent with prior years and relate primarily to R&D payables and accruals. Non-current liabilities of CHF0.2 million at the end of Q3 relate primarily to lease liabilities. The decrease compared to last year is driven by an increase in the discount rate applied in the calculation of the retirement benefit obligations, resulting in retirement benefit obligations, calculated under IFRS, becoming a small asset. Now, to summarize, our partner Janssen is on track to complete Part 1 of the Phase 2 epilepsy clinical study with results expected in Q1 2023. We are putting plans together for future development of dipraglurant in parallel, pursuing a number of licensing discussions with objective to secure a partner prior to restarting development activity. We continue to make good progress in advancing our preclinical programs towards the clinic and we are entering multiple partnering discussions across the portfolio. As a reminder, our portfolio was discovered in-house from our pioneering allosteric modulator drug discovery platform and, consequently, we have significant intellectual property on all programs. We have a track record of securing partnerships at the preclinical stage in support of top-tier investors. We recognize our stock performance and current market capitalization of CHF10 million is very disappointing, however, we strongly believe that if we are successful in executing our near-term partnering strategy, our stock price should move to recognize the value of our portfolio. This concludes the presentation. I will now open the call for questions.

[Operator:]

Thank you. [Operator Instructions] And the first question comes from the line of Leonildo Delgado from Baader-Helvea. Your line is open. Please, ask your question.

[Leonildo Delgado:]

Hi, good afternoon. This is Leonildo. Thanks for taking our questions. A couple of questions. The first one, could you provide more details on your BD efforts? And more specifically, how optimistic are you on closing a deal? And if yes, possible timeline and the earliest deal might be close? Second question is, can you shed light on the main goal of the Part 1 of the epilepsy study? And what follows after Part 1? Thanks.

[Tim Dyer:]

Yeah, thanks very much for the question. So, on the BD efforts, I don’t think it would be prudent of me to enter into discussions or details. What I can say is that we have a portfolio of programs. A number of those programs are not partnered. Dipraglurant is a mGluR5 negative allosteric modulator, been into the clinic, it demonstrated a safe and good tolerability, and we have entered into discussion with multiple potential partners for its development. Different partners have different indication priorities, and we are pursuing these discussions in parallel. We believe in the assets, but we also believe that restarting development makes sense with a partner on board. Are we confident about getting a deal done this year? We are moderately confident about getting something done by the middle of next year. Now, on the rest of the portfolio, GABAB is partnered -- or partly partnered with Indivior, however, because we’re still at the R&D stage, relevant candidates have not been selected by Indivior. It’s very challenging to enter into partnership discussions on our part of the GABAB program. And therefore, the GABAB is less advanced in partnering discussions with third-parties. And mGluR7, there is a nominated candidate, well profiled, ready to go into IND-enabling studies. This program is attracting the interests of multiple parties and we are pursuing discussion on the programs. The mGluR4, due to -- I’m sorry, the M4, due to the data that was in Phase 3 from Karuna, this is attracting some interest. But again, this is indeed optimization. So, there are multiple theories being evolved. And, again, this is a much earlier program and an earlier-stage discussion. And then, on the mGluR2 NAM, another compound where there is a fair amount of validation. And again, this is in cognition, which is a very interesting area. We began attracting some interest from multiple parties. So, I hope that helps to give you a little bit more detail. Now, with respect to the epilepsy, so there is Part 1. So, you have 60 patients 2

[Leonildo Delgado:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] There are no further questions at this time. I would now like to hand the conference over to Tim Dyer for closing remarks.

[Tim Dyer:]

Well, thank you everyone for attending the Q3 conference call. We very much look forward to keeping you updated on all our progress through regular press releases. And we look forward to speaking to you on our next conference call, which will be in 2023. I wish you all a very nice day.

[Operator:]

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.