© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Hello, everyone. I would like to thank you all for attending our First Quarter 2023 Financial Results Conference Call.
I'm here with Robert Lütjens, our Head of Discovery Biology. 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 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, who will review our clinical and preclinical pipeline. I will then review our Q1 2023 financial results. Following that, we will open the call for questions.
Our partner, Janssen, continues to make excellent progress in executing their global Phase 2 study in epilepsy patients with ADX71149. Cohort 1 of 60 patients has completed Part 1 of the study and progressed to Part 2. An independent interim review committee has been established by Janssen to review the unblinded data from Part 1 and recently made its recommendation to continue the study. The recommendation of the independent interim review committee and the decision of our partner, Janssen, to continue the study is very encouraging, and suggests ADX71149 is potentially safe and well tolerated and may have a positive impact on this patient population. We look forward to providing further updates on the progression of this important clinical study in the second half of this year.
We continue to believe there is value in dipraglurant and have substantially completed our evaluation for future development. We have identified post-stroke recovery and pain as interesting areas for future development in addition to PD-LID. However, we are currently pursuing collaborative arrangements to advance future development. We continue to be excited by our preclinical pipeline, which has made excellent progress with multiple clinical candidates rapidly advancing towards IND-enabling studies. We have selected a drug candidate in our mGlu7-negative allosteric modulator program for stress-related disorders including post-traumatic stress disorder and are progressing this drug candidate into IND-enabling studies.
We expect to start dosing in these studies in the second half of this year. We also continue to progress several backup compounds from differentiated chemical series through clinical candidate selection phase. We have made some progress in our collaboration with Indivior in advancing several GABAB PAM compounds into clinical candidate selection. As a reminder, Indivior 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, including Charcot-Marie-Tooth 1A neuropathy, chronic pain, sorry, chronic cough and pain. First quarter, we have been focused on preclinical profile in compounds and chronic cough. We expect Indivior and ourselves to select compounds to advance into IND-enabling studies in 2024.
And last but not least, our M4 PAM program for schizophrenia continues to make progress through late lead optimization. M4 PAM is a particularly exciting target for schizophrenia especially following the recent positive Phase 3 data from Karuna. We continue to pursue partnering discussions across the portfolio to secure financial resources and expertise to advance the portfolio into the clinic. We raised a total of $5.7 million funding year-to-date through the sale of treasury shares through our Keppra ATM facility, and in April completed an offering to a single U.S. investor of $4.5 million. We continue to focus on conserving cash and prioritizing activities that can bring value to our programs in the short-term. These cost control measures have reduced our monthly cash burn going forward, and as of today we estimate that our cash reserves provide us with a runway into 2024.
Now, I will hand over to Robert, who will give you some more details about our exciting pipeline.
Thanks Tim. Hello, everyone.
As mentioned by Tim, we communicated yesterday on the progress our partner, Janssen, has made in advancing our epilepsy program currently in Phase 2. I will focus on this update today and also present the latest on the rest of our portfolio afterwards. As an introduction to this program, for those who are not aware of the details, ADX71149 is a metabotropic glutamate receptors sub-Type 2 or mGlu2 positive allosteric modulator discovered in partnership with Janssen using Addex's proprietary allosteric modulation platform.
Janssen have extensively profiled ADX71149 in pre-clinical models of epilepsy and has demonstrated both stand-alone efficacy and a strong synergistic effect in combination with inhibitors of SV2A such as Keppra and Briviact. Epilepsy is a large multibillion-dollar market opportunity where despite several available treatment options, many patients are still in need of improved therapies to treat their seizures. Interestingly, Keppra while being largely sold as a generic is still leading the market of anti-epileptics with close to $1 billion sales revenue per year. Over 2 million patients are taking Keppra, but many experienced breakthrough these seizures or a suboptimal response, demonstrating the need for improved treatment options.
ADX71149 has been thoroughly profiled in pre-clinical and clinical studies by Janssen, demonstrating its good safety and tolerability profile in healthy volunteers and patients. Janssen are responsible for the development of the compound and are currently running both a Phase 2 study and an open-label extension study in epilepsy patients. It is important to note that we have significant economics in our deal with Janssen. We have pre-launched milestones of €109 million, low-double-digit royalties on net sales and Janssen are responsible for all costs.
I would like to show you some of the preclinical data. We've shown this data in the past, but let me remind you of the main take-home message, which is the strong synergistic effect obtained when ADX71149 is given in combination with levetiracetam, the active molecule in Keppra. These preclinical studies were performed in the 6-hertz model, which is widely recognized as being a model with high translational value to characterize the efficacy of antiepileptic drugs. The left graph shows how the effect of levetiracetam is dramatically increased in presence of a low dose of ADX71149, producing a 35-fold shift in its efficacy. And the right graph shows the result obtained when the paradigm was reversed, where a low dose of Keppra induces a 14-fold increase in efficacy of ADX71149.
In other words, we obtained an antiepileptic effect with this combination of low doses of ADX71149 and Keppra that was similar to the one obtained with a full dose of Keppra. We hypothesize this synergistic effect is due to the strong localization and similar neurotransmitter vertical release control function of M2 receptors and SV2A proteins. Taken together, these findings have been instrumental in the decision taken by Janssen to initiate the study of ADX71149 in combination with levetiracetam in epilepsy. This is a Phase 2 double-blind placebo-controlled proof-of-concept study enrolling patients with focal onset seizures who have suboptimal response to treatment with levetiracetam, Keppra or brivaracetam, Briviact.
Janssen plan to recruit up to 160 patients with up to three cohorts to test multiple doses. Cohort 1 is partly completed and Cohort 2 has started recruiting patients. In this Phase 2 study design, patients establish a 28-day seizure count over a 56-day baseline period prior to being randomized to receive either ADX71149 or matching placebo. The primary endpoint is the time taken to return to their monthly baseline seizure count. The study has two parts; Part 1 being the four-week acute efficacy phase and Part 2 being an eight-week maintenance of efficacy phase.
Part 2 includes patients who did not reach their baseline seizure count during Part 1 of the study and continue on their randomized drug of placebo. Cohort 1 with 60 patients have completed Part 1 of the study, while Part 2 will complete by end of May, and Part 1 of Cohort 2 has started recruiting patients. Data obtained in Part 1 for Cohort 1 was sent to an independent interim review committee to avoid un-lining of study who gave the recommendation to continue the study. This is encouraging news, suggesting ADX71149 is safe and well tolerated with potential benefit to epilepsy patients. We look forward to be able to update you with the progress of this study later in the year. Based on the hypothesis forged in preclinical models, if the synergistic effect seen with the combination of ADX71149 with levetiracetam translates into patients, then we see a huge opportunity to turn our approach into probably the most important novel treatment for epilepsy patients suffering from focal onset seizures.
And now to dipraglurant, our mGlu5 negative allosteric modulator, while several indications such as substance use disorder or trigeminal neuralgia could be interesting for dipraglurant. We believe to the differentiate the profile of the dipraglurant makes it particularly suitable for dyskinesia associated with Parkinson's disease and for stroke recovery. We are continuing our exploration with key opinion leaders to establish the future development plans in PD-LID and post-stroke recovery.
In parallel, we are pursuing collaborative arrangements to implement these future clinical plans. The prevalent is a Phase 2-ready compound with a robust intellectual property protection until 2034 and with significant API and product supply to start a new clinical trial as soon as we will be ready to launch it.
Let me now update you on our preclinical programs. We continue making significant progress in advancing our preclinical programs. Let me remind you that all programs have been identified in-house from our proprietary allosteric modulation discovery platform. The success of our platform is driven by the powerful 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 to support lead optimization.
I would like to share with you the progress we have made in our GABAB PAM, mGlu7 NAM and M4 PAM preclinical programs, where we see considerable near-term value creation. Starting with our GABAB positive allosteric program, which is partnered with Indivior. The aim of this collaboration is to deliver a new treatment for substance use disorders. Indivior is supporting to research Addex and have recently committed additional funding for us to complete clinical candidate selection activities reaching CHF13.8 million total funding so far.
As a reminder, GABAB receptor activation has been clinically validated in a number of disease areas using baclofen, GABAB orthosteric agonist. Baclofen is FDA approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including alcohol use disorder, chronic cough, CMT1A and various types of pain. 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.
We are well on our way to meeting this objective with multiple novel drug candidates rapidly advancing through clinical candidate selection phase with the aim to nominate drug candidate ready to enter IND-enabling studies in 2024 for our partnerships with Indivior. As part of our agreement with Indivior, we have the right to select drug candidates from the funded research activities for our own independent GABAB PAM program. There are several possible indications to explore, validated [indiscernible] by off-label use of baclofen, such as Charcot-Marie-Tooth Type 1A disease, chronic cough or pain. We have generated data with our GABAB PAM in preclinical models of CMT1A and pain and have been focused on preclinical compounds for chronic cough in Q1 2023.
Let me today focus on this opportunity. There's 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 because of an overactive cough reflex. Support for this approach comes from validation with baclofen used off-label in several categories of chronic cough and from GABAB receptors, strong expression in the neuronal pathway involved in cough.
Therefore, we believe that GABAB PAM could be an innovative new treatment of chronic cough offering improved efficacy, fewer non-responder patients, and lack of gustatory side effects in comparison to the P2X3 inhibitors. We are working with compounds progressing in late clinical candidate selection phase, and we expect to move into IND-enabling studies in 2024 in parallel to delivering compounds for a partner Indivior.
On to our mGlu7 negative allosteric modulator program for stress-related disorders including post-traumatic stress disorder. The program has delivered on clinical candidate, drug ready to enter IND-enabling studies as well as several differentiated backup compounds. We have established a robust intellectual property position with five patent applications covering our lead and backup compounds, guaranteeing a strong protection for our program.
PTSD is a psychiatric disorder, affecting approximately 3.5% of the population and may occur in people who have experienced or witnessed a traumatic, often life-threatening events such as a serious accident, natural disaster or war. Current treatments rely mostly on behavioral therapy as most pharmacological treatments such as anxiolytics and antidepressants show insufficient benefit.
The rationale for inhibiting mGlu7 NAM as an approach for treating stress-related disorders including PTSD, is based on a wide body of preclinical evidence from the anxiolytic profile of mGlu7 or knockdown animals. Two studies using mGlu7 negative allosteric modulator is performed at Addex as well as by many other groups. We have completed a robust preclinical package with our lead drug candidate and are now moving into IND-enabling studies and expect to enter Phase 1 studies in the second half of 2024.
And finally, a few words about muscarinic M4 positive allosteric modulator program for treatment of schizophrenia and other types of psychosis. Psychosis has been treated with the same mechanism of action for the last 50 years with limited efficacy and significant tolerability issues, often leading to treatment discontinuation and relapse. This is now about to change with the advent of a completely novel approach based on activation of M4 receptors. The recent positive readout on a third Phase 3 registrational study of KarXT and the expected approval strongly validates the M4 approach and our positive allosteric modulation approach as we are aiming at identifying highly selective and brain-penetrant molecules.
In summary, our drug discovery engine has achieved great progress with multiple drug candidates advancing towards IND-enabling studies. The renewed commitment of our partner Indivior, the delivery of a candidate starting IND-enabling studies in the mGlu7 program and the significant progress achieved in our other preclinical programs are further validation of the quality and productivity of our allosteric modulation platform.
And with this, I hand it back to you, Tim.
Thanks Robert.
I'll now switch to an overview of the financials. Starting with the income statement. We recognized CHF0.5 million of income in Q1 compared to CHF0.2 million in Q1 of 2022. The primary source of revenue is our research funding from our collaboration with Indivior. In terms of expenses, R&D expenses were CHF1.7 million in Q1 2023 compared to CHF3.8 million in Q1 2022. The significant decrease of CHF2.1 million is primarily due to decreased dipraglurant related external research and development activities.
G&A expenses were CHF1.2 million in Q1 2023 compared to CHF2.2 million in Q1 of 2022. The decrease of CHF1 million is primarily driven by reduced share-based compensation costs. The finance result is primarily related to positive interest on U.S. dollar cash deposits.
Now, to the balance sheet. Our assets are primarily held in cash, and we completed Q1 with CHF5.6 million of cash held in Swiss francs and U.S. dollars. Other current assets amount to CHF1.3 million and primarily related to prepayment of retirement benefits as well as trade receivables that mainly relate to a search agreement with Indivior. Current liabilities of CHF2.2 million are stable and primarily related to R&D payables and accruals, non-current liabilities relate to lease liabilities.
Now, to summarize the development of 71149 in epilepsy is going well with Cohort 2 recruiting patients. And we are encouraged by the recommendation of the independent interim review committee to continue this study. We continue to believe in the value of dipraglurant and are evaluating its future development with a focus on post-stroke recovery. In parallel, we are pursuing collaborative arrangements to advance development and look forward to sharing more information in the future. Our preclinical program continued to make solid progress towards delivering drug candidates for future clinical studies in important therapeutic areas, including: stress-related disorders, chronic cough, cognition and schizophrenia.
As a reminder, our portfolio was discovered in-house from our pioneering allosteric modulated drug discovery platform and constantly we have significant intellectual property in all programs. We have a track record of securing partnerships at preclinical stage and support of top-tier investors. We recognize the 2023 stock performance and current market capitalization is very disappointing. However, we are having multiple business discussions across our portfolio and strongly believe that if we are successful at executing our near-term partnering strategy, then our stock price should move to recognize the value of our portfolio.
This concludes the presentation, and we will now open the call for questions.
Thank you. Please stand by for your first question. Your first question comes from Boobalan Pachaiyappan from H.C. Wainwright. Boobalan, your line is open. Please go ahead.
Hi. This is Boobalan. I'm dialing in for Ram Selvaraju, and thanks for taking our questions. So two from us. Firstly, how does the recommendation to continue the Phase 2 trial of ADX71149 potentially increase the likelihood of a positive final outcome?
Yes, thanks for the question. So yes, so Janssen has established an independent review committee because to look at Part 1 – the unblinded Part I data from Cohort 1. Now, if you've been following this study, I mean the study was originally established just to have one cohort, and then it was modified to have up to three cohorts looking at multiple doses with 160 patients. Now, they do not want to unblind the study. So this is why they've established this committee. Now, the remit of the committee was to really give a no-go decision recommendation, I should say, for Janssen then to take a decision. So what we know is that the committee has made a recommendation to continue the study. So this suggests that they must be seeing something positive from the data they looked at.
Now, based on the recommendation, Janssen have then decided to continue the study, which we, again, see as very positive. And we certainly believe that this is now, gives us more, I would say increases the probability of a successful outcome of the study. But again, I – this is a clinical study, and I think we all know that lots and lots of things can go wrong in clinical studies. And this is only the data from Part 1 of Cohort 1. So this is 60 patients, which were 2:1 randomized, and it's the data from the first four-week period.
All right. Thanks for the detailed color. And secondly, in addition to what is stated in your prepared remarks, has there been any progress in your efforts to identify a potential collaboration partner or maybe license fee for dipraglurant? Thanks.
Yes. So we continue to have discussions with multiple potential partners across the portfolio. We know when we start the discussion, very difficult to predict where we end the discussion, and we continue to advance the programs. We continue to generate interesting data, and we continue to have very encouraging discussions with potential partners. And that's all I can really say at this point in time.
All right. Thanks again for taking our questions, and congrats on the progress.
The next question comes from Leonildo Delgado of Baader Helvea. Leonildo, your line is open. Please go ahead.
Hi. Good afternoon. This is Leonildo speaking. Thanks lot for taking our questions. With the current burn rate, it looks to me that cash will only take you through 3Q 3023, but you mentioned 2024 in your opening remarks. Does it mean that you're going to stop all the R&D activities, including the IND-enabling studies? Or should we expect rather a personal reduction?
We have no plans to restructure the company. And I'm not quite sure where you get your position around Q3. We finished the quarter with CHF5.6 million, and we've raised CHF4.5 million, and I think what you have to realize – if you look at the cash burn in 2022, you've got to remember we had an ongoing Phase 3 study with an open-label study, and so this got closed out. We continue to have certain costs related to the closing out of the dipraglurant PD-LID development in Q1. And so R&D expenses are continuing to come down. So this is why our guidance is that we have cash through into 2024.
Okay. Thank you. And so this, the positive opinion on the epilepsy study facilitate in your view, some of the partnering conversations. And so do you have something concrete, for example, term sheets on the table? Could you maybe provide some details there? Thank you.
Look, we have multiple discussions with multiple parties across the portfolio. We are not giving this sort of granularity around our business discussions. But I think if you look at the portfolio, if you look at the programs, we have a track record of doing deals at the preclinical stage. And we have some very exciting first-in-class programs. The mGlu7, we have a clinical candidate. We have multiple backups. We have a very, very young IP portfolio in an exciting area. This is first-in-class and we have an M4 PAM program on an extremely exciting target. The GABAB chronic cough program is particularly interesting. We're very close to having a molecule that's going to be ready to go into IND-enabling studies. We recently saw the takeout of Bellus for $2 billion by GSK in the chronic cough space. I think there's plenty of exciting programs that can drive business development within the Addex portfolio.
Thank you.
Thank you.
[Operator Instructions] We currently have no further telephone questions. Just to confirm, we currently have no further telephone questions.
I will now hand back to you for any web questions.
Yes. So we have a web question about the expected readout of data from J&J. So as I said, Part 1 of Cohort 1 has completed. There are patients in Part 2. We're expecting them to complete quite soon. We know that Cohort 2 is recruiting patients, and we're expecting Cohort 2 to recruit in the coming months, and then it will go into – they'll be in Part 1, and then they'll move into Part 2. So we would expect Cohort 2 to be completed probably around the end of the year.
But we are not giving any firm guidance on when data will be reading out because if you read clinicaltrials.gov, you'll see that J&J are ready to go up to three cohorts. And certainly, if they introduce a third cohort after Cohort 2 has completed recruitment, then the reporting of data will be pushed out until Cohort 3 is completed. So I think you can appreciate that it would be extremely unwise to try and speculate on when the data will be read out or when we will be able to read out the data from J&J.
There are no more telephone questions in the queue. Thank you. That ends today's call.