Addex Therapeutics Ltd

SIX:ADXN

Earnings Call Transcript 2022-Q3

[Timothy Dyer, executive]

Hello, everyone. I'd like to thank you all for joining our quarter 3 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'd 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, Anton Pharmaceuticals continues to make significant progress in executing their global Phase II study in epilepsy patients and are on track to complete part 1 of the study in Q1 of 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 GABA-B 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 order. And under the agreement, we have retained the right to select drug cancer for developing certain exclusive reserve indications. Our GABA-B PAM funded research effort has progressed to late clinical candid selection phase and multiple candidates being profiled in secondary disease-relevant model. We expect Indivior ourselves to select compounds in 2023 to advance into IND-enabling studies. We plan to develop our independent presence of CMT1A neuropathy, product cost and pain. We've also made great progress in our MUR7-negative allosteric modulator program is stress related to the order and a process identified a compound, which is now ready to enter IND-enabling studies. In addition, we continue to advance the selection of differentiated backup compound delay clinical and refresh. Our NRI NAM program for mild neurocognitive disorders associated with Alton disease, Parkinson's disease expression is in clinical candidate selection phase. Last but not least, M4 PAM program is advancing rapidly through lead optimization. M4 PAM is a particularly exciting target for schizophrenia, especially following the recent positive Phase III data from Karuna. On the financing side, $4.6 million equity financing completed in July has increased our cash reserves to $10.4 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, executive]

Thanks, Tim. Hello, everyone. I would like to start by speaking about our epilepsy program, followed by -- before handing over to Nisha. ADX-71149 is a positive allosteric modulator discovered in partnership with Janssen Pharmaceuticals a Johnson & Johnson company. Our 2 companies collaborated for the discovery of this compound and the Atmos is responsible for its progression and --. Alex initially identified the chemical starting point using its unique aero documentation platform and the 2 teams work together to optimize compounds until delivery of ADX71149. The compound then completed 9 Phase I studies and 2 proof of concept studies in schizophrenia and showing at ADX71149 as well tolerated drug. It was then demonstrated that ADX71149 showed asset effects in preclinical models of epilepsy, but also that once administered in combination with most commonly used anti-epileptic levetiracetam the active molecule in Keppra. The effect is dramatically enhanced, and I will show this on the next slide. But first, let me talk about the opportunity in epilepsy. Today, even though the treatment options are multiple, epilepsy is still large for mathematical need as many patients are in need for alternative or improved treatment for their seizures. Keppra is a LDTA antagonist, while being modestly sold as a generic is still leading the market for anticonvulsants estimated at close to $20 billion sales revenue following the strong frequency variation of trading FPS models, our partner decided to go ADX71149 into a Phase II study evaluating its potential to treat patients with partial concept seizures when administered in combination with Levetiracetam. In May, an open multi-center study was announced, allowing patients to on placebo drugs, access to ADX71149 and in September accruing criteria were extended to include patients on Levetiracetam a second-generation LDTA antagonist. This Phase II study is now well as way, and we are expecting to receive results for Part 1 in Q1 2020. As a reminder, Janssen is covering all costs of the development, and we have significant prelaunch milestones of EUR 109 million and double-digit royalty on net sales. Here is the compelling data obtained by our Janssen colleagues and its model are highly predicted model of epilepsy with a combination of ADX-71149 and Keppra and which has been instrumental in the decision taking by answered this program into epilepsy. The left graph shows how the effects of Levetiracetam dramatically increased in presence of a low dose of ADX-71149, producing a 35-fold shift in equity. And the right graph shows the results obtained when the paradigms reversed, where a low dose of Keppra induces a 14-fold increase in of ADX-71149. Take-home message here is that we see a strong antiepileptic effect with a combination of low doses of ADX-71149 and Keppra, similar to the obtained with a 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 recall isobaric 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 come in for novel treatment for the public. A few words on the study design. This is a Phase II double-blind placebo-controlled proof-of-concept study and is enrolling patients with over onsets seizures who have suboptimal response to treatment with Levetiracetam or brivaracetam. Patients will establish a 28-day fee account over a 5-day baseline period prior to being randomized to receive either ADX-71149 50mg BID or matching placebo. The primary endpoint is the time taken to return to their monthly state 19. The study will have 2 parts: Part 1 being 4-week efficacy phase and part 2 being an 8-week maintenance. Part 2 will include patients who did not return to their baseline monthly seizure during part 1 of the state, and they will continue on their randomized drug. Results from part 1 of this study are expected in Q1 -- and now a quick update on the prevalence, our M5 next allosteric moderator. The private loan has significant potential in a number of disease areas, including PDS substance use disorder, pain, stroke recovery and neuro development neuro development of the lobe. The recount has completed Phase I and a Phase II proof of concept study in PDS patients, demonstrating safety and therapy. Despite the recruitment challenges we experienced earlier this year in our pivotal PDS program, we strongly believe that the potential to create significant benefit to PDS patients. Furthermore, the program has been awarded for contracted elation for men in the U.S., where there are approximately 200,000 patients, making this a significant commercial portion. We are currently pursuing multiple business discussions related to the program for multiple indications and plans to restart development once [indiscernible].I will now hand over to Mikhail, who will present the update on our presentable program.

[Mikhail Kalinichev, executive]

Thank you, Robert. Hello, everyone. We have made significant progress in the -- a preclinical program. 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 critical and methods, which we deploy to identify the initial hit and support need optimization. Today, I would like to share with you the progress that we have made in for our most advanced clinical programs. The GABA-B positive allosteric modulator program and M17 and M12 negative allosteric modulator programs and muscarinic M4 positive allosteric modulated program. Let me start with GABA-B, which is our partnering with Indivior. The of this collaboration is to deliver a new treatment for substance use disorders. Indivior is supporting the research at ADEX and have recently committed additional funding for us to complete clinical candidate selection activities. As a reminder, GABA-B receptor activation has been clinically validated in a number of disease areas using baclofen and GABA-B allosteric agonist. Baclofen is FDA approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including alcohol use disorder, gastroesophageal reflux disease occurred and various conditions of pain. However, Baclofen has a short of life and comes with significant side effects, hampering its wider use. Thus, there is a strong need for a better backlog. We believe this can be achieved with positive allosteric modulators and the 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 space. We are currently profiling several drug candidates in non-GLP studies with the aim to nominate drug candidates for IND-enabling studies in 2023. As mentioned earlier, we have the right to select drug candidates from the Indivior funded research activities for our own independent GABA-B program. I will now speak about the indications we plan to pursue. Firstly, CMT1A or Charcot-Marie T 1A disorder, a type of inherited neurological disorder that affects peripheral nerves. People with this disease experience weaknesses and wasting of their muscle of the lower limb starting earlier later, they can also have hand weaknesses and sensory loss, resulting in a significant reduction in their quality of life. CMT1A is caused by having an extra copy or duplication of the PMP22G, which is inherited in an autosomal dominant manner. There is currently no approved drug to treat CMT1A, However, baclofen has shown beneficial effects in patients. In addition, we have collected robust preclinical data with the government and in highly translational models of CMT1A -- in the studies, we have demonstrated positive effects of chronic treatment on both biomarkers and behavioral measures suggesting a GABA-B PAM has the potential to slow or even stop the progression of this disease. We are currently completing preclinical profiling of our proprietary drug candidates in advanced disease relevant model. We are conducting these activities in collaboration with American Charcot-Marie association. Secondly, there is a strong rationale for developing GABA-B PAM for chronic cost based on off label use of Baclofen in several categories of chronic cost and the role of GABA-B receptors in the neuronal pathway involved in cost. We believe that GABA-B PAM could be an innovative new treatment of chronic cost offering improved efficacy, fewer nonresponder patients and lack of control side effects in comparison to P2X3 inhibitors. We are currently profiling our proprietary GABA-B PAM in-disease development models of chronic cost. Thirdly, there is also a strong rationale for developing GABA-B PAM for various types of pain, including telling pain such as bladder pain, cancer pain and pain associated with trigeminal neuralgia. Current medication is largely based on opioids, gabapentin and pregabalin, nonsteroid anti-inflammatory drugs for bladder pain or carbamazepine and other antiepileptic drugs to treat trigeminal neuralgia-- these medications are suboptimal as they leave a significant proportion of patients without adequate or any benefits and carry risk of significant side attacks. Again, the GABA-B receptor target has been well validated by Baclofen, which has shown efficacy in patients with cancer pain and is used off label in patients with bladder pain and trigeminal neuralgia. Now to the status of the program, we have identified multiple novel chemical series with potential for robust normal intellectual property and multiple compounds are inlay clinical candidate selection phase, completely known GLV proprietary studies. We expect to deliver multiple drug candidates for Indivior and in parallel, multiple differentiated drug candidates for our independent program for progression into IND-enabling studies in 2023. We have made significant progress with our MUR7 negative allosteric modulating program for stress-related disorders including post traumatic stress disorder or PTSD, as we have selected a clinical candidate drug to enter IND-enabling studies. PTSD is a psychiatric disorder affecting approximately 3.5% of the population worldwide, and they occur in people who have experienced or witnessed a dramatic often life-threatening event such as serious accidents, natural disaster or war. Current treatments are mostly relying on behavioral therapy as most pharmacological treatments such as anxiolytic or antidepressants show insufficient benefits. Based on established knowledge around the or targets, such as the reduced anxiety in MUR7 knockout animals and anxiolytic profile and more cell inhibitors in multiple in vivo models of the disease, we have a very strong rationale to progress this project towards the clinic. Our clinical candidate drug ready to enter IND-enabling studies and in addition, multiple chemical series are identified as backup. On to our MBR 2 negative allosteric modulated program for mild neurocognitive disorders or MNCD and depression. MNCD is the stage between expected cognitive decline of normal aging and more serious declines related to dementia. Besides being potentially the early sign of our thymus disease, MNCD is also often experienced by patients suffering from depression. Developing Group 2 offers the exciting opportunity to treat cognitive impairment while also addressing symptoms of depression. Both procompetitive and antidepressant effects have been demonstrated in relevant preclinical models with our MU2 negative offering modulator candidate compounds -- we believe that Merck have initiated a Phase II proof of concept study with their MU2 negative out stream valuated compound, and they are currently running a drug-to-drug interactions with suggesting they prepare study in an MNCD patients with a combination with the compound and Argent. We aim to be a fast forward to them in their approach with our well-differentiated compounds. We are completing lead optimization and have begun clinical candidate collection phase with multiple compounds with the aim to start IND-enabling studies in the second half of 2023. And finally, a few words about our muscarinic M4 positive allosteric study program for treatment of schizophrenia and other types of psychosis. As you probably know, psychosis has been treated with the same mechanism of action over the last 50 years with limited efficacy and significant tolerability issues, often leading to treatment discontinuation and relapse. The big news in the field came from corona therapeutics to publish the port results of their Phase III study of their KAR XT compound in schizophrenia patients and who are on track to emit new drug application to FDA in 2023. KarXT is a combination of Xanomeline an muscarinic M1/M4 receptor agonist and trospium an peripherally restricted muscarinic antagonist. This combination allows to selectively activate muscarinic receptors in the brain while blocking the off-target effects of the number. This is a perfect validation of the M4 receptor target and of our positive allosteric modulator approach as we are aiming at identifying highly selective and brain anatrolic. 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 ready to start IND-enabling studies in the MU7 program are further validation of the quality and productivity of our allosteric modulator program. This concludes my prepared remarks, and I hand it back to Tim.

[Timothy Dyer, executive]

Thank you, Mikhail. I'll now switch to an overview of the financials. Starting with the income statement. We recognized $0.4 million of income in Q3 2022 compared to $0.8 million in Q3 2021. Primary source of the revenue is research funding from our collaboration with Indivior, which we expect to reduce in 2022 as drug candidates moved to late-stage clinical center selection and our partners takes over more of the operational execution of the development. In terms of expenses, R&D expenses were $2.8 million in Q3 2022 compared to $2.9 million in Q3 of 2021, a decrease of $0.1 million is primarily due to reduced differ development activities. G&A expenses were $1.8 million in the third quarter compared to $1.5 million in the equivalent quarter in 2021. The increase of $0.3 million was primarily due to increased share-based compensation costs. The finance gain of $60,000 in Q3 2022 relates primarily to exchange gains due to the strengthening of the U.S. dollar over the period. Now to the balance sheet. Our assets are primarily held in cash on completed Q3 with 10.4 million of cash held in Swiss francs and U.S. dollars. Other current assets, $1.3 million relates primarily to prepaid insurance and retirement benefits. The decrease relates to reductions in prepays and CROs. Current liabilities of $4.1 million are consistent with prior years and related primarily to R&D payables and accruals. Noncurrent liabilities of $0.2 million at the end of Q3 related primarily 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 II epilepsy clinical study with results expected in Q1 2023. We are putting plans together for future development of Fifth grant in parallel pursuing a number of licensing discussions with objectives to secure a partner priority restarting development activity. We continue to make good progress in advancing our preclinical programs towards the clinic and are entering multiple partnering discussions across the portfolio. As a reminder, our portfolio was discovered in-house from our pioneering asset modulated discovery platform. And constantly, we have significant intellectual property on all programs. We have a track record of securing partnerships at the preclinical stage and supportive top-tier investors. We recognize our stock performance and current market capitalization of GBP 10 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, and we will now open the call for questions.

[Operator]

[Operator Instructions] And the first question comes from the line of Leonildo Delgado from Baader-Helvea.

[Leonildo Delgado, analyst]

This is Leonildo. 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, possibly a possible time line and the earliest deal might be closed? Second question is, can you shed light on the main goal of the part 1 of the epilepsy study? And what follows up to Part 1?

[Timothy Dyer, executive]

Yes. Thanks very much for the question. So on the BD effort, yes, I don't think it would be prudent for me to enter into discussions or details. What I can say is that we have a portfolio of programs and a number of those programs are not partners. Did procurance is a MUR5 negative alosteric modulator being into the clinic demonstrated a safe and good tolerability. And we have entered into discussions with multiple potential partners for its development. Different partners have different indication priorities, and we are pursuing these discussions in parallel. And we believe in the assets and -- but we also believe that restarting development makes sense with a partner on board. And I'm confident about getting a deal done this year. And we are moderately confident about getting something done by the middle of next year. And -- now on the rest of the portfolio, I mean, GABA-B is partners or partly partnered with Indivior because we're still at the R&D stage and relevant candidates have not been selected by Indivior. It's very challenging to enter into partnership discussions on our part of the GABA-B program. And therefore, the GABA-B is less advanced in partnering discussions with third parties. And MUR7's, there is a nominated candidate, well profiled ready to go into IND-enabling studies. This program is attracting the interest of multiple parties, and we are pursuing discussions on the program. The M4 due to the data that was in Phase III from Karuna, -- this is attracting some interest. But again, this is indeed optimization. So there are multiple series being advanced. And again, again, this is a much earlier program and an earlier stage discussion. And then on the MUR2 now, another compound where there is a fair amount of validation. And again, this is in cognition, which is a very interesting area is again attracting some interest from multiple parties. I hope that helps to give you a little bit more detail. Now with respect to the epilepsy -- so there is Part 1, that you have 60 patients, 2:1 randomized between active and placebo. And it's a 4-week period, and the endpoint of Part 1 is time is the difference between the active group and the placebo group with respect to time to baseline seizure counts. This data is expected to be delivered to our partner in Q1 of 2023. And our partner will then take certain decisions around the program. Now Part 2, patients -- the way the study is designed is that the patients within Part 1 will move into part 2 and assuming that they did not reach their baseline seizure count. And then with the data from that 8-week period, we'll report out later in 2023. And that's really all we can say about the progress at this time.

[Operator]

[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.

[Timothy Dyer, executive]

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

[Operator]

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