Addex Therapeutics Ltd (ADXN) Q3 2021 Earnings Report, Transcript and Summary

Dear ladies and gentlemen, welcome to the WebEx conference of Addex Therapeutics regarding the announcement of the Q3 2021 financial results. At our customers' request, this conference will be recorded. [Operator Instructions] May I now hand you over to Tim Dyer, who will start the meeting today. Please go ahead.

Hello, everyone. I would like to thank you all for joining our third quarter 2021 financial results conference call. I am here with Roger Mills, our Chief Medical Officer; and Robert Lutjens, 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 disclaimers. We will be making certain forward-looking statements that are based on the knowledge we have today. I will start by giving a quick overview of our recent achievements before handing over to Roger and Robert, 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 Q&A. So to start with our Q3 achievements, we continue to make excellent progress towards achieving our strategic objectives during Q3 and now have 3 clinical programs dosing patients, which is a significant achievement. Q3 saw us initiate and start dosing patients in our Phase II clinical trial dipraglurant for blepharospasm. We also continued to advance our pivotal program with dipraglurant in dyskinesia associated with Parkinson's disease with regular entry of patients into the pivotal 301 study. Our partner, Janssen Pharmaceuticals also continued to make significant progress in executing their transatlantic Phase II study in epilepsy patients. All 3 studies are progressing as planned and on track to report data in 2022. We're also very excited by our preclinical pipeline, which is rapidly advancing towards the clinic. In Q3, we announced the extension of our strategic collaboration on GABAB PAM with Indivior and their commitment of an additional $4 million of research funding to advance drug candidates through to the start of IND-enabling studies. As previously reported, we are advancing an independent GABAB PAM program for Charcot-Marie-Tooth Type 1a neuropathy and recently entered a collaboration with the Charcot-Marie-Tooth Association in the U.S. This collaboration is to evaluate selected drug candidates in preclinical models of Charcot-Marie-Tooth's 1a neuropathy. We are on track to deliver multiple GABAB PAM drug candidates ready to start IND-enabling studies in mid-2022. We continue to make solid progress in advancing our other preclinical programs, in particular, our mGlu7 negative allosteric modulator program for post-traumatic stress disorder, which is being funded by the Eurostars/Innosuisse grant program. In August, we welcomed back Dr. Mikhail Kalinichev who rejoined us as Head of Translational Science. Dr. Kalinichev is a neuropharmacologist with significant experience in drug discovery and development across the industry and academia. On the financing side, we completed Q3 with a strong balance sheet of CHF 15.5 million or USD 16.6 million. So now over to Roger.

Thanks, Tim. Good morning, good afternoon, everybody. I'd like to start by speaking about our dipraglurant program for dyskinesia associated with Parkinson's disease. This indication represents a multibillion dollar market opportunity. We announced the initiation of our 301 pivotal Phase IIb/III study during the second quarter of this year. The study is intending to enroll 140 Parkinson's patients who are experiencing moderate to severe dyskinesia and will include around 50 sites based in the United States. Let me remind you of the study design. This is a one-to-one randomized, placebo-controlled study of 100 milligrams of dipraglurant taken 3 times daily in conjunction with the patient's L-DOPA dose. The study duration is 12 weeks. We have also initiated enrollment into our 302 study. Patients who complete the 12 weeks of the 301 study are eligible to roll over into the 302 study, which is a 12-month open-label safety study, where all patients will receive dipraglurant 100 milligrams, 3 times daily, irrespective of the study arm they were randomized to in the area of 301 study. The 302 studies intend to provide the 6- and 12-month treatment safety data to meet the regulatory requirements for an NDA submission. The primary endpoint of the 301 study is a change from baseline in the Unified Dyskinesia Rating Scale or UDysRS. This scale was developed specifically to assess dyskinesia symptoms in Parkinson's patients. It is a scale recommended by the Movement Disorder Society, and has regulatory precedent with the FDA approval of GOCOVRI for PD-LID. Secondary endpoints include clinicians' global impression of severity and standardized patient diary-based assessments of on-time without troublesome dyskinesia and off time. Importantly, we have included a number of measures to manage placebo response. These include the use of the UDysRS scale, which is less prone to placebo response low scale to dyskinesia. The use of the brief psychosocial therapy adapted for dyskinesia to be used in the screening period of the study and the requirement for patients to have moderate to severe symptoms, both at the screening visit as well as the study baseline visit. We will also be using expert reviews of the ratings to ensure quality. In addition, the 12-week duration of study will be expected to mitigate placebo response. For background, in a previous Phase IIa study, dipraglurant met its primary endpoint by being generally well-tolerated and showing no clinically significant safety issues. In addition, at day 1 and day 14, dipraglurant showed statistically significant effect from PD-LID's clinical symptoms as measured using the modified Abnormal Involuntary Movement Scale or mAIMS. However, statistical significance was not achieved at day 28, due in part to an increasing placebo response. Registrational 301 study has an improved design incorporating multiple methods for mitigating placebo response. We expect this study to read out top line data in Q4 of 2022. In addition, we've initiated our second clinical program this quarter. This involves a study for the treatment of blepharospasm, blepharospasm or BSP, is a type of dystonia, which affects the muscles of the eyelids and can lead to sustained eyelid closure, resulting in substantial visual disturbance and functional blindness and can involve other craniofacial muscles in over half of patients. There are at least 50,000 BSP patients in the United States, about 2,000 new cases occurring every year. Main fair treatment is by injecting botulinum toxin, and this is the only treatment approved by FDA for BSP. With varying benefit or in more severe cases, patients plan to go surgical interventions often with a limited benefit or resulting in poor cosmetic outcomes. There is a clear need for an improved therapy with an oral therapeutic. This is the design of our 203 study. 203 is an exploratory placebo-controlled study. About 15 patients with moderate to severe blepharospasm will be randomized 1:1 to 1 to either 50 milligrams or 100 milligrams dipraglurant or matching placebo. Patients receive 3 doses in total over a 2-day period. The patients receive their first dose in the clinic following baseline assessments and the severity of the blepharospasm will be assessed during dosing. Patients will take a further dose at home, returning for the pre- and post-dose assessments in the clinic the following day. The outcome measures in this study include the Computerized Motor Objective Rater or CMOR as well as standard efficacy scale for blepharospasm. We plan to report data for dipraglurant for blepharospasm in Q1 of 2022. And now to ADX71149 for epilepsy, which is partnered with Janssen Pharmaceutical, a Johnson & Johnson Company. In June, we announced that Janssen started enrolling into a Phase II epilepsy study, evaluating 149 in treating patients with partial onset seizures. 149 is a selective metabotropic glutamate type 2 or mGlu2 receptor positive allosteric modulator. This is a Phase II double-blind placebo-controlled proof-of-concept study and is enrolling patients with partial onset seizures who have suboptimal response to treatment with levetiracetam or Keppra. Patients will establish a 28-day seizure count over a 56-day baseline period prior to randomization when they will be randomized to receive either 149 of 50 mg b.i.d or matching placebo. The primary endpoint is the time taken to return to their monthly baseline seizure count. The study will have 2 periods, period 1 being the 4-week acute efficacy phase and period 2 being an 8-week maintenance efficacy phase. Period 2 will include patients who do not return to their baseline monthly seizure rate during the first period of the study, and they will continue on their randomized drug or placebo. Data from these studies are expected in Q3 2022. This study illustrates a continued commitment to our long-time collaboration partner, Janssen Pharmaceuticals, Inc. to this program and to pioneering novel ways to help epilepsy patients. As a reminder, Janssen is covering all costs of development, and we have significant prelaunch milestones of EUR 109 million and double-digit royalties on net sales. Now I'd like to hand over to Robert, who will provide an update on some of our preclinical programs.

Thanks, Roger. Good morning and good afternoon to everyone. Let me give you an update on our preclinical programs. Starting with the GABAB positive allosteric modulator program. As a reminder, this program is partnered with Indivior, who are funding a research effort at Addex and have a primary interest in substance use disorder. This is a very exciting program with several additional potential indications, all validated through use of baclofen, the FDA-approved GABAB agonist. We announced this quarter the extension of our research collaboration with an additional USD 4 million of new funding committed by Indivior to advance development of selected novel oral GABAB positive allosteric modulator drug candidates discovered by Addex. We are currently profiling several drug candidates in non-GLP studies with the aim to nominate 2 drug candidates for IND-enabling studies in 2022. That will be one candidate for Indivior's substance use disorder program and one candidate for our internal CMT1A program. This renewed commitment from our partner to the GABAB positive allosteric modulator program is further validation of the quality and productivity of Addex's drug discovery platform and the significant achievements made in the program to date. Concerning our internal GABAB positive allosteric modulator program for CMT1A, we have announced end of September, our collaboration with the American Charcot-Marie Tooth Association. This collaboration will provide us access to significant resources and expertise in the field of CMT1A. As a reminder to everyone, there is an extremely strong rationale for developing a GABAB positive allosteric modulator for CMT1A based on our understanding of the mechanism of action of GABAB receptor activation, preclinical data generated with ADX71441, a first-generation GABAB positive allosteric modulator identified by Addex. And last but not least, the clinical data reported with baclofen in patients of CMT1A. Therefore, we had a strong confidence that our newly identified GABAB positive allosteric modulator drug candidates will show efficacy in CMT1A models. And this important data generated in collaboration with the CMT Association will help pave the way for our candidate drug to move into IND-enabling studies in 2022. Other programs showing significant progress are our mGlu7 negative allosteric modulator program for post-traumatic stress disorder and our mGlu2 negative allosteric modulator program for mild neurocognitive disorders. Both programs are currently progressing compounds through clinical candidate selection phase, and we expect to deliver drug candidates to enter IND-enabling studies also in 2022. Finally, a quick word on the international mGlu receptor meeting that took place in October. This was yet another opportunity to showcase our drug discovery platform and the leading position Addex has in terms of cutting-edge science in discovery and development of allosteric modulators of G-protein coupled receptors and mGlu receptors in particular. Some of the take-home messages of this meeting include the growing understanding of the function of mGlu receptors in healthy and disease conditions, adding support to the rationale to develop molecules targeting specific mGlu receptor subtypes for indications with high unmet medical need. Additional key reports covered the resolution of active and on active receptor structures using cryo-electron microscopy and describing the allosteric modulator binding pockets in these receptors. As a reminder, Addex was actively involved in a collaborative work with Stanford and Copenhagen Universities, contributing to a seminal paper published in nature in July, describing mGlu2 receptor bound by ADX55164, which is an mGlu2 positive allosteric modulator that Addex discovered. This and other reports provide important data supporting the use of structure-based drug discovery approaches as we advance our internal discovery programs. In summary, in addition to our exciting clinical programs, we have 4 preclinical programs which are expected to enter IND-enabling studies in 2022, which, if successful, would be ready to enter clinical development mid-2023. This is further evidence that demonstrates the productivity of our allosteric modulation platform to generate higher-quality drug candidates. This concludes my remarks, and I pass the stage back to Tim.

Thanks, Robert. I'll now shift gears to provide a quick review of the financials. So starting with the income statement. We recognized just over $680,000 in revenue and income in Q3 compared to $27,000 in Q3 of 2020. The primary source of revenue is research funding from our collaboration with Indivior, which we expect to continue at a similar level through to the end of 2021. In terms of expenses, R&D expenses of $2.9 million are primarily related to research and development activities on our dipraglurant and GABAB PAM programs, and to a lesser extent, our mGlu7 NAM and mGlu2 NAM programs. R&D expenses have increased by $900,000 compared to Q3 of 2020, primarily due to the increased activities in our dipraglurant PD-LID and blepharospasm programs as they move into the clinic. G&A expenses were $1.5 million in Q3 compared to $1.2 million in Q3 2020 due to the increased professional fees related to setting up our U.S. shelf registration and ATM ADS equity sale program with Cantor Fitzgerald. Finance results of $22,000 in Q3 relate primarily to exchange rate losses on U.S. cash deposits and to a lesser extent, the effects of negative interest charges on Swiss francs. Now to the balance sheet. Our assets are primarily held in cash, and we completed the quarter with CHF 15.5 million of cash held in Swiss francs and U.S. dollars. Other current assets of $1.9 million at the quarter end relate primarily to research funding receivable from our collaboration partner Indivior and prepayments related to insurance and retirement benefits. Current liability of $3.3 million are consistent with year-end and related primarily to R&D payables and accruals. Noncurrent liabilities of $1.4 million related to retirement benefit obligations calculated under IFRS. That concludes my financial remarks. So in summary, I believe Addex has a very exciting equity story and has made notable progress in the third quarter. We have 3 clinical programs which are actively recruiting patients in some very interesting indications where we are first in class. The company is built based on a leading technology platform, which has delivered an exciting portfolio of in-house discovered programs and partnerships. We have an experienced team of drug developers in the company, partnerships with industry and a rich news flow coming in 2022 and beyond, with 3 clinical data readouts starting as early as Q1 next year and 4 preclinical programs, which are expected to enter IND-enabling studies in 2022, representing a promising outlook. This concludes the presentation, and we will now open the call for questions.

[Operator Instructions] And the first question is from Victoria English, MedNous.

Yes. I'm wondering if I could ask a question about the epilepsy program and the mechanism of action of your drug. You said in your press release in June that the intention is to normalize excessive glutamate release. Presumably, this is something that you can see in people with partial onset seizures. That's sort of the first question. And the second one is what -- how is this different from the mechanism of action of Keppra?

So I think, Robert, would you like to take that one?

Yes, please. Thanks, Victoria. Excellent question. I think, again, I think the fact that we have a hyper glutamatergic situation at times when their epileptic spikes and has very strong scientific background. And so anything that will reduce this excessive glutamatergic transmission is going to help actually in this disorder. And this links me to the second question I kind of build my answer both for the first and the second question is that mGlu2 is expressed presynaptically, and so it is a so-called auto receptor. So when glutamate gets released into the synaptic cleft, which is the area where neurons interact, you get this increase of glutamate when the presynaptic neuron is stimulated. And this will then activate the mGlu receptor. And then it's an auto receptor because it then feeds back to reduce further glutamatergic release. So you kind of reduce the release of glutamate. And Keppra levetiracetam, is a compound that is an antagonist of a protein called SV2. And this protein is part of the vesicle release machinery. So by blocking this SV2A what we're observing is that we are blocking the vesicle to basically go and -- go to the membrane of the neuron and release what is implied, which is glutamate. So the 2 together -- also each one has a similar type of action, but through different mechanisms. And what was interesting and which was a hypothesis at the beginning of that was that because these were 2 targets that were expressed exactly in the same physiological, I would say, compartment, the one -- the 2 together would potentially generate a synergistic effect. And this is exactly what was demonstrated in animal models of epilepsy, which carry a strong translational value for this disorder. So many compounds have been tested in these models and many -- actually it was repeated. So this experiment was repeated with our compound, 71149, but also with other mGlu2 positive allosteric modulators and also with other anti-epileptics, and it was demonstrated that what we're seeing is really the synergy between activating mglu2 receptors and blocking SV2A process.

And there are currently no further questions. [Operator Instructions] And the next question is from Ram Selvaraju of H.C. Wainwright.

Yes, I just wanted to see if you had any thoughts, any comments on the potential implications for Addex of the recent announced planned acquisition of Adamas, the originator of GOCOVRI by Supernus, if you believe that this has any positive read-through for the public perception, the industry perception of dipraglurant?

Yes, thanks for the question. I mean as you know, GOCOVRI is approved for the treatment of PD-LID and it's the only approved treatment in the United States. And its activity is through the NMDA receptor. So it's on the same biological pathway as dipraglurant. And Addex is targeting the mGluR5 receptor, dipraglurant is absolutely selective. While we're expecting to see similar efficacy in the next clinical study, we're certainly expecting to see an improved safety. So our target product profile is really to have similar efficacy with better safety in GOCOVRI. Now the read-through for Addex is that clearly, while GOCOVRI sales were, let's put it this way, less than expected, we believe that this shows that PD-LID is clearly a large market opportunity. And as we've said in the past, we believe that PD-LID is actually looking for an efficacious and well-tolerated drug, and that is a significant market opportunity. Now we don't see any negative read-through for Addex of the acquisition of Adamas. And we see it very much as a positive signal that there are people out there that recognize the commercial opportunity in PD-LID of an antidyskinetic drug.

Also with respect to the epilepsy candidate, I was wondering if you could provide us with some additional granularity regarding the epilepsy subpopulations that you anticipate are most likely to be prioritized in clinical development and that are most likely to be targetable from the point of view of commercialization if and when this candidate gets to market?

Sorry, can you repeat the beginning of your question? We -- you broke up a bit.

It's regarding the epilepsy candidates and which epilepsy subpopulations are most likely to be targeted in future clinical development and are the most logical targets with respect to commercialization if and when this candidate reaches the market?

Roger, would you like to take that one?

Yes, sure. We're really not commenting, this is being developed by Janssen so it'd be inappropriate for us to comment on their strategy until they feel comfortable doing it themselves. So apologies, I can't be more granular than that, I'm afraid. But obviously, I think if you look at them, I mean, what would be a reasonable surrogate is given the synergistic activity with Keppra is to follow the pathway with Keppra, which should give you a pretty good idea of what would be the most susceptible populations. When Janssen and J&J give more light themselves on where they're going with the program, we'll be happy to sort of reiterate that. As I say, I think Keppra is a pretty good surrogate for where it can go.

That's in and of itself helpful. With respect to the Charcot-Marie Tooth scientific research activity, I just wanted to clarify whether in the context of the preclinical evaluations that you're going to be running in conjunction with CMTA, whether those are going to be limited specifically to compounds in the GABAB PAM family or if they're going to include compounds that have different mechanisms of action?

I can answer to that. Yes, clearly, this is -- these -- so we will be testing exclusively GABAB positive allosteric modulators in the model. The idea is really to come with the compound that has the best profile based on some of the pharmacologic results that we'll get in these models.

Okay. And then the last question is relating to the punitive PTSD program. I was just wondering whether you believe that there's any potential read through, any possible kind of take home lessons that would be informative in guiding future clinical development in this indication that you could take from the development of a drug called NYX-783, which is in development by an American company called Aptinyx also for PTSD?

Yes, I don't think we're in a position to comment on that at this stage I'm afraid.

The next question is from [ Reny Rosario, Fresenius ].

I was just wondering if you envision in the future a back-to-back comparison with GOCOVRI on your PD-LID program?

Roger, do you want to take that?

We'll be not doing a comparison study we don't need to do in the United States, so the pathway to a successful NDA is doing the comparison with the placebo and that's accepted and that's where we are going, obviously. We continue to look at GOCOVRI and the studies that they've done and we've incorporated whatever lessons we can glean from their program into ours.

On the epilepsy, if you could answer, what could be the potential price of the treatment per year? Will it be priced like Keppra or at the premium?

I mean this is a -- I mean this -- we are a very quiet, if not silent partner in this program with Janssen. Janssen are operationally leading the development, they are financing the development and they've certainly not shared with us any information about how they see pricing of an mGluR2 NAM? And we have not -- and we would -- we have -- we have certainly not done any work to establish what that would be. So I'm afraid I can't give you any answer on that question.

And maybe one final question on the preclinical programs. Given the current cash position, do you foresee delays for them to basically entering the IND-enabling stage?

Well, at the moment, we're moving all programs full speed ahead. And as you can see, the cash burn in the last quarter was less than $3 million. And you remember, we've got some significant financing of our research activities through the Indivior collaboration and to a lesser extent from grants, including the Eurostars/Innosuisse grant. So we are currently -- we are managing our cash burn. And so at the moment, we do not see any delays.

[Operator Instructions] And we haven't received any further questions. So I hand back to the speakers.

Okay. Well, thank you very much, everyone, for attending our Q3 2021 Financial Results Conference Call. We look forward to hearing from you on our next call. I wish you all a very nice day. Thank you very much.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.