Addex Therapeutics Ltd (ADXN) Q4 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary reveals several concerns: decreased income, reliance on partnerships, and lack of a clear shareholder return plan. While there are some positive aspects, such as decreased expenses and a small financial gain, the overall sentiment is negative due to the significant decrease in income and the risk factors highlighted in the Q&A section. The lack of strong positive catalysts or new partnerships, combined with the low market cap and dilution risk, suggests a negative stock price movement over the next two weeks.
Key Financial Performance
Income 400,000 (decreased from 1.6 million in 2023) - The decrease is primarily due to the completion of the funded research phase of our collaboration with Indivior in June of 2024.
R&D Expenses CHF0.9 million (decreased by CHF0.2 million compared to 2023) - The decrease is mainly due to the completion of the research phase of the Indivior collaboration.
G&A Expenses CHF2.3 million (decreased by CHF0.4 million compared to 2023) - The decrease is primarily due to reduced D&O costs.
Finance Result Small gain (previously a loss in 2023) - The gain is primarily due to a significant reduction in Forex exposure as most cash is now held in Swiss francs.
Net Loss of Associates CHF2.2 million - This relates to the 20% equity interest received as part of the consideration for the divestment to Neurosterix, accounted for using the equity method under IFRS 12.
Cash Balance CHF3.3 million (decreased by CHF0.6 million compared to the beginning of the year) - The decrease is due to operating costs of continuing activities offsetting the CHF5 million gross proceeds from the divestment.
Current Liabilities CHF0.8 million (decreased by CHF2.1 million compared to December 31, 2023) - The decrease primarily relates to R&D related accruals and payables.
Non-Current Liabilities CHF0.2 million (decreased by CHF0.4 million compared to December 31, 2023) - The decrease is primarily due to the reduction in retirement benefit obligations following the transfer of staff to Neurosterix.
Non-Current Assets CHF7.1 million - This primarily relates to the 20% equity interest in Neurosterix Group recorded on the balance sheet under the equity method of accounting for associates.
Other Current Assets CHF0.2 million - This primarily relates to prepaid R&D costs.
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Operating Highlights
Neurosterix Launch: In 2024, Addex launched Neurosterix with a US$65 million Series A financing led by Perceptive Advisors, securing CHF5 million in cash and a 20% equity interest.
GABAB PAM Program: Addex has made progress in its GABAB PAM program, with a compound selected by partner Indivior for development in substance use disorders, and R&D enabling studies expected to be announced soon.
Chronic Cough Program: Addex has selected a compound for its independent GABAB PAM program for chronic cough, with pre-clinical profiling substantially completed and plans to secure funding for R&D enabling studies.
Dipraglurant Repositioning: Dipraglurant has been repositioned for brain injury recovery, with negotiations ongoing to access intellectual property for mGluR5 inhibitors.
Market Positioning: Addex has repositioned its development strategy following the spin-out of its platform into Neurosterix, allowing it to focus on its core programs and reduce financing overhang.
Cash Position: Addex completed the year with CHF3.3 million in cash, providing a runway through mid-2026, with reduced cash burn following the Neurosterix transaction.
Operational Efficiency: The cash burn has significantly reduced due to the Neurosterix spin-out, allowing Addex to focus on advancing its pipeline.
Strategic Shift: Following the termination of ADX-71149's development by Johnson & Johnson, Addex regained rights to this Phase 2 asset, enhancing its strategic position.
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Risk or Challenges
Cash Burn and Funding Challenges: Current cash does not fund the progression of unpartnered programs into the clinic, indicating a risk in advancing R&D without securing additional financing.
Market Capitalization and Dilution Risk: The low market capitalization of Addex makes raising necessary capital challenging and could lead to significant dilution for shareholders.
Regulatory and Development Milestones: Addex is eligible for payments of up to US$330 million upon successful achievement of regulatory clinical and commercial milestones, which presents a risk if these milestones are not met.
Dependency on Partnerships: The company relies on partnerships, such as with Indivior, for the development of certain programs, which could pose risks if these partnerships do not yield expected results.
Intellectual Property Negotiations: Negotiations to access intellectual property for mGluR5 inhibitors are ongoing, which could present risks if not successfully concluded.
Economic Factors: The overall economic environment may impact the ability to secure funding and the success of drug development programs.
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Guidance & Outlook
Neurosterix Financing: Launched Neurosterix with a US$65 million Series A financing led by Perceptive Advisors, securing CHF5 million in cash and a 20% equity interest.
GABAB PAM Program: Partner Indivior selected a compound for development in substance use disorders and started R&D enabling studies.
Dipraglurant Repositioning: Repositioned dipraglurant for brain injury recovery and negotiating access to intellectual property for mGluR5 inhibitors.
Independent GABAB PAM Program: Selected a compound for chronic cough treatment and completed pre-clinical profiling, seeking funding for R&D enabling studies.
Cash Management: Reduced cash burn significantly following Neurosterix spin-out, with CHF3.3 million cash runway through mid-2026.
Financial Projections: Eligible for up to US$330 million in payments upon achieving regulatory and commercial milestones, plus tiered royalties on net sales.
R&D Enabling Studies: Expect to start IND enabling studies for the independent GABAB PAM program for chronic cough this year, subject to securing financing.
Cash Position: Completed 2024 with CHF3.3 million cash, which does not fund progression of unpartnered programs into the clinic.
Strategic Objectives: Positioned to deliver on strategic objectives with a strong balance sheet and ongoing partnerships.
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Shareholder Return Plan
Shareholder Return Plan: Addex Therapeutics has not announced any specific share buyback or dividend program. However, they have secured CHF5 million from the Neurosterix transaction and retained a 20% equity interest in Neurosterix, which could provide future returns to shareholders.
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Key Q&A
Q:Do they have other projects other than what you now sold to them?
A:Neurosterix was actually founded by Addex as a spin-out company... There are four programs. The lead program is a muscarinic M4 PAM and then there is an mGluR7 negative modulator program and also an mGluR2 negative allosteric modulator program, and then another program which is undisclosed at the very early stages of discovery.
Q:I guess that means that you have a lot of additional work just to sort of control the activities of Neurosterix and your 20% investment there. Is that correct?
A:Neurosterix has its own team... I am currently the CEO of Neurosterix and the CEO of Addex.
Q:Could you enumerate how you are seeing the strategic environment and essentially evolving for dipraglurant, particularly within the context of neuro-rehabilitation?
A:As dipraglurant is our clinical asset that has shown very good tolerability... We believe these studies will first confirm the modulation of plasticity in humans in particular in post-stroke patients.
Q:Could you comment on the recent developments in the neuropsych field, particularly the failure of the Phase 3 trial of COBENFY as adjunctive treatment in schizophrenia?
A:We saw the news of course and we believe that it has minimal if any impact on our strategy... it's not going to alter our plans at all.
Q:Could you offer us some idea of what if anything you plan to do with the compound that was returned to Addex from J&J?
A:We're already discussing with a number of interested parties... this is a very, very high quality compound with a lot of data.
Q:Review of Unclear Management Responses
A:Management's response to the question about the future development path for the compound returned from J&J lacked specific details on potential collaborations and timelines.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
GABAB PAMs
Johnson
MTEP
Neurosterix
RD study
acid cough
baclofen
brain injury
cash
citric acid
comparison
connectivity
cough guinea
dipraglurant
effect
efficacy
evidence
experiment compound
financing
guinea pig
improvement
indication
injury recovery
mGluR
mg kg
model
need
number
patient
pig compound
profile
rehabilitation
sign
stroke
substance use
tolerability
treatment
use disorder
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ADXN Report
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