Addex Therapeutics Ltd (ADXN) Q4 2024 Earnings Call Transcript
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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.
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.
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.
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.
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.
Key Q&A
Earnings Word Cloud
ADXN Transcript
The earnings call reflects a mixed outlook. The financial performance remains stable, but with increased liabilities and reliance on partnerships, there's uncertainty. The Q&A reveals concerns about competitive pressures and funding needs. Positive aspects include potential milestone payments and strategic repositioning of programs. However, the lack of specific guidance and increased liabilities weigh down sentiment, leading to a neutral stock price prediction.
Despite some positive elements like debt reduction and service levels, the overall sentiment is negative due to declining sales, margins, and EPS. Inflation, weak consumer sentiment, and higher tariff costs are significant concerns. The Q&A section did not provide clarity, adding uncertainty. The expectation of declining sales in Q2 and lower operating margins further contribute to the negative outlook. The impact of divestitures and foreign exchange headwinds exacerbates the situation, leading to a likely negative stock price movement in the short term.
The earnings call highlights financial and operational challenges, including a limited cash runway, dependency on partnerships, and increased liabilities. The need for additional financing and the company's reliance on external collaborations pose significant risks. Despite some positive developments in the neuropsychiatry space, the Q&A session revealed management's evasiveness on strategic details, further contributing to uncertainty. Overall, these factors suggest a negative sentiment and potential stock price decline.
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.
ADXN Report
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