Executive Summary / Key Takeaways

• Addex Therapeutics is undergoing a significant strategic transformation, pivoting to a leaner operating model focused on its clinical-stage and partnered assets, while leveraging its proprietary allosteric modulator technology.
• The spin-out of Neurosterix, securing $65 million in Series A financing, has significantly strengthened Addex's balance sheet with CHF 5 million in cash and provides a 20% equity interest, offering substantial upside potential from Neurosterix's advanced preclinical pipeline, including a novel M4 PAM for schizophrenia.
• Key pipeline assets include the GABAB PAM program partnered with Indivior (INDV), which is advancing into IND-enabling studies for substance use disorders and could yield up to $330 million in milestones plus tiered royalties, and an independent GABAB PAM program for chronic cough showing robust preclinical efficacy.
• Dipraglurant, an mGluR5 NAM, has been strategically repositioned for brain injury recovery (post-stroke/TBI), with plans for clinical pharmacology studies to confirm neuroplasticity modulation.
• While Addex has a cash runway through mid-2026, its current cash position does not fully fund the progression of its unpartnered programs into the clinic, highlighting a dependency on future financing or partnerships for these assets.

A Strategic Rebirth: Focusing Allosteric Innovation

Addex Therapeutics, founded in 2002 in Geneva, Switzerland, has carved a niche in the biopharmaceutical industry by focusing on the discovery and development of small-molecule allosteric modulators for neurological disorders. This specialized approach, targeting G-protein coupled receptors (GPCRs) and enzymes, forms the bedrock of its strategy, aiming to deliver therapies with enhanced specificity and improved tolerability profiles compared to traditional orthosteric agonists. The company's journey has been marked by strategic evolution, culminating in a significant restructuring designed to unlock value from its innovative platform.

The biopharmaceutical landscape is intensely competitive, dominated by large players like Biogen (BIIB), Pfizer (PFE), Johnson & Johnson (JNJ), and AbbVie , which possess vast resources and established market presence. Addex, as a development-stage company, positions itself as an agile innovator, seeking to exploit areas of high unmet medical need where its allosteric modulation technology can offer a differentiated advantage. Its strategy emphasizes both strategic partnerships to de-risk development and focused internal programs.

Technological Edge: Precision in Allosteric Modulation

Addex's core competitive advantage lies in its proprietary allosteric modulation technology. This approach allows for fine-tuning receptor activity, potentially leading to more precise therapeutic effects and fewer off-target side effects. This differentiation is particularly evident across its key programs:

The GABAB positive allosteric modulator (PAM) program, central to both its partnership with Indivior and its independent chronic cough initiative, aims to deliver a "better baclofen." Baclofen, a GABAB agonist, is clinically validated but limited by its short half-life and significant side effects. Addex's GABAB PAMs are designed to offer comparable efficacy with a longer half-life and an improved side effect profile. Preclinical studies for the chronic cough candidate (Compound A) have demonstrated a consistent minimum effective dose of 1 mg/kg and an ED50 of 6 mg/kg in cough frequency. Crucially, Compound A exhibited a more than 30-fold safety margin based on tolerability biomarkers. In head-to-head comparisons in guinea pig models, Compound A was significantly better tolerated than baclofen, showing no marked changes in respiratory rate, body temperature, or plasma growth hormone at doses up to 60 mg/kg, unlike baclofen which suppressed respiratory rate and reduced body temperature by nearly 2 degrees Celsius at just 3 mg/kg. Furthermore, Compound A showed similar efficacy and tolerability to a P2X3 inhibitor in a comparative model. This technological advantage is critical, as Addex aims to achieve efficacy in a broader patient population, addressing the up to 25% of patients who do not respond to existing treatments like Camlipixant.

Similarly, Dipraglurant, an mGluR5 negative allosteric modulator (NAM), is being repositioned for brain injury recovery, specifically in traumatic brain injury and stroke patients. Its differentiated profile, characterized by a fast onset of action, short half-life, and good tolerability (showing only mild to moderate CNS-related adverse effects in healthy subjects and Parkinsonian patients), makes it ideally suited to enhance rehabilitation therapies. Preclinical evidence suggests that mGluR5 inhibition can facilitate adaptive rewiring of the brain, promoting neuroplasticity and creating new functional pathways.

The spin-out of Neurosterix further highlights the breadth of Addex's allosteric modulation platform. Neurosterix's lead M4 PAM program for schizophrenia, along with mGluR7 NAM and mGluR2 NAM programs, utilize novel chemistry distinct from other M4 PAMs currently in development. This technological distinction could provide a significant competitive edge in highly sought-after neuropsychiatric indications.

For investors, these technological differentiators translate into the potential for first-in-class or best-in-class therapies. Such advancements could command premium pricing, drive higher adoption rates due to improved patient outcomes and tolerability, and generate substantial milestone and royalty revenues from partnerships. The strategic decision to spin out Neurosterix allows Addex shareholders to participate in the upside of these advanced preclinical programs without direct capital expenditure or dilution to Addex's core assets.

Financial Performance and Strategic Realignment

Addex Therapeutics has undergone a significant financial restructuring, particularly evident in its 2024 results following the Neurosterix spin-out. The company's income from continuing operations decreased to CHF 0.4 million in 2024 from CHF 1.6 million in 2023, primarily due to the completion of the funded research phase of its collaboration with Indivior in June 2024. Continuing R&D expenses also saw a reduction, decreasing by CHF 0.2 million to CHF 0.9 million in 2024, reflecting the conclusion of the Indivior research phase and the transfer of certain preclinical programs. General and administrative expenses similarly declined by CHF 0.4 million to CHF 2.3 million in 2024, mainly due to reduced Directors & Officers (D&O) insurance costs.

A notable financial development is the share of net loss of associates, which amounted to CHF 2.2 million in 2024. This figure represents Addex's 20% equity interest in Neurosterix, accounted for using the equity method under IFRS 12. This reflects Neurosterix's initial ramp-up in R&D spending as it advances its pipeline. The company's finance result improved from a loss in 2023 to a small gain in 2024, attributed to a significant reduction in foreign exchange exposure as Addex now holds most of its cash in Swiss francs.

Addex ended 2024 with a cash balance of CHF 3.3 million, which management indicates provides a cash runway through mid-2026. This liquidity was bolstered by the CHF 5 million in gross proceeds received from the Neurosterix transaction. However, it is important to note that this cash position does not fund the progression of Addex's unpartnered programs into the clinic. The Q1 2025 financial results showed a net loss of CHF 1.47 million, a 53% improvement from CHF 3.09 million in Q1 2024, driven by reduced R&D and G&A expenses, signaling the company's efforts towards cost efficiencies.

Outlook and Growth Catalysts

Addex's future hinges on the successful advancement of its pipeline and strategic partnerships. The collaboration with Indivior for the GABAB PAM program in substance use disorders is a significant value driver. Indivior has selected a drug candidate and initiated R&D enabling studies, with Addex eligible for up to US$330 million in milestone payments and tiered royalties ranging from high-single-digits to low-double-digits on net sales. The company expects to announce results from these R&D enabling studies soon.

The independent GABAB PAM program for chronic cough represents another promising internal asset. Preclinical profiling is substantially complete, and IND-enabling studies are planned to commence in 2025, specifically early in the first half of 2025. However, the progression of this program into the clinic is explicitly subject to securing additional financing.

Dipraglurant, repositioned for brain injury recovery, is ready to restart clinical development. Addex plans to conduct two clinical pharmacology studies, first in healthy volunteers and then in post-stroke patients, to confirm the modulation of plasticity in humans, which will inform the design of a Phase 2a rehabilitation study. The company is also actively negotiating an option agreement with Sinntaxis for an exclusive license to intellectual property covering the use of mGlu5 inhibitors in this indication.

A significant near-term catalyst lies with Neurosterix. Its lead M4 PAM program is on track to complete IND-enabling studies by mid-2025 and is expected to move into Phase 1 in the second half of 2025. Addex's 20% equity interest in Neurosterix, valued at approximately $20 million at the time of the transaction (based on Neurosterix's post-money valuation of just under $100 million), offers substantial upside potential. Recent M4 PAM deals in the neuropsychiatry space, such as AbbVie's (ABBV) acquisition of Cerevel (CEVL) for $8.7 billion and BMS's (BMY) acquisition of Karuna (KRTX) for $14 billion, underscore the significant market appetite and potential valuation for successful M4 PAM programs. Neurosterix is well-funded with $65 million in capital to advance its M4 PAM program through key value inflection points.

Furthermore, Addex has regained all development and commercialization rights to ADX-71149, its Phase 2 mGlu2 PAM asset, following Janssen's termination of development in epilepsy. This includes a high-value data set and a substantial 280 kilograms of active pharmaceutical ingredient. Addex is actively evaluating future development paths and discussing potential new collaborations for this asset, presenting an additional optionality for value creation.

Risks and Competitive Dynamics

Despite the promising pipeline and strategic shifts, Addex faces inherent risks common to development-stage biopharmaceutical companies. The most immediate financial risk is the dependency on securing additional financing for its unpartnered programs, such as the chronic cough GABAB PAM, to advance into clinical trials. While the Neurosterix spin-out provided a cash infusion and reduced overall burn, the current cash runway through mid-2026 does not cover the clinical progression of these internal assets.

Addex's competitive positioning, while strong in its specialized allosteric modulation technology, is challenged by the vast resources and established market presence of larger pharmaceutical companies. While Addex aims to develop "better baclofen" and achieve broader efficacy than competitors like Camlipixant in chronic cough, these claims require validation through clinical trials. The failure of the ADX-71149 epilepsy study underscores the high-risk nature of drug development.

The 20% equity interest in Neurosterix, while offering significant upside, also carries a potential dilution risk for Addex if Neurosterix requires further capital raises in which Addex chooses not to participate. However, with $65 million on Neurosterix's balance sheet, this risk is mitigated in the near term. Addex's strategic response to these competitive forces involves focusing on its technological differentiation, pursuing strategic partnerships to share development costs and risks, and maintaining a lean operational structure.

Conclusion

Addex Therapeutics is at a pivotal juncture, having strategically refocused its operations and pipeline to maximize value from its proprietary allosteric modulator platform. The Neurosterix spin-out represents a transformative move, providing a clear path for its advanced preclinical assets while strengthening Addex's balance sheet and offering shareholders a significant equity stake in a well-funded, high-potential entity. With the Indivior partnership advancing and the independent chronic cough program showing strong preclinical promise, Addex is poised to deliver on key milestones. The repositioning of Dipraglurant for brain injury recovery and the regained rights to ADX-71149 further diversify its value creation opportunities. While future financing for unpartnered programs remains a critical factor, Addex's sharpened strategic focus, innovative technology, and robust partnership model position it as a compelling investment opportunity in the specialized field of neurological drug development.