Executive Summary / Key Takeaways

• Neurosterix Spin-Out Transformed the Capital Equation: Addex's 2024 divestiture of its preclinical neuropsychiatry pipeline into a $65 million Series A-funded spin-out delivered CHF 5 million in cash, retained 20% equity upside, and slashed the company's cash burn—removing a financing overhang that had made the stock uninvestable for institutional capital.

• GABAB PAM Dual-Track Offers Asymmetric Upside: The partnered Indivior program for substance use disorders provides up to $330 million in milestone potential plus royalties, while the independent chronic cough program targets a market where 50% of patients fail existing P2X3 inhibitors—offering a best-in-class profile that could command premium pricing if IND-enabling studies proceed.

• Dipraglurant Repositioning Opens a Blue Ocean: Shifting the mGlu5 negative allosteric modulator from Parkinson's dyskinesia to post-stroke recovery addresses a $50 billion global economic burden with no approved pharmacological therapy, leveraging the drug's fast onset and short half-life as ideal for rehabilitation synergy.

• Cash Runway Creates Forced Efficiency and Dilution Risk: With CHF 2.2 million in cash providing runway only through mid-2026, management's December 2025 expansion of the ATM facility to 3.3 million shares signals that funding the unpartnered cough and stroke programs will likely require shareholder dilution—making financing execution the critical variable for equity value.

• Valuation Reflects Pure Optionality: Trading at 196 times sales with a $10 million market cap, ADXN's enterprise value of $7.3 million is essentially a call option on three shots on goal: Indivior's IND filing, cough program financing, and dipraglurant's Phase 2a stroke study—any one of which could justify the current valuation multiple times over if successful.

Setting the Scene: A 23-Year-Old Platform Finally Finds Its Financial Footing

Addex Therapeutics, founded in 2002 and headquartered in Geneva, Switzerland, spent two decades building one of the most sophisticated allosteric modulator platforms in central nervous system drug discovery. The company's core competency—engineering small molecules that fine-tune rather than block G-protein coupled receptors —promised superior selectivity and tolerability versus traditional CNS drugs. Yet this scientific promise remained trapped in a structural vice: a microcap valuation that made raising capital for clinical development prohibitively dilutive, and partnership dependencies that left the company vulnerable to Big Pharma portfolio decisions.

The strategic landscape shifted decisively in 2024. When Johnson & Johnson (JNJ) terminated development of ADX71149, the Phase II mGlu2 PAM compound, Addex faced a choice: absorb the setback as another biotech casualty, or weaponize the event. Management chose the latter, regaining rights to a compound with 280 kilograms of manufactured API and extensive clinical data. More importantly, they recognized that their preclinical neuropsychiatry pipeline—M4 PAM for schizophrenia, mGluR7 NAM for mood disorders, mGlu2 NAM for cognition—required capital scales that their public market valuation could not support without wiping out existing shareholders.

The Neurosterix spin-out transaction in April 2024 represents the most important capital markets maneuver in Addex's history. By packaging the allosteric platform, facilities, and majority of preclinical staff into a new Swiss entity capitalized with $65 million from Perceptive Advisors, Addex extracted CHF 5 million in cash while retaining 20% equity upside. This move didn't just fund the preclinical pipeline—it surgically removed a financing overhang that had depressed the stock for years. The cash burn reduction was immediate and material, dropping quarterly operating expenses from CHF 1.5 million to under CHF 0.7 million. For the first time, Addex could advance its remaining assets without constant dilutive financing overhang.

Technology, Products, and Strategic Differentiation: Three Shots on Goal

Addex's remaining portfolio concentrates risk but amplifies potential reward through three distinct mechanisms: a partnered GABAB PAM with near-term catalysts, an independent cough program with best-in-class preclinical data, and a repositioned stroke asset with first-mover advantage.

The GABAB PAM platform demonstrates the power of allosteric modulation. Traditional GABAB agonists like baclofen suffer from short half-lives requiring five daily doses and dose-limiting sedation that prevents patients from driving. By fine-tuning receptor activity rather than fully activating it, Addex's compounds achieve superior efficacy-to-tolerability ratios. The partnered program with Indivior (INDV) for substance use disorders has already cleared IND-enabling studies , triggering the next phase of a collaboration that could deliver up to $330 million in milestones plus tiered royalties from high single digits to low double digits. This isn't speculative science—it's a validated mechanism where the primary risk is clinical execution, not target biology.

The independent chronic cough program addresses a market failure that directly impacts patient quality of life. Current standards of care leave 30% of patients completely unresponsive and provide only moderate relief to 60%, while carrying risks of serious side effects. Gefapixant, the only approved P2X3 inhibitor, suffers from taste disturbances and isn't even registered in the U.S., while up to 50% of patients discontinue due to lack of benefit. Addex's centrally acting GABAB PAM targets the central mechanisms that peripheral P2X3 inhibitors miss. Preclinical data published in Q1 2025 show the lead compound delivering 70% cough reductions at maximal doses, with a 60-fold safety margin over respiratory depression—a stark contrast to baclofen's narrow therapeutic window. In head-to-head comparisons, the compound outperformed nalbuphine, Orvepitant, baclofen, and codeine on both cough number and latency measures. This matters because it suggests the potential for best-in-disease efficacy with P2X3-like tolerability, capturing the 50% of refractory patients that competitors cannot serve.

Dipraglurant's repositioning from Parkinson's levodopa-induced dyskinesia to brain injury recovery exploits an underappreciated pharmacological profile. The mGlu5 negative allosteric modulator 's fast onset and short half-life make it ideally suited for use during rehabilitation sessions, where brief windows of enhanced neuroplasticity could accelerate recovery. With over 100 million stroke survivors worldwide and 12 million new cases annually, the economic burden exceeds $50 billion, yet no pharmacological agent exists to augment rehabilitation therapy. Addex's option agreement with Sinntaxis and collaboration with Lund University provides a clear development path, while the drug's existing safety database from Parkinson's studies de-risks early clinical work.

Financial Performance & Segment Dynamics: Efficiency Forced by Necessity

Addex's financial results read like a case study in forced capital efficiency. Nine-month 2025 revenue of CHF 0.3 million represents a 40% decline year-over-year, entirely due to the completion of the funded research phase with Indivior in June 2024. This revenue collapse, however, reflects a strategic choice: trading predictable but low-margin service income for high-margin milestone and royalty potential. The CHF 0.1 million quarterly run rate from patent maintenance and services is essentially a rounding error, making the company entirely dependent on pipeline catalysts for value creation.

Operating expenses tell a more nuanced story. R&D spending of CHF 0.2 million in Q3 2025 is down 50% from historical levels, but this reflects the spin-out of preclinical activities to Neurosterix rather than reduced development intensity. The remaining spend focuses exclusively on the GABAB PAM cough program and dipraglurant stroke preparation—two programs with clear clinical paths. G&A expenses of CHF 0.5 million remain stable, suggesting the company has reached a minimal viable corporate cost structure.

The balance sheet reveals both the achievement and limitation of the Neurosterix strategy. CHF 2.2 million in cash provides runway through mid-2026, a dramatic improvement from the pre-spin-out trajectory that would have exhausted capital in early 2025. However, this runway explicitly does not fund progression of the unpartnered programs into the clinic, as management has repeatedly stated. The CHF 5 million noncurrent asset representing the 20% Neurosterix equity stake is marked at cost but could appreciate significantly if the M4 PAM program doses patients in 2025 as planned—especially given the schizophrenia market's renewed interest after Karuna (KRTX)'s COBENFY launch and AbbVie (ABBV)'s emraclidine advancement.

The equity method accounting for Neurosterix creates visible P&L noise—CHF 0.9 million in Q3 2025 losses—but this is non-cash and reflects investment in high-value programs that Addex no longer needs to fund directly. The real financial story is cash burn reduction from over CHF 2 million quarterly to under CHF 0.7 million, buying time for catalysts to mature.

Outlook, Management Guidance, and Execution Risk: Financing is the Rate-Limiting Step

Management's guidance across 2025 earnings calls centers on a single, repeated theme: the company has sufficient cash for operations but lacks capital to advance its unpartnered pipeline. This isn't a subtle hint—it's an explicit statement that the GABAB PAM cough program and dipraglurant stroke program will not enter IND-enabling studies or clinical trials without additional financing. The December 2025 amendment to the ATM offering agreement, increasing the maximum offering to 3.3 million shares, provides the mechanism for that financing. At current prices, this represents potential dilution of over 270% of the current share base, making the timing and pricing of any offering the most critical variable for near-term equity value.

The partnered programs offer a parallel path to value creation. Indivior's successful completion of IND-enabling studies for the GABAB PAM in substance use disorders positions Addex for potential milestone payments in 2026, though management has not quantified the near-term payment schedule. The addiction market opportunity is substantial—baclofen is widely used off-label despite its limitations, suggesting a clear regulatory and commercial path for a superior alternative. The key question is whether Indivior will prioritize this program among its portfolio, as Addex has no control over development pace.

Stalicla represents a call option within a call option. Addex's CHF 2 million investment gives it exposure to a precision medicine platform that has demonstrated proof-of-concept in autism spectrum disorders, with Stalicla pursuing Series C financing for two Phase II studies and considering an IPO. While Addex accounts for this as a passive investment, any liquidity event—whether through mavoglurant out-licensing for cocaine use disorder or a public listing—could deliver a meaningful return and validate Addex's strategy of leveraging its balance sheet for strategic optionality.

The mGlu2 PAM program (ADX71149) regained from J&J remains a wild card. With 280 kilograms of API and extensive Phase II data, this compound could be partnered for multiple indications, but management has provided no timeline for collaboration discussions. The asset's value is entirely latent, dependent on Addex's ability to find a partner willing to advance development—likely requiring upfront capital that the company cannot provide itself.

Risks and Asymmetries: The Thin Line Between Dilution and Destruction

The central risk to the investment thesis is financing execution. If Addex cannot secure non-dilutive funding or complete an equity raise at reasonable prices, the company faces a binary outcome: either shelve its most valuable unpartnered programs or accept massive dilution that permanently impairs equity value. The mid-2026 cash runway provides a hard deadline, and the biotech funding environment remains challenging for pre-revenue companies. A failed financing or down-round could trigger a death spiral, while successful funding would validate the platform and provide catalyst fuel.

Clinical execution risk remains material despite promising preclinical data. The GABAB PAM cough program's robust animal efficacy must translate to human studies where CNS drugs face high failure rates. The 60-fold safety margin is encouraging, but the transition from guinea pig models to Phase I dose-finding studies often reveals unexpected pharmacokinetic or tolerability issues. For dipraglurant, the repositioning to stroke recovery is scientifically rational but clinically unproven—no mGlu5 inhibitor has demonstrated efficacy in this indication, and the Sinntaxis collaboration is still completing preclinical profiling.

Partner dependency creates external risk vectors. Indivior's strategic priorities could shift, delaying the GABAB PAM program despite successful IND-enabling studies. The substance use disorder market is crowded, and while Addex's mechanism is differentiated, Indivior may choose to allocate resources to nearer-term opportunities. Similarly, Stalicla's success is entirely outside Addex's control—if their Series C financing fails or their autism studies disappoint, the CHF 2 million investment could be written down to zero.

The competitive landscape is evolving rapidly. In chronic cough, GSK (GSK)'s camlipixant Phase III data could establish a new standard of care before Addex enters the clinic. In stroke recovery, the CAMAROS trial with maraviroc could validate the CCR5 mechanism and attract competitor investment in mGlu5 modulation. In schizophrenia, Neurosterix's M4 PAM faces competition from Karuna's launched COBENFY and AbbVie's emraclidine, though management argues their monotherapy approach is differentiated. Any competitor success could compress Addex's market opportunity or attract capital away from its platform.

Valuation Context: Pricing a Three-Option Lottery Ticket

At $8.17 per share, Addex trades at a $9.97 million market capitalization and $7.27 million enterprise value after accounting for net cash. The 196 times sales multiple is mathematically correct but economically meaningless for a company with $508,000 in annual revenue—this valuation reflects option value, not operating performance.

The balance sheet provides the only concrete valuation anchor. CHF 2.2 million in cash supports operations through mid-2026, implying the market values the three core programs at approximately $7.3 million, consistent with its enterprise value. This represents around 2.2% of the potential $330 million milestone package from the Indivior collaboration alone, suggesting the market assigns minimal probability to any program success.

Peer comparisons highlight the speculative nature of the valuation. Supernus Pharmaceuticals (SUPN), with approved products and $192 million in quarterly revenue, trades at 3.9 times sales. Jazz Pharmaceuticals (JAZZ), with $1.1 billion in quarterly revenue, trades at 2.4 times sales. Even clinical-stage peers like Alector (ALEC) and Gain Therapeutics (GANX) trade at 2.3 and 15 times sales, respectively—still a fraction of Addex's multiple. The premium reflects either extreme optimism about the allosteric platform or simply illiquidity and low float in a microcap stock.

The Neurosterix equity stake provides a hidden valuation component. If the M4 PAM program successfully doses schizophrenia patients in 2025 and demonstrates differentiation from COBENFY, the 20% stake in a $65 million-funded company could be worth multiples of Addex's current enterprise value. Conversely, if the program fails or Perceptive Advisors forces a down-round, the stake could be impaired. This bifurcation makes Addex's valuation highly levered to events it does not control.

The ATM facility's expansion to 3.3 million shares represents potential dilution of over 270% of the current share base at current prices. If executed, this would raise approximately $27 million—enough to fund both the cough and stroke programs through Phase II. The valuation impact depends entirely on execution price: a raise near current levels would be massively dilutive but programmatically de-risking, while a higher price would require clinical catalysts that the company cannot currently fund.

Conclusion: A Platform in Search of a Balance Sheet

Addex Therapeutics has executed one of the most elegant capital restructuring moves in microcap biotech, transforming a financing-constrained platform into a lean, catalyst-driven investment vehicle. The Neurosterix spin-out removed the preclinical funding burden while retaining equity upside, the Indivior partnership provides milestone optionality, and the remaining programs target markets with clear unmet needs and differentiated mechanisms.

The investment thesis hinges on a single variable: the company's ability to finance its unpartnered programs without destroying equity value. The GABAB PAM cough program's best-in-class preclinical profile and dipraglurant's first-mover position in stroke recovery represent genuine scientific opportunities that could support multiples of the current valuation. However, these opportunities expire in mid-2026 when cash runs out, and the ATM facility expansion suggests management recognizes the urgency.

For investors, Addex is a three-option lottery ticket where the options have surprisingly good odds. The Indivior partnership could deliver meaningful milestones within 18 months, the cough program's data package could attract a partner or acquirer, and the stroke program could open a blue ocean indication. But the ticket price includes potential dilution, clinical execution risk, and partner dependency. The $8.17 stock price reflects a market that has seen many biotech promises fail to convert to value. Whether Addex breaks that pattern depends less on its science—which appears solid—and more on management's ability to thread the needle between necessary financing and shareholder value preservation.