Addex Therapeutics Ltd. — FY2019 Form 20-F
Reporting period: Year ended December 31, 2019; figures are in Swiss francs (CHF) unless stated otherwise. This is an annual report, not a standalone fourth-quarter report. The company is a clinical-stage biotechnology business developing small-molecule allosteric modulators, primarily for neurological conditions. Financial statements are prepared under IFRS and were audited by PwC, which issued an unqualified opinion.
Financial performance and liquidity
| Metric | FY2019 | FY2018 |
|---|---|---|
| Revenue | CHF 2.76 million | CHF 6.04 million |
| Other income | CHF 0.07 million | CHF 0.66 million |
| Research and development expense | CHF 12.45 million | CHF 4.92 million |
| General and administrative expense | CHF 4.98 million | CHF 3.21 million |
| Operating loss | CHF 14.60 million | CHF 1.42 million |
| Net loss | CHF 14.78 million | CHF 1.64 million |
| Basic and diluted loss per share | CHF 0.56 | CHF 0.07 |
| Cash and cash equivalents at year-end | CHF 31.54 million | CHF 41.67 million |
| Net cash used in operating activities | CHF 9.48 million | Cash generated: CHF 1.75 million |
| Working capital | CHF 26.71 million | CHF 39.82 million |
| Total assets / total liabilities | CHF 33.03 million / CHF 7.50 million | CHF 42.21 million / CHF 2.97 million |
- Revenue was collaborative research funding from Indivior; Addex reported no product sales. The 2018 total included a CHF 4.88 million license fee for ADX71441, which did not recur in 2019.
- R&D spending rose sharply, principally from dipraglurant PD-LID trial preparation and increased GABAB PAM work. The filing reports no clear gross margin measure; product-sales margins are not applicable.
- Cash declined by CHF 10.13 million year over year. The company had no borrowing debt; CHF 0.55 million of lease liabilities were recognized under IFRS 16. The CHF 14.78 million accumulated loss for 2019 brought accumulated losses to CHF 300.85 million.
Material changes and business developments
- Revenue fell CHF 3.28 million, mainly because the Indivior upfront license payment recognized in 2018 was absent in 2019. Research funding from Indivior increased, but did not offset that decline.
- Operating costs more than doubled to CHF 17.44 million. R&D expense increased CHF 7.54 million; G&A rose CHF 1.78 million, including costs associated with preparing for the U.S. listing.
- Operating cash flow shifted from CHF 1.75 million generated in 2018 to CHF 9.48 million used in 2019. The prior-year cash inflow reflected Indivior license and research receipts.
- In February 2019, Indivior discontinued development of the selected compound ADX71441. A separate Indivior-funded GABAB PAM discovery program continued; Addex expected to deliver candidate(s) for selection in 2020.
- Addex issued 4.28 million shares to its wholly owned subsidiary in 2019, held as treasury shares; this did not raise external cash. Outstanding ordinary shares were reported as 32,848,635 at year-end. The filing also reports 11.91 million potential shares from options, certificates and warrants, which could dilute shareholders.
Outlook, risks and unusual items
- Dipraglurant: Management planned a placebo-controlled Phase 2b/3 pivotal PD-LID study of about 140 patients at approximately 50 U.S. sites, targeting initiation in the second half of 2020 and topline results in the second quarter of 2022. The trial had been suspended because COVID-19 disrupted site availability and raised risks for vulnerable patients. These were targets, not assured outcomes.
- The prior Phase 2a study met its primary safety/tolerability objective and showed statistically significant symptom effects at Days 1 and 14, but not Day 28, amid an increasing placebo response. The planned pivotal trial would use a different primary measure and placebo-mitigation procedures.
- Management stated in the risk discussion that year-end cash was expected to fund operations through at least December 2021, subject to assumptions and possible additional funding. Elsewhere, the liquidity discussion says existing cash should cover at least the next 12 months. The company expects continuing losses and may need partnerships, grants or equity financing; failure to secure funds could force program reductions or discontinuation.
- Other pipeline priorities included Indivior-funded GABAB PAM research, an Addex-selected CMT1A program, and early-stage mGlu7, mGlu2, mGlu4 and mGlu3 programs. Addex also reported a €4.85 million Eurostars grant for its mGlu7 PTSD program.
- Key risks include clinical and regulatory failure, dependence on partners for out-licensed programs, reliance on third-party trial and manufacturing providers, competition, intellectual-property challenges, foreign-exchange exposure and limited revenue sources. Management identified Addex as a likely passive foreign investment company (PFIC) for U.S. tax purposes in 2019; status is uncertain and may have adverse tax consequences for U.S. investors.
- The adoption of IFRS 16 in 2019 recognized right-of-use assets and lease liabilities; the company said it did not materially affect net loss or loss per share. Management concluded COVID-19 did not create material uncertainty casting significant doubt on going concern at the time the statements were approved.
- No material litigation was reported. No dividends have been paid or are expected in the foreseeable future. Nasdaq ADS trading began January 29, 2020, after the reporting period, with no new securities issuance in connection with the listing.
Most important facts for investors to verify
- Whether the dipraglurant pivotal trial actually began, its enrollment and costs, and whether results support the proposed timeline and regulatory path.
- Cash burn, updated runway assumptions and financing needs; reconcile the filing’s “through at least December 2021” statement with its separate “at least 12 months” liquidity statement.
- Indivior’s continuation and funding of the new GABAB PAM research program, and the implications of terminating ADX71441 development for potential milestone revenue.
- Potential dilution from outstanding options, warrants and other equity instruments, and the filing’s share-count disclosures; one risk-factor passage lists 32,848,645 shares, while the balance sheet and cover page report 32,848,635.
- Annual PFIC status and related U.S. tax reporting implications, as well as the impact of COVID-19 and foreign-exchange movements on operations and liquidity.