Addex Therapeutics Ltd. — 2022 Form 20-F summary
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter report. Addex is a clinical-stage Swiss biotechnology company developing small-molecule allosteric modulators, primarily for neurological and other CNS conditions. Financial statements are audited and prepared under IFRS as issued by the IASB; amounts below are in Swiss francs (CHF), unless noted.
Financial performance and position
| Metric | 2022 | 2021 | Change / context |
|---|---|---|---|
| Revenue | CHF 1.42 million | CHF 2.92 million | Down 51%; entirely collaborative research funding from Indivior. |
| Operating costs | CHF 21.97 million | CHF 18.66 million | Up 18%, reflecting higher R&D and staff costs, including share-based compensation. |
| Operating loss | CHF 20.52 million | CHF 15.51 million | Loss widened. |
| Net loss | CHF 20.80 million | CHF 15.35 million | Loss widened; basic and diluted loss per share was CHF 0.46 versus CHF 0.45. |
| Operating cash used | CHF 16.44 million | CHF 14.71 million | Cash outflow increased. |
| Cash and cash equivalents | CHF 6.96 million | CHF 20.48 million | Down CHF 13.53 million year over year. |
| Total assets / equity | CHF 8.28 million / CHF 4.91 million | CHF 22.54 million / CHF 16.93 million | Both declined substantially. |
Addex has no products approved for sale, so product sales and commercial margins are not meaningful; the filing reports no product-sales revenue. Net finance result was a CHF 0.28 million expense in 2022, compared with CHF 0.15 million income in 2021, primarily due to foreign-exchange losses. The company reported no outstanding debt, but had CHF 0.37 million of lease liabilities at year-end. Current liabilities were CHF 3.28 million and payables and accruals were CHF 3.00 million.
Material changes and financing
- Revenue fell as Indivior-funded research activity recognized against costs incurred declined. Research and development costs rose to CHF 14.67 million from CHF 12.84 million; general and administrative costs rose to CHF 7.30 million from CHF 5.82 million.
- Share-based compensation increased to CHF 3.68 million from CHF 1.18 million, largely following reductions in exercise prices. The company recorded a CHF 1.27 million actuarial gain on retirement benefits in other comprehensive income; the pension balance-sheet liability was nil at year-end 2022.
- Financing activities provided CHF 3.10 million of net cash in 2022, mainly from the July financing and treasury-share sales. The July transaction generated approximately CHF 4.1 million gross proceeds and included warrants; all pre-funded warrants from the July 2022 and December 2021 financings were exercised during 2022.
- After year-end, Addex reported raising CHF 1.2 million under its Kepler Cheuvreux sale agency agreement by the report’s issuance date. It also reported selling treasury shares for CHF 1.2 million gross between year-end and approval of the financial statements. Equity financing and warrant exercises may dilute shareholders.
Business, outlook and principal risks
- Pipeline: Janssen’s ADX71149 is in a Phase 2a epilepsy proof-of-concept program; Part 1 was completed, with a partner review of next steps expected in 2023. Janssen funds and controls its development. Indivior funds Addex’s GABAB PAM research program; Addex described candidate selection as ongoing and expected IND-enabling studies in 2024. Addex’s mGlu7 NAM program was expected to enter IND-enabling studies in the second half of 2023; mGlu2 NAM and GABAB PAM programs for selected indications were expected to progress toward IND-enabling studies in 2024. These are forward-looking expectations, not reported outcomes.
- Dipraglurant: Addex terminated its U.S. Phase 2b/3 and open-label PD-LID studies in June 2022 because of slow enrollment, attributed to COVID-related patient concerns and study-site staffing issues. The company was evaluating other indications and seeking a strategic partner; the filing does not establish that a partner or new development program was secured.
- Funding and going concern: At issuance, management expected available cash to fund operating expenses through the end of the third quarter of 2023. Management and the auditor identified a material uncertainty that raises substantial doubt about the company’s ability to continue as a going concern. The auditor’s opinion on the IFRS financial statements was unmodified and highlighted the going-concern uncertainty. Continued operations depend on additional capital, licensing proceeds, or collaborations; funding may not be available on acceptable terms.
- Other risks: Addex has recurring losses, negative operating cash flows, no marketed products, and significant development and regulatory uncertainty. It relies on partners for important programs and on third parties for clinical trials and manufacturing. The filing also cites competition, intellectual-property and supply risks, foreign-exchange exposure, and potential disruption from COVID-19 and the Russia-Ukraine conflict.
- The company reported no material litigation pending, no contracted capital expenditure at year-end, and no off-balance-sheet arrangements. It has never paid dividends and does not anticipate doing so in the foreseeable future. Management assessed disclosure controls and internal control over financial reporting as effective at December 31, 2022; the auditor did not provide an internal-control attestation.
Investor verification priorities
- Verify current cash, subsequent financing, expected runway, and the status of the going-concern uncertainty.
- Check subsequent updates on Janssen’s ADX71149 epilepsy program, Indivior’s GABAB PAM research, and any dipraglurant partnership or new indication.
- Review outstanding warrants, options, deferred-strike-price-plan shares, and other potential dilution; the filing reports 30.9 million subscription rights and warrants reserved or outstanding at year-end, in addition to treasury-share accounting complexities.
- Reconcile reported share counts: the cover reports 77.1 million shares outstanding at December 31, 2022, excluding treasury shares; the filing reports 80.9 million outstanding on March 28, 2023 after subsequent treasury-share sales.
- Assess the sustainability of Indivior research funding, which accounted for all 2022 revenue, and the company’s ability to finance development without relying on recurring equity issuance.