Addex Therapeutics Ltd. — FY2020 Form 20-F
Reporting period: Fiscal year ended December 31, 2020; this is an annual report, not a standalone fourth-quarter filing. Financial statements are prepared under IFRS and presented in Swiss francs (CHF). The filing was signed March 11, 2021.
Business context
Addex is a clinical-stage biotechnology company developing small-molecule allosteric modulators, primarily for neurological conditions. Its lead proprietary candidate, dipraglurant, is being developed for Parkinson’s disease levodopa-induced dyskinesia (PD-LID) and dystonia. The company has no marketed products and reported no product-sales revenue. Revenue primarily reflects collaboration research funding, notably from Indivior.
Key financial metrics
| CHF millions, except per-share data | 2020 | 2019 |
|---|---|---|
| Revenue | 3.61 | 2.76 |
| Other income | 0.27 | 0.07 |
| Research and development costs | 10.37 | 12.45 |
| General and administrative costs | 5.75 | 4.98 |
| Operating loss | (12.24) | (14.60) |
| Net loss | (12.86) | (14.78) |
| Basic and diluted loss per share (CHF) | (0.48) | (0.56) |
| Operating cash flow | (12.18) | (9.48) |
| Cash and cash equivalents at year-end | 18.70 | 31.54 |
| Working capital | 15.87 | 26.71 |
| Total assets | 20.18 | 33.03 |
| Total liabilities | 5.57 | 7.51 |
| Borrowings | None | None |
Lease liabilities were CHF 0.57 million at year-end 2020. Accumulated losses were CHF 313.71 million. A conventional product gross margin is not meaningful because the company has no product sales.
Changes versus 2019
- Revenue increased CHF 0.85 million, mainly from Indivior-funded research activities.
- R&D expense fell CHF 2.08 million, primarily because the pandemic delayed clinical-development activity; dipraglurant PD-LID outsourced R&D costs declined from CHF 7.18 million to CHF 4.87 million.
- G&A expense rose CHF 0.77 million, principally due to a CHF 1.46 million increase in directors’ and officers’ insurance following the Nasdaq listing.
- Net loss narrowed by CHF 1.92 million, while operating cash use increased CHF 2.70 million. Year-end cash declined CHF 12.84 million, including a CHF 0.65 million adverse cash exchange-rate effect.
- Finance costs were CHF 0.62 million net, mainly reflecting CHF 0.58 million in foreign-exchange losses as the Swiss franc strengthened.
Outlook, commentary and risks
- Management expected year-end cash, together with the January 2021 financing proceeds, to fund operating and capital needs through at least the second quarter of 2022. This is a forecast based on assumptions; additional funding will be needed to sustain development thereafter.
- On January 8, 2021, Addex issued 6.9 million new shares, including 6.75 million ADSs, for gross proceeds of CHF 10.1 million (USD 11.5 million). The proceeds were intended mainly for drug development and general corporate purposes.
- The planned dipraglurant Phase 2b/3 PD-LID trial was suspended in March 2020 because U.S. sites could not initiate it under the company’s procedures and COVID-19 safeguards. Management planned initiation in the first half of 2021 and topline results in the fourth quarter of 2022; both depended on pandemic conditions and remain forward-looking expectations.
- The prior Phase 2a trial 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 pivotal study was designed with placebo-response mitigation measures.
- Other stated development plans included an exploratory dipraglurant Phase 2 blepharospasm trial and a Janssen-led ADX71149 epilepsy Phase 2a trial, both anticipated in 2021. Indivior-funded GABAB PAM research was in candidate selection; Indivior had discontinued development of the earlier selected candidate ADX71441 in 2019.
- Key risks include clinical and regulatory failure or delay, dependence on partners and third-party trial/manufacturing providers, limited revenue, need for future capital and potential shareholder dilution, currency exposure, and competition. Addex disclosed no material pending litigation and no off-balance-sheet arrangements.
- The financial statements received an unmodified audit opinion. Management assessed disclosure controls and internal control over financial reporting as effective at year-end; the auditor did not provide an internal-control attestation because Addex was an emerging growth company.
Most important facts for investors to verify
- Whether the dipraglurant pivotal PD-LID trial actually began on the forecast schedule, and subsequent enrollment, safety and efficacy updates.
- Whether the CHF 10.1 million January 2021 equity raise, together with the CHF 18.7 million year-end cash balance, supports the stated runway and what financing is required beyond Q2 2022.
- Progress and funding responsibilities under the Janssen and Indivior collaborations, including the status of ADX71149 and the newly researched GABAB PAM candidates.
- Potential dilution: the filing reports 13.03 million dilutive instruments at December 31, 2020, and the January 2021 share issuance increased the share count.
- Currency sensitivity and reported cash use: USD/CHF movements materially affected 2020 finance results and cash balances.
- U.S. investor tax implications: Addex said it may have been a passive foreign investment company for 2020; the filing provides no assurance of its tax classification.