Addex Pharmaceuticals Reports First Half 2008 Financial Results

Tim Dyer, CFO, said: “While we are proud to report our first profitable period, which is primarily due to the recognition of $22 million in upfront fees from the sale of the license rights for ADX63365 to Merck & Co., future profitability will be dependent on the timing and structure of additional licensing activities and potential milestones. We are excited to report that our expansion plans are fully on track with the launch of our Inflammation Business Unit getting under way during the first half and the continued expansion of both the Metabolic and CNS Business Units proceeding smoothly. As a result, spending in the first half of 2008 was in line with our expectations and we reiterate our full year cash burn guidance of CHF25-30 million.”

First Half 2008 Financial Summary

Revenues of CHF25.8 million consist primarily of $22 million of upfront fees received from Merck & Co., Inc. under the mGluR5 PAM license agreement signed in January and upfront and milestone payments under the mGluR4 PAM collaboration which are being recognized over the term of the collaboration.

Research & Development expenses increased to CHF18.9 million in the first half of 2008 from CHF12.6 million in the first half of 2007 broadly reflecting the growth in our discovery and development capabilities and the maturing preclinical and clinical product pipeline.

General and Administration expenses decreased to CHF3.5 million in the first half of 2007 compared to CHF7.9 million in the first half of 2007, due primarily to the absence of the IPO related costs. Excluding IPO related costs G&A has increased by 49% in line with growth in R&D expenses.

Finance income increased to CHF1.9 million in the first half of 2008 from CHF0.6 million primarily due to higher levels of cash invested. Financial expenses increased significantly to CHF2.7 million due to unrealized exchange losses on the translation of USD cash balances.

Cash and cash equivalents amount to CHF142.8 million at the 30 June 2008, an increase of CHF2.8 million compared to the position at year-end 2007.

Pipeline update

ADX10059, an mGluR5 NAM (metabotropic glutamate receptor 5 negative allosteric modulator) in development for GERD and migraine prevention, is advancing well. Addex announced in June that, based on pre-defined pharmacokinetic criteria, it had chosen a new formulation of ADX10059, for use in the Phase IIb GERD and migraine prevention studies, which will start in the fourth quarter of 2008.

During 2007, ADX10059 met the primary endpoints in separate Phase IIa proof of concept studies in patients with migraine and GERD. Development of a more commercial formulation of ADX10059 began in 2007 and Phase I studies are ongoing. Safety, tolerability and pharmacodynamic data from the ongoing ADX10059 Phase I studies (Study 104 & Study 105) will be communicated in September.

ADX48621, also an mGluR5 NAM, was well tolerated in an initial Phase I study in healthy volunteers, Addex reported in 2007. A more commercial formulation of ADX48621 is being prepared and the Phase I program will be completed, using the new formulation, in the fourth quarter of 2008. ADX48621, like ADX10059, has potential in multiple indications, but Addex will develop it for levodopa associated dyskinesia in Parkinson’s disease patients. Addex chose this niche indication because the path to market is rapid and may not require Addex to take a development or marketing partner. ADX48621 also can serve as a backup to ADX10059 in GERD and migraine.

ADX63365, an mGluR5 PAM (positive allosteric modulator) with potential in schizophrenia and undisclosed indications, has moved into late stage preclinical development. Merck & Co. Inc. purchased an exclusive worldwide license to develop and sell ADX63365 and backups in January 2008.

ADX71943, a GABAB receptor PAM with potential for GERD, urinary incontinence & pain, has moved into late stage preclinical development and is on schedule to enter Phase I clinical trials in the first half of 2009.


Operating review


As part of the expansion strategy, Addex announced at its R&D day in April 2008 that it would broaden the implementation of its allosteric modulation discovery and development platform to address clinically validated targets in inflammation and metabolic diseases as well as CNS indications. To achieve this, the company has organized itself into three business units (CNS, Inflammation and Metabolic Disorders) supported by shared Core Chemistry and Core Biology departments.

Addex made significant progress in implementing this new organizational structure during the first half of 2008. To this end, Addex announced in a separate press release today that Dr. Laurent Galibert, formerly senior staff scientist at Merck Serono, has been appointed head of the Inflammation Business Unit. In addition, Dr. Emmanuel Le Poul, formerly head of biochemistry at Addex, has been promoted to head of the CNS Business Unit. Both have joined the executive management team.

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