EX-99.1 2 tm2131709d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

ADDEX THERAPEUTICS LTD

 

INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Unaudited Interim Condensed Consolidated Financial Statements  
Unaudited Interim Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 2
Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss for the three-month and nine-month periods ended September 30, 2021 and 2020 3
Unaudited Interim Condensed Consolidated Statements of Changes in Equity for the nine-month periods ended September 30, 2021 and 2020 4
Unaudited Interim Condensed Consolidated Statements of Changes in Equity for the three-month periods ended September 30,2021 and 2020 5
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2021 and 2020 7
Unaudited Notes to the Interim Condensed Consolidated Financial Statements for the three-month and nine-month periods ended September 30, 2021 8

 

 

 

Addex Therapeutics │ Interim Condensed Consolidated Financial Statements

 

Unaudited Interim Condensed Consolidated Balance Sheets

 

as of September 30, 2021, and December 31, 2020

 

    Notes     September 30,
2021		     December 31,
2020		  
                    
          Amounts in Swiss francs    
ASSETS             
              
Current assets             
Cash and cash equivalents  6   15,486,114    18,695,040 
Other financial assets  7/15   27,963    64,930 
Trade and other receivables  7   199,035    68,373 
Contract asset  7   383,432    - 
Prepayments and deferred costs  7   1,339,521    661,221 
Total current assets      17,436,065    19,489,564 
              
Non-current assets             
Right-of-use assets  8   511,805    565,344 
Property, plant and equipment  9   54,206    67,760 
Non-current financial assets  10   57,995    59,144 
Total non-current assets      624,006    692,248 
              
Total assets      18,060,071    20,181,812 
              
LIABILITIES AND EQUITY             
              
Current liabilities             
Current lease liabilities      290,990    308,611 
Payables and accruals  11   2,980,274    2,491,927 
Contract liability  15   -    733,668 
Deferred income  16   -    86,481 
Total current liabilities      3,271,264    3,620,687 
              
Non-current liabilities             
Non-current lease liabilities      230,234    258,785 
Retirement benefits obligations  14   1,217,605    1,692,537 
Total non-current liabilities      1,447,839    1,951,322 
              
Equity             
Share capital  12   49,272,952    32,848,635 
Share premium  12   288,278,928    286,888,354 
Treasury shares reserve  12   (15,475,255)   (6,078,935)
Other reserves      15,898,186    14,657,637 
Accumulated deficit      (324,633,843)   (313,705,888)
Total equity      13,340,968    14,609,803 
              
Total liabilities and equity      18,060,071    20,181,812 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

2

 

 

Addex Therapeutics │ Interim Condensed Consolidated Financial Statements 3

 

Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss

 

for the three-month and nine-month periods ended September 30, 2021 and 2020

 

        For the three months ended
September 30,  		     For the nine months ended
September 30,  		  
    Notes   2021       2020       2021       2020    
                             
         Amounts in Swiss francs  
Revenue from contract with customer     15     682,002       27,264       2,518,820       1,792,117  
Other income   16   75,778    75,388    233,261    195,345 
                         
Operating costs                        
Research and development       (2,862,276)   (1,978,955)   (9,342,158)   (7,850,543)
General and administration       (1,471,335)   (1,236,729)   (4,640,419)   (4,496,535)
Total operating costs   17   (4,333,611)   (3,215,684)   (13,982,577)   (12,347,078)
                         
Operating loss       (3,575,831)   (3,113,032)   (11,230,496)   (10,359,616)
                         
Finance income       (12,373)   1,280    356,209    34,049 
Finance expense        (9,989)   (201,282)   (53,668)   (408,126)
Finance result    19   (22,362)   (200,002)   302,541    (374,077)
                         
Net loss before tax        (3,598,193)   (3,313,034)   (10,927,955)   (10,733,693)
Income tax expense       -    -    -    - 
Net loss for the period        (3,598,193)   (3,313,034)   (10,927,955)   (10,733,693)
                         
Basic and diluted loss per share for loss attributable to the ordinary equity holders of the Company    20   (0.11)   (0.12)   (0.32)   (0.40)
                         
Other comprehensive income/(loss)                        
Items that will never be reclassified to profit and loss:                        
Remeasurements of retirement benefits obligation       84,544    (150,130)   336,006    (192,178)
Items that may be classified subsequently to profit and loss:                        
Exchange difference on translation of foreign operations       (1,169)   (1,278)   527    (2,125)
Other comprehensive income/(loss) for the period, net of tax       83,375    (151,408)   336,533    (194,303)
                         
Total comprehensive loss for the period       (3,514,818)   (3,464,442)   (10,591,422)   (10,927,996)

 

The accompanying notes form an integral part of these consolidated financial statements.

 

3

 

 

 

Addex Therapeutics │ Interim Condensed Consolidated Financial Statements

 

Unaudited Interim Condensed Consolidated Statements of Changes in Equity

 

For the nine-month periods ended September 30, 2021 and 2020

 

    Notes     Share
Capital		     Share
Premium		     Treasury
Shares
Reserve		     Foreign
Currency
Translation
Reserve		     Additional
Reserves		     Accumulated
Deficit		     Total  
                                                 
          Amounts in Swiss francs  
Balance as of January 1, 2020             32,848,635       286,375,977       (6,572,316 )     (653,161 )     14,371,983       (300,847,289 )     25,523,829  
Net loss for the period             -       -       -       -       -       (10,733,693 )     (10,733,693 )
Other comprehensive loss for the period             -       -       -       (2,125 )     (192,178 )     -       (194,303 )
Total comprehensive loss for the period             -       -       -       (2,125 )     (192,178 )     (10,733,693 )     (10,927,996 )
Value of share-based services     13       -       -       -       -       946,234       -       946,234  
Movement in treasury shares:     12                                                          
Settlement of supplier invoices             -       58,442       171,079       -       -       -       229,521  
Net purchases under liquidity agreement             -       28,796       (56,418 )     -       -       -       (27,622 )
Balance as of September 30, 2020             32,848,635       286,463,215       (6,457,655 )     (655,286 )     15,126,039       (311,580,982 )     15,743,966  
                                                                 
Balance as of January 1, 2021             32,848,635       286,888,354       (6,078,935 )     (657,230 )     15,314,867       (313,705,888 )     14,609,803  
Net loss for the period             -       -       -       -       -       (10,927,955 )     (10,927,955 )
Other comprehensive income for the period             -       -       -       527       336,006       -       336,533  
Total comprehensive loss for the period             -       -       -       527       336,006       (10,927,955 )     (10,591,422 )
Issue of shares-third parties     12       6,900,000       3,199,323       -       -       -       -       10,099,323  
Issue of treasury shares     12       9,524,317       -       (9,524,317 )     -       -       -       -  
Cost of share capital issuance             -       (1,896,021 )     -       -       -       -       (1,896,021 )
Value of share-based services     13       -       -       -       -       904,016       -       904,016  
Movement in treasury shares:     12                                                          
Settlement of supplier invoices             -       48,517       112,026       -       -       -       160,543  
Net purchases under liquidity agreement             -       (5,799 )     (31,169 )     -       -       -       (36,968 )
Sales under ATM program             -       3,882       7,200       -       -       -       11,082  
Cost of treasury shares sales             -       (332 )     -       -       -       -       (332 )
Other net sales of treasury shares             -       41,004       39,940       -       -       -       80,944  
Balance as of September 30, 2021             49,272,952       288,278,928       (15,475,255 )     (656,703 )     16,554,889       (324,633,843 )     13,340,968  

 

The accompanying notes form an integral part of these consolidated financial statements.

 

4

 

 

Addex Therapeutics │ Interim Condensed Consolidated Financial Statements

 

Unaudited Interim Condensed Consolidated Statements of Changes in Equity

 

For the three-month period ended September 30, 2021 (1/2)

 

   Notes   Share
Capital		   Share
Premium		   Treasury
Shares
Reserve		   Foreign
Currency
Translation
Reserve		   Additional
Reserves		   Accumulated
Deficit		   Total 
                                 
       Amounts in Swiss francs 
Balance as of January 1, 2020        32,848,635    286,375,977    (6,572,316)   (653,161)   14,371,983    (300,847,289)   25,523,829 
Net loss for the period        -    -    -    -    -    (4,305,921)   (4,305,921)
Other comprehensive income for the period        -    -    -    (33)   184,951    -    184,918 
Total comprehensive loss for the period        -    -    -    (33)   184,951    (4,305,921)   (4,121,003)
Value of share-based services   13    -    -    -    -    297,708    -    297,708 
Movement in treasury shares:   12                                    
Settlement of supplier invoices        -    20,123    62,808    -    -    -    82,931 
Net sales under liquidity agreement        -    (3,193)   596    -    -    -    (2,597)
Balance as of March 31, 2020        32,848,635    286,392,907    (6,508,912)   (653,194)   14,854,642    (305,153,210)   21,780,868 
Net loss for the period        -    -    -    -    -    (3,114,738)   (3,114,738)
Other comprehensive loss for the period        -    -    -    (814)   (226,999)   -    (227,813)
Total comprehensive loss for the period        -    -    -    (814)   (226,999)   (3,114,738)   (3,342,551)
Value of share-based services   13    -    -    -    -    343,083    -    343,083 
Movement in treasury shares:   12                                    
Settlement of supplier invoices        -    7,832    49,034    -    -    -    56,866 
Net purchases under liquidity agreement        -    (4,794)   (32,355)   -    -    -    (37,149)
Balance as of June 30, 2020        32,848,635    286,395,945    (6,492,233)   (654,008)   14,970,726    (308,267,948)   18,801,117 
Net loss for the period        -    -    -    -    -    (3,313,034)   (3,313,034)
Other comprehensive loss for the period        -    -    -    (1,278)   (150,130)   -    (151,408)
Total comprehensive loss for the period        -    -    -    (1,278)   (150,130)   (3,313,034)   (3,464,442)
Value of share-based services   13    -    -    -    -    305,443    -    305,443 
Movement in treasury shares:   12                                    
Settlement of supplier invoices        -    30,487    59,237    -    -    -    89,724 
Net purchases under liquidity agreement        -    36,783    (24,659)   -    -    -    12,124 
Balance as of September 30, 2020        32,848,635    286,463,215    (6,457,655)   (655,286)   15,126,039    (311,580,982)   15,743,966 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

5

 

 

Addex Therapeutics │ Interim Condensed Consolidated Financial Statements 

 

Unaudited Interim Condensed Consolidated Statements of Changes in Equity

 

For the three-month period ended September 30, 2021 (2/2)

 

   Notes   Share
Capital		   Share
Premium		   Treasury
Shares
Reserve		   Foreign
Currency
Translation
Reserve		   Additional
Reserves		   Accumulated
Deficit		   Total 
                                 
       Amounts in Swiss francs 
Balance as of January 1, 2021        32,848,635    286,888,354    (6,078,935)   (657,230)   15,314,867    (313,705,888)   14,609,803 
Net loss for the period        -    -    -    -    -    (2,639,613)   (2,639,613)
Other comprehensive income for the period        -    -    -    464    125,401    -    125,865 
Total comprehensive loss for the period        -    -    -    464    125,401    (2,639,613)   (2,513,748)
Issue of shares-third parties   12    6,900,000    3,199,323    -    -    -    -    10,099,323 
Cost of share capital issuance        -    (1,767,053)   -    -    -    -    (1,767,053)
Value of share-based services   13    -    -    -    -    186,102    -    186,102 
Movement in treasury shares:   12                                    
Settlement of supplier invoices        -    21,284    37,382    -    -    -    58,666 
Net purchases under liquidity agreement        -    8,061    (63,028)   -    -    -    (54,967)
Other net sales of treasury shares        -    41,004    39,940    -    -    -    80,944 
Balance as of March 31, 2021        39,748,635    288,390,973    (6,064,641)   (656,766)   15,626,370    (316,345,501)   20,699,070 
Net loss for the period        -    -    -    -    -    (4,690,149)   (4,690,149)
Other comprehensive income for the period        -    -    -    1,232    126,061    -    127,293 
Total comprehensive loss for the period        -    -    -    1,232    126,061    (4,690,149)   (4,562,856)
Issue of treasury shares   12    9,524,317    -    (9,524,317)   -    -    -    - 
Cost of share capital issuance        -    (135,434)   -    -    -    -    (135,434)
Value of share-based services   13    -    -    -    -    336,849    -    336,849 
Movement in treasury shares:   12                                    
Settlement of supplier invoices        -    13,831    42,924    -    -    -    56,755 
Net sales under liquidity agreement        -    (12,483)   40,825    -    -    -    28,342 
Balance as of June 30, 2021        49,272,952    288,256,887    (15,505,209)   (655,534)   16,089,280    (321,035,650)   16,422,726 
Net loss for the period        -    -    -    -    -    (3,598,193)   (3,598,193)
Other comprehensive income for the period        -    -    -    (1,169)   84,544    -    83,375 
Total comprehensive loss for the period        -    -    -    (1,169)   84,544    (3,598,193)   (3,514,818)
Cost of share capital issuance        -    6,466    -    -    -    -    6,466 
Value of share-based services   13    -    -    -    -    381,065    -    381,065 
Movement in treasury shares:   12                                    
Settlement of supplier invoices        -    13,402    31,720    -    -    -    45,122 
Net purchases under liquidity agreement        -    (1,377)   (8,966)   -    -    -    (10,343)
Sales under ATM program        -    3,882    7,200    -    -    -    11,082 
Cost of treasury shares sales        -    (332)   -    -    -    -    (332)
Balance as of September 30, 2021        49,272,952    288,278,928    (15,475,255)   (656,703)   16,554,889    (324,633,843)   13,340,968 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

6

 

 

 

Addex Therapeutics │ Interim Condensed Consolidated Financial Statements

 

Unaudited Interim Condensed Consolidated Statements of Cash Flows

 

for the nine-month periods ended September 30, 2021 and 2020

 

       For the nine months ended
September 30,		 
   Notes   2021   2020 
             
         Amounts in Swiss francs  
Net loss for the period        (10,927,955)   (10,733,693)
Adjustments for:               
Depreciation   8/9   264,647    291,677 
Disposal of right-of-use assets        (127)   - 
Value of share-based services   13    904,016    946,234 
Post-employment benefits        (138,926)   (42,031)
Finance cost/(income) net        (328,768)   412,504 
Decrease/(increase) in other financial assets   7    36,967    (52,378)
Decrease/(increase) in trade and other receivables   7    (130,662)   42,192 
Increase in contract asset   7    (383,432)   - 
Increase in prepayments   7    (841,139)   (572,751)
Increase/(decrease) in payables and accruals   11    444,687    (2,279,614)
Decrease in contract liability   15    (733,668)   (945,737)
Decrease in deferred income   16    (86,481)   (180,839)
Services paid in shares        160,543    229,521 
Net cash used in operating activities        (11,760,298)   (12,884,915)
                
Cash flows from investing activities               
Purchase of property, plant and equipment   9    (7,063)   (11,329)
Proceeds from decrease in non-current financial assets   10    1,149    - 
Net cash used in investing activities        (5,914)   (11,329)
                
Cash flows from financing activities               
Proceeds from capital increase        10,161,746    - 
Costs paid on issue of shares        (1,685,668)   (109,167)
(Purchase)/sale of treasury shares        54,726    (27,622)
Principal element of lease payment        (235,715)   (281,314)
Interest received   19    4,568    34,049 
Interest paid   19    (53,668)   (59,228)
Net cash from/(used in) financing activities        8,245,989    (443,282)
                
Decrease in cash and cash equivalents        (3,520,223)   (13,339,526)
                
Cash and cash equivalents at the beginning of the period   6    18,695,040    31,536,803 
Exchange difference on cash and cash equivalents        311,297    (383,827)
                
Cash and cash equivalents at the end of the period   6    15,486,114    17,813,450 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

7

 

 

Unaudited Notes to the Interim Condensed Consolidated Financial Statements

 

for the three-month and nine-month periods ended September 30, 2021

 

(Amounts in Swiss francs)

 

1. General information

 

Addex Therapeutics Ltd (the “Company”), formerly Addex Pharmaceuticals Ltd, and its subsidiaries (together, the “Group”) are a clinical stage pharmaceutical group applying its leading allosteric modulator drug discovery platform to discovery and development of small molecule pharmaceutical products, with an initial focus on central nervous system disorders.

 

The Company is a Swiss stockholding corporation domiciled c/o Addex Pharma SA, Chemin des Aulx 12, CH1228 Plan-les-Ouates, Geneva, Switzerland and the parent company of Addex Pharma SA, Addex Pharmaceuticals France SAS and Addex Pharmaceuticals Inc. registered in Delaware with its principal business location in San Francisco, California, United States. Its registered shares are traded at the SIX, Swiss Exchange, under the ticker symbol ADXN. On January 29, 2020, the Group listed on the Nasdaq Stock Market, American Depositary Shares (ADSs) under the symbol “ADXN”, without a new issuance of securities. ADSs represents shares that continue to be admitted to trading on SIX Swiss Exchange.

 

These condensed consolidated financial statements have been approved for issuance by the Board of Directors on November 3, 2021.

 

2. Basis of preparation

 

These condensed consolidated interim financial statements for the three-month and nine-month periods ended September 30, 2021, have been prepared under the historic cost convention and in accordance with IAS 34 “Interim Financial Reporting” and are presented in a format consistent with the consolidated financial statements under IAS 1 “Presentation of Financial Statements”. However, they do not include all of the notes that would be required in a complete set of financial statements. Thus, this interim financial report should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020.

 

Interim financial results are not necessarily indicative of results anticipated for the full year. The preparation of these unaudited condensed consolidated interim financial statements made in accordance with IAS 34 requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates. The areas involving a higher degree of judgment which are significant to the condensed consolidated interim financial statements are disclosed in note 4 to the consolidated financial statements for the year ended December 31, 2020.

 

A number of new or amended standards and interpretations became applicable for financial periods beginning on or after January 1, 2021. The Group noted that the latter did not have a material impact on the Group’s financial position or disclosures made in the condensed consolidated interim financial statements.

 

Due to rounding, numbers presented throughout these condensed consolidated financial statements may not add up precisely to the totals provided. All ratios and variances are calculated using the underlying amount rather than the presented rounded amount.

 

3. Critical accounting estimates and judgments

 

The Group makes estimates and assumptions concerning the future. These estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities or may have had a significant impact on the reported results are disclosed below:

 

8

 

 

Going concern

 

The Group’s accounts are prepared on a going concern basis. To date, the Group has financed its cash requirements primarily from share issuances and licensing certain of its research and development stage products. The Group is a development-stage enterprise and is exposed to all the risks inherent in establishing a business. The Group expects that its existing cash and cash equivalents will be sufficient to fund its operations and meet all of its obligations as they fall due for at least twelve months from the date of issuance of these unaudited condensed consolidated financial statements. The future viability of the Group is dependent on its ability to raise additional capital to finance its future operations that may be delayed due to COVID 19 pandemic. The Group will seek additional funding through public or private financings or collaboration agreements. The sale of additional equity may dilute existing shareholders. The inability to obtain funding, as and when needed, would have a negative impact on the Group’s financial condition and ability to pursue its business strategies. If the Group is unable to obtain the required funding to run its operations and to develop and commercialize its product candidates, the Group could be forced to delay, reduce or stop some or all of its research and development programs to ensure it remain solvent. Management continues to explore options to obtain additional funding, including through collaborations with third parties related to the future potential development and/or commercialization of its product candidates. However, there is no assurance that the Group will be successful in raising funds, closing a collaboration agreement, obtaining sufficient funding on terms acceptable to the Group, or if at all, which could have a material adverse effect on the Group’s business, results of operations and financial conditions.

 

COVID-19

 

In early 2020 a coronavirus disease (COVID-19) pandemic developed globally resulting in a significant number of infections and negative effects on economic activity. The Group is actively monitoring the situation and is taking any necessary measures to respond to the situation in cooperation with the various stakeholders.

 

On March 18, 2020, the Group announced the suspension of the initiation of a placebo-controlled Phase 2b/3 pivotal clinical trial of dipraglurant in levodopa-induced dyskinesia associated with Parkinson’s disease (PD-LID). The Group decided to suspend the trial based on the inability of planned clinical trial sites in the United States to initiate the trial in full compliance with the Group’s planned clinical trial procedures including with respect to data reporting, data monitoring, and the recommendations of various health authorities that the infirm patients who would participate in the trial not risk being exposed to COVID-19 at clinical trial sites. Such sites have been and may continue to be required to focus their limited resources on matters unrelated to our planned clinical trial, thereby decreasing availability, in whole or in part, for services to our planned clinical trial.

 

On June 29, 2021, the Group announced the initiation of a placebo-controlled Phase 2b/3 pivotal clinical trial of dipraglurant in PD-LID and on September 29, 2021, the Group announced the initiation of an exploratory placebo-controlled phase 2 clinical study of dipraglurant in blepharospasm.

 

Although the Group believes, based on current projections of the pandemic, that it will be able to execute the clinical trials as planned, the duration of the COVID-19 crisis is uncertain and may impact the Group’s ability to execute these clinical trials as planned. In addition, the COVID-19 pandemic may affect the operations of the FDA and other health authorities, which could result in delays of reviews and approvals, including with respect to dipraglurant and our other product candidates. Any such delays could increase the cost of our clinical trials and increase the uncertainty of receiving approval from the FDA of our product candidates.

 

Depending on the duration of the COVID-19 crisis and continued negative impact on global economic activity, the Group may have to take additional measures that will have a negative impact on the Group’s business continuity and may experience certain liquidity restraints as well as incur impairments on its assets. The exact impact on the Group’s activities in 2021 and thereafter cannot be reasonably predicted. However, based on the risk mitigation measures undertaken, the Group concluded that there is no material uncertainty that may cast a significant doubt upon the Group’s ability to continue as a going concern.

 

Revenue recognition

 

Revenue is primarily from fees related to licenses, milestones and research services. Given the complexity of the relevant agreements, judgements are required to identify distinct performance obligations, allocate the transaction price to these performance obligations and determine when the performance obligations are met. In particular, the Group’s judgement over the estimated stand-alone selling price which is used to allocate the transaction price to the performance obligations is disclosed in note 15.

 

9

 

 

Grants

 

Grants are recorded at their fair value when there is reasonable assurance that they will be received and recognized as income when the Group has satisfied the underlying grant conditions. In certain circumstances, grant income may be recognized before explicit grantor acknowledgement that the conditions have been met.

 

Accrued research and development costs

 

The Group records accrued expenses for estimated costs of research and development activities conducted by third party service providers. The Group records accrued expenses for estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced, and these costs are included in accrued expenses on the balance sheets and within research and development expenses in the statements of comprehensive loss. These costs are a significant component of research and development expenses. Accrued expenses for these costs are recorded based on the estimated amount of work completed in accordance with agreements established with these third parties.

 

To date, the Group has not experienced significant changes in the estimates of accrued research and development expenses after a reporting period. However, due to the nature of estimates, the Group may be required to make changes to the estimates in the future as it becomes aware of additional information about the status or conduct of its research activities.

 

Research and development costs

 

The Group recognizes expenditure incurred in carrying out its research and development activities, including development supplies, until it becomes probable that future economic benefits will flow to the Group, which results in recognizing such costs as intangible assets, involving a certain degree of judgement. Currently, such development supplies are associated with pre-clinical and clinical trials of specific products that do not have any demonstrated technical feasibility.

 

Share-based compensation

 

The Group recognizes an expense for share-based compensation based on the valuation of equity incentive units using the Black-Scholes valuation model. A number of assumptions related to the volatility of the underlying shares and to the risk-free rate are made in this model. Should the assumptions and estimates underlying the fair value of these instruments vary significantly from management’s estimates, then the share-based compensation expense would be materially different from the amounts recognized.

 

Pension obligations

 

The present value of the pension obligations is calculated by an independent actuary and depends on a number of assumptions that are determined on an actuarial basis such as discount rates, future salary and pension increases, and mortality rates. Any changes in these assumptions will impact the carrying amount of pension obligations. The Group determines the appropriate discount rate at the end of each period. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. Other key assumptions for pension obligations are based in part on current market conditions.

 

4. Interim measurement note

 

Seasonality of the business: The business is not subject to any seasonality, but expenses and corresponding revenue are largely determined by the phase of the respective projects, particularly with regard to external research and development expenditures.

 

Costs: Costs that incur unevenly during the financial year are anticipated or deferred in the interim report only if it would also be appropriate to anticipate or defer such costs at the end of the financial year.

 

5. Segment reporting

 

Management has identified one single operating segment, related to the discovery, development and commercialization of small-molecule pharmaceutical products.

 

10

 

 

Information about products, services and major customers

 

External income of the Group for the three-month and nine-month periods ended September 30, 2021 and 2020 is derived from the business of discovery, development and commercialization of pharmaceutical products. Income was earned from rendering of research services to a pharmaceutical company and grants earned.

 

Information about geographical areas

 

External income is exclusively recorded in the Swiss operating company.

 

Analysis of revenue from contract with customer and other income by nature is detailed as follows:

 

   For the three months
ended September 30,		   For the nine months
ended September 30,		 
   2021   2020   2021   2020 
Collaborative research funding   682,002    27,264    2,518,820    1,792,117 
Grants earned   71,478    70,033    218,330    180,839 
Other service income   4,300    5,355    14,931    14,506 
Total   757,780    102,652    2,752,081    1,987,462 

 

Analysis of revenue from contract with customer and other income by major counterparties is detailed as follows:

 

   For the three months
ended September 30,		   For the nine months
ended September 30,		 
   2021   2020   2021   2020 
Indivior PLC   682,002    27,264    2,518,820    1,792,117 
Eurostars/Innosuisse   71,478    70,033    218,330    180,839 
Other counterparties   4,300    5,355    14,931    14,506 
Total   757,780    102,652    2,752,081    1,987,462 

 

For more detail, refer to note 15, “Revenue from contract with customer” and note 16 “Other income”.

 

The geographical allocation of long-lived assets is detailed as follows:

 

   September 30, 2021   December 31, 2020 
Switzerland   620,010    665,012 
United States of America   3,608    26,847 
France   388    389 
Total   624,006    692,248 

 

The geographical analysis of operating costs is as follows:

 

    For the three months
ended September 30,		     For the nine months
ended September 30,		  
    2021     2020     2021     2020  
Switzerland     4,324,391       3,192,154       13,952,548       12,278,647  
United States of America     8,581       19,221       25,208       62,268  
France     639       4,309       4,821       6,163  
Total operating costs (note 17)     4,333,611       3,215,684       13,982,577       12,347,078  

 

The capital expenditure during the nine-month period ended September 30, 2021 is CHF 7,063 (CHF 11,329 for the nine-month period ended September 30, 2020).

 

6. Cash and cash equivalents

 

   September 30, 2021   December 31, 2020 
Cash at bank and on hand   15,486,114    18,695,040 
Total cash and cash equivalents   15,486,114    18,695,040 

 

11

 

 

Split by currency:

 

    September 30, 2021   December 31, 2020 
CHF    65.78%   60.53%
USD    33.42%   38.70%
EUR    0.32%   0.63%
GBP    0.48%   0.14%
Total    100.00%   100.00%

 

The Group pays interests on CHF cash and cash equivalents and earns interests on USD cash and cash equivalents. The Group invests its cash balances into a variety of current and deposit accounts mainly with Swiss banks. In addition, the Group invests a portion of its USD cash in line with its treasury guidelines. As of December 31, 2020, non-used funds received from Eurostars/Innosuisse amount to CHF 86,481 (note 16).

 

All cash and cash equivalents were held either at banks or on hand as of September 30, 2021 and December 31, 2020.

 

7. Other current assets

 

   September 30, 2021   December 31, 2020 
Other financial assets   27,963    64,930 
Trade and other receivables   199,035    68,373 
Contract asset   383,432    - 
Prepayments   1,339,521    498,382 
Deferred costs   -    162,839 
Total other current assets   1,949,951    794,524 

 

The Group applies the IFRS 9 simplified approach to measuring expected credit losses (“ECL”), which uses a lifetime expected loss allowance for all contract assets, trade receivables and other receivables. As of September 30, 2021, the contract asset relates to the research agreement with Indivior whilst the trade and other receivables comprise of CHF 131,848 related to the grant from Eurostars/Innosuisse to be received and three non-governmental debtors whose combined outstanding balances are CHF 6,352 (four non-governmental debtors for CHF 20,577 as of December 31, 2020). The Group has considered that the contract asset and the trade and other receivables have a low risk of default based on historic loss rates and forward-looking information on macroeconomic factors affecting the ability of the third parties to settle invoices. As a result, expected loss allowance has been deemed as nil as of September 30, 2021 and December 31, 2020. The increase in prepayments as of September 30, 2021 compared to December 31, 2020 primarily relates to the Directors and Officers (D&O) Insurance premiums. As of December 31, 2020 deferred costs relate to paid legal and auditor fees associated with the preparation of the capital increase executed on January 8, 2021.

 

8. Right-of-use assets

 

   Properties   Equipment   Total 
Year ended December 31, 2020               
Opening net book amount   496,126    47,214    543,340 
Additions   27,612    -    27,612 
Depreciation charge   (333,714)   (25,760)   (359,474)
Effect of lease modifications   434,150    -    434,150 
Disposals   (72,504)   -    (72,504)
Exchange differences   (7,780)   -    (7,780)
Closing net book amount   543,890    21,454    565,344 
As of December 31, 2020               
Cost   1,111,338    71,168    1,182,506 
Accumulated depreciation   (567,448)   (49,714)   (617,162)
Net book value   543,890    21,454    565,344 

 

12

 

 

   Properties   Equipment   Total 
Period ended September 30, 2021               
Opening net book amount   543,890    21,454    565,344 
Additions   2,000    -    2,000 
Depreciation charge   (224,579)   (19,451)   (244,030)
Effect of lease modifications   174,297    17,676    191,973 
Disposals   (4,303)   -    (4,303)
Exchange differences   821    -    821 
Closing net book amount   492,126    19,679    511,805 
As of September 30, 2021               
Cost   1,264,044    88,844    1,352,888 
Accumulated depreciation   (771,918)   (69,165)   (841,083)
Net book value   492,126    19,679    511,805 

 

9. Property, plant and equipment

 

   Equipment   Furniture & fixtures   Chemical
library		   Total 
Year ended December 31, 2020                    
Opening net book amount   27,626    -    -    27,626 
Additions   59,414    -    -    59,414 
Depreciation charge   (19,280)   -    -    (19,280)
Closing net book amount   67,760    -    -    67,760 
As of December 31, 2020                    
Cost   1,682,279    7,564    1,207,165    2,897,008 
Accumulated depreciation   (1,614,519)   (7,564)   (1,207,165)   (2,829,248)
Net book value   67,760    -    -    67,760 

 

   Equipment   Furniture & fixtures   Chemical
library		   Total 
Period ended September 30, 2021                    
Opening net book amount   67,760    -    -    67,760 
Additions   7,063    -    -    7,063 
Depreciation charge   (20,617)   -    -    (20,617)
Closing net book amount   54,206    -    -    54,206 
As of September 30, 2021                    
Cost   1,689,342    7,564    1,207,165    2,904,071 
Accumulated depreciation   (1,635,136)   (7,564)   (1,207,165)   (2,849,865)
Net book value   54,206    -    -    54,206 

 

10. Non-current financial assets

   September 30, 2021   December 31, 2020 
Security rental deposits   57,995    59,144 
Total non-current financial assets   57,995    59,144 

 

11. Payables and accruals

   September 30, 2021   December 31, 2020 
Trade payables   1,157,170    983,545 
Social security and other taxes   110,741    171,876 
Accrued expenses   1,712,363    1,336,506 
Total payables and accruals   2,980,274    2,491,927 

 

All payables mature within 3 months. Accrued expenses and trade payables primarily relate to R&D services from contract research organizations, consultants and professional fees. The increase in payables and accrued expenses as of September 30, 2021 compared to December 31, 2020, primarily relates to increased R&D activities on the dipraglurant PD LID program. The carrying amounts of payables do not materially differ from their fair values, due to their short-term nature.

 

13

 

 

 

12. Share capital

 

   Number of shares 
  

Common

shares

  

Treasury

shares

  

 

Total

 
Balance as of January 1, 2020   32,848,635    (6,243,487)   26,605,148 
Settlement of supplier invoices   -    171,079    171,079 
Net purchase of treasury shares under liquidity agreement   -    (21,925)   (21,925)
Balance as of September 30, 2020   32,848,635    (6,094,333)   26,754,302 

 

   Number of shares 
  

Common

shares

  

Treasury

shares

  

 

Total

 
Balance as of January 1, 2021   32,848,635    (5,729,861)   27,118,774 
Issue of shares – capital increase   16,424,317    (9,524,317)   6,900,000 
Settlement of supplier invoices   -    112,026    112,026 
Net purchase of treasury shares under liquidity agreement   -    (26,956)   (26,956)
Sale of treasury shares under ATM program   -    7,200    7,200 
Other net sale of treasury shares   -    39,940    39,940 
Balance as of September 30, 2021   49,272,952    (15,121,968)   34,150,984 

 

The Company maintains a Liquidity Agreement with Kepler Capital Markets SA (“Kepler”). Under the agreement, the Group has provided Kepler with cash and shares to enable them to buy and sell the Company’s shares. As of September 30, 2021, 81,445 (December 31, 2020: 54,489) treasury shares are recorded under this agreement in the treasury share reserve and CHF 27,963 (December 31, 2020: CHF 64,930) is recorded in other financial assets.

 

As of September 30, 2021, the total outstanding share capital is CHF 34,150,984, consisting of 34,150,984 shares excluding 15,121,968 treasury shares. As of December 31, 2020, the total outstanding share capital was CHF 27,118,774 consisting of 27,118,774 shares excluding 5,729,861 treasury shares. All shares have a nominal value of CHF 1.

 

On April 23, 2021, Addex Therapeutics Ltd issued 9,524,317 new shares from the authorized capital to its 100% owned subsidiary, Addex Pharma SA, at CHF 1. These shares are held as treasury shares.

 

On January 8, 2021, Addex Therapeutics Ltd issued 6,900,000 registered shares, with a nominal value of CHF 1 each, at an issue price of CHF 1.46. Out of the total new shares, 6,750,000 are in the form of American Depositary Shares, listed on the Nasdaq Stock Market. The gross proceeds amounted to CHF 10.1 million (USD 11.5 million) and directly related share issuance costs of CHF 1.8 million were recorded as a deduction in equity.

 

During the nine-month period ended September 30, 2021, the Group sold 39,940 treasury shares for a gross amount of CHF 80,944 under a Sale Agency Agreement entered with Kepler Cheuvreux and used 112,026 treasury shares to purchase services from consultants (September 30, 2020: 171,079) including 60,638 treasury shares for Roger Mills, the Group’s Chief Medical Officer (September 30, 2020: 92,423). The total value of consulting services settled in shares was CHF 159,455 for the nine-month period ended September 30, 2021 (CHF 229,521 for the nine-month period ended September 30, 2020). On June 30, 2021, the Company entered into a sales agreement with Cantor Fitzgerald & Co (Cantor Fitzgerald) to offer ADSs through an “at-the-market” (ATM) offering program. As of September 30, 2021, 7,200 treasury shares have been sold under the ATM offering program for a gross amount of CHF 11,082.

 

13. Share-based compensation

 

The total share-based compensation expense recognized in the statement of comprehensive loss for equity incentive units granted to directors, executives, employees and consultants for the three-month and nine-month periods ended September 30, 2021 amounts respectively to CHF 381,065 and CHF 904,016 (CHF 305,443 and CHF 946,234 for the three-month and nine-month periods ended September 30, 2020).

 

As of September 30, 2021, 8,636,464 options were outstanding (6,768,460 options as of December 31, 2020). During the nine-month period ended September 30, 2021, the Group granted 1,872,900 options with vesting over 4 years and a 10-year exercise period and 4,896 options were forfeited. Of these new options, 27,492 were granted at an exercise price of CHF 1.99 on April 1, 2021, 1,801,000 were granted at an exercise price of CHF 1.45 on May 17, 2021 and 44,408 were granted at an exercise price of CHF 1.6 on July 1, 2021.

 

14

 

 

On January 1, 2020, the exercise period of 194,687 vested options has been extended for 5 years and share-based compensation related to the fair value adjustment for the exercise period extensions of CHF 25,683 has been recognized for the nine-month period ended September 30, 2020 (CHF 4,070 for the three-month period ended September 30, 2020).

 

As of September 30, 2021 and December 31, 2020, a total of 198,750 equity sharing certificates (ESCs) were outstanding.

 

14. Retirement benefits obligations

 

The amounts recognized in the statement of comprehensive loss are as follows:

 

  

For the three months

ended September 30,

  

For the nine months

ended September 30,

 
   2021   2020   2021   2020 
Current service cost   (104,452)   (78,932)   (267,891)   (236,795)
Past service cost   -    -    219,104    102,764 
Interest cost   (6,384)   (5,501)   (18,505)   (16,503)
Interest income   3,858    3,551    11,572    10,652 
Company pension amount (note 18)   (106,978)   (80,882)   (55,720)   (139,882)

 

The conversion rates have successively changed as of January 1, 2020, and January 1, 2021, which has led to a positive past service cost for the nine-month periods ended September 30, 2020 and 2021.

 

The amounts recognized in the balance sheet are determined as follows:

 

   September 30, 2021   December 31, 2020 
Defined benefit obligation   (9,102,774)   (9,406,967)
Fair value of plan assets   7,885,169    7,714,430 
Funded status   (1,217,605)   (1,692,537)

 

15. Revenue from contract with customer

 

License & research agreement with Indivior PLC

 

On January 2, 2018, the Group entered into an agreement with Indivior for the discovery, development and commercialization of novel GABAB PAM compounds for the treatment of addiction and other CNS diseases. This agreement included the selected clinical candidate, ADX71441. In addition, Indivior agreed to fund a research program at the Group to discover novel GABAB PAM compounds.

 

The contract contains two distinct material promises and performance obligations: (1) the selected compound ADX71441 which falls within the definition of a licensed compound, whose rights of use and benefits thereon was transferred in January 2018 and, (2) the research services to be conducted by the Group and funded by Indivior to discover novel GABAB PAM compounds for clinical development that may be discovered over the research term of the agreement and selected by Indivior.

 

Indivior has sole responsibility, including funding liability, for development of selected compounds under the agreement through preclinical and clinical trials, as well as registration procedures and commercialization, if any, worldwide. Indivior has the right to design development programs for selected compounds under the agreement. Through the Group’s participation in a joint development committee, the Group reviews, in an advisory capacity, any development programs designed by Indivior. However, Indivior has authority over all aspects of the development of such selected compounds.

 

Under terms of the agreement, the Group granted Indivior an exclusive license to use relevant patents and know-how in relation to the development and commercialization of product candidates selected by Indivior. Subject to agreed conditions, the Group and Indivior jointly own all intellectual property rights that are jointly developed and the Group or Indivior individually own all intellectual property rights that the Group or Indivior develop individually. The Group has retained the right to select compounds from the research program for further development in areas outside the interest of Indivior including Charcot-Marie-Tooth type 1A neuropathy, or CMT1A. Under certain conditions, but subject to certain consequences, Indivior may terminate the agreement.

 

In January 2018, the Group received, under the terms of the agreement, a non-refundable upfront fee of USD 5.0 million for the right to use the clinical candidate, ADX71441, including all materials and know-how related to this clinical candidate. In addition, the Group is eligible for payments on successful achievement of pre-specified clinical, regulatory and commercial milestones totaling USD 330 million and royalties on net sales of mid-single digits to low double-digits.

 

15

 

 

On February 14, 2019, Indivior terminated the development of their selected compound, ADX71441. Separately, Indivior funds research at the Group, based on a research plan to be mutually agreed between the parties, to discover novel GABAB PAM compounds. These future novel GABAB PAM compounds, if selected by Indivior, become licensed compounds. The Group agreed with Indivior to an initial research term of two years, that can be extended by twelve-month increments and a minimum annual funding of USD 2 million for the Group’s R&D costs incurred. R&D costs are calculated based on the costs incurred in accordance with the contract. Following Indivior’s selection of one newly identified compound, the Group has the right to also select one additional newly identified compound. The Group is responsible for the funding of all development and commercialization costs of its selected compounds and Indivior has no rights to the Group’s selected compounds. The initial two-year research term was expected to run from May 2018 to April 2020. In 2019, Indivior agreed an additional research funding of USD 1.6 million, for the research period. On October 30, 2020, the research term was extended until June 30, 2021 and Indivior agreed an additional research funding of USD 2.8 million. Effective May 1, 2021, the research term was extended until July 31, 2022 and Indivior agreed an additional research funding of CHF 3.7 million, of which CHF 1.4 million has been paid to the Group on August 20, 2021, a remaining amount of CHF 1.3 million is expected to be received directly by the Group and CHF 1 million paid directly by Indivior to third party suppliers that are supporting the funded research program.

 

For the three-month and nine-month periods ended September 30, 2021, the Group recognized CHF 0.7 million and CHF 2.5 million as revenue, respectively (For the three-month and the nine-month periods ended September 30, 2020, CHF 0.03 million and CHF 1.8 million, respectively) and recorded CHF 0.4 million as contract asset as of September 30, 2021 (December 31, 2020: CHF 0.7 million as contract liability).

 

Janssen Pharmaceuticals Inc. (formerly Ortho-McNeil-Janssen Pharmaceuticals Inc).

 

On December 31, 2004, the Group entered into a research collaboration and license agreement with Janssen Pharmaceuticals Inc. (JPI). In accordance with this agreement, JPI has acquired an exclusive worldwide license to develop mGlu2 PAM compounds for the treatment of human health. The Group is eligible to receive up to EUR 109 million in success-based development and regulatory milestone, and low double-digit royalties on net sales. The Group considers these various milestones to be variable consideration as they are contingent upon achieving uncertain, future development stages and net sales. For this reason, the Group considers the achievement of the various milestones as binary events that will be recognized as revenue upon occurrence.

 

No amounts have been recognized under this agreement in the three-month and nine-month periods ended September 30, 2021 and 2020.

 

16. Other income

 

Under a grant agreement with Eurostars/Innosuisse the Group is required to complete specific research activities within a defined period of time. The Group’s funding is fixed and received based on the satisfactory completion of the agreed research activities and incurring the related costs.

 

The Group was awarded a grant by Eurostars/Innosuisse for CHF 512,032 of which CHF 380,184 were paid as of September 30, 2021. For the three-month and nine-month periods ended September 30, 2021, the Group recognized CHF 71,478 and CHF 218,330 as other income (CHF 70,033 and CHF 180,839 for the three-month and nine-month periods ended September 30, 2020). As of September 30, 2021, the Group recognized CHF 131,848 as other receivables in accordance with the grant conditions (CHF 86,481 as short-term deferred income as of December 31, 2020).

 

For the three-month and nine-month periods ended September 30, 2021, the Group additionally recognized other income from IT consultancy agreements for CHF 4,300 and CHF 14,931 (CHF 5,355 and CHF 14,506 for the three-month and nine-month periods ended September 30, 2020).

 

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17. Operating costs

 

  

For the three months

ended September 30,

  

For the nine months

ended September 30,

 
   2021   2020   2021   2020 
Staff costs (note 18)   1,306,553    1,061,189    3,469,897    3,278,253 
Depreciation (notes 8/9)   87,738    99,007    264,647    291,677 
External research and development costs   1,805,413    1,167,229    6,546,750    5,310,617 
Laboratory consumables   83,224    70,187    222,130    229,981 
Patent maintenance and registration costs   52,819    63,010    197,780    236,370 
Professional fees   342,410    208,441    1,271,156    1,203,687 
Short-term leases   7,330    9,676    23,767    27,010 
D&O insurance   397,604    389,506    1,193,462    1,116,391 
Other operating costs   250,520    147,439    792,988    653,092 
Total operating costs   4,333,611    3,215,684    13,982,577    12,347,078 

 

The evolution of the total operating costs is mainly driven by external research and development expenses, staff costs, professional fees, D&O insurance and other operating costs.

 

During the nine-month period ended September 30, 2021, total operating costs increased by CHF 1.6 million compared to the same period ended September 30, 2020, primarily due to increased external research and development costs of CHF 1.2 million relating to dipraglurant blepharospasm program for CHF 0.6 million and GABAB PAM program for CHF 0.3 million. During the same period, staff costs increased by CHF 0.2 million primarily due to increased R&D headcount.

 

During the three-month period ended September 30, 2021, total operating costs increased by CHF 1.1 million compared to the same period ended September 30, 2020, primarily due to increased external research and development costs of CHF 0.6 million relating to dipraglurant PD LID program for CHF 0.3 million and dipraglurant blepharospasm program for CHF 0.2 million. During the same period, staff costs increased by CHF 0.2 million primarily due to increased R&D headcount.

 

18. Staff costs

 

  

For the three months

ended September 30,

  

For the nine months

ended September 30,

 
   2021   2020   2021   2020 
Wages and salaries   798,639    668,626    2,391,241    2,170,043 
Social charges and insurances   89,866    69,042    307,472    244,922 
Value of share-based services   311,070    242,639    715,464    723,406 
Retirement benefit (note 14)   106,978    80,882    55,720    139,882 
Total staff costs   1,306,553    1,061,189    3,469,897    3,278,253 

 

19. Finance result, net

 

  

For the three months

ended September 30,

  

For the nine months

ended September 30,

 
   2021   2020   2021   2020 
Interest income   1,239    1,280    4,568    34,049 
Interest cost   (4,469)   (8,649)   (35,873)   (44,126)
Interest expense on leases   (5,520)   (3,884)   (17,795)   (15,102)
Foreign exchange (losses)/gains, net   (13,612)   (188,749)   351,641    (348,898)
Finance result, net   (22,362)   (200,002)   302,541    (374,077)

 

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20. Loss per share

 

Basic and diluted loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of shares in issue during the period excluding shares purchased by the Group and held as treasury shares.

 

  

For the three months

ended September 30,

  

For the nine months

ended September 30,

 
   2021   2020   2021   2020 
Loss attributable to equity holders of the Company   (3,598,193)   (3,313,034)   (10,927,955)   (10,733,693)
Weighted average number of shares in issue   34,122,052    26,687,189    33,900,655    26,653,630 
Basic and diluted loss per share   (0.11)   (0.12)   (0.32)   (0.40)

 

The Company has three categories of dilutive potential shares as of September 30, 2021 and 2020: equity sharing certificates (“ESCs”), share options and warrants. For the three-month and nine-month periods ended September 30, 2021 and 2020, equity sharing certificates, share options and warrants have been ignored in the calculation of the loss per share, as they would be antidilutive.

 

21. Related party transactions

 

Related parties include members of the Board of Directors and the Executive Management of the Group. The following transactions were carried out with related parties:

 

Key management compensation

 

 

For the three months

ended September 30,

  

For the nine months

ended September 30,

 
   2021   2020   2021   2020 
Salaries, other short-term employee benefits and post-employment benefits   370,108    278,485    1,163,185    1,037,801 
Consulting fees   50,052    67,576    171,906    247,049 
Share-based compensation   308,545    271,946    729,766    783,331 
Total   728,705    618,007    2,064,857    2,068,181 

 

Salaries, other short-term employee benefits and post-employment benefits relate to members of the Board of Directors and Executive Management who are employed by the Group. Consulting fees relate to Roger Mills, a member of the Executive Management who delivers his services to the Group under a consulting contract. The Group has a net payable to the Board of Directors and Executive Management of CHF 117,170 as of September 30, 2021 (December 31, 2020: CHF 145,443).

 

22. Events after the balance sheet date

 

There were no material events between the balance sheet date and the date on which these financial statements were approved by the board of directors that would require adjustment to the financial statements or disclosure under this heading.

 

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