Hello, everyone. I'd like to thank you all for joining our Q3 2022 financial results conference call. I'm here with Robert Lutjens, our Head of Discovery Biology, and Misha Kalinichev, our Head of Translational Science. I draw your attention to the press release and the financial statements issued earlier today, which are available on our website. I also draw your attention to our disclaimer. We will be making certain forward-looking statements that are based on the knowledge we have today. I will start this conference call by giving a quick overview of our recent achievements before handing over to Robert and Misha, who will review our clinical and pre-clinical pipeline. I will then review our third quarter financial results. Following that, we will open the call for questions.
Our partner, Janssen Pharmaceutical, continues to make significant progress in executing their global phase II study in epilepsy patients and are on track to complete part one of the study in Q1 2023. We continue to be excited by our pre-clinical pipeline, which has made excellent progress, with multiple clinical candidates rapidly advancing towards IND-enabling studies. Previously, we announced the extension of our strategic collaboration on GABA-B positive allosteric modulators with Indivior and their commitment of an additional $900,000 of research funding to advance drug candidates through to the start of IND-enabling studies. As a reminder, Indivior's primary interest is in substance use disorder, and under the agreement, we have retained the right to select drug candidates for development in certain exclusive reserved indications.
Our GABA-B PAM funded research effort has progressed to late clinical candidate selection phase, and multiple candidates are being profiled in secondary disease-relevant models. We expect Indivior and ourselves to select compounds in 2023 to advance into IND-enabling studies. We plan to develop our independent program with Charcot-Marie-Tooth 1A neuropathy, chronic cough, and pain. We've also made great progress in our mGluR7 negative allosteric modulator program for stress-related disorders and have successfully identified a compound which is now ready to enter IND-enabling studies. In addition, we continue to advance the selection of differentiated backup compounds to the late clinical candidate selection phase. Our mGluR2 NAM program for mild neurocognitive disorders associated with Alzheimer's disease and Parkinson's disease is in clinical candidate selection phase. Last but not least, our M4 PAM program is advancing rapidly through lead optimization.
M4 PAM is a particularly exciting target for schizophrenia, especially following the recent positive phase III data from Karuna Therapeutics. On the financing side, CHF 4.6 million equity financing completed in July has increased our cash reserves to CHF 10.4 million at the end of September, providing us with cash runway through Q2 of 2023. Now I will hand over Robert Lutjens, who will give you some more details about our exciting pipeline.
Thanks, Tim. Hello, everyone. I'd like to start by speaking about our epilepsy program, followed by dipraglurant, before handing over to Misha. ADX-71149 is an mGlu2 positive allosteric modulator discovered in partnership with Janssen Pharmaceuticals, a Johnson & Johnson company. Our two companies collaborated for the discovery of this compound, and Janssen is responsible for its progression in clinical development. Addex initially identified the chemical starting point using its unique allosteric modulation platform, and the two teams worked together to optimize compounds until delivering ADX-71149. The compound then completed nine phase I studies and two proof-of-concept studies in schizophrenia and anxiety, showing that ADX-71149 is a well-tolerated drug. It was then demonstrated that ADX-71149 showed anti-epileptic effects in preclinical models of epilepsy.
Also that when administered in combination with the most commonly used anti-epileptic, levetiracetam, the active molecule in Keppra, the effect is dramatically enhanced. I will show this on the next slide. First, let me talk about the opportunity in epilepsy. Today, even though the treatment options are multiple, epilepsy is still a large unmet medical need, as many patients are in need for alternative or improved treatments for their seizure. Keppra, an SV2A antagonist, while being largely sold as a generic, is still leading the market for antiepileptics, estimated at close to $20 billion in sales revenue per year. Following the strong pre-clinical validation obtained in epilepsy models, our partner decided to move ADX-71149 into a phase II study evaluating its potential to treat patients with partial onset seizures when administered in combination with levetiracetam.
In May, an open-label expansion study was announced, allowing patients on placebo and drug to gain access to ADX71149. In September, inclusion criteria were expanded to include patients on brivaracetam, a second-generation SV2A antagonist epilepsy. The phase II study is now well midway, and we are expecting Janssen to receive results for part one in Q1 2023. As a reminder, Janssen is covering all costs for development. We have significant pre-launch milestones of EUR 109 million and double-digit royalty on net sales. Here is the compelling data obtained by our Janssen colleagues in the 6 Hz model, a highly predictive model of epilepsy, with a combination of ADX71149 and Keppra, and which has been instrumental in the decision taken by Janssen to move this program into epilepsy.
The left graph shows how the effect of levetiracetam is dramatically increased in presence of a low dose of ADX71149, producing a 35-fold shift in efficacy. The right graph shows results obtained when the paradigm is reversed, where a low dose of Keppra induces a 14-fold increase in the efficacy of ADX71149 in vivo. Take-home message here is that we see a strong anti-epileptic effect with a combination of low doses of ADX71149 and Keppra, similar to the one obtained with a full dose of Keppra. I should mention that this combination is the result of a true synergistic effect, not just an additive or pharmacokinetic effect, as it was demonstrated using a method called isobolographic analysis. This is the hypothesis being currently tested in patients.
If what we saw in the preclinical models translate into patients, then our approach could become an important novel treatment for this patient population. A few words on the study design. This is a phase II double-blind placebo-controlled proof-of-concept study and is enrolling patients with focal onset seizures who have suboptimal response to treatment with levetiracetam or brivaracetam. Patients will establish a 28-day seizure count over a 66-day baseline period prior to being randomized to receive either ADX71149 at 50 mg BID or matching placebo. The primary endpoint is the time taken to return to their monthly baseline seizure. The study will have two parts, part one being a four-week acute efficacy phase, and part two being an eight-week maintenance phase.
Part two will include patients who did not return to their baseline monthly seizure rate during part one of the study, and they will continue on their randomized drug. Results from part one of this study are expected in Q1 of 2023. Now a quick update on dipraglurant, our mGlu5 negative allosteric modulator. Dipraglurant has significant potential in a number of disease areas, including PD-LID, substance use disorder, pain, stroke recovery, and neurodevelopmental disorders. Dipraglurant has completed phase I and a phase II proof-of-concept study in PD-LID patients, demonstrating safety and tolerability. Despite the recruitment challenge we experienced earlier this year in our pivotal PD-LID program, we strongly believe in the potential of dipraglurant to bring significant benefit to PD-LID patients.
Furthermore, dipraglurant has been awarded orphan drug designation for PD-LID in the U.S., where there are approximately 200,000 patients, making this a significant commercial opportunity. We are currently pursuing multiple business discussions related to dipraglurant for multiple indications and plan to restart development once the partner is engaged. I will now hand over to Misha, who will present the update on our pre-clinical programs.
Thank you, Robert. Hello, everyone. We have made significant progress in advancing our pre-clinical programs. As a reminder, all our programs were identified in-house from our proprietary allosteric modulation discovery platform. The success of our platform is driven by the combination of our unique small molecule chemical library and tailor-made proprietary biological screening tools and methods, which we deploy to identify the initial hits and support lead optimization. Today, I would like to share with you the progress that we have made in our four most advanced pre-clinical programs. The GABA-B positive allosteric modulator program, mGlu7 and mGlu2 negative allosteric modulator program, and muscarinic M4 positive allosteric modulator program. Let me start with GABA-B, which is in our partnering with Indivior. The aim of this collaboration is to deliver a new treatment for substance use disorders.
Indivior is supporting the research at Addex and have recently committed additional funding for us to complete clinical candidate selection activities. As a reminder, GABA-B receptor activation has been clinically validated in a number of disease areas using baclofen, a GABA-B orthosteric agonist. Baclofen is FDA-approved for treatment of spasticity and is widely used off-label to treat numerous diseases, including alcohol use disorder, gastroesophageal reflux disease or GERD, and various conditions of pain. However, baclofen has a short half-life and comes with significant side effects, hampering its wider use. Thus, there is a strong need for a better baclofen. We believe this can be achieved with positive allosteric modulators and their differentiated pharmacology, having the efficacy of baclofen but longer half-life and improved side effect profile. We are well on our way to meeting this objective with multiple novel drug candidates rapidly advancing through clinical candidate selection phase.
We are currently profiling several drug candidates in non-GLP studies with the aim to nominate drug candidates for IND-enabling studies in 2023. As mentioned earlier, we have the right to select drug candidates from the Indivior-funded research activities for our own independent GABA-B PAM program. I will now speak about the indications we plan to pursue. Firstly, CMT1A or Charcot-Marie-Tooth type 1A disorder, a type of inherited neurological disorder that affects peripheral nerves. People with this disease experience weaknesses and wasting of their muscles of the lower limb, starting early adolescence. Later, they can also have hand weaknesses and sensory loss, resulting in a significant reduction in their quality of life. CMT1A is caused by having an extra copy or duplication of the PMP22 gene, which is inherited in an autosomal dominant manner. There is currently no approved drug to treat CMT1A.
However, baclofen has shown beneficial effects in patients. In addition, we have collected robust pre-clinical data with the GABA-B PAM in highly translational models of CMT1A. In the studies, we have demonstrated positive effects of chronic treatment on both biomarkers and behavioral measures, suggesting a GABA-B PAM has the potential to slow or even stop the progression of this disease. We are currently completing pre-clinical profiling of our proprietary drug candidate in advanced disease relevant models. We are conducting these activities in collaboration with American Charcot-Marie-Tooth Association. Secondly, there is a strong rationale for developing GABA-B PAM for chronic cough based on off-label use of baclofen in several categories of chronic cough and the role of GABA-B receptors in the neuronal pathway involved in cough.
We believe that GABA-B PAM could be an innovative new treatment of chronic cough, offering improved efficacy, fewer non-responder patients, and lack of constitutional side effects in comparison to P2X3 inhibitors. We are currently profiling our proprietary GABA-B PAM in disease development models of chronic cough. Thirdly, there is also a strong rationale for developing GABA-B PAM for various types of pain, including pelvic pain, such as bladder pain, cancer pain, and pain associated with trigeminal neuralgia. Current medication is largely based on opioids, gabapentin and pregabalin, nonsteroidal anti-inflammatory drugs for bladder pain, or carbamazepine and other anti-epileptic drugs for trigeminal neuralgia. These medications are suboptimal as they leave a significant proportion of patients without adequate or any benefit and carry risk of significant side effects.
Again, the GABA-B receptor target has been well-validated by baclofen, which has shown efficacy in patients with cancer pain and is used off-label in patients with bladder pain and trigeminal neuralgia. Now to the status of the program. We have identified multiple novel chemical series with potential for robust novel intellectual property and multiple compounds are in late clinical candidate selection phase, completing non-GLP preparatory studies. We expect to deliver multiple drug candidates for Indivior and in parallel, multiple differentiated drug candidates for our independent program for progression into IND-enabling studies in 2023. We have made significant progress with our mGluR7 negative allosteric modulator program for stress-related disorders, including post-traumatic stress disorder or PTSD, as we have selected a clinical candidate drug to enter IND-enabling studies.
PTSD is a psychiatric disorder affecting approximately 3.5% of the population worldwide and may occur in people who have experienced or witnessed a traumatic, often life-threatening event such as a serious accident, natural disaster, or war. Current treatments are mostly relying on behavioral therapy as most pharmacological treatments, such as anxiolytics or antidepressants, show insufficient benefits. Based on established knowledge around the mGluR7 target, such as the reduced anxiety in mGluR7 knockout animals and anxiolytic-like profile of mGluR7 inhibitors in multiple in vivo models of the disease, we have a very strong rationale to progress this project towards the clinic. Our clinical candidate drug ready to enter IND-enabling studies, and in addition, multiple chemical series are identified as backups. On to our mGluR2 negative allosteric modulator program for mild neurocognitive disorders, or MNCD, and depression.
MNCD is the stage between expected cognitive decline of normal aging and more serious decline related to dementia. Besides being potentially the early sign of Alzheimer's disease, MNCD is also often experienced by patients suffering from depression. Developing mGlu2 now offers the exciting opportunity to treat cognitive impairment while also addressing symptoms of depression. Both pro-cognitive and antidepressant effects have been demonstrated in relevant preclinical models with our mGlu2 negative allosteric modulator candidate compounds. We believe that Merck have initiated a phase II proof of concept study with their mGlu2 negative allosteric modulator compound, and they are currently running a drug interaction study with donepezil, suggesting they prepare a study in MNCD patients with a combination with their compound and Aricept. We aim to be a fast follower to them in their approach with our well-differentiated compounds.
We are completing lead optimization and have begun clinical candidate selection phase with multiple compounds, with the aim to start IND-enabling studies in the second half of 2023. Finally, a few words about our muscarinic M4 positive allosteric program for treatment of schizophrenia and other types of psychosis. As you probably know, psychosis has been treated with the same mechanism of action for the last 50 years, with limited efficacy and significant tolerability issues, often leading to treatment discontinuation and relapse. The big news in the field came from Karuna Therapeutics, who published the positive result of their phase III study of their KarXT compound in schizophrenia patients, and who are on track to submit new drug application to FDA in 2023. KarXT is a combination of xanomeline, a muscarinic M1/M4 receptor agonist, and trospium, a peripherally-restricted muscarinic antagonist.
This combination allows to selectively activate muscarinic receptors in the brain while blocking the off-target effects of xanomeline. This is a perfect validation of the M4 receptor target and of our positive allosteric modulator approach, as we are aiming at identifying highly selective and brain-penetrant molecules. In summary, our drug discovery engine has achieved great progress with multiple drug candidates advancing towards IND-enabling studies. The renewed commitment of our partner, Indivior, the delivery of a candidate ready to start IND-enabling studies in the mGlu7 program, are further validation of the quality and productivity of our allosteric modulation products. This concludes my prepared remarks, and I hand it back to Tim.
Thanks, Misha. I'll now switch to an overview of the financials. Starting with the income statement, we recognized CHF 0.4 million of income in Q3 2022 compared to CHF 0.8 million in Q3 2021. Primary source of revenue is research funding from our collaboration with Indivior, which we expect to reduce in 2022 as drug candidates move to late-stage clinical candidate selection and our partners takes over more of the operation execution of the development. In terms of expenses, R&D expenses were CHF 2.8 million in Q3 2022 compared to CHF 2.9 million in Q3 of 2021. The decrease of CHF 0.1 million is primarily due to reduced dipraglurant development activities. G&A expenses were CHF 1.8 million in the third quarter compared to CHF 1.5 million in the equivalent quarter in 2021.
The increase of CHF 0.3 million was primarily due to increased share-based compensation costs. The finance gain of CHF 60,000 in Q3 2022 relates primarily to exchange gains due to the strengthening of the U.S. dollar over the period. Now to the balance sheet. Our assets are primarily held in cash, and we completed Q3 with CHF 10.4 million of cash held in Swiss francs and U.S. dollars. Other current assets, CHF 1.3 million, relate primarily to prepaid insurance and retirement benefits. The decrease relates to reductions in prepayments to CROs. Current liabilities of CHF 4.1 million are consistent with prior years and relate primarily to R&D payables and accruals. Non-current liabilities of CHF 0.2 million at the end of Q3 relate primarily to lease liabilities.
The decrease compared to last year is driven by an increase in the discount rate applied in the calculation of the retirement benefit obligations, resulting in retirement benefit obligations calculated under IFRS becoming a small asset. Now, to summarize. Our partner, Janssen, is on track to complete part one of the phase II epilepsy clinical study, with results expected in Q1 2023. We are putting plans together for future development of dipraglurant in parallel to pursuing a number of licensing discussions with objective to secure a partner prior to restarting development activity. We continue to make good progress in advancing our preclinical programs towards the clinic and are entering multiple partnering discussions across the portfolio. As a reminder, our portfolio was discovered in-house from our pioneering allosteric modulator drug discovery platform. Consequently, we have significant intellectual property on all programs.
We have a track record of securing partnerships at the preclinical stage and supportive top-tier investors. We recognize our stock performance and current market capitalization of CHF 10 million is very disappointing. However, we strongly believe that if we are successful at executing our near-term partnering strategy, our stock price should move to recognize the value of our portfolio. This concludes the presentation, and we will now open the call for questions.
Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star one one on your telephone keypad and wait for your name to be announced. Alternatively, if you wish to ask a question via the webcast, please use the Q&A box available on the webcast link. Please stand by while we compile the Q&A queue. This will take a few moments. Now, we're going to take the first question. The first question comes from the line of Leonildo Delgado from Baader Helvea. Your line is open. Please ask your question.
Hi, good afternoon. This is Leonildo. Thanks for taking our questions. A couple of questions. The first one, will you provide more details on your BD efforts? And more specifically, how optimistic are you on closing a deal? And if yes, possibly, possible timeline and the earliest the deal might be closed. Second question is, can you shed light on the main goal of the part one of the epilepsy study and what follows after part one? Thanks.
Yeah, thanks very much for the question. On the BD effort, yeah, I don't think it would be prudent of me to enter into discussions or details. What I can say is that we have a portfolio of programs, a number of those programs are not partnered. Dipraglurant, you know, is a mGluR5 negative allosteric modulator. Been into the clinic. It's demonstrated a safe and good tolerability, and we have entered into discussions with multiple potential partners for its development. Different partners have different indication priorities, and we are pursuing these discussions in parallel. We believe in the asset, but we also believe that restarting development makes sense with a partner on board. Are we confident about getting a deal done this year?
We are moderately confident about getting something done by the middle of next year. Now, on the rest of the portfolio, I mean, GABA-B is partnered or partially partnered with Indivior. However, because we're still at the R&D stage and relevant candidates have not been selected by Indivior, it's very challenging to enter into partnership discussions on our part of the GABA-B program. Therefore, the GABA-B is less advanced in partnering discussions with third parties. mGluR7, there is a nominated candidate, well-profiled. We're ready to go into IND-enabling studies. This program is attracting the interest of multiple parties, and we are pursuing discussions on the program. The mGluR4, due to the M4 data that was in phase III from Karuna Therapeutics, this is attracting some interest.
This is in lead optimization. There are multiple theories being advanced. Again, this is a much earlier program and an earlier stage discussion. Then on the mGluR2 NAM, another compound where there is, you know, a fair amount of validation. Again, this is in cognition, which is a very interesting area. It's again, attracting some interest from multiple parties. I hope that helps to give you a little bit more detail. Now, with respect to the epilepsy. There is part one, so you have 60 patients, two-to-one randomized, between active and placebo. There's a four-week period, and the endpoint of part one is time. Is what? It's the difference between the active group and the placebo group with respect to time to baseline seizure counts.
Now this data is expected to be delivered to our partner in Q1 of 2023. You know, our partner will then take certain decisions around the program. Now, part two patients. The way the study is designed is that the patients within part one will move into part two assuming that they did not reach their baseline seizure count. Then the data from that eight-week period we'll report out later in 2023. That's really all we can say about the program at this time.
Thank you.
Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star one one on your telephone keypad. Alternatively, you can use the Q&A box available on the webcast. There are no further questions at this time. I would now like to hand the conference over to Tim Dyer for closing remarks.
Well, thank you everyone for attending the Q3 conference call. We very much look forward to keeping you updated on our progress through regular press releases. We look forward to speaking to you on our next conference call, which will be in 2023.
That does-
I wish you all a very nice day.
That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.