Shares of Addex Therapeutics (ADXN) have rallied in the past few days, soaring by 43%, after the company announced the selection of clinical candidates with Indivior (INDV), its collaborator, from its joint GABAB positive allosteric modulator research venture. The selected compound is being developed as a potential treatment for substance use disorder. Addex stands to gain heavily from this collaboration. Under the terms of the agreement, the company is slated to receive up to $330 million in milestone payments.
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Furthermore, Addex will earn tiered royalties on net sales, ranging from the high single digits to the low double digits. It is a game-changer for the company, making the stock an intriguing option in the biotech industry for investors looking for a high-risk, high-reward opportunity.
Addex’s Promising Pipeline
Addex Therapeutics is a pharmaceutical company that develops and commercializes small-molecule drugs for central nervous system (CNS) disorders. The company is focused on pioneering medication for various medical conditions impacted by G-protein-coupled receptors and enzymes.
The lead candidate in Phase 2b/3 is Dipraglurant, which is being developed for treating issues such as levodopa-induced dyskinesia and dystonia in Parkinson’s disease and fostering post-stroke/TBI recovery.
The company is also progressing with GABAB PAM, a drug for treating pain, anxiety, overactive bladder, addiction, and substance use disorder.
Finally, the company launched Neurosterix in collaboration with Perceptive Advisors, successfully raising capital of $63 million in a Series A funding round. This financial boost is set to expedite the development of its preclinical portfolio, prominently featuring an M4 PAM for schizophrenia. In April 2024, an additional injection of CHF 5 million was received, which included 20% equity in Neurosterix, guaranteeing a secure cash runway extending beyond 2026.
Analysis of Addex’s Recent Financial Results
Addex recently released its Q1 2024 financial results. The company reported revenue of $268,835 and earnings per share of -$1.37.
Income for the quarter, largely due to amounts received under Addex’s funded research collaboration with Indivior, shrank by CHF 0.3 million to CHF 0.2 million. R&D expenses, mainly related to the GABAB PAM program, remained stable at CHF 0.3 million. However, G&A expenses increased by CHF 0.2 million to CHF 0.8 million compared to the same period in 2023. The net loss from continuing operations rose by CHF 0.4 million, mainly driven by a decline in income and increased G&A expenses.
At the quarter’s end, cash and cash equivalents were CHF 1.6 million, compared to CHF 5.6 million at the end of March 2023.
What Is the Price Target for ADXN Stock?
The stock has had a volatile year, experiencing a run-up in share price to $27 in early April. However, it suffered a severe blow following the failure of its Phase 2 clinical trial for epilepsy drug candidate ADX71149 to meet its primary endpoint. This led to the stock cascading down 72% to $7.54 by month’s end. It trades in the lower half of its 52-week price range of $5.00 – $27.90 while demonstrating positive price momentum by trading above its 20-day (8.15) and 50-day (8.39) moving averages.
Wall Street follows ADXN stock thinly. However, a recent recommendation by Ram Selvaraju at H.C. Wainwright has resulted in a Moderate Buy rating, with an average price target on ADXN stock of $30.00, representing a potential 159.07% upside from current levels.
Closing Analysis on ADXN
Addex’s recent collaboration with Indivior has led to a significant resurgence in ADXN stock. The shares show positive momentum with potential further upside from current levels, making it worthy of consideration for investors willing to bear the risk of a clinical-stage biotech opportunity.
