Allosteric Modulators for
Human Health
Annual Report 2021
Addex Therapeutics Annual Report 2021
Contents
3
4
6
Letter to Shareholders
Financial Review
Corporate Governance Report
20
Compensation Report
24
Consolidated Financial Statements
55
Statutory Financial Statements
Key Facts / Addex Therapeutics
Focus:
Disease area:
Lead programs:
Oral small molecule allosteric modulation-based drug discovery and
development against diseases with high unmet medical needs.
Rare diseases with orphan drug designation potential
Central Nervous System (“CNS”)
Dipraglurant for Parkinson’s disease levodopa-induced dyskinesia
Dipraglurant for blepharospasm
ADX71149 for epilepsy (licensed to Janssen Pharmaceuticals Inc.)
GABAB PAM for substance use disorders (licensed to Indivior PLC)
GABAB PAM
type 1A neuropathy
(“CMT1A”)
mGlu7 NAM for post-traumatic stress disorder (“PTSD”)
for Charcot-Marie-Tooth
Total full-time equivalent employees and
consultants as of December 31, 2021:
28
Stock symbol / exchange:
ADXN (ISIN:CH0029850754) / SIX Swiss Exchange
ADXN (American Depositary Shares) / Nasdaq Stock Market
Shares issued as of December 31, 2021:
49,272,952
Cash as of December 31, 2021:
20,484,836
Headquarter:
Geneva, Switzerland
Page 2 of 65
Addex Therapeutics Annual Report 2021
Letter to Shareholders
Dear Shareholders,
We have made substantial progress in 2021 across our portfolio as we continue to focus on the discovery and development of
allosteric modulator drug candidates for the treatment of neurological disorders. We now have three programs actively recruiting
patients in clinical trials, as well as several other discovery programs that have delivered drug candidates which are rapidly advancing
towards enter investigational new drug (IND) enabling studies. From a financial perspective, we completed two global offerings raising
gross proceeds of $21.5 million from the sale of new shares primarily in the form of American Depository Shares on the Nasdaq Stock
Market, increasing our US investor base and welcoming a number of top tier specialist healthcare investors as shareholders.
Our priority remains our lead drug candidate, dipraglurant for the treatment of levodopa induced dyskinesia associated with
Parkinson’s disease. We completed several important activities related to this registration program including the initiation of a placebo-
controlled Phase 2b/3 pivotal clinical trial in June 2021. In parallel, we started dosing patients in a Phase 2 clinical study with
dipraglurant for blepharospasm, a debilitating form of dystonia involving the involuntary contraction of the eyelid muscles resulting in
visual disturbance which can lead to functional blindness. Our third clinical program, ADX71149 is being developed by our partner,
Janssen Pharmaceuticals, Inc., a Johnson and Johnson company. In 2021, Janssen started dosing epilepsy patients with focal onset
seizures in a Phase 2a proof of concept clinical study with ADX71149 as an add-on in combination with levetiracetam (Keppra), the
main stay of therapy for epilepsy patients.
Our gamma-aminobutyric acid subtype B receptor (“GABAB”) positive allosteric modulators (“PAMs”) partnership with Indivior was a
continued focus of our discovery team in 2021 with multiple novel compounds progressing through clinical candidate selection phase.
We expect multiple drug candidates to be ready to enter IND enabling studies by the end of 2022 for both Indivior’s substance use
disorder program and our Charcot-Marie-Tooth type 1A neuropathy program. On May 31, 2021, we extended our research
collaboration with Indivior and Indivior agreed additional research funding of CHF3.7 million, bringing total research funding since
2018 to more than CHF12 million, demonstrating their strong commitment to our partnership.
Our metabotropic glutamate receptor subtype 7 (“mGlu7”) negative allosteric modulators (“NAM”) program for post-traumatic stress
disorder has made significant progress in 2021 with the delivery of multiple novel lead series of compounds and a one series entering
clinical candidate selection. The program has received significant support in 2021 from our consortium partners under the DiSARM
FEAR Eurostars grant award of €4.85 million, which we announced in 2019.
Our metabotropic glutamate receptor subtype 2 (“mGlu2”) NAM program for mild neurocognitive disorders has made significant
progress in 2021 with multiple novel lead series of compounds progressing into late lead optimization. We expect to enter clinical
candidate selection phase in the second half of 2022.
We have made tremendous progress in a difficult year and would like to acknowledge and thank our employees, consultants and
collaboration partners for their dedication, loyalty and perseverance. We would also like to thank our shareholders for their valued
support.
Vincent Lawton
Chairman of the Board
Tim Dyer
Chief Executive Officer
Page 3 of 65
Addex Therapeutics Annual Report 2021│Financial Review
Financial Review
The following review and discussion of the financial results for 2021 should be read in conjunction with the consolidated financial
statements and related notes, which have been prepared in accordance with International Financial Reporting Standards and are
presented in this Annual Report.
We are a clinical development-stage biopharmaceutical company focused on building a sustainable pharmaceutical business around
our expertise in the discovery and development of oral small molecule allosteric modulators of G-protein coupled receptors. As a
result, commercialization is currently limited to licensing, and research and development services related to selected discovery and
development stage programs.
During 2021, our financial results are driven primarily by activities related to the development of dipraglurant for Parkinson’s disease
levodopa-induced dyskinesia (“PD-LID”) and blepharospasm, as well as discovery activities related to our gamma-aminobutyric acid
subtype B receptor (“GABAB”) positive allosteric modulators (“PAMs”) partnership with Indivior PLC (“Indivior”) and to a lesser extent
our metabotropic glutamate subtype 7 receptor (“mGlu7”) negative allosteric modulator (“NAM”) and mGlu2 NAM programs. In
addition, we were engaged in a number of business development and financing activities related to securing resources to advance
our portfolio, including entering into collaborations with patient advocacy groups, academic institutions and governmental
organizations to characterize our portfolio of drug candidates and access expertise to complement our internal resources. At
December 31, 2021, our headcount was 26 full time equivalents (FTEs) compared to 23 FTEs at December 31, 2020. Our average
headcount increased to 25 FTEs in 2021 compared to 22 in 2020. In addition to our headcount, we engaged a number of consultants
and service providers to complement our internal resources.
Research and development expenditure increased to CHF 12.8 million and general and administrative expenses increased to CHF
5.8 million. CHF 2.9 million has been recognized as income in the year and our net loss increased to CHF 15.4 million. We ended the
year with a cash position of CHF 20.5 million.
Results of operations
The following table presents our consolidated results of operations for the fiscal years 2021 and 2020:
For the years
ended December 31
Amounts in millions of Swiss francs
Revenue from contract with customer….
Other income……………………………...
Total Income……………………………..
Research and development expenses....
General and administrative expenses.....
Total operating costs…………………..
Operating loss…………………………...
Finance result, net………………………..
Net loss for the year…………………....
2021
2.9
0.2
3.1
(12.8)
(5.8)
(18.6)
(15.5)
0.1
(15.4)
2020
3.6
0.3
3.9
(10.4)
(5.7)
(16.1)
(12.2)
(0.7)
(12.9)
Income
Income was CHF 3.1 million in 2021 compared to CHF 3.9 million in 2020. In 2021, the Group recognized CHF 2.9 million under the
licensing and research agreement with Indivior. Other income primarily relates to amounts recognized under our Eurostars/Innosuisse
grant award.
Research and development expenses
R&D expenses increased by CHF 2.4 million to CHF 12.8 million in 2021, compared to CHF 10.4 million in 2020, primarily due to
increased outsourced clinical development expenses related to our dipraglurant PD LID Phase 3 clinical study and our dipraglurant
blepharospasm Phase 2a clinical study. R&D expenses consist primarily of costs associated with research, preclinical and clinical
testing and related staff costs. They also include depreciation of laboratory equipment, costs of materials used in research, costs
associated with renting and operating facilities and equipment, as well as fees paid to consultants, patent costs, other outside service
fees and overhead costs. These expenses include costs for proprietary and third-party R&D.
General and administrative expenses
G&A expenses increased by CHF 0.1 million to CHF 5.8 million in 2021, compared to CHF 5.7 million in 2020, mainly due to slightly
higher directors and officer’s liability insurance premiums following the Company's listing on the Nasdaq Stock Market on January
29, 2020.
Page 4 of 65
Addex Therapeutics Annual Report 2021│Financial Review
Finance Result, net
Finance result net increased by CHF 0.8 million in in 2021 compared to 2020 mainly due to a currency exchange gain of CHF 0.2
million in 2021 primarily on U.S dollar cash deposits due to the strengthening of the U.S dollar, whilst we incurred a currency exchange
loss of CHF 0.6 million in 2020.
Net loss for the year
The net loss for the 2021 financial year was CHF 15.4 million compared to CHF 12.9 million for 2020 primarily due to the decrease in
R&D costs. Basic and diluted loss per share decreased to CHF 0.45 for 2021, compared to CHF 0.48 for 2020 due to an increase in
the weighted average number of shares issued.
Balance sheet & cash flows
Cash and cash equivalents increased to CHF 20.5 million at December 31, 2021, compared to CHF 18.7 million at December 31,
2020. This increase of CHF 1.8 million is mainly due to the two offerings executed on January 8, 2021 and December 16, 2021
respectively with a total net proceeds of CHF 16 million partially offset by our net loss of CHF 15.4 million. During the same period,
non-cash items mainly relating to the value of share-based services amounted to CHF 1.4 million have been partially off-set by the
net effect of the increased net working capital of CHF 0.6 million.
Total shareholders’ equity has increased to CHF 16.9 million at December 31, 2021 compared to CHF 14.6 million at December 31,
2020. The increase of CHF 2.3 million is primarily due to the two offerings executed on January 8, 2021 and December 16, 2021
respectively with a total net proceeds of CHF 16 million and the fair value of the share-based serviced of CHF 1.2 million partially
offset by our net loss of CHF 15.4 million.
Post balance sheet event
On February 2, 2022, Addex Therapeutics Ltd issued 16,000,000 new shares from authorized capital to its fully owned subsidiary,
Addex Pharma SA, at CHF 1 per share. These shares are held as treasury shares, hence the operation does not impact the
outstanding share capital.
Shares and shareholders’ information
At December 31, 2021, the Company had 49,272,952 (2020: 32,848,635) issued shares and a free float of approximately 76.91%.
Of the issued shares at December 31, 2021, 11,374,803 shares were held in treasury (at December 31, 2020: 5,729,861 shares).
The closing share price was CHF 1.04 at December 31, 2021 compared to CHF 1.99 at December 31, 2020 and the market
capitalization was CHF 51.2 million compared to CHF 65.4 million, respectively.
2022 outlook
We expect to report topline results in the exploratory placebo-controlled phase 2 clinical trial in Blepharospasm in Q2 2022 and
advance our placebo-controlled Phase 2b/3 pivotal clinical trial of dipraglurant in PD-LID patients which we have been conducting
since June 2021. We also expect our partner Janssen to report topline results in the placebo-controlled Phase 2a proof of concept
clinical trial of ADX71149 in epilepsy patients in the third quarter of 2022. Furthermore, we expect to advance our discovery programs
including our GABAB PAM program under our partnership with Indivior, mGlu7 NAM program which is supported by a grant from
Eurostars/Innosuisse as well as our mGlu2 NAM program. We will continue to invest in our allosteric modulator technology platform
and pursue collaborations with industry, patient advocacy groups, academic institutions and governmental organizations to drive
forward our portfolio of allosteric modulator drug candidates.
Page 5 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
Corporate Governance Report
General information
Addex Therapeutics Ltd’s articles of association (the “Articles”), organizational rules (the “Organizational Rules”) and policies provide
the principles of Corporate Governance. These documents are available on Addex’s website at
the basis
https://www.addextherapeutics.com/en/investors/corporate-governance/. This report has been prepared in accordance with the SIX
Swiss Exchange Directive on Information Relating to Corporate Governance dated October 1, 2021.
for
1. Group structure and shareholders
1.1. Group structure
1.1.1. Description of Addex’ operational group structure
Addex Therapeutics Ltd (“Addex” or the “Company”; CHE-113.514.094) is the holding and finance company of the Group. Addex
Pharma SA (CHE-109.561.624), based in Geneva, Switzerland, a 100% subsidiary of the Company, is in charge of research,
development, registration, commercialization, and holds the Group’s intellectual property. Addex Pharma SA, with registered office
at Chemin des Aulx 12, P.O. Box 68, CH-1228 Plan-les-Ouates, has a share capital of CHF 3,987,492 divided into 3,987,492
registered shares with a nominal value of CHF 1 each. Addex Pharmaceuticals France SAS, based in Archamps, France, with
registered office at 72, Rue Georges de Mestral, Athena 1, Archamps Technopole, 74160 Archamps, France, has a share capital of
EUR 37,000 divided into 37,000 registered shares with a nominal value of EUR 1 each, fully-owned by the Company. Addex
Pharmaceuticals Inc, a company incorporated on May 29, 2019, registered in Delaware with its principal registered office at 650
California Street, San Francisco, CA 94108, USA, has a share capital of USD 1 divided into 1,000 shares fully owned by the Company.
1.1.2. Listed company
Addex has its registered office c/o Addex Pharma SA, Chemin des Aulx 12, P.O. Box 68, CH-1228 Plan-les-Ouates, Geneva,
Switzerland. Its shares have been listed on the SIX Swiss Exchange (SIX) since May 21, 2007 under the Swiss security number
(Valorennummer) 2985075. The ISIN is CH0029850754, the common code is 030039254 and the ticker symbol is ADXN. Since
January 29, 2020, its shares have been listed on the Nasdaq Stock Market (Nasdaq) under the symbol “ADXN” in the form of American
Depositary Shares, or ADSs. Each ADS represents the right to receive six shares of Addex. As of December 31, 2021 Addex' market
capitalization was approximately CHF 51.2 million and 23.09% of Addex' shares were indirectly held by the Company as treasury
shares.
1.1.3. Non-listed company
For an overview of the operational non-listed consolidated entities please refer to section 1.1.1 above and page 59 in the section
financial statements of this Annual Report.
1.2. Significant shareholders
As far as can be ascertained from the information available, the following shareholders owned 3% or more of the Company’s share
capital as at December 31, 2021, based on published notifications to SIX and published Schedules 13D/G on Nasdaq Stock Market:
Shareholder
Addex Pharma SA3
Growth Equity Opportunities Fund IV, LLC4
Armistice Capital Master Fund Ltd5
Goldman Sachs International / Folio Investments Inc.6
New Leaf Biopharma Opportunities I, L.P.7
CDK Associates, LLC8
Shares held1
11,374,803
5,648,690
3,796,782
3,006,982
1,897,444
1,595,640
% of voting rights2 % of capital2
23.09%
11.46%
7.71%
6.10%
3.85%
3.24%
23.09%
11.46%
7.71%
6.10%
3.85%
3.24%
1 This table presents the shares held by the shareholders listed therein. The derivative holdings held by such shareholders are not included.
2 Based on the share capital registered in the Commercial Register as of December 31, 2021 (i.e. CHF 49,272,952 divided into 49,272,952 registered shares).
3 The beneficial owner is Addex Therapeutics Ltd, Chemin des Aulx 12, CH-1228 Plan-les-Ouates, Switzerland.
4 The beneficial owner is New Enterprise Associates Timonium MD 21093, USA.
5 The beneficial owner is Armistice Capital LLC, 510 Madison Avenue, 7th Floor, New-York, NY.
6 The beneficial owner is The Goldman Sachs Group, Inc. 1209 Orange Street, Corporation Trust Center, DE 19801 Wilmington, USA.
7 The beneficial owner is New Leaf Venture Management III LLC, 1209 Orange Street, c/o Corporation Trust Company/Center, DE 19801 Wilmington, USA.
8 The beneficial owner is Bruce Kovner, c/o CDK Associates LLC, Princeton, 08540 New Jersey, USA.
For a comprehensive list of notifications of shareholdings received during 2021 pursuant to article 120 of the Swiss Federal Act on
Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FMIA) and its implementing ordinances,
refer to the SIX website (https://www.ser-ag.com/en/resources/notifications-market-participants/significant-shareholders.html#/).
For a comprehensive list of Schedules 13D/G published on Nasdaq Stock Market during 2021, refer to SEC Filings published on
Nasdaq Stock Market (https://www.sec.gov/cgi-bin/browse-edgar?company=addex&owner=exclude&action=getcompany).
Page 6 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
1.3. Cross-shareholdings
There are no cross-shareholdings in terms of capital shareholdings or voting rights in excess of 5%.
2. Capital structure
There were 2,388 shareholders registered in the share register on December 31, 2021. The distribution of shareholdings is divided
as follows:
Number of shares
1 to 100
101 to 1,000
1,001 to 10,000
10,001 to 100,000
100,001 to 1,000,000
1,000,001 to 10,000,000
Above 10,000,0000
Number of registered shareholders on December 31, 2021
228
905
1,068
170
10
6
1
The shareholder base on December 31, 2021 was constituted as follows:
Shareholder structure according to category of investors
(weighted by number of shares)
Private persons
Institutional shareholders
Non-identified
20.81%
61.48%
17.71%
Shareholder structure by country
(weighted by number of shares)
United States
Switzerland
Other
Non-identified
32.29%
48.89%
1.11%
17.71%
2.1. Capital
As of December 31, 2021, the share capital amounted to CHF 49,272,952 consisting of 49,272,952 issued shares with a nominal
value of CHF 1 per share. As of December 31, 2021, the Company, indirectly, held 11,374,803 of its own shares. These shares are
recorded as treasury shares.
2.2. Authorized and conditional capital
Authorized share capital
As of December 31, 2021, and according to the article 3b of the Articles, the Board of Directors (“Board”) was authorized, at any time
until June 16, 2023 to increase the share capital in an amount of CHF 24,636,476 through the issuance of 24,636,476 fully paid
registered shares with a nominal value of CHF 1 each. An increase in partial amounts is permitted. The Board shall determine the
issue price, the type of payment, the date of issue of new shares, the conditions for the exercise of pre-emptive rights and the
beginning date for dividend entitlement. In this regard, the Board may issue new shares by means of a firm underwriting through a
banking institution, a syndicate or another third party with a subsequent offer of these shares to the current shareholders (unless the
pre-emptive rights of current shareholders are excluded). The Board may permit pre-emptive rights that have not been exercised to
expire or it may place these rights and/or shares as to which pre-emptive rights have been granted but not exercised, at market
conditions or use them for other purposes in the interest of the Company.
The subscription and acquisition of the new shares, as well as each subsequent transfer of the shares, shall be subject to the
restrictions set forth in article 5 of the Articles.
The Board is authorized to restrict or exclude the pre-emptive rights of shareholders and allocate such rights to third parties if the
shares are to be used:
–
for the acquisition of enterprises, parts of an enterprise, or participations, or for new investments, or, in case of a share placement,
for the financing or refinancing of such transactions;
for the purpose of the participation of strategic partners (including in the event of a public tender offer) or for the purpose of an
expansion of the shareholder constituency in certain investor markets;
for the granting of an over-allotment option (Greenshoe) of up to 20% to the banks involved in connection with a placement of
shares; or
for raising capital in a fast and flexible manner, which would not be achieved without the exclusion of the statutory pre-emptive
rights of the existing shareholders
–
–
–
Page 7 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
Conditional share capital
As of December 31, 2021 and according to article 3c(A) of the Articles, the share capital of the Company may be increased by a
maximum aggregate amount of CHF 18,769,578 through the issuance of a maximum of 18,769,578 registered shares, which shall
be fully paid-in, with a par value of CHF 1 per share by the exercise of option rights or subscription rights attached to bons de
jouissance which the employees, directors and/or consultants of the Company or a group company are granted according to
respective regulations of the Board. The pre-emptive rights of the shareholders are excluded. The acquisition of registered shares
through the exercise of option rights or subscription rights granted to the holders of bons de jouissance and the subsequent transfer
of the registered shares shall be subject to the transfer restrictions provided in article 5 of the Articles.
According to article 3c(B) of the Articles, the share capital of the Company may be increased by a maximum aggregate amount of
CHF 5,866,898 through the issuance of a maximum of 5,866,898 registered shares, which shall be fully paid-in, with a par value of
CHF 1 per share by the exercise of option and/or conversion rights which are granted to shareholders of the Company and/or in
connection with the issue of bonds, similar obligations or other financial instruments by the Company or another group company. In
the case of such grants of option and/or conversion rights, the advanced subscription right of shareholders is excluded. The holders
of option and/or conversion rights are entitled to receive the new shares. The Board shall determine the terms of the option and/or
conversion rights. The acquisition of registered shares through the exercise of option or conversion rights and the subsequent transfer
of the registered shares shall be subject to the transfer restrictions provided in article 5 of the Articles.
–
–
The Board is authorized to restrict or exclude the advanced subscription rights of shareholders:
–
if the debt or other financial instruments and/or conversion rights or warrants are issued for the purpose of financing or refinancing
of the acquisition of enterprises, parts of an enterprise, or participations or new investments;
if such debt or other financial instruments and/or conversion rights or warrants are issued on the national or international capital
markets and for the purpose of a firm underwriting by a banking institution or a consortium of banks with subsequent offering to
the public; or
if such debt or other financial instruments and/or conversion rights or warrants are issued for raising capital in a fast and flexible
manner, which would not be achieved without the exclusion of the advanced subscription rights of the existing shareholders. If
the Board excludes the advance subscription rights, the followings shall apply: the issuance of convertible bonds or warrants or
other financial market instruments shall be made at the prevailing market conditions (including dilution protection provisions in
accordance with market practice) and the new shares shall be issued pursuant to the relevant conversion or exercise rights in
connection with bond or warrant issue conditions. Conversion rights may be exercised during a maximum 10 year period, and
warrants may be exercised during a maximum 7 year period, in each case from the date of the respective issuance.
2.3. Changes in capital
Nominal share capital
December 31, 2019
December 31, 2020
December 31, 2021
CHF 32,848,635
CHF 32,848,635
CHF 49,272,952
Conditional share capital
December 31, 2019
December 31, 2020
December 31, 2021
CHF 16,424,317
CHF 16,424,317
CHF 24,636,476
Authorized share capital
December 31, 2019
December 31, 2020
December 31, 2021
CHF 16,424,317
CHF 16,424,317
CHF 24,636,476
Changes in capital in 2019
On May 17, 2019, the Company increased its capital from CHF 28,564,031 to CHF 32,848,635 through the issue of 4,284,604 new
registered shares at nominal value of CHF 1 each.
On June 19, 2019, the shareholders increased the authorized capital from CHF 9,997,411 to CHF 16,424,317 expiring on June 19,
2021 and the conditional capital from CHF 14,282,015 to CHF 16,424,317.
Changes in capital in 2020
In 2020 there was no change in the share capital of the Company.
On June 9, 2020 the shareholders resolved to extend the term of the authorized capital to June 9, 2022.
Page 8 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
Changes in capital in 2021
On January 8, 2021 the Company increased its capital from CHF 32,848,635 to CHF 39,748,635 through the issue of 6,900,000 new
registered shares at nominal value of CHF 1 each, in connection with a global offering of shares.
On April 23, 2021, the Company increased its capital from CHF 39,748,635 to CHF 49,272,952 through the issue of 9,524,317 new
registered shares at nominal value of CHF 1 each out of the authorized capital.
On June 16, 2021, the shareholders increased the authorized capital from CHF 9,524,317 to CHF 24,636,476 expiring on June 16,
2023 and the conditional capital from CHF 16,424,317 to CHF 24,636,476.
For further information on changes in capital including changes in reserves, refer to the consolidated statements of changes in equity
as well as note 13 of the consolidated financial statements included in this Annual Report.
2.4. Shares and participation certificates
Addex has one class of shares, i.e. registered shares with a nominal value of CHF 1 per share. Each share is fully paid up and carries
one vote and equal dividend rights, with no privileges. The Company has no participation certificates (bons de participation /
Partizipationsscheine).
2.5. Dividend-right certificates
Equity sharing certificates are available for granting to employees and/or directors and/or consultants of the Company or any Group
company under the Group’s equity incentive plan. Equity sharing certificates do not form part of the share capital, have no nominal
value, and do not grant any right to vote nor to attend meetings of shareholders. The Company has 1,700 issued equity sharing
certificates (bons de jouissance/Genussscheine). Each equity sharing certificate grants the right to subscribe for 1,000 shares of the
Company and a right to liquidation proceeds of the Company calculated in accordance with article 34 of the Articles.
The Company’s shares and equity sharing certificates are not certificated. Shareholders and equity sharing certificate holders are not
entitled to request printing and delivery of certificates, however, any shareholder or equity sharing certificate holder may at any time
request the Company to issue a confirmation of their holdings.
2.6. Limitations on transferability of shares and nominee registration
A transfer of uncertified shares is affected by a corresponding entry in the books of a bank or depository institution following an
assignment in writing by the selling shareholder and notification of such assignment to Addex by the bank or the depository institution.
If following a transfer of shares a shareholder wishes to vote at or participate in a shareholders’ meeting, such shareholder must file
a share registration form in order to be registered in our share register with voting rights. Failing such registration, a shareholder may
not vote at or participate in a shareholders meeting. The shares in the form of American Depository Shares or ADSs are held by
Citibank acting as depositary and voted at the shareholders’ meeting according to the instructions received from the ADS holders.
A purchaser of shares will be recorded in Addex’ share register as a shareholder with voting rights if the purchaser discloses its name,
citizenship or registered office and address and declares that it has acquired the shares in its own name and for its own account.
Article 5 of the Articles provides that a person or entity not explicitly stating in its registration request that it will hold the shares for its
own account (Nominee) may be entered as a shareholder in the share register with voting rights for shares up to a maximum of 5%
of the share capital as set forth in the commercial register. Shares held by a Nominee that exceed this limit are only registered in the
share register with voting rights if such Nominee discloses the name, address and shareholding of any person or legal entity for whose
account it is holding 1% or more of the share capital as set forth in the commercial register. The limit of 1% shall apply correspondingly
to Nominees who are related to one another through capital ownership or voting rights or have a common management or are
otherwise interrelated. A share being indivisible, hence only one representative of each share will be recognized. Furthermore, shares
may only be pledged in favor of the bank that administers the bank entries of such shares for the account of the pledging shareholders.
If the registration of shareholdings with voting rights was effected based on false information, the Board may cancel such registration
with retroactive effect.
There are no further rules in the Articles for granting exceptions and no exceptions were granted in 2021. The Articles do not contain
any provisions on the procedure and conditions for cancelling privileges and limitations on transferability.
2.7. Convertible bonds and options
As of December 31, 2021, the Company has no convertible or exchangeable bonds or loans outstanding. As of December 31, 2021,
the Company has a total of 29,590,875 options that primarily include 8,615,885 Employee Share Option Plan (ESOP), 198,750 Equity
Sharing Certificates (ESCs), 5,866,898 warrants granted to investors on March 29, 2018, 9,230,772 warrants and 5,478,570 pre-
funded warrants granted to one investor on December 21, 2021. The ESOP and ESCs outstanding, are granted to non-Directors,
Executive Management, employees or consultants of the Group. They vest over a four-year period and have a 1:1 subscription ratio,
have a ten-year expiration term and an exercise price between CHF 1.00 to CHF 3.00.
Page 9 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
0.45 warrants outstanding have been granted to investors in connection with the capital increase of March 28, 2018, for each new
share issued. Each warrant entitles the investor to subscribe (which may be exercised without any specific conditions) to one
registered share at a price of CHF 3.43 during a seven -year period.
5,478,570 pre-funded warrants in the form of 913,095 ADS listed on Nasdaq Stock Market have been granted to one investor with a
total exercise price of USD 6.50 per ADS (CHF 1 per share) of which USD 6.49 (CHF 0.99 per share) has been paid before their
issuance. The remaining exercise price is USD 0.01 per ADS. Each ADS represents 6 shares listed on Six Swiss Exchange. Pre-
funded warrants will expire when exercised in full. Their subscription ratio is 1:1.
9,230,772 warrants in the form of 1,538,462 ADS listed on Nasdaq Stock Market have been granted to one investor with an exercise
price of USD 6.50 per ADS (CHF 1 per share). Each ADS represents 6 shares listed on Six Swiss Exchange. Warrants will expire
six years after their issuance, on December 21, 2027. Their subscription ratio is 1:1.
For information on equity incentive plans, refer to notes 13 and 14 of the consolidated financial statements included in this Annual
Report.
3. Board of directors
3.1. Members of the board of directors
The following table sets forth the name, year joined the Board, position and directorship term of each member of the Board, followed
by a short description of each member’s business experience, education and activities. Except for Tim Dyer and Roger Mills, all Board
members are non-executive and none of them was a member of the management of the Company or one of its subsidiaries in the
three financial years before 2021 or has significant business connections with the Company or one of its subsidiaries.
Name
Vincent Lawton
Raymond Hill
Tim Dyer
Roger Mills
Jake Nunn
Isaac Manke
Year of birth
1949
1945
1968
1957
1970
1977
Nationality
UK
UK
Swiss/UK
US/UK
US
US
First elected
2009
2015
2015
2017
2018
2018
Elected until
2022
2022
2022
2022
2022
2022
Board
Chairman
Member
Member
Member
Member
Member
Vincent Lawton
Chairman of the Board of Directors
Dr. Lawton was Vice President Merck Europe and Managing Director of MSD UK until he stepped down in 2006, after 26 years’ service
internationally for Merck & Co Inc. He was appointed CBE (Commander of the British Empire) by the Queen of England for services to
the Pharmaceutical Industry. During his tenure, MSD UK achieved sustained commercial success, launching many new medicines to
the market in a wide range of therapeutic areas, becoming the fastest growing company in the market over a number of years. He
worked in commercial, research and senior management roles in France, the US and Canada, Spain and throughout Europe. As
President of the UK Industry Association, the ABPI, he negotiated industry pricing, worked with Government bodies to help establish
the UK globally as a leading centre of clinical research. He served on the board of the UK regulatory authority (MHRA) from 2008 to
2015. He was a Senior Strategy Advisor for Imperial College Department of Medicine, University of London and serves as a consultant
to a number of leading healthcare organizations. He studied Psychology at the University of London and holds an undergraduate
degree and PhD.
Raymond Hill
Member of the Board of Directors
Dr. Hill was previously a member of the Board of Directors from the Annual General Meetings of 2008 until 2012. Currently Visiting
Professor of Pharmacology at Imperial College in London, and Chairman/Non-Executive Director of Avilex (Denmark), Chair of SAB
Asceneuron (Switzerland) and was NED of Orexo AB (Sweden) from 2008 to 2019. Prior to his retirement, he was Executive Director,
Licensing and External Research at Merck/MSD in Europe (2002 - 2008); Executive Director, Pharmacology (1990-2002) at the Merck
Neuroscience Research Centre and had oversight responsibility for Neuroscience research at the Banyu Research Labs in Tsukuba,
Japan (1997-2002). At Merck, he chaired a number of discovery project teams including those responsible for the marketed products
Maxalt® and Emend®. Dr. Hill received his academic training (BPharm PhD) at the University of London. He was awarded an Honorary
DSc by the University of Bradford in 2004 and was elected to Fellowship of the Academy of Medical Sciences in 2005. He was a
lecturer in Pharmacology at the University of Bristol School of Medicine from 1974 to 1983 and supervisor in Pharmacology at Downing
College, University of Cambridge from 1983 to 1988. He joined the pharmaceutical industry in 1983 as Head of Biology and founder
member of the Park Davis Research Unit at Cambridge. In 1988, he joined SK&F (United Kingdom) as Group Director of Pharmacology
and in 1990 moved to Merck. He is a past Council Member of the UK Academy of Medical Sciences and President Emeritus of the
British Pharmacological Society. He is a Visiting Professor at the University of Bristol and was a member of the UK Government
Advisory Council on the Misuse of Drugs from 2010 to 2019. He continues to serve on the ACMD Working Group on the Medicinal
Uses of Cannabis and is a member of the drug misuse WG of Royal Pharmaceutical Society Science Committee.
Page 10 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
Tim Dyer
Member of the Board of Directors and Chief Executive Officer
Since co-founding Addex in 2002, Mr. Dyer has played a pivotal role in building the Addex Group, raising significant capital, including
Addex IPO and negotiating licensing agreements with pharmaceutical industry partners. Prior to founding Addex, he spent 10 years
with Price Waterhouse, or PW & PricewaterhouseCoopers, or PwC in the UK and Switzerland as part of the audit and business advisory
group. At PwC in Switzerland, Mr Dyer’s responsibilities included managing the service delivery to a diverse portfolio of clients including
high growth start-up companies, international financial institutions and venture capital and investment companies. Mr. Dyer has
extensive experience in finance, corporate development, business operations and the building of start-up companies. He is a UK
Chartered Accountant and holds a BSc (Hons) in Biochemistry and Pharmacology from the University of Southampton, UK.
Roger Mills
Member of the Board of Directors and Chief Medical Officer
Dr. Mills brings more than 30 years of biopharmaceutical industry experience at both large global pharmaceutical companies and
smaller biotechnology companies, including Acadia Pharmaceuticals, Pfizer, Gilead Sciences, Abbott Laboratories and The Wellcome
Foundation, across a spectrum of disease areas. His extensive track record includes managing drug development programs, including
IND’s and NDAs as well as post-marketing and OTC products. Most recently, Dr. Mills was with Acadia Pharmaceuticals for nine years,
serving as Executive Vice President, Development and Chief Medical Officer. In this role, he oversaw the largest ever international
Phase 3 program in Parkinson’s Disease Psychosis and led its NDA submission to the FDA for NUPLAZID, which was subsequently
approved and remains the first and only medication approved in this indication. Dr. Mills currently serves as Professor of Medical
Research in Practice at the University of Exeter, UK, and a Visiting Professor at the Centre for Age Related Diseases, Institute of
Psychiatry, Psychology and Neuroscience, King’s College London. He is a member of the Board of Directors of Enterin Inc, a US
biopharmaceutical company. He received his medical degree from Imperial College, Charing Cross Hospital Medical School, London,
United Kingdom.
Jake Nunn
Member of the Board of Directors
Mr. Nunn has more than 25 years of experience in the life science industry as an investor, independent director, research analyst and
investment banker. He is currently an independent advisor to life science companies and a venture advisor at New Enterprise
Associates, or NEA, where he was a partner from 2006 to 2018, focusing on later-stage specialty pharmaceuticals, biotechnology and
medical device investments and managing a number of NEA’s public investments in healthcare. Mr. Nunn is a Director of Hexima Ltd.
(ASX: HXL), Oventus Medical Ltd. (ASX: OVN), Regulus Therapeutics (Nasdaq: RGLS) and Trevena, Inc. (Nasdaq: TRVN). He
previously was a Director of Dermira Inc. (acquired by Eli Lilly), Hyperion Therapeutics (acquired by Horizon Pharma PLC), TriVascular
(acquired by Endologix), Aciex Therapeutics (acquired by Nicox SA), Transcept Pharmaceuticals (merged with Paratek) and a board
observer at Vertiflex, Inc. (acquired by Boston Scientific). Prior to NEA, Mr. Nunn worked at MPM Capital as a Partner with the MPM
BioEquities Fund, where he specialized in public, PIPE and mezzanine-stage life sciences investing. Previously, he was a healthcare
research analyst and portfolio manager at Franklin Templeton Investments. Mr. Nunn was also an investment banker with Alex.
Brown & Sons. He received an MBA from the Stanford Graduate School of Business and an AB in Economics from Dartmouth College.
Mr. Nunn holds the Chartered Financial Analyst designation, is a member of the CFA Society of San Francisco, and recently completed
the Stanford GSB Directors’ Consortium executive education program.
Isaac Manke
Member of the Board of Directors
Dr. Manke has more than 15 years of experience in the life science industry as an investor, research analyst, consultant and scientist.
Isaac is currently a General Partner at Acorn Bioventures, where he focuses on investing in small-cap public and private biotechnology
companies. Prior to Acorn, Isaac spent 11 years at New Leaf Venture Partners (NLV). In addition to private venture investments, during
his time at NLV, he also led the firm’s public investment activities initially with the public portfolio within NLV-II, and from 2014 through
2019, had day-to-day management and oversight responsibility for the NLV Biopharma Opportunities Funds. Isaac has been a board
member or observer for several companies, including the boards of True North Therapeutics (acquired by Bioverativ) and Karos
Pharmaceuticals (acquired by an undisclosed company). Previously, Isaac was an Associate in the Global Biotechnology Equity
Research group at Sanford C. Bernstein. Isaac was also an Associate in the Biotechnology Equity Research group at Deutsche Bank
and was a Senior Analyst at Health Advances, a biopharmaceutical and medical device strategy consulting firm. Isaac received a B.A.
in Biology and a B.A. in Chemistry at Minnesota State University (Moorhead), and a Ph.D. in Biophysical Chemistry and Molecular
Structure at the Massachusetts Institute of Technology, or MIT. Isaac’s discoveries led to several publications in top journals, including
Science and Cell, and were selected by Science as one of the “2003: Signaling Breakthroughs of the Year”. These discoveries also
resulted in four issued patents.
3.2. Other activities and vested interests
Apart from the information given above, none of the members of the Board has had other activities or holds any positions:
–
in governing and supervisory bodies of important Swiss and foreign organizations, institutions and foundations under private and
public law;
– of permanent management and consultancy functions for important Swiss and foreign interest groups; or
– of official government functions and political posts.
Page 11 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
3.3. Rules in the articles of incorporation regarding the number of permitted mandates outside the Company
Article 31 of the Articles provides certain restrictions to the number of mandates that members of the Board may have in the supreme
governing bodies of legal entities registered in the Swiss commercial register or similar foreign register as follows:
– no member of the Board may hold more than fourteen additional mandates of which no more than four mandates in listed entities;
– mandates in companies controlled by Addex or which control Addex are not subject to restrictions;
– mandates that are held by order and on behalf of Addex or companies under Addex control are restricted to ten; and
– mandates in associations, charitable organizations, family trusts and foundations relating to post-retirement benefits and other
not-for-profit organizations are restricted to twenty-five.
Multiple mandates in different legal entities which are under common control or same beneficial ownership are deemed to be one
mandate.
3.4. Elections and terms of office
In accordance with articles 15, 16 and 17 of the Articles:
– The Board shall consist of between one and eleven members. The Company currently has six Board members.
–
In accordance with the Swiss Ordinance Against Excessive Compensation in Listed Stock Companies of November 20, 2013 (the
"Compensation Ordinance"), members of the Board including the Chairman are appointed and removed exclusively by
shareholders’ resolution for a term of one year until completion of the next annual general meeting of shareholders.
– The members of the Board and the Chairman of the Board may be re-elected without limitation.
–
If the office of the Chairman of the Board is vacant, the Board shall appoint a Chairman from among its members for a term of
office extending until completion of the next annual general meeting of shareholders.
– Subject to mandatory law and the provisions of these Articles, the Board determines its own internal organization and the
modalities for the passing of resolutions in its Organizational Rules.
3.5. Internal organization
Except for the election of the Chairman of the Board and the members of the Compensation Committee (which are to be elected by
the general meeting of shareholders), the Board determines the Company’s internal organization. It shall elect the members of the
Audit Committee and of the Nomination Committee and appoint a Secretary who does not need to be a member of the Board. The
committees may designate their own secretaries.
3.5.1. Allocation of tasks within the Board of Directors
The Articles and Organizational Rules define the Company’s internal organization and areas of responsibility of the Board, Chairman,
Chief Executive Officer ("CEO") and the Executive Management. In accordance with article 17 of the Articles, the Board may appoint
from amongst its members standing or ad hoc committees entrusted with the preparation and execution of its decisions or the
supervision of specific parts of business of the Company.
3.5.2. Committees of the Board of Directors
As of December 31, 2021, the Company had two committees: The Audit Committee and the Compensation Committee. These
Committees are assisting the Board in fulfilling its duties and have also decision authority to the extent described below.
The Board Committees as of December 31, 2021
Members of the
Board of Directors
Vincent Lawton
Raymond Hill
Tim Dyer
Roger Mills
Jake Nunn
Isaac Manke
Audit Committee
Board of
Directors
Chairman
Member
Member
Member
Member
Member
Audit Committee
Committee Member
–
–
–
Committee Member
Committee Member
Compensation
Committee
Committee Member
Committee Member
–
–
–
–
Members as of December 31, 2021: The Audit Committee consists of Vincent Lawton (Chairman Audit Committee), Jake Nunn and
Isaac Manke.
In accordance with the Organization Rules, the Audit Committee consists of up to three non-executive and independent Directors.
The members have to be financially literate.
Pursuant to the Organizational Rules, a "non-executive" Director is a Director who does not perform any line management function
within the Company; an "independent" Director is a non-executive Director and a Director who never was or was more than three
Page 12 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
years ago a member of the Executive Management and who has no or comparatively minor business relations with the Company.
The members shall be appointed, as a rule, for the entire duration of their mandate as Board members and be re-eligible.
The Audit Committee assists the Board in fulfilling its duties of supervision of management. The Audit Committee has following powers
and duties:
–
to review and assess the effectiveness of the statutory auditors and the group auditors, in particular their independence from the
Company. In connection therewith, it reviews in particular additional assignments given by the Company or its subsidiaries. It may
issue binding regulations or directives in connection with such additional assignments;
to review and assess the scope and plan of the audit, the examination process and the results of the audit and to examine whether
the recommendations issued by the auditors have been implemented by management;
to review the auditors' reports, to discuss their contents with the auditors and with the management;
to approve the terms and conditions of the engagement of the auditors;
to assess the risk assessment established by the management and the proposed measures to reduce risks;
to assess the state of compliance with norms within the Company;
to review in cooperation with the auditors, the CEO and Head of Finance whether the accounting principles and the financial
control mechanism of the Company and its subsidiaries are appropriate in view of the size and complexity of the Group;
to review the annual and interim statutory and consolidated financial statements intended for publication. It should discuss these
with the CEO and the Head of Finance and, separately, with the head of external audit; and
to make a proposal to the Board with respect to these annual and interim statutory and consolidated financial statements; the
responsibility for approving the annual financial statements remains with the Board.
–
–
–
–
–
–
–
–
Should an internal audit function be established, the Audit Committee would have the power and duties:
–
to review the effectiveness of the internal audit function, its professional qualifications, resources and independence and its
cooperation with external audit;
to approve the annual internal audit concept and the annual internal audit report, including the responses of the management
thereto;
–
The Audit Committee regularly reports to the Board on its decisions, assessments, findings and proposes appropriate actions.
Nomination Committee
In accordance with the Organization Rules, should the Board elect to constitute a Nomination Committee then the Nomination
Committee shall consist of up to three Directors, the majority of which shall be non-executive and independent. The Board did not
constitute a Nomination Committee in 2021.
Compensation Committee
Members as of December 31, 2021: Raymond Hill (Chairman Compensation Committee) and Vincent Lawton.
In accordance with the Organization Rules, the Compensation Committee consists of two non-executive and independent Directors.
Pursuant to the Organizational Rules, a "non-executive" Director is a Director who does not perform any line management function
within the Company; an "independent" Director is a non-executive Director and a Director who never was or was more than three
years ago a member of the Executive Management and who has no or comparatively minor business relations with the Company.
The members shall be appointed by the shareholder's meeting until the next ordinary general meeting of shareholders and be re-
eligible.
The Compensation Committee assists the Board in fulfilling its remuneration related matters. The Compensation Committee has the
following powers and duties:
–
to review and assess on a regular basis the remuneration system of the Company and the Group (including the management
incentive plans) and to make proposals in connection thereto to the Board;
to recommend the terms of employment, in particular the remuneration package, of the CEO and to make proposals in relation to
the remuneration of Directors;
to recommend upon proposal of the CEO the terms of employment, in particular the remuneration package, of employees reporting
directly to the CEO as well as review matters related to the compensation of other top managers, as well as the general employee
compensation, benefit policies and HR practices of the Company; and
to make recommendations on the grant of options or other securities under any management incentive plan of the Company.
–
–
–
The Compensation Committee regularly reports to the Board on its decisions, assessments, findings and proposes appropriate
actions.
The Compensation Committee meets as often as business requires. The Compensation Committee held two meetings in 2021 to
review the 2020 achievements versus the planned corporate objectives, determine the performance related bonus pool, review the
annual salary review process and 2021 corporate objectives as well as to review the remuneration of the members of the Board.
Page 13 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
3.5.3. Working methods of the Board of Directors and its committees
In 2021, due to COVID 19 pandemic, the Board held four virtual meetings with average duration of half a day. In addition to formal
Board meetings, the Board holds additional ad hoc meetings or telephone conferences to discuss specific matters. The CEO and
Chief Medical Officer (“CMO”) are entitled to attend every Board meeting and to participate in its debates and deliberations with the
exception of non-executive sessions.
During Board meetings, each member of the Board may request information from the other members of the Board, as well as from
the members of the Executive Management present on all affairs of the Company. The CEO reports at each meeting of the Board on
the course of business of the Company in a manner agreed upon from time to time between the Board and the CEO. The Board also
engages specific advisors to address specific matters when required.
In addition to reporting at Board meetings, the CEO reports immediately any extraordinary event and any significant change within
the Company to the Chairman. Outside of Board meetings, each member of the Board may request from the CEO information
concerning the course of business of the Company.
3.6. Definition of areas of responsibility
The Board is the ultimate corporate body of the Company. It further represents the Company towards third parties and shall manage
all matters which by law, Articles or Organizational Rules have not been delegated to another body of the Company.
–
–
In Accordance with article 19 of the Articles, the Board has delegated all areas of management of the Group’s business to the CEO
and the Executive Management, and has granted the CEO the power to appoint the members of the Executive Management. The
Board carries out the responsibilities and duties reserved to it by law, the Articles and the Organizational Rules. The following
responsibilities remain with the Board:
–
–
–
–
the ultimate direction of the Company and the Group and the issuance of the necessary instruction;
the determination of the organization of the Company, including the adoption and revision of the Organizational Rules;
the organization of the accounting system, the financial control and the financial planning;
the appointment, remuneration and dismissal of the CEO of the company and of managers directly reporting to the CEO, as well
as the determination of their signatory power;
the ultimate supervision of the persons entrusted with management of the Company, specifically in view of their compliance with
the law, the Articles, the Organizational Rules and directives given from time to time by the Board;
the preparation of the business report, the preparation for the meetings of shareholders and the implementation of the resolutions
adopted by the meeting of shareholders;
the notification of the judge if liabilities exceed assets;
the passing of resolutions regarding the supplementary contribution for shares not fully paid-in;
the passing of resolutions concerning an increase in share capital to the extent that such power is vested in the Board, and of
resolutions concerning the confirmation of capital increases and corresponding amendments to the Articles, as well as making
the required report on the capital increase;
the non-delegable and inalienable duties and powers of the Board pursuant to the Swiss Merger Act and any other law;
the examination of the necessary qualifications of the auditors;
the adoption of, and any amendments or modifications (except for immaterial changes) to, any equity incentive plan, stock option
agreement, restricted stock purchase agreement, etc.;
the decisions regarding entering into any financing arrangement in excess of CHF 2,000,000 including loan agreements, credit
lines, letters of credit or capitalized leases;
the issuance of convertible debentures, debentures with option rights or other financial market instruments;
–
–
the approval of the business strategy and the approval and adoption of the budget of the Company;
– decisions or actions in excess of CHF 1,000,000 which are not in accordance with the budget; and
–
the approval of any recommendation made by any of the Committees.
–
–
–
–
–
–
–
According to the current Organizational Rules enacted by the Board, resolutions of the Board are passed by way of simple majority
vote. To validly pass a resolution, more than half of the members of the Board have to attend the meeting. No quorum is required for
confirmation resolutions and adaptations of the Articles in connection with capital increases pursuant to articles 634a, 651a, 652g
and 653g of the Swiss Federal Code of Obligations.
Except for Vincent Lawton (Chairman) and Tim Dyer, who have single signature authority, the members of the Board have joint
signatory authority.
3.7. Information and control instruments vis-à-vis the Executive Management
The Board ensures that it receives sufficient information from the CEO and Executive Management to perform its supervisory duty
and to make the decisions that are reserved to the Board. At each Board meeting the Board receives reports from the CEO and
selected members of the Executive Management on the status of finance, business, research and development. These reports focus
on the main risks and opportunities related to the Group. In addition, the Board is provided with a status report prior to each board
meeting, a monthly finance report and other ad hoc reports on significant matters related to the Group’s operations.
Page 14 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
Furthermore, the Board receives unaudited annual and interim financial statements for all Group companies including consolidated
financial statements for the Company. The Board receives a written report from the auditors on the results of the audit which includes
any findings with respect to internal control risks arising as a result of their audit procedures. The auditors held two meetings with the
Chairman during the 2021 audit process. Addex does not have an independent internal audit function. For further information on the
risk management and the financial risks factors inherent to the Group’s activities, refer to note 3 of the consolidated financial
statements.
4. Executive Management
4.1. Members of the Executive Management
In accordance with the Articles and the Organizational Rules, the Board has delegated the operational management to the CEO. The
CEO together with the Executive Management and under the control of the Board conducts the operational management of the
Company pursuant to the Organizational Rules and reports to the Board on a regular basis.
The following table sets forth the name, year of birth and principal position of those individuals who currently are part of the Executive
Management followed by a short description of each member’s business experience, education and activities:
Name
Tim Dyer
Roger Mills
Robert Lütjens
Jean-Philippe Rocher
Mikhail Kalinichev
Year of Birth
Position
1968
1957
1968
1959
1967
Chief Executive Officer
Chief Medical Officer
Head of Discovery - Biology
Head of Discovery - Chemistry
Head of Translational Science
Nationality
Swiss / British
USA / British
Swiss
French
French / British
Member since
2002
2016
2015
2018
2021
Tim Dyer
Chief Executive Officer – Refer to page 11
Roger Mills
Chief Medical Officer – Refer to page 11
Robert Lütjens
Co-Head of Discovery - Biology
Dr. Lütjens is responsible for all biology activities and has extensive experience in drug discovery. He established the biology
capabilities and built the Company’s small molecule allosteric modulator biology platform. He played a pivotal role in the success of
both internal and partnered programs, including the discovery of dipraglurant and ADX71149, both of which progressed into Phase II
clinical development. Prior to joining Addex at inception in 2002, Dr. Lütjens completed a postdoctoral fellowship in the Department
of Neuropharmacology at the Scripps Research Institute, in La Jolla, CA, where he focused on understanding molecular changes
involved in addiction disorders. Dr. Lütjens obtained his degrees in Biology from the University of Geneva, his master’s at the Swiss
Institute for Experimental Cancer Research and his Ph.D. thesis at the Glaxo Institute for Molecular Biology in Geneva and the
Institute for Cellular Biology and Morphology in Lausanne. Dr. Lütjens is co-author of over 30 peer-reviewed publications and patents.
Jean-Philippe Rocher
Co-Head of Discovery - Chemistry
Dr. Rocher is responsible for IP and for all chemistry activities including CMC, scale-up and formulation, medicinal chemistry,
computational chemistry, compound library management and activities linked to developability. He has extensive experience in drug
discovery and returns to Addex from Pierre Fabre where he was Director of CNS Programs from March 2014 to May 2018. Joining
Addex at its inception in 2002, Dr. Rocher established the Company’s chemistry capabilities and built its small molecule allosteric
modulator chemistry platform. He played a pivotal role in the success of both internal and partnered programs, including the discovery
of dipraglurant and ADX71149, both of which progressed into Phase 2 clinical development. Prior to joining Addex, Dr. Rocher was
Director of Chemistry at Devgen NV (Gent, Belgium), Senior Research Scientist for GlaxoSmithKline KK (Tsukuba, Japan), Scientific
Project Leader in CNS at Mitsubishi Tanabe (Yokohama, Japan) and Head of Drug Discovery Unit for Battelle (Geneva, Switzerland).
He started his career as a Research Scientist in the Dermatology Research Center of Galderma (Sophia-Antipolis, France) following
a PhD in Medicinal Chemistry and Pharm D at the Faculty of Pharmacy of Lyon (France). He is a co-author of more than 40 research
publications and patents.
Mikhail Kalinichev
Head of translational science
This is the second time Dr. Kalinichev is a part of Addex team, as previously, he spent 4 years in the company in several positions,
including Associate Director and Group Leader, Behavioral Neuroscience. Immediately before his second appointment at Addex,
Dr. Kalinichev spent 6 years as Director of in vivo neurology at Ipsen, France. In this role, he helped define the neuroscience
therapeutic strategy, led operational activities and initiated several industrial and academic collaborations in the area of
neuromuscular disorders and pain. Before Ipsen, he was a section head at Lundbeck, Denmark where he helped drive translational
Page 15 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
studies in schizophrenia, cognitive impairment and pain. His first role in pharmaceutical industry was as a principal scientist at
Psychiatry Center of Excellence of GlaxoSmithKline, UK.
Dr. Kalinichev’s post-doctoral training was at the Department of Pharmacology, Emory University School of Medicine (USA). Dr.
Kalinichev has been awarded several prestigious awards, including the Vernalis Prize of the British Association for
Psychopharmacology and the GlaxoSmithKline Exceptional Science Award. He is inventor on several patents and co-authored
more than 50 papers. Dr. Kalinichev earned his PhD in behavioural neuroscience at Rutgers University (USA).
4.2. Other activities and vested interests
Apart from the information given above, none of the members of the Executive Management has had other activities or holds any
positions in:
– governing and supervisory bodies of important Swiss and foreign organizations, institutions and foundations under private and
public law;
– permanent management and consultancy functions for important Swiss and foreign interest groups; or
– official government functions and political posts.
4.3. Rules in the articles of association on the number of permitted mandates outside the Company
Article 31 of the Articles provide certain restrictions to the number of mandates that members of the Executive Management may
have in the supreme governing bodies of legal entities registered in the Swiss commercial register or similar foreign register as follows:
– no member of the Executive Management may hold more than five board of director mandates with no more than two mandates
in listed entities;
– mandates in companies controlled by Addex or which control Addex are not subject to restrictions;
– mandates that are held by order and on behalf of Addex or companies under Addex control are restricted to ten; and
– mandates in associations, charitable organizations, family trusts and foundations relating to post-retirement benefits and other
not-for-profit organizations are restricted to twenty-five.
Multiple mandates in different legal entities which are under common control or same beneficial ownership are deemed to be one
mandate.
4.4. Management contracts
There are no management contracts between Addex and third parties.
5. Compensation, shareholdings and loans
5.1. Content and method of determining the compensation and the shareholding programs
Detailed information about content and method of determining compensation and shareholder programs of the members of the Board
and Executive Management is included in the Compensation Report of the Group. Information about shareholdings of the members
of the Board and Executive Management is included in note 15 of the statutory financial statements of the Company.
5.2. Disclosure of rules in the articles of incorporation regarding compensation of the Board of Directors and of the
Executive Management
For rules in the Articles regarding the approval of compensation by the meeting of shareholders, the supplementary amount for
changes in the Executive Management as well as the general compensation principles, please refer to articles 26–28 of the Articles.
The rules regarding agreements with members of the Board and of the Executive Management in terms of duration and termination,
please refer to article 29 of the Articles. Article 30 of the Articles indicates the rules regarding credits for the members of the Board
and of the Executive Management.
6. Shareholders’ participation rights
6.1. Voting rights restrictions and representation
Voting rights may be exercised only after a shareholder has been recorded in the Company’s share register as a shareholder or
usufructuary with voting rights, subject further the restrictions on transferability set forth in article 5 of the Articles. No exceptions from
these restrictions were granted in 2021. A shareholder may be represented by his legal representative, the independent proxy or by
a duly authorized person who does not need to be a shareholder. Subject to the registration of shares in the share register within the
deadline set from time to time by the Board before shareholders’ meetings, the Articles do not impose any restrictions on the voting
rights of shareholders. Specifically, there is no limitation on the number of voting rights per shareholder. For further information on
the conditions for registration in the share register (including in relation to Nominees) and for attending and voting at a shareholders’
meeting, please refer to the sections “Limitations on transferability of shares and nominee registration” on page 9 above and
“Registration in the share register” on page 17 below.
Page 16 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
Article 13 of the Articles provides the basis for election of the independent proxy. The Articles do not contain any rules on the issue
of instructions to the independent proxy or on the electronic participation in the general meeting of shareholders. The Shareholders’
Meeting of June 16, 2021, re-elected Robert P. Briner as the independent proxy.
Resolutions of shareholders’ meetings generally require the approval of the absolute majority of the votes represented at the
shareholders meeting (more than 50% of the share votes represented at such meeting). Such resolutions include amendments to the
Articles, elections of the members of the Board and statutory and group auditors election of the Chairman of the Board and of the
members of the Compensation Committee, election of the independent proxy, approval of the annual financial statements, setting the
annual dividend, approval of the compensation of the Board and management pursuant to the Articles, decisions to discharge the
members of the Board and management for liability for matters disclosed to the shareholders’ meeting and the ordering of an
independent investigation into specific matters proposed to the shareholders’ meeting.
A resolution passed at a shareholders’ meeting with a qualified majority of at least two-thirds of the votes represented and the absolute
majority of the nominal share capital is required by law for:
– changes to the business purpose;
the creation of shares with privileged voting rights;
–
restrictions on the transferability of registered shares;
–
– an increase of the authorized or conditional share capital;
– an increase in the share capital by way of capitalization of reserves, against contribution in kind, for the acquisition of assets or
involving the grant of special privileges;
the restriction or exclusion of pre-emptive rights of shareholders;
–
– a relocation of the registered office; and
–
the dissolution of the Company.
Special quorum rules apply by law to a merger, demerger, or conversion of the Company. The introduction or abolition of any provision
in the Articles introducing a majority greater than that required by law must be resolved in accordance with such greater majority.
6.2. Statutory quorums
There is no provision in the Articles requiring a majority for shareholders’ resolutions beyond the majority requirements set out by
applicable legal provisions.
6.3. Convocation of the general meeting of shareholders
The shareholders’ meeting is the supreme body of the Company and under Swiss law, the ordinary shareholders’ meeting takes place
annually within six months after the close of the business year. Shareholders’ meetings may be convened by the Board or, if
necessary, by the auditors. Furthermore, the Board is required to convene an extraordinary shareholders’ meeting if so requested in
writing by holders of shares representing at least 10% of the share capital and who submit a petition specifying the item for the agenda
and the proposals.
6.4. Inclusion of items on the agenda
Shareholders representing shares with a nominal value of at least CHF 1,000,000 or 10% of the share capital have the right to request
in writing that an item be included on the agenda of the next shareholders’ meeting, setting forth the item and the proposal. A request
to put an item on the agenda has to be made at least 60 days prior to the meeting. Extraordinary shareholders’ meetings may be
called as often as necessary, in particular in all cases required by law.
A shareholders’ meeting is convened by publishing a notice in the Swiss Official Commercial Gazette (Feuille Officielle Suisse du
Commerce/Schweizerisches Handelsamtsblatt) at least 20 days prior to such meeting. In addition, holders of shares may be informed
by a letter sent to the address indicated in the share register.
6.5. Entries in the share register
The Board determines the relevant deadline for registration in the share register giving the right to attend and to vote at the
shareholders’ meeting. Such deadline is published by Addex on the Company’s website, usually in connection with the publication of
the invitation to the shareholders’ meeting in the Swiss Official Commercial Gazette. The registration deadline for the ordinary
shareholders’ meeting will be determined and communicated prior to the end of May 2022. Addex has not enacted any rules on the
granting of exceptions in relation to these deadlines. No exceptions were granted in 2021, and the Board does not anticipate granting
any exceptions related to the shareholders’ meeting to be held in 2022. For further information on registration in the share register,
please refer to section “Limitations on transferability of shares and nominee registration” on page 9.
7. Changes of control and defense measures
7.1. Duty to make an offer
Swiss law provides for the possibility to have the Articles contain a provision which would eliminate the obligation of an acquirer of
shares, exceeding the threshold of 33 1/3% of the voting rights (whether exercisable or not), to proceed with a public tender offer to
Page 17 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
acquire 100% of the listed equity securities of the Company (opting-out provision pursuant to article 125 para. 3 FMIA or which would
increase such threshold to 49% of the voting rights (opting-up provision pursuant to article 135 para. 1 FMIA).
On March 16, 2018, the EGM resolved a selective opting-out limited to a 5-year period of the mandatory offer rules of article 135 FMIA
based on article 125 para. 3 FMIA by adopting a new article 39 of the Articles (the "Opting-out") in order to facilitate the financing of
the Company by two lead investors, i.e. Growth Equity Opportunities Fund IV, LLC and New Leaf Biopharma Opportunities I, L.P.,
and to provide legal certainty in connection with the possible legal consequences under Swiss takeover law of these investors'
acquisition of newly issued registered shares of the Company for an amount of around CHF 20,000,000 in March 2018. As a result
of the Opting-out, neither Growth Equity Opportunities Fund IV, LLC. or New Leaf Biopharma Opportunities I, L.P., nor their respective
affiliates would have a duty to make a mandatory offer for a period until March 21, 2023 in case any of them would acquire (either
alone or acting in concert pursuant to article 135 FMIA) 33 1/3% or more of the outstanding voting rights of the Company. The
Company's shareholders would be deprived of their right to tender their shares in a mandatory offer triggered by a change of control
over the Company caused by Growth Equity Opportunities Fund IV, LLC and/or New Leaf Biopharma Opportunities I, L.P. and/or
their respective affiliates until March 21, 2023 pursuant to article 135 FMIA.
7.2. Clauses on changes of control
Addex’ equity sharing certificate incentive plan and share option plan contain a provision in respect of changes of Addex shareholder
base. In the event of a change of control over Addex (defined as a change of control event triggering a mandatory public tender offer
according to applicable stock exchange rules) all outstanding unvested share options and subscription rights attached to equity
sharing certificates, vest, and they become exercisable with their remaining term being reduced proportionally.
8. Auditors
8.1. Duration of the mandate and term of office of the lead auditor
Pursuant to article 23 of the Articles and the Organization Rules, the auditor shall be elected every year and may be re-elected. The
statutory and group auditors of Addex Therapeutics is BDO AG, Switzerland since their election during the Annual General Meeting
held on June 9, 2020. Mr Christoph Tschumi acts as lead auditor of Addex since 2020.
8.2. Auditing fees
In 2021, BDO AG charged the Group audit fees in the amount of CHF 258,870.
8.3. Additional fees
In 2021, BDO AG charged the Group additional fees of CHF 82,461 primarily for consents needed for filings in Nasdaq Stock Market.
8.4. Information instruments pertaining to the external audit
The Audit Committee as a committee of the Board reviews and evaluates the performance and independence of the auditor at least
once a year. Based on its review, the Audit Committee recommends to the Board, which external auditor should be proposed for
election at the general meeting of shareholders. The decision regarding this agenda is then taken by the Board. When evaluating the
performance and independence of the auditor, the Audit Committee puts special emphasis on criteria such as global network of the
audit firm, professional competence of the lead audit team, understanding of Addex' specific business risks, personal independence
of the lead auditor and independence of the audit firm as a company and coordination of the auditor with the Audit Committee.
The Audit Committee determines the scope of the external audit and the relevant methodology to be applied to the external audit with
the auditors and discusses the results of the respective audits with the auditor. Representatives of the auditor are regularly invited to
meetings of the Audit Committee, to attend during those agenda points dealing with an accounting, financial reporting or auditing
matters.
The Audit Committee assumes the task of supervising the auditors. The Audit Committee meets with external auditor at least once a
year to discuss the scope and the results of the audit and to assess the quality of their service. The auditor prepares a Board Report
addressed to the Chairman of the Board two times per year, informing them of their audit plan for the year under review followed by
a report detailing the result of their annual audit.
In 2021, the Chairman of the Board or Audit Committee met with the auditors five times to discuss the financial situation of the Group,
the scope and the results of their 2020 year-end audit and their review of the interim reports relating to the published quarterly reports.
In 2021, the Audit Committee of the Board met with the auditors two times to discuss the financial situation of the Group, the scope
and the results of their 2021 year-end audit.
9.
Information policy
Addex is committed to an open and transparent communication with its shareholders, financial analysts, potential investors, the
media, customers, suppliers and other interested parties.
Page 18 of 65
Addex Therapeutics Annual Report 2021│Corporate Governance Report
Addex publishes financial results in the form of an Annual Report and quarterly reports (Interim Reports). In addition, Addex informs
shareholders and the public regarding the Group’s business through press releases, conference calls, as well as roadshows. Where
required by law or Addex’ Articles, publications are made in the Swiss Official Commercial Gazette. The Annual Report, usually
published no later than April of the following year and the Interim Reports, usually published no later than two months after the closing
date, are announced by press release. Annual Reports, Interim Reports and press releases are available on request in printed form
to all registered shareholders and are also made available on the Group’s website. The Group’s website, which is the Group’s
permanent source of information, also provides other information useful to investors and the public, including information on the
Group’s research and development programs as well as contact information. It is the Group’s policy not to release explicit earnings
projections, but it will provide general guidance to enable the investment community and the public to better evaluate the Group and
its prospective business and financial performance. The Board has issued a disclosure policy to ensure that investors will be informed
in compliance with the requirements of the SIX.
Details and information on the business activities, Company structure, financial reports, media releases and investor relations are
available on the Company's website:
https://www.addextherapeutics.com
The official means of publication of the Company is the Swiss Official Gazette of Commerce:
https://www.shab.ch
Web-links regarding the SIX push-/pull-regulations concerning ad hoc publicity issues are:
https://www.addextherapeutics.com/en/investors/ad-hoc-announcements-art-53-lr/
https://www.addextherapeutics.com/en/investors/register-email-news
The financial reports as well as shareholders meeting invitations and results are available under:
https://www.addextherapeutics.com/en/investors/financial-reports/
The Group’s investor relations department is available to respond to shareholders’ or potential investors’ queries under
IR@addextherapeutics.com or via post at Addex Therapeutics Ltd., Investor Relations, C/O Addex Pharma SA, Chemin des Mines
9, CH-1202 Geneva, Switzerland. Additional inquiries may also be made by phone at +41 22 884 1555.
10. Quiet periods
For members of the Board, members of the Executive Management and employees directly reporting to them, including their
respective staff, trading in securities of Addex, including, but not limited to, shares of Addex, options or convertible bonds, or any
other financial instruments whose price is dependent to a degree of more than 25% on such securities of Addex (collectively the
Relevant Securities), is prohibited from trading in any Relevant Securities during the following regular restricted periods, regardless
of whether such member is in possession of insider information or not:
a)
b)
c)
d)
the period starting two (2) weeks prior to the end of any half yearly reporting period of Addex and ending one (1) full trading
day following the respective public release of semi-annual results;
the period starting two (2) weeks prior to the end of any yearly reporting period of Addex and ending one (1) full trading day
following the respective public release of annual results;
the period starting two (2) weeks before any public earnings release of Addex and ending one (1) full trading day following
such public release; and
the period starting four (4) weeks prior to the first public release of an offering memorandum for the issuance of Relevant
Securities and ending one (1) full trading day following such public release.
Members of the Board and the Executive Management and employees directly reporting to them may only deal in Relevant Securities
if they obtained clearance in advance from the Chief Financial Officer.
11. Ethical business conduct
The Group is committed to the highest standards of ethical conduct. As a pharmaceutical business, the Group is operating in a highly
regulated business environment. Strict compliance with all legal and health authority requirements, as well as requirements of other
regulators, is mandatory. The Group expects its employees, contractors and agents to observe the highest standards of integrity in
the conduct of the Group’s business. The Code of Conduct sets forth the Group’s policy embodying the highest standards of business
ethics and integrity required of all directors, executives, employees and agents when conducting business affairs on behalf of the
Group. The Group is committed to complying with the spirit and letter of all applicable laws and regulations where the Group engages
in business.
Page 19 of 65
Addex Therapeutics Annual Report 2021 │Compensation Report
Compensation Report
Overview
This Compensation Report provides the information required by the federal Ordinance against excessive compensation in listed
companies ("Compensation Ordinance") (effective as of January 1, 2014). It also includes information required by section 5 of the
Annex to the Directive on Information relating to Corporate Governance of the SIX Swiss Exchange (effective date January 2, 2020,
amended on October 1, 2021) and the Swiss Code of Best Practice for Corporate Governance (status August 28, 2014).
Addex' Articles, Organization Rules and policies provided the basis for the principles of compensation.
Review and approval process
The Board reviews compensation of its members and members of the Executive Management annually in accordance with the
Company’s Compensation Policy. In its review process the Board considers compensation packages of other companies in the
biotech and pharmaceutical industry in Switzerland and Europe that are comparable to Addex with respect to size or business model,
the professional experience and areas of responsibility of the respective members. The Board of Directors may also consult relevant
compensation surveys and bench marking reports. Based on its review, the Board of Directors submits two proposals for approval at
the shareholders meeting: (i) the maximum aggregate amount of fixed and variable compensation for the Board of Directors for the
prospective period from one ordinary general meeting of shareholders to the following ordinary general meeting of shareholders; and
(ii) the maximum aggregate amount of fixed and variable compensation for the Executive Management for the period from January 1
to December 31 of the next financial year. Approval of these proposals requires an absolute majority (more than 50% of the share
votes represented at the shareholders meeting).
Compensation elements for the Board of Directors and Executive Management
Board of Directors
The compensation of the member of the Board consists of fixed and variable elements. The fixed element comprises a fixed annual
monetary compensation per board term from one general meeting of shareholders to the next. The variable element comprises a
monetary compensation based on board meeting attendance and equity incentive units (share options and equity sharing certificates).
Social security contributions of the Company are accrued on the fixed and variable elements. Board member social security
contributions are accrued on the fair value of equity incentive units. Equity incentive units are granted based on the discretion of the
Board. In addition, the Company reimburses members of the Board for out-of-pocket expenses incurred in relation to their services
on an on-going basis upon presentation of the corresponding receipts. The most recent review of compensation for members of the
Board took place in May 2021. For further information on the compensation for members of the Board, please refer to the section
“Compensation of the Board in 2021" on page 21.
Executive Management
The compensation of members of the Executive Management consists of fixed and variable elements. The fixed element may include
a base salary or a cash retainer paid under a consulting contract. The variable element may include performance-related cash or
share based bonuses, consulting fees based on chargeable hours and equity incentive units (equity sharing certificates and share
options). Company contributions to pension plans, death and invalidity insurances and social security contributions are accrued on
all fixed and variable element compensation that relates to an employment relationship. Company social security contributions are
accrued for all shares or equity incentive unit compensation. The amount of the fixed element depends on the position, responsibilities,
experience and skills, and takes into account individual performance. The fixed element is reviewed at the end of each year by the
Board. Any changes in the fixed elements are made effective in January of the following year. The variable elements are based on
individual and company performance. The potential variable cash bonus is determined in the employment contract and in general is
a percentage of the base salary. Where the Executive Manager has been engaged under a consulting contract, the variable element
is based on the time spent at the contractually defined rate of remuneration. At the beginning of each year the Board decides, on the
total amount of variable elements including the amount of cash and equity incentive units to be granted for the previous year based
on the achievement of Company goals. Equity incentive units are granted based on the discretion of the Board. Variable cash
compensation paid to Executive Managers in 2021 includes bonus and consulting fees.
Equity incentive plans
The purpose of the Company’s share purchase, share option and equity sharing certificate programs (refer to note 14 of the
consolidated financial statements) is to provide members of the Board, Executive Management, employees and certain consultants
with an opportunity to benefit from the potential appreciation in the value of the Company’s shares, thus providing an increased
incentive for participants to contribute to the future success and prosperity of the Company, enhancing the value of the shares for the
benefit of the shareholders of the Company and increasing the ability of the Company to attract and retain individuals of exceptional
skill. In addition, these plans provide the Company with a mechanism to engage services for non-cash consideration. The grant of
any share option or equity sharing certificate is at the discretion of the Board. Key factors considered by the Board in making grants
of share options or equity sharing certificates are the amount of shareholder approved conditional capital, the benchmarking with
Page 20 of 65
Addex Therapeutics Annual Report 2021 │Compensation Report
other companies as well as individual performance. The strike price is determined by the Board and is primarily based on the closing
price of the Company’s shares on the SIX Swiss Exchange on the grant date. The transfer of treasury shares under the share purchase
plan to settle consulting services are based on predefined terms of the consulting contract.
Indirect benefits
The Company may contribute to the pension plan and maintains certain insurance for death and invalidity for the members of the
Executive Management. New entrants may be eligible for reimbursement of relocation costs, compensation for lost benefits or stock
granted by a previous employer, international school for children or language courses for a limited time period. No Indirect benefits
have been paid to Executive Management in 2021.
The Company has not granted any loans, credits or guarantees to members of the Board or of the Executive Management in 2021.
Compensation for the financial year under review (audited)
Measurement basis for compensation
Fixed cash compensation, variable cash compensation and shares acquired under the share purchase plan: accrual basis;
The measurement basis for each component of compensation is described below:
Equity incentive units: fair value at the grant date in accordance with IFRS 2 valuation methodology; and
Employers’ social security: accrual basis except for equity incentive units where the notional amount is calculated based on the
fair value at grant date.
Compensation of the Board of Directors in 2021 and 2020
2021
Fixed
Variable compensation
CHF
Vincent Lawton, chairman..……………..
Raymond Hill, member…………………..
Tim Dyer, member………...……………..
Roger Mills, member……….……………
Jake Nunn, member………………...…...
Isaac Manke, member…………...………
Total……………………………………….
cash
compensation
26,590
15,954
-
-
13,295
13,295
69,134
cash
attendance
26,590
15,954
-
-
13,295
13,295
69,134
number of
equity
incentive
units(1)
70,000
40,000
-
-
30,000
30,000
170,000
(1) Equity incentive units include share options granted under the Company’s share option plan (refer to note 14 of the consolidated financial statements).
2020
Fixed
Variable compensation
CHF
Vincent Lawton, chairman..……………..
Raymond Hill, member…………………..
Tim Dyer, member………...……………..
Roger Mills, member……….……………
Jake Nunn, member………………...…...
Isaac Manke, member…………...………
Total……………………………………….
cash
compensation
26,590
15,954
-
-
13,295
13,295
69,134
cash
attendance
26,590
15,954
-
-
13,295
13,295
69,134
number of
equity
incentive
units(1)
70,000
40,000
-
-
30,000
30,000
170,000
(1) Equity incentive units include share options granted under the Company’s share option plan (refer to note 14 of the consolidated financial statements).
value of
equity
incentive
units(1)
54,129
30,931
-
-
23,198
23,198
131,456
value of
equity
incentive
units(1)
32,814
18,751
-
-
14,063
14,063
79,691
Total
2021
107,309
62,839
-
-
49,788
49,788
269,724
Total
2020
85,994
50,659
-
-
40,653
40,653
217,959
Page 21 of 65
Addex Therapeutics Annual Report 2021 │Compensation Report
Compensation to the Executive Management in 2021 and 2020
2021
Fixed
Variable compensation
CHF
Total Executive Management (1)….…..
cash
compensation
1,082,184
Cash(3)
414,313
number of
equity
incentive
units (2)
1,410,638
value of
shares(2)
1,157,969
Total
2021
2,654,466
(1) The highest paid member of Executive Management in 2021 was the CEO, Tim Dyer, who received CHF 457,717 of fixed cash compensation, CHF 130,725 of variable cash compensation and
700,000 equity incentive units. The value of equity incentive units including accrued social charges amounted to CHF 569,990.
(2) Equity incentive units include shares awarded for consulting services under the share purchase plan and share options granted under the Company’s share option plan.
(3) Variable compensation in cash relates to bonuses and compensation paid to Executive Managers engaged under consulting contracts which include hourly and daily rates with a monthly cap.
2020
Fixed
Variable compensation
CHF
Total Executive Management (1)….…..
cash
compensation
966,148
Cash(3)
368,020
number of
equity
incentive
units (2)
1,007,682
value of
shares(2)
664,928
Total
2020
1,999,096
(1) The highest paid member of Executive Management in 2020 was the CEO, Tim Dyer, who received CHF 454,442 of fixed cash compensation, CHF 121,611 of variable cash compensation and
698,011 equity incentive units. The value of equity incentive units including accrued social charges amounted to CHF 341,087.
(2) Equity incentive units include shares awarded for consulting services under the share purchase plan and share options granted under the Company’s share option plan.
(3) Variable compensation in cash relates to bonuses and compensation paid to Executive Managers engaged under consulting contracts which include hourly and daily rates with a monthly cap.
Page 22 of 65
Addex Therapeutics Annual Report 2021 │Compensation Report
Phone +41 22 322 24 24
Fax
+41 22 322 24 00
www.bdo.ch
BDO AG
Rte de Meyrin 123
Case postale 150
1215 Genève 15
REPORT OF THE STATUTORY AUDITOR ON THE COMPENSATION REPORT
To the General Meeting of
Addex Therapeutics Ltd, Geneva
We have audited the compensation report (annual report pages 20 to 22) of Addex Therapeutics Ltd for the year ended 31 December
2021. The audit was limited to the information provided under articles 14 –16 of the Ordinance against Excessive Compensation
with respect to Listed Stock Companies (the Ordinance).
Responsibility of the Board of Directors
The Board of Directors is responsible for the preparation and overall fair presentation of the compensation report in accordance
with Swiss law and the Ordinance against Excessive Compensation with respect to Listed Stock Companies. The Board of Directors
is also responsible for designing the compensation system and defining individual compensation packages.
Auditor's responsibility
Our responsibility is to express an opinion on the accompanying compensation report. We conducted our audit in accordance with
Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the compensation report complies with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the compensation report with regard
to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatements in the compensation report, whether due to
fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components of compensation,
as well as assessing the overall presentation of the compensation report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the compensation report of Addex Therapeutics Ltd for the year ended 31 December 2021 complies with Swiss law
and articles 14 – 16 of the Ordinance.
Geneva, 10 March 2022
BDO Ltd
Nigel Le Masurier
Christoph Tschumi
Licensed Audit Expert
Licensed Audit Expert
(Auditor in Charge)
Page 23 of 65
Addex Therapeutics Annual Report 2021 │Consolidated Financial Statements
Consolidated Financial Statements of Addex
Therapeutics Ltd as at December 31, 2021
Page 24 of 65
Addex Therapeutics Annual Report 2021 │Consolidated Financial Statements
Consolidated Balance Sheets
as at December 31, 2021 and December 31, 2020
ASSETS
Notes
December 31,
2021
December 31,
2020
Amounts in Swiss francs
Current assets
Cash and cash equivalents………………………………..…………….......
Other financial assets………………………………………………………...
Trade and other receivables…………………………….……………………
Contract asset…………………………...…………………….………………
Prepayments and deferred costs……...…………………….………………
Total current assets…………………………………………………………
Non-current assets
Right-of-use assets…………..……………………………………………….
Property, plant and equipment………………………………………………
Non-current financial assets…………………………………………………
Total non-current assets…………………………………………………...
6
7
7
7
7
8
9
10
20,484,836
17,145
164,785
159,636
1,115,374
21,941,776
469,989
72,111
57,908
600,008
18,695,040
64,930
68,373
-
661,221
19,489,564
565,344
67,760
59,144
692,248
Total assets…………………………………………...................................
22,541,784
20,181,812
LIABILITIES AND EQUITY
Current liabilities
Current lease liabilities……………………………………………………….
Payables and accruals……………………………………………………….
Contract liability ………………………………………………………………
Deferred income………………………………………………………………
Total current liabilities……………………………………………………...
Non-current liabilities
Non-current lease liabilities…………………………………………………..
Retirement benefits obligations……………………………………………...
Total non-current liabilities………………………...................................
Equity
Share capital…………………………………………………………….........
Share premium……………………………………………………………......
Treasury shares reserve……………………………………………………..
Other reserves……..………………………………………………………….
Accumulated deficit…………………………………………………………...
Total equity………………………………………………............................
3.2
11
15
12
3.2
20
13
13
287,698
3,847,145
-
-
4,134,843
194,316
1,281,525
1,475,841
308,611
2,491,927
733,668
86,481
3,620,687
258,785
1,692,537
1,951,322
49,272,952
283,981,361
(11,703,279)
24,437,868
(329,057,802)
16,931,100
32,848,635
286,888,354
(6,078,935)
14,657,637
(313,705,888)
14,609,803
Total liabilities and equity………………………..………........................
22,541,784
20,181,812
The accompanying notes form an integral part of these consolidated financial statements.
Page 25 of 65
Addex Therapeutics Annual Report 2021 │Consolidated Financial Statements
Consolidated Statements of Comprehensive Loss
for the years ended December 31, 2021 and 2020
Notes
December 31,
December 31,
2021
2020
Amounts in Swiss francs
Revenue from contract with customer…………………………………
Other income………………………………………………………………..
15
16
2,916,308
236,997
3,612,819
266,324
Operating costs
Research and development...……………………………………..............
General and administration….……………………………………………..
Total operating costs…………………………………….........................
Operating loss……………………………………………………..............
Finance income………………………………………………………………
Finance expense…………………………………………………………….
Finance result…………………………………….....................................
Net loss before tax…………………………………….............................
Income tax expense…………………..……...……………………………..
Net loss for the year...…………………………………………................
Basic and diluted loss per share for loss attributable to the
ordinary equity holders of the Company………………………………
Other comprehensive income/(loss)
Items that will never be reclassified to profit and loss:
Remeasurements of retirement benefits obligation.………………...…...
Items that may be classified subsequently to profit and loss:
Exchange difference on translation of foreign operations……………….
Other comprehensive income/(loss) for the year, net of tax..….....
17
21
19
22
20
(12,840,540)
(5,818,682)
(18,659,222)
(10,373,200)
(5,749,217)
(16,122,417)
(15,505,917)
(12,243,274)
217,015
(63,012)
154,003
(15,351,914)
-
(15,351,914)
35,304
(650,629)
(615,325)
(12,858,599)
-
(12,858,599)
(0.45)
(0.48)
260,548
(295)
260,253
(233,529)
(4,069)
(237,598)
Total comprehensive loss for the year…………………………………
(15,091,661)
(13,096,197)
The accompanying notes form an integral part of these consolidated financial statements.
Page 26 of 65
Addex Therapeutics Annual Report 2021 │Consolidated Financial Statements
Consolidated Statements of Changes in Equity
for the years ended December 31, 2021 and 2020
Notes
Share Capital
Share
Premium
Treasury
Shares
Reserve
Foreign
Currency
Translation
Reserve
Other
Reserves
Accumulated
Deficit
Total
Balance as of
January 1, 2020.....
Net loss for the
year………………...
Other comprehensive
loss for the year…...
Total comprehensive
loss for the year....
Value of share-based
services..........….....
Movement in treasury
shares:
Settlement of supplier
invoices..................
Net purchases under
liquidity agreement..
Other net sales of
14
13
treasury shares……
13
Balance as of
January 1, 2021.....
Net loss for the
year……...…...……
Other comprehensive
income for the year.
Total comprehensive
loss for the year....
Issue of shares-third
Cost of share capital
issuance…………...
Sales under shelf-
registration………… 13
Related costs of sales
shelf- registration…..
Sale of pre-funded
warrants……………
13
13
14
13
Cost of pre-funded
warrants sold….…..
Value of warrants and
pre-funded warrants.
Value of share-based
services.....………...
Other movements in
treasury shares:
Settlement of supplier
invoices..……….....
Net purchases under
liquidity agreement..
Other net sales of
treasury shares...…
Balance as of
December 31, 2021
32,848,635
286,375,977
(6,572,316)
(653,161)
14,371,983
(300,847,289)
25,523,829
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78,555
17,772
416,050
207,190
(46,809)
333,000
-
-
(12,858,599)
(12,858,599)
(4,069)
(233,529)
-
(237,598)
(4,069)
(233,529)
(12,858,599)
(13,096,197)
-
-
-
-
1,176,413
-
-
-
-
-
-
-
1,176,413
285,745
(29,037)
749,050
32,848,635
286,888,354
(6,078,935)
(657,230)
15,314,867
(313,705,888)
14,609,803
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,865,475)
-
3,882
3,759,402
(581,800)
-
-
(3,720,491)
-
-
-
-
-
-
48,066
116,914
(31,502)
(16,283)
41,004
39,940
-
(295)
(295)
-
(15,351,914)
(15,351,914)
260,548
-
260,253
260,548
(15,351,914)
(15,091,661)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,470,141
(848,998)
3,720,491
1,178,344
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,099,323
-
(1,865,475)
3,763,284
(581,800)
5,470,141
(848,998)
-
1,178,344
164,980
(47,785)
80,944
49,272,952
283,981,361
(11,703,279)
(657,525)
25,095,393
(329,057,802)
16,931,100
parties……………...
13
6,900,000
3,199,323
Issue of treasury
shares……………...
13
9,524,317
-
(9,524,317)
The accompanying notes form an integral part of these consolidated financial statements.
Page 27 of 65
Addex Therapeutics Annual Report 2021 │Consolidated Financial Statements
Consolidated Statements of Cash Flows
for the years ended December 31, 2021 and 2020
Notes
December 31,
December 31,
2021
2020
Amounts in Swiss francs
Net loss for the year...………………………………………………………...
Adjustments for:
Depreciation………………….............................................................
Disposal of right-of-use assets…………………………………………
Value of share-based services..……………………………….............
Post-employment benefits……………...............................................
Finance cost/(income) net ....,……….………………………………….
8/9
14
20
Decrease/(increase) in other financial assets…………………………….
Decrease/(increase) in trade and other receivables………………..………
Increase in contract asset...…………………………………………………..
Decrease/(increase) in prepayments…….…………………..……………..
(Decrease)/increase in payables and accruals…………………………....
Decrease in contract liability…………………...……………………………..
Decrease in deferred income………………………………….....................
Services paid in shares……………………………………………………….
Net cash used in operating activities….……………………………..….
Cash flows from investing activities
Purchase of property, plant and equipment….….……………………........
Proceeds from decrease in non-current financial assets…………..……...
Net cash used in investing activities…………………………………….
Cash flows from financing activities
Proceeds from capital increase…………………………………………...….
Costs / deferred costs paid on issue of shares…………………………….
Proceeds from sale of treasury shares…………………………….……….
Costs paid on sales of treasury shares………………………………………
Proceeds from sale of pre-funded warrants….……....………..……………
Costs paid on sale of pre-funded warrants……………………………….
Principal element of lease payment..………..………………………………
Interests received……………………………………………………………..
Interests paid………………………………………………………………......
Net cash from financing activities…………...........................................
13
9
10
21
(15,351,914)
(12,858,599)
347,613
(127)
1,178,344
(150,464)
(132,050)
47,785
(96,412)
(159,636)
(616,992)
883,837
(733,668)
(86,481)
164,980
(14,705,185)
(31,549)
1,236
(30,313)
10,161,746
(1,698,782)
3,796,443
(390,189)
5,470,141
(569,228)
(309,617)
5,322
(63,012)
16,402,824
378,754
(4,992)
1,176,413
(22,730)
686,886
(50,962)
49,655
-
221,680
(1,585,550)
(212,069)
(244,298)
285,745
(12,180,067)
(59,414)
-
(59,414)
-
(272,005)
720,013
-
-
-
(367,412)
35,305
(69,502)
46,399
Increase/(decrease) in cash and cash equivalents……………………..
1,667,326
(12,193,082)
Cash and cash equivalents at beginning of the year...…………………....
Exchange difference on cash and cash equivalents………………….......
Cash and cash equivalents at end of the year………..........................
6
6
18,695,040
122,470
20,484,836
31,536,803
(648,681)
18,695,040
The accompanying notes form an integral part of these consolidated financial statements.
Page 28 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
Notes to the Consolidated Financial Statements
for the years ended December 31, 2021 and 2020
(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 consolidated financial statements have been approved for issuance by the Board of Directors on March 9, 2022.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of Addex Therapeutics Ltd have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (“IASB”), and under the historical cost
convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree
of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are
disclosed in note 4 “Critical accounting estimates and judgements”.
Due to rounding, numbers presented throughout these 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.
Where necessary, comparative figures have been revised to conform with the current year 2021 presentation.
2.2 Standards and interpretations published by the IASB
New and amended standards adopted by the Group
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 financial statements.
New standards and interpretations not yet adopted by the Group
The Group is currently assessing the potential impacts of the various new and revised standards and interpretations that will be
mandatory from January 1, 2022 which the Group has not yet applied. Based on an analysis to date, the Group does not anticipate
that these will have a material impact on the Group’s overall results and financial position. The Group is also assessing other new
and revised standards which are not mandatory until after 2022.
2.3 Consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The Company currently consolidates the financial operations of its three fully-owned subsidiaries, Addex Pharma SA, which is
registered in Plan-Les-Ouates, Switzerland, Addex Pharmaceuticals Inc., which is registered in Delaware, United States with its
Page 29 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
principal business location in San Francisco, United States and Addex Pharmaceuticals France SAS which is registered in Archamps,
France.
Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized
losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The reporting date
of all Group companies is December 31.
2.4 Segment reporting
The Group operates in one segment, which is the discovery, development and commercialization of small-molecule pharmaceutical
products. A single management team that reports to the chief executive officer comprehensively manages the entire business. The
chief operating decision-maker is the Chief Executive Officer who reviews the statement of operations of the Group on a consolidated
basis, makes decisions and manages the operations of the Group as a single operating segment. The Group’s activities are not
affected by any significant seasonal effect. Revenue is attributable to the Company’s country of domicile, Switzerland.
2.5 Foreign currency transactions
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic
environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in Swiss
francs, which is the Group’s presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognized in the statement of comprehensive loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of
comprehensive loss within ‘finance cost’.
Group companies
The results and financial position of the Group's subsidiary that has a functional currency different from the presentation currency are
translated into the presentation currency as follows:
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each statement of comprehensive loss are translated at the average exchange rate; and
all resulting exchange differences are recognized in other comprehensive loss.
2.6 Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation, and impairment (if any). Historical cost
includes expenditure that is directly attributable to the acquisition of the item. Subsequent costs are included in the asset's carrying
amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the
statement of comprehensive loss during the financial period in which they are incurred. Depreciation is calculated using the straight-
line method to allocate their cost to their residual values over their estimated useful lives as follows:
Computer equipment
Laboratory equipment
Furniture and fixtures
Chemical library
3 years
4 years
5 years
5 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying
amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable
amount (see note 2.7). Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are
included in the statement of comprehensive loss.
2.7 Impairment of non-financial assets
Assets that are subject to depreciation or amortization are reviewed for impairment annually, and whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which
the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs
to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash generating units). Prior impairment of non-financial assets other than goodwill is reviewed for
possible reversal at each reporting date.
Page 30 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
2.8 Financial assets
The Group has one category of financial assets, namely “trade and other receivables”. Trade and other receivables are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market. These assets are held for collection of
contractual cash flows which represent solely the payment of principal and interest. They arise when the Group provides money,
goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for
maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. Trade and other
receivables are included in other current assets in the balance sheet (see note 7).
Trade and other receivables are initially measured at fair value and subsequently measured at amortized cost. The amortized cost of
a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the
cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount,
adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortized cost of a financial asset before
adjusting for any loss allowance. Trade and other receivables are derecognized when settled.
The Company classifies a contract asset as a receivable when the Company’s right to consideration is unconditional. If the Company
transfers control of goods or services to a customer before the customer pays consideration, the Company records either a contract
asset or a receivable depending on the nature of the Company’s right to consideration for its performance. Contract assets and
contract liabilities arising from the same contract are netted and presented as either a single net contract asset or net contract liability.
Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on trade and other receivables, contract assets and security rental
deposits that are measured at amortized cost. The amount of expected credit losses is updated at each reporting date to reflect
changes in credit risk since initial recognition of the respective financial instrument.
The Group always recognizes lifetime expected credit losses (“ECL”) for trade and other receivables and contract assets where
applicable. The ECL on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss
experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current
as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
Lifetime ECL represents the ECL that will result from all possible default events over the expected life of a financial instrument. In
contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument
that are possible within 12 months after the reporting date.
2.9 Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with
original maturities of three months or less. They are both readily convertible to known amounts of cash and so near their maturity that
they present insignificant risk of changes in value because of changes in interest rates. Any bank overdrafts are not netted against
cash and cash equivalents but are shown as part of current liabilities on the consolidated balance sheet.
2.10 Share capital
Shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown as a deduction, net of
tax, from the proceeds.
Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any
directly attributable incremental cost (net of income taxes) is recorded as a deduction from equity attributable to the Company's equity
holders as a treasury share reserve until the shares are cancelled, reissued or disposed of. When such shares are subsequently sold
or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effect,
the nominal amount is reversed from the treasury share reserve, with any remaining difference to the total transaction value being
recognized in share premium.
The Company has entered into a liquidity contract where an independent broker buys and sells the Company’s shares held in the
broker’s custody. Such shares are presented in the treasury share reserve with all the other treasury shares directly held by Addex
Pharma SA.
The Company also uses treasury shares to partially settle services rendered by third and related parties. When shares are issued for
this purpose, the nominal share value is recognized as a treasury share reserve and the value above par is presented as a share
premium.
2.11 Equity instruments
Equity instruments issued by the Group are recorded at the fair value of the proceeds received, net of direct issuance costs.
Page 31 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
2.12 Trade payables
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
All payables have a contract maturity within 1 year.
2.13 Grants
Grants are not recognized until there is reasonable assurance that the Group will comply with the terms and conditions of the grant
and that the grants will be received. Grants are recognized as other income in the statement of comprehensive loss on a systematic
basis over the periods in which the Group recognizes as expenses the related costs for which the grant is intended to compensate.
Specifically, grants whose primary conditions is that the Group should undertake specific research activities within a defined period
of time, are recognized as deferred income in the consolidated statement of financial position and transferred to the statement of
comprehensive loss on a systematic and rationale basis over the defined timeframe.
2.14 Deferred income tax
Deferred income tax is recorded in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax arises from
initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates and laws that
have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income
tax asset is realized, or the deferred income tax liability is settled.
Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilized.
Deferred income tax is recorded on temporary differences arising on investments in subsidiaries, except where the Group deems it
probable that the temporary difference will not reverse in the foreseeable future.
Potential deferred income tax assets from tax loss carry forwards exceed deferred tax liabilities. Deferred income tax assets from tax
loss carry forwards are initially recognized to the extent that there are suitable deferred income tax liabilities, then to the extent that
the realization of the related tax benefit through future taxable profits is probable.
2.15 Pension obligations
The Group operates one pension scheme. The scheme is generally funded through payments to insurance companies or trustee-
administered funds, determined by periodic actuarial calculations. The Group has defined benefit plans. A defined benefit plan is a
pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or
more factors such as age, years of service and compensation. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are recognized immediately in other comprehensive loss and past-service costs are recognized
immediately in the statement of comprehensive loss.
The liability recognized in the balance sheet in respect of defined benefit pension plans is the defined benefit obligation at the balance
sheet date minus the fair value of the plan assets. The defined benefit obligation is calculated at least annually by an independent
actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the
estimated future cash outflows using 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 to the terms of the related pension liability.
2.16 Share-based compensation
The Group operates an equity sharing certificates’ equity incentive plan, a share option plan, and a share purchase plan. The Group
also from time-to-time grants warrants to brokers and investors. The fair value of the services received in exchange for the grant or
transfer of equity sharing certificates, options, shares or warrants is recognized in the consolidated financial statements over the
period for which the services are received. The total amount to be recognized over the vesting period is determined by reference to
the fair value of the equity incentive unit granted or transferred. The fair value of instruments granted includes any market performance
conditions and excludes the impact of any service and non-market performance vesting conditions. Service and non-market
performance conditions are included in assumptions about the number of equity incentive units that are expected to vest. At each
balance sheet date, the Group revises its estimates for the number of equity incentive units that are expected to vest. It recognizes
the impact of the revision to original estimates, if any, in the statement of comprehensive loss, with a corresponding adjustment to
equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share
premium when the equity incentive units are exercised.
Page 32 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
2.17 Revenue recognition
The Group recognizes revenue from the license of intellectual property and providing research and development services:
License of intellectual property
If the license to the Group’s intellectual property is determined to be distinct from the other performance obligations identified in the
arrangement, the Group recognizes revenues when the license conveys a right of use, or there is a right of access to the underlying
intellectual property. For licenses that are sold in conjunction with a related service, the Group uses judgment to assess the nature of
the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point
in time. If the performance obligation is settled over time, the Group determines the appropriate method of measuring progress for
purposes of recognizing license revenue. The Group evaluates the measure of progress each reporting period and, if necessary,
adjusts the measure of performance and related revenue recognition.
Research and development services
The Group has an arrangement with its partner that includes deploying its employees for research and development activities. The
Group assesses if these research and development activities are considered distinct in the context of the respective contract and, if
so, they are accounted for as a separate performance obligation. This revenue is calculated based on the costs incurred (input
method) in accordance with the respective contract, and recorded within “Revenue from contract with customer” over time as the
activities are performed.
Contract balances
The Group receives payments and determines credit terms from its customers for its various performance obligations based on billing
schedules established in each contract. The actual timing of the income recognition, billings and cash collections may result in other
current receivables, accrued revenue (contract assets), and (contract liabilities) being recorded on the balance sheets. Amounts are
recorded as other current receivables when the Group’s right to consideration is unconditional. The Group does not assess whether
a contract has a significant financing component if the expectation at contract inception is such that the period between payment by
the customer and the transfer of the promised goods or services to the customer will be one year or less.
Under IFRS 15, the Group recognizes as revenue its non-refundable license fees, milestone, research activities and royalties when
its customer obtains control of promised services, in an amount that reflects the consideration which the Group expects to receive in
exchange for those rendered services. To assess revenue recognition for arrangements that the Group determines are within the
scope of IFRS 15, the Group performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance
obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the
contract; and (v) recognize revenue when (or as) the Group satisfies a performance obligation. The Group only applies the five-step
model to contracts when it is probable that the Group will collect the consideration it is entitled to in exchange for services it transfers
to the customer. At contract inception, once the contract is determined to be within the scope of IFRS 15, the Group assesses the
services promised within each contract and determine those that are performance obligations and assess whether each promised
service is distinct. The Group uses the most likely method to estimate any variable consideration and include such consideration in
the amount of the transaction price based on an estimated stand-alone selling price. Revenue is recognized for the respective
performance obligation when (or as) the performance obligation is satisfied.
2.18 Finance income and expense
Interest received or paid on cash and cash equivalents are classified in the statement of cash flows under financing activities.
2.19 Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognizes a right-of-use asset
and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined
as leases with a lease term of 12 months or less) and leases of low value assets (less than USD 5 thousand). For these leases, the
Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments as from the commencement date of the lease until
the expected termination date. In determining the lease term, management consider all facts and circumstances that create an
economic incentive to exercise an extension option, or not to exercise a termination option. Extension option are only considered if
the lease is reasonably certain to be extended. The assessment of reasonable certainty is only revised if a significant event or a
significant change in circumstances, that is within the control of the lessees, occurs. The lease payments are discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate, being the rate that
the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in
a similar economic environment with similar terms, security and conditions. The lease liability is presented as a separate line in the
consolidated statement of financial position. The interest expense is presented in the line finance expenses in the consolidated
statement of comprehensive loss.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses. They are depreciated over the shorter period of lease term and useful life of the
underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group
Page 33 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The
depreciation starts at the commencement date of the lease. The right-of-use assets are presented as a separate line in the
consolidated statement of financial position.
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the
modification:
if the renegotiation results in one or more additional assets being leased for an amount commensurate with the standalone price
for the additional rights-of-use obtained, the modification is accounted for as a separate lease;
in all other cases where the renegotiated increases the scope of the lease (whether that is an extension to the lease term, or one
or more additional assets being leased), the lease liability is remeasured using the discount rate applicable on the modification
date, with the right-of-use asset being adjusted by the same amount;
if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right-of-use
asset are reduced by the same proportion to reflect the partial of full termination of the lease with any difference recognized in the
statement of comprehensive loss. The lease liability is then further adjusted to ensure its carrying amount reflects the amount of
the renegotiated payments over the renegotiated term, with the modified lease payments discounted at the rate applicable on the
modification date. The right-of-use asset is adjusted by the same amount.
All lease payments on leases are presented as part of the cash flow from financing activities, except for the short-term and low value
leases cash flows, which are booked under operating activities.
2.20 Research and development
Research and development costs are expensed as incurred. Costs incurred on development projects are recognized as intangible
assets when the following criteria are fulfilled:
it is technically feasible to complete the intangible asset so that it will be available for use or sale;
management intends to complete the intangible asset and use or sell it;
there is an ability to use or sell the intangible asset;
it can be demonstrated how the intangible asset will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are
available; and
the expenditure attributable to the intangible asset during its development can be reliably measured.
In the opinion of management, due to uncertainties inherent in the development of the Group's products, the criteria for development
costs to be recognized as an asset, as prescribed by IAS 38, “Intangible Assets”, are not met.
3. Financial risk management
3.1 Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk, credit risk, liquidity risk and capital risk. The Group's overall
risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the
Group's financial performance. Risk management is carried out by the Group's finance department (Group Finance) under the policies
approved by the Board. Group Finance identifies, evaluates and in some instances economically hedges financial risks in close co-
operation with the Group's operating units. The Board provides written guidance for overall risk management, as well as written
policies covering specific areas, such as foreign exchange risk, interest-rate risk, use of derivative financial instruments and non-
derivative financial instruments, credit risk and investing excess liquidity.
Market risk and foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various exposures with respect to the Euro,
US dollar and UK pound. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net
investments in foreign operations. To manage foreign exchange risk Group Finance maintains foreign currency cash balances to
cover anticipated future requirements. The Group's risk management policy is to economically hedge 50% to 100% of anticipated
transactions in each major currency for the subsequent 12 months. The Group has a subsidiary in France and in United States of
America, whose net assets are exposed to foreign currency translation risk. In 2021, a 10% increase or decrease in the EUR/CHF
exchange rate would have resulted in a CHF 7,948 increase or decrease in net loss and shareholders’ equity as at December 31,
2021 (2020: a CHF 4,064 decrease or increase) , a 10% increase or decrease in the GBP/CHF exchange rate would have resulted
in a CHF 17,893 (2020: CHF 14,723) decrease or increase in net loss and shareholders’ equity as at December 31, 2021 and a 10%
increase or decrease in the USD/CHF exchange rate would have resulted in a CHF 1,027,027 (2020: CHF 644,865) increase or
decrease in net loss and shareholders’ equity as at December 31, 2021. The Group is not exposed to equity price risk or commodity
price risk as it does not invest in these classes of investment.
Interest rate risk
The Group’s exposure to interest rate fluctuations is limited because the Group has no interest-bearing indebtedness. The Company’s
Swiss francs cash holdings are subject to negative interest rates at certain thresholds defined by its bank counterparties. A 10%
increase or decrease in the interest rates charged by the counterparties would not have had a material impact on the net loss for the
period.
Page 34 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with banks, as well as credit
exposures to collaboration partners. The Group has a limited number of collaboration partners and consequently has a significant
concentration of credit risk. The Group has policies in place to ensure that credit exposure is kept to a minimum and significant
concentrations of credit risk are only granted for short periods of time to high credit quality partners. The Group's policy is to invest
funds in low-risk investments including interest bearing deposits. For banks and financial institutions, only independently rated parties
with a minimum rating of “A” are accepted (see note 6).
Liquidity risk
The Group's principal source of liquidity is its cash reserves which are obtained through the sale of new shares and to a lesser extent
the sale of its research and development stage products. Group Finance monitors rolling forecasts of the Group’s liquidity
requirements to ensure it has sufficient cash to meet operational needs. The ability of the Group to maintain adequate cash reserves
to sustain its activities in the medium term is highly dependent on the Group's ability to raise further funds from the licensing of its
development stage products and the sale of new shares. Consequently, the Group is exposed to significant liquidity risk (see note 4).
3.2 Capital risk management
The Group is not regulated and not subject to specific capital requirements. The amount of equity depends on the Group’s funding
needs and statutory capital requirements. The Group monitors capital periodically on an interim and annual basis. From time to time,
the Group may take appropriate measures or propose capital increases to its shareholders to ensure the necessary capital remains
intact. The Group did not have any short-term or long-term debt outstanding as of December 31, 2021 and 2020.
The ability of the Group to maintain adequate cash reserves to continue its activities in the medium term is subject to risk as it is
highly dependent on the Group’s ability to raise further funds from the sale of new shares.
The Group’s objectives when managing capital based on its net debt are to safeguard the Group’s ability to continue as a going
concern in order to ensure the financing of successful research and development activities so that future profits can be generated
and to maintain sufficient financial resources to mitigate against risks and unforeseen events.
A reconciliation of the net debt position is detailed as follows:
Net debt as at January 1, 2020………………………
Cash flows…………..……………………………………
Acquisition – Leases……..……………………………..
Effect of modification to lease terms…………………..
Disposals………………………………………………....
Foreign exchange differences…..……………………..
Net debt as at December 31, 2020…………………..
Cash flows…………..……………………………………
Acquisition – Leases……..……………………………..
Effect of modification to lease terms…………………..
Disposals………………………………………………....
Foreign exchange differences…..……………………..
Net debt as at December 31, 2021…………………..
Leases
(550,245)
367,412
(27,612)
(434,150)
77,199
-
(567,396)
309,617
(2,000)
(226,578)
4,343
-
(482,014)
Cash and
cash
equivalents
31,536,803
(12,193,082)
-
-
-
(648,681)
18,695,040
1,667,326
-
-
-
122,470
20,484,836
Other
financial
assets
13,938
50,992
-
-
-
-
64,930
(47,785)
-
-
-
-
17,145
Total
31,000,496
(11,774,678)
(27,612)
(434,150)
77,199
(648,681)
18,192,574
1,929,158
(2,000)
(226,578)
4,343
122,470
20,019,967
In addition, the maturity profile of the Group’s financial liabilities is presented in the table below:
At December, 31 2021
Lease Liabilities………………………………………….
At December, 31 2020
Lease Liabilities………………………………………….
Less
than
1 Year
315,412
Less
than
1 Year
331,911
1 to 5
Years
202,526
1 to 5
Years
270,133
More
than
5 Years
-
Total
cash out
flows
517,938
Carrying
amount
liabilities
482,014
More
than
5 Years
-
Total
cash out
flows
602,044
Carrying
amount
liabilities
567,396
Page 35 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
Lease liabilities relate to the rent of laboratories, equipment, offices and related spaces used by the Group.
3.3 Fair value estimation
The nominal value less estimated credit adjustments of trade and other receivables, contract assets and payables are assumed to
approximate to their fair values due to the short-term maturity of these instruments and are held at their amortized cost in accordance
with IFRS 9. The fair value of other financial assets and liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
4. 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:
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 remains 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 2022 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
Page 36 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
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.
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.
Deferred taxes
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the
liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are
recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be
utilized. The probability that taxable profits will be available is assessed by management based on business projections for each
relevant entity.
The carrying amount of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realized
based on tax laws and rates that have been enacted or substantively enacted at the reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the way the Group
expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is recognized in statement of comprehensive loss, except when related to items that are recognized in other
comprehensive loss or directly in equity, in which case, the current and deferred tax are recognized in other comprehensive loss or
directly in equity.
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.
Had these assumptions been modified within their feasible ranges, i.e. a 10% increase or decrease in the volatility assumption and a
risk-free rate of 0.5 or zero, and the Group calculated the share-based compensation based on the higher and lower values of these
ranges, share-based compensation expense in 2021 would have been CHF 955,414 or CHF 1,342,764, respectively (2020: CHF
888,845 or CHF 1,390,306, respectively). This is compared to the amount recognized as an expense in 2021 of CHF 1,178,344 (2020:
CHF 1,176,413). Additional information is disclosed in note 14.
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. Additional information is disclosed in note 20.
Page 37 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
5. Segment information
Management has identified one single operating segment, related to the discovery, development and commercialization of small-
molecule pharmaceutical products.
Information about products, services and major customers
External income of the Group for the years ended December 31, 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:
Collaborative research funding……………………......
Grants earned…………………………………..............
Other service income…………………………………...
Total …..…………………………………………………
2021
2,916,308
218,330
18,667
3,153,305
2020
3,612,819
244,298
22,026
3,879,143
Analysis of revenue from contract with customer and other income by major counterparties is detailed as follows:
Indivior PLC ……………………………………………..
Eurostars/Innosuisse……………...…………………….
Other counterparties………………………………….…
Total …………………..……………………………..…..
2021
2,916,308
218,330
18,667
3,153,305
2020
3,612,819
244,298
22,026
3,879,143
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:
Switzerland………………...………………………........
United States of America……………………...............
France…………………………………………………....
Total…….…………………..………………..................
The geographical analysis of operating costs is as follows:
December 31, 2021
596,098
3,536
374
600,008
December 31, 2020
665,012
26,847
389
692,248
Switzerland…………….………………………..............
United States of America……………………...............
France…………………………………...…………........
Total operating costs (note 17) ………………….....
2021
18,619,123
33,016
7,083
18,659,222
2020
16,050,488
64,922
7,007
16,122,417
There was capital expenditure of CHF 31,549 in 2021 and CHF 59,414 in 2020.
6. Cash and cash equivalents
Cash at bank and on hand…………………….............
Total cash and cash equivalents……………….......
December 31, 2021
20,484,836
20,484,836
December 31, 2020
18,695,040
18,695,040
Page 38 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
Split by currency:
CHF……………...………………………………..……...
USD………….……………………………………………
EUR………...………………………………..……..........
GBP……………………………………………………….
Total………………………………………………………
December 31, 2021
44.33%
54.47%
0.58%
0.62%
100.00%
December 31, 2020
60.53%
38.70%
0.63%
0.14%
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.
All cash and cash equivalents were held either at banks or on hand at December 31, 2021 and December 31, 2020.
Credit quality of cash and cash equivalents
The table below shows the cash and cash equivalents by credit rating of the major counterparties:
External credit rating of counterparty
P-1 / A-1………...……..……...
Other
Cash on hand………………………..……
Total cash and cash equivalents……..
December 31, 2021
11'943'391
8'541'279
166
20,484,836
December 31, 2020
17'379'008
1'315'875
157
18,695,040
External credit ratings of counterparties were obtained from Moody’s (P-1) or Standard & Poor’s (A-1).
7. Other current assets
Other financial assets…………………………………..
Trade and other receivables……………….…………...
Contract asset..…………………………………………..
Prepayments………..…………...................................
Deferred costs…………………………………………...
Total other current assets……………………..….....
December 31, 2021
17,145
164,785
159,636
1,115,374
-
1,456,940
December 31, 2020
64,930
68,373
-
498,382
162,839
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 December 31, 2021, the contract asset relates to the
research agreement with Indivior whilst the trade and other receivables primarily relates to the grant from Eurostars/Innosuisse for
CHF 131,848 and four non-governmental debtors whose combined outstanding balances are CHF 3,978 (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, excepted loss allowance has been deemed as nil as of December 31,
2021 and December 31, 2020. The increase in prepayments as of December 31, 2021 compared to December 31, 2020 primarily
relates to advance payments relating to R&D service contracts on Dipraglurant PD-LID program. As of December 31, 2020, deferred
costs primarily relate to paid legal and auditor fees associated with the preparation of the capital increase executed on January 8,
2021.
Page 39 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
8. Right-of-use assets
Properties
Equipment
Total
Year ended December 31, 2020
Opening net book amount…………………………..…..
Additions……………………………………………..…...
Depreciation charge……………………………….…….
Effect of lease modifications………………………...….
Disposals….……………………………………………...
Exchange differences…….…………….…...................
Closing net book amount…………..………………...
496,126
27,612
(333,714)
434,150
(72,504)
(7,780)
543,890
47,214
-
(25,760)
-
-
-
21,454
As of December 31, 2020
Cost…………………......……………............................
Accumulated depreciation………………..…………….
Net book value……………...…………………………..
Properties
1,111,338
(567,448)
543,890
Equipment
71,168
(49,714)
21,454
543,340
27,612
(359,474)
434,150
(72,504)
(7,780)
565,344
Total
1,182,506
(617,162)
565,344
Properties
Equipment
Total
Year ended December 31, 2021
Opening net book amount……………………………...
Additions……………………………………………..…...
Depreciation charge……………………………….…….
Effect of lease modifications………………………...….
Disposals….……………………………………………...
Exchange differences…….…………….…...................
Closing net book amount…………..………………...
543,890
2,000
(294,389)
208,902
(4,216)
698
456,885
21,454
-
(26,026)
17,676
-
-
13,104
As of December 31, 2021
Cost…………………......……………............................
Accumulated depreciation………………..…………….
Net book value……………...…………………………..
Properties
1,298,569
(841,684)
456,885
Equipment
88,844
(75,740)
13,104
565,344
2,000
(320,415)
226,578
(4,216)
698
469,989
Total
1,387,413
(917,424)
469,989
For the year ended December 31, 2021, the Group recorded a depreciation charge of CHF 253,166 (2020: CHF 291,107) as part of
research and development expenses and CHF 67,249 (2020: CHF 68,367) as part of general and administration expenses. For the
same period, the total cash outflows for the principal element of lease payment amounted to CHF 309,617 and CHF 367,412
respectively. The maturity analysis of lease liabilities is presented under note 3.2.
Page 40 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
9. Property, plant and equipment
Year ended December 31, 2020
Opening net book amount…..………………………….
Additions………..………………………………………...
Depreciation charge…...………………………………..
Closing net book amount…...………………………..
As of December 31, 2020
Cost……………………………………………………….
Accumulated depreciation……..……………………….
Net book value………..………………………………...
Year ended December 31, 2021
Opening net book amount……..……………………….
Additions……………..…………………………………..
Depreciation charge…….…..…………………………..
Closing net book amount……..................................
As of December 31, 2021
Cost………………..……………………………………...
Accumulated depreciation………................................
Net book value………..………………………………...
Equipment
Furniture &
fixtures
Chemical
Library
27,626
59,414
(19,280)
67,760
Equipment
1,682,279
(1,614,519)
67,760
Equipment
67,760
31,549
(27,198)
72,111
Equipment
1,713,828
(1,641,717)
72,111
-
-
-
-
Furniture &
fixtures
7,564
(7,564)
-
Furniture &
fixtures
-
-
-
-
Furniture &
fixtures
7,564
(7,564)
-
-
-
-
-
Chemical
Library
1,207,165
(1,207,165)
-
Chemical
Library
-
-
-
-
Chemical
Library
1,207,165
(1,207,165)
-
Total
27,626
59,414
(19,280)
67,760
Total
2,897,008
(2,829,248)
67,760
Total
67,760
31,549
(27,198)
72,111
Total
2,928,557
(2,856,446)
72,111
For the year ended December 31, 2021, the Group recorded a depreciation charge of CHF 19,934 (2020: CHF 11,759) as part of
research and development expenses and CHF 7,264 (2020: CHF 7,521) as part of general and administration expenses.
10. Non-current financial assets
Security rental deposits.………………………………...
Total non-current financial assets………………….
December 31, 2021
57,908
57,908
December 31, 2020
59,144
59,144
Security rental deposits relate to laboratory and office space which has decreased during 2021. The applicable interest rate to such
deposits is immaterial, and therefore, the value approximates amortized cost.
11. Payables and accruals
Trade payables…………………………………………..
Social security and other taxes……………..………….
Accrued expenses………..……………………………..
Total payables and accruals…………………………
December 31, 2021
1,787,287
203,288
1,856,570
3,847,145
December 31, 2020
983,545
171,876
1,336,506
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 December 31, 2021
compared to December 31, 2020, primarily relates to increased R&D activities on discovery programs. The carrying amounts of
payables do not materially differ from their fair values, due to their short-term nature.
12. Deferred income
The Group expects the deferred income to be recognized in the statement of comprehensive loss as follows:
Within one year…………………………………………..
Total deferred income…………………………………
December 31, 2021
-
-
December 31, 2020
86,481
86,481
The deferred income relates to a grant from Eurostars/Innosuisse described on the note 16 “other income”.
Page 41 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
13. Share capital
Balance as of January 1, 2020…….….……………....
Settlement of supplier invoices………………………...
Net purchase of treasury shares under liquidity
agreement………………………………………………..
Other net sale of treasury shares…….………..………
Balance as of December 31, 2020.….………..……...
Issue of shares-capital increase………………………..
Settlement of supplier invoices………………………...
Net purchase of treasury shares under liquidity
agreement………………………………………………..
Sale of treasury shares under shelf registration………
Other net sale of treasury shares…….………..………
Balance as of December 31, 2021….………………...
Number of shares
Common
shares
32,848,635
-
-
-
32,848,635
16,424,317
-
-
-
-
49,272,952
Treasury
shares
(6,243,487)
207,190
(26,564)
333,000
(5,729,861)
(9,524,317)
116,914
(36,881)
3,759,402
39,940
(11,374,803)
Total
26,605,148
207,190
(26,564)
333,000
27,118,774
6,900,000
116,914
(36,881)
3,759,402
39,940
37,898,149
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 December 31, 2021, 91,370
(December 31, 2020: 54,489) treasury shares are recorded under this agreement in the treasury share reserve and CHF 17,145
(December 31, 2020: CHF 64,930) is recorded in other financial assets.
As of December 31, 2021, the total outstanding share capital is CHF 37,898,149, consisting of 37,898,149 shares excluding
11,374,803 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 December 16, 2021, the Group entered into a Securities Purchase Agreement with Armistice Capital LLC, and sold 3,752,202
treasury shares in the form of 625,367 American Depositary Share (ADS) listed on the Nasdaq Stock Market at a sale price of USD
1.08 (CHF 1) per share, USD 6.50 (CHF 6) per ADS. In addition, 5,478,570 pre-funded warrants in the form of 913,095 ADS were
sold at a sale price of USD 1.08 (CHF 0.99) per share, USD 6.49 (CHF 5.99) per ADS with an exercise price of USD 0.01 per ADS.
The total gross proceeds of this offering amounted to USD 10 million (CHF 9.2 million) and directly related share issuance costs of
CHF 1.4 million were recorded as a deduction in equity. The Group additionally issued to Armistice Capital LLC, 9,230,772 warrants
to purchase 1,538,462 ADS with an exercise price of USD 1.08 (CHF 1) per share and USD 6.5 (CHF 6) per ADS. The fair value of
each of the warrants issued is CHF 0.40 per share, CHF 2.4 per ADS, and has been calculated using the Black-Scholes valuation
model and recorded in equity as a cost of the offering, with a volatility of 55.57% and an annual risk-free rate of -0.64%. The total
value of the warrants issued amounted to CHF 3.7 million.
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 ADS. The gross proceeds amounted to CHF 10.1 million
(USD 11.5 million) and directly related share issuance costs of CHF 1.9 million were recorded as a deduction in equity.
During the year ended December 31, 2021, the Group sold 3,759,402 shares under a shelf-registration in Nasdaq Stock Market, that
includes the 3,752,202 treasury shares sold to Armistice Capital LLC on December 16, 2021 and the 7,000 shares sold under ATM
program initiated on June 29, 2021 and put on hold on December 15, 2021. During the same period, the Group sold 39,940 (December
31, 2020: 333,000) additional treasury shares for a gross amount of CHF 80,944 (December 31, 2020: CHF 749,050) under a Sale
Agency Agreement entered into with Kepler Cheuvreux and used 116,914 treasury shares to purchase services from consultants
(December 31, 2020: 207,190) including 60,638 treasury shares for Roger Mills, the Group’s Chief Medical Officer (December 31,
2020: 114,851). The total value of consulting services settled in shares was CHF 164,980 for the year ended December 31, 2021.
(CHF 285,745 for the year ended December 31, 2020).
Page 42 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
14. 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, consultants and investors has been recorded under the following headings:
Research and development………………...………….
General and administration…….……………………....
Total share-based compensation..………………….
2021
467,812
710,532
1,178,344
2020
354,934
821,479
1,176,413
Analysis of share-based compensation by equity incentive plan is detailed as follows:
Equity sharing certificate plan……………...………….
Share purchase plan……..…….……………………....
Share option plans………………………………………
Total share-based compensation..…………………
Equity Sharing Certificate Equity Incentive Plan
2021
4,476
23,498
1,150,370
1,178,344
2020
14,644
49,813
1,111,956
1,176,413
On June 1, 2010, the Company established an equity incentive plan based on equity sharing certificates (“ESCs”) to provide incentives
to directors, executives, employees and consultants of the Group. Each ESC provides the holder (i) a right to subscribe for 1,000
shares in the Company, and (ii) a right to liquidation proceeds equivalent to that of shareholders. All rights of the ESCs expire after
their defined exercise period with the ownership of the ESCs reverting to the Group. ESCs granted are subject to certain vesting
conditions based on service period defined in each grant agreement. The holder of vested ESCs has the right to subscribe to shares
at the subscription price if the underlying share price has reached the floor price. The floor and subscription price are defined by the
Board of Directors in each grant agreement at the time of issuance. In the event of a change in control, all ESCs are automatically
vested. The Group has no legal or constructive obligation to repurchase or settle ESCs in cash.
Movements in the number of share subscription rights attached to the ESCs outstanding are as follows:
At January 1……………………………………………...
Granted…………………………………………………...
Forfeited…………………………………………………..
Expired……………………………………………………
At December 31………………………………………...
2021
198,750
-
-
-
198,750
2020
198,750
-
-
-
198,750
At December 31, 2021, of the outstanding 198,750 subscription rights (2020: 198,750) attached to the ESCs, 198,750 were
exercisable (2020: 171,750).
The outstanding subscription rights as at December 31, 2021 and 2020 have the following expiry dates, subscription prices and floor
prices:
At December 31, 2021
Expiry date
2024…………………………….....................................
2027…………………………….....................................
Total subscription rights……………………………..
Subscription prices / floor prices (CHF)
1.00 / 2.30
90,750
-
90,750
2.00 / 2.30
-
108,000
108,000
Total
90,750
108,000
198,750
At December 31, 2020
Expiry date
2024…………………………….....................................
2027…………………………….....................................
Total subscription rights……………………………..
Subscription prices / floor prices (CHF)
1.00 / 2.30
90,750
-
90,750
2.00 / 2.30
-
108,000
108,000
Total
90,750
108,000
198,750
Share option plans
The Company established a share option plan to provide incentives to directors, executives, employees and consultants of the Group.
Page 43 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
During 2021, the Group granted the following options with vesting over 4 years and a 10-year exercise period as follow:
April 1, 2021………………………………………….
May 17, 2021………………………………………….
July 1, 2021……………………………………………...
October 1, 2021…………………………………………
Total 2021….…………………………………………….
Number
27,492
1,791,000
44,408
6,000
1,868,900
Exercise price
Expiry date
1.99 December 31, 2030
May 16, 2031
1.45
June 30, 2031
1.6
1.45 September 30, 2031
During 2020, the Group granted the following options with vesting over 4 years and a 10-year exercise period as follow:
January 1, 2020………………………………………….
April 1, 2020……………………………………………...
July 1, 2020………………………………………………
Total 2020….…………………………………………….
Movements in the number of options outstanding are as follows:
At January 1……………………………………………...
Granted…………………………………………………...
Forfeited…………………………………………………
Expired……………………………………………………
At December 31………………………………………...
Number
38,487
1,158,011
31,362
1,227,860
2021
6,768,460
1,868,900
(11,475)
(10,000)
8,615,885
Exercise price
Expiry date
1.64 December 31, 2029
March 31, 2030
1.14
June 30, 2030
1.45
2020
5,540,600
1,227,860
-
-
6,768,460
At December 31, 2021, of the outstanding 8,615,885 share options (2020: 6,768,460), 5,954,115 were exercisable (2020: 4,235,706).
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 25,309 has been recognized in 2020.
The outstanding share options as at December 31, 2021 and 2020 have the following expiry dates:
At December 31, 2021
Expiry date
2024……………………………………………………
2025……………………………………………………
2026……………………………………………………
2027……………………………………………………
2028……………………………………………………
2029……………………………………………………
2030……………………………………………………
2031……………………………………………………
Total…………………………………………………...
At December 31, 2020
Expiry date
2021……………………………………………………
2024……………………………………………………
2025……………………………………………………
2026……………………………………………………
2027……………………………………………………
2028……………………………………………………
2029……………………………………………………
2030……………………………………………………
Total…………………………………………………...
Range of exercise prices (CHF)
1.00 to 1.50 1.51 to 2.00 2.01 to 2.50 2.51 to 3.00
-
-
-
-
2,464,890
-
-
-
2,464,890
-
-
-
292,261
-
184,883
1,189,373
1,792,727
3,459,244
506,351
49,687
95,000
1,606,820
-
68,487
27,492
44,408
2,398,245
-
-
50,000
-
243,506
-
-
-
293,506
Range of exercise prices (CHF)
1.00 to 1.50 1.51 to 2.00 2.01 to 2.50 2.51 to 3.00
-
-
-
-
-
2,467,584
-
-
2,467,584
-
-
-
-
292,261
-
187,189
1,189,373
1,668,823
10,000
506,351
49,687
95,000
1,609,022
-
68,487
-
2,338,547
-
-
-
50,000
-
243,506
-
-
293,506
Page 44 of 65
Total
506,351
49,687
145,000
1,899,081
2,708,396
253,370
1,216,865
1,837,135
8,615,885
Total
10,000
506,351
49,687
145,000
1,901,283
2,711,090
255,676
1,189,373
6,768,460
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
The weighted average fair value of share options granted during 2021 determined using a Black-Scholes model was CHF 0.72 (2020:
CHF 0.45). The significant inputs to the model were:
Weighted average share price per share at the grant date……………..
Weighted average strike price per share………………………………….
Weighted average volatility……..……………………..............................
Dividend yield………………………………………………………………...
Weighted average annual risk-free rate……………………………………
Share purchase plan
2021
CHF 1.58
CHF 1.46
47.07%
-
0.44%
2020
CHF 1.16
CHF 1.16
40.24%
-
0.13%
The Group established a share purchase plan under which services are settled for shares. Under the plan directors, executives,
employees and consultants may receive fully paid ordinary shares from the Group’s treasury share reserve for services rendered.
During the year ended December 31, 2021, 116,914 shares (2020: 207,190 shares) were transferred to settle CHF 164,689 (2020:
CHF 285,745) of consulting fees.
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.
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 twelvemonth 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 2.0 million has been paid to the Group as of December 31, 2021, a remaining amount of
CHF 0.7 million is expected to be received directly by the Group in the year 2022 and CHF 1.0 million paid directly by Indivior to third
party suppliers that are supporting the funded research program.
For the year ended December 31, 2021, the Group recognized CHF 2.9 million as revenue (2020: CHF 3.6 million) and recorded CHF
0.2 million as contract asset as of December 31, 2021 (December 31, 2020: CHF 0.7 million as contract liability).
Page 45 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
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 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 in 2019 for CHF 512,032 of which CHF 380,184 were paid as of December
31, 2021. For the year ended December 31, 2021, the Group recognized CHF 218,330 as other income (CHF 244,298 for the year
ended December 31, 2020). As of December 31, 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).
In 2021, the Group additionally recognized other income mainly from IT consultancy agreements for CHF 18,667 (CHF 22,026 in
2020).
17. Operating costs
Staff costs (note 18)………………………………….....
Depreciation (notes 8/9)…..…….................................
External research and development costs…………...
Laboratory consumables…………………...…………..
Patent maintenance and registration costs.……….....
Professional fees………………………………………...
Short term leases………………………………………..
D&O insurance…………………………………………..
Other operating costs……………………………..........
Total operating costs……………………………….…
2021
4,737,138
347,613
9,014,083
295,377
266,043
1,379,734
37,512
1,591,882
989,840
18,659,222
2020
4,397,004
378,754
6,981,854
295,005
328,177
1,399,123
36,651
1,505,897
799,952
16,122,417
The evolution of the total operating costs is mainly driven by external research and development expenses, staff costs, D&O
insurance, professional fees and other operating costs.
During the year ended December 31, 2021, total operating costs increased by CHF 2.5 million compared to the year ended December
31, 2020, primarily due to increased external research and development costs of CHF 2 million of which CHF0.6 million relates to the
dipraglurant PD-LID program, CHF 0.6 million relates to the dipraglurant blepharospasm program and CHF 0.1 million relates to the
GABAB PAM program. During the same period, staff costs increased by CHF 0.3 million primarily due to the strengthening of our
R&D team.
18. Staff costs
Wages and salaries.…………………………………….
Social charges and insurances….…………...………..
Value of share-based services (note 14)………......…
Retirement benefit (note 20)….…………………..……
Total staff costs………………...…….…....................
2021
3,280,004
396,149
946,632
114,353
4,737,138
2020
2,959,856
315,164
901,425
220,559
4,397,004
The wages and salaries increased by CHF 0.3 million for the year ended December 31, 2021 compared to the same period in 2020,
primarily due to an increase in the average number of full-time equivalent employees from 22 in 2020 to 25 in 2021.
Page 46 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
19. Taxes
Loss before tax…………………………………….........
Tax calculated at a tax rate of 13.99% ………………...
Effect of different tax rates in USA and France………
Deductible expenses charged against equity
/
deferred costs for issuance of shares…………………
Sale of treasury shares by a subsidiary, recognized
as
financial
statements………………………………………………..
Expenses not deductible for tax purposes……………
Temporary differences………………………………….
Total tax losses not recognized as deferred tax asset
Income tax expense…………………………….……..
in standalone
financial
income
December 31, 2021
December 31, 2020
15,351,914
2,147,733
5,398
382,829
(8,556)
(145,195)
(954)
(2,381,255)
-
12,858,599
1,798,918
11,046
78,164
(71,285)
(160,729)
(2,515)
(1,653,599)
-
The Group has decided not to recognize any deferred income tax assets at December 31, 2021 or 2020. The key factors which have
influenced management in arriving at this evaluation are the fact that the Group has not yet a history of making profits and product
development remains at an early stage.
The amount of deferred income tax assets that arise from sources other than tax losses carried forward and the amount of deferred
income tax liabilities are insignificant compared to the unrecognized tax losses carried forward.
The tax losses carried forward by the Group and their respective expiry dates are as follows:
2021………………………………………………………
2022………………………………………………………
2023………………………………………………………
2024………………………………………………………
2025………………………………………………………
2026………………………………………………………
2027………………………………………………………
2028………………………………………………………
Total unrecorded tax losses carry forwards……...
December 31, 2021
-
3,540,541
141,425,567
290,949
3,586,490
23,467,840
9,831,196
24,391,568
206,534,151
December 31, 2020
1,224,210
3,540,541
141,425,567
290,949
3,586,490
23,467,858
9,834,674
-
183,370,289
As of December 31, 2021, the unrecorded tax losses carried forward increased to CHF 206,534,151 (2020: CHF 183,370,289).
20. Retirement benefit obligations
Apart from the social security plans fixed by the law, the Group sponsors an independent pension plan. The Group has contracted
with Swiss Life for the provision of occupational benefits. All benefits in accordance with the regulations are reinsured in their entirety
with Swiss Life within the framework of the corresponding contract. This pension solution fully reinsures the risks of disability, death
and longevity with Swiss Life. Swiss Life invests the vested pension capital and provides a 100% capital and interest guarantee. The
pension plan is entitled to an annual bonus from Swiss Life comprising the effective savings, risk and cost results. Although, as is the
case with many Swiss pension plans, the amount of ultimate pension benefit is not defined, certain legal obligations of the plan create
constructive obligations on the employer to pay further contributions to fund an eventual deficit; this results in the plan nevertheless
being accounted for as a defined benefit plan. All employees are covered by this plan, which is a defined benefit plan. Retirement
benefits are based on contributions, computed as a percentage of salary, adjusted for the age of the employee and shared
approximately 46% / 54% by employee and employer. In addition to retirement benefits, the plans provide death and long-term
disability benefits to its employees. Liabilities and assets are revised every year by an independent actuary. Assets are held in the
insurance company. In accordance with IAS 19 (revised), plan assets have been estimated at fair market values and liabilities have
been calculated according to the "projected unit credit" method. The Group recorded a pension benefit charge in 2021 of CHF 114,353
(2020: CHF 220,559) as part of staff costs.
Page 47 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
Employment benefit obligations
The amounts recognized in the balance sheet are determined as follows:
Defined benefit obligation………..…………...………..
Fair value of plan assets…………………….………….
Funded status………………………………..…………
2021
(9,276,675)
7,995,150
(1,281,525)
2020
(9,406,967)
7,714,430
(1,692,537)
The amounts recognized in the statement of comprehensive loss are as follows:
Current service cost……………….…………………….
Past service cost……………….………………..………
Interest cost………………………..………...…………..
Interest income…………………..……………….…......
Company pension amount (note 18)……................
2021
(325,144)
219,104
(23,742)
15,429
(114,353)
2020
(315,727)
102,764
(21,799)
14,203
(220,559)
The conversion rates have successively changed as of January 1, 2020, and January 1, 2021 which has led to a positive past service
cost during the year 2020 and 2021.
The movements in the defined benefit obligations during the year are as follows:
Defined benefit obligation at beginning of year...........
Current service cost………………………....................
Past service cost………………………………………...
Interest cost………………………………...………..…..
Employee contributions……………………….………..
Actuarial gain arising from changes in financial
assumptions.……………………………………………..
Actuarial gain arising from changes in demographic
assumptions……………………………………………...
Actuarial loss on experience adjustment……………..
Benefits paid/ (deposited)…………...………………….
Defined benefit obligations at end of year………...
2021
(9,406,967)
(325,144)
219,104
(23,742)
(222,772)
295,480
186,583
(115,175)
115,958
(9,276,675)
The movements in the fair value of plan assets during the year are as follows:
Fair value of plan assets at beginning of year…….....
Interest income……………………………………….....
Employee contributions……..…………………..…......
Employer contributions………..………………………..
Plan assets loss……………………...…………..……...
Benefits (paid)/ deposited…………….……..………....
Fair value of plan assets at end of year……………
2021
7,714,430
15,429
222,772
264,817
(106,340)
(115,958)
7,995,150
2020
(8,583,214)
(315,727)
102,764
(21,799)
(205,085)
-
-
(208,572)
(175,334)
(9,406,967)
2020
7,101,476
14,203
205,085
243,289
(24,957)
175,334
7,714,430
Page 48 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
As of the date of the preparation of these consolidated financial statements, the 2021 annual report of the pension fund has not yet
been issued, and therefore the detailed structures and assets held at December 31, 2021, are not currently available for presentation.
However, the detailed assets held at December 31, 2020, which were reported to the Group on May 4, 2021 by its plan administrator,
are as follows:
Cash………………………………………………………
Bonds…………………………………………................
Equity instruments………………………………………
Real estate……………………………………...............
Mortgages……………………………………................
Others……………………………………………………
Total
The principal actuarial assumptions used were as follows:
December 31,
2020
0.76%
56.09%
10.91%
21.43%
9.24%
1.57%
100.00%
Discount rate………………………...……………..........
Mortality tables………………..…………………………
Salary growth rate……………………………………….
Pension growth rate….………………………………….
December 31, 2021
0.35%
BVG2020 GT
1.00%
0.00%
December 31, 2020
0.20%
BVG2015 GT
1.00%
0.00%
The following sensitivity analysis shows the impact of increasing or decreasing certain assumptions on the defined benefit obligation
of the Swiss pension plan:
-
0.25% increase or decrease in the discount rate would lead to a decrease of 3.93% (2020: 4.36%) or an increase of 4.52% (2020:
5.06%) in the defined benefit obligation.
0.25% increase or decrease in the interest rate on retirement savings capital would lead to an increase of 0.58% (2020: 0.63%)
or a decrease of 0.52% (2020: 0.59%) in the defined benefit obligation.
0.25% increase or decrease in salaries would lead to an increase of 0.01% (2020: 0.03%) or no decrease (2020: 0.02%) in the
defined benefit obligation; and
+/-1 year in the life expectancy would lead to an increase of 1.63% (2020: 1.85%) or a decrease of 1.69% (2020: 1.92%) in the
defined benefit obligation.
-
-
-
The discount rate and life expectancy were identified as significant actuarial assumptions for the Swiss pension plan.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice,
this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined
benefit obligations to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated
with the projected unit credit method at the end of the reporting period) has been applied as that used in calculating the pension
liability recorded on consolidated balance sheets.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
The estimated employer contributions to pension plans for the financial year 2022 amount to CHF 277,000. The following table shows
the funding of the defined benefit pensions and actuarial adjustments on plan liabilities:
Present value of defined benefit obligation………......
Fair value of plan assets………………………………..
Deficit in the plan………………………………………
Experience adjustment………………………………….
Actuarial loss on plan assets…………….……………..
2021
(9,276,675)
7,995,150
(1,281,525)
366,888
(106,340)
2020
(9,406,967)
7,714,430
(1,692,537)
(208,572)
(24,957)
The following table shows the estimated benefit payments for the next ten years where the number of employees remains constant:
2022….........….........….........…...................................
2023….........….........….........…...................................
2024….........….........….........…...................................
2025….........….........….........…...................................
2026….........….........….........…...................................
2027-2031….........….........….........……………………
348,900
363,500
666,600
457,900
337,100
1,951,500
Page 49 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
21. Finance result, net
Interest income ………………………………………..
Interest expense on leases…………………………...
Interest cost……………………………..………..........
Foreign exchange (losses)/gains, net……….…..…….
Finance result, net..………...………………………….
2021
5,322
(23,866)
(39,146)
211,693
154,003
2020
35,305
(19,042)
(50,460)
(581,128)
(615,325)
The evolution of the finance result is mainly driven by foreign exchange losses and gains on our cash deposits which consists of a
net gain of CHF0.2 million for the year 2021 compared to a net loss of CHF 0.6 million in the year 2020 due to the strengthening of
the U.S dollar against the Swiss franc.
22. 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 year excluding shares purchased by the Group and held as treasury shares.
Loss attributable to equity holders of the Company…
Weighted average number of shares in issue………..
Basic and diluted loss per share……………………
2021
(15,351,914)
34,119,666
(0.45)
2020
(12,858,599)
26,681,774
(0.48)
The Company has three categories of dilutive potential shares as at December 31, 2021 and December 31, 2020: equity sharing
certificates (“ESCs”), share options and warrants. As of December 31, 2021, and December 31, 2020, equity sharing certificates,
share options and warrants have been ignored in the calculation of the loss per share, as they would be antidilutive.
The total number of dilutive instruments as of December 31, 2021 is 29,590,875 (2020: 13,034,108) which primarily consists of
198,750 ESCs, 8,615,885 ESOP, 5,866,898 warrants granted to investors on March 29, 2018, 9,230,772 warrants and 5,478,570
pre-funded warrants granted to one investor on December 21, 2021 (2020: 198,750 ESCs, 6,768,460 ESOP and 5,866,898 warrants
granted to investors on March 29, 2018). These options could potentially dilute basic earnings per share in the future.
23. Commitments and contingencies
Capital commitments
As at December 31, 2021 and 2020, the Group has no contracted capital expenditure.
Contingencies
As part of the ordinary course of business, the Group is subject to contingent liabilities in respect of certain litigation. Currently, there
is no outstanding litigation with a possible negative effect on the Group.
24. 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
Salaries, other short-term employee benefits and
post-employment benefits………………………………
Consulting fees…………………………………………..
Share-based compensation….………………………...
Total………………………………………………………
2021
1,502,377
224,091
955,051
2,681,519
2020
1,314,723
317,425
975,579
2,607,727
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 primarily 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 172,443 at December 31, 2021 (December 31, 2020: CHF 145,443).
25. Events after the balance sheet date
On January 4, 2022, the exercise price of 8,294,045 equity incentive units was reduced to CHF 1 and the share-based compensation
related to the fair value adjustment for the reduction in the exercise price of CHF 1.7 million will be recognized over the remaining
Page 50 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements Notes
vesting period of the respective equity incentive units or immediately for fully vested units. As a result, CHF 1.6 million will be
recognized in 2022 and CHF0.1 million over the period 2023 to 2025 as share-based compensation expense.
On February 2, 2022, Addex Therapeutics Ltd issued 16,000,000 new shares from authorized capital to its fully owned subsidiary,
Addex Pharma SA, at CHF 1 per share. These shares are held as treasury shares, hence the operation does not impact the
outstanding share capital.
On February 24, 2022, Russia invaded Ukraine creating a global conflict. The resulting conflict and retaliatory measures by the global
community have created global security concerns, including the possibility of expanded regional or global conflict, which have had,
and are likely to continue to have, short-term and more likely longer-term adverse impacts on Ukraine and Europe and around the
globe. Potential ramifications include disruption of the supply chain including research activities and complications with the conduct
of ongoing and future clinical trials of our product candidates led by the Group, including patient enrollment. The Group and its
collaborators rely on global networks of contract research organizations and clinical trial sites to enroll patients, certain of which are
in Russia and Ukraine. Delays in research activities or in the conduct of the clinical trials of the Group could increase associated costs
and, depending upon the duration of any delays, require the Group to find alternative suppliers at additional expense. In addition, the
conflict in Eastern Europe has had significant ramifications on global financial markets, which may adversely impact the ability of the
Group to raise capital on favorable terms or at all.
Page 51 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements
Phone +41 22 322 24 24
+41 22 322 24 00
Fax
www.bdo.ch
BDO AG
Rte de Meyrin 123
Case postale 150
1215 Genève 15
STATUTORY AUDITOR'S REPORT
To the General Meeting of Addex Therapeutics Ltd, Plan-les-Ouates
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Addex Therapeutics Ltd and its subsidiaries (the Group), which comprise
the consolidated statement of financial position as at 31 December 2021 and the consolidated statement of comprehensive loss,
consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion the accompanying consolidated financial statements (pages 24 to 51) give a true and fair view of the consolidated
financial position of the Group as at 31 December 2021, and its consolidated financial performance and its consolidated cash flows
for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
Basis for Opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standards. Our
responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession,
as well as the International Code of Ethics for Professional Accountants (including International Independence Standards) of the
International Ethics Standards Board for Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Page 52 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements
Key Audit Matter
How our audit addressed the key audit matter
Revenue from contract with customer:
The Group has only one source of revenue from contract with
customer which relates to the licensing & research agreement
with Indivior PLC (the "Agreement").
Since January 1, 2018 the Group has implemented the
financial reporting standard IFRS 15 Revenue from Contracts
with Customers. Under this standard, the Group identifies the
distinct performance obligations in a contract, uses the most
likely method to determine the variable consideration for
inclusion in the transaction of an estimated stand-alone
selling price and recognizes the related revenue over time or
at a point in time as the performance obligations are satisfied
and control passes to the customer.
The Group signed a contract extension in July 2021 for an
additional CHF 2'700'000 compensation of the joint research
agreement and recognized a total of CHF 2'916'308 in revenue
during the year ended 31 December 2021 related to the on-
going research collaboration agreement with Indivior.
This is a significant focus point due to the significance of the
revenue recognized, the complexity of the Agreement and the
judgement
the performance
obligations and potential changes thereon as well as the
allocation of the transaction price.
identifying
involved
in
We obtained an understanding of the process and controls
through discussion with members of management and
observation of documents.
We performed inquiries of management concerning any
changes to the original Agreement which could affect the
judgement underlying revenue recognized in 2021.
We read and assessed the contract extension signed in July
2021 to determine whether terms that may affect revenue
identified and properly considered,
recognition were
performance obligations were appropriately identified in the
Company’s evaluation of the accounting for the contracts,
and revenue was recognized in the appropriate amounts and
periods.
We assessed management’s judgments and evaluated the
Company’s models, which included the detailed cost build-
ups of the underlying services. We tested substantively the
determination of the costs incurred which is the basis for the
recognition of the transaction price.
Additionally, we obtained the support for the cash received
from Indivior PLC in 2021 and recalculated the related
contract assets recorded at 31 December 2021.
Refer to note 15 Revenue from contract with customer.
Other Information in the Annual Report
The Board of Directors is responsible for the other information in the annual report. The other information comprises all
information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial
statements of the Company, remuneration report and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in the
annual report and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Page 53 of 65
Addex Therapeutics Annual Report 2021 │ Consolidated Financial Statements
Responsibility of the Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in
accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary
to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located at the website of
EXPERTsuisse: http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.
Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal control system
exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board
of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
Geneva, 10 March 2022
BDO Ltd
Nigel Le Masurier
Christoph Tschumi
Licensed Audit Expert
Licensed Audit Expert
(Auditor in Charge)
Enclosures
Consolidated Financial statements
Page 54 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements
Statutory Financial Statements of Addex
Therapeutics Ltd as at December 31, 2021
Page 55 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements
Balance Sheets
as at December 31, 2021 and December 31, 2020
Notes
December 31,
December 31,
2021
2020
Amounts in Swiss francs
ASSETS
Current assets
Cash and cash equivalents………………………………..
Accrued income and prepayments……………………….
Total current assets………………………………………
Non-current assets
Investments in Subsidiaries……………...……...………..
Other non-current assets
Subordinated Loans to Subsidiaries………………
Total non-current assets…………………….…………..
8
9
212,751
1,500
214,251
132,572
56,415
188,987
3
3
30,476,792
30,476,795
25,023,029
25,023,032
Total assets………………………………………..……....
30,691,046
25,212,019
LIABILITIES AND EQUITY
Current liabilities
Trade payables…...…………………………………..…....
Other payables - third parties…………….……...............
Accruals……….………………………………….…………
Other current Liabilities
Short-term borrowings from Subsidiaries………
Total current liabilities……………………………..…….
Equity
Share capital……………………………………..…………
Share premium……………………………………..………
Treasury shares reserve…………………………………..
Pre-funded warrants reserve…………………………….
Non-voting equity securities (*)……………..…………….
Accumulated deficit………………………………………...
Total equity………………….……………………………..
10
12
11
11
281,927
46,523
456,527
-
784,977
49,272,952
21,547,131
11,703,279
5,470,141
p.m
(58,087,434)
29,906,069
407,819
45,331
200,429
2,759,369
3,412,948
32,848,635
23,972,152
6,078,935
-
p.m
(41,100,651)
21,799,071
Total liabilities and equity………...….…………………
30,691,046
25,212,019
(*) p.m. = pro memoria. Non-voting equity securities have no nominal value.
The accompanying notes form an integral part of these financial statements.
Page 56 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements
Statements of Loss
for the years ended December 31, 2021 and 2020
Notes
December 31,
December 31,
2021
2020
Amounts in Swiss francs
Operating costs
Professional fees…………………………………...….......
Capital increase & offering costs…………………………
Other operating costs………………………………………
Provision for loans to Subsidiaries……...………….........
Taxes………………………………………………………...
13
13
13
9
(915,923)
(2,736,448)
(1,906,926)
(11,444,128)
(4,376)
(483,395)
(558,716)
(1,806,149)
(8,924,864)
(3,546)
Total operating costs…………………………………….
(17,007,801)
(11,776,670)
Interest expenses…………………………………………..
Exchange differences……………………………………...
(23,758)
44,776
(2,584)
2,790
Net loss before taxes…………………………………….
(16,986,783)
(11,782,044)
Income tax expense…………………..……...……………
-
-
Net loss for the year……………………………………...
(16,986,783)
(11,782,044)
The accompanying notes form an integral part of these financial statements.
Page 57 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements Notes
Notes to the Financial Statements for the years
ended December 31, 2021 and 2020
(amounts in Swiss francs)
1. General
Addex Therapeutics Ltd, formerly Addex Pharmaceuticals Ltd, was founded on February 19, 2007 and domiciled C/O Addex Pharma
SA, Chemin des Aulx 12, CH1228 Plan-Les-Ouates, Geneva, Switzerland.
2. Accounting Policies
These financial statements have been prepared in accordance with the provisions of commercial accounting as set out in the Swiss
follows:
Code of Obligations
to 963b CO). Significant balance sheet
items are accounted
(Art. 957
for as
Cash and cash equivalents
Cash and cash equivalents include cash on hand. Any bank overdrafts are not netted against cash and cash equivalents but are
shown as part of current liabilities on the balance sheet.
Loans and other receivables
Loans and other short-term receivables are carried at their nominal value. Impairment charges are calculated for these assets on an
individual basis, and no general allowance is recorded.
Foreign currencies
Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses
resulting from the settlement of such transactions and from the remeasurement of current assets and current liabilities denominated
in foreign currencies are recognized in financial income and financial expense. Net unrealized gains on non-current assets and
liabilities are deferred in non-current liabilities, and net unrealized losses are recognized in financial expense.
3. Guarantees, other indemnities and assets pledged in favor of third parties
As of December 31, 2021 and December 31, 2020, there were no guarantees, other indemnities or assets pledged in favor of third
parties.
4. Pledges on assets to secure own liabilities
As of December 31, 2021 and December 31, 2020, there were no assets pledged to secure own liabilities.
5. Lease commitments not recorded in the balance sheet
As of December 31, 2021 and December 31, 2020, there were no lease commitments not recorded in the balance sheet.
6. Amounts due to pension funds
As of December 31, 2021 and December 31, 2020, there were no amounts due to pension funds.
7. Full-time positions
The company as the holding of the Group, did not employ any Full-Time equivalent Employees (FTEs) during the years ending
December 31, 2021 and December 31, 2020
Page 58 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements Notes
8. Significant investments
Addex Therapeutics Ltd as a holding company for the Addex Therapeutics Group owns:
Company
Addex Pharma SA,
Plan-les-Ouates, Switzerland
Addex Pharmaceuticals France SAS,
Archamps, France
Addex Pharmaceuticals Inc.,
Delaware, USA
Business
Capital
Interest in capital &
votes %
Research & development
CHF 3,987,492
Research & development
EUR 37,000
Research & development
USD 1
100%
100%
100%
As at December 31, 2021 and 2020, the Company has provided for its investments in Group companies as follows:
Investment in Addex Pharma SA………………………
Provision for investment in Addex Pharma SA………
Investment in Addex Pharmaceuticals France SAS…
Investment in Addex Pharmaceuticals Inc………..…..
December 31, 2021
3,987,492
(3,987,491)
1
1
3
December 31, 2020
3,987,492
(3,987,491)
1
1
3
9. Other non-current assets – Loans to Group companies
As at December 31, 2021 and 2020, the Company has provided for its loan to Addex Pharma SA as follows:
Subordinated loan to Addex Pharma SA……………..
Provision for loan to Addex Pharma SA………………
December 31, 2021
221,315,638
(190,838,846)
30,476,792
December 31, 2020
204,417,747
(179,394,718)
25,023,029
The loan to Addex Pharma SA is subordinated to the claims of other creditors of the subsidiary up to CHF 221,315,638.
10. Other current liabilities – short-term borrowings from Group companies
Short-term borrowing from Addex Pharma SA………
December 31, 2021
-
-
December 31, 2020
2,759,369
2,759,369
11. Equity
January 01, 2020……..
Transfer from treasury
shares reserve…......
Net loss of the year…......
December 31, 2020…….
Issue of shares - capital
Share
capital
General reserve, from…
…retained
…capital
earnings
contribution
Treasury
shares
reserve
Pre-funded
warrants
reserve
32,848,635
187,186,870
(163,708,099)
6,572,316
-
-
493,381
-
-
-
(493,381)
-
32,848,635
187,680,251
(163,708,099)
6,078,935
increase……..………
6,900,000
3,199,323
Issue of treasury shares..
Sale of pre-funded
warrants………………….
Transfer to treasury
shares reserve……....…..
Net loss of the year...…...
9,524,317
-
-
-
-
-
(5,624,344)
-
-
-
-
-
-
-
-
-
5,470,141
5,624,344
-
-
-
-
-
-
-
Accumulated
deficit
Total
(29,318,607)
33,581,115
-
-
(11,782,044)
(11,782,044)
(41,100,651)
21,799,071
-
-
-
-
10,099,323
9,524,317
5,470,141
-
-
(16,986,783)
(16,986,783)
December 31, 2021…….
49,272,952
185,255,230
(163,708,099)
11,703,279
5,470,141
(58,087,434)
29,906,069
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.
Page 59 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements Notes
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 (ADS), listed on the Nasdaq
Stock Market.
On December 16, 2021, Addex therapeutics Ltd sold 5,470,141 pre-funded warrants in the form of 913,095 ADS at a sale price of
USD 1.08 (CHF 0.99) per share, USD 6.49 (CHF 5.99) per ADS with an exercise price of USD 0.01 per ADS. Funds received have
been recorder in reserves.
At December 31, 2021 the total outstanding share capital is CHF 49,272,952 (At December 31, 2020 : CHF 32,848,635) consisting
of 49,272,952 shares ( At December 31,2020 : 32,848,635 shares). All shares have a nominal value of CHF 1.
The authorized capital and conditional capital as at December 31, 2021 and 2020 are as follows:
Authorized capital………………………………………..
Conditional capital……………………………………….
12. Treasury share reserve
December 31, 2021
24,636,476
24,636,476
December 31, 2020
16,424,317
16,424,317
This reserve relates to the purchase price of shares in Addex Therapeutics Ltd held by Group companies. The table shows movements
in the number of shares and the treasury share reserve:
Balance at January 1, 2020……………..
Net sales…….………………...……………
Balance at December 31, 2020…………
Net purchases………………..……………
Balance at December 31, 2021…………
13. Operating costs
Number of registered
shares
6,243,487
(513,626)
5,729,861
5,644,942
11,374,803
% of share
capital
19.01%
17.44%
23.09%
Treasury shares
reserves
6,572,316
(493,381)
6,078,935
5,624,344
11,703,279
Operating costs excluding provisions for loans to subsidiaries amounted to CHF 5.6 million for the year ended December 31, 2021
compared to CHF 2.9 million for the same period in 2020. The increase of CHF 2.7 million is primarily due to costs related to capital
increases and offerings executed in 2021 (see note 11 above).
14. Significant shareholders
According to the information available, based on published notifications to the SIX and Nasdaq Stock Market, the following
shareholders own 3% or more of the company’s share capital as of December 31, 2021:
Addex Pharma SA2………………………….
IV,
Growth Equity Opportunities Fund
LLC3……………………………………..........
Armistice Capital Master Fund Ltd4………
Goldman Sachs
/ Folio
Investments Inc5………………………………
I,
New Leaf Biopharma Opportunities
L.P.6……………...........................................
CDK Associates, LLC7………………………
International
Number of
shares
11,374,803
December 31, 20211
Interest in capital
in %
23.09%
Number of
shares
5,729,861
December 31, 2020
Interest in capital
in %
17.44%
5,648,690
3,796,782
3,006,982
1,897,444
1,595,640
11.46%
7.71%
6.10%
3.85%
3.24%
4,568,690
-
-
1,597,444
1,597,444
13.91%
-
-
4.86%
4.86%
1 This table presents the shares held by the shareholders listed therein. The derivative holdings held by such shareholders are not included.
2 Addex Pharma SA, Chemin des Aulx, CH-1228 Plan-Les-Ouates
3 The beneficial owner is New Enterprise Associates Inc., Timonium MD 21093, USA.
4 The beneficial owner is Armistice Capital LLC, 510 Madison Avenue, 7th floor, New-York, NY.
5 The beneficial owner is The Goldman Sachs Group, Inc. 1209 Orange Street, Corporation Trust Center, DE 19801 Wilmington, USA.
6 The beneficial owner is New Leaf Venture Management III LLC, 1209 Orange Street, c/o Corporation Trust Company/Center, DE 19801 Wilmington,
USA.
7 The beneficial owner is Bruce Kovner, c/o CDK Associates. LLC, Princeton, 08540 New Jersey, USA.
Page 60 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements Notes
15. Board of Directors and Executive Management shareholdings and equity incentive units
As of December 31, 2021 and 2020, members of the Board of Directors and Executive Management held the following shares in the
Company:
Vincent Lawton, Chairman………………....................
Roger Mills, Chief Medical Officer…………................
Tim Dyer, Chief Executive Officer……………………..
Total………………………………………………………
2021
Number of Shares
500
393,139
435,192
828,831
2020
Number of Shares
500
332,501
435,192
768,193
As of December 31, 2021, members of the Board of Directors and Executive Management held the following equity incentive units in
the Company:
Vincent Lawton, Chairman………………...........................
Raymond Hill……..……………………………….................
Jake Nunn…………………………………………………….
Isaac Manke…………………………………………………..
Tim Dyer, Chief Executive Officer…………..….................
Roger Mills, Chief Medical Officer………………………….
Robert Lütjens, Co-Head of Discovery Biology……..........
Jean-Philippe Rocher, Co-Head of Discovery Chemistry…
Mikhail Kalinichev, Head of Translational Science……….
Total……………………………………………………………
Number of
vested equity
incentive units
580,392
313,330
17,815
17,815
3,354,761
242,556
543,254
283,636
15,616
5,369,175
Number of
unvested equity
incentive units
125,625
72,364
42,185
42,185
1,168,148
50,281
278,168
300,595
84,384
2,163,935
Total number of
equity incentive
units
706,017
385,694
60,000
60,000
4,522,909
292,837
821,422
584,231
100,000
7,533,110
As of December 31, 2020, members of the Board of Directors and Executive Management held the following equity incentive units in
the Company:
Vincent Lawton, Chairman………………...........................
Raymond Hill……..……………………………….................
Jake Nunn…………………………………………………….
Isaac Manke…………………………………………………..
Tim Dyer, Chief Executive Officer…………..….................
Roger Mills, Chief Medical Officer………………………….
Robert Lütjens, Co-Head of Discovery Biology……..........
Jean-Philippe Rocher, Co-Head of Discovery Chemistry..
Total……………………………………………………………
Number of
vested equity
incentive units
445,059
232,923
5,625
5,625
2,446,079
186,480
385,010
160,858
3,867,659
Number of
unvested equity
incentive units
190,958
112,771
24,375
24,375
1,376,830
56,357
186,412
173,373
2,145,451
Total number of
equity incentive
units
636,017
345,694
30,000
30,000
3,822,909
242,837
571,422
334,231
6,013,110
Page 61 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements Notes
16. Events after the balance sheet date
On February 2, 2022, Addex Therapeutics Ltd issued 16,000,000 new shares from the authorized capital and fully subscribed by its
fully owned subsidiary, Addex Pharma SA, at CHF 1 per share.
On February 24, 2022, Russia invaded Ukraine creating a global conflict. The resulting conflict and retaliatory measures by the global
community have created global security concerns, including the possibility of expanded regional or global conflict, which have had,
and are likely to continue to have, short-term and more likely longer-term adverse impacts on Ukraine and Europe and around the
globe. Potential ramifications include disruption of the supply chain including research activities and complications with the conduct
of ongoing and future clinical trials of our product candidates led by the Group, including patient enrollment. The Group and its
collaborators rely on global networks of contract research organizations and clinical trial sites to enroll patients, certain of which are
in Russia and Ukraine. Delays in research activities or in the conduct of the clinical trials of the Group could increase associated costs
and, depending upon the duration of any delays, require the Group to find alternative suppliers at additional expense. In addition, the
conflict in Eastern Europe has had significant ramifications on global financial markets, which may adversely impact the ability of the
Group to raise capital on favorable terms or at all.
Page 62 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements
Phone +41 22 322 24 24
+41 22 322 24 00
Fax
www.bdo.ch
BDO AG
Rte de Meyrin 123
Case postale 150
1215 Genève 15
REPORT OF THE STATUTORY AUDITOR
To the General Meeting of Addex Therapeutics Ltd, Plan-les-Ouates
Report of the Statutory Auditor on the Financial Statements
Opinion
We have audited the financial statements of Addex Therapeutics Ltd (the "Company"), which comprise the balance sheet as at 31
December 2021 and the income statement and notes for the year then ended, including a summary of significant accounting policies.
In our opinion the financial statements (pages 55 to 62) as at 31 December 2021 comply with Swiss law and the company’s articles
of incorporation.
Basis for Opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions and
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the Company in accordance with the provisions of Swiss law and the requirements of the Swiss audit
profession and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the key audit matter
Valuation of the loans to subsidiaries
The Company has granted loans to its subsidiary Addex
Pharma SA for a total gross value of CHF 221'315'638 and has
recorded a corresponding provision of CHF 190'838'846.
We obtained an understanding of management’s overall
process for valuing loans to subsidiaries, including the related
internal controls to address the risk of non-recoverability of such
loans and the recording of timely provisions, where applicable.
This is a significant focus point due to the significance of the
loans provided by Addex Therapeutics Ltd to its subsidiary and
the need of management estimates for the assessment of the
carrying value of these loans in the financial statements which
implies a high level of judgment.
In order to determine any potential impairment of the value of
the loans granted to its subsidiaries, management has
assessed the financial strength (net asset value or NAV) of the
subsidiary.
Refer to note 9. Other non-current assets - Loans to Group
companies
reviewed management’s assessment of
We have
the
recoverability of the loans and resulting provisions, which is
based on the financial position of its subsidiary and inquired with
management about events
future
performance and financial position of this subsidiary.
that could affect
the
We also assessed
disclosures.
the appropriateness of
the related
Page 63 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements
Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swiss law
and the company’s articles of incorporation, and for such internal control as the Board of Directors determines is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board
of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the website of EXPERTsuisse:
http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.
Report on Other Legal Requirements
In accordance with article 728a para. 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists,
which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.
We recommend that the financial statements submitted to you be approved.
We draw attention to the fact that treasury shares have been subscribed by a group company in the absence of sufficient freely
disposable equity and that the company holds treasury shares in excess of 10 percent of the share capital, which is in breach of
Article 659 paragraph 1 of the Swiss Code of Obligations.
Furthermore, we draw attention to the fact that half of the share capital and legal reserves are no longer covered (art 725 para.1 CO).
Geneva, 10 March 2022
BDO Ltd
Nigel Le Masurier
Christoph Tschumi
Licensed Audit Expert
Licensed Audit Expert
Auditor in Charge
Page 64 of 65
Addex Therapeutics Annual Report 2021 │Statutory Financial Statements
Forward Looking Statements
These materials contain forward-looking statements that can be identified by terminology such as “not approvable”, “continue”,
“believes”, “believe”, “will”, “remained open to exploring”, “would”, “could”, or similar expressions, or by express or implied discussions
regarding Addex Therapeutics, formerly known as, Addex Pharmaceuticals, its business, the potential approval of its products by
regulatory authorities, or regarding potential future revenues from such products. Such forward-looking statements reflect the current
views of Addex Therapeutics regarding future events, future economic performance or prospects, and, by their very nature, involve
inherent risks and uncertainties, both general and specific, whether known or unknown, and/or any other factor that may materially
differ from the plans, objectives, expectations, estimates and intentions expressed or implied in such forward-looking statements.
Such may in particular, cause actual results with allosteric modulators of mGlu2, mGlu3, mGlu4, mGlu5, mGlu7, GABAB or other
therapeutic targets to be materially different from any future results, performance or achievements expressed or implied by such
statements. There can be no guarantee that allosteric modulators of mGlu2, mGlu3, mGlu4, mGlu5, mGlu7, GABAB or other
therapeutics targets will be approved for sale in any market or by any regulatory authority. Nor can there be any guarantee that
allosteric modulators of mGlu2, mGlu3, mGlu4, mGlu5, mGlu7, GABAB or other therapeutic targets will achieve any particular levels
of revenue (if any) in the future. In particular, management’s expectations regarding allosteric modulators of mGlu2, mGlu3, mGlu4,
mGlu5, mGlu7, GABAB or other therapeutic targets could be affected by, among other things, unexpected actions by our partners,
unexpected regulatory actions or delays or government regulation generally; unexpected clinical trial results, including unexpected
new clinical data and unexpected additional analysis of existing clinical data; competition in general; government, industry and general
public pricing pressures; the company’s ability to obtain or maintain patent or other proprietary intellectual property protection. Should
one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, believed, estimated or expected. Addex Therapeutics is providing the information in these materials
as of this date and does not undertake any obligation to update any forward-looking statements contained in these materials as a
result of new information, future events or otherwise, except as may be required by applicable laws.
For more information about the Addex Therapeutics Ltd Group please contact:
Addex Therapeutics
C/O Addex Pharma SA
Chemin des Mines 9
1202 Geneva
Switzerland
Investor & Media Relations
Tel: +41 22 884 15 55
Fax: +41 22 884 15 56
investor.relations@addextherapeutics.com
media.relations@addextherapeutics.com
Share Registry
SharecommServices AG
Tel: +41 44 809 58 58
Fax: +41 44 809 58 59
General Information
Tel: +41 22 884 15 55
Fax: +41 22 884 15 56
info@addextherapeutics.com
Addex on the Internet
www.addextherapeutics.com
Page 65 of 65