Allosteric Modulators for
Human Health
Annual Report 2022
Addex Therapeutics Annual Report 2022
Contents
3
4
6
21
27
59
Letter to Shareholders
Financial Review
Corporate Governance Report
Compensation Report
Consolidated Financial Statements
Statutory Financial Statements
Key Facts / Addex Therapeutics
Focus:
Disease area:
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 post-stroke recovery
ADX71149 for epilepsy (licensed to Janssen Pharmaceuticals Inc.)
GABAB PAM for substance use disorders (licensed to Indivior PLC)
GABAB PAM for CMT1A, chronic cough & pain
mGlu7 NAM for stress related disorders including post-traumatic
stress disorder (“PTSD”)
M4 PAM for schizophrenia and other psychoses
Total full-time equivalent employees and
consultants as of December 31, 2022:
24
Stock symbol / exchange:
ADXN (ISIN:CH0029850754) / SIX Swiss Exchange
ADXN (American Depositary Shares) / Nasdaq Stock Market
Shares issued as of December 31, 2022:
115,348,311
Cash as of December 31, 2022:
6,957,086
Headquarter:
Geneva, Switzerland
Page 2 of 70
Addex Therapeutics Annual Report 2022
Letter to Shareholders
Dear Shareholders,
2022 has been a very challenging year with the inconclusive data from our blepharospasm clinical study followed by the termination
of dipraglurant’s development in PD-LID due to a slow recruitment rate attributed to COVID-19 pandemic related constraints. We
have substantially completed our evaluation of the future development of dipraglurant and have identified stroke recovery and pain
as interesting areas for future development in addition to PD-LID. We are currently pursuing collaborative arrangements prior to
restarting development.
On a more positive note, our partner Janssen Pharmaceuticals Inc., a Johnson and Johnson company, made excellent progress in
advancing the ADX71149 phase 2a proof of concept clinical study in epilepsy patients with the enrollment of 60 patients in cohort 1
and the start of enrollment of patients in cohort 2. An independent interim review committee (IRC) has been constituted by Janssen
to review the data and make a recommendation on the future direction of the study which we expect to report early in the second
quarter of 2023.
In addition, we made substantial progress in our collaboration with our partner, Indivior, in advancing our gamma-aminobutyric acid
subtype B receptor (“GABA B”) positive allosteric modulators (“PAMs”) program towards selection of development candidates for
substance use disorder, CMT1A, chronic cough and pain. During 2022, we extended our research collaboration with Indivior and they
agreed additional research funding of CHF1.8 million, bringing total research funding since 2018 to more than CHF13.8 million,
demonstrating their strong commitment to our partnership.
Furthermore, we made excellent progress in our unpartnered preclinical portfolio:
Our metabotropic glutamate receptor subtype 7 (“mGlu7”) negative allosteric modulators (“NAM”) program for stress related disorders,
including post-traumatic stress disorder, made significant progress in 2022. As result we have selected a drug candidate to enter
investigational new drug (“IND”) enabling studies and have multiple novel back up series of compounds in clinical candidate selection
phase.
Our metabotropic glutamate receptor subtype 2 (“mGlu2”) NAM program for mild neurocognitive disorders has made solid progress
in 2022 with multiple novel lead series of compounds progressing in lead optimization and one series entering clinical candidate
selection.
Our muscarinic acetylcholine receptor subtype 4 (“M4”) PAM program for the treatment of schizophrenia and other psychoses has
rapidly advanced multiple differentiated novel chemical series into late lead optimization.
Due to the challenging financing environment, we continue to pursue discussions with potential partners across our portfolio, focus
on cost control and making selective investments in areas of our portfolio where we believe we can bring the most value to support
our discussions with potential partners. We strengthened our balance sheet in July 2022 with a small offering raising gross proceeds
of $4.2 million from the sale of new shares primarily in the form of American Depository Shares on the Nasdaq Stock Market.
We have made significant progress in a difficult year and would like to acknowledge and thank our employees 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 70
Addex Therapeutics Annual Report 2022│Financial Review
Financial Review
The following review and discussion of the financial results for 2022 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 2022, 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”), M4 PAM program
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, 2022, our headcount was 24 full time equivalents (FTEs) compared to 26 FTEs at December 31, 2021.
Our average headcount was stable at 25 in 2022 and 2021. 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 14.6 million and general and administrative expenses increased to CHF
7.3 million. CHF 1.4 million has been recognized as income in the year and our net loss increased to CHF 20.8 million. We ended the
year with a cash position of CHF 7.0 million.
Results of operations
The following table presents our consolidated results of operations for the fiscal years 2022 and 2021:
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………………….....
2022
1.4
-
1.4
(14.6)
(7.3)
(21.9)
(20.5)
(0.3)
(20.8)
2021
2.9
0.2
3.1
(12.8)
(5.8)
(18.6)
(15.5)
0.1
(15.4)
Income
Income decreased by CHF 1.7 million in 2022 compared to 2021 primarily due to reduced research funding from Indivior which is
recognized in income as related costs are incurred.
Research and development expenses
R&D expenses increased by CHF 1.8 million to CHF 14.6 million in 2022, compared to CHF 12.8 million in 2021. The increase
primarily relates to outsourced R&D costs for CHF 1.0 million including dipraglurant clinical development activities for CHF 0.4 million
and discovery activities for CHF 0.6 million, as well as higher share-based compensation costs for CHF 0.6 million. 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 1.5 million to CHF 7.3 million in 2022, compared to CHF 5.8 million in 2021, primarily due to higher
share-based compensation costs.
Finance Result, net
Finance result net decreased by CHF 0.4 million in 2022 compared to 2021 mainly due to currency exchange differences on U.S
dollar cash deposits following the strengthening of the Swiss franc.
Page 4 of 70
Addex Therapeutics Annual Report 2022│Financial Review
Net loss for the year
The net loss for the 2022 financial year was CHF 20.8 million compared to CHF 15.4 million for 2021. The increase in the net loss of
CHF 5.4 million is primarily due to increased share-based compensation costs of CHF 2.5 million and a CHF 1.7 million reduction in
revenue. Basic and diluted loss per share increased to CHF 0.46 for 2022, compared to CHF 0.45 for 2021 due to an increase in the
loss offset by an increase in the weighted average number of shares issued.
Balance sheet & cash flows
Cash and cash equivalents decreased by CHF 13.5 million to CHF 7.0 million at December 31, 2022, compared to CHF 20.5 million
at December 31, 2021. During the same period, total shareholders’ equity decreased by CHF 12.0 million and amounted to CHF 4.9
million at December 31, 2022 compared to CHF 16.9 million at December 31, 2021. Decreases in both cash and cash equivalents
and total shareholders’ equity are primarily due to the net loss of CHF 20.8 million adjusted for CHF 3.7 million of share-based
compensation expense, partially offset by the net proceeds of CHF 3.7 million from the offering executed on July 22, 2022.
Post balance sheet event
The Group sold 3,742,506 treasury shares for a gross amount of CHF 1.2 million under the sale agency agreement with Kepler
Cheuvreux, between the closing date and the approval of these consolidated financial statements by the board of directors.
Shares and shareholders’ information
At December 31, 2022, the Company had 115,348,311 (2021: 49,272,952) issued shares and a free float of approximately 58.25%.
Of the issued shares at December 31, 2022, 38,214,291 shares (at December 31, 2021: 11,374,803 shares) are held by Addex
Pharma SA and recorded as treasury shares. The closing share price was CHF 0.10 at December 31, 2022 compared to CHF 1.04
at December 31, 2021 and the market capitalization was CHF 11.7 million compared to CHF 51.2 million, respectively.
2023 Outlook
Following the completion of enrollment of patients in part 1 of the ADX71149 phase 2a epilepsy clinical study by our partner Janssen
Pharmaceuticals Inc., we expect to report the outcome of the independent interim review committee (IRC) review of the data and
next steps at the beginning of the second quarter of 2023. We are also continuing discussions with potential strategic partners to
reinitiate Phase 2 development of dipraglurant in PD-LID or alternative indications, including stroke recovery, SUD and pain.
Furthermore, we expect to advance our mGlu7NAM discovery program into IND enabling studies in 2023, prepare our GABAB PAM
program under our partnership with Indivior for IND enabling studies in 2024 and progress our mGlu2 NAM and M4 PAM programs
in clinical candidate selection phase. 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 and secure further financial resources to advance their development and strengthen
our balance sheet,
Page 5 of 70
Addex Therapeutics Annual Report 2022│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 basis
the principles of Corporate Governance. These documents are available on Addex’s website at
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 1968 S
Coast HWY #1915, Laguna Beach, CA 92651, 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, 2022, Addex' market
capitalization was approximately CHF 11.7 million and 33.13% 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 62 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 voting
rights as at December 31, 2022, based on published notifications to SIX:
Shareholder
Addex Pharma SA3
Lock-up group4
Growth Equity Opportunities Fund IV, LLC5
Tim Dyer
33.13%
8.62%
4.90%
3.91%
1 This table presents the number of 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, 2022 (i.e. CHF 1,153,483 divided into 115,348,311 registered shares).
3 The beneficial owner is Addex Therapeutics Ltd, Chemin des Aulx 12, CH-1228 Plan-les-Ouates, Switzerland.
4 Lock-up group established by a lock-up agreement among the following beneficial owners following the exercise of options granted to Board Members, Executive Managers and
employees: Tim Dyer, who owns 4.51% of the voting rights, and 25 other shareholders, who individually hold less than 3% of the voting rights. The lock-up agreement will terminate on
October 4, 2026.
5 The beneficial owner is New Enterprise Associates Timonium MD 21093, USA.
Shares held1
38,214,291
9,941,187
5,648,690
4,505,157
% of voting rights2 % of capital2
33.13%
8.62%
4.90%
3.91%
For a comprehensive list of notifications of shareholdings received during 2022 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#/).
1.3. Cross-shareholdings
There are no cross-shareholdings in terms of capital shareholdings or voting rights in excess of 5%.
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Addex Therapeutics Annual Report 2022│Corporate Governance Report
2. Capital structure
There were 2,401 shareholders registered in the share register on December 31, 2022. 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
Total
Number of registered shareholders on December 31, 2022
224
849
1,020
272
29
6
1
2,401
The shareholder base on December 31, 2022 was constituted as follows:
Shareholder structure according to category of investors
(weighted by number of shares)
28.57%
Private persons
Institutional shareholders
40.89%
Holder of ADSs listed on Nasdaq not registered in the share register 20.29%
10.25%
Non-identified
100.00%
Total
Shareholder structure by country
(weighted by number of shares)
United States
Switzerland
Other
Holder of ADSs listed on Nasdaq not registered in the share register 20.29%
10.25%
Non-identified
100.00%
Total
6.21%
58.05%
5.20%
2.1. Capital
As of December 31, 2022, the share capital amounted to CHF 1,153,483.11 consisting of 115,348,311 issued shares with a nominal
value of CHF 0.01 per share. As of December 31, 2022, the Company, indirectly, held 38,214,291 of its own shares. These shares
are recorded as treasury shares.
2.2. Authorized and conditional capital
Authorized share capital
As of December 31, 2022, the Company’s authorized capital under article 3b of the Articles was nil.
Conditional share capital
As of December 31, 2022 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 13,306.95 through the issuance of a maximum of 1,330,695 registered shares, which shall be
fully paid-in, with a par value of CHF 0.01 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 138,668.98 through the issuance of a maximum of 13,866,898 registered shares, which shall be fully paid-in, with a par value
of CHF 0.01 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:
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Addex Therapeutics Annual Report 2022│Corporate Governance Report
–
–
–
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, 2020
December 31, 2021
December 31, 2022
CHF 32,848,635
CHF 49,272,952
CHF 1,153,483
Conditional share capital
December 31, 2020
December 31, 2021
December 31, 2022
Authorized share capital
December 31, 2020
December 31, 2021
December 31, 2022
CHF 16,424,317
CHF 24,636,476
CHF 151,976
CHF 16,424,317
CHF 24,636,476
-
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.
Changes in capital in 2021
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.
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 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.
Changes in capital in 2022
On December 15, 2022, the Company increased its share capital from CHF 979,094 to CHF 1,153,483 through the issuance of
17,438,883 new registered shares at a nominal value of CHF 0.01 each out of the conditional capital following the exercise of
17,438,883 equity incentive units at a strike price of CHF 0.13 by Board Members, Executive Managers and other employees on
October 26, 2022.
On October 31, 2022, the Company increased its share capital from CHF 652,730 to CHF 979,094 through the issuance of 32,636,476
new registered shares at nominal value of CHF 0.01 each out of the authorized capital.
On May 9, 2022, the shareholders (i) increased the authorized capital from CHF 8,636,476 to CHF 32,636,476 and extended its term
to May 9, 2024 and (ii) increased the conditional capital from CHF 24,636,476 to CHF 32,636,476. On the same date, the shareholders
approved the reduction of the nominal value from CHF 1 to CHF 0.01 of all 65,272,952 issued shares, and of all shares issuable from
the authorized capital and conditional capital. The approved reduction was registered by the Geneva’s commercial registry on July
19, 2022 and published on July 22, 2022, after the expiration of a period of two months from the publication in the Swiss Gazette of
Commerce of three calls to creditors. The Company's share capital was thus reduced by a total amount of CHF 64,602,222.48 from
CHF 65,272,952 to CHF 652,729.52, and its authorized capital and conditional capital were each reduced by a total amount of
CHF 32,310,111.24 from CHF 32,636,476 to CHF 326,634.76. The Company's total number of issued shares (i.e. 65,272,952) as
well as its total number of issuable shares out of the authorized capital and conditional capital were not affected by the reduction. The
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Addex Therapeutics Annual Report 2022│Corporate Governance Report
amount corresponding to the nominal reduction of the Company's issued capital was allocated to capital contributions reserves and
there was no distribution to shareholders.
On February 2, 2022, the Company increased its share capital from CHF 49,272,952 to CHF 65,272,952 through the issuance of
16,000,000 new registered shares at nominal value of CHF 1 each out of the authorized capital.
For further information on changes in capital including changes in reserves, refer to the consolidated statements of changes in equity
as well as note 12 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 0.01 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 the 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 2022. 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, 2022, the Company has no convertible or exchangeable bonds or loans outstanding. As of December 31, 2022,
the Company has a total of 30,874,670 options outstanding, which primarily include (i) 777,000 options granted according to the
Employee Share Option Plan (ESOP), (ii) 5,866,898 warrants granted to various investors on March 29, 2018, and (iii) 9,230,772 and
15,000,000 warrants granted to one investor, respectively on December 21, 2021 and July 26, 2022. The ESOP options outstanding
were granted to employees or consultants of the Group. They vest over a four-year period, have a ten-year expiration term and a
strike price between CHF 0.13 to CHF 3.00.
In connection with the capital increase of March 28, 2018, each investor was granted 0.45 warrants for each new share subscribed.
Upon exercise (which may occur without any specific conditions), each warrant entitles the investor to subscribe one registered share
at a price of CHF 3.43 during a seven-year period.
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Addex Therapeutics Annual Report 2022│Corporate Governance Report
A total of 24,230,772 warrants have been granted to one investor through two offerings. On December 21, 2021, 9,230,772 warrants
in the form of 1,538,462 ADSs listed on Nasdaq Stock Market have been granted with a strike price of USD 6.50 per ADS (CHF 1 per
share) and six year exercise period expiring on December 21, 2027. On July 26, 2022, 15,000,000 warrants in the form of 2,500,000
ADS warrants have been granted with a strike price of USD 1.90 per ADS (CHF 0.30 per share) and five year exercise period expiring
on July 26, 2027. ADS are listed on the Nasdaq Stock Market and represents 6 shares listed on SIX Swiss Exchange.
For information on equity incentive plans, refer to notes 12 and 13 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 were members of the management of the Company or one of its subsidiaries in the
three financial years before 2022 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
2023
2023
2023
2023
2023
2023
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 center 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.
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.
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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 partner at SR One Capital
Management. Mr. Nunn was previously 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), 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.
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.
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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, 2022, the Company had two committees: The Audit Committee and the Compensation Committee. These
Committees are assisting the Board in fulfilling its duties and also have decision authority to the extent described below.
The Board Committees as of December 31, 2022
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
Compensation
Committee
Chairman
–
–
–
Member
Member
Member
Chairman
–
–
–
–
Members as of December 31, 2022: 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
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;
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–
–
–
–
–
–
–
–
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 2022.
Compensation Committee
Members as of December 31, 2022: 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 five meetings in 2022 to
review the 2021 achievements versus the planned corporate objectives, determine the performance related bonus pool, review the
annual salary review process and 2022 corporate objectives as well as to review the remuneration of the members of the Board,
amend the grant conditions relating to the strike price and propose a Staff retention deferred strike price payment plan (See
Compensation report of the Group).
3.5.3. Working methods of the Board of Directors and its committees
In 2022, 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.
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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 instructions;
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 filing of a request for a debt restructuring moratorium and the notification of the judge if liabilities exceed assets;
the preparation of the compensation report;
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.
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 2022 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.
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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
Year of Birth
1968
1957
Position
Chief Executive Officer
Chief Medical Officer
Robert Lütjens
Jean-Philippe Rocher
Mikhail Kalinichev
1968
1959
1967
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 10
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
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 behavioral neuroscience at
Rutgers University (USA).
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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 2022. 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 “Entries
in the share register” on page 17 below.
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 May 9, 2022, 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
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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 consolidation of shares;
– 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;
the creation of a conditional capital or of a capital range;
restrictions on the transferability of registered shares;
the creation of shares with privileged voting rights;
–
–
–
–
– a change of the currency in which the share capital is denominated;
–
–
–
– a relocation of the registered office;
–
–
the introduction of an arbitration clause in the Articles; and
the dissolution of the Company.
the introduction of a casting vote for the Chairman at the general meeting;
the introduction of a provision in the Articles allowing general meetings to be held abroad;
the delisting of shares;
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 April 2023. Addex has not enacted any rules on the
granting of exceptions in relation to these deadlines. No exceptions were granted in 2022, and the Board does not anticipate granting
any exceptions related to the shareholders’ meeting to be held in 2023. 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
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).
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Addex Therapeutics Annual Report 2022│Corporate Governance Report
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. The extension of the opting out will be discussed during
the next annual general assembly that is planned to be held the week of May 22, 2023.
On August 18, 2022, the Swiss Takeover Board granted, subject to certain conditions, an exemption to Addex Pharma SA from the
obligation to make an offer in relation to the acquisition of shares in Addex. After such acquisition, which occurred on October 31,
2022, Addex Pharma SA temporarily exceeded the shareholding threshold of 33 1/3 % of the voting rights in Addex. On December
19, 2022, Addex Pharma reduced its shareholding in Addex below the threshold of 33 1/3% of the voting rights, thus complying with
all conditions of the exemption.
7.2. Clauses on changes of control
Addex’ equity sharing certificate incentive plan, share option plan and staff retention deferred strike price payment 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 become exercisable with their remaining term being
reduced proportionally, and deferred strike price payment obligations and sales restrictions associated with the staff retention deferred
strike price payment plan are waived.
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 2022, BDO AG charged the Group audit fees in the amount of CHF 260,000.
8.3. Additional fees
In 2022, BDO AG charged the Group additional fees of CHF 34,141 for services relating to operations on the capital and Nasdaq
Stock Market related filings.
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 the general meeting 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 2022, 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 2021 year-end audit and their review of the interim reports relating to the published quarterly reports.
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Addex Therapeutics Annual Report 2022│Corporate Governance Report
In 2023, 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 2022 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.
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.
The following table summarizes the scheduled financial calendar for the financial year 2023:
Expected Dates:
March 30, 2023
March 30, 2023
Week of May 8, 2023
Week of May 22, 2023
Week of August 7, 2023
Week of November 6, 2023
Event:
Publication of the annual 2022 report
Media conference annual 2022 report
Publication of the Q1 2023 report
Annual General Meeting
Publication of the half-year 2023 report
Publication of the Q3 2023 report
Our 2023 calendar is as well available on our website:
https://www.addextherapeutics.com/en/investors/events/
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:
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Addex Therapeutics Annual Report 2022│Corporate Governance Report
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 Board Members, Executive Managers, 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 20 of 70
Addex Therapeutics Annual Report 2022 │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 (Amendment effective 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
Subject to the powers of the general meeting of shareholders, the Board of Directors determines the compensation of its members
and of the Executive Management in accordance with the Company’s Compensation Policy, on the recommendation of the
Compensation Committee. The Compensation Committee is composed of two members of the Board of Directors who have been
individually elected by the general meeting of shareholders, for a term of one year, until the end of the next annual general meeting.
The Board of Directors elects the chairman of the Compensation Committee from the members of the Compensation Committee.
Members of the compensation Committee are eligible for re-election indefinitely.
The Compensation Committee supports the Board of Directors in establishing and reviewing the Company’s compensation strategy,
guidelines and the performance targets. The Compensation Committee may also submit proposals to the Board of Directors in other
compensation-related issues. For a more detailed description of the Compensation Committee, please refer to section 3.5.2 of the
Corporate Governance Report on page 12.
The Compensation Committee meets as often as necessary to fulfil its role, and generally at least once a year. The Board of Directors
generally resolves on the recommendations of the Compensation Committee during the meeting of the Board of Directors which
immediately follows the meeting of the Compensation Committee during which a recommendation was made.
As a principle, the Chief Executive Officer (“CEO”) attends the meetings of the compensation Committee and, provided he is also a
Board Member, attends and votes during the meetings of the Board of Directors where the compensation of the Board Members and
the compensation of the Executive Managers are discussed. However, discussions and decisions of the Board of Directors and of
the Compensation Committee regarding the compensation of the CEO are resolved in his absence. The other members of the
Executive Management do not attend the meetings of the compensation Committee nor the parts of the meetings of the Board of
Directors, where the compensation of the Board Members or the compensation of the Executive Managers are discussed. Board
Members, who are not members of the Compensation Committee, do not attend the meetings of the Compensation Committee, but
take part in the meetings of the Board of Directors during which the compensation of the Board Members is discussed and the
compensation of the Executive Managers as well as the vote relating thereto.
In its review process the Compensation Committee 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 and business model, considering
the professional experience and areas of responsibility of the respective members of the Board of Directors and Executive Managers.
In 2020, a compensation benchmarking study has been conducted by a reputable, independent expert firm which has not been
awarded additional mandates by the Company. This benchmarking study has contributed to the Compensation Committee’s
assessment of the appropriateness of the Company’s compensation level and structure for the 2021 and 2022 business years. In this
benchmarking study, compensation data of Swiss and European listed companies from the biotech sector with a similar size and
stage of development to Addex were collected and used to establish compensation levels and structure. The Compensation
Committee also consults relevant compensation surveys and benchmarking reports. Based on the detailed review process of the
Compensation Committee, 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 non-executive board members mostly includes variable elements whilst executive board members are not
remunerated as board member. 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 the fair value of equity incentive units (share options and equity sharing certificates) and represents from 50% to 250% of fixed
annual compensation. Nevertheless, in 2022, the variable compensation of the chairman of the Board of Directors and of the chairman
of the compensation committee represented fourteen and thirteen time their fixed annual compensation respectively, primarily due to
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Addex Therapeutics Annual Report 2022 │Compensation Report
the increased fair value of their options granted as the exercise prices have been reduced (See note 13). 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 of Directors. Equity incentive
units are granted to compensate for the dilutive effects of capital raising to ensure Board Members have sufficient unvested equity
incentive units in accordance with external benchmarks. The most recent review of compensation for members of the Board took
place in October 2022. For further information on the compensation for members of the Board, please refer to the section
“Compensation of the Board in 2022" on page 23.
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 goals. 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. Every 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 and Individual goals. Equity incentive units are granted based on the discretion of the Board of Directors.
Variable cash compensation paid to Executive Managers includes bonus and equity incentive units. The variable compensation of
CEO is determined 100% based on company goals and includes a cash bonus representing from 0% to 50% of base salary and
equity incentive units representing from 0% to 150% of base salary, exceptionally increased to seven times of base salary in 2022
primarily due to the higher fair value of his equity incentive units following the reduction of the exercise prices. Our Chief Medical
Officer (“CMO”) is engaged through a consultancy agreement and invoices the company for hours worked on a monthly basis which
are settled in cash. In addition, equity incentive units are granted from time to time at the discretion of the Board of Directors. The
variable compensation of the other Executive Managers includes a cash bonus representing from 0% to 25% of base salary and is
determined based on 20% individual goals and 80% company goals, and equity incentive units representing 0% to 100% of base
salary, exceptionally increased up to 182% of base salary in 2022 primarily due to the increased fair value of their equity incentive
units granted following the reduction of the exercise prices. In addition, the Board of Directors grants equity incentive units to Executive
Managers to compensate for the dilutive effects of capital raising to ensure Executive Managers have sufficient unvested equity
incentive units in accordance with external benchmarks.
The company goals for 2022 were established at the beginning of the year as follows:
Execution of dipraglurant phase 2b/3 PD LID study (study 301)
Execution of dipraglurant phase 2a blepharospasm study
Advancing GABAB PAM to end of clinical candidate selection
Advancing other discovery programs to end of clinical candidate selection
Securing the Group’s financial situation
Maintain effective governance, regulation and administration
30%
15%
15%
15%
20%
5%
Following the termination of the dipraglurant clinical development in PD LID in June 2022, the company goals were realigned with the
Group’s revised strategy which primarily resulted in the dipraglurant phase 2b/3 PD LID study execution goal being replaced by an
objective to efficiently and effectively close down the PD LID development in a cost-effective manner with a weighting of 15%. In
addition, the percentage weighting of 20% for “securing the Group’s financial situation” was increased to 35%.
The individual goals of the Executive Managers for 2022 were as follows: 1) Deliver novel drug candidates weighted at 50%; 2)
Develop collaborative arrangements to efficiently advance preclinical portfolio weighted at 25%; and 3) Develop novel tools to identify
and characterize allosteric modulators weighted at 25%.
Equity incentive plans
The purpose of the Group’s share purchase, share option and equity sharing certificate programs (refer to note 13 of the consolidated
financial statements) is to provide members of the Board of Directors, Executive Management, employees and certain consultants
(together “Staff”) 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 Group, enhancing the value of the
shares for the benefit of the shareholders of the Group and increasing the ability of the Group to attract and retain individuals of
exceptional skills. In addition, these plans provide the Group with a mechanism to engage services for non-cash consideration by
settling them through a transfer of treasury shares under the share purchase plan based on predefined terms of the consulting
contract. The grant of any share option or equity sharing certificate is at the discretion of the Board of Directors. Key factors considered
by the Board of Directors in making grants of share options or equity sharing certificates are the amount of shareholder approved
conditional capital, the benchmarking with other companies as well as individual performance (for further information on the detail
and composition of the benchmark please refer to the paragraph review and approval process above). The strike price is determined
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Addex Therapeutics Annual Report 2022 │Compensation Report
by the Board of Directors and is primarily based on the closing price of the Company’s shares on the SIX Swiss Exchange on the
grant date. In addition, the Group has implemented a staff retention plan which includes a deferred strike price payment plan
(“DSPPP”) which encourages Board Members, Executive Managers and employees to exercise their share options or equity sharing
certificates and become shareholders of the Company by allowing deferral of the obligation to pay the strike price on exercise
("Deferred Strike Price Payment Obligations").
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 2022.
Special conditions in case of change of control
In the event of a change of control of the company, three Executive Managers are entitled to receive an amount equivalent to one
time the annual gross salary and 1.5 times the targeted annual bonus 12 months after the change of control, unless they have given
notice of termination or have received notice of termination for cause.
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 2022 and 2021
2022
Fixed
Variable compensation
value of
equity
incentive
units(2)
384,587
209,113
-
-
25,616
25,616
644,932
(1) Equity incentive units include share options granted during the year under the Company’s share option plan (refer to note 13 of the consolidated financial statements).
(2) Value of equity incentive units include the fair value of share options granted during the year under the Company’s share option plan amounting to CHF 246,502 and the increase of CHF 398,430
CHF
Vincent Lawton, chairman..……………...
Raymond Hill, member…………………..
Tim Dyer, member………...……………..
Roger Mills, member……….…………….
Jake Nunn, member………………...…...
Isaac Manke, member…………...………
Total……………………………………….
cash
compensation
26,330
15,529
-
-
13,639
13,639
69,137
number of
equity
incentive
units(1)
758,317
411,869
-
-
68,238
68,238
1,306,662
cash
attendance
26,330
15,529
-
-
13,639
13,639
69,137
Total
2022
437,247
240,171
-
-
52,894
52,894
783,206
in fair value of the equity incentive units whose grant conditions have been changed during the year (Refer to note 13 of the consolidated financial statements).
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
value of
equity
incentive
units(1)
54,129
30,931
-
-
23,198
23,198
131,456
Total
2021
107,309
62,839
-
-
49,788
49,788
269,724
(1) Equity incentive units include share options granted under the Company’s share option plan (refer to note 13 of the consolidated financial statements).
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Addex Therapeutics Annual Report 2022 │Compensation Report
Deferred Strike Price Payment Obligations of the Board of Directors:
CHF
Vincent Lawton, chairman..……………...
Raymond Hill, member…………………..
Tim Dyer, member………...……………..
Roger Mills, member……….…………….
Jake Nunn, member………………...…...
Isaac Manke, member…………...………
Total (1)……………………………………………………….
December 31,
2022
190,364
103,683
-
-
16,671
16,671
327,389
(1) The amounts reported in this table correspond to the amounts owed by members of the Board of Directors in relation to Deferred Strike Price Payment Obligations (see note 13), which may be
assimilated to loans to be disclosed in the remuneration report within the meaning of the Compensation Ordinance.
Compensation to the Executive Management in 2022 and 2021
2022
Fixed
Variable compensation
CHF
Total Executive Management (1)….…...
cash
compensation
1,249,366
Cash(4)
375,685
number of
equity
incentive
units (2)
6,846,206
value of
equity
incentive
units(3)
3,455,027
Total
2022
5,080,077
(1) The highest paid member of Executive Management in 2022 was the CEO, Tim Dyer, who received CHF 472,724 of fixed cash compensation, CHF 133,881 of variable cash compensation and
4,882,845 equity incentive units. The fair value of equity incentive units including accrued social charges amounted to CHF 2,498,459 including CHF 970,001 for equity incentive units granted during
the year and CHF1,528,458 relating to the change in grant conditions made during the year (see note 13).
(2) Equity incentive units include share options granted during the year under the Company’s share option plan.
(3) Value of equity incentive units include the fair value of share options granted during the year under the Company’s share option plan amounting to CHF 1,343,025 and the increase of CHF 2,112,002
in fair value of the equity incentive units whose grant conditions have been changed during the year (Refer to note 13 of the consolidated financial statements).
(4) 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.
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
equity
incentive
units(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.
Deferred Strike Price Payment Obligations of the Executive Management:
CHF
Total Executive Management (1)………….
December 31,
2022
1,711,789
(1) The amounts reported in this table correspond to the amounts owed by Executive Managers in relation to Deferred Strike Price Payment Obligations (see note 13), which may be assimilated to
loans to be disclosed in the remuneration report within the meaning of the Compensation Ordinance. The Highest Deferred Strike Price Payment Obligation amounted to CHF 1,222,748 as of December
31, 2022 and was attributable to the CEO Tim Dyer.
Page 24 of 70
Addex Therapeutics Annual Report 2022 │Compensation Report
Phone +41 22 322 24 24
www.bdo.ch
geneve@bdo.ch
BDO Ltd
Rte de Meyrin 123
P.O. Box 150
1215 Geneva 15
REPORT OF THE STATUTORY AUDITOR
To the General meeting of Addex Therapeutics Ltd, Plan-les-Ouates
Report on the Audit of the Compensation Report
Opinion
We have audited the Compensation Report of Addex Therapeutics Ltd (the Company) for the year
ended December 31, 2022. The audit was limited to the information on remuneration, loans and
advances pursuant to Art. 14-16 of the Ordinance against Excessive Remuneration in Listed Companies
bei
Limited
börsenkotierten Aktiengesellschaften, VegüV) in the tables marked «audited» on pages 21 to 24
of the Compensation Report.
Vergütungen
übermässige
(Verordnung
Shares
gegen
by
In our opinion, the information on remuneration, loans and advances in the accompanying
Compensation Report (pages 21 to 24) complies with Swiss law and Art. 14-16 VegüV.
Basis for Opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our
responsibilities under those provisions and standards are further described in the Auditor’s
Responsibilities for the Audit of the Compensation Report 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.
Other Information
The Board of Directors is responsible for the other information. The other information comprises the
information included in the annual report, but does not include the tables marked «audited» in the
Compensation Report, the consolidated financial statements, the stand-alone financial statements
and our auditor’s reports thereon.
Our opinion on the Compensation Report does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the Compensation Report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the audited financial information in the Compensation Report 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.
Board of Directors' Responsibilities for the Compensation Report
The Board of Directors is responsible for the preparation of a Compensation Report 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 a
Compensation Report that is free from material misstatement, whether due to fraud or error. The
Board of Directors is also responsible for designing the remuneration system and defining
individual remuneration packages.
BDO Ltd, a limited company under Swiss law, incorporated in Zurich, forms part of the international BDO Network of independent member firms.
Page 25 of 70
Addex Therapeutics Annual Report 2022 │Compensation Report
Auditor’s Responsibilities for the Audit of the Compensation Report
Our objectives are to obtain reasonable assurance about whether the information on remuneration,
loans and advances pursuant to Art. 14-16 VegüV is 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 SA-CH 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 this Compensation
Report.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement in the Compensation Report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made.
We communicate with the Board of Directors or its relevant committee regarding, among other
matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have
complied with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.
Geneva, March 30, 2023
BDO Ltd
Nigel Le Masurier
Licensed Audit Expert
Christoph Tschumi
Licensed Audit Expert
(Auditor in Charge)
BDO Ltd, a limited company under Swiss law, incorporated in Zurich, forms part of the international BDO Network of independent member firms.
Page 26 of 70
Addex Therapeutics Annual Report 2022 │Consolidated Financial Statements
Consolidated Financial Statements of Addex
Therapeutics Ltd as at December 31, 2022
Page 27 of 70
Addex Therapeutics Annual Report 2022 │Consolidated Financial Statements
Consolidated Balance Sheets
as at December 31, 2022 and December 31, 2021
ASSETS
Notes
December 31,
2022
December 31,
2021
Amounts in Swiss francs
Current assets
Cash and cash equivalents………………………………..……………........
Other financial assets………………………………………………………....
Trade and other receivables…………………………….……………………
Contract asset…………………………...…………………….………………
Prepayments …………………….……...…………………….………………
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
6,957,086
3,165
416,875
181,441
270,394
7,828,961
357,613
41,121
54,355
453,089
20,484,836
17,145
164,785
159,636
1,115,374
21,941,776
469,989
72,111
57,908
600,008
Total assets…………………………………………...................................
8,282,050
22,541,784
LIABILITIES AND EQUITY
Current liabilities
Current lease liabilities………………………………………………………..
Payables and accruals………………………………………………………..
Total current liabilities……………………………………………………...
Non-current liabilities
Non-current lease liabilities…………………………………………………..
Retirement benefits obligations……………………………………………...
Total non-current liabilities………………………...................................
Equity
Share capital……………………………………………………………..........
Share premium……………………………………………………………......
Other equity……………………………………………………………………
Treasury shares reserve……………………………………………………...
Other reserves……..………………………………………………………….
Accumulated deficit…………………………………………………………...
Total equity……………………………………………….............................
3.2
11
3.2
19
12
12
12
286,107
2,996,004
3,282,111
87,028
-
87,028
1,153,483
269,511,610
64,620,223
(6,278,763)
25,768,373
(349,862,015)
4,912,911
287,698
3,847,145
4,134,843
194,316
1,281,525
1,475,841
49,272,952
283,981,361
-
(11,703,279)
24,437,868
(329,057,802)
16,931,100
Total liabilities and equity………………………..……….........................
8,282,050
22,541,784
The accompanying notes form an integral part of these consolidated financial statements.
Page 28 of 70
Addex Therapeutics Annual Report 2022 │Consolidated Financial Statements
Consolidated Statements of Comprehensive Loss
for the years ended December 31, 2022 and 2021
Notes
December 31,
December 31,
2022
2021
Amounts in Swiss francs
Revenue from contract with customer………………………………….
Other income………………………………………………………………..
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
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 for the year, net of tax………….….....
14
15
16
20
18
21
19
1,422,438
22,521
2,916,308
236,997
(14,665,462)
(7,299,704)
(21,965,166)
(12,840,540)
(5,818,682)
(18,659,222)
(20,520,207)
(15,505,917)
29,251
(313,257)
(284,006)
(20,804,213)
-
(20,804,213)
217,015
(63,012)
154,003
(15,351,914)
-
(15,351,914)
(0.46)
(0.45)
1,270,132
(345)
1,269,787
260,548
(295)
260,253
Total comprehensive loss for the year………………………………….
(19,534,426)
(15,091,661)
The accompanying notes form an integral part of these consolidated financial statements.
Page 29 of 70
Addex Therapeutics Annual Report 2022 │Consolidated Financial Statements
Consolidated Statements of Changes in Equity
for the years ended December 31, 2022 and 2021
Notes
Share Capital
Share
Premium
Other equity
Treasury
Shares
Reserve
Foreign
Currency
Translation
Reserve
Other
Reserves
Accumulated
Deficit
Total
32,848,635
286,888,354
(6,078,935)
(657,230)
15,314,867
(313,705,888)
14,609,803
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
parties…………………...
Issue of treasury
shares…………………...
Cost of share capital
issuance………………...
Sales under shelf
registration……….……..
12
Related costs of sales
shelf registration………
Sale of pre-funded
warrants…………………
12
12
13
12
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 January
1, 2022….………………
Net loss for the year…...
Other comprehensive
income for the year….…
Total comprehensive
loss for the year...........
Reduction of the
nominal value…………..
Issue of treasury
shares………………….
Exercise ESOP & ESC
(treasury shares IFRS 2)
Cost of shares
issuance………………...
Sales under shelf
registration……………...
12
12
12
13
12
Related costs of sales
shelf registration………
Sale of pre-funded
warrants…………….…..
Cost of pre-funded
warrants sold………..….
Exercise of pre-funded
warrants…………….…..
Value of warrants and
pre-funded warrants…...
Value of share-based
services.............………..
Movement in treasury
shares:
Net purchases under
liquidity agreement…….
Sales agency
agreement………………
Costs under sale
agency agreement……..
Balance as of
December 31, 2022…...
-
-
-
-
-
-
12
12
6,900,000
3,199,323
9,524,317
-
-
-
-
-
-
-
-
-
-
-
(1,865,475)
3,882
(581,800)
-
-
(3,720,491)
-
48,066
(31,502)
41,004
49,272,952
283,981,361
-
-
-
(64,620,223)
12
16,326,365
12/13
174,389
-
-
-
-
-
-
(288,131)
(3,275,107)
(114,754)
-
-
(8,792,756)
(999,789)
-
(105,433)
(890,294)
(3,487)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
64,620,223
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9,524,317)
-
3,759,402
-
-
-
-
-
116,914
(16,283)
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
(11,703,279)
(657,525)
25,095,393
(329,057,802)
16,931,100
-
-
-
-
(16,326,365)
(174,389)
-
4,500,000
-
-
-
15,978,570
-
-
91,452
1,355,248
-
-
-
(20,804,213)
(20,804,213)
(345)
1,270,132
-
1,269,787
(345)
1,270,132
(20,804,213)
(19,534,426)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,841,270
(301,841)
(7,160,573)
999,789
3,682,073
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(288,131)
1,224,893
(114,754)
2,841,270
(301,841)
25,241
-
3,682,073
(13,981)
464,954
(3,487)
1,153,483
269,511,610
64,620,223
(6,278,763)
(657,870)
26,426,243
(349,862,015)
4,912,911
The accompanying notes form an integral part of these consolidated financial statements.
Page 30 of 70
Addex Therapeutics Annual Report 2022 │Consolidated Financial Statements
Consolidated Statements of Cash Flows
for the years ended December 31, 2022 and 2021
Notes
December 31,
December 31,
2022
2021
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 ....,……….………………………………….
Decrease in other financial assets……………………………..…………….
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 from/(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-shelf registration………………….
Costs paid on sale of treasury shares-shelf registration ……….……….…
Proceeds from sale of pre-funded warrants….……....………..……………
Costs paid on sale of pre-funded warrants………………………………….
Proceeds from the exercise of pre-funded warrants………………………..
Sale of treasury shares under liquidity and sale agency agreement……...
Costs paid on sale of treasury shares under sale agency agreement…….
Cost paid on issue of treasury shares………………………………………..
Principal element of lease payment..………..………………………………
Interest received……………….……………………………………………...
Interest paid………………..………………………………………………......
Net cash from financing activities…………...........................................
8/9
13
19
7
7
7
7
12
9
10
12
12
12
12
12
12
12
20
20
(20,804,213)
(15,351,914)
323,144
-
3,682,073
(11,393)
215,527
13,980
(252,090)
(21,805)
844,980
(427,388)
-
-
-
(16,437,185)
(581)
3,553
2,972
-
-
1,224,893
(304,009)
2,841,270
(576,117)
25,241
450,973
(3,487)
(248,354)
(288,076)
29,251
(48,897)
3,102,688
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)
3,763,284
(389,857)
5,470,141
(569,228)
-
33,159
(332)
-
(309,617)
5,322
(63,012)
16,402,824
Increase/(decrease) in cash and cash equivalents……………………..
(13,331,525)
1,667,326
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
20,484,836
(196,225)
6,957,086
18,695,040
122,470
20,484,836
The accompanying notes form an integral part of these consolidated financial statements.
Page 31 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
Notes to the Consolidated Financial Statements
for the years ended December 31, 2022 and 2021
(Amounts in Swiss francs)
1. General information
Addex Therapeutics Ltd (the “Company”), formerly Addex Pharmaceuticals Ltd, and its subsidiaries (together, the “Group”) are a
clinical stage pharmaceutical group applying its leading allosteric modulator drug discovery platform to discovery and development
of small molecule pharmaceutical products, with an initial focus on central nervous system disorders.
The Company is a Swiss stockholding corporation domiciled c/o Addex Pharma SA, Chemin des Aulx 12, CH1228 Plan-les-Ouates,
Geneva, Switzerland and the parent company of Addex Pharma SA, Addex Pharmaceuticals France SAS and Addex Pharmaceuticals
Inc. registered in Delaware, 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 29, 2023.
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 2022 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,
2022. 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, 2023 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 2023.
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, Addex
Pharmaceuticals Inc., and Addex Pharmaceuticals France SAS.
Page 32 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
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 result’.
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 33 of 70
Addex Therapeutics Annual Report 2022 │ 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 Group classifies a contract asset as a receivable when the Group’s right to consideration is unconditional. If the Group transfers
control of goods or services to a customer before the customer pays consideration, the Group records either a contract asset or a
receivable depending on the nature of the Group’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 other treasury shares directly held by Addex
Pharma SA.
The Group 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.
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Addex Therapeutics Annual Report 2022 │ 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 are 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 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,
changes in actuarial assumptions and changes in the asset ceiling effect are recognized immediately in other comprehensive loss
and past-service costs are recognized immediately in statement of comprehensive loss.
Under IAS 19, the shortfall or the surplus of the fair value of the plan assets compared with the defined benefit obligation is recorded
as a liability or an asset in the consolidated balance sheet. That recognition is subject to asset ceiling rules and minimum funding
requirements set out in IFRIC 14. 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.
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Addex Therapeutics Annual Report 2022 │ 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 deferred revenue (contract liabilities) being recorded on the balance
sheet. 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
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Addex Therapeutics Annual Report 2022 │ 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 or full termination of the lease with any difference recognized in the
statement of comprehensive loss. The lease liability is then further adjusted to ensure the 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 2022, a 10% increase or decrease in the EUR/CHF
exchange rate would have resulted in a CHF 7,945 decrease or increase in net loss and shareholders’ equity as at December 31,
2022 (2021: a CHF 7,948 increase or decrease), a 10% increase or decrease in the GBP/CHF exchange rate would have resulted in
a CHF 1,470 increase or decrease in net loss and shareholders’ equity as at December 31, 2022 (2021: a CHF 17,893 decrease or
increase) and a 10% increase or decrease in the USD/CHF exchange rate would have resulted in a CHF 175,837 (2021: CHF
1,027,027) increase or decrease in net loss and shareholders’ equity as at December 31, 2022. 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.
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Addex Therapeutics Annual Report 2022 │ 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, 2022 and 2021.
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 31, 2021………………………
Cash flows…………..……………………………………
Acquisition – Leases……..……………………………...
Effect of modification to lease terms…………………...
Disposals………………………………………………....
Foreign exchange differences…..……………………...
Net debt as at December 31, 2021…………………...
Cash flows…………..……………………………………
Effect of modification to lease terms…………………..
Foreign exchange differences…..……………………...
Net debt as at December 31, 2022……………………
Leases
(567,396)
309,617
(2,000)
(226,578)
4,343
-
(482,014)
288,076
(179,197)
-
(373,135)
Cash and
cash
equivalents
18,695,040
1,667,326
-
-
-
122,470
20,484,836
(13,331,525)
-
(196,225)
6,957,086
Other
financial
assets
64,930
(47,785)
-
-
-
-
17,145
(13,980)
-
-
3,165
Total
18,192,574
1,929,158
(2,000)
(226,578)
4,343
122,470
20,019,967
(13,057,429)
(179,197)
(196,225)
6,587,116
In addition, the maturity profile of the Group’s financial liabilities is presented in the table below:
At December, 31 2022
Lease Liabilities………………………………………….
At December, 31 2021
Lease Liabilities………………………………………….
Less
than
1 Year
305,294
Less
than
1 Year
315,412
1 to 5
Years
90,684
1 to 5
Years
202,526
More
than
5 Years
-
Total
cash out
flows
395,978
Carrying
amount
liabilities
373,135
More
than
5 Years
-
Total
cash out
flows
517,938
Carrying
amount
liabilities
482,014
Lease liabilities relate to the rent of laboratories, equipment, offices and related spaces used by the Group.
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Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
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, at
the issuance date of these audited consolidated financial statements, will be sufficient to fund its operations and meet all of its
obligations as they fall due, through the third quarter of 2023. These factors individually and collectively indicate that a material
uncertainty exists that raise substantial doubt about the Group's ability to continue as a going concern for one year from the date of
issuance of these audited consolidated financial statements. The future viability of the Group is dependent on its ability to raise
additional capital through public or private financings or collaboration agreements to finance its future operations, which may be
delayed due to reasons outside of the Group’s control including the COVID-19 pandemic and the Russia’s invasion of Ukraine. 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
collaboration agreements, 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 condition.
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 June 17, 2022 the Group terminated its dipraglurant US registration
program including pivotal Phase 2B/3 and open label clinical trials of dipraglurant in levodopa-induced dyskinesia associated with
Parkinson’s disease (PD-LID) due to a slow recruitment of patients, attributed to the consequences of COVID-19 related patient
concerns about participation in clinical studies, as well as staffing shortages and turnover within study sites. 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 2023 and thereafter cannot be reasonably predicted.
Russia’s invasion of Ukraine
On February 24, 2022, Russia invaded Ukraine. 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 and development activities being conducted by the Group and its strategic
partners. The Group and partners rely on global networks of contract research organizations to engage clinical study sites and enroll
patients, certain of which are in Russia and Ukraine. Delays in research and development activities of the Group and its partners
could increase associated costs and, depending upon the duration of any delays, require the Group and its partners 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.
Revenue recognition
Revenue is primarily from fees related to licenses, milestones and research services. Given the complexity of the relevant agreements,
judgements are required to identify distinct performance obligations; allocate the transaction price to these performance obligations
and determine when the performance obligations are met. In particular, the Group’s judgement over the estimated stand-alone selling
price which is used to allocate the transaction price to the performance obligations is disclosed in note 14.
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.
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Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
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 2022 would have been CHF 3.0 million or CHF 4.3 million respectively (2021: CHF
1.0 million or CHF 1.3 million, respectively). This is compared to the amount recognized as an expense in 2022 of CHF 3.7 million
(2021: CHF 1.2 million). Additional information is disclosed in note 13.
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 19.
5. Segment information
Management has identified one single operating segment, related to the discovery, development and commercialization of small-
molecule pharmaceutical products.
Page 40 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
Information about products, services and major customers
External income of the Group for the years ended December 31, 2022 and 2021 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 …..………………………………………………….
2022
1,422,438
-
22,521
1,444,959
2021
2,916,308
218,330
18,667
3,153,305
Analysis of revenue from contract with customer and other income by major counterparties is detailed as follows:
Indivior PLC ……………………………………………...
Eurostars/Innosuisse……………...…………………….
Other counterparties………………………………….…
Total …………………..……………………………..…..
2022
1,422,438
-
22,521
1,444,959
2021
2,916,308
218,330
18,667
3,153,305
For more detail, refer to note 14, “Revenue from contract with customer” and note 15 “Other Income”.
The geographical allocation of long-lived assets is detailed as follows:
Switzerland………………...……………………….........
United States of America……………………................
France………………………………………………….....
December 31, 2022
452,732
-
357
December 31, 2021
596,098
3,536
374
Total…….…………………..………………...................
453,089
600,008
The geographical analysis of operating costs is as follows:
Switzerland…………….………………………..............
United States of America……………………................
France…………………………………...………….........
Total operating costs (note 16) ………………….......
2022
21,933,056
27,513
4,597
21,965,166
2021
18,619,123
33,016
7,083
18,659,222
There was capital expenditure of CHF 581 in 2022 and CHF 31,549 in 2021.
6. Cash and cash equivalents
Cash at bank and on hand……………………..............
December 31, 2022
6,957,086
December 31, 2021
20,484,836
Total cash and cash equivalents………………........
6,957,086
20,484,836
Split by currency:
CHF……………...………………………………..……...
USD………….……………………………………………
EUR………...………………………………..……..........
GBP……………………………………………………….
December 31, 2022
52.98%
42.10%
2.69%
2.23%
December 31, 2021
44.33%
54.47%
0.58%
0.62%
Total………………………………………………………
100.00%
100.00%
Page 41 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
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.
All cash and cash equivalents were held either at banks or on hand as of December 31, 2022 and December 31, 2021.
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………...……..……........................................
P-2 / A-2…………………………………………………..
Other………………………………………………………
Cash on hand………………………..…………………...
December 31, 2022
3,708,603
3,031,028
217,335
120
December 31, 2021
11,943,391
-
8,541,279
166
Total cash and cash equivalents………...................
6,957,086
20,484,836
External credit ratings of counterparties were obtained from Moody’s (P-) or Standard & Poor’s (A-).
7. Other current assets
Other financial assets……………………………………
Trade and other receivables……………….…………...
Contract asset (Indivior PLC).……………..…………...
Prepayments………..…………....................................
December 31, 2022
3,165
416,875
181,441
270,394
December 31, 2021
17,145
164,785
159,636
1,115,374
Total other current assets……………………..…......
871,875
1,456,940
Other current assets decreased by CHF 0.6 million as of December 31, 2022 compared to December 31, 2021 including a decrease
of CHF 0.8 million in prepayments primarily due to reduced prepaid amounts related to dipraglurant clinical development activities
partially offset by an increase of CHF 0.3 million in the combined amount of contract assets, trade and other receivables primarily
relating to the research agreement with Indivior. 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, 2022, the combined amount of the contract asset, trade receivables and other receivables amounted to CHF 0.6 million
(CHF 0.3 million as of December 31, 2021) including CHF 0.4 million for the research agreement with Indivior (CHF 0.2 million as of
December 31, 2021), CHF 0.1 million for the grant from Eurostars/Innosuisse (CHF 0.1 million as of December 31, 2021). The Group
has considered that the contract asset, trade receivables and other receivables have a low risk of default based on historic loss rates
and forward-looking information on macroeconomic factors affecting the ability of the third parties to settle invoices. As a result,
expected loss allowance has been deemed as nil as of December 31, 2022 and December 31, 2021.
8. Right-of-use assets
Year ended December 31, 2021
Opening net book amount……………………………...
Additions………………………………………………….
Depreciation charge……………………………………..
Effect of lease modifications……………………………
Disposals….……………………………………………...
Exchange differences…….…………….…...................
Closing net book amount…………..…………….......
Properties
Equipment
Total
543,890
2,000
(294,389)
208,902
(4,216)
698
456,885
21,454
-
(26,026)
17,676
-
-
13,104
565,344
2,000
(320,415)
226,578
(4,216)
698
469,989
Total
1,387,413
(917,424)
469,989
As of December 31, 2021
Cost…………………......……………............................
Accumulated depreciation………………..…………….
Net book value……………...…………………………..
Properties
Equipment
1,298,569
(841,684)
456,885
88,844
(75,740)
13,104
Page 42 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
Year ended December 31, 2022
Opening net book amount………………………………
Depreciation charge……………………………………..
Effect of lease modifications……………………………
Closing net book amount…………..…………….......
Properties
Equipment
Total
456,885
(277,069)
173,281
353,097
13,104
(14,504)
5,916
4,516
469,989
(291,573)
179,197
357,613
As of December 31, 2022
Cost…………………......……………............................
Accumulated depreciation………………..…………….
Net book value……………...…………………………..
Properties
Equipment
1,471,850
(1,118,753)
353,097
13,542
(9,026)
4,516
Total
1,485,392
(1,127,779)
357,613
For the year ended December 31, 2022, the Group recorded a depreciation charge of CHF 0.2 million (2021: CHF 0.2 million) as part
of research and development expenses and CHF 0.1 million (2021: CHF 0.1 million) as part of general and administration expenses.
The total cash outflows for the principal element of lease payment amounted to CHF 0.3 million for the years ended December 31,
2022 and 2021. The maturity analysis of lease liabilities is presented under note 3.2.
9. Property, plant and equipment
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………..………………………………...
Year ended December 31, 2022
Opening net book amount……..………………………..
Additions……………..…………………………………...
Depreciation charge…….…..…………………………..
Closing net book amount……..................................
As of December 31, 2022
Cost………………..……………………………………...
Accumulated depreciation………................................
Net book value………..………………………………...
Equipment
Furniture &
fixtures
Chemical
library
67,760
31,549
(27,198)
72,111
Equipment
1,713,828
(1,641,717)
72,111
Equipment
72,111
581
(31,571)
41,121
Equipment
1,714,409
(1,673,288)
41,121
-
-
-
-
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
67,760
31,549
(27,198)
72,111
Total
2,928,557
(2,856,446)
72,111
Total
72,111
581
(31,571)
41,121
Total
2,929,138
(2,888,017)
-
-
41,121
For the year ended December 31, 2022, the Group recorded a depreciation charge of CHF 26,615 (2021: CHF 19,934) as part of
research and development expenses and CHF 4,956 (2021: CHF 7,264) as part of general and administration expenses.
10. Non-current financial assets
Security rental deposits.………………………………...
December 31, 2022
54,355
December 31, 2021
57,908
Total non-current financial assets…………………..
54,355
57,908
Security rental deposits relate to laboratory and office space. The applicable interest rate to such deposits is immaterial, and therefore,
the value approximates amortized cost.
Page 43 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
11. Payables and accruals
Trade payables…………………………………………..
Social security and other taxes……………..…………..
Accrued expenses………..……………………………..
December 31, 2022
1,276,546
120,875
1,598,583
December 31, 2021
1,787,287
203,288
1,856,570
Total payables and accruals………………………….
2,996,004
3,847,145
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 decrease of CHF 0.9 million in payables and accruals as of December 31,
2022, compared to December 31, 2021, includes CHF 0.4 million of capital increase costs of the offering executed on December 16,
2021 and CHF 0.3 million for dipraglurant clinical development activities. The carrying amounts of payables do not materially differ
from their fair values, due to their short-term nature.
12. Share capital
Balance as of January 1, 2021…….….……………....
Issue of shares- treasury shares……………………….
Issue of shares - third parties…………………………...
Sale of shares under shelf registration…………………
Sale of shares under sale agency agreement…….…..
Settlement of supplier invoices………………………....
Net purchase of treasury shares under liquidity
agreement………………………………………………..
Balance as of December 31, 2021.….………..……...
Issue of shares - treasury shares……………………….
Issue of shares - exercise ESOP & ESC………………
Sale of shares under shelf registration…………………
Exercise of pre-funded warrants……………………….
Sale of shares under sale agency agreement…….…..
Net purchase of shares under liquidity agreement……
Balance as of December 31, 2022….………………...
Shares reclassed as treasury shares under IFRS 2….
Number of shares
Common
shares
32,848,635
9,524,317
6,900,000
-
-
-
-
49,272,952
48,636,476
17,438,883
-
-
-
-
115,348,311
-
Treasury
shares
(5,729,861)
(9,524,317)
-
3,759,402
39,940
116,914
(36,881)
(11,374,803)
(48,636,476)
-
4,500,000
15,978,570
1,355,248
(36,830)
(38,214,291)
(17,438,883)
Total
27,118,774
-
6,900,000
3,759,402
39,940
116,914
(36,881)
37,898,149
-
17,438,883
4,500,000
15,978,570
1,355,248
(36,830)
77,134,020
(17,438,883)
Balance as of December 31, 2022 IFRS 2…………...
115,348,311
(55,653,174)
59,695,137
As of December 31, 2022, 77,134,020 shares were outstanding excluding 38,214,291 treasury shares directly held by Addex Pharma
SA and including the 17,438,883 shares issued on the exercise of equity incentive units on October 26, 2022 which are considered
as treasury shares under IFRS 2 (See note 13). All shares have a nominal value of CHF 0.01 following the reduction of the nominal
value effective on July 26, 2022. As of December 31, 2021, 37,898,149 shares were outstanding excluding 11,374,803 treasury
shares directly held by Addex Pharma SA. All shares had a nominal value of CHF 1.00.
The Group maintains a liquidity agreement with Kepler Cheuvreux. 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, 2022, 128,200 (December 31, 2021: 91,370)
treasury shares are recorded under this agreement in the treasury share reserve and CHF 3,165 (December 31, 2021: CHF 17,145)
is recorded in other financial assets.
On December 15, 2022, the Group increased its capital from CHF 979,094 to CHF 1,153,483 through the issuance of 17,438,883
new registered shares at a nominal value of CHF 0.01 per share from its conditional capital following the exercise of 17,438,883
equity incentive units at a strike price of CHF 0.13 by Board Members, Executive Managers and employees on October 26, 2022.
The payment of the strike price has been deferred under the Group’s staff retention deferred strike price payment plan (“DSPPP”)
and consequently, under IFRS 2, the 17,438,883 shares issued from the exercise of equity incentive units are considered as treasury
shares. The 17,438,883 shares are considered to be legally owned by the exercising equity incentive unit holders on October 26,
2022.
On October 31, 2022, the Group increased its capital from CHF 652,730 to CHF 979,094 through the issuance of 32,636,476 new
registered shares from its authorized capital to its fully owned subsidiary, Addex Pharma SA, at CHF 0.01 per share. These shares
are held as treasury shares, hence the operation does not impact the outstanding share capital.
Page 44 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
On July 22, 2022, the Group entered into a securities purchase agreement with Armistice Capital LLC and sold 4,500,000 treasury
shares in the form of 750,000 ADSs at a price of USD 1.70 per ADS (CHF 0.27 per share). In addition, 10,500,000 pre-funded
warrants, in the form of 1,750,000 ADSs, were sold at a price of USD 1.69 per ADS (CHF 0.27 per share) with a strike price of USD
0.01 per ADS. As of December 31, 2022 all pre-funded warrants have been exercised at a total exercise price of USD 17,500 (CHF
16,812). The total gross proceeds from the offering amounted to USD 4.2 million (CHF 4.1 million) and directly related share issuance
costs of CHF 0.4 million were recorded as a deduction in equity.
The Group additionally granted Armistice Capital LLC, 15,000,000 warrants, in the form of 2,500,000 ADSs, with a strike price of USD
1.90 per ADS (CHF 0.30 per share) and an exercise period of 5 years. The fair value of each of the warrants issued is CHF 0.07 per
share or CHF 0.40 per ADS calculated using the Black-Scholes valuation model. The fair value calculation assumptions included
volatility of 64.61% and an annual risk-free rate of +0.05%. The total fair value of the warrants issued is CHF 1.0 million and has been
recorded in equity as a cost of the offering.
On July 19, 2022, the nominal value of the issued, conditional and authorized share capital has been reduced from CHF 1.00 to
CHF 0.01 effective on the SIX Swiss Exchange and Nasdaq stock market on July 26, 2022. As a consequence, the share capital was
reduced to CHF 652,730. The decrease of CHF 64.6 million in share capital remains in equity and has been reclassed to other equity.
The total number of issued, outstanding, conditional and authorized shares remained the same.
On June 21, 2022, the Group entered into a new sale agency agreement with Kepler Cheuvreux whose substantive terms are aligned
with the agreement entered into on August 24, 2020, that expired on December 31, 2021. In July 2022, 1,355,248 treasury shares
were sold at an average price of CHF 0.34 per share with a gross proceed of CHF 464,954 (39,940 treasury shares for a gross
proceed of CHF 80,944 during the year 2021).
On February 2, 2022, the Company issued 16,000,000 new shares from the authorized capital to its 100% owned subsidiary, Addex
Pharma SA, at CHF 1.00. These shares are held as treasury shares, hence the operation does not impact the outstanding share
capital. Directly related share issuance costs of CHF 0.2 million were recorded as a deduction in equity.
During the year 2022, the Group did not use its treasury shares to pay consultants, whilst during the year 2021, the Group used
116,914 treasury shares to purchase services from consultants including 60,638 treasury shares for Roger Mills, the Group’s Chief
Medical Officer. The total value of consulting services settled in shares was CHF 164,980.
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 price of USD 1.08
(CHF 1.00) per share, equivalent to USD 6.50 (CHF 6.00) per ADS. In addition, 5,478,570 pre-funded warrants in the form of 913,095
ADSs were sold at a price of USD 1.08 (CHF 0.99) per share, equivalent to USD 6.49 (CHF 5.99) per ADS with a strike 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 for the year ended December 31, 2021 of which CHF 0.5
million has been paid during the first quarter of 2022. In July 2022, Armistice Capital LLC exercised all the pre-funded warrants in the
form of 913,095 ADSs for a total strike price of USD 9,131 (CHF 8,429).
The Group additionally issued to Armistice Capital LLC, 9,230,772 warrants to purchase 1,538,462 ADSs with a strike price of USD
1.08 (CHF 1.00) per share, equivalent to USD 6.5 (CHF 6.00) 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 for the year ended December 31, 2021. Fair value calculation assumptions included volatility of 55.57% and an annual risk-
free rate of -0.64%. The total fair value of the warrants issued of CHF 3.7 million has been recorded in equity as a cost of the offering.
On April 23, 2021, the Company issued 9,524,317 new shares from the authorized capital to its 100% owned subsidiary, Addex
Pharma SA, at CHF 1.00. These shares are held as treasury shares, hence the operation does not impact the outstanding share
capital.
On January 8, 2021, the Company issued 6,900,000 registered shares, with a nominal value of CHF 1.00 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 1.8 million were recorded as a deduction in equity.
During the year ended December 31, 2021, the Group sold 7,000 shares under its ATM program initiated on June 29, 2021.
13. Share-based compensation
The total share-based compensation expense recognized in the statement of comprehensive loss for equity incentive units granted
to Board Members, Executive Managers, employees and consultants has been recorded under the following headings:
Research and development………………...…………..
General and administration…….……………………....
2022
1,047,398
2,634,675
2021
467,812
710,532
Total share-based compensation..………………….
3,682,073
1,178,344
Page 45 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
Analysis of share-based compensation by equity incentive plan is detailed as follows:
Equity sharing certificate plan……………...…………..
Share purchase plan……..…….…………………….....
Share option plans……………………………………….
2022
44,244
-
3,637,829
2021
4,476
23,498
1,150,370
Total share-based compensation..………………….
3,682,073
1,178,344
The share-based compensation expense increased by CHF 2.5 million in 2022 compared to 2021 primarily due to the increase in the
fair value of equity incentive units (ESC and employee share options) following reductions in their strike price.
The table below describes the changes in granting conditions of the equity sharing certificates and the employee share option plans
in 2022:
Equity Sharing Certificate as of December 31
2021………………………………………………..
Employee share options as of December 31
2021………………………………………………..
Employee share options granted in 2022 at a
strike price above CHF 0.13……………………..
Employee share options granted in 2022 at a
strike price of CHF 0.13…………………………..
Total……………………………………………….
Equity Sharing Certificate Equity Incentive Plan
Number of
Equity
incentive
units
Number of
Equity incentive
units repriced
to CHF 1.00 on
January 4, 2022
Number of
Equity incentive
units repriced
to CHF 0.19 on
August 2, 2022
Number of
Equity incentive
units repriced to
CHF 0.13 on
October 5, 2022
Number of equity
incentive units
exercised under
the DSPPP
198,750
108,000
198,750
198,750
198,750
8,615,885
8,186,045
8,383,306
8,320,836
8,154,651
4,011,325
5,425,753
-
3,852,657
3,852,657
3,750,258
-
8,294,045
-
12,434,713
-
12,372,243
5,335,224
17,438,883
On June 1, 2010, the Company established an equity incentive plan based on equity sharing certificates (“ESCs”) to provide incentives
to Board Members, Executive Managers, 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 the 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………………………………………
Exercised under the DSPPP………………
At December 31………………………………….
Average
subscription
prices / floor
prices (CHF)
1.54
0.13
-
Average
subscription
prices / floor
prices (CHF)
1.54
-
1.54
2022
198,750
(198,750)
-
2021
198,750
-
198,750
At December 31, 2022, there are no subscription rights attached to the ESCs (2021: 198,750 were exercisable and outstanding).
The outstanding subscription rights as at December 31, 2021 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
Page 46 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
Employee share option plans (ESOP)
The Company established an employee share option plan to provide incentives to directors, executives, employees and consultants
of the Group.
During 2022, the Group granted the following options with vesting over 4 years and a 10-year exercise period at the grant date as
described in the table below. Grant conditions relating to the strike price have been amended during the year ended December 31,
2022.
April 12, 2022………
April 12, 2022………
April 12, 2022……...
May 2, 2022………..
October 5, 2022…...
October 6, 2022……
December 29, 2022.
Total 2022….……....
Strike price at
grant date
Expiry date at
grant date
1.00
April 11, 2032
1.00 Dec. 31, 2031
1.04 Dec. 31, 2031
May 1, 2032
1.00
Oct. 4, 2032
0.13
Oct. 5, 2032
0.13
June 30, 2032
0.20
Number of share
options granted
3,840,657
6,000
49,713
6,000
5,423,076
2,677
108,955
9,437,078
Number of share
options repriced
to CHF 0.19 on
August 2 2022
3,840,657
6,000
-
6,000
-
-
-
3,852,657
Number of share
options repriced
to CHF 0.13 on
October 5 2022
3,840,657
6,000
-
6,000
-
-
-
3,852,657
Number of options
exercised under
the DSPPP
3,738,258
6,000
-
6,000
5,332,547
2,677
-
9,085,482
In 2022, the Group granted 9,437,078 share options of which 3,852,657 were repriced at a strike price of CHF 0.13 on October 5,
2022 and 9,085,482 have been exercised on October 26, 2022 under the DSPPP.
During 2021, the Group granted the following options with vesting over 4 years and a 10-year exercise period as described in the
table below. Grant conditions relating to the strike price and grant conditions have been amended during the year ended December
31, 2022.
April 1, 2021…………
May 17, 2021………..
July 1, 2021………….
October 1, 2021……..
Total 2021…………...
Strike price at
grant date
Expiry date at
grant date
1.99 Dec. 31, 2030
1.45 May 16, 2031
1.60 June 30, 2031
1.45 Sept. 30, 2031
Number of
share options
granted
27,492
1,791,000
44,408
6,000
1,868,900
Number of
share options
repriced to
CHF 1.00 on
Jan. 4 , 2022
-
1,786,000
30,000
6,000
1,822,000
Number of
share options
repriced to
CHF 0.19 on
Aug. 2 , 2022
-
1,756,000
30,000
6,000
1,792,000
Number of
share options
repriced to
CHF 0.13 on
Oct. 5, 2022
-
1,756,000
30,000
6,000
1,792,000
Number of
options
exercised
under the
DSPPP
-
1,716,000
30,000
6,000
1,752,000
Movements in the number of options outstanding are as follows:
At January 1……………………………………….
Exercised under the DSPPP……………………
Granted……………………………………………
Forfeited…………………………………………...
Expired…………………………………………….
At December 31………………………………….
Average strike
price (CHF)
2.01
0.13
0.49
1.00
-
0.55
2022
8,615,885
(17,240,133)
9,437,078
(35,830)
-
777,000
Average strike
price (CHF)
2.16
-
1.46
1.93
2
2.01
2021
6,768,460
-
1,868,900
(11,475)
(10,000)
8,615,885
At December 31, 2022, of the outstanding 777,000 share options (2021: 8,615,885), 389,668 were exercisable (2021: 5,954,115).
Page 47 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
The outstanding share options as at December 31, 2022 and 2021 have the following expiry dates:
At December 31, 2022
Expiry date
2025……………………………………………
2027……………………………………………
2028……………………………………………
2029……………………………………………
2030……………………………………………
2031……………………………………………
2032……………………………………………
Total…………………………………………...
0.13
-
56,655
59,530
-
10,000
40,000
192,928
359,113
Range of strike prices (CHF)
0.14 to 0.99 1.00 to 1.50 1.51 to 2.50 2.51 to 3.00
-
-
5,292
-
-
-
-
25,000
11,385
26,085
-
-
-
108,955
4,687
7,241
-
38,487
27,492
14,408
-
-
-
-
72,013
17,362
59,480
-
171,425
148,855
92,315
5,292
At December 31, 2021
Expiry date
2024……………………………………………
2025……………………………………………
2026……………………………………………
2027……………………………………………
2028……………………………………………
2029……………………………………………
2030……………………………………………
2031……………………………………………
1.00 to 1.50
-
-
-
292,261
-
184,883
1,189,373
1,792,727
Range of strike prices (CHF)
2.01 to 2.50
-
-
50,000
-
243,506
-
-
-
1.51 to 2.00
506,351
49,687
95,000
1,606,820
-
68,487
27,492
44,408
2.51 to 3.00
-
-
-
-
2,464,890
-
-
-
Total…………………………………………...
3,459,244
2,398,245
293,506
2,464,890
Total
29,687
75,281
90,907
110,500
54,854
113,888
301,883
777,000
Total
506,351
49,687
145,000
1,899,081
2,708,396
253,370
1,216,865
1,837,135
8,615,885
The weighted average fair value of share options granted during 2022 determined using a Black-Scholes model was CHF 0.18 (2021:
CHF 0.72). 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……………………………………
Deferred Strike Price Payment Plan (DSPPP)
2022
CHF 0.41
CHF 0.49
50.34%
-
0.75%
2021
CHF 1.58
CHF 1.46
47.07%
-
0.44%
The Group has implemented a staff retention plan which includes a DSPPP which encourages Board Members, Executive Managers
and employees to exercise their share options or equity sharing certificates and become shareholders of the Company by allowing
the deferral of the obligation to pay the strike price until the earlier of the sale of the shares or 10 years. Shares received through the
exercise of unvested share options are subject to sales restrictions reflecting the remaining vesting period of exercised equity incentive
units. In the event of a change of control, bankruptcy of the Company or forced sale of the shares at a price below the strike price,
the deferred strike price payment obligation is waived. Under IFRS 2, the DSPPP is considered to be a non-recourse loan and
consequently the options are deemed to be exercised on the date that the loan is repaid. Therefore, neither the shares nor the loan,
are outstanding until either the options are exercised by paying the exercise price for the shares (repaying the loan) or the options
expire entirely after 10 years without any remaining obligation from the option holders. The DSPPP is considered to be a modification
of the equity incentive plan and consequently, the 17,438,883 shares (“DSPPP Shares”) issued from the exercise of equity incentive
units are recorded as treasury shares and associated share-based compensation is recognized over the remaining vesting period as
if the equity incentive units had not been exercised. The modification of the equity incentive plan results in an increase in the fair value
of CHF 63,399 of which CHF 52,216 has been recognized in 2022.
Page 48 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
Movements in the number of DSPPP shares are as follows:
At January 1……………………………………….
Granted - exercise of ESOP & ESC……………..
At December 31………………………………….
Average
deferred
strike price
payment
(CHF)
0.13
0.13
2022
-
17,438,883
17,438,883
On October 26, 2022, Board Members, Executive Managers and employees exercised a total of 17,438,883 equity incentive units at
a strike price of CHF 0.13. At December 31, 2022, of the 17,438,883 DSPPP Shares, 7,726,415 are not subject to sales restrictions
and all DSPPP Shares expire in 2032.
Share purchase plan
The Group established a share purchase plan under which services are settled for shares. Under the plan Board Members, Executive
Managers, 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, 2022, the Group did not use its treasury shares to pay consultants whilst during the
year ended December 31, 2021, 116,914 shares were transferred to settle CHF 164,980 of consulting fees.
14. 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, Chronic Cough and pain. 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, which can be extended by twelve month increments and a minimum annual
funding of USD 2 million for the Group’s R&D costs incurred. R&D costs are calculated based on the costs incurred in accordance
with the contract. Following Indivior’s selection of one newly identified compound, the Group has the right to also select one additional
newly identified compound. The Group is responsible for the funding of all development and commercialization costs of its selected
compounds and Indivior has no rights to the Group’s selected compounds. The initial two-year research term was expected to run
from May 2018 to April 2020. In 2019, Indivior agreed to 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 to additional research funding of USD
2.8 million. Effective May 1, 2021, the research term was extended until July 31, 2022 and Indivior agreed additional research funding
Page 49 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
of CHF 3.7 million, of which CHF 2.7 million has been paid to the Group and CHF 1.0 million paid directly by Indivior to third party
suppliers that are supporting the funded research program. In August 2022, the research agreement was extended until March 31,
2023 and Indivior agreed to additional research funding of CHF 0.85 million. The reserved indications, where Addex retains exclusive
rights to develop its own independent GABAB PAM program, have also been expanded to include chronic cough. Effective November
1, 2022, the research term was extended until June 30, 2023 and Indivior agreed to additional research funding of CHF 0.95 million.
For the year ended December 31, 2022, the Group recognized CHF1.4 million as revenue (2021: CHF 2.9 million) and recorded a
combined amount of CHF 0.4 million in contract asset and trade receivable as of December 31, 2022 (December 31, 2021: CHF 0.2
million).
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 considerations
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 2022 and 2021.
15. 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 0.5 million of which CHF 0.38 million were paid as of
December 31, 2022 and CHF 0.12 million in February 2023. As of December 31, 2022 the Group recognized CHF 0.12 million as
other receivables (CHF 0.13 million as of December 31, 2021). For the year ended December 31, 2022, the amount recognized in
other income is nil (CHF 0.2 million for the year ended December 31, 2021).
The Group additionally recognized other income from IT consultancy agreements.
16. Operating costs
Staff costs (note 17)…………………………………......
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……………………………….…
2022
7,053,102
323,144
10,029,786
319,305
318,194
1,424,333
47,283
1,591,231
858,788
21,965,166
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
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, 2022, total operating costs increased by CHF 3.3 million compared to the year ended December
31, 2021, primarily due to increased staff costs for CHF 2.3 million mainly due to higher share-based compensation costs. During the
same period, the external research and development costs increased by CHF 1.0 million primarily due to dipraglurant clinical
development activities for CHF 0.4 million and discovery activities for CHF 0.6 million.
Page 50 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
17. Staff costs
Wages and salaries.……………………………………..
Social charges and insurances….…………...………...
Value of share-based services (note 13)………......….
Retirement benefit (note 19)….…………………..……
Total staff costs………………...…….….....................
2022
3,343,645
394,797
3,034,740
279,920
7,053,102
2021
3,280,004
396,149
946,632
114,353
4,737,138
Total staff costs increased by CHF 2.3 million for the year ended December 31, 2022 compared to the same period in 2021, primarily
due to higher share-based compensation cost including CHF 1.8 million for the increase in fair value of equity incentive units due to
the reduction of their strike price (see note 13).
18. 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 loss (income) in standalone financial
statements………………………………………………..
Expenses not deductible for tax purposes…………….
Temporary differences…………………………………..
Total tax losses not recognized as deferred tax asset..
Income tax expense…………………………….……...
December 31, 2022
December 31, 2021
20,804,213
2,910,509
3,801
178,015
1,666,594
(514,017)
(1,324)
(4,243,578)
-
15,351,914
2,147,733
5,398
382,829
(8,556)
(145,195)
(954)
(2,381,255)
-
The Group has decided not to recognize any deferred income tax assets at December 31, 2022 or 2021. 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 arises 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:
2022……………………………………………………….
2023……………………………………………………….
2024……………………………………………………….
2025……………………………………………………….
2026……………………………………………………….
2027……………………………………………………….
2028……………………………………………………….
2029……………………………………………………….
Total unrecorded tax losses carry forwards……....
December 31, 2022
-
141,425,567
290,949
3,586,490
23,467,840
12,590,566
28,427,419
65,367,349
275,156,180
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
Tax losses carried forward expiring in 2027 and 2028, have been increased by CHF 4.0 million and CHF 2.8 million respectively due
to final tax returns for the fiscal years ended December 31, 2020 and 2021 received from Swiss tax administration in 2022.
As of December 31, 2022, the unrecorded tax losses carried forward increased to CHF 275,156,180 (2021: CHF 206,534,151).
19. 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
Page 51 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
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 2022 of CHF 279,920
(2021: CHF 114,353) as part of staff costs.
Employment benefit obligations
The amounts recognized in the balance sheet are determined as follows:
Defined benefit obligation………..…………...………...
Fair value of plan assets…………………….…………..
Effect of asset ceiling…...….……………………………
Funded status surplus/ (shortfall)………..…………
December 31, 2022
(7,682,529)
7,867,835
(185,306)
-
December 31, 2021
(9,276,675)
7,995,150
-
(1,281,525)
As of December 31, 2022, the funded status had a surplus of CHF 0.2 million that has not been recorded as an asset in accordance
with the asset ceiling rules and minimum funding requirements whilst they were in a shortfall situation of CHF 1.3 million as of
December 2021. The decrease of the present value of the defined benefit obligation is primarily due to the increase of the discount
rate to 2.30% as of December 31, 2022 compared to 0.35% as of December 31, 2021.
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 17)…….................
2022
(306,491)
36,459
(98,639)
88,751
(279,920)
2021
(325,144)
219,104
(23,742)
15,429
(114,353)
The conversion rates have changed in April 2022 and January 2021 which has led to a positive past service cost during the years
ended December 31, 2022 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 gain/ (loss) on experience adjustment………
Benefits paid……………..…………...………………….
Defined benefit obligations at end of year………....
2022
(9,276,675)
(306,491)
36,459
(98,639)
(244,097)
2021
(9,406,967)
(325,144)
219,104
(23,742)
(222,772)
1,923,273
295,480
51,085
6,850
225,706
(7,682,529)
186,583
(115,175)
115,958
(9,276,675)
Page 52 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
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……………...…………….……..………....
Fair value of plan assets at end of year……………..
2022
7,995,150
88,751
244,097
291,313
(525,770)
(225,706)
7,867,835
2021
7,714,430
15,429
222,772
264,817
(106,340)
(115,958)
7,995,150
As of the date of the preparation of these consolidated financial statements, the 2022 annual report of the pension fund has not yet
been issued, and therefore the detailed structures and assets held at December 31, 2022, are not currently available for presentation.
However, the detailed assets held at December 31, 2021, which were reported to the Group on May 3, 2022 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, 2021
1.79%
52.36%
11.16%
22.75%
10.22%
1.72%
100.00%
Discount rate………………………...……………..........
Mortality tables………………..………………………….
Salary growth rate……………………………………….
Pension growth rate….………………………………….
December 31, 2022
2.30%
BVG2020 GT
1.20%
0.00%
December 31, 2021
0.35%
BVG2020 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 3.09% (2021: 3.93%) or an increase of 3.48% (2021:
4.52%) in the defined benefit obligation.
0.25% increase or decrease in the interest rate on retirement savings capital would lead to an increase of 1.06% (2021: 0.58%)
or a decrease of 1.03% (2021: 0.52%) in the defined benefit obligation.
0.25% increase or decrease in salaries would lead to an increase of 0.09% (2021: 0.01%) or a decrease of 0.09%(2021: no
decrease) in the defined benefit obligation; and
+/-1 year in the life expectancy would lead to an increase of 1.02% (2021: 1.63%) or a decrease of 1.07% (2021: 1.69%) 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.
Page 53 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
The estimated employer contributions to pension plans for the financial year 2023 amount to CHF 288,000. The following table shows
the funding of the defined benefit pensions and the components of the costs recognized in other comprehensive income:
Present value of defined benefit obligation………........
Fair value of plan assets………………………………...
Effect of asset ceiling…..…………………….………….
Surplus / (Deficit) in the plan………………………….
Actuarial gain on defined benefit obligation……………
Actuarial loss on plan assets…………….……………..
Change in the effect of the asset ceiling ………………
Total ……………...………………………………………
2022
(7,682,529)
7,867,835
(185,306)
-
1,981,208
(525,770)
(185,306)
1,270,132
2021
(9,276,675)
7,995,150
-
(1,281,525)
366,888
(106,340)
-
260,548
The following table shows the estimated benefit payments for the next ten years where the number of employees remains constant:
2023….........….........….........…...................................
2024….........….........….........…...................................
2025….........….........….........…...................................
2026….........….........….........…...................................
2027….........….........….........…...................................
2028-2032................….........…...................................
20. Finance result, net
Interest income ………………………………………….
Interest expense on leases…………………………......
Interest cost……………………………..………............
Foreign exchange (losses)/gains, net……….…..…….
Finance result, net..………...………………………….
374,000
748,000
501,000
357,000
358,000
2,238,000
2022
29,251
(23,019)
(25,878)
(264,360)
(284,006)
2021
5,322
(23,866)
(39,146)
211,693
154,003
The evolution of the finance result is mainly driven by foreign exchange losses and gains on our U.S Dollar cash deposits due to the
evolution of the exchange rate of U.S Dollar compared to the Swiss franc. Finance result was a net loss of CHF 0.3 million for the
year ended December 31, 2022 whilst it was a net gain of CHF 0.2 million for the year ended December 31, 2021.
21. 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 treasury shares.
Loss attributable to equity holders of the Company…..
Weighted average number of shares in issue…………
Basic and diluted loss per share…………………….
2022
(20,804,213)
45,184,865
(0.46)
2021
(15,351,914)
34,119,666
(0.45)
The Company has four categories of dilutive potential shares: treasury shares, equity sharing certificates (“ECSs”), share options and
warrants which have been ignored in the calculation of the loss per share for the year ended December 31, 2022 and 2021, as they
would be antidilutive.
In addition to treasury shares, the total number of dilutive instruments as of December 31, 2022 is 30,874,670 (2021: 29,590,875)
which consists of 777,000 ESOP, 5,866,898 warrants granted to investors on March 28, 2018 and 24,230,772 warrants granted to
one investor (9,230,772 warrants on December 21, 2021 and 15,000,000 on July 26, 2022 respectively). As of December 31, 2021,
dilutive instruments primarily consist 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. These options could
potentially dilute basic earnings per share in the future.
Page 54 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements Notes
22. Commitments and contingencies
Capital commitments
As at December 31, 2022 and 2021, 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.
23. 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………………………………………………………
2022
1,619,186
151,639
3,196,353
4,967,178
2021
1,502,377
224,091
955,051
2,681,519
Salaries, other short-term employee benefits and post-employment benefits relate to members of the Board of Directors and Executive
Management who are employed by the Group. Consulting fees relate mainly 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 0.1 million as of December 31, 2022 (December 31, 2021: CHF 0.2 million). Share-based
compensation relates to the fair value of equity incentive units recognized through profit and loss following their vesting plan.
24. Events after the balance sheet date
The Group sold 3,742,506 treasury shares for a gross amount of CHF 1.2 million under the sale agency agreement with Kepler
Cheuvreux, between the closing date and the approval of these consolidated financial statements. The number of outstanding shares
amounts to 80,879,591 on March 28, 2023 excluding 34,468,720 treasury shares directly held by Addex Pharma SA.
Page 55 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements
Phone +41 22 322 24 24
www.bdo.ch
geneve@bdo.ch
BDO AG
Rte de Meyrin 123
P.O. Box 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 balance sheet as at December 31, 2022, 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 28 to 55) give a true and fair view of the consolidated
financial position of the Group as at December 31, 2022 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 Standards on Auditing
(SA-CH). 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, together with the requirements of the Swiss audit profession, as well as those of 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.
Material Uncertainty Related to Going Concern
We draw attention to Note 4 in the consolidated financial statements, which indicates that the Group future viability is dependent
on its ability to raise additional capital through public or private financings or collaboration agreements to finance its future
operations. The Group expects that its existing cash and cash equivalents be sufficient to fund its operations and meet all of its
obligations as they fall due, through the third quarter of 2023. As stated in Note 4, these events or conditions, along with other
matters as set forth in Note 4, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability
to continue as a going concern. Our opinion is not modified in respect of this matter.
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 56 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements
Key Audit Matter
How the Key Audit Matter was addressed in the
audit
Deferred Strike Price Payment Plan (DSPPP):
The Group has implemented a staff retention plan
which includes a DSPPP which encourages Board
Members, Executive Managers and employees to
exercise their share options or equity sharing
certificates and become shareholders of the
Group by allowing the deferral of the obligation to
pay the strike price until the earlier of the sale of
the shares or 10 years.
Shares received through the exercise of unvested
share options are subject to sales restrictions
reflecting the remaining vesting period of
exercised equity incentive units.
On 26 October 2022, options holder exercised
their vested and unvested options under the
DSPPP.
This is a significant focus point due to the
complexity, judgement and estimates involved in
determining the proper accounting in accordance
with IFRS 2 "Share-based Payment".
Refer to note 13 - Share-based compensation.
We obtained an understanding of the process and
controls through discussion with members of
management and observation of documents.
We substantively tested a sample of exercise options
which is the basis for the recognition of the new
options plan.
We read and assessed the deferred strike price
payment agreement and evaluated the transaction
within the framework of IFRS 2 to determine how to
account for the option exercises and whether the
transaction constitute a replacement grant which
should be accounted for by applying the principles of
modification accounting, rather than as a separate
new award and cancellation of the unvested old
options.
We assessed management’s judgments and estimates
and evaluated the Group’s models to determine the
incremental fair value as the difference between the
fair value of the replacement equity instruments and
the net fair value of the cancelled equity
instruments, at the date the replacement by using
the assistance of our valuation expert.
We consulted with our internal experts regarding the
accounting treatment in accordance with IFRS.
We verified whether the relating disclosure in note 13
is accurate and complete.
Other Information
The board of directors is responsible for the other information. The other information comprises the information included in the
annual report, but does not include the consolidated financial statements, the financial statements, the compensation report and
our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information 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 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 57 of 70
Addex Therapeutics Annual Report 2022 │ Consolidated Financial Statements
Responsibilities of the Board of Directors for the Consolidated Financial Statements
The board of directors is responsible for the preparation of the consolidated financial statements, which 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 SA-
CH 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 the auditor’s responsibilities for the audit of the consolidated financial statements is located at
EXPERTsuisse's website at: https://www.expertsuisse.ch/en/audit-report-for-ordinary-audits. This description forms part of our
auditor’s report.
Report on Other Legal and Regulatory Requirements
In accordance with Art. 728a para. 1 item 3 CO and PS-CH 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, March 30, 2023
BDO Ltd
Nigel Le Masurier
Christoph Tschumi
Licensed Audit Expert
Licensed Audit Expert
(Auditor in Charge)
Enclosures
Consolidated Financial statements
Page 58 of 70
Addex Therapeutics Annual Report 2022 │Statutory Financial Statements
Statutory Financial Statements of Addex
Therapeutics Ltd as at December 31, 2022
Page 59 of 70
Addex Therapeutics Annual Report 2022 │Statutory Financial Statements
Balance Sheets
as at December 31, 2022 and December 31, 2021
Notes
December 31,
December 31,
2022
2021
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
255,514
36,043
291,557
212,751
1,500
214,251
3
3
10,514,116
10,514,119
30,476,792
30,476,795
Total assets………………………………………..……....
10,805,676
30,691,046
LIABILITIES AND EQUITY
Current liabilities
Trade payables…...…………………………………..…....
Other payables - third parties…………….……................
Accruals……….………………………………….…………
Total current liabilities……………………………..…….
Equity
Share capital……………………………………..…………
Statutory capital reserve ………………………………….
Reserve from capital contribution. ………………………
Pre-funded warrants reserve………………………………
Treasury shares reserve…………………………………...
Non-voting equity securities (*)……………..……………..
Accumulated deficit………………………………………...
Total equity………………….……………………………..
10
10
10
10
11
10
145,754
46,475
153,001
345,230
1,153,483
29,238,702
64,620,223
-
6,104,374
p.m
(90,656,336)
10,460,446
281,927
46,523
456,527
784,977
49,272,952
21,547,131
-
5,470,141
11,703,279
p.m
(58,087,434)
29,906,069
Total liabilities and equity………...….………………….
10,805,676
30,691,046
(*) p.m. = pro memoria. Non-voting equity securities have no nominal value.
The accompanying notes form an integral part of these financial statements.
Page 60 of 70
Addex Therapeutics Annual Report 2022 │Statutory Financial Statements
Statements of Loss
for the years ended December 31, 2022 and 2021
Notes
December 31,
December 31,
2022
2021
Amounts in Swiss francs
Operating costs
Professional fees…………………………………...….......
Capital increase & offering costs………………………….
Other operating costs………………………………………
Provision for loans to Subsidiaries……...…………..........
Taxes………………………………………………………...
12
12
12
9
(553,152)
(704,726)
(1,878,923)
(35,043,177)
1,471
(915,923)
(2,736,448)
(1,906,926)
(11,444,128)
(4,376)
Total operating costs……………………………………..
(38,178,507)
(17,007,801)
Finance income……………………………………………..
Finance expenses…………………………………...……..
Finance result……………………………………………...
13
5,619,934
(10,329)
5,609,605
44,776
(23,758)
21,018
Net loss before taxes……………………………………..
(32,568,902)
(16,986,783)
Income tax expense…………………..……...…………….
-
-
Net loss for the year……………………………………....
(32,568,902)
(16,986,783)
The accompanying notes form an integral part of these financial statements.
Page 61 of 70
Addex Therapeutics Annual Report 2022 │Statutory Financial Statements Notes
Notes to the Financial Statements for the years
ended December 31, 2022 and 2021
(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, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, there were no assets pledged to secure own liabilities.
5. Lease commitments not recorded in the balance sheet
As of December 31, 2022 and December 31, 2021, there were no lease commitments not recorded in the balance sheet.
6. Amounts due to pension funds
As of December 31, 2022 and December 31, 2021, 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, 2022 and December 31, 2021
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%
Page 62 of 70
Addex Therapeutics Annual Report 2022 │Statutory Financial Statements Notes
As at December 31, 2022 and 2021, 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, 2022
3,987,492
(3,987,491)
1
1
3
December 31, 2021
3,987,492
(3,987,491)
1
1
3
9. Other non-current assets – loans to Group companies
As at December 31, 2022 and 2021, 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, 2022
236,396,139
(225,882,023)
10,514,116
December 31, 2021
221,315,638
(190,838,846)
30,476,792
The loan to Addex Pharma SA is subordinated to the claims of other creditors of the subsidiary up to CHF 236,396,139.
10. Equity
January 1, 2021....
Issue of shares –
capital increase…..
Issue of treasury –
shares……………..
Sale of pre-funded
warrants…………...
Transfer to
treasury shares
reserve…………....
Net loss of the
year………………..
December 31,
2021……………….
Issue of shares -
capital increase….
Issue of treasury
shares……………..
Sale of pre-funded
warrants…………...
Exercise of pre-
funded warrants….
Reduction of the
nominal value…….
Transfer to
treasury shares
reserve…………....
Net loss of the
year………………..
December 31,
2022……………….
Statutory capital reserves,
from…
Share capital
…capital
contribution
…retained
earnings
Reserves
from capital
contribution
Pre-funded
warrants
reserve
Treasury
shares reserve
Accumulated
deficit
Total
32,848,635
187,680,251
(163,708,099)
6,900,000
3,199,323
9,524,317
-
-
-
-
-
(5,624,344)
-
-
-
-
-
-
49,272,952
185,255,230
(163,708,099)
174,389
2,092,666
16,326,365
-
-
(64,620,223)
-
-
-
-
-
-
5,598,905
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
64,620,223
-
-
1,153,483
192,946,801
(163,708,099)
64,620,223
6,078,935
(41,100,651)
21,799,071
-
-
-
5,470,141
-
-
-
-
-
-
-
10,099,323
9,524,317
5,470,141
-
-
5,624,344
-
(16,986,783)
(16,986,783)
5,470,141
11,703,279
(58,087,434)
29,906,069
-
-
2,841,270
(8,311,411)
-
-
-
-
-
-
-
-
-
(5,598,905)
-
-
-
-
-
-
2,267,055
16,326,365
2,841,270
(8,311,411)
-
-
-
(32,568,902)
(32,568,902)
6,104,374
(90,656,336)
10,460,446
On December 15, 2022, Addex Therapeutics Ltd increased its capital from CHF 979,094 to CHF 1,153,483 through the issuance of
17,438,883 new registered shares at a nominal value of CHF 0.01 per share from its conditional capital following the exercise of
17,438,883 equity incentive units at a strike price of CHF 0.13 on October 26, 2022.
On October 31, 2022, Addex Therapeutics Ltd increased its capital from CHF 652,730 to CHF 979,094 through the issuance of
32,636,476 new registered shares from its authorized capital to its fully owned subsidiary, Addex Pharma SA, at CHF 0.01 per share.
These shares are held as treasury shares.
On July 22, 2022, Addex therapeutics Ltd sold 10,500,000 pre-funded warrants in the form of 1,750,000 ADSs at a sale price of USD
0.28 (CHF 0.27) per share, USD1.69 (CHF 1.62) per ADS with a strike price of USD 0.01 per ADS. All pre-funded warrants have
been exercised as of December 31, 2022.
Page 63 of 70
Addex Therapeutics Annual Report 2022 │Statutory Financial Statements Notes
On July 19, 2022, the nominal value of the issued, conditional and authorized share capital has been reduced from CHF 1.00 to
CHF 0.01 effective on the SIX Swiss Exchange and Nasdaq stock market on July 26, 2022. As a consequence, the share capital was
reduced to CHF 652,730.
On February 2, 2022, Addex Therapeutics Ltd issued 16,000,000 new shares from the authorized capital to its 100% owned
subsidiary, Addex Pharma SA, at CHF 1.00. These shares are held as treasury shares.
On December 16, 2021, Addex therapeutics Ltd sold 5,478,570 pre-funded warrants in the form of 913,095 ADSs at a sale price of
USD 1.08 (CHF 0.99) per share, USD 6.49 (CHF 5.99) per ADS with a strike price of USD 0.01 per ADS. All pre-funded warrants
have been exercised as of December 31, 2022.
On April 23, 2021, Addex Therapeutics Ltd issued 9,524,317 new shares from the authorized capital to its 100% owned subsidiary,
Addex Pharma SA, at CHF 1. These shares are held as treasury shares.
On January 8, 2021, Addex Therapeutics Ltd issued 6,900,000 registered shares, with a nominal value of CHF 1 each, at an issue
price of CHF 1.46. Out of the total new shares, 6,750,000 are in the form of American Depositary Shares (ADS), listed on the Nasdaq
stock market.
At December 31, 2022 the total outstanding share capital is CHF 1,153,483 consisting of 115,348,311 shares with a nominal value
of CHF 0.01. At December 31, 2021 the total outstanding share capital is CHF 49,272,952 consisting of 49,272,952 shares with a
nominal value of CHF 1.
The authorized capital and conditional capital as at December 31, 2022 and 2021 amounted as described below:
Authorized capital………………………………………..
Conditional capital……………………………………….
December 31, 2022
-
151,976
December 31, 2021
24,636,476
24,636,476
11. Treasury share reserve
This reserve relates to the purchase price of shares in Addex Therapeutics Ltd held by Group companies according to SIX Swiss
Exchange rules. The table shows movements in the number of shares and the treasury share reserve:
Balance at January 1, 2021……………...
Net purchases………………..…………….
Balance at December 31, 2021………….
Net purchases………………..…………….
Balance at December 31, 2022………….
12. Operating costs
Number of registered
shares
5,729,861
5,644,942
% of share
capital
17.44%
Treasury shares
reserves
6,078,935
5,624,344
11,374,803
26,839,488
38,214,291
23.09%
33.13%
11,703,279
(5,598,905)
6,104,374
Operating costs excluding provisions for loans to subsidiaries amounted to CHF 3.1 million for the year ended December 31, 2022
compared to CHF 5.6 million for the same period in 2021. The decrease of CHF 2.4 million is primarily due to decreased costs related
to capital increases and offerings for CHF 2 million (see note 10 above) and to a lesser extent to decreased professional fees.
13. Finance result
Sale of treasury shares (loss) / gain, net……………..
Interest expenses……..………………..………............
Foreign exchange (losses)/gains, net……….…..…….
Finance result, net..………...………………………….
2022
5,557,102
(10,329)
62,832
5,609,605
2021
-
(23,758)
44,776
21,018
Finance result, net primarily relates to the resale of Addex Therapeutics shares bought by Addex Pharma SA.
The net gain from the sale of treasury shares bought to Addex Pharma SA amounts to CHF 5.6 million of which CHF 5.5 million
relates to offerings executed with Armistice Capital.
Page 64 of 70
Addex Therapeutics Annual Report 2022 │Statutory Financial Statements Notes
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, 2022:
Addex Pharma SA2
Lock-up Group3
Growth Equity Opportunities Fund IV, LLC4
Tim Dyer5
Number of
shares
38,214,291
9,941,187
5,648,690
4,505,157
December 31, 20221
Interest in capital
in %
33.13%
8.62%
4.90%
3.91%
Number of
shares
11,374,803
-
5,648,690
435,192
December 31, 2021
Interest in capital
in %
23.09%
-
11.46%
0.88%
1 This table presents the shares held by the shareholders listed therein. The derivative holdings held by such shareholders are not included.
2 The beneficial owner is Addex Therapeutics Ltd, Chemin des Aulx 12, CH-1228 Plan-les-Ouates, Switzerland.
3 The beneficial owners are Tim Dyer holding 4.51% through this lock-up agreement and 25 other shareholders individually holding less than 3% of
the voting rights relating to Board Members, Executive Managers and employees. This lock-up agreement will terminate on October 4, 2026.
4 The beneficial owner is New Enterprise Associates Timonium MD 21093, USA.
5 The beneficial owner is Tim Dyer, 1196 Gland, Switzerland.
15. Board of Directors and Executive Management shareholdings and equity incentive units
As of December 31, 2022 and 2021, members of the Board of Directors and Executive Management held the following shares in the
Company:
Tim Dyer…………………………..……………………………
Robert Lütjens………………………...……………...............
Jean-Philippe Rocher…………………………………………
Vincent Lawton……………………………............................
Raymond Hill……..………………………….........................
Roger Mills…………………………………...........................
Mikhail Kalinichev…………………………………..…………
Jake Nunn……………………………………………………...
Isaac Manke…………………………………………………...
Total……………………………………………………………
2022
Number of Shares
9,840,946
1,755,612
1,484,231
1,464,834
797,563
735,976
179,171
128,238
128,238
16,514,809
2021
Number of Shares
435,192
-
-
500
-
393,139
-
-
-
828,831
As of December 31, 2022, members of the Board of Directors and Executive Management do not hold any equity incentive units.
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…………..………………............................
Raymond Hill……..……………………………….................
Jake Nunn……………………………………………………..
Isaac Manke…………………………………………………..
Tim Dyer…………………………..…………..…...................
Roger Mills………………………...…………………………..
Robert Lütjens…………………………………..……............
Jean-Philippe Rocher……………………………………...…
Mikhail Kalinichev…………………………………..………...
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
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
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
Total……………………………………………………………
5,369,175
2,163,935
7,533,110
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Addex Therapeutics Annual Report 2022 │Statutory Financial Statements Notes
16. Uncertainties and ability to continue operations
The company believes that it will be able to meet all its obligation for a further 12 months from the issuance date of the financial
statements, hence, the statutory financial statements have been prepared on a going concern basis. Nevertheless, it exists a
substantial doubt about the company’s ability to continue as a going concern as the existing cash and cash equivalents of the Group
at the issuance date of the statutory financial statements is sufficient to fund its operations and meet all of its obligations as they fall
due through the third quarter of 2023. The future viability of the Group is dependent on its ability to raise additional capital through
public or private financings or collaboration agreements to finance its future operations, which may be delayed due to reasons outside
of the Group’s control including the COVID-19 pandemic and the Russia’s invasion of Ukraine. 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 collaboration
agreements, 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 condition.
17. Events after the balance sheet date
Addex Therapeutics sold 3,742,506 treasury shares for a gross amount of CHF 1.2 million under the sale agency agreement with
Kepler Cheuvreux between the closing date and the approval of these financial statements.
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Addex Therapeutics Annual Report 2022 │Statutory Financial Statements
Phone +41 22 322 24 24
www.bdo.ch
geneve@bdo.ch
BDO AG
Rte de Meyrin 123
P.O. Box 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 Financial Statements
Opinion
We have audited the financial statements of Addex Therapeutics Ltd (the "Company"), which comprise the balance sheet as at
December 31, 2022, and the statement of loss for the year then ended, and notes to the financial statements, including a summary
of significant accounting policies.
In our opinion the accompanying financial statements (pages 60 to 66) 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 Standards on Auditing (SA-CH). 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.
Material Uncertainty Related to Going Concern
We draw attention to Note 16 in the financial statements, which indicates that the Group future viability is dependent on its ability
to raise additional capital through public or private financings or collaboration agreements to finance its future operations. The
Group expects that its existing cash and cash equivalents be sufficient to fund its operations and meet all of its obligations as they
fall due, through the third quarter of 2023. As stated in Note 16, these events or conditions, along with other matters as set forth
in Note 16, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, 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.
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Addex Therapeutics Annual Report 2022 │Statutory Financial Statements
Key Audit Matter
How the Key Audit Matter was addressed in the
audit
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.
We evaluated management’s assessment of the
recoverability of the loans and resulting provisions,
which is based on the net asset value of its subsidiary.
We also assessed the appropriateness of the related
disclosures.
Valuation of the loans to subsidiaries
The Company has granted loans to its subsidiary
Addex Pharma SA for a total gross value of
CHF 236'396'139 and has recorded a corresponding
provision of CHF 225'882'023.
This is a significant focus point due to the
loans provided by Addex
significance of the
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 subsidiaries.
Refer to note 9 Other non-current assets - Loans to
Group companies
Other Information
The board of directors is responsible for the other information. The other information comprises the information included in the
annual report, but does not include the financial statements, the consolidated financial statements, the compensation report and
our auditor’s reports thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the 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.
Responsibilities 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.
Page 68 of 70
Addex Therapeutics Annual Report 2022 │Statutory Financial Statements
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 SA-CH 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 the auditor’s responsibilities for the audit of the financial statements is located at EXPERTsuisse's website
at: https://www.expertsuisse.ch/en/audit-report-for-ordinary-audits. This description forms part of our auditor’s report.
Report on Other Legal and Regulatory Requirements
In accordance with Art. 728a para. 1 item 3 CO and PS-CH 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 excess of 10 percent of the
share capital, which is in breach of Article 659 paragraph 2 of the Swiss Code of Obligations.
Geneva, March 30, 2023
BDO Ltd
Nigel Le Masurier
Christoph Tschumi
Licensed Audit Expert
Licensed Audit Expert
Auditor in Charge
Page 69 of 70
Addex Therapeutics Annual Report 2022 │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
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