scr.zacks.com 111 North Canal Street, Chicago, IL (ADDXF-OTC) UPDATE ZACKS ESTIMATES

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1 Small-Cap Research February 8, 2013 Jason Napodano, CFA scr.zacks.com 111 North Canal Street, Chicago, IL Addex Therapeutics Ltd. (ADDXF-OTC) ADXN: Refocusing Resources On Clinical Candidates & Orphan Diseases Current Recommendation Neutral Prior Recommendation Buy Date of Last Change 02/08/2013 Current Price (02/08/13) $10.05 Target Price $12.50 UPDATE On February 7, 2013, Addex announced it would focus its resources on developing its clinical stage pipeline for rare diseases. This is in contrast to the previous focus of the company, which included broad development programs in large diseases like schizophrenia, depression and anxiety. The new strategy includes narrowing the focus on the company to molecules where management believes orphan drug status (ODS) can be obtained, thus reducing both the time and cost to develop the drugs while guaranteeing market exclusivity and potentially attracting partners. Our rating is Neutral as we believe expectations need to reset around a dipraglurant deal in PD-LID and a potential ADR offering later in 2013 for a U.S. listing. SUMMARY DATA 52-Week High $ Week Low $7.85 One-Year Return (%) Beta 0.06 Average Daily Volume (sh) 57 Shares Outstanding (mil) 8 Market Capitalization ($mil) $79 Short Interest Ratio (days) Institutional Ownership (%) 0 Insider Ownership (%) Annual Cash Dividend $0.00 Dividend Yield (%) Yr. Historical Growth Rates Sales (%) Earnings Per Share (%) Dividend (%) P/E using TTM EPS P/E using 2012 Estimate P/E using 2013 Estimate Risk Level Type of Stock Industry ZACKS ESTIMATES Above Average Small-Growth Med-Biomed/Gene Revenue (In millions of CHF) Q1 Q2 Q3 Q4 Year (Mar) (Jun) (Sep) (Dec) (Dec) A 0.6 A 3.7 A A 0.9 E 1.0 E E E Earnings per Share (Reported EPS in CHF) Q1 Q2 Q3 Q4 Year (Mar) (Jun) (Sep) (Dec) (Dec) A A A A E E E E Copyright 2013, Zacks Investment Research. All Rights Reserved.

2 WHAT S NEW Addex Looks To Refocus Efforts On Clinical Candidates / Orphan Disease On February 7, 2013, Addex Therapeutics announced it would focus its resources on developing its clinical stage pipeline for rare diseases. This is in contrast to the previous focus of the company, which included developing clinical candidates for large indications like schizophrenia, depression, anxiety, diabetes, rheumatoid arthritis, psoriasis, Alzheimer s and Parkinson s disease. Addex also had significant pre-clinical discovery with mechanisms targeting mglur2 PAM, mglur2 NAM, mglur4 PAM, mglur7 NAM, GLP1R PAM, TrkB PAM, and TNFR1 NAM. The new strategy includes narrowing the focus on the company to molecules where management believes orphan drug status (ODS) can be obtained, thus reducing both the time and cost to develop the drugs while guaranteeing market exclusivity and potentially attracting partners. We note that nearly half (19) of the 39 drugs approved in 2012 had orphan drug designations. Dipraglurant Specifically, management will refocus its efforts on dipraglurant to rare forms of dystonias. Management continues to be in discussion with potential partners on dipraglurant for Parkinson s disease levodopa induced dyskinesia (PD-LID). We remind investors that Addex presented positive data from a phase 2a PD-LID trial in March We encourage investors to view our previous work on this data from August However, Addex believes it can create value around dipraglurant by refocusing the company s internal efforts on potential orphan indications and dystonia by pushing forward development of the drug into a phase 2a study in the next few months. The specific indication has yet to be noted, but on the company s conference call on February 7, 2013, Chief Medical Officer, Charlotte Keywood, mentioned writer s cramp, which is a focal dystonia of the fingers, hand, and/or forearm. Patients with writer s cramp typically try anticholinergic drugs such as trihexyphenidyl or benztropine. Others may progress to botulinum neurotoxin (Botox) injections. Still, as many as half of these patients are inadequately treated, and a molecule like dipraglurant may be a viable new option. Ultimately we believe Addex will seek to reformulate dipraglurant into an extended release formulation for dystonia. However, the phase 2a study the company seeks to initiate in the next few months will be with the same immediate release formulation that was successful in PD-LID. This makes it easy for management to push forward with confidence in the known pharmacokinetics and dose-response. Reformulation can be completed concurrent while this proof-of-concept work is done in phase 2a. We would expect that data from this study will be available in early By that time, the formulation work on the extended release version should be complete and the company can move into a larger-scale phase 2b in 2014 for dystonia. We also expect that Addex will file for orphan drug status (ODS) on dipraglurant for this rate type of dystonia. This provides reduced cost to develop in the indication and potentially a quicker path to approval. ODS also guarantees market exclusivity and potentially helps attract partners for commercialization. We believe management will be in position to file the orphan drug application later in ADX71441 Addex also expects to push forward into clinical studies with ADX71441, a potent, selective, orally available small molecule that is brain penetrant and shows good pharmacokinetic properties for once-daily dosing. ADX71441 is a gamma-aminobutyric acid subtype B (GABA-B) receptor positive allosteric modulator (PAM). This pathway has been clinically and commercially validated by generic GABA-B receptor agonist, baclofen, currently used primarily for spasticity and spinal cord injuries. Orthosteric GABA-B receptor agonists have also shown clinical validation in gastroesophageal reflux disease (GERD) as well. Addex s ADX71441 has shown efficacy in multiple preclinical models including: CMT1A, overactive bladder (OAB), pain, osteoarthritis, anxiety, and in reducing alcohol binge drinking. In a rodent model of alcohol binge drinking, results show that ADX71441 provides robust, dose-dependent and long-lasting suppression of alcohol intake when compared to naltrexone, the most-commonly prescribed treatment for alcohol addiction. Specifically, rodents on higher doses (10 & 30 mg/kg) achieved an 80% reduction in alcohol intake compared to a control. Zacks Investment Research Page 2 scr.zacks.com

3 Management plans to begin a phase 1 study with a focus on Charcot-Marie-Tooth disease, or CMT1A. CMT1A is a rare hereditary motor and sensory neuropathy that causes demyelination of the peripheral nerves with a consequence of severely and uniformly reduced nerve conduction velocities and consecutive axonal loss. CMT1A patients typically see damage or destruction to the myelin sheath covering around nerve fibers in the legs first, but symptoms can move to the arms and hands, and often becomes highly debilitating with progressive neurological pain and muscle atrophy on disease progression. CMT1A can result in sensory system dysfunction and loss of vibration and joint position sense. Onset of the disease is between age 5 and 25 years, with a prevalence of 1 in 5,000. Charcot-Marie-Tooth is one of the most common inherited nerve-related disorders passed down through families in an autosomal dominant fashion. Duplication of a chromosome 17 fragment harboring PMP22 represents 43% of the total CMT cases. PMP22 is an essential component of myelin expressed in all myelinated fibers. PMP22 is necessary for stabilizing compact myelin in the body. There are no known cures for CMT1A. Addex has studied the mechanism of ADX71441 in transgenic CMT rats with data showing reduced hypo-myelinated axons and increased compound muscle action potentials in peripheral nerves when compared to a control. ADX71441 also prevented grip strength loss in CMT rats compared to wild type rats. The goal here for Addex is to move into a phase 1a single-dose study in the next few months and then a phase 1b multi-dose study around the middle of the year. Management will be looking for biomarker data from these studies in late If all goes well, Addex could be in position to begin phase 2a studies with ADX71441 in We remind investors that in January 2013, the company secured a composition of matter patent (U.S. Patent # 8,344,138) covering ADX71441 and other GABA-B receptor (GABA-BR) positive allosteric modulators (PAM). mglur4 PAM The third molecule that Addex plans to focus on is an oral mglur4 PAM currently in pre-ind studies for the treatment of multiple sclerosis and Parkinson s disease. Management is particularly excited about this agent given the non-dopaminergic mechanism of action and potential disease-modifying efficacy. Specifically, mglur4 is highly expressed within the basal ganglia in key areas for motor control and movement. Activation of mglur4 may restore balance by decreasing GABA and Glutamate neurotransmitter tone. The mechanism for mglur4 PAM has demonstrated improvement in motor function and neuroprotection in preclinical models. In September 2012, Addex reported positive proof of concept for its lead mglur4 PAM compound in a validated rodent model for multiple sclerosis (MS). Addex is currently in the candidate selection stage and expects to be in position to begin IND-enabling studies in We expect management to provide an update on the specifics of selection and timing for an IND filing later in We remind investors that in October 2012, Addex announced that it has been awarded a CHF 0.7 million grant from the Swiss Commission for Technology and Innovation (CTI) to develop allosteric modulator therapeutics for neurodegenerative and psychiatric diseases. Addex will collaborate with the Center for Psychiatric Neuroscience at the University of Lausanne and at the Laboratory for the Study of Neurodegenerative Diseases (LEN) at Ecole Polytechnique Fédérale de Lausanne (EPFL). The objective of the project is the characterization and optimization of potent and selective allosteric modulators targeting Group III of metabotropic glutamate receptors, one mechanism of which was mglur4 PAM. U.S. LISTING Addex Therapeutics has also made the decision to pursue a listing on a major U.S. exchange, most likely the NASDAQ market through the offering of American depository receipts (ADRs). We note that U.S. shareholders (as of the last annual report) now account for roughly 40% of current shareholder base, with home-country Switzerland in second with roughly 23%. Addex shares currently only trade on the OTC market under ADDXF, creating liquidity and compliance issues for major U.S. institutional buyers. We think listing on a U.S. exchange is a wise move. From a financial standpoint, we believe Addex has the necessary cash to fund operations into The company exited 2012 with roughly CHF 15.3 million on the books. Burn in 2012 was CHF 20.8 million, but we think this new refocusing of clinical efforts on dipraglurant and ADX71441 to niche orphan indications and limiting the preclinical discovery engine should help to reduce burn dramatically in 2013 and make the company more attractive to investors. We expect the company to secure sizable financing later in 2013 upon the listing on the ADRs to the NASDAQ or NYSE-MKT. This could provide funding well into 2015 or beyond. Zacks Investment Research Page 3 scr.zacks.com

4 DIPRAGLURANT FOR PD-LID Partnership for Dipraglurant Remains Upside Driver Addex remains in active discussion with interested partners on dipraglurant for the treatment of Parkinson s disease levodopa-induced dyskinesia (PD-LID). Data from a phase 2a study was released in March The primary endpoint of the study was safety and tolerability. A total of 76 patients were randomized between dipraglurant (n=52) and the placebo (n=24). After four weeks, 90% of the patients on dipraglurant (47 out of 52) completed the study. Two patients withdrew and three patients were removed for protocol violations. Work from this phase 2a trial was supported by a $0.900 million grant from The Michael J. Fox Foundation (MJFF). - Safety Tolerability Results The study treatment duration was 4 weeks and patients followed a dose titration regimen, receiving 50 mg doses up to three times daily in the first 2 weeks of the study until day 14; and then from day 14 to day 28, they escalated to 100 mg three times daily. Results show that both dose levels, 50 and 100 mg, were well tolerated and there were no safety concerns arising from any of the safety monitoring parameters. These include things like heart rate, blood pressure, ECG, and blood tests looking for impact on liver function. Adverse events in the study were common in both the dipraglurant and placebo arms, coming in at 88.5% and 75%, respectively. The data did show typical mglur-type adverse events, such as vertigo, blurred vision, and a drunk feeling, but management noted that none of these were severe and did not compromise the use of the drug. Tolerability Dipraglurant (n=52) Placebo (n=24) Completers 90% 100% Adverse Events 89% 75% Blood Tests normal normal - Efficacy Results Secondary endpoints in the study were exploratory, but centered on validated clinical measures for Parkinson s disease assessment, including the modified Abnormal Involuntary Movement Scale (modified AIMS), patient and clinician global impression of change (PGIC & CGIC), Unified Parkinson s Disease Rating Scale (UPDRS), and the Hospital Anxiety & Depression Scale (HADS). Results on the modified AIMS scale showed statistically significant improvement on days 1 and 14, with impressive and clinically relevant reductions in the dipraglurant group on all three periods tested (days 1, 14, and 28). Management will have to control the escalating placebo response in the next clinical study, as the Day 28 data just missed statistical significance. Reduction in modified AIMS Dipraglurant (n=52) Placebo (n=24) Day % 4.1% p=0.042 Day % 12.6% p=0.034 Day % 21.5% n/s Interestingly, management did not notice a difference in the AIMS reduction trends for patient with an implanted electronic DBS (deep brain stimulation) device. DBS is a sort of pacemaker for the brain for patients with severe PD. This is encouraging and opens the door for potential dipraglurant use in this population. Targeted reduction in Levodopa-induced dyskinesia severity over the entire 3 hour post Levodopa dose period (area under the curve) demonstrated solid results for dipraglurant at Day 14 (32.3%) and Day 28 (31.4%). The Day 14 AIMS AUC 0-3 data was statistically significant (p=0.034) at Day 14 for the 50 mg dose, but missed at Day 28 due to lack of statistical powering and a meaningful reduction in the Day 28 AIMS AUC 0-3 data for the placebo. This is something management will have to address in the next clinical trial. Zacks Investment Research Page 4 scr.zacks.com

5 Modified AIMS AUC 0-3 Data We note for the above data, patients received 50 mg TID dipraglurant on Day 1, 100 mg TID on Day 14, and 100 mg TID on Day 28. We expect that for the phase 2b program, patients will be on 100 mg TID for a much longer period of time. Phase 1 data suggests up to 500 mg per day was well-tolerated. The phase 2a trial also included 7 patients with dystonia. The data were limited, so no statistical analyses was performed, but management noted a similar response with respect to the magnitude of improvement for the 4 patients receiving dipraglurant to the response in chorea. This opens the doors to potential further studies in patients with peak dose dystonia in the future. Patient and Clinician Global Impression of Change (PGIC & CGIC) and patient diary data also yielded encouraging results. The data showed no increase in off time seen with dipraglurant use meaning that dipraglurant had no detrimental effect on the underlying Levodopa efficacy. In fact, by week 4 of the study, the mean off time for the dipraglurant group actually decreased by 50 minutes compared to no change for the placebo. This is suggestive of a beneficial (symbiotic) effect of dipraglurant on parkinsonian symptoms. UPDRS (motor function scoring) remained unchanged at all treatment visits during the 4 week program, again suggestive of no detrimental effect to the drug. Similarly, an increase in on time effect without dyskinesia was observed for the dipraglurant group compared to the placebo in all 4 weeks of treatment. By week 4 of the study, patients in the dipraglurant group had an extra 2.3 hours per day of on time without dyskinesia. We find this to be highly clinically relevant, and suggestive for a potential blockbuster opportunity. On time Without Dyskinesia Zacks Investment Research Page 5 scr.zacks.com

6 Market Opportunity & Sales Forecast Parkinson s disease is the second most common neurodegenerative disorder after Alzheimer s disease. According to the National Institute of Neurological Disorder and Stroke, there are an estimated 500,000 people in the U.S. living with Parkinson s disease. The National Parkinson s Foundation estimates 50,000 to 60,000 new cases are diagnosed each year. The European Parkinson s Disease Association (EPDA) estimates another 500,000+ Parkinson s patients in Europe. According to an article published in The Lancet in June 2006 (5(6):525-35), Epidemiology of Parkinson's Disease, prevalence of Parkinson s is about 0.3% of the whole population in industrialized countries. PD is more common in the elderly and prevalence rises from 1% in those over 60 years of age to 4% of the population over 80. Between North America and Europe, we estimate there are over 1 million addressable patients living with Parkinson s disease. Roughly 90% of these patients are considered moderate to severe in their parkinsonian symptoms, as many mild cases of Parkinson s go undiagnosed. The majority of these 900,000 moderate to severe Parkinson s patients will be on Levodopa therapy, either monotherapy or in combination with MAOB inhibitors. Parkinson s patients and physicians feel strongly PD-LID is a high unmet medical need. After five years of Levodopa treatment, 50% of PD patients will suffer from dyskinesia. The number jumps to 90% of PD patients following 10 years for Levodopa therapy. With dipraglurant, Addex Therapeutics and its commercialization partner have an opportunity to target the vast majority of these 900,000 patients, as early as their second or third year of Levodopa therapy. We estimate dipraglurant could cost approximately $5,000 per year in the U.S. We believe that 25% peak penetration is reasonable considering the significant nature of the problem and lack of competition from existing therapies. Peak sales for dipraglurant-ir in PD-LID are $650 million in our view. As noted above, we expect Addex Therapeutics to partner the dipraglurant molecule with a larger pharmaceutical company with the expertise and capability to fully exploit this sort of broad commercial potential. A partnership for the phase 2b trial could bring an upfront payment in the area of $25 to $50 million (USD) and mid-double digit royalties on worldwide sales. We expect a deal in the next few months. Zacks Investment Research Page 6 scr.zacks.com

7 PARTNERED PROGRAMS ADX71149 Successful in Phase2a for Schizophrenia In November 2012, Addex Therapeutics reported top-line results from Part B of the company s phase 2a trial studying ADX71149 in patients with schizophrenia. The trial met the primary objectives of safety and tolerability. The trial was conducted by Janssen Pharmaceuticals, a division of Johnson & Johnson. Addex also confirmed that ADX71149 demonstrated efficacy in patients with residual negative symptoms of schizophrenia, with the 50 mg BID dose identified as having the optimal benefit/risk ratio in this study. Unfortunately, this is all the information that Addex and partner J&J have shared on the results of the phase 2a study, no doubt for competitive reasons. The study is being conducted in two parts. Part A is testing ADX71149 on safety, tolerability, and efficacy as a monotherapy in the treatment of patients with sub-acute psychosis and schizophrenia over a 12 week open-label format in 15 patients not on antipsychotic medication. Doses for Part A range from 50 mg BID to 150 mg BID. This part of the study is ongoing, although our expectations here are low given the small size of this arm. Part B tested ADX71149 as an adjunctive therapy to antipsychotic medication. Part B was a randomized, double-blind, placebocontrolled trial designed to evaluate the safety, tolerability, and efficacy in a total of 92 patients on stable doses of antipsychotic medications. The study population comprised 3 groups: patients with residual negative symptoms (n = 47); patients with residual positive symptoms (n = 25); and patients with insufficient response to clozapine treatment (n = 20). For the first 4 weeks of treatment all patients were randomized to receive either ADX mg BID, ADX mg BID or placebo, taken concomitantly with their currently prescribed antipsychotic medication (randomized 2:2:1). Addex Therapeutics is developing ADX71149, a positive allosteric modulator (PAM) of metabotropic glutamate receptor 2 (mglur2), specifically to address negative symptoms of schizophrenia. Negative symptoms of schizophrenia include social withdrawal, apathy, inability to experience pleasure, attention defect, and blunted or muted affect and emotion. These may manifest in poverty of speech (alogia), inability to experience pleasure (anhedonia), lack of desire to form relationships (asociality), and lack of motivation (avolition). We believe that ADX71149 may be differentiated from marketed antipsychotics by showing efficacy on negative symptoms and avoid compliance-limiting side effects like weight gain, hyper-prolactinemia, and extrapyramidal symptoms such as akathisia, parkinsonism, and dystonia, which are associated with the use of dopamine antagonists. The mglur2 activation is intriguing because it is one of the few non-dopaminergic mechanisms to show clinical signs of efficacy. If successful, we think ADX71149 has the potential to be the first oral, nondopaminergic complete therapy that addresses both the positive and negative symptoms of schizophrenia. We remind investors that in January 2005, Addex Therapeutics and Johnson & Johnson entered into a worldwide research collaboration and license agreement to discover, develop, and commercialize novel compounds modulating allosterically G-Protein Coupled Receptors for the treatment of anxiety, depression, schizophrenia, and Alzheimer s disease. The deal came with 7.2 million for two years of research funding by J&J, which was later expanded when the duo selected ADX71149 to move into clinical studies. We view J&J as an outstanding partner for Addex Therapeutics. Addex has received a total of 10.2 million in upfront and milestone payments to date on ADX71149, with the potential to receive an additional 109 million in future milestones and potential low double-digit royalties on worldwide sales once commercialized. The potential for future milestone totaling 109 million all pre-commercialization, nearly three-times the current market value of the company, along with low double-digit royalties on sales a potential blockbuster drug presents enormous upside for Addex shareholders. We expect that J&J will look to move into a phase 2b trial for schizophrenia in Zacks Investment Research Page 7 scr.zacks.com

8 Finally, we are pleased that J&J shares Addex vision for the drug, seeking additional indications in anxiety and major depressive disorder. A phase 2a multicenter, double-blind, placebo-controlled study was initiated in September The trial will study 25 mg BID to 150 mg BID ADX71149 as an adjunctive therapy in 94 adults on active antidepressant medications. The primary endpoint of the study is the change from baseline in the Hamilton Anxiety Rating scale (HAM-A6) score. Secondary endpoints include change from baseline of several other clinicianadministered rating scales designed to assess the severity of depression and anxiety symptoms. Data from this trial is expected in early Below is an outline of the trial. Zacks Investment Research Page 8 scr.zacks.com

9 PROJECTED FINANCIALS Addex Therapeutics Ltd. Income Statement 2010 E 2011 A H1 A H2 E 2012 E 2013 E 2014 E 2015 E Royalties on Dipraglurant-IR (PD- LID) Royalties on ADX Dipraglurant-ER in Dystonia ADX71441 (GABA-BR PAM) mglu4 PAM Collaborations / Other Total Revenues R&D % R&D SG&A % SG&A Operating Income (33.598) (30.974) (14.749) (10.600) (25.349) (19.800) (19.450) (11.400) Operating Margin 0.0% Net Other Income (0.048) (0.167) (0.009) (0.100) (0.109) (0.200) (0.200) (0.200) Pre-Tax Income (33.645) (31.141) (14.759) (10.700) (25.459) (20.000) (19.650) (11.600) Taxes Tax Rate 0% 0% 0% 0% 0% 0% 0% 0% Net Income (33.645) (31.141) (14.759) (10.700) (25.459) (20.000) (19.650) (11.600) Net Margin 0.0% % -57.7% Reported EPS (5.69) (4.19) (1.91) (1.32) (3.22) (2.30) (2.21) (1.29) Wt. Ave Shares Outstanding Source: Zacks Investment Research, Inc. Jason Napodano, CFA Copyright 2013, Zacks Investment Research. All Rights Reserved.

10 HISTORICAL ZACKS RECOMMENDATIONS DISCLOSURES The following disclosures relate to relationships between Zacks Investment Research ( ZIR ) and Zacks Small-Cap Research ( Zacks SCR ) and the issuers covered by the Zacks SCR analysts in the Small-Cap Universe. ZIR or Zacks SCR Analysts do not hold or trade securities in the issuers which they cover. Each analyst has full discretion on the rating and price target based on their own due diligence. Analysts are paid in part based on the overall profitability of Zacks SCR. Such profitability is derived from a variety of sources and includes payments received from issuers of securities covered by Zacks SCR for non-investment banking services. No part of analyst compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in any report or blog. ZIR and Zacks SCR do not make a market in any security nor do they act as dealers in securities. Zacks SCR has never received compensation for investment banking services on the small-cap universe. Zacks SCR does not expect received compensation for investment banking services on the small-cap universe. Zacks SCR has received compensation for non-investment banking services on the small-cap universe, and expects to receive additional compensation for non-investment banking services on the small-cap universe, paid by issuers of securities covered by Zacks SCR. Non-investment banking services include investor relations services and software, financial database analysis, advertising services, brokerage services, advisory services, investment research, and investment management. Additional information is available upon request. Zacks SCR reports are based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed by Zacks SCR Analysts are subject to change. Reports are not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks SCR uses the following rating system for the securities it covers. Buy/Outperform: The analyst expects that the subject company will outperform the broader U.S. equity market over the next one to two quarters. Hold/Neutral: The analyst expects that the company will perform in line with the broader U.S. equity market over the next one to two quarters. Sell/Underperform: The analyst expects the company will underperform the broader U.S. Equity market over the next one to two quarters. The current distribution of Zacks Ratings is as follows on the 1011 companies covered: Buy/Outperform- 14.5%, Hold/Neutral- 77.6%, Sell/Underperform 7.3%. Data is as of midnight on the business day immediately prior to this publication. Copyright 2013, Zacks Investment Research. All Rights Reserved.