Aadi Bioscience, Inc. (NASDAQ:AADI) Q1 2024 Earnings Call Transcript May 8, 2024
Aadi Bioscience, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day and thank you for standing by. Welcome to the Aadi Bioscience First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only-mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. Now I’ll turn the call over to Audrey Gross, Head of Corporate Communications for Aadi Bioscience. Ms. Gross, please go ahead.
Unidentified Company Representative: Thank you. Good morning and welcome to the Aadi Bioscience conference call to provide an operational update and review results for the first quarter of 2024. On the call is Dr. Dave Lennon, our President and CEO; Scott Giacobello, our CFO; and our Chief Medical Officer, Dr. Loretta Itri. Today, we will provide an overview of operational activity and financial results for the first quarter of 2024. We will open the line for questions at the end of the call following closing comments. A quick reminder that statements made on the call today will include forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in the Risk Factors section of our annual and quarterly filings with the Securities and Exchange Commission, which can be found at www.sec.gov or on our website at www.aadibio.com.
In addition, any forward-looking statements made on this call represent our views only as of today, May 8th, 2024, and should not be relied upon as representing our view as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. With that I will turn the call over to Dave for his opening statements. Dave?
Dave Lennon: Good morning, everyone, and thank you for joining us today to review our financial and operational results for the first quarter of 2024. At Aadi, we’re focused on unlocking the full potential of mTOR inhibition by uniquely combining nab technology in the potent mTOR inhibitor, sirolimus. We believe nab-sirolimus has the potential to deliver deeper inhibition of the mTOR pathway and ultimately better outcomes for people living with cancers that are dependent on that pathway. Today, I’m pleased to announce that a registration-intended PRECISION1 trial is now fully enrolled across a broad array of tumor types. This is an important milestone as we seek to understand the potential of nab-sirolimus for patients with solid tumors harboring either TSC1 or TSC2 inactivating alterations, a sizable market.
Our latest internal analysis indicates there are approximately 16,000 patients with these mutations across a variety of tumor types, with mutations roughly evenly split between genes. Each mutation represents a potential multibillion-dollar total addressable market for nab-sirolimus. TSC1 or TSC2-driven cancers are found across a wider range of tumor types, clustering in lung, gastrointestinal, genitourinary, breast and gynecological locations and are often difficult to treat. We believe PRECISION1 is a cutting-edge trial, testing our innovative therapy, nab-sirolimus in these cancers. Although PRECISION1 is designed as a single trial, each arm is independently evaluated, providing us with the ability to assess one arm separately from the other.
Given this design, PRECISION1 can effectively be viewed as two separate studies, each with its own outcome. As a reminder, in Q4, we provided top line results from a planned interim evaluation of the first 40 patients enrolled in PRECISION1. These data demonstrated sustained tumor reductions in a heavily pretreated population based on investigator-assessed responses in the first 40 patients across both arms. Of note, for the TSC1 arm, we reported an investigator-assessed overall response rate of 26%, which was within the range of our expectations. These responses appear to be early, deep and durable, which is especially noteworthy given this heavily pretreated population with a median of three prior lines of therapy. Lastly, these responses were seen across four different tumor types, potentially supporting a tumor-agnostic indication.
I want to highlight that ongoing conversations with experts reinforce our view of the clinical significance of the responses we reported from the first interim analysis, especially in the late-line treatment in both patient groups. We continue to believe that should these results hold or improve in larger group of patients, we have a path to submission and potential approval for TSC mutations. With the trial now fully enrolled, we remain on track for our next planned interim readout, which is expected in Q3 of 2024. This highly anticipated analysis will include a total of 80 patients, who have been followed for a minimum of six months and will evaluate the primary endpoint of the study, independently assessed overall response rate as opposed to our December interim analysis, which reported investigator-assessed responses.
Looking ahead, we expect the study to be completed by the end of 2024 with full data in 2025. In addition to PRECISION1, the Phase II trials for two promising mTOR-driven cancer targets continue to enroll well. As a reminder on these two trials, the first is evaluating the therapeutic potential of nab-sirolimus in advanced or recurrent endometrioid-type endometrial cancer or EEC in combination with the aromatase inhibitor, letrozole. Endometrial cancer is the most common cancer of the female reproductive tract and one of the few cancers with increasing mortality. There is an estimated 10,000 cases of EEC diagnosed annually in the US alone. Prior clinical studies of mTOR inhibitors combined with letrozole have yielded promising results and recent changes in the recommended standard-of-care for early-stage disease creates a potential opportunity for this combination to be used in the first and second-line settings.
The second trial is evaluating nab-sirolimus in neuroendocrine tumors, or NETs. NETs are rare with approximately 3,500 cases a year. NETs have a historically low response rate to the treatment with oral rapalogs or other agents, which nonetheless are used clinically and recommended in treatment guidelines. In preclinical animal models, nab-sirolimus demonstrated improved target suppression relative to other mTORs, warranting further exploration of nab-sirolimus in the clinical setting for NETs. We’re excited about this trial because it provides the opportunity to demonstrate what we believe is nab-sirolimus’ best-in-class efficacy in a known mTOR-sensitive tumor type. Overactivation and dysregulation of the mTOR pathway is commonly found in various tumors and the unique delivery and excellent safety profile of nab-sirolimus provides the opportunity to combat these difficult to treat cancers.
As such, we think these are promising indications and are eager to present initial data from these open label studies later this year. As a final update to our development plans, today, we announced that we have terminated our collaboration and supply agreement with Mirati, now BMS. That was evaluating the combination of its adagrasib, a KRAS selective inhibitor, and nab-sirolimus in KRAS-mutant non-small cell lung cancer and other solid tumors. At our request, we mutually agreed with BMS to discontinue this early phase trial, which enables us to prioritize the evaluation of nab-sirolimus in our ongoing Phase II trials for the promising indications of EEC and NETs. Turning now to FYARRO. FYARRO continues to perform well with net product sales for the quarter of $5.4 million.
For a bit of context, this is a decrease from prior year and reflects Q1 changes in distributor ordering patterns and fewer new commercial patient initiations in Q1 than historical average. Swings in what is actually a very small number of patients may be due in part to cannibalization at top accounts, where we’re seeing robust enrollment into our current clinical trials. We believe this will correct itself in subsequent quarters and we expect a return to sales growth in Q2. FYARRO has cemented its position as the preferred treatment for malignant PEComa after just two years on the market. We have high penetration across academic and community settings and have seen the consistent addition of new accounts ordering FYARRO every quarter now with more than 200 accounts ordering since launch.
We are proud of the impact FYARRO has had and will continue to have for patients with this rare and aggressive cancer. With sustained commercial success of FYARRO, cash runway into Q4 2025 and a catalyst heavy 12 months ahead of us, we are well positioned to realize our ambition of becoming a multi-indication precision oncology company. I will now turn the call over to Scott for updates on our financial progress. Scott?
Scott Giacobello: Thanks, Dave. We ended the first quarter 2024 with $88.3 million in cash, cash equivalents and short-term investments. Responsible capital management, including measures implemented in early 2024 to streamline our operations and reduce costs, continue to support a healthy balance sheet that will fund operations into Q4 2025 based on current plans. FYARRO net product sales were $5.4 million for the first quarter, representing an 8.8% decrease from the prior year period. As Dave mentioned, this decrease was due in part to distributor ordering patterns in Q1, which we expect will correct in future quarters as well as lower commercial patient initiations. Research and development expenses for the quarter increased to $13.6 million compared to $11 million in the prior year quarter.
This increase is primarily related to the continued progress of the ongoing PRECISION1 trial, which is now fully enrolled and the programs in endometrial cancer and NETs. Selling, general and administrative expenses for the first quarter were $10.6 million compared to $11.2 million in the same period in 2023. This decrease is due mainly to reduced legal and consulting expenses versus the prior year, offset in part by severance costs related to the streamlining of our operations. Net loss for the first quarter was $18.3 million compared to $15.2 million in the first quarter of 2023. For more information on our financial performance in the first quarter, a detailed discussion of the results reported on this call will be provided in our Form 10-Q to be filed later today.
I’ll now hand the call back over to Dave for his closing comments. Dave?
Dave Lennon: Thanks, Scott. I’m proud of the strides we’ve made already this year. We’re making tremendous progress against our clinical development plans with two sizable markets in TSC1 and TSC2 inactivating alterations as well as other mTOR-driven cancers. We look forward to providing a highly anticipated two-thirds interim analysis from PRECISION1 in the third quarter and is sharing an early look from our Phase II trial later this year. Now we can open the line for questions. Operator?
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