Aadi Bioscience, Inc. (NASDAQ:AADI) Q4 2023 Earnings Call Transcript
Aadi Bioscience, Inc. (NASDAQ:AADI) Q4 2023 Earnings Call Transcript March 13, 2024
Aadi Bioscience, Inc. beats earnings expectations. Reported EPS is $-0.6, expectations were $-0.67. AADI 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 Aadi Bioscience Fourth Quarter 2023 Earnings Conference Call. At this time, more participants are in a listen-only-mode. After the speaker's presentation, there will be question-and-answer session. [Operator Instructions] Please note that today's conference is being recorded. I will now turn the call over to Audrey Gross [ph] 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 of the fourth quarter and full year 2023. On the call is Dr. Dave Lennon, our President and CEO; Scott Giacobello, our CFO; and Chief Medical Officer, Dr. Loretta Itri. Today, we will provide an overview of operational activity and financial results for the fourth quarter and full year of 2023. 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, March 13, 2024, and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. With that, I'll 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 fourth quarter and full year of 2023. At Aadi, we are focused on unlocking the full potential of mTOR inhibition by uniquely combining nab technology and the potent mTOR inhibitor, sirolimus. We believe nab-sirolimus has potential to deliver deeper inhibition and ultimately better outcomes for patients living with cancers that are dependent on the mTOR pathway. In 2023 was a year marked by progress and increasing momentum for the company as we delivered strong execution against both commercial and development goals. First, FYARRO sales remained solid, achieving a cumulative $24.4 million for the full year of 2023, representing a 60% growth over prior year.
FYARRO achieved high penetration in the academic and community settings and is considered the preferred treatment for malignant PEComa. Clinically, a key focus for our organization has been realizing the potential of nab-sirolimus for patients with solid tumors harboring either TSC1 or TSC2 inactivating alterations. These type of genetic alterations are thought to activate the mTOR pathway leading to uncontrolled cell growth and our PRECISION 1 trial is an interventional study designed to elucidate the potential of nab-sirolimus to treat all types of solid tumors with either of these alterations. As a reminder, the unmet need in TSC1 and TAC2 mutated cancers is sizable, whether considering together or independently and represents about 2% of all solid tumor cancer patients.
Our latest internal analysis indicates there are approximately 16,000 new patients with these new mutations across a variety of tumor types each year in the U.S. alone. With mutations roughly evenly split between genes, each mutation represents a potential multibillion-dollar addressable market for nab-sirolimus. TSC1 or TSC2-driven cancers are found across a wide range of tumor types, clustering in lung, gastrointestinal, general urinary, breast and gynecological locations and are often very difficult to treat. We believe PRECISION 1 is a cutting-edge trial testing our innovative therapy nab-sirolimus in these cancer types. Although PRECISION 1 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, PRECISION 1 can effectively be viewed as two separate studies, each with its own outcome. In Q4, we provided top line results from a planned interim evaluation of the first 40 patients enrolled in PRECISION 1. These data demonstrated sustained tumor reductions in a heavily pretreated population based on investigator-assessed responses in the first 40 patients across both arms. As a reminder, for the TSC 1 arm, 19 efficacy evaluable patients were included in the cutoff date for the interim analysis who had at least one post baseline scan. We reported an overall response rate of 26%, which was within the range of our expectations. Importantly, responses appear to be early, deep and durable. Time to response was 1.4 months and all responses were ongoing at the time of data cutoff.
This is especially noteworthy given that this is a heavily pretreated population with a median of three prior lines of therapy. Lastly, these responses were seen across four different tumor types supporting a tumor-agnostic indication. In the TSC 2 arm, we reported a lower response rate, but given these patients were heavily pretreated, including 50% who had had at least five prior lines of therapy, these early TSC 2 results are challenging to interpret. PRECISION 1 continues to enroll steadily, and we now expect the trial to be fully enrolled by May. We are still on track for our next plan interim readout, which is expected in Q3 of 2024. This readout will include a total of 80 patients who have been followed for a minimum of 6 months and will evaluate the primary input in the study, independently assessed overall response rate as opposed to our December analysis, which reported investigator-assessed responses.
We expect the study to be completed by the end of 2024 with full data in early 2025. In addition to PRECISION 1, enrollment is underway for both of the previously announced Phase II single indication trials for two promising mTOR driven cancer targets. Overactivation and dysregulation of the mTOR pathway is commonly found in various tumors, and unique delivery and excellent safety profile of nab-sirolimus provides the opportunity to combat these difficult-to-treat cancers. The first trial is evaluating nab-sirolimus in neuroendocrine tumors, or NETs, NETs are with approximately 3,500 patients per year. NETs have historically had a low response rate to treatment with oral rapalogs and other agents, which nonetheless are used clinically and recommended in treatment guidelines today.
In preclinical animal models, nab-sirolimus demonstrated improved target suppression relative to other mTORs warranting further exploration of nab-sirolimus in this indication. 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. The second trial we started last year is evaluating the therapeutic potential of nab-sirolimus in advanced and recurrent endometrial type endometrial cancer 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's an estimated 10,000 cases of EEC diagnosed annually in the U.S. alone.
Prior clinical studies of the 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 our combination to be used in these first and second-line settings. Both of these open-label studies are actively enrolling, and we plan to present initial data later this year. Rounding out our clinical development program, we also have an ongoing trial with combination of Mirati's KRAS inhibitor in lung cancer and other solid tumors. With a solid commercial foundation provided by FYARRO [ph] a robust and bold clinical development program spanning genetically-driven tumors in other mTOR-sensitive tumors and a cash runway into Q4 2025, 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 had a solid fourth quarter and ended 2023 with $108.8 million in cash, cash equivalents and short-term investments. In early 2024, we implemented measures to streamline our operations and reduce costs, which included headcount reductions in our customer-facing operations and corporate functions. Following these measures, we anticipate that our balance sheet will fund operations into Q4 2025 based on current plans. FYARRO net product sales were $6.3 million for the fourth quarter, representing 6% growth over Q3 2023 and 21% over the prior year quarter. Full year 6.3sales were $24.4 million, an increase of 60% over prior year sales of $15.2 million. Research and development expenses for the quarter increased to $12.8 million compared to $9.4 million in the prior year quarter.
For the year, R&D expense amounted to $48.9 million compared to $32.7 million last year. This increase is primarily related to the continued progress of the ongoing PRECISION 1 trial and initiation of the programs in endometrial cancer and NETs. Selling, general and administrative expenses for the fourth quarter were $10.3 million compared to $11.1 million in the same period in 2022. For the year, SG&A expenses totaled $44.5 million compared to $40.2 million in the prior year. This increase is due primarily to higher legal and company infrastructure costs and increased marketing expenses related to FYARRO. Net loss for the fourth quarter was $16.3 million compared to $13.9 million in the fourth quarter of 2022. Net loss for the year was $65.8 million compared to $60.5 million in the prior year.
For more information on our financial performance for 2023, a detailed discussion of the results reported on this call will be provided in our 10-K to be filed later today. I'll now hand the call back to Dave for his closing comments. Dave?
Dave Lennon: Thank you, Scott. I'm so proud of the progress we made in Q4 and what the team accomplished in 2023. FYARRO remains a valuable asset with sustained demand to help meet the needs of patients with PEComa. We're making tremendous progress against our clinical development plans with two sizable markets in TSC1 and TSC2 in activating alterations as well as other mTOR-driven cancers. We're looking forward to sharing the two-thirds interim analysis from PRECISION 1 in the third quarter with full enrollment inspected in May and study completion by the end of 2024. We can now open the line for questions. Operator?
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