Aadi Bioscience, Inc. (NASDAQ:AADI) Q1 2023 Earnings Call Transcript

Aadi Bioscience, Inc. (NASDAQ:AADI) Q1 2023 Earnings Call Transcript May 10, 2023

Operator: Good day and welcome to the Aadi Bioscience First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Instructions will be given at that. As a reminder, this call may be recorded. Now I’ll turn the call over to Marcy Graham, Senior Vice President of Investor Relations and Corporate Communications at Aadi Bioscience. Ms. Graham, please go ahead.

Marcy Graham: Thank you. Good morning and welcome to the Aadi Bioscience conference call to provide an operational update and review results for the first quarter 2023. Joining me on the call today is Scott Giacobello, our CFO and Interim President and CEO who will provide an overview of financial and operational activity during the period, including an update on our continued commercial progress, followed by our Chief Medical Officer, Dr. Loretta Itri, who will provide an update on our PRECISION 1 study and clinical developments and plans for 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 filing 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 10, 2023 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 Scott for his opening statements. Scott?

Scott Giacobello: Thank you, Marcy and hello everyone. Thank you for joining us this morning to review our financial and operational results for the first quarter 2023. We’re off to a strong start this year as our performance continued to drive results and the first quarter closed out well. Our focus on successful commercial execution of FYARRO for the treatment of advanced malignant PEComa resulted in sales of $5.9 million during the quarter, a 12% sequential increase over the previous quarter. The efforts of our commercial team to expand our region increased the visibility of FYARRO driving our success in the market and we’re pleased with the continued growth resulting from their hard work. We look forward to delivering continued benefits to these patients suffering from this rare and now treatable disease.

On the clinical front, today we will provide an initial update on our tumor agnostic PRECISION 1 registration directed trial for patients harboring inactivating alterations in TSC1 or TSC2 genes. This trial has the potential to significantly broaden the future application of nab-sirolimus for many different tumor types and a much larger patient population than we currently address in PEComa, presenting an exciting opportunity for additional growth. We are encouraged by initial enrolment data on the types of tumors we are seeing in the trial as well as the enrollment distribution in the two arms. Loretta will share further details on the conduct of the PRECISION 1 trial shortly. Beyond the PRECISION study, initiation of the Phase 1/2 trial in KRASG12C is expected to begin with the first patient dosing in the second quarter of 2023.

The study in collaboration with Mirati Therapeutics will evaluate the combination of adagrasib with nab-sirolimus and is intended to determine the optimal dose and recommend Phase 2 dose in patients with KRASG12C mutant solid tumors. Additionally we continue to evaluate the potential for use of nab-sirolimus in a number of new clinical indications, either as a single agent or in combination with other targeted therapies with the potential for new clinical programs later this year. We are aligning for success on several fronts in a key executional year, building on the achievements of prior periods and are working hard to attain our goals as the year progresses. Before we review operational and financial results for the quarter, Loretta is up next to provide an update on our PRECISION 1 trial and discuss our ongoing clinical activity.

Loretta?

Loretta Itri: Thank you Scott, and good morning everyone. Throughout the first quarter, we have continued to advance our ongoing PRECISION 1 tumor agnostic trial in mTOR naive patients with malignant solid tumors harboring TSC1 or TSC2 inactivating alterations. Today we are providing the first update on our progress so far. As a reminder, the trial is prospectively designed to evaluate patients in one of two independent study arms, one with solid tumors harboring TSC1, the other with TSC2. I’m pleased to tell you that the distribution of TSC1 and TSC2 alterations is exceptionally well balanced and that the trial is accruing relatively evenly between the two study arms. We are also seeing a remarkably diverse mix of cancer histologies with more than 15 discrete tumor types enrolled thus far, and no more than three of any one tumor type represented.

This accrual pattern clearly supports prior observations that TSC1 and TSC2 alterations occur broadly across solid tumors. Additionally, sarcomas have no higher representation than any of the other common solid tumors including breast and bladder cancer. Simply stated, we have a very broad representation of solid tumors and expect that the results will represent a truly tumor agnostic outcome. Importantly, the safety profile we have observed thus far is very consistent with that seen in the AMPECT study, and no new safety signals have emerged to date in this diverse and heavily pretreated population of patients. Given the potential of this study to impact the treatment of a large number of patients with a variety of tumor histologies, we believe it is critical to preserve data integrity, including sponsor binding in the way we conduct a trial and report results, particularly in the current regulatory environment surrounding tumor agnostic trials and accelerated approvals.

We look forward to sharing further information, including efficacy analysis on PRECISION 1 later in the year when response data will be presented in conjunction with a pre-planned interim analysis on 40 patients with appropriate followup. Enrollment in the trial is progressing well and we continue to target full patient enrollment by the spring of next year, 24 months after the first patient was enrolled. As the study matures, our partners at U.S. Oncology, Tempus Cares [ph] and Foundation Medicine are consistently working with us to develop novel methods to identify and support enrollment into our trial, and we are seeing benefit from the measures we have put in place during the recruitment process. We have continued to expand our broad outreach to the oncology community in order to increase the visibility of the study, including multiple presentations, most recently at scientific meetings including CTOS, SGO and soon at ASCO among others.

We are very excited about the potential of this truly novel and important study and the promise nab-Sirolimus may hold for the treatment of a diverse group of patients in need. I will now turn the call back over to Scott for updates on our commercial and financial progress. Scott?

Scott Giacobello: Thanks, Loretta. Commercially, we continue to make strong progress and are pleased to see steady product demand growth with the further adoption of FYARRO for patients with PEComa, and importantly, commercial access remains favorable with over 85% of lives covered. We achieved $5.9 million in sales for the first quarter, which represents growth in 12% over the fourth quarter of the last year, driven by the addition of new accounts and continuing account orders. We believe that our sales to date have been impressive reaching more than $21 million in just 13 months on the market. At the end of the first quarter, we had more than 145 unique ordering accounts, up 21% from the prior quarter with 26 of those accounts ordering for the first time.

The reorder rate was above 90% in the first quarter, underscoring the positive clinical experience conveyed by HCPs who are increasingly viewing FYARRO as the standard of care for their PEComa patients. It is encouraging to see the consistent uptake in community clinics and hospitals representing approximately half of FYARRO sales nationwide. Our team continues to execute in driving awareness and education and our efforts to cement FYARRO as a gold standard for malignant PEComa. As they do so, it is becoming clear that stakeholders understand the value and differentiation of FYARRO for PEComa patients. Our tracking shows significant physician awareness of FYARRO with 65% overall and an impressive 80% awareness for those specializing in sarcomas.

The feedback we are receiving is also robust and indicates that providers are readily adopting FYARRO as a top choice for treatment of their patients. On the financial front, we remain well capitalized, ending the first quarter with $151 million in cash, cash equivalents and short-term investments, which is expected to fund operations into 2025 based on current plans. Research and development expenses for the quarter increased to $11 million as compared to $6.8 million in the prior year quarter. This increase is primarily related to the continued progress of the ongoing PRECISION 1 trial and the buildout for the R&D organization. Selling general and administrative expenses for the first quarter were $11.2 million compared to $9.1 million in the same period in 2022.

This increase is due primarily to the build out of company infrastructure and increased marketing expenses related to the commercial launch of FYARRO. Net loss for the first quarter was $15.2 million compared to $13.9 million in the prior year quarter. For more information on our financial performance for the first quarter, a detailed discussion of the results reported on this call will be provided in our Form 10-Q. As I stated earlier, we are pleased with our overall progress and we are really excited about what lies ahead. We’re very encouraged by what we have seen from the initial enrollment data in the PRECISION 1 trial, and we look forward to sharing further information from the pre-planned interim analysis on 40 patients later in the year.

Meanwhile, we will continue to build on the momentum from the first quarter as we focus on maximizing the clinical and commercial potential of it is our goal to further strengthen our ability to deliver therapeutic benefits to patients and to create long-term value for stakeholders by establishing Aadi as a leading precision oncology company focused on delivering therapies that improve the lives of those who suffer from mTOR diseases. We can now open the line for questions. Operator?

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Q&A Session

Operator: [Operator Instructions] Our first question comes from Roger Song with Jefferies. Your line is open.

Operator: Thank you. Our next question comes from Joe Catanzaro with Piper. Your line is open.

Operator: Thank you. Our next question comes from Boris Peaker with Cowen. Your line is open.

Operator: Thank you. Our next question comes from Ahu Demir with Ladenburg. Your line is open.

Operator: Thank you. There are no further questions at this time. I’d like to turn the call back over to Scott for any closing remarks.

Scott Giacobello: Yes, thank you. I want to thank everyone for taking the time to join our call today. Obviously we’re very excited about what we have going on here at the company, and we look forward to updating you again on our progress soon.

Operator: Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.