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

Aadi Bioscience, Inc. (NASDAQ:AADI) Q1 2023 Earnings Conference Call May 10, 2023 8:30 AM ET

Company Participants

Marcy Graham - Senior Vice President of Investor Relations and Corporate Communications

Neil Desai - Founder and Executive Chairman

Scott Giacobello - Interim Chief Executive Officer, President, and Chief Financial Officer

Loretta Itri - Chief Medical Officer

Conference Call Participants

Roger Song - Jefferies LLC

Joseph Catanzaro - Piper Sandler

Boris Peaker - Cowen and Company

Ahu Demir - Ladenburg Thalmann & Company

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?

Question-and-Answer Session

Operator

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

Roger Song

Great. Thanks for the update and taking our questions. A couple from us. So the first one related to the initial enrollment data from your PRECISION trial, may be just can you provide additional color around outside of what you have told us the histology distribution and the balance between the TSC1 and TSC12, any other baseline patient population like comutation or the stage of a disease, prior therapy, you can share with us? And also in terms of the later this year the initial data readout, any what is expectation for the followup in terms of the current enrollment versus the 40 patients or how confident you are you will have around 40 patients by the end of this year? Thank you.

Scott Giacobello

All right, thanks, Roger. Loretta, do you want to take that one?

Loretta Itri

Sure. We are not really releasing details around the baseline characteristics of the population. I think it is fair to say that most of these patients have advanced disease and we anticipated second and third line patients, and I think that will be borne out in the end. In terms of the patient population we will be reporting on towards the end of the year, we're very confident not only in the number of patients that we will definitely have 40 patients to report on, but also that there will be significant followup available for those patients given the accrual pattern thus far. I hope that answers your question.

Roger Song

That's perfect. Thank you, Loretta.

Loretta Itri

Thank you.

Roger Song

Thank you. And then, so in terms of the FYARRO sales, it seems the first quarter, you have the pretty strong launch, we have to admit that, for the first Q, seems the growth trajectory a little bit slow, maybe just give us a little bit kind of context given this is the first Q and how the data ready to the new account. Does the orders seem still strong? How do you project the re rest of the year and then maybe beyond how far will the sales will kind of a track? Thank you.

Scott Giacobello

Yes, sure. I'll take that, Roger. So I would say first, I would think, 12, we're pretty pleased with 12% growth in the quarter, right? I think that that's still pretty strong, particularly in the first quarter of the year, which can tend to be slower than others. Also I would say though, in the last few quarters, right, we had been growing at 20% plus. And I think that over time as is typical with launch curves, those curves start to flatten and particularly in the small indications such as PEComa.

So, I think that overall we're really pleased with the growth. As far as what it's going to look like for the rest of the year, we don't, we're not providing guidance and obviously we're always challenged, I think in PEComa with the patient population that's somewhere between 100 and 300. But I think we'll continue to see strong growth as we move forward.

Roger Song

Excellent. Thank you for taking our questions.

Operator

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

Joseph Catanzaro

Hey guys, thanks so much for taking my questions. Maybe just two quick ones from me on PRECISION 1. First, Loretta, I think you touched on this a bit in the prepared remarks, but can you elaborate a little bit more on the data you received at this initial look? It sounds like you saw some details around safety, but can you confirm whether or not you, you received any efficacy data?

And then second, trying to think about timelines here, so PRECISION 1 ultimately expected to enroll around 120 patients. If you'll have interim data from 40 patients at around year end, how should we think about time to full enrollment and ultimately the full top line readout? Thanks.

Loretta Itri

Good, good morning, and thanks for that question. So in terms of the enrollment, we're sticking to our original statement that we believe we will be fully enrolled by the end of first quarter of next year, so a full 24 months of enrollment. And we are seeing the usual kind of hockey stick that happens with clinical trials, slow start, and then you see kind of an upswing and we are in the middle of that upswing right now.

As I stated in, in the previous question, we're very confident in our 40-patient enrollment with enough followup which is a really important piece that I think sometimes gets lost. It's not just getting the patients on study, it's having enough followup to allow them to evolve their response, whatever that may be. So we're quite confident that we are going to be able to enroll as anticipated.

I think you had another question. I'm not sure that I answered both of them.

Joseph Catanzaro

Yes, so you got the second question. Yes and I guess the first question largely relates to whether at this initial look, it sounds like you saw some data around safety. Did you see any data as it relates to efficacy or do you guys remain fully blinded on that side of thing?

Loretta Itri

Yes, to be clear, we remain blinded to efficacy. The reason we know about safety is that it gets reported to us separately. So if there is a serious event, I would be notified as Chief Medical Officer. So we are aware of any serious safety issues that occur during the study separate from the regular database. I hope that's clear.

Joseph Catanzaro

Yep, that's clear. Thanks so much for taking my questions.

Loretta Itri

Thank you.

Operator

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

Boris Peaker

Great. Thanks for taking my questions. The first one, I just want to ask on PEComa epidemiology, now that you've been selling drugs for a little while and you're starting to get a sense of the commercial uptaking curve, do you have any sense or better sense of what the actual market size is, or are you doing any work that will kind of publish and give us a more precise answer to that question?

Scott Giacobello

Yes, Boris, thanks for the question. Yes, I mean, we're still working on that. Right? We've been out there now 10 [ph] months and, but the epidemiology that we have, and as you know, the challenges we've always had around that, with not any real concrete information out there, just the work that we had done was 100 to 300 patients. I think what we can say is with the 145 unique accounts ordering since launch that we feel like we're north of the bottom end of that range, but I think we're doing, we still need more time out there before we get a better idea of where it's going to be overall.

Boris Peaker

Great. And my second question is, you mentioned multiple presentations at various meetings later this year. Can you more precisely elaborate exactly when and what?

Scott Giacobello

Yeah, Loretta, do you want to take that one?

Loretta Itri

I'm not sure I understood the question.

Scott Giacobello

The present…Go ahead.

Boris Peaker

I was just going to say the specific presentation and what medical meeting we should be expecting it at.

Loretta Itri

Oh, we don't anticipate that these data will be presented at a medical meeting. It will be more of a corporate presentation.

Boris Peaker

No, I mean, in general, do you have anything, I'm not going to talk about PRECISION 1, but any other updates or any kind of medical meeting presentations you anticipate later this year?

Loretta Itri

We, ongoing data, we will be at ASCO. We will be having at CHIP [ph], at ASCO. I'm trying to remember what else. We have so many different, I know that we're going to be at ASCO. I'm sorry, I just can't remember the nature of the presentations we'll be making other than at CHIP [ph].

Boris Peaker

Great, thanks.

Operator

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

Ahu Demir

Good morning. Thank you very much for taking my questions. I have three questions on my side. First one is on PRECISION 1. Loretta, you did mention there are 15 indications enrolled. I was wondering if you could give us a sense if there is any predominant indications and perhaps the percentage number for endometrial cancers that was enrolled in the trial?

Loretta Itri

Good morning. How are you? So we are not releasing specific information, but you may imagine that there are not, as we've publicly released, there are no more than three of any specific type of tumor enrolled in the study to date. So there's really not much to say. We do have representation of all of the major GYN oncology tumor types, the common ones. But there's not a preponderance of any one type that I think we could draw a conclusion from.

Ahu Demir

Okay. Thank you. My second question is on the clinical development plans. Are there any changes to what you plan to do in terms of additional combinational trials or other mTOR tumors that you were planning to initiate? When are we expecting to see them or are you going to wait for the PRECISION 1 interim readout?

Loretta Itri

We do have a relationship with Mirati, which I'm sure you're aware of. We anticipate that the combination study of adagrasib with nab-sirolimus will happen this year. Stay tuned. That will probably be announced at some point in the near future. We do have several other studies that are planned, but we have not released guidance on that just yet. But there are some very interesting combinations that we will be exploring in the near future. But I'm really not liberty to release the details. I'm sorry.

Ahu Demir

Understood. Then my last question is on the commercial side. Scott, do you, can you comment on the commercial effort outside of U.S., Europe or Asia?

Scott Giacobello

Yes, thanks for the question, Ahu. Sure. So I think as we said previously, we continue still to evaluate our options there outside of the U.S. And I think what we've said is we're, what we're looking at is just taking into consideration the Tacoma market and then also the implications which we have of TSC1 and TSC2 coming down the road. So I think it's something that's still under evaluation.

Ahu Demir

Sounds good. Thanks for taking my questions.

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.