Q3 2023 Aadi Bioscience Inc Earnings Call

Participants

Marcy Graham; SVP of IR; Aadi Bioscience, Inc.

Scott Giacobello; President & CFO; Aadi Bioscience, Inc.

Dave Lennon; President & CEO; Aadi Bioscience, Inc.

Loretta Itri; Chief Medical Officer; Aadi Bioscience, Inc.

Boris Peaker; Analyst; TD Cowen

Joseph Catanzaro; Analyst; Piper Sandler Companies

Roger Song; Analyst; Jefferies

Ahu Demir; Analyst; Ladenburg Thalmann & Co. Inc.

Presentation

Operator

Good day and thank you for standing by, and welcome to the Aadi Bioscience Third Quarter 2023 earnings conference call. (Operator Instructions). Again, please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Marcy Graham, Senior Vice President of Investor Relations and Corporate Communications at Aadi bioscience. Marcy 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 third quarter 2023. Joining me on the call today are Dr. Dave Lennon, our President and CEO, Scott Jacques Abell, our CFO, and our Chief Medical Officer, Dr.Loretta Itri.
Today, we will provide an overview of operational activity and financial results for the third quarter of 2023 and an update on our PRECISION1 trial in clinical development plans going forward.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, November 8, 2023 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 will turn the call over to our CFO, Scott Giacobello for his opening statements.
Scott.

Scott Giacobello

Thank you, Marcy, and good morning, everyone. Thank you for joining us today to review our financial and operational results for the third quarter of 2023. Before we discuss our progress in the third quarter and activities currently underway.
I would like to take this opportunity to introduce Dave Lennon, who joined us as President and CEO at the start of the fourth quarter. Dave comes to us with more than 20 years of pharmaceutical leadership and deep expertise in mTOR driven diseases with a history in oncology and rare disease and a strong background in US and global commercialization. All experiences that make him the perfect choice to join Aadi through our next phase of growth and development. I'm excited about the future and look forward to working with Dave continuing in my role as CFO.
Now I'd like to turn the call over to Dave for his initial comments. Dave?

Dave Lennon

Thank you, Scott. I appreciate the warm welcome introduction. I would also like to thank you for taking the role of interim CEO prior to my joining and thank the entire management team for all their hard work in getting us to where we are today.
The unique combination of technology, timing and team is what drew me to Aadi. There's a great opportunity here to build on the success of the mTOR inhibitor class in cancer. Our groundbreaking therapy, nab-sirolimus allows us to generate deeper inhibition of the mTOR pathway at the site of tumor and hopefully more potent anticancer activity, resulting in better patient responses.
We have proven this in our first indication of PEComa , a rare soft tissue sarcoma in our very unique moment as a company where we expect to have multiple data readouts over the next 12 to 18 months from our highly anticipated tumor-agnostic study PRECISION1.
I'm also fortunate to be joining Aadi with an excellent team who continue to execute on an ambitious commercial and clinical programs focused on building a leading precision oncology company. I'm very happy to share their strong performance over the third quarter.
Importantly,PRECISION1 continues to enroll rapidly, and we now expect to present early interim data by mid December. We will share more of our trial progress and upcoming catalysts in a moment.
FYARRO sales remained solid at $6 million in the third quarter, a 40% growth over the prior year, $18 million in cumulative sales in the first nine months of 2023. We are also executing on our previously announced development strategy with the initiation of two Phase 2 studies of nab-sirolimus.
One in combination with standard of care in endometrial cancer and the other as a single agent in neuroendocrine tumors. These are in addition to our ongoing trial in combination with varieties, KRAS inhibitor in lung cancer and other solid tumors.
A key focus of our organization has been realizing the potential of nab-sirolimus for patients with solid tumors harboring either TSC1 or TSC2 in activating alterations. These type of genetic alterations are thought to activate the mTOR pathway leading to uncontrolled cell growth. And our PRECISION1 trial is an interventional study designed to elucidate the potential of nab-sirolimus to treat all two types of tumors with either of these alterations,
The unmet need in TSC1 or TSC2 mutated cancers is sizable, whether considered together or independently. We presented data at this Fall's ENA symposium or triple meeting based on next-generation sequencing of mutations of nearly 440,000 cancer patients from the Foundation Medicine database.
This large real-world evidence provides the best look at data to date on TSC1 or TSC2 mutation frequencies across all common tumor types. This corroborates our previous estimate that patients with TSC1 or TSC2 represent about 2% of all cancer patients.
Our latest internal analysis indicates that approximately 16,000 patients with these mutations across a variety of tumor types with mutations roughly evenly split between genes. Each mutation represents potential multi-billion dollar total addressable market for nab-sirolimus.
TSC1 or TSC2 driven cancers are found across a wide range of tumor types, clustering and lung gastrointestinal, generally urinary 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 cancer types.
With that background, I'd like to turn it over to Loretta, who will speak further to the details of this unique tumor-agnostic trial and our plans going forward.
Loretta?

Loretta Itri

Thank you, Dave, and good morning, everyone. As Dave noted, PRECISION1 is a unique study and one without cohort segregated by specific tumor types making it truly tumor agnostic. This is an ambitious and adaptive trial intended to elucidate the impact of nab-sirolimus on cancers expressing inactivating mutations ofTSC1 or TSC2 regardless of tumor type.
We are very pleased with the continuing advancement of the trial. The number of open sites has increased as has access to patients with more than 150 sites available to us using our just-in-time mechanism that allows us to open pre-qualified sites within as little as a two week period.
Working with our NGS partners and benefiting from the broad outreach have forwarded by our clinical sites, both academic and community-based. We are able to effectively identify and track patients with TTSC1 or TSC2 in activating alterations who have an interest in participating in our study.
A crew between the two arms has been remarkably even as predicted by the real world data recently published at the ENA. Annual Meeting. We continue to have a very broad representation of solid tumors with more than 25 discrete tumor types enrolled in the trial to date.
It is important to remember that although decision one 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 outcomes
Additional these are not just two studies. They are two stand-alone tumor-agnostic studies consistent with the adaptive statistical analysis plan. There are two preplanned interim analyses in the near future, one at one-third, enrollment, which we plan to report in mid-December of this year and another at two-third enrollment, which we expect to report in the third quarter of 2024.
The interim analysis that will be performed when two- thirds of patients are accrued and have been followed for six months. We'll evaluate the primary endpoint of the study. DMC, evaluated or are arm will provide us with the opportunity to modify the study or to file early if the data want.
The upcoming per protocol interim analysis planned for later this year will include early data on tumor type distribution, safety and investigator assessment of response using resist criteria on approximately 20 evaluable patients from each arm. We expect these results to reflect a broad representation of tumor types, vary treatment histories and lines of therapy. We have built great momentum in our PRECISION1 program and look forward to delivering on key milestones both later this year and throughout 2024.
We expect to have completed enrollment by the spring of next year, well ahead of our planned delivery of the two- third interim readout in the third quarter and to complete the study by the end of 2024. We remain very excited about the potential of this important study and the promise of nab-sirolimus and look forward to communicating the preliminary results from the PRECISION1 trial in a few weeks.
I'll now turn the call over to Scott for updates on our financial progress.
Scott?

Scott Giacobello

Thanks, Loretta. On the financial front, we remain well capitalized, ending the third quarter was $119.3 million in cash, cash equivalents and short-term investments, which is expected to fund operations into 2025. based on current plans.
FYARRO sales were $6 million in the quarter, representing 40% growth over the same period in 2022. Research and development expenses for the quarter increased to $11.9 million as compared to$ 8.8 million in the prior year quarter. This increase is primarily related to the continued progress of the ongoing PRECISION1 trial and the build-out of the R&D organization.
Selling, general and administrative expenses for the third quarter were $11.2 million compared to $9.9 million for the same period in 2022. This increase is due primarily to the out of company infrastructure and increased marketing expenses related to FYARRO.
Our net loss for the third quarter was $16.3 million compared to $14.4 million in the prior year quarter. For more information on our financial performance for the third quarter, a detailed discussion of the results reported on this call will be provided in our Form 10Q.
I'll now turn the call over to Dave for his closing comments.
Dave?

Dave Lennon

Thanks, Scott. As I said earlier, we are truly excited about what lies ahead. We've defined two sizable markets in cancers with TSC1 or TSC2 in activating alterations and look forward to sharing upcoming interim PRECISION1 analysis planned for mid-December. Beyond that, we're excited about the new catalysts coming up in 2024, including our two thirds interim analysis in the third quarter. We expect to reach full enrollment in the trial in the spring of next year, fully completing this study by the end of 2024.
We can now open the line for questions.
Operator?

Question and Answer Session

Operator

Ladies and gentlemen (Operator Instructions)
Boris Peaker, TD Cowen

Boris Peaker

Right. Thanks for taking my question. Two questions from me. First on that second interim analysis, which you estimate in 3Q of next year, what efficacy do you need to stop early. And second, in the PEComa market (technical difficulty). Do you have any sense of kind of what the duration of therapies turning out to be (technical difficulty)

Dave Lennon

Thanks very much, for the questions on. In terms of the second interim, I wouldn't comment at this point around what efficacy needs to be. Obviously, we have two arms running within this study and the context of response rate and duration. And that combination needs to be considered when we think about potential for stopping a study early. But of course, we do have that option at that point in time.
On the PEComa side, in terms of duration, I think what we can see is that duration is consistent with what we've been seeing in the clinical trial, and that's what I would comment at this point.

Boris Peaker

Great thanks for taking my questions.

Operator

Joseph Catanzaro with Piper Sandler Companies.

Joseph Catanzaro

Hey everybody appreciate taking my questions. Maybe a couple from me on PRECISION1. So for the initial interim expected by year end with the minimum follow-up of 4.5 months, can you just let us know what minimum amount of post baseline scan that ensures.
And then then for the second interim analysis. I think this is the first we're hearing of this. So was this always the plan? And if not, what drove the decision to take another look and then sort of along these lines. Loretta, if I heard you right, the second interim analysis will allow you to modify the study. Just wanted to understand that a little bit better given it sounds like the study will be fully enrolled by that time. What modifications may be you could potentially employ them?Thanks.

Dave Lennon

Sure. So , Loretta do you want to comment on that? Those first three areas.

Loretta Itri

Hi, Joe, thanks for your questions so let me let me reply. So the I'm sorry, I kind of have the order of your questions a little bit confused. Do you think you could repeat the first one, please?

Joseph Catanzaro

Yes, sure. I'll be I'll be quick here. So the minimum amount of post-baseline scans that's insured with 4.5 months of follow-up? And then the second interim analysis was it always in the plans or is this something new and what drove the decision? And then what modifications you could potentially take post the second interim analysis given that the trial would have been fully enrolled by that point.

Loretta Itri

Okay, great. So the 4.5 month guarantees at least at least two post-baseline scans. So everyone will have at least the ability to have that kind of follow-up. The on the interim analysis, the second interim analysis at two- thirds that you were asking question about has always been in the statistical analysis plan. It is an adaptive design. This is a very common when approximately two-thirds of patients are on study to have a look and to assess whether or not the sample size is sufficient to file early or whether or not you might want to consider resizing.
So those are both options that we would have when that interim occurs. But this this analysis was always planned and we will have six months of follow-up. This analysis will look at the independent review of radiologic scans and will be performed by an independent data monitoring committee. So even though we will have and completed enrollment in the study presumably by that time, we will be requiring additional follow-up on the entire cohort.
I hope that addresses your questions.

Joseph Catanzaro

Yeah it does super helpful. Thanks for taking my questions.

Loretta Itri

You're so welcome.

Operator

Roger Song, Jefferies.

Roger Song

Great. Thanks for the update and taking our questions. A couple from us in terms of the interim analysis, now we have a two maybe I can let us know. I understand you are not going to be providing the guidance right now, but at which interim analysis at all, you will contextualize the efficacy against on the FDA statistical hurdle or no, the standard of care you have been providing to the FDA as the benchmark. So we can we can know each interim analysis, the efficacy of the [LAR] will be reaching and the goal we want to achieve.

Dave Lennon

Thanks for the question, Roger, on I'll take this one -- the it's important to note that this interim that we're presenting in December is based on one-third of patients enrolled and minimum of 4.5 months of follow-up. It's also investigator-assessed ORR. So this is not the primary endpoint of the study, which is independently assessed overall response rate. And the second interim is actually based on the primary endpoint, and it will be at that point, we would we testing against the statistics of the plan.

Roger Song

Got it. So that in the second prime, the interim analysis you will do the primary endpoint analysis will be that points and you will let us know what's the hurdle for that or you would just let us know, okay, we are not stopping the trial and will continue for the for the full day.

Dave Lennon

Yes, we view the hurdle to be something that is probably is a review issue and we probably wouldn't talk about that at that point in time, but rather give a sense of what the efficacy measures we're seeing are and whether where we are with the trust in terms of continuation.

Roger Song

Got it, thank you.If it's okay a quick follow-up just a quick follow-up on this. Is that you say you will complete the trial by the end of 2024. And when should we expect the full data from the trial? Thank you.

Dave Lennon

Yes, it's still on its it's roughly at the end of 2024 or early 2025. We haven't -- we anticipated probably more likely early 2025 at this point, but we'll give a further update once we complete enrollment.

Roger Song

And I think that's it for me.

Operator

Ahu Demir, Ladenburg Thalmann & Co. Inc.

Ahu Demir

Good morning team, thank you so much for taking my question. Two questions from our first one is regarding the triple meeting presentation. It looks like [TP53] more frequently observed co-morbidity. Curious how that might impact the quote mobility, how they might impact the trial activity and doing the interim analysis really disclosed the other mutations in the patients? Or is it going to be more high levels?

Dave Lennon

Yes. So I'll take a first crack and Loretta back me up on this TP53 is, the most common mutation that you see in that analysis for patients across 440,000 cancers that we looked at. And our internal calculations when we look at those distributions indicate there's potentially 16,000 new cancer patients each year with either TSC1 or TSC2 mutations.
About 50% of those. If I recall, the data correctly had co- mutations in P53 and the arm that's the goal, although that while high overall is very consistent with what you see across all tumor types and all types of cancers. TP53 is the most common mutation in general for different types of tumors.
And so it's not different from what you would might expect overall. And given that we've seen responses to patients with TSC1 or TSC2 altered cancers in the past in the retrospective analysis that became the basis for PRECISION1, PRECISION2 we wouldn't expect it to necessarily negatively or impact the trial in any way and we believe it would worked within that context.
And Loretta I don't know if you would add anything to that?

Loretta Itri

No I think that that's entirely correct would have answered the same way.

Dave Lennon

Yes. And then in the interim, we won't we won't be presenting co-mutation status at this point in time. The numbers while significant in terms of an initial on indicative nature of how the trials going. We don't believe would be sufficient to really do a detailed analysis of the mutation status, and that would be robust enough to make any determinations on at this point. So we won't be sharing that data.

Ahu Demir

That's helpful. And my second question is on the endometrial program. Now the trial is enrolling, how many sites are open and when do you expect to see initial data from stage 1 portion of the study?

Dave Lennon

So we are on we've just started that study. I wouldn't comment on the number of sites we have. But we're we the community is very excited about engaging in this study, and we hope to have an update on the study sometime in 2024.

Ahu Demir

Thank you for taking my questions.

Operator

I'm not showing any further questions at this time. I I'd like to turn the call back over to Dave for any closing remarks.

Dave Lennon

Super. Thank you very much, Kevin, and thank you, everyone, for joining us on today's call. As we I mentioned, we're really excited about the progress we're making on the PRECISION1 trial with the interim analysis planned for mid December and a number of exciting catalysts for 2024 that could propel our company to growth.
We appreciate your time and look forward to the opportunities in the future to provide additional updates on our process or progress, I should say thank you for joining the call and have a great day, everyone.

Operator

Ladies and gentlemen, that does conclude today's presentation. You may now disconnect and have a wonderful day.