Aadi Bioscience Q4 2023 Earnings Call Transcript

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March 13, 2024

There are 8 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to Addy Bioscience 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please note that today's conference is being recorded.

Operator

I will now turn the call over to Adri Kos, Head of Corporate Communications for Addi Bioscience. Ms. Gross, please go ahead.

Speaker 1

Thank you. Good morning, and welcome to the Addy Bioscience conference call to provide an operational update and review results of the Q4 and full year 2023. On the call is Doctor. Dave Linnen, our President and CEO Scott Giacobello, our CFO and Chief Medical Officer, Doctor. Loretta Eitri.

Speaker 1

Today, we will provide an overview of operational activity and financial results for the Q4 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.addibio.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.

Speaker 1

We specifically disclaim any obligations to update or revise any forward looking statements. With that, I'll turn the call over to Dave for his opening statements. Dave?

Speaker 2

Good morning, everyone, and thank you for joining us today to review our financial and operational results for the Q4 and full year of 2023. At Adi, we are focused on unlocking the full potential of mTOR inhibition by uniquely combining nAb technology and the potent mTOR inhibitor, serolimus. We believe nAb serolimus has the potential to deliver deeper inhibition and ultimately better outcomes for patients living with cancers that are dependent on the mTOR pathway. And 2023 was a year marked by progress and increasing momentum for the company as we delivered strong execution against both commercial and development goals. 1st, the ARO sales remained solid, achieving a cumulative $24,400,000 for the full year of 2023, representing a 60% growth over prior year.

Speaker 2

Yaro achieved high penetration in the academic and community settings and is considered the preferred treatment for malignant glaucoma. Clinically, a key focus for our organization has been realizing the potential of nabsterolimus for patients with solid tumors, harboring either TSC1 or TSC2 in activating alterations. These types of genetic alterations are thought activate the mTOR pathway leading to uncontrolled cell growth. And our PRECISION 1 trial is an interventional study designed to elucidate the potential of navosirlimus to treat all types of solid tumors with either of these alterations. As a reminder, the unmet need in TSC1 and TSC2 mutated cancers is sizable, whether considering together or independently and represents about 2% of all solid tumor cancer patients.

Speaker 2

Our latest internal analysis indicates that approximately 16,000 new patients with these 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 NAV serolimus. 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.

Speaker 2

We believe PRECISION 1 is a cutting edge trial testing our innovative therapy, NAV serolimus in these cancer types. Although PRECISION-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, PRECISION-one can effectively be viewed as 2 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-one. These data demonstrated sustained tumor reductions in a heavily pretreated population based on investigator assessed responses in the first 40 patients across both arms.

Speaker 2

As a reminder, for the TSC-one arm, 19 efficacy valuable patients were included in the cutoff date for the interim analysis who had at least 1 post baseline scan. We reported an overall response rate of 26%, which was within the range of our expectations. Importantly, responses appeared to be early, deep and durable. Median 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 was a heavily pre treated with a median of 3 prior lines of therapy.

Speaker 2

Lastly, these responses we're seeing across 4 different tumor types supporting a tumor agnostic indication. In the TSC2 arm, we reported a lower response rate, but given these patients were heavily pretreated, including 50% who had had at least 5 prior lines of therapy, these early TSC2 results are challenging to interpret. PRECISION1 continues enroll steadily and we now expect the trial to be fully enrolled by May. We are still on track for our next planned interim readout, which is expected in Q3 of 2024. This readout will include a total of 80 patients who've 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 responses.

Speaker 2

We expect the study to be completed by the end of 2024 with full data in early 2025. In addition to PRECISION-one, enrollment is underway for both of the previously announced Phase 2 single indication trials for 2 promising mTOR driven cancer targets. Over activation and dysregulation of the mTOR pathway is commonly found in various tumors and unique delivery and excellent safety profile of NAV serolimus provides the opportunity to combat these difficult to treat cancers. The first trial is evaluating NAV serolimus in neuroendocrine tumors or NETs. NETs are rare with approximately 3,500 patients per year.

Speaker 2

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, naphserolimus demonstrated improved target suppression relative to other mTORs, warning further exploration of nafcillorolymis in this indication. We're excited about this trial because it provides the opportunity to demonstrate what we believe is NAV serolimus' best in class efficacy in a known mTOR sensitive tumor type. The second trial we started last year is evaluating the therapeutic potential of NAV SER alignments in advanced and recurrent endometriotype 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.

Speaker 2

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 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.

Speaker 2

Rounding out our clinical development program, we also have ongoing trial with combination of Mirati's KRAS inhibitor and lung cancer and other solid tumors. With a solid commercial foundation provided by Thiaro, robust and bold clinical development programs spanning genetically driven tumors and 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?

Speaker 3

Thanks, Dave. We had a solid Q4 and ended 2023 with $108,800,000 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. Fyaro net product sales were $6,300,000 for the 4th quarter, representing 6% growth over Q3 2023 and 21% over the prior year quarter.

Speaker 3

Full year Fiaro sales were $24,400,000 an increase of 60% over prior year sales of $15,200,000 Research and development expenses for the quarter increased to $12,800,000 compared to $9,400,000 in the prior year quarter. For the year, R and D expense amounted to $48,900,000 compared to $32,700,000 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 Q4 were $10,300,000 compared to $11,100,000 in the same period in 2022. For the year, SG and A expenses totaled $44,500,000 compared to $40,200,000 in the prior year.

Speaker 3

This increase is due primarily to higher legal and company infrastructure costs and increased marketing expenses related to FIARO. Net loss for the Q4 was $16,300,000 compared to 13,900,000 in the Q4 of 2022. Net loss for the year was $65,800,000 compared to $60,500,000 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 ks to be filed later today. I'll now hand the call back to Dave for his closing comments.

Speaker 3

Dave?

Speaker 2

Thank you, Scott. I'm so proud of the progress we made in Q4 and what the team accomplished in 2020 3. The arrow remains a valuable asset with sustained demand to help meet the needs of patients with Vekoma. We're making tremendous progress against our clinical development plans with 2 sizable markets in TSCI and TSCI in activating ulceration as well as other mTOR driven cancers. We're looking forward to sharing the 2 thirds interim analysis from PRECISION 1 in the 3rd quarter with full enrollment inspected in May and study completion by the end of 2024.

Speaker 2

We can now open the line for questions. Operator?

Operator

Thank you. And our first question coming from the line of Joe Catanzaro with Piper Sandler. Your line is open.

Speaker 4

Yes, thanks. I appreciate you taking the questions here. Maybe first one, I know the first 40 patients were characterized as being very heavily appreciated. So wondering if you have any visibility or updates around what the remainder of the trials look like? And maybe along these lines, whether you've seen any change in enrollment dynamics in any way since the interim data disclosure?

Speaker 4

Thanks. And I have one follow-up.

Speaker 2

Great. Joe, thank you for the question. I always appreciate talking more about PRECISION-one. Yes, so the first 40 patients were heavily pretreated. We saw 3 or more lines of prior therapy as those patients enrolled in that first 40 group.

Speaker 2

We anticipate, right, by the trial design that this is we're going to get a number of late line patients. Patients have to have satisfied the criteria for the indication that they enroll in, in terms of being having received all appropriate standard of care prior to their entry and treatment with, NAVSIROLIMUS in our trial. And so we anticipate continuing to enroll later Lyme patients within the trial. I wouldn't comment on the overall nature of what we're going to end up with. We're still enrolling patients in the trial and we'll obviously report out the next or the total 80 patients at the 2 thirds interim later this year.

Speaker 4

Okay, thanks. And then my follow-up maybe unrelated to PRECISION 1, wondering if there are any early expectations around when you could report initial data from the endometrial or net studies. Appreciate those are still in the early days. And then, any updates on the adagressive combo trial? Wondering maybe if there's been any changes there with the adaggressive acquisition by Bristol?

Speaker 4

Thanks.

Speaker 2

Yes. So, great questions. I think I mentioned earlier that we do anticipate potentially sharing data on endometrial or neuroendocrine trial later this year. Those are open label single arm Phase 2 studies and we have the opportunity to enroll those. We'll share the data when we think it's appropriate and we have something meaningful to say about how that data is those patients are enrolling and that data is maturing.

Speaker 2

I'm happy to say the patient both studies are actively enrolling patients and there's good engagement with the community on generating patients for each of those trials, which we just think is initially a great sign in terms of folks' interest in these therapeutic regimens in each of those indications. And then on the Mirati BMS collaboration that continues and is ongoing. We are enrolling patients into that trial and we don't have any further updates at this point.

Speaker 4

Okay. Thanks. That's helpful and thanks for taking my questions.

Speaker 2

Thanks,

Speaker 4

Jeff.

Operator

Thank you. And our next question coming from the line of Liang Chang with Jefferies. Your line is open.

Speaker 5

Sure. Thank you. This is Liang for Roger. So thank you for taking our questions. I guess from us, we have two questions.

Speaker 5

One is around Fyarro. So just for Fyarro in the coming year, can you provide us any detailed guidance or commercial plan? Second question is about, I know you guys been interacting with the DA about the tumor agnostic. So what's in your understanding, what's the most important thing for FDA to consider label as a tumor agnostic? Thank you.

Speaker 2

Great. Thank you, Liang, and thanks for stepping in for Roger. So maybe in terms of Fiera outlook, maybe I'll turn it over to Scott to talk a little bit about that and then we'll talk about your second question a little more. But Scott, do you want to just comment on the Fyaro outlook for the coming year?

Speaker 3

Sure, absolutely. Yes, thanks for the question Liang. I think for Fyaro, I mean, as you've seen, I mean, we're not going to provide guidance for this year. I think what we've seen over the last few quarters, sales stabilizing around the $6,000,000 mark or slightly above and I think so. The expectation there is we continue to be excited about the about Fyaro and the potential to grow there.

Speaker 3

But I think that over the last few quarters you've seen the sales stabilizing in that $6,000,000 to $6,500,000 range and I think that's what we would expect for 2024.

Speaker 2

Thanks Scott. It is Liang, it is a very team's done a great job penetrating the market here. We're available and preferred for PACOMA in the first line setting and widely recognized as the preferred therapy for PECOMA. It is just an ultra rare population and ultimately we may be reaching saturation in that market and expect more incremental growth from here on out. And then your second question was on what are the most important considerations when we think about the FDA's view on the tumor agnostic indication.

Speaker 2

I'm going to turn it over to Loretta to give her thoughts on how we think or how we interpret the FDA's guidance around tumor agnostic indication and what's most important there. So Loretta, do you want to comment?

Speaker 6

Sure. I'd be happy to. I think from what we have seen recently, perhaps the most important thing that the agency wants to see in tumor agnostic studies is a variety of different tumor types. What they do not want in a tumor agnostic study is to see concentrations of information in certain subtypes of patients. They are looking for a representation of the mutation across a variety of different tumor types that that is why you do a tumor agnostic study.

Speaker 6

So I think that that is perhaps the single most important element in terms of their determination regarding whether or not a drug classifies for tumor agnostic approval. And then of course, I think they are looking for a reasonable response rate and of course a good safety profile. In our case, since we already have approval in a single indication, I think they would be looking to see that the safety profile, in the agnostic population closely resembles what we have already seen

Speaker 2

in Tacoma. Thanks, Loretta. And just to add on to what Loretta was saying, what we saw so far, we have enrolled a very diverse tumor population within our trial. And I think you saw that even in the early results, where we had a kind of broad distribution of tumor types that we shared back in December. Thanks, Liang for the questions.

Speaker 2

And I think if there's no follow ups, we can move to the next set of questions.

Speaker 5

Thank you. Appreciate it, guys.

Speaker 2

Thank you.

Operator

Thank you. And our next question coming from the line of Ahu Demir with Ladenburg. Your line is open.

Speaker 7

Good morning. Thank you so much for taking my questions. I have two questions. A follow-up to Joe's question regarding endometrial cancers. 1, could you give us a sense of the sites open, how many sites are open and inclusion and exclusion criteria for the patients?

Speaker 7

And what are we expecting to see this year? How many patients? Are they heavily pretreated? If you can provide a little bit color, that would be great.

Speaker 2

Sure. I think so, Ahu, we're happy to answer those questions. I'm going to turn it over to Loretta for some of the details. But at the same time, we probably wouldn't discuss number of sites or a number of patients at this point, just given where we are in the trial and it is active and we're kind of continuing to build that story. But maybe just in the design of the trial and what we might expect to see later this year, I'll let Loretta give you an update there.

Speaker 2

So Loretta?

Speaker 6

Good morning, Ahu. Always great questions as usual coming from you. So basically this is an open label Phase 2 study looking to evaluate the combination of nabsololimus with letrozole in patients who have advanced and that would be advanced or unresectable Stage 3 or 4 or recurrent endometrioid endometrial carcinoma. Patients will have received either no or one prior line of chemotherapy. So this is a population of patients who are relatively early in their treatment course, which is somewhat differentiated, of course from what we're doing in precision.

Speaker 6

So patients are treated with the same dose of nabsololimus as they were in Tacoma. That is a well established and safe dose. And I think pretty much that this is a SIMON 2 stage study. So we plan to enroll the 1st cohort. And we anticipate, since this is an open label study, being able to report out early results by the end of this year.

Speaker 6

Does that address your question, Ahu? Or would you like more detail?

Speaker 7

This is great. Thank you so much, Loretta. This is very helpful and thank you for your compliment as well. I have one more conceptual question to you, Loretta, if I may. So you mentioned mTOR sensitive tumors.

Speaker 7

Besides TSC-twelve, could you comment on what other nutritional backgrounds are sensitive to mTOR inhibitors?

Speaker 6

Well, I think that's a quite a difficult question because I think there are many mutations along the mTOR pathway that may provide targets. However, I don't think that any of those specifically has been identified as a specific mutational target for mTOR inhibition. There are suggestions, but I don't think if any of those are proven.

Speaker 7

Very helpful. Thank you so much.

Speaker 6

You're most welcome.

Speaker 2

Thanks, Asaf. Operator, are there any other questions?

Operator

I see no further questions in the queue at this time. I'll now turn the call back over to Doctor. Dave Flynn for any closing remarks.

Speaker 2

Thank you, operator. And thank you everyone for joining the call today. I think as you see, we are delivering on the operational goals we have set for both 2023 and looking ahead into 2024, we're very confident on our ability to deliver against our number one priority, which is the PRECISION 1 trial. And we look forward to providing an update on that 2 thirds interim later this year and finishing that trial within 2024. We're also excited about the new programs we mentioned today and we got to discuss a little bit in the Q and A, and look forward to providing updates on both our NET and endometrial trials later this year.

Speaker 2

At the same time, we remain really confident in the continued progress we're making in the glaucoma market with BRO. This is an ultra orphan indication, and we're highly penetrated within that market, and that continues to deliver, solid sales for us as we go forward. Overall, otherwise, I thank you all for your time and attention today and we look forward to the next update with you all. Thank you and have a great day.

Operator

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.

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Key Takeaways

  • We ended 2023 with $108.8 million in cash, and after implementing cost reductions, we expect a cash runway into Q4 2025 to fund operations.
  • Full-year FYARO net product sales reached $24.4 million in 2023, a 60% increase year-over-year, with Q4 sales of $6.3 million (up 6% sequentially).
  • PRECISION-1 trial interim data in the first 40 heavily pretreated patients showed a 26% overall response rate in the TSC1 arm with early, deep, and durable tumor reductions across four tumor types, and the study is on track for an 80-patient readout in Q3 2024.
  • Two Phase 2 trials of NAB-sirolimus in neuroendocrine tumors and endometrial cancer are actively enrolling, with initial data anticipated later in 2024.
  • Research and development expenses increased to $48.9 million in 2023 (from $32.7 million in 2022) alongside SG&A rising to $44.5 million, contributing to a net loss of $65.8 million for the year.
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Earnings Conference Call
Aadi Bioscience Q4 2023
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