Aadi Bioscience Q1 2024 Earnings Call Transcript

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May 8, 2024

There are 8 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Addy Bioscience First Quarter 20 24 Earnings Please be advised that today's conference is being recorded. Now, I will turn the call over to Audrey Gross, Head of Corporate Communications for Adi Bioscience. Ms. Gross, please go ahead.

Speaker 1

Thank you. Good morning, and welcome to the Adi Bioscience conference call to provide an operational update and review results for the Q1 2024. On the call is Doctor. Dave Limon, our President and CEO Scott Giacobello, our CFO and our Chief Medical Officer, Doctor. Loretta Itri.

Speaker 1

Today, we will provide an overview of operational activity and financial results for the Q1 of 2024. 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, May 8, 2024, and should not be relied upon as representing our view as any subsequent date.

Speaker 1

We specifically disclaim any obligation to update or revise any forward looking statements. With that, I will 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 Q1 of 2024. At Adi, we're focused on unlocking the full potential of mTOR inhibition by uniquely combining NAV technology and the potent mTOR inhibitor serolimus. We believe NAV serolimus has the potential to deliver deeper inhibition of the mTOR pathway and ultimately better outcomes for people living with cancers that are dependent on that pathway. Today, I'm pleased to announce that our registration intended PRECISION-one trial is now fully enrolled across a broad array of tumor types. This is an important milestone as we seek to understand the potential of NABSphere alignments for patients with solid tumors harboring either TSC1 or TSC2 in activating alterations, a sizable market.

Speaker 2

Our latest internal analysis indicates there are approximately 16,000 patients with these mutations across a variety of tumor types, with mutations roughly evenly split between genes. Each mutation represents a potential multibillion dollar total addressable market for nevsterolimus. TSC-one or TSC-two driven cancers are found across a wider range of tumor types, clustering in lung, gastrointestinal, general urinary, breast and gynecological locations and are often difficult to treat. We believe PRECISION 1 is a cutting edge trial testing our innovative therapy NAV SER alignments in these cancers. 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.

Speaker 2

Given this design, PRECISION-one can effectively be viewed as 2 separate studies, each with its own outcome. As a reminder, 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. Of note, for the TSC-one arm, we reported an investigator assessed overall response rate of 26%, which was within the range of our expectations. These responses appear to be early, deep and durable, which is especially noteworthy given this heavily pretreated population with a median of 3 prior lines of therapy.

Speaker 2

Lastly, these responses were seen across 4 different tumor types potentially supporting a tumor agnostic indication. I want to highlight that ongoing conversations with experts reinforce our view of the clinical significance of the responses we reported from the first interim analysis, especially in the late line treatment in both patient groups. We continue to believe that should these results hold or improve in larger group of patients, we have a path to submission and potential approval for TSC mutations. With the trial now fully enrolled, we remain on track for our next planned interim readout, which is expected in Q3 of 2024. This highly anticipated analysis will include a total of 80 patients who have been followed for a minimum of 6 months and will evaluate the primary endpoint of this study, independently assessed overall response rate, as opposed to our December interim analysis, which reported investigator response responses.

Speaker 2

Looking ahead, we expect the study to be completed by the end of 2024 with full data in 2025. In addition to PRECISION 1, the Phase 2 trials for 2 promising mTOR driven cancer targets continue to enroll well. As a reminder on these two trials, the first is evaluating the therapeutic potential of NAVSIROLIMUS in advanced or recurrent endometriotypeendometrial cancer or EEC 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 is an estimated 10,000 cases of EEC diagnosed annually in the U.

Speaker 2

S. Alone. Prior clinical studies of 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 this combination to be used in the first and second line settings. The second trial is evaluating NAV SER alignments in neuroendocrine tumors or NETs. NETs are rare with approximately 3,500 cases a year.

Speaker 2

NETs have historically low response rate to the treatment with oral rapalogs or other agents, which nonetheless are used clinically and recommended in treatment guidelines. In preclinical animal models, NAV serolimus demonstrated improved target suppression relative to other mTORs, warranting further explanation of clinical setting for NETs. We're excited about this trial because it provides the opportunity to demonstrate what we believe is NAV serumis' best in class efficacy in a known mTOR sensitive tumor type. Overactivation and dysregulation of the mTOR pathway is commonly found in various tumors and the unique delivery and excellent safety profile of navsterolimus provides the opportunity to combat these difficult to treat cancers. As such, we think these are promising indications and are eager to present initial data from these open label studies later this year.

Speaker 2

As a final update to our development plans, today we announced that we have terminated our collaboration and supply agreement with Mirati, now BMS. That was evaluating the combination of its adagracib, a KRAS selective inhibitor and NAVSIR olimus and KRAS mutant non small cell lung cancer and other solid tumors. At our request, we mutually agreed with BMS to discontinue this early phase trial, which enables us to prioritize the evaluation of NAVSUPERLYMIS in our ongoing Phase II trials for the promising indications of EEC and NET. Turning now to Fyaro. Fyaro continues to perform well with net product sales for the quarter of 5,400,000 For a bit of context, this is a decrease from prior year and reflects Q1 changes in distributor ordering patterns and fewer new commercial patient initiation in Q1 than historical average.

Speaker 2

Swings in what is actually a very small number of patients may be due in part to cannibalization at top accounts where we're seeing robust enrollment into our current clinical trials. We believe this will correct itself in subsequent quarters and we expect a return to sales growth in Q2. Diaro has cemented its position as the preferred treatment for malignant coma after just 2 years on the market. We have high penetration across academic and community settings and have seen the consistent addition of new accounts ordering Fyaro every quarter. Now with more than 200 accounts ordering since launch, we are proud of the impact Yaro has had and will continue to have for patients with this rare and aggressive cancer.

Speaker 2

With sustained commercial success of PRO, cash runway into Q4 2025 and a catalyst heavy 12 months ahead of us, we are well positioned to realize our ambition becoming 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 ended the Q1 2024 with $88,300,000 in cash, cash equivalents and short term investments. Responsible capital management, including measures implemented in early 2024 to streamline our operations and reduce costs, continue to support a healthy balance sheet that will fund operations into Q4 2025 based on current plans. Payara net product sales were $5,400,000 for the Q1, representing an 8.8% decrease from the prior year period. As Dave mentioned, this decrease was due in part to distributor ordering patterns in Q1, which we expect will correct in future quarters, as well as lower commercial patient initiations.

Speaker 3

Research and development expenses for the quarter increased to $13,600,000 compared to $11,000,000 in the prior year quarter. This increase is primarily related to the continued progress of the ongoing PRECISION-one trial, which is now fully enrolled, and the programs in endometrial cancer and NETs. Selling, general and administrative expenses for the Q1 were $10,600,000 compared to $11,200,000 in the same period in 2023. This decrease is due mainly to reduced legal and consulting expenses versus the prior year, offset in part by severance costs related to the streamlining of our operations. Net loss for the Q1 was $18,300,000 compared to $15,200,000 in the Q1 of 2023.

Speaker 3

For more information on our financial performance in the Q1, a detailed discussion of the results reported on this call will be provided in our Form 10 Q to be filed later today. I'll now hand the call back over to Dave for his closing comments. Dave?

Speaker 2

Thanks, Scott. I'm proud of the strides we've made already this year. We're making tremendous progress against our clinical development plans with 2 sizable markets in TSCI and TSCII in activating alterations as well as other mTOR driven cancers. We look forward to providing the highly anticipated 2 thirds interim analysis from PRECISION 1 in the 3rd quarter and is sharing an early look from our Phase 2 trial later this year. Now we can open the line for questions.

Speaker 2

Operator?

Speaker 4

Thank you. At this time,

Operator

we will conduct a question and answer session. Our first question comes from Roger Song with Jefferies. Please go ahead.

Speaker 5

Great. Thanks for the update and taking our question. Maybe just quickly on the ECC and NET. Curious about the expectation into the initial data readout later this year, particularly the patient numbers and how much efficacy we're going to see versus the safety and the etcetera, how meaningful that data update will become? Thank you.

Speaker 2

Great. Thank you, Roger. So on the EAC and NET trial, remember that these are 2 part Phase 2 studies and the initial part 1 enroll approximately 10 patients in each trial. We anticipate we'll be able to report out early efficacy data and safety data on those initial Part 1s by the end of this year. Loretta, anything you would add to that?

Speaker 6

Only that the recruitment is going well and as anticipated. And I don't think we're going to have any problem reaching the ends that have been determined in the Simon's 2 stage design. So yes, I think we're on target to report out results, as Dave just mentioned.

Speaker 2

Yes. We're very Roger, we're very encouraged by both of these trials, on both because there's been great interest in the community in these combinations and in exploring the potential of nafsir alignments to improve upon what has been seen before with prior mTOR inhibitors in these both of these spaces. So hopefully we'll see that pull through as we report out the first parts of this data. Thanks, Scott.

Speaker 5

Yes. Thank you. Yes, that's very helpful. And in terms of the viral, the sales trajectory, understanding the 1Q seems that a bit kind of off compared to historical average, But any color around the parameters in terms of the first line use, duration on treatment and maybe some repeat dosing for those existing patients? And maybe also curious what's the feedback from the field from your Precision results, maybe some impact to the viral sales?

Speaker 5

Thank you.

Speaker 2

Yes, sure. So 2 parts to that in a sense. So let me cover first. On the parameters we look at in terms of physician adoption, awareness, first line uses, etcetera, all of those were extremely strong for us as late as we've looked at that data. And so we see no real changes in the community's attitude towards Fiaro and its use in Tacoma.

Speaker 2

We are in a more steady state situation with incremental sales growth and we expect some variations quarter to quarter to occur. And as I think we indicated a little bit in Q4, we expected Q1 could be a lower quarter for us in the course of this year. Importantly, we remain the adoption remains very robust and it's really a small swing in new patient starts that has impacted VRO here. About half of that impact is driven by what we see in demand with new patient starts in some of our largest centers. These also correlate with the largest centers where we've enrolled a large number of patients in PRECISION 1 over the course of the last 6 to 9 months.

Speaker 2

And recall that we have usually anywhere around 90 patients commercially on drug at any one time. And over the last 9 months, we've recruited 80 patients into the PRECISION 1 trial. So typically clinical trials aren't of the same scale and magnitude as the commercial business. But in this case, that is we're more aligned in terms of what we're doing on the clinical trial side versus what's happening on the commercial side. Maybe I'll just let Scott talk about the distributor situation and then I would like to go to Loretta to talk a little bit about the physician responses to PRECISION 1.

Speaker 3

Yes, sure. Thanks, Dave. Yes, on the inventory side, as we noted, we saw some swings in distributed inventory in the quarter, which is on we're at an unusually low level at the end of Q1 based on what we've seen in recent quarters. And so we do expect that that's going to work itself out over the next few quarters.

Speaker 2

And then Loretta, I just want to comment maybe on what we saw from investigators on the PRECISION 1 interim results and their response and particularly how that led through to recruitment?

Speaker 6

Well, the responses that we saw at the 1st interim actually had virtually no impact on our accrual. The community remains very supportive of this study. We didn't miss a beach. And frankly, given the very advanced stage of many of these patients, remember that the median of prior therapies was 3 to 3.5 with many patients having received more than 5 prior regimens. So to the community that treats these patients, the responses that we saw look pretty good.

Speaker 6

And so everyone remains enthusiastic, and we have not missed a beat in terms of our accrual. In fact, we had a small uptick. So I don't know if that's what you wanted me to say, Dave, but that's the reality.

Speaker 2

I always want you to say the reality, Loretta. Thank you. Thanks, Roger. Any other questions?

Speaker 5

No, that's helpful. Thank you. Thank you for taking the question.

Speaker 2

Thanks. Operator, next

Speaker 4

question. Thank you.

Operator

One moment for our next question. Our next question comes from Joe Catanzaro with Piper Sandler. Please go ahead.

Speaker 7

Hey, everybody. Appreciate you taking my questions. Just have a couple of quick ones. Maybe first following up on the Faiero sort of commercial dynamic. I guess I'm trying to understand this cannibalization sort of phenomenon that you're describing.

Speaker 7

It sounds like and maybe I'm just misunderstanding it, but it sounds like you're saying enrollment into PRECISION 1 pulled away commercial plaucoma patients. And I'm trying to understand why that's the case. If that's the case, I think maybe I'm just totally misunderstanding it. So any help there appreciate it. And I have maybe 1 or 2 follow ups.

Speaker 2

Yes, sure. So Joe, it's hard for us to tell exactly what patients end up where. What we saw is that the orders coming through, this is an IV product and therefore we don't get physician level data, but we get institutional level data. And what we saw was a correlation between reductions in commercial business at some of our largest accounts that often were highly correlated with our precision sites with some of our largest enrolling precision sites. At a patient level, we don't know exactly how that plays out, but we would anticipate that maybe a few of those patients were spontaneous use like noncoma patients that were being treated commercially and that physicians took the opportunity instead of enrolling those patients in a commercial on a commercial basis may have enrolled them into the clinical trial.

Speaker 2

So it's not the coma patients that do the clinical trial because that's obviously an exclusion criteria in this case. And remember that we're talking about swings of 10 patients that create the gap that we saw in Q1 or less, 10 patients or less that create the gap that we saw in Q1. And so it takes very few sets of decisions actually just swing the business that way. And so now with Precision fully enrolled, etcetera, the only option for patients that are looking for that last line opportunity in a non promoted indication would be to go back to that commercial business.

Speaker 7

Okay, got it. That's helpful. Maybe just two quick clinical questions. I know you guys have said this would be your expectations, but wondering if you can confirm that within PRECISION 1, the sort of baseline features for the full population aligns with the first 40 patients, meaning heavily pretreated diverse set of tumor types? And then for the G12C decision to terminate that, was that based on any data, that had emerged out of that trial?

Speaker 7

Thanks.

Speaker 2

Sure. So the on the baseline population, we from what we can see, it's consistent with what we've seen before. But obviously, we haven't fully evaluated the data to that and that will only come when we do the interim analysis on the fully cleaned and completed data set. The and on the Mirati decision, that decision had nothing to do with efficacy or safety that we saw in that trial. And in fact, we have very little data from that trial so far.

Speaker 2

And it's more it's very much a financial strategic decision to focus on the endometrial program as well as the NET program. We're really excited about the potential for nonsterolimus in those indications. Thanks, Joe. Any other questions?

Speaker 3

Thank you. One moment, Ferg.

Speaker 2

Thanks, Joe. We'll go on to the next question.

Operator

Our next question comes from Tara Bancroft with C. D. Cowen. Please go ahead. Hi, good morning.

Operator

So just want to follow-up on the last question that Joe asked. So how much difference in cost saving can we expect now over the next year or 2 now that you're ending this agreement?

Speaker 2

Sure. Scott, do you want to comment on outlook for spending?

Speaker 3

Yes. Tara, thanks for the question. Yes, we haven't shared that information, specific information on the individual program. There will be savings, but we haven't shared that information.

Operator

Okay, thanks.

Speaker 2

Thanks, Tara. Anything else?

Operator

No, I'm good. Thank you very much.

Speaker 2

Operator, we can move to any other questions.

Operator

Our next question comes from Ahu Demir with Ladenburg. Please go ahead.

Speaker 4

Good morning. Thank you for taking my questions. 2 from us. First one, a follow-up to Roger's question. Could you provide more guidance on the EEC program?

Speaker 4

What are the benchmarks? And what would success look like in this interim analysis for this setting?

Speaker 2

Super. Thanks for the question, Ahu. Aurelia, would you like to comment on that? Sure.

Speaker 6

Good morning. So the Good morning, Tom. Hi. How are you, Ahu?

Speaker 4

So this is a it's a Simon's 2 stage design

Speaker 6

and the first cohort is 10 patients and we're pretty far along in accruing those folks. And the second portion will be an additional 19 patients for a total of 29 patients in the study. It's designed to show on the basis of overall response. We're looking for a response rate that exceeds 20%. And our expectation, of course, is that it may be higher.

Speaker 6

But that would be that would give you the kind of guidance I think you're looking for.

Speaker 4

That sounds great. Yes. Thanks for that, Loretta. My second question is regarding the Mirati collaboration. Based on our scientific understanding, there's a strong rationale between albumin uptake also, therefore, nabstrelimous uptake in RAS mutated cancers.

Speaker 4

So curious if you will be obtaining the clinical data and do you plan to pursue this setting in the future, any RAS mutated cancers and any aspect on that side?

Speaker 2

I think, Ahu, we'll see how the data comes in on the patients that were enrolled in the trial and make that decision on a later point in time. Right now, we have no plans to expand into that area.

Speaker 4

Got it. Okay. Thanks for taking my questions.

Speaker 2

Super. Thank you. Operator, any other questions?

Operator

I'm showing no further questions at this time. I'd like to turn it back to Dave for closing remarks.

Speaker 2

Great. Thank you. Well, thanks everyone for joining the call this morning. Thanks to Scott, Loretta and Audrey for supporting this. And I wanted to remind everyone that we really had great progress over the course of this year, particularly around our clinical study and development programs.

Speaker 2

We have now fully enrolled our PRECISION-one trial and look forward to our 2 thirds interim analysis in quarter 3 of this year, which will be a major milestone for us and determining where we go next with TSC1 and TSC2 mutant cancers, which are really large opportunity for us to expand the NAV serolimus portfolio. We're also really excited about the progress we've seen in EEC and NET enrollment and look forward to early updates on those programs later this year. And then finally, we expect to return to growth for Fyaro in Q2 of 2024 and look forward to sharing updates on that as we progress our commercial business. Otherwise, thank you for joining the call today and we look forward to further updates as we go through the year. Thanks everyone.

Speaker 2

Bye now.

Operator

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

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Key Takeaways

  • PRECISION-one trial is now fully enrolled across multiple solid tumor types, with the next two-thirds interim readout of 80 patients expected in Q3 2024.
  • Interim data from the first 40 patients showed a 26% overall response rate in the TSC-1 arm, featuring early, deep and durable responses across four tumor types.
  • Phase 2 trials in endometrioid endometrial cancer (with letrozole) and neuroendocrine tumors are enrolling well, with initial efficacy and safety data on 10-patient cohorts due by year-end.
  • Fyaro net product sales declined 8.8% year-over-year to $5.4 million in Q1, driven by distributor ordering shifts and clinical trial enrollment; management expects growth to resume in Q2.
  • Cash runway into Q4 2025 is supported by $88.3 million in cash and cost-saving measures implemented in early 2024.
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Earnings Conference Call
Aadi Bioscience Q1 2024
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