Q1 2024 Earnings Summary
- Strong Progress in Clinical Trials: Aadi's PRECISION1 trial is fully enrolled and continues to receive strong support from the medical community, with no issues in accrual and even a small uptick despite interim results, indicating potential for positive outcomes and significant expansion opportunities in TSC1 and TSC2 mutant cancers. The upcoming interim analysis in Q3 2024 could be a major milestone.
- Strategic Focus on Promising Indications: The company is prioritizing development in endometrial cancer (EEC) and neuroendocrine tumors (NETs), with initial data expected later this year. Recruitment for these trials is progressing well, and the EEC study aims for a response rate exceeding 20%, which could lead to significant market opportunities given the estimated 10,000 cases of EEC diagnosed annually in the U.S..
- Expected Return to Sales Growth: Despite a temporary 8.8% decrease in FYARRO net product sales in Q1 2024 due to distributor ordering patterns and fewer new commercial patient initiations, management expects sales growth to return in Q2. The decrease was partly attributed to cannibalization of commercial sales as patients were enrolled into clinical trials, a situation expected to normalize now that PRECISION1 is fully enrolled.
- Decrease in FYARRO sales and potential cannibalization by clinical trials: In Q1 2024, FYARRO net product sales decreased by 8.8% compared to the prior year period. The company attributes this decrease to lower commercial patient initiations, possibly due to patients enrolling in their PRECISION1 clinical trial instead of receiving commercial treatment. This may indicate challenges in maintaining commercial sales while conducting clinical trials, which could impact revenue growth.
- Lack of transparency on cost savings from terminated agreement: When asked about the expected cost savings from terminating the collaboration and supply agreement with Mirati (now BMS), the company did not provide specific information. This lack of disclosure may raise concerns about the company's cost management and financial transparency.
- Termination of collaboration with Mirati due to strategic and financial reasons with limited data: The company terminated its collaboration with Mirati, stating it was a strategic decision to focus on other programs and that they have very little data from that trial. This may suggest uncertainties in their pipeline advancement and potential missed opportunities in expanding into KRAS-mutated cancers.
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FYARRO Sales Impact
Q: What's affecting FYARRO sales trajectory and parameters?
A: Sales of FYARRO in Q1 were impacted by a small swing in new patient starts, particularly at our largest accounts. About half of the impact is driven by demand with new patient starts in our largest centers, which correlate with sites enrolling patients in the PRECISION1 trial. Over the last 9 months, we've recruited 80 patients into PRECISION1, affecting commercial sales where we typically have around 90 patients on drug at any one time. Despite this, physician adoption and first-line use remain extremely strong, and we expect FYARRO sales to return to growth in Q2.
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Cannibalization by Clinical Trials
Q: Is PRECISION1 enrollment pulling patients from commercial use?
A: We observed reductions in commercial FYARRO orders at some of our largest accounts, which correlate with high enrollment in PRECISION1. It's possible that some patients who would have been treated commercially were enrolled in the trial instead. With PRECISION1 fully enrolled, we anticipate patients seeking last-line options in non-promoted indications will return to commercial treatment.
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EEC and NET Trials Update
Q: Expectations for upcoming EEC and NET data readouts?
A: The EEC and NET trials are two-part Phase II studies, with initial Part 1 enrollment of approximately 10 patients each. Recruitment is going well, and we anticipate reporting early efficacy and safety data from these initial cohorts by the end of this year. There has been great interest in the community, and we are encouraged by the potential of nab-sirolimus in these indications.
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Cost Savings from Terminated Agreement
Q: How much cost savings from ending the Mirati collaboration?
A: We haven't shared specific information on individual program savings. There will be savings from terminating the G12C collaboration, but exact figures have not been disclosed. The decision was strategic and financial, allowing us to focus on the endometrial and NET programs.
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EEC Program Benchmarks
Q: What are the benchmarks for success in the EEC program?
A: The EEC trial uses a Simon's two-stage design, with an initial cohort of 10 patients and an additional 19 patients in the second stage, totaling 29 patients. The study aims to demonstrate an overall response rate exceeding 20%, and we are optimistic about achieving higher rates.
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PRECISION1 Baseline Alignment
Q: Does the full PRECISION1 population align with initial patients?
A: From what we can see, the baseline features of the full PRECISION1 population are consistent with the first 40 patients, though we haven't fully evaluated all the data yet. A complete analysis will occur upon interim analysis of the fully cleaned dataset.
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Future in RAS-Mutated Cancers
Q: Will you pursue RAS-mutated cancer indications?
A: We'll assess data from patients enrolled in the terminated trial but currently have no plans to expand into RAS-mutated cancers. Our focus is on the endometrial and NET programs with nab-sirolimus.