Aadi Bioscience, Inc. (AADI)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 revenue was $5.35M, down 8.8% year over year and below Q4’s $6.33M; management attributed the decline to distributor ordering patterns and fewer new patient initiations, with an expectation to return to sales growth in Q2 .
• Net loss widened to $18.29M and EPS was $(0.68), versus $(15.22) and $(0.57) in Q1 2023; R&D spend increased on PRECISION1 and Phase 2 EEC/NET trials, while SG&A declined modestly due to lower legal/consulting expenses and severance costs tied to streamlining .
• PRECISION1 is fully enrolled; the two‑thirds interim analysis (80 patients, independent review) is planned for Q3 2024, with study completion by year‑end and full results in early 2025—key catalysts likely to drive stock reaction .
• Wall Street consensus (S&P Global) was unavailable for AADI this quarter; no formal numerical revenue/EPS guidance was issued, though management reiterated a cash runway into Q4 2025 and near‑term commercial rebound expectations .

What Went Well and What Went Wrong

What Went Well

• PRECISION1 fully enrolled across a broad range of tumor types, with two‑thirds interim readout due in Q3 2024 and full results expected in early 2025, sustaining the clinical catalyst path .
• EEC and NET Phase 2 trials are enrolling well; initial Part 1 efficacy and safety readouts (≈10 patients per trial) are anticipated later in 2024, with a Simon two‑stage design targeting ≥20% ORR in EEC .
• FYARRO remains the preferred PEComa treatment with broad penetration, >200 accounts ordering since launch; the company retains a healthy cash runway into Q4 2025 supporting operations through upcoming readouts .

What Went Wrong

• Q1 2024 sales softness driven by distributor inventory swings and fewer new patient starts, partially correlated with robust clinical trial enrollment at top accounts (“cannibalization”) .
• Net loss expanded year over year as R&D costs rose on PRECISION1 and Phase 2 programs; top‑line leverage remains limited with the ultra‑rare PEComa base reaching saturation .
• Collaboration with Mirati/BMS was terminated to prioritize EEC/NET spending, removing a potential lung cancer combination avenue and leaving future KRAS G12C combo exploration undecided .

Financial Results

Segment breakdown: Single product FYARRO; no reportable segments .

KPIs (Q1 2024):

• Accounts ordering FYARRO since launch: >200 .
• Commercial patients on drug at any time: ~90 .
• Cash, cash equivalents and short‑term investments: $88.3M; runway into Q4 2025 .
• PRECISION1 status: fully enrolled; two‑thirds interim in Q3 2024; study completion by year‑end; full data early 2025 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “PRECISION1 is now fully enrolled…two‑thirds interim analysis in the third quarter, and full results in early 2025…Phase 2 trials in EEC and NETs are enrolling well…we anticipate initial data from these later this year.” — Dave Lennon, CEO .
• “FYARRO…preferred treatment for malignant PEComa…impacts to sales in the first quarter are well‑understood events and we expect to return to sales growth in Q2.” — Dave Lennon, CEO .
• “We ended the first quarter 2024 with $88.3 million…streamline our operations and reduce costs…will fund operations into Q4 2025…R&D increased to $13.6M…SG&A $10.6M…Net loss $18.3M.” — Scott Giacobello, CFO .
• “Distributor inventory…unusually low level at the end of Q1…we expect that’s going to work itself out over the next few quarters.” — Scott Giacobello, CFO .

Q&A Highlights

• EEC/NET timelines: Initial Part 1 efficacy and safety from ~10 patients each by year‑end 2024; EEC designed for ORR ≥20% threshold in Simon two‑stage design .
• FYARRO softness drivers: Correlation between lower commercial orders at largest accounts and high PRECISION1 enrollment sites; distributor inventory unusually low; ~90 commercial patients on drug typically, so swings of ~10 patients impact quarterly sales .
• Mirati/BMS termination: Decision was strategic/financial prioritization for EEC/NET; not driven by efficacy/safety; cost savings not quantified .
• Population characteristics: Full PRECISION1 baseline features expected broadly consistent with initial cohort; diversity across >25 tumor types emphasized in prior updates .

Estimates Context

• S&P Global Wall Street consensus for AADI was unavailable this quarter; as a result, comparisons to consensus for revenue and EPS cannot be provided. Expectation to return to sales growth in Q2 and the Q3 PRECISION1 interim are likely to drive estimate revisions once data points materialize .

Key Takeaways for Investors

• Near‑term catalyst path intact: Two‑thirds PRECISION1 interim in Q3 2024, study completion by year‑end, and full data in early 2025 remain central to the multi‑indication thesis .
• Commercial dip appears transient: Management cites distributor inventory and fewer initiations; expects sales growth in Q2, easing concerns about PEComa demand durability .
• Pipeline focus sharpened: Termination of Mirati/BMS combo frees resources for EEC/NET programs, with initial Part 1 data by year‑end; watch EEC ORR ≥20% benchmark .
• Cash runway supportive: ~$88.3M cash and investments fund into Q4 2025, covering the interim and initial Phase 2 readouts; reduces near‑term financing overhang .
• Trial design advantage: Independent TSC1/TSC2 arms with diverse tumor representation align with tumor‑agnostic regulatory expectations, potentially accelerating path if ORR is compelling .
• Trading implications: Q2 sales recovery commentary and Q3 interim timing frame the stock’s event path; weakness on Q1 print may reverse if distributor/initiations normalize and interim data is supportive .
• Estimate resets likely post‑interim: With S&P Global consensus unavailable now, expect analysts to recalibrate models around Q2 sales trajectory and Q3 efficacy signals.

Notes: All document-based values and statements are cited to company filings and transcripts. S&P Global consensus was unavailable for AADI this quarter, so estimate comparisons are not provided.