Aadi Bioscience, Inc. (AADI)·Q2 2024 Earnings Summary

Executive Summary

• Q2 2024 revenue was $6.18M from FYARRO, up 15% sequentially and roughly flat year over year; net loss improved to $14.6M and diluted EPS to $(0.54) versus $(0.67) a year ago .
• Management cited stronger demand across new and existing accounts, led by major oncology centers; ordering accounts increased 14% quarter-over-quarter, and cumulative FYARRO sales since launch reached $51.1M .
• Guidance reiterated Q3 2024 two-thirds interim analysis for the tumor-agnostic PRECISION1 trial and completion by year-end; however, on Aug 20, Aadi halted PRECISION1 after the IDMC concluded it was unlikely to meet efficacy thresholds for accelerated approval, shifting focus to the FYARRO commercial business and extending cash runway to at least 2H 2026 .
• Near-term stock reaction catalysts include the halted PRECISION1 program and the plan to adjust Phase 2 trials (EEC, NETs) and reduce R&D headcount by 80%, which materially changes the medium-term pipeline and burn outlook .

What Went Well and What Went Wrong

What Went Well

• FYARRO demand improved: net product sales of $6.2M, +15% QoQ; management highlighted increased demand across segments and large accounts, with ~80% of accounts ordering multiple times YTD .
• Operating expense discipline: SG&A fell to $7.9M from $11.8M YoY due to rightsizing and lower legal costs, helping narrow net loss versus prior year .
• Commercial foundation: cumulative FYARRO sales reached $51.1M since launch; >200 accounts have ordered since launch, supporting breadth of adoption in academic and community settings .

Quote: “Approximately 80 percent of accounts have ordered multiple times already this year, reflecting the clinical value of FYARRO for patients with advanced malignant PEComa.” — Dave Lennon, President & CEO .

What Went Wrong

• PRECISION1 setback: on Aug 20, Aadi announced the trial would be halted after the IDMC concluded it was unlikely to meet an efficacy threshold for accelerated approval; this removes a key growth optionality and delays broader label expansion .
• Q1 softness carried into narrative: Q1 was impacted by distributor ordering patterns and fewer patient initiations; while Q2 rebounded, gross-to-net deductions and earlier cannibalization at large centers were cited as headwinds in Q1 .
• R&D execution reprioritization: to preserve cash, Aadi will pause new enrollment in EEC and NETs (continue dosing existing patients), and reduce R&D headcount by 80%, which may limit pace of future clinical data generation .

Financial Results

Revenue, Net Loss, EPS — YoY and Sequential Comparisons

Narrative: Sequential revenue growth of 15% (Q1→Q2) reflects demand recovery across segments and large accounts; YoY revenue effectively flat. Net loss and EPS improved YoY, aided by lower SG&A .

Operating Expense and COGS

Balance Sheet Snapshot

KPIs and Commercial Metrics

Note: Margin metrics (e.g., gross margin, EBITDA margin) were not disclosed in company materials for these quarters .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic focus: “We believe nab-sirolimus has the potential to build on previous mTOR inhibitors to deliver better outcomes for people living with cancers that are dependent on that pathway.” — Dave Lennon .
• Commercial traction: “FYARRO product sales were $6.2 million for the second quarter, in line with the prior year period and up 15% over Q1… growth was observed across all segments, including large accounts.” — CFO Scott Giacobello .
• Pipeline reality: “We remain on track for our next plan interim analysis… and… a path to submission and potential approval for TSC mutations.” — Dave Lennon (Q2 call remarks pre-update) .
• Post-update repositioning: “PRECISION1… unlikely to exceed an efficacy threshold necessary to support an accelerated approval… Aadi will focus on FYARRO commercial business… extend cash runway into at least 2H 2026.” — Corporate update .

Q&A Highlights

• PRECISION1 scenarios: Management did not anticipate design changes post two-thirds interim; full 120-patient dataset expected in early 2025; plan for FDA dialogue after interim readout .
• FYARRO outlook: Q2 demand outperformed net sales due to gross-to-net deductions and inventory movements; incremental growth expected into Q3/Q4 .
• Trial disclosures: Two-thirds interim likely via company presentation rather than a medical conference .
• EEC/NET data expectations: Open-label designs enable early efficacy/safety reporting; EEC first cohort complete with potential substantial PFS benefit precedent vs chemo; NET responses historically low—company hopes for better signals .

Estimates Context

• We attempted to pull consensus Revenue and EPS for Q2 2024 and Q1 2024 via S&P Global, but consensus data were unavailable due to a missing SPGI/CIQ mapping for AADI. As a result, we cannot provide a definitive beat/miss versus Wall Street for Q2 2024 (values unavailable via S&P Global) [SpgiEstimatesError from tool].
• Given the absence of consensus, traders should anchor on sequential growth (+15% QoQ revenue), YoY stability, and expense reductions, while factoring the program halt on Aug 20 as a material negative surprise for the pipeline .

Key Takeaways for Investors

• FYARRO demonstrated sequential recovery with +15% QoQ sales; breadth of account growth and adoption suggests continued incremental commercial momentum near term .
• Expense discipline, notably in SG&A, improved the P&L trajectory YoY; cash runway extended to at least 2H 2026 post-update, reducing financing urgency in the medium term .
• The halted PRECISION1 trial removes a major label expansion path in the near term and shifts the story to a commercial PEComa franchise with a smaller TAM, plus more limited EEC/NET optionality (paused new enrollment) .
• Near-term trading may reflect the divergence between a stabilized commercial base and diminished pipeline optionality; expect estimate models to cut out TSC1/TSC2 contributions and lower medium-term revenue trajectories.
• Watch for EEC/NET initial efficacy signals later in 2024 as potential proof points for mTOR-sensitive indications, albeit with slower enrollment and reduced R&D headcount affecting cadence .
• Without SPGI consensus, relative performance framing relies on sequential trends and company commentary rather than beat/miss metrics; monitor future filings for any non-GAAP or margin disclosures to refine valuation anchors .
• Strategic review could catalyze corporate actions (e.g., partnerships, M&A, divestitures) aimed at maximizing shareholder value; the advisory engagement signals openness to structural changes .

Other Relevant Press Releases (Q2 2024 context)

• Pre-earnings announcement of Q2 results call (July 31) .
• Corporate update (Aug 20): halt of PRECISION1; pause new enrollment in EEC/NETs; R&D headcount reduction by 80%; cash runway extended to at least 2H 2026 .

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