Q3 2022 Aadi Bioscience Inc Earnings Call

November 9, 2022

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Good day and thank you for standing by welcome to the <unk> Bioscience, Inc. Third quarter earnings Conference call. At this time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need a press star one one on your telephone please be advised that today's conference is being recorded.

I'd like to hand, the conference over to your host today, Martha Graham Senior Vice President Investor Relations and corporate Communications. Please go ahead.

Thank you good morning, and welcome to the Abbvie Bioscience Conference call to review results and provide an update on the third quarter of 2022.

Joining me on the call today is our founder and CEO , Neil Desai, who will provide an overview of activity during the quarter, followed by Brendan Delaney, our chief operating officer, who will give us an update on our early commercial progress.

Next will be our chief Medical officer, Dr. Loretta <unk>, who will give a brief update on our clinical progress followed by our CFO Scott Rockefeller with a review of our financial performance during the period.

We will open the line for questions at the end of the call following closing comment.

Before we get started a quick reminder, that statements made on the call. Today will include forward looking statements.

All events or results could differ materially from those expressed or implied by any forward looking statements as a result of various risks and.

Certainties and other factors, including those set forth in the risk factors section of our annual and quarterly filing with the Securities and Exchange Commission, which can be found at www SEC Gov.

Or on our website at Www Dot Addie bio dot com.

In addition, any forward looking statements made on this call represents our views only as of today November nine 2022, and should not be relied upon as representing our views as of any subsequent date.

We specifically disclaim any obligation to update or revise any forward looking statements.

With that I will turn the call over to Neal for his opening statements Neal.

Thank you Marci good morning, everyone and thank you for joining us today for the earnings results call for the third quarter of.

2022.

2022 has been a transformational time for IV <unk>.

Following FDA approval in late 2021, we successfully launched our first product <unk> for the treatment of advanced malignant B coma in early 2022.

We drove forward a registration directed trial precision one in solid tumors, having CSC won our TSV too in activating alterations.

Completed a pipe financing of $72 $5 million that extends our runway into 2025.

We initiated a collaboration with Marathi therapeutics for a new combination clinical study in patients with Prs <unk> mutations as part of the strategy to expand indications both viral and we grew the company to over 80 employees with a stellar leadership team now in place.

All of this progress positions us extremely well for the next phase of growth and operational excellence is a multi stage precision oncology company.

As you may have seen in our announcement out last evening beginning at the start of the new year on January one 2023, we are planning a management transition and realigning our leadership structure to reflect our recent progress. This will allow me to move into the role of executive Chairman, while our current CEO Brendan Delaney.

We will transition to president and CEO .

I've been fortunate to work very closely with Brendan since he joined US as Chief operating officer in September 2021.

Since that time has proven track record and committed leadership have been instrumental in building the organization, achieving our milestones and preparing for the growth that lies ahead.

We're at the perfect time for this transition and I am pleased to welcome him into this new role.

Going forward from January one Brendan will assume leadership of the company as we continue to gain momentum in the commercialization of <unk> in pre coma advanced our registration directed precision one trial and prepare for the potential commercialization of <unk> in patients with PSC, one and two in activating alterations, which.

One of the larger targeted oncology indications.

I will continue to serve on the board of directors alongside Brendan where my focus will turn to the advancement of our scientific initiatives. Congratulations Brandon we look forward to your leadership in 2023.

The last several months have been some of the most active and productive for us to date and we have seen impressive execution across the company throughout the third quarter and into the current period.

Importantly, our promise as an organization and the value we are working to create a supported by high quality institutional investors some of whom recently participated in a $72 5 million pipe financing at the close of the quarter.

<unk> strengthening our balance sheet.

Allows us to further extend our cash runway into 2025, not only getting us through the continued commercialization of firearm coma and the completion of the precision <unk> trial, but also enabling us to continue to evaluate strategies for broadening viral indications beyond pre coma and TSV, one and two.

Activating alterations.

Our commercial success with Fireeye and <unk> continues with a 24% increase in net product sales over the second quarter, we are seeing increasing adoption in the community setting and key update in our target regions, which are indications of our progress made during the quarter.

On our tumor agnostic precision one study we saw continued advancement during the quarter in patient enrollment and site initiation with numerous clinical centers and just in time sites now open.

As a reminder, this is a prospectively design registration directed trial.

We are encouraged by our progress and are on track to provide preliminary data on a meaningful number of patients in the first half of 2023.

Loretta will join us shortly with commentary on our progress on the clinical front in the third quarter and our progress to date.

Lastly, at our core IV was built around the central ideas that are best in class <unk> inhibitor could unlock the broad promise of the MTR pathway itself, both as a potent single agent in indications like the coma and TSV, one and two in activating alterations.

But also in combination with other agents.

Few weeks ago, we announced a clinical collaboration with Novartis is a leader in <unk> inhibition to evaluate the combination of our aggressive and natural <unk> in <unk> mutant non small cell lung cancer and other tumors.

<unk> pathway is often activated in patients with <unk> mutation and may contribute to adaptive resistance to <unk> inhibitors. So this combination strategy is expected to improve outcomes for these patients.

We continue to evaluate expansion opportunities for our pipeline with the goal of becoming a leading precision oncology company in the future with that it is my pleasure to turn the call over to Brendan Delaney, who will become our new President and Chief Executive Officer, starting January one.

<unk>.

Thanks, Neal and good morning, everyone.

I'm honored to have been selected to lead this organization.

I am excited about the opportunity to continue working with Neil and the entire team here in the CEO role and I look forward to what we can accomplish together as we prepare for launching and TFC won two inactivating mutations a sizable tumor agnostic oncology indications.

Our team is functioning at a very high level right now and our future is bright.

We're very optimistic about our trajectory and our continued execution as we advanced our precision one trial and further expand the clinical opportunities with Phi Arrow.

I couldnt be more pleased with the performance our team has demonstrated and it's energizing to consider the potential achievements that lie ahead.

Our commercial oncology franchise is growing and I believe we are well positioned to achieve our goal of expanding Fi Aro indications and continue to provide therapeutic benefit to patients in need.

Let me turn now to our oncology franchise.

In the third quarter of 2022, our second full quarter of sales of <unk> in Tacoma, we were happy to see steady growth in demand. Despite the unpredictability of sales in the summer months.

We achieved U S net product sales of $4 $2 million during the period, representing 24% growth over the second quarter and bringing total U S. Net product sales for the first seven five months of launch to $10 million.

Insights from our recent launch tracking survey show very strong brand awareness message recall product perception and intent to prescribe among physicians, who treat <unk> patients.

We are building momentum across our major sales regions with sustained growth in the overall number of accounts and excellent reorder rates within major cancer centers, indicating that some patients are experiencing continued benefit from use of ferro.

In the community setting the uptick continues to increase now accounting for about 60% of sales overall.

Further we are promoting our science at key medical meetings, like <unk>, and <unk>, which we believe further expand multi brand and company awareness.

As of September 30, there were more than 90 unique accounts ordering <unk> up approximately 50% from last quarter with a reorder rates still exceeding 80% across all ordering accounts.

Adoption and the academic treatment centers remained strong and we continue to be impressed by the fact that almost half of ordering accounts. Since launch are now represented by those in the community treatment setting.

Our market access team continued to deliver broad patient access to <unk> in the third quarter.

We are closely monitoring payer metric and I'm happy to report that as of September 30th payers covering approximately 85% of commercial lives in the U S market have reviewed and adopted a formal <unk> coverage policy.

This rapid payer progress combined with a strong suite of patient support resources available for our <unk> program has continued to provide strong patient access to ferro since FDA approval.

Our team is excited about what is to come as we head into 2023 and I personally could not be more enthusiastic about my expanded role and helping to lead that team to future success.

Thank you I will now turn the call over to Loretta to discuss the progress of our clinical program Loretta.

Thank you Brandon.

In the third quarter, we continue to see good progress in our ongoing precision one tumor agnostic trial as the number of open sites increased along with access to patients and cancer centers of excellence as well as in the Canadian heading.

We have achieved our goal for the year, if Oklahoma trial in at least 20 major cancer centers and upward of 120 treatment sites in the United States.

Staffing shortages due to COVID-19 continue to impact most centers, causing widespread startup delays.

This patient accrual remains on track as projected reflecting hard work of our dedicated team.

Our partnerships with three of the leading next generation sequencing companies have been successful in affordable access to patients in community based practices.

Using these enables us to routinely identified patients with TFC, one for TFC too in activating alterations who are eligible for the precision <unk> trial.

We have broad geographic coverage in the United States and continue to leverage to Ngls providers internal physician networks to locate and identifying new potential patients on an ongoing basis.

Importantly, we have finalized our partnership with U S oncology and have begun to identify patients from their broad community base.

Using U S oncology Star program, we can rapidly activate individual site once a patient is identified who qualifies for the trial.

We are still relatively early in the process, but our multifaceted approach to rapidly identify the appropriate patients with tier one or tier two and activating alterations who may benefit from trial participation appears to be working.

We continue to believe that full patient enrollment into the study will be completed within 24 months from first patient treated.

The reception from the oncology physician community continues to be encouraging and in the last quarter. We have held advisory boards across several important sub specialty oncology groups, which have provided an opportunity for education and meaningful feedback as.

As a cross functional team, we have begun conducting widespread print and electronic awareness campaigns.

<unk> one study in order to increase visibility to the entire oncology community.

Additionally, we are now working with Marathi to initiate an open label phase one two trial to determine the optimal and recommended phase II dose for the combination of that aggressive and Thats your alignment in patients with K Ras <unk> seen mutant non small cell lung cancer.

Or in other solid tumors.

Recently presented preclinical data on the combination of K Ras inhibitors of Napster lineups at the ACR NCI <unk> molecular targets meeting in October which laid the foundation for our partnership on combination strategies to treat non small cell lung cancer and other solid tumor.

Yes.

The preclinical results presented demonstrate that <unk> has the potential to significantly improve the antitumor activity of K Ras inhibitors encouraging the further exploration of the potential for these combination treatment options.

We are continuing to evaluate additional indications for <unk>, either a single agent or in combination and have been gratified by the level of interest in our conversations with the oncology community.

I will now turn it over to Scott for a financial update Scott.

Thanks, Brenda and good morning, everyone. We.

We had another strong quarter as we head towards the end of 2022.

As Neal mentioned in his opening remarks, we completed the $72 $5 million pipe financing in September .

Well capitalized ending the third quarter with cash cash equivalents and short term investments of $183 million, which.

Which we expect to fund operations into 2025.

<unk> net product sales amount of $4 2 million for the quarter, representing a 24% increase over Q2.

Research and development expenses for the quarter increased to $8 8 million as compared to $5 8 million in the prior year quarter to $7 7 million in the second quarter.

This increase was primarily related to the continued progress of the ongoing precision <unk> trial and the build out of the R&D organization.

Selling general and administrative expenses for the third quarter were in line with the second quarter at $9 9 million compared.

Compared to $7 4 million in the same period in 2021.

This increase was primarily due to the buildout of our commercial operations and infrastructure and increased marketing expenses related to the commercial launch of <unk>.

Net loss for the third quarter was $14 5 million.

Compared to $87 1 million in the third quarter of 2021.

The prior year quarter included a noncash impairment charge of $74 2 million related to the acquired contract intangible assets incurred in conjunction with the <unk> merger.

For more information a detailed discussion of the results reported on this call will be provided in our 10-Q to be filed later today.

I'll now hand, the call back to Neil for his closing comments Neil.

Thanks Scott.

As you've heard today our efforts in 2022 have led us to continued advancements throughout the organization. While we've achieved many corporate milestones. Our focus continues to remain on the patients. We serve and we are encouraged by the impact <unk> is having on People's lives and look forward to furthering its potential benefit to patients.

Need.

With that we can open the line for questions operator, Thank you.

You. If you have a question at this time. Please press star one on your telephone one moment, while we compile the Q&A roster.

Our first question comes from the line of Roger song with Jefferies. Your line is open. Please go ahead.

Great Congrats for the great color. Thank.

Thank you for taking my questions a couple of <unk>. The first one is.

So you start your large that draw.

Okay.

And we see the steady girl. So just curious how do you see that trend for the growth and the when you will start to get we can see some kind of steady state for the growth, particularly after the pent up demand in the beginning thank you.

Yes, Hi, this is Neil decide Brendan would you like to take that question. Please yeah sure Hey, Roger how are you. Thanks for the question.

It's a little too early as we have said I'd like to get at least a year or so under our belt before we start predicting steady state as you recognize the growth continues and I think a lot of the trends.

The breadth of adoption is particularly.

Impressive to me as is the adoption in the community setting as you've noticed from the first.

Partial quarter in Q1 to Q2, now Q3 approaching 60% of the ordering accounts in the community setting as it's far well.

Well above what I expected so all of the trends new accounts over 90, as we stated in if you track that from early on continuing just to show good growth I don't expect that to stop anytime soon so I'm not going to give a prediction on when it goes to the steady state a couple of things I will say about the launch evolution in your.

The the bolus, we're starting to recognize that again, it's early and we're not going to give a number because of the kind of rough data that we work with.

I would say the duration of therapy starts to look like its trending in the right direction. As you would expect right. If you have a bolus of patients in early patients coming on as we said you have to meet those patients where they are in their treatment path right and sometimes that means they are heavily pre treated where you might expect a shorter duration where.

Starting to see the turnover of that group into more frontline penetration so newly diagnosed <unk> patients and as that starts to turnover, we expect to see longer duration again, it's early but you are starting to see that expected transition and positive trends in duration.

Hope that helps.

Yes, thats excellent great great to hear for the trend.

Maybe just another question for the precision study PSC one in the queue. Just curious I know you have been opening a lot of the new sites.

Curious.

How did that align with the epidemiology, because so you'll get a pretty decent job or characterize the epidemiology.

Ken perhaps maybe 12000 plus.

But jesse went onto how did that.

How do you see that industrial award that that's my first part of the question. The other one is.

Your reporting the initial data first half next year, so how should investors interpret that data and do you have any kind of box to hit in order to make a go no go decision from there. Thank you.

Yes, Hi, this is Neil I can take a little bit of that question and then pass it onto Loretta.

The first part of your question was around the epidemiology and.

Enrollment.

And we are seeing that indeed, there is.

There is a good number of Trc, one and TLC to patients that are out there and we know this through our relationships with the NDS providers.

And we can follow all of those patients.

And then eventually when they are ready, we can track them and put them on the trial and so there is definitely.

So it lives up to its expectations in terms of the number of patients and epidemiology.

So that's the first part of your question in terms of the dataset.

We are still on track to release data in the first half so nothing has changed there.

What we're waiting for is made.

Maybe some additional enrollment and we'll see how that goes for the next few months and after that we'll be able to provide some more color on timing.

Laura would you like to add anything more to that please.

I think in general we're in a very tight alignment.

Or take for this now.

I think that what we've seen early on is that.

The accrual is very closely following.

The epidemiology that we had before we started the study so.

There have been no surprises to date.

Thanks.

Excellent. Thank you both that's a product congrats again.

Thank you. Thank you and one moment for our next question.

Okay.

Our next question comes from the line of Boris <unk> with Cowen. Your line is open. Please go ahead.

Alright.

Congratulations on excellent progress it's up two questions on my end first do you have data to show and what line of therapy is being used and second are you doing work on Tacoma epidemiology in general and if so when can we better get a better understanding of how many patients that really are out there.

Yes, Brendan would you like to take those two questions, yes sure <unk>. Thanks for the question.

As far as data.

As I've said before of course, the data is pretty scattered here because of the.

Lack of FTE data, but also the claims data is very unclear.

What I will say is we do tracking studies right and we track a random sample of.

The oncology community in the U S and see what their intent to prescribe is that way kind of follows what you would expect from an early launch right. We're responsive from physicians who've used the drug say that they've used it in the late line later line settings early on but thats starting to shift very quickly to the frontline right. So I think okay.

And early on.

You would you would expect a lot in the second third line setting, although we don't have a specific number but based on the market research. It looks like your north of starting to get to <unk>.

50% to 60% or so of the frontline penetration again, that's just based on market research. That's not based on claims data hopefully we have better claims data as we go forward, but because of the lack of codes for Tacoma that also becomes pretty difficult, but I think I would just say it's trending in the right direction.

As far as evolution from later lines to the frontline setting.

I wouldn't expect too many newly diagnosed <unk> patients going forward not to see <unk> in the frontline setting. It just takes it takes time.

Got it but hopefully that helps.

And then just not to comment forgive me allergy in general.

Many patients are out there.

Again, I think it's a little too early for that Boris for the same reasons I described I think the best which we try to provide color on is were north of 90 accounts as of the end of Q3.

And I think sometimes that's not a perfect.

Indicator of the number of patients because some patients do get a diagnosis somewhere and go elsewhere for their treatment right, but it gives you I think the number of accounts gives you a rough idea of individual accounts somewhat can be associated with an individual patient and it's the best indicator, we have still early though Boris.

I'd like to get at least 12 months under our belt of launch to really start seeing where do we sit within that range that we've provided of 100 to 300.

Yes.

Patients I think it would be inappropriate for me now to kind of comment on a specific number but hopefully that helps alright.

Alright, Thank you very much.

Thank you and one moment for our next question.

And our next question comes from the line of Joseph <unk> with Piper Sandler. Your line is open. Please go ahead.

Hey, guys. Thanks.

Thanks, so much for taking my questions here, maybe one quick one from me on that aggressive combo I guess, when we think about lung cancer and colorectal cancer is there any reason to think why one tumor might be more amenable to this combination strategy and I guess, along those lines, whether there are co alterations with GE.

<unk> see that make the most sense and I guess I ask that is I look at some of the preclinical data you've presented.

And the tumor types with the cooperation and <unk> 10 loss looking to generate them some pretty robust synergy weather.

Being a common alteration in colorectal cancer to keep in mind, so any thoughts there would be super helpful. Thanks.

Yes, Hi, this is Neil to say Hi, Joe.

So good question on that I can tell you at the outside we don't have all the answers because we have to look at a broad seer.

<unk>.

Of different types of cell lines in tumors due to figure that out and that type of work is still pending.

There is I mean, as we've seen from the kers data itself not necessarily the combinations.

Pending on whether it's lung colorectal or some other tumor the response can be different.

I would say that that possibly would also extend when youre doing the combination.

But obviously things like <unk> 10 loss and other mutations that could be more related to the <unk> pathway.

Have the potential to respond better to the combination just because you are suppressing them too so I think without.

Enough information I think thats the best we can say at this point, but we will continue to look.

At the different spectrum of.

No mutation profiles and see what ultimately works the best.

Okay, Great and then maybe just a quick follow up I guess, its a plan to enroll patients who are naive to <unk> inhibitors or those patients with prior exposure and then try to re sensitize them with the combination.

Actually actually the plan is for both.

It will be too once we've completed the phase one dose finding study.

Then there will be two separate arms, one for <unk> and one for exposed. So we will get an idea of very clearly of how the combination helps.

Particularly in the <unk>.

Previous resistant or expose patients.

Okay, great. Thanks, so much for taking my question.

Thank you and one moment for our next question.

Okay.

And our next question comes from the line of Amit <unk> with Ladenburg. Your line is open. Please go ahead.

Good morning team. Thank you so much for taking my question and congrats on the progress My first question will be on the PRL.

I was curious what is the feedback you get from.

From physicians and patients and then you might see the duration of response data that you commented on it right.

Brendan.

I'm, sorry, I heard the first part broke up a little bit here, you're saying what do we heard from patients and physicians are I'm, sorry can you clarify that.

I was curious about the real real world patients.

Feedbacks.

Thanks.

Yes, no listen I think we've had.

We've had a lot more physician feedback then patient feedback, but certainly I think it's positive on both fronts now Unfortunately.

Depending on where a patient is not not every patient.

Get to the door at the maximal benefit depending on second line third line as we've discussed and certainly I think we can see.

And here that.

<unk> of patients are doing quite well from the physician side.

As we said in the past I think the the feedback has been overwhelmingly positive obviously.

These physicians, who treat Tacoma patients are extremely excited to have an approved therapy, especially one that's a recommended by the CCN guidelines, but certainly from the data as I've said before they are impressed I mean, they see this as a very differentiated drug along all aspects. So impressed by the 40% response rate.

Also the disease control rate of over 70%, but most differentiating as we've mentioned before is the duration of response and the duration continues to be the most differentiating aspect here and I think we're starting with the evolution from the launch of the bolus to now.

<unk> in frontline I think we're starting to see that in the numbers again.

What we can extrapolate as far as duration of therapy, So I couldnt be more happy with the acceptance of the clinical profile of the drug also from a safety perspective, right as we said before.

Physicians are quite familiar with managing inventory inhibitors and they see the profile is predictable and manageable right and I think that's incredibly important the last thing is in the prepared remarks market access continues to be very positive.

North of 85%.

For covered lives and.

That has continued to grow since early on and continues to be impressive so hope that helps.

Absolutely Hasbro brands and so I would also like to ask about the ex U S. Commercial last part is there any update on the A&D side or are we going to see any partnerships ex U S.

Yes, hi.

This is neill I can take that question on the EMEA front.

I think we had mentioned earlier on our earlier in the year that we were looking for scientific advice.

Waiting to complete that procedure. So we have in fact completed that and.

There is no restrictions.

That were.

Scene and that advice and that if we did want to do so we could file an MAA with the current trial as we have it.

Our registration trial in the U S. So that's behind Us now.

I think where we sit at this point is to evaluate.

So the full scope of what it takes to launch a drug in Europe .

And we're evaluating the business case of that.

As we speak so I think sometime in the future we would have some more color on that.

Okay.

Thank you so much for taking my questions.

Thank you and I'm showing no further questions at this time I'd like to hand, the conference back over to Neil Desai for any further remarks.

Hello, all and thank you for joining us on today's call. We really appreciate your time and look forward to the opportunities in the future to provide additional updates on our progress have a great day. Thank you.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

The conference will begin shortly to raise Johan during Q&A you can dial one one.

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The conference will begin shortly.

As Johan during Q&A, you can dial one one.

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Good day and thank you for standing by welcome to the <unk> Bioscience, Inc. Third quarter earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need a press star one one on your telephone please be advised that today's conference is being recorded.

I would like to hand, the conference over to your host today, Martha Graham Senior Vice President Investor Relations and corporate Communications. Please go ahead.

Thank you good morning, and welcome to the antibody with <unk> Conference call to review results and provide an update on the third quarter of 2022.

Joining me on the call today is our founder and CEO , Neil Desai, who will provide an overview of activity during the quarter.

With that Brendan Delaney, our Chief operating officer, who will give us an update on our early commercial progress.

Next will be our chief Medical officer, Dr. Loretta E trade, who will give a brief update on our clinical progress.

Led by our CFO , Scott Rockefeller with a review of our financial performance during the period.

We will open the line for questions at the end of the call following closing comment.

Before we get started 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 filing with the Securities and Exchange Commission, which can be found at www SEC Gov.

On our website at Www Dot Addie bio dot com.

In addition, any forward looking statements made on this call represent our views only as of today November nine 2022, and should not be relied upon as representing our views as of any subsequent date.

We specifically disclaim any obligation to update or revise any forward looking statements.

With that I will turn the call over to Neal for his opening statements Neil Thank.

Thank you Marci good morning, everyone and thank you for joining us today for the earnings results call for the third quarter of.

2022.

2022 has been a transformational time for IV. Following FDA approval in late 2021, we successfully launched our first product <unk> for the treatment of advanced malignant B coma in early 2022.

We drove forward a registration directed trial precision one in solid tumors, having PSC one <unk> two in activating alterations.

Completed a pipe financing of $72 $5 million that extends our runway into 2025, we initiated a collaboration with <unk> therapeutics for a new combination clinical study in patients with Prs <unk> mutations as part of the strategy to expand indications for Cairo, and we grew the company to over <unk>.

Employees with a stellar leadership team now in place.

All of this progress positions us extremely well for the next phase of growth and operational excellence is a multi stage precision oncology company.

As you may have seen in our announcements out last evening beginning at the start of the new year on January one 2023, we are planning a management transition and realigning our leadership structure to reflect our recent progress. This will allow me to move into the role of executive Chairman, while our current CEO Brendan Delaney.

We will transition to president and CEO .

I've been fortunate to work very closely with Brendan since he joined US as Chief operating officer in September 2021.

Since that time has proven track record and committed leadership have been instrumental in building the organization, achieving our milestones and preparing for the growth that lies ahead.

We're at the perfect time for this transition and I am pleased to welcome him into this new role.

One of the larger targeted oncology indications.

Gently strengthening our balance sheet.

This allows us to further extend our cash into 2025, not only getting us through the continued commercialization of firearm Docomo <unk>.

And the completion of the precision <unk> trial, but also enabling us to continue to evaluate strategies for broadening viral indications beyond pre coma and TSV, one and two in activating alterations.

Our commercial success with Fireeye and <unk> continues with a 24% increase in net product sales over the second quarter.

We have seen increasing adoption in the community setting and key uptake in our target regions, which are indications of our progress made during the quarter.

On our tumor agnostic precision one study we saw continued advancement during the quarter in patient enrollment and site initiation with numerous clinical centers and just in time sites now opened.

As a reminder, this is a prospectively design registration directed trial.

We are encouraged by our progress and are on track to provide preliminary data on a meaningful number of patients in the first half of 2023.

Loretta will join us shortly with commentary on our progress on the clinical front in the third quarter and our progress to date.

Lastly, at our core RV was built around the central ideas that are best in class <unk> inhibitor could unlock the broad promise of the MTR pathway itself, both as a potent single agent in indications like the coma and TSV, one and two in activating alterations.

But also in combination with other agents.

A few weeks ago, we announced a clinical collaboration with Novartis is a leader in <unk> inhibition to evaluate the combination of other aggressive and natural elements in <unk> mutant non small cell lung cancer and other tumors.

The <unk> pathway is often activated in patients with <unk> mutation and may contribute to adaptive resistance to <unk> inhibitors. So this combination strategy is expected to improve outcomes for these patients.

<unk>.

Thanks, Neal and good morning, everyone.

I'm honored to have been selected to lead this organization.

I am excited about the opportunity to continue working with Neil and the entire team here in the CEO role and I look forward to what we can accomplish together as we prepare for launching in PSC, one two inactivating mutations a sizable tumor agnostic oncology indications.

Our team is functioning at a very high level right now and our future is bright I.

I feel very optimistic about our trajectory and our continued execution as we advanced our precision one trial and further expand the clinical opportunities with Phi Arrow.

I couldnt be more pleased with the performance our team has demonstrated and it's energizing to consider the potential achievements that lie ahead.

Our commercial oncology franchise is growing and I believe we are well positioned to achieve our goal of expanding <unk> indications and continue to provide therapeutic benefit to patients in need.

Let me turn now to our oncology franchise.

In the third quarter of 2022, our second full quarter of sales of <unk>, we were happy to see steady growth in demand. Despite the unpredictability of sales in the summer months.

Insights from our recent launch tracking survey show very strong brand awareness message recall product perception and intent to prescribe among physicians, who treat <unk> patients.

In the community setting the uptick continues to increase now accounting for about 60% of sales overall.

Further we are promoting our science at key medical meetings, like <unk>, and <unk>, which we believe further expand multi brand and company awareness.

As of September 30, there were.

More than 90 unique accounts ordering <unk> up approximately 50% from last quarter with a reorder rate still exceeding 80% across all ordering accounts.

Adoption in the academic treatment centers remains strong and we continue to be impressed by the fact that almost half of ordering accounts. Since launch are now represented by those in the community treatment setting.

Our market access team continued to deliver broad patient access to <unk> in the third quarter.

We are closely monitoring payer metric and I am happy to report that as of September 30th Payors covering approximately 85% of commercial lives in the U S market have reviewed and adopted a formal <unk> public policy.

This rapid payer progress combined with a strong suite of patient support resources available for our <unk> program has continued to provide strong patient access to ferro since FDA approval.

Our team is excited about what is to come as we head into 2023 and I personally could not be more enthusiastic about my expanded role and helping to lead this team for future success.

Thank you I'll now turn the call over to Loretta to discuss the progress of our clinical program Loretta.

Thank you Brandon.

In the third quarter, we've continued to see good progress in our ongoing precision lung tumor agnostic trial as the number of open sites increased along with access to patients both in cancer centers of excellence as well as in the community setting.

We have achieved our goal for the year of opening the trial in at least 20 major cancer centers and upward of 120 treatment sites in the United States.

Staffing shortages due to TV continued to impact most centers, causing widespread startup delays.

Spike this patient accrual remains on track as projected reflecting hard work of our dedicated team.

Our partnerships with three of the leading next generation sequencing companies have been successful in affordable access to patients in community based practices.

Using these enables us to routinely identified patients with TFC, one or tier two in activating alterations who are eligible for the precision <unk> trial.

We have broad geographic coverage in the United States and continue to leverage the NGF providers internal physician networks to locate and identify new potential patients on an ongoing basis.

Importantly, we have finalized our partnership with U S oncology and have begun to identify patients from their broad community base.

Using U S oncology Star program, we can rapidly activate individual site once a patient is identified who qualifies for the trial.

We are still relatively early in the process, but our multifaceted approach to rapidly identifying appropriate patients with TFC, one or TFC and activating alterations who may benefit from trial participation appears to be working.

We continue to believe that full patient enrollment into the study will be completed within 24 months from first patient treated.

As a cross functional team, we have begun conducting widespread print and electronic awareness campaigns.

Decision one study in order to increase visibility to the entire oncology community.

Additionally, we are now working with Marathi to initiate an open label phase one two trial to determine the optimal and recommended phase two dose for the combination of that aggressive and thats your alignment in patients with Kers, GE 12, <unk> mutant non small cell lung cancer.

Or in other solid tumors.

We recently presented preclinical data on the combination of K Ras inhibitors of Napster alignment at the ACR NCI <unk> molecular targets meeting in October which laid the foundation for our partnership on combination strategies to treat non small cell lung cancer and other solid too.

Sure.

The preclinical results presented demonstrate that napster alignment has the potential to significantly improve the antitumor activity of K Ras inhibitors.

<unk> further exploration of the potential for these combination treatment options.

We are continuing to evaluate additional indications for <unk>, either as single agent or in combination and have been gratified by the level of interest in our conversations with the oncology community.

I will now turn it over to Scott for a financial update Scott.

Thanks, Brett and good morning, everyone.

We had another strong quarter as we head toward the end of 2022.

As Neal mentioned in his opening remarks, we completed the $72 5 billion pipe financing in September .

Well capitalized ending the third quarter with cash cash equivalents and short term investments of $183 million, which we expect to fund operations into 2025.

<unk> net product sales amounted to $4 2 million for the quarter, representing a 24% increase over Q2.

Research and development expenses for the quarter increased to $8 8 million.

As compared to $5 8 million in the prior year quarter to $7 7 million in the second quarter.

This increase was primarily related to the continued progress of the ongoing precision <unk> trial and the build out of the R&D organization.

Selling general and administrative expenses for the third quarter were in line with the second quarter at $9 9 million compared to $7 4 million in the same period in 2021.

This increase was primarily due to the buildout of our commercial operations and infrastructure and increased marketing expenses related to the commercial launch of <unk>.

Net loss for the third quarter was $14 5 million.

Compared to $87 1 million in the third quarter of 2021.

The prior year quarter included the noncash impairment charge of $74 2 million related to the acquired contract intangible assets incurred in conjunction with the <unk> merger.

For more information a detailed discussion of the results reported on this call will be provided in our 10-Q to be filed later today.

I'll now hand, the call back to Neil for his closing comments Neil.

Thanks Scott.

As you've heard today our efforts in 2022 had led us to continued advancements throughout the organization. While we've achieved many corporate milestones. Our focus continues to remain on the patients we serve and we're encouraged by the impact <unk> is having on People's lives and look forward to furthering its potential benefit to patients.

Need.

With that we can open the line for questions operator. Thank.

Thank you if you have a question at this time. Please press star one on your telephone one moment, while we compile the Q&A roster.

Our first question comes from the line of Roger song with Jefferies. Your line is open. Please go ahead.

Great.

For the for the great color.

For the Gallo questions a couple from US the first one is.

So you start your larger to draw.

Okay.

Yes, Hi, this is Neil decide Brendan would you like to take that question. Please yeah sure Hey, Roger how are you. Thanks for the question Ross.

Roger It's a little too early as we have said I'd like to get at least a year or so under our belt before we start predicting steady state as you recognize the growth continues and I think a lot of the trends.

The breadth of adoption is particularly.

Impressive to me as is the adoption in the community setting as you've noticed from the first.

Partial quarter in Q1 to Q2, now Q3 approaching 60% of the ordering accounts in the community setting as is far.

Helen above what I expected so all of the trends new accounts over 90, as we stated in if you track that from early on continuing just to show good growth I don't expect that to stop anytime soon so I'm not going to give a prediction on when it goes to the steady state a couple of things I will say about the launch evolution in your.

The bolus, we're starting to recognize that again, it's early and we're not going to give a number because of the kind of rough data that we work with I would say the duration of therapy starts to look like its trending in the right direction. As you would expect right. If you have a bolus of patients in early patients coming on as we said you have.

To meet those patients where they are in their treatment path.

Right and sometimes that means they are heavily pre treated where you might expect a shorter duration, we're starting to see the turnover of that group into more frontline penetration so newly diagnosed <unk> patients and as that starts to turnover, we expect to see longer duration again, it's early but you are starting to see that expected.

Transition and positive trends in duration.

Hope that helps.

Yes, that's excellent.

Great to hear for the trend.

Just another question for the precision study PSC went into Q2, just curious I know you have been opening a lot of the new sites.

Just curious.

How did that align with the epidemiology, because you know so you'll get a pretty decent job for characterized the epidemiology.

Ken perhaps maybe 12000 plus.

What you see one or two how did that.

How do you see that the real world that that's my first part of the question. The other one is.

Your reporting the initial data first half next year, so how should investors interpret that data and do you have any internal bar to hit in order to make a go no go decision from there. Thank you.

Yes, Hi, this is Neil I can take a little bit of that question and then pass it onto Loretta.

The first part of your question was around the epidemiology and.

Enrollment.

And we are seeing that indeed, there is.

There is a good number of Trc one in PSC to patients that are out there and we know this through our relationships with the NGL providers.

And we can follow all of those patients.

And then eventually when they are ready, we can track them and put them on the trial and so theres definitely.

So our lives up to its expectations in terms of the number of patients and epidemiology.

So that's the first part of your question in terms of the dataset.

We are still on track to release data in the first half so nothing has changed there.

What we're waiting for is.

Maybe some additional enrollment and we'll see how that goes for the next few months and after that we'll be able to provide some more color on timing.

Laura would you like to add anything more to that please.

I think in general we're in a very tight alignment.

And our take for this now and I think that what we've seen early on is that.

The accrual is very closely following.

The epidemiology that we had before we started the study so.

There have been no surprises to date.

Thanks.

Excellent. Thank you both that's a part of that convert.

Congrats again.

Thank you. Thank you and one moment for our next question.

Our next question comes from the line of Boris <unk> with Cowen. Your line is open. Please go ahead.

Alright.

Congratulation on the excess progress okay. So two questions on my end first do you have data to show and what line of therapy is being used and second are you doing work on Tacoma epidemiology in general and if so when can we better get a better understanding of how many patients they really are out there.

Yes, Brendan would you like to take those two questions, yes sure <unk>. Thanks for the question.

As far as data.

As I've said before the data is pretty scattered here because of the <unk>.

Lack of FB data, but also the flame shape is very unclear.

What I will say is we do tracking studies right and we track a random sample of.

The oncology community in the U S and see what their intent to prescribe is so that way it kind of follows what you would expect from an early launch right where responsive from physicians, who use the drug say that they've used it in the late line later line settings early on but thats starting to shift very quickly to the frontline right. So I think again early.

<unk>.

You would you would expect a lot in the SEC.

Third line setting, although we don't have a specific number but based on the market research it looks like your north of starting to get to.

I think I would just say it's trending in the right direction.

As far as evolution from later lines to the frontline setting.

I wouldn't I wouldn't expect too many newly diagnosed per coma patients going forward not to see.

<unk>.

<unk> in the frontline setting it just takes it takes time.

Got it but hopefully that helps.

And then just not to comment pick immunology in general.

How many patients are out there.

Again, I think it's a little too early for that Boris for the same reasons I described I think the best which we try to provide color on is were north of 90 accounts as of the end of Q3, and I think sometimes that's not a perfect.

Indicator of the number of patients because some patients do get a diagnosis somewhere and go.

<unk> for their treatment right, but it gives you I think the number of accounts gives you a rough idea of individual accounts somewhat can be associated with an individual patient and it's the best indicator. We have still early though Boris I would like to get at least 12 months under our belt of launch to really start seeing where.

We sit within that range that we've provided of 100 to 300.

Patients I think it would be inappropriate for me now to kind of comment on a specific number but hopefully that helps.

Great. Thank you very much.

Thank you and one moment for our next question.

And our next question comes from the line of Joseph <unk> with Piper Sandler. Your line is open. Please go ahead.

Hey, guys.

<unk> see that make the most sense and I guess I ask that is I look at some of the preclinical data you've presented.

And the tumor types with the cooperation <unk> 10 loss looking to generate some some pretty robust synergy weather.

That being a common alteration in colorectal cancer to keep in mind, so any thoughts there would be super helpful. Thanks.

Yes, Hi, this is Neil to say hi.

Hi, Joe.

So good question on that I can tell you at the outset, we don't have all the answers because we have to look at a broad series of.

Of different types of cell lines in tumors due to figure that out and that type of work is still pending.

There is I mean, as we've seen from the QRS data itself not necessarily the combinations, depending on whether it's lung colorectal or some other tumor. The response can be different so I would say that.

Possibly <unk> would also extend when youre doing the combination.

But obviously things like <unk> 10 loss and other mutations that could be more related to the <unk> pathway.

Have the potential to respond better to the combination just because you are suppressing them Tau.

I think without.

Enough information I think that's the best we can say at this point, but we will continue to look at.

At the different spectrum of <unk>.

The patient profiles and see what ultimately works the best.

Actually actually the plan is for both so there will be two once we've completed the phase one dose finding study.

And then there will be two separate arms, one for naive and one for exposed so we will get an idea of very clearly.

How the combination helps.

Particularly in the <unk>.

Previous resistant or expose patients.

Okay, great. Thanks, so much for taking my question.

Thank you and one moment for our next question.

And our next question comes from the line of Amit <unk> with Ladenburg. Your line is open. Please go ahead.

Good morning team. Thank you so much for taking my question.

Congrats on the progress my first question will be on the PRL.

I was curious what is the feedback from.

From physicians and patients and then we might see the duration of response data that you commented on this Brendan.

Brendan.

I'm, sorry, I heard the first part broke up a little bit here, you're saying, what do we heard from patients and physicians or I'm, sorry can you clarify that.

I was curious about your real real world patients.

Feedbacks.

Thanks.

Yes, no listen I think we've had.

We've had a lot more physician feedback then patient feedback, but certainly I think it's positive on both fronts now Unfortunately.

Depending on where a patient is not not every patient.

Get to the door at the maximal benefit depending on second line third line as we've discussed and certainly I think we can see.

And here that.

Number of patients are doing quite well from the physician side.

As we've said in the past I think the the feedback has been overwhelmingly positive obviously.

These physicians, who treat glaucoma patients are extremely excited to have an approved therapy, especially one that's recommended by the end CCN guidelines, but certainly from the data as I've said before they are impressed I mean, they see this as a very differentiated drug along all aspects. So impressed by the 40% response rate.

Also the disease control rate of over 70%, but most differentiating as we've mentioned before as the duration.

Of response and the duration continues to be the most differentiating aspect here and I think we're starting with the evolution from the launch of the bolus to know penetration in frontline I think we're starting to see that in the numbers again footwear.

We can extrapolate as far as duration of therapy, So I couldnt be more happy with the acceptance of the clinical profile of the drug also from a safety perspective, right as we've said before.

Physicians are quite familiar with managing inventory inhibitors and <unk>.

They see the profile is predictable and manageable right and I think that's incredibly important the last thing is in the prepared remarks market access continues to be very positive.

North of 85%.

For covered lives and I think that can continue to grow since early on and continues to be impressive. So hope that helps.

I believe hospital Brendan So I would also like to ask you about the ex U S. Commercial last part is there any update on the <unk> side or are we going to see any partnerships ex U S.

Yes, hi.

This is neill I can take that question on the <unk>.

EMEA front.

I think we had mentioned earlier on our earlier in the year that we were.

For scientific advice.

We're waiting to complete that procedure. So we have in fact completed that and.

There is no restrictions.

That were.

Scene and that advice and that if we did want to do so we could file an MAA with the current trial as we have it.

Registration trial in the U S. So that's behind Us now.

I think where we sit at this point is to evaluate.

So the full scope of what it takes to launch a drug in Europe .

And we're evaluating the business case of that.

As we speak so I think sometime in the future we would have some more color on that.

Yes.

Thank you so much for taking my questions.

Thank you and I'm showing no further questions at this time I'd like to hand, the conference back over to Neal <unk> for any further remarks.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

Q3 2022 Aadi Bioscience Inc Earnings Call

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