On November 10, 2021 Aadi Bioscience, Inc. ("Aadi") (Nasdaq: AADI), a clinical-stage biopharmaceutical company focusing on precision therapies for genetically-defined cancers with alterations in mTOR pathway genes, reported financial results for the three and nine months ended September 30, 2021 and provided a general business update (Press release, Aadi Bioscience, NOV 10, 2021, View Source [SID1234595663]).
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Neil Desai, Ph.D., Founder, Chief Executive Officer and President of Aadi, commented, "Following the successful merger completed in the third quarter, we are now fortified on all fronts with a strengthened balance sheet and expanded management team ahead of our November 26 Prescription Drug User Fee Action ("PDUFA") target date for FYARRO. With a sizeable PIPE financing that closed in connection with our merger with Aerpio, we can effectively deploy capital toward the commercialization of FYARRO in advanced malignant PEComa and for our planned tumor-agnostic registrational trial in patients with solid tumors harboring inactivating alterations of TSC1 and TSC2 genes in the mTOR pathway. In addition, we are also planning for new studies to investigate ABI-009 in combination with other targeted agents in different cancers."
Key Business Updates for the Third Quarter:
Merger and PIPE Financing
On August 26, 2021, Aadi merged with Aerpio Pharmaceuticals, Inc., a publicly traded biotechnology company (previously traded on the Nasdaq Capital Market under "ARPO"), with Aadi being the surviving entity. As part of the merger, each share of Aadi common stock was converted into the right to receive 0.3172 shares of Aerpio common stock following a 15:1 reverse split of Aerpio’s common stock. Aadi’s common stock is traded on the Nasdaq Capital Market (Nasdaq) under the ticker symbol "AADI".
Concurrent to the closing of the merger, the combined company closed the previously announced $155 million private investment in public equity (PIPE) financing of its common stock.
Immediately following the merger, PIPE financing, and reverse split, Aadi had approximately 20.8 million shares of common stock outstanding, with prior Aadi stockholders collectively owning approximately 29.2% of the combined company, prior Aerpio stockholders owning approximately 15.2% of the combined company, and the PIPE investors collectively owning approximately 55.6% of the combined company, each on a fully-diluted basis.
NDA Acceptance
In July, the U.S. Food and Drug Administration (FDA) accepted Aadi’s New Drug Application (NDA) for its nanoparticle albumin-bound mTOR inhibitor, FYARRO (sirolimus albumin-bound nanoparticles for injectable suspension, nab-sirolimus ABI-009) for the treatment of advanced PEComa, and has granted the company Priority Review status with a PDUFA target action date of November 26, 2021.
Key Leadership Appointments
In September, Aadi announced key appointments of an additional independent board member as well as a Chief Operating Officer:
Emma Reeve was appointed to Aadi’s Board of Directors and as chair of the Audit Committee. Ms. Reeve brings over 25 years of value creation in pharmaceutical, medical device and bio-pharma service companies and a successful track record of transitioning companies from private to public.
Brendan Delaney was appointed to the role of Chief Operating Officer. Brendan has had an established career in oncology-focused commercial leadership roles, launching multiple groundbreaking new products and building effective and cohesive commercial teams.
Recent Updates Following the Close of the Quarter:
In the fourth quarter, the Company made two more key executive appointments:
Loretta M. Itri, M.D., FACP was appointed to the role of Chief Medical Officer. Dr. Itri’s extensive career spans clinical and regulatory global-leadership roles at both major pharmaceutical and biopharmaceutical companies. Most recently, Dr. Itri was Chief Medical Officer at Immunomedics, Inc., where she oversaw the development program and approval of TRODELVY, the first TROP-2 directed antibody-drug conjugate for the treatment of unresectable locally advanced or metastatic triple-negative breast and urothelial cancers. Immunomedics was subsequently acquired by Gilead Sciences, Inc.
Scott M. Giacobello, CPA, was appointed to the role of Chief Financial Officer and Treasurer, effective November 28, 2021. Most recently, Mr. Giacobello was the Chief Financial Officer of GW Pharmaceuticals plc until its $7.2 billion acquisition by Jazz Pharmaceuticals. Mr. Giacobello joined GW Pharmaceuticals in 2017 and played a key role in the buildout of the U.S. operations and commercial readiness for the company. While Chief Financial Officer, Mr. Giacobello was instrumental in devising the financing strategy to support the development, approval and highly successful launch of GW’s lead product, EPIDIOLEX, which had sales of over $296 million in its first full year of commercialization. Mr. Giacobello also raised over $620 million via follow-on offerings prior to the company’s acquisition by Jazz Pharmaceuticals.
Also in October, the Company presented at a medical conference and announced the publication of its registrational study of FYARRO (ABI-009) in a major medical journal:
Lead researchers at Aadi presented a poster at the Virtual AACR-NCI-EORTC (Free AACR-NCI-EORTC Whitepaper) International Conference on Molecular Targets and Cancer Therapeutics (EORTC-NCI-AACR) (Free ASGCT Whitepaper) (Free EORTC-NCI-AACR Whitepaper) held from October 7th -10th. The poster consisted of preclinical data evaluating nab-sirolimus (ABI-009) in PTEN-deleted and TSC2-deleted cancer models and demonstrated that ABI-009 showed significantly higher tumor accumulation, increased inhibition of downstream mTOR targets S6 and 4EBP1 and greater tumor growth suppression in comparison with other mTOR inhibitors sirolimus and everolimus at equal dose.
The Company also announced the publication of "nab-Sirolimus for Patients With Malignant Perivascular Epithelioid Cell Tumors" in the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper)’s Journal of Clinical Oncology based on the results of the AMPECT registrational trial. The authors concluded that investigational nab-sirolimus (ABI-009), if approved, may represent an important new treatment option in malignant PEComa, a rare cancer and aggressive form of sarcoma, with no currently approved treatment.
Third Quarter 2021 Financial Highlights
As of September 30, 2021, cash and cash equivalents totaled $161.4 million, an increase from $4.5 million as of December 31, 2020, resulting primarily from the consolidated capital and proceeds received from the PIPE financing. Based on our current plans, we expect cash and cash equivalents to fund operations into 2024.
For the three months ended September 30, 2021, operating expenses totaled $87.3 million, an increase of $84.4 million compared to $2.9 million for the same period in 2020. For the nine months ended September 30, 2021, operating expenses totaled $95.4 million, an increase of $84.0 million compared to $11.4 million for the same period in 2020. The increase in operating expenses for the three- and nine-month periods ended September 30, 2021, is due primarily to a non-cash impairment charge related to an acquired contract intangible asset of $74.2 million incurred in conjunction with the merger compared to the same period in 2020.
Research and development expenses for the three months ended September 30, 2021, increased approximately $3.4 million, to $5.8 million compared to $2.4 million for the same period in 2020. Research and development expenses for the nine months ended September 30, 2021, increased approximately $2.7 million, to $12.4 million compared to $9.7 million for the same period in 2020. This increase was primarily the result of increased expenses associated with our clinical drug manufacturing process in the three and nine-month periods ended September 30, 2021, compared to the same periods in 2020.
General and administrative expenses for the three months ended September 30, 2021, increased approximately $6.9 million to $7.4 million compared to $0.5 million for the same period in 2020. General and administrative expenses for the nine months ended September 30, 2021, increased approximately $7.1 million, to $8.8 million from $1.7 million, in the nine months ended September 30, 2020. This increase was primarily the result of increased personnel expenses, including approximately $2.0 million of compensation expense related to former Aerpio executives as a result of the merger.
Net loss attributable to common stockholders for the three and nine months ended September 30, 2021, was $87.2 million and $94.7 million, respectively, primarily driven by the non-cash impairment charge of $74.2 million discussed above.