Good day and thank you for standing by. Welcome to the Aadi Bioscience First Quarter 2024 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. Please be advised that today's conference is being recorded. Now I'll turn the call over to Audrey Gross, Head of Corporate Communications for Aadi Bioscience. Ms. Gross, please go ahead.

Thank you. Good morning and welcome to the Aadi Bioscience conference call to provide an operational update and review results for the first quarter of 2024. On the call is Dr. Dave Lennon, our President and CEO; Scott Giacobello, our CFO; and our Chief Medical Officer, Dr. Loretta Itri. Today, we will provide an overview of operational activity and financial results for the first quarter of 2024. We will open the line for questions at the end of the call following closing comments. 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 filings with the Securities and Exchange Commission, which can be found at www.sec.gov or on our website at www.aadibio.com. In addition, any forward-looking statements made on this call represent our views only as of today, and should not be relied upon as representing our view 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 Dave for his opening statements. Dave?

Good morning, everyone, and thank you for joining us today to review our financial and operational results for the first quarter of 2024. At Aadi, we're focused on unlocking the full potential of mTOR inhibition by uniquely combining nab technology in the potent mTOR inhibitor, sirolimus. We believe nab-sirolimus has the potential to deliver deeper inhibition of the mTOR pathway and ultimately better outcomes for people living with cancers that are dependent on that pathway. Today, I'm pleased to announce that a registration-intended PRECISION1 trial is now fully enrolled across a broad array of tumor types. This is an important milestone as we seek to understand the potential of nab-sirolimus for patients with solid tumors harboring either TSC1 or TSC2 inactivating alterations, a sizable market. Our latest internal analysis indicates there are approximately 16,000 patients with these mutations across a variety of tumor types, with mutations roughly evenly split between genes. Each mutation represents a potential multibillion-dollar total addressable market for nab-sirolimus. TSC1 or TSC2-driven cancers are found across a wider range of tumor types, clustering in lung, gastrointestinal, genitourinary, breast and gynecological locations and are often difficult to treat. We believe PRECISION1 is a cutting-edge trial, testing our innovative therapy, nab-sirolimus in these cancers. Although PRECISION1 is designed as a single trial, each arm is independently evaluated, providing us with the ability to assess one arm separately from the other. Given this design, PRECISION1 can effectively be viewed as two separate studies, each with its own outcome. As a reminder, in Q4, we provided top line results from a planned interim evaluation of the first 40 patients enrolled in PRECISION1. These data demonstrated sustained tumor reductions in a heavily pretreated population based on investigator-assessed responses in the first 40 patients across both arms. Of note, for the TSC1 arm, we reported an investigator-assessed overall response rate of 26%, which was within the range of our expectations. These responses appear to be early, deep and durable, which is especially noteworthy given this heavily pretreated population with a median of three prior lines of therapy. Lastly, these responses were seen across four different tumor types, potentially supporting a tumor-agnostic indication. I want to highlight that ongoing conversations with experts reinforce our view of the clinical significance of the responses we reported from the first interim analysis, especially in the late-line treatment in both patient groups. We continue to believe that should these results hold or improve in larger groups of patients, we have a path to submission and potential approval for TSC mutations. With the trial now fully enrolled, we remain on track for our next planned interim readout, which is expected in Q3 of 2024. This highly anticipated analysis will include a total of 80 patients, who have been followed for a minimum of six months and will evaluate the primary endpoint of the study, independently assessed overall response rate as opposed to our December interim analysis, which reported investigator-assessed responses. Looking ahead, we expect the study to be completed by the end of 2024 with full data in 2025. In addition to PRECISION1, the Phase II trials for two promising mTOR-driven cancer targets continue to enroll well. As a reminder on these two trials, the first is evaluating the therapeutic potential of nab-sirolimus in advanced or recurrent endometrioid-type endometrial cancer or EEC in combination with the aromatase inhibitor, letrozole. Endometrial cancer is the most common cancer of the female reproductive tract and one of the few cancers with increasing mortality. There are an estimated 10,000 cases of EEC diagnosed annually in the US alone. Prior clinical studies of mTOR inhibitors combined with letrozole have yielded promising results, and recent changes in the recommended standard-of-care for early-stage disease create a potential opportunity for this combination to be used in the first and second-line settings. The second trial is evaluating nab-sirolimus in neuroendocrine tumors, or NETs. NETs are rare, with approximately 3,500 cases a year. NETs have a historically low response rate to the treatment with oral rapalogs or other agents, which nonetheless are used clinically and recommended in treatment guidelines. In preclinical animal models, nab-sirolimus demonstrated improved target suppression relative to other mTORs, warranting further exploration of nab-sirolimus in the clinical setting for NETs. We're excited about this trial because it provides the opportunity to demonstrate what we believe is nab-sirolimus' best-in-class efficacy in a known mTOR-sensitive tumor type. Overactivation and dysregulation of the mTOR pathway is commonly found in various tumors, and the unique delivery and excellent safety profile of nab-sirolimus provides the opportunity to combat these difficult-to-treat cancers. As such, we think these are promising indications and are eager to present initial data from these open-label studies later this year. As a final update to our development plans, today, we announced that we have terminated our collaboration and supply agreement with Mirati, now BMS. That was evaluating the combination of its adagrasib, a KRAS selective inhibitor, and nab-sirolimus in KRAS-mutant non-small cell lung cancer and other solid tumors. At our request, we mutually agreed with BMS to discontinue this early phase trial, which enables us to prioritize the evaluation of nab-sirolimus in our ongoing Phase II trials for the promising indications of EEC and NETs. Turning now to FYARRO. FYARRO continues to perform well with net product sales for the quarter of $5.4 million. For a bit of context, this is a decrease from the prior year and reflects Q1 changes in distributor ordering patterns and fewer new commercial patient initiations in Q1 than the historical average. Swings in what is actually a very small number of patients may be due in part to cannibalization at top accounts, where we're seeing robust enrollment into our current clinical trials. We believe this will correct itself in subsequent quarters, and we expect a return to sales growth in Q2. FYARRO has cemented its position as the preferred treatment for malignant PEComa after just two years on the market. We have high penetration across academic and community settings and have seen the consistent addition of new accounts ordering FYARRO every quarter now, with more than 200 accounts ordering since launch. We are proud of the impact FYARRO has had and will continue to have for patients with this rare and aggressive cancer. With sustained commercial success of FYARRO, cash runway into Q4 2025 and a catalyst-heavy 12 months ahead of us, we are well positioned to realize our ambition of becoming a multi-indication precision oncology company. I will now turn the call over to Scott for updates on our financial progress.

Thanks, Dave. We ended the first quarter 2024 with $88.3 million in cash, cash equivalents and short-term investments. Responsible capital management, including measures implemented in early 2024 to streamline our operations and reduce costs, continue to support a healthy balance sheet that will fund operations into Q4 2025 based on current plans. FYARRO net product sales were $5.4 million for the first quarter, representing an 8.8% decrease from the prior year period. As Dave mentioned, this decrease was due in part to distributor ordering patterns in Q1, which we expect will correct in future quarters, as well as lower commercial patient initiations. Research and development expenses for the quarter increased to $13.6 million compared to $11 million in the prior year quarter. This increase is primarily related to the continued progress of the ongoing PRECISION1 trial, which is now fully enrolled, and the programs in endometrial cancer and NETs. Selling, general and administrative expenses for the first quarter were $10.6 million compared to $11.2 million in the same period in 2023. This decrease is due mainly to reduced legal and consulting expenses versus the prior year, offset in part by severance costs related to the streamlining of our operations. Net loss for the first quarter was $18.3 million compared to $15.2 million in the first quarter of 2023. For more information on our financial performance in the first quarter, a detailed discussion of the results reported on this call will be provided in our Form 10-Q to be filed later today. I'll now hand the call back over to Dave for his closing comments.

Thanks, Scott. I'm proud of the strides we've made already this year. We're making tremendous progress against our clinical development plans with two sizable markets in TSC1 and TSC2 inactivating alterations as well as other mTOR-driven cancers. We look forward to providing a highly anticipated two-thirds interim analysis from PRECISION1 in the third quarter and to sharing an early look at our Phase II trial later this year. Now we can open the line for questions.

Thank you. Our first question comes from Roger Song with Jefferies. Please go ahead.

Great. Thanks for the update and taking our question. Maybe just quickly on the EEC and NET. Curious about the expectations into the initial data readout later this year, particularly the patient numbers and how much efficacy we're going to see versus the safety, et cetera? How meaningful that data update will become? Thank you.

Great. Thank you, Roger. So on the EEC and NET trial, remember that these are two-part Phase II studies, and the initial Part 1s enroll approximately 10 patients in each trial. We anticipate we'll be able to report out early efficacy data and safety data on those initial Part 1s by the end of this year. Loretta, anything you would add to that?

Only that the recruitment is going well and as anticipated, and I don't think we're going to have any problem reaching the ends that have been determined in the Simon's 2-stage design. So, yes, I think we're on target to report our results, as Dave just mentioned.

Yes, Roger, we're very encouraged by both of these trials because there's been great interest in the community in these combinations and then exploring the potential of nab-sirolimus to improve upon what has been seen before with prior mTOR inhibitors in both of these spaces. So hopefully we'll see that pull through as we report out the first parts of this data. Thanks.

Yes, thank you. That's very helpful. And in terms of the FYARRO, the sales trajectory, understanding Q1 seems a little off compared to historical averages, but any color around the parameters in terms of the first-line use, duration on treatment, and maybe some repeat dosing for those existing patients? And maybe also curious about the feedback from the field from your PRECISION results, maybe some impact on FYARRO sales. Thank you.

Yes, sure. So two parts to that. Let me cover first, on the parameters we look at in terms of physician adoption, awareness, first-line uses, et cetera, all of those were extremely strong for us as late as we've looked at that data. And so we see no real changes in the community's attitude towards FYARRO and its use in PEComa. We are in a more steady-state situation with incremental sales growth, and we expect some variations quarter-to-quarter to occur. And as I think we indicated a little bit in Q4, we expected Q1 could be a lower quarter for us in the course of this year. Importantly, the adoption remains very robust, and it's really a small swing in new patient starts that has impacted FYARRO here. About half of that impact is driven by what we see in demand with new patient starts in some of our largest centers. These also correlate with the largest centers, where we've enrolled a large number of patients in PRECISION1 over the course of the last six to nine months. Recall that we have usually around 90 patients commercially on drug at any one time, and over the last nine months, we've recruited 80 patients into the PRECISION1 trial. Typically, clinical trials aren't of the same scale and magnitude as a commercial business. But in this case, we are more aligned in terms of what we're doing in the clinical trial side versus what's happening on the commercial side. Maybe I'll just let Scott talk about the distributor situation and then I would like to go to Loretta to talk a little bit about the physician responses to PRECISION1.

Yes, sure. Thanks, Dave. Yes, on the inventory side, as we noted, we saw some swings in distributed inventory in the quarter, which is we're at an unusually low level at the end of Q1 based on what we've seen in recent quarters. We do expect that that's going to work itself out over the next few quarters.

And then, Loretta, I just want a comment maybe on what we saw from investigators on the PRECISION1 interim results and their response and particularly how that led to recruitment.

Well, the responses that we saw at the first interim actually had virtually no impact on our accrual. The community remains very supportive of this study. We didn't miss a beat. Given the very advanced stage of many of these patients, remember that the median of prior therapies was 3 to 3.5, with many patients having received more than five prior regimens. To the community that treats these patients, the responses that we saw looked pretty good. Everyone remains enthusiastic, and we have not missed a beat in terms of our accrual. In fact, we had a small uptick. So I don't know if that's what you wanted me to say, Dave, but that's the reality.

I always want you to say the reality, Loretta. Thank you. Thanks, Roger. Any other questions?

No, that's helpful. Thank you. Thank you for taking the question.

Thanks. Operator, next question.

Thank you. One moment for our next question. Our next question comes from Joe Catanzaro with Piper Sandler. Please go ahead.

Hey, everybody. Appreciate you taking my questions. Just have a couple of quick ones. Maybe first following up on the FYARRO commercial dynamic. I guess I'm trying to understand this cannibalization phenomenon that you're describing. It sounds like—and maybe I'm just misunderstanding it—but it sounds like you're saying enrollment into PRECISION1 pulled away commercial PEComa patients. I'm trying to understand why that's the case, if that's the case. I think maybe I'm just totally misunderstanding it. So any help there, I appreciate it. And I have maybe one or two follow-ups.

Yes, sure. So Joe, it's hard for us to tell exactly what patients end up where. What we saw is that the orders coming through—this is an IV product, and therefore we don't get physician-level data, but we get institutional-level data, and what we saw was a correlation between reductions in commercial business at some of our largest accounts that often were highly correlated with our PRECISION sites with some of our largest enrolling PRECISION sites. At a patient level, we don't know exactly how that plays out, but we would anticipate that maybe a few of those patients were spontaneous use, like non-PEComa patients, that were being treated commercially, and that physicians took the opportunity instead of enrolling those patients in a commercial basis may have enrolled them into the clinical trial. It's not PEComa patients into clinical trial because that's obviously an exclusion criteria in this case. Recall that we're talking about swings of 10 patients that create the gap we saw in Q1, or less than 10 patients that create the gap we saw in Q1. It takes very few sets of decisions to swing the business that way. Now with Precision fully enrolled, the only option for patients looking for that last line opportunity in a non-promoted indication would be to go back to that commercial business.

Okay. Got it. That's helpful. Maybe just two quick clinical questions. I know you guys have said this would be your expectations, but wondering if you could confirm that within PRECISION1, the sort of baseline features for the full population align with the first 40 patients, meaning heavily pretreated, diverse set of tumor types. And then for the G12C decision to terminate that, was that based on any data that had emerged out of that trial? Thanks.

Sure. So the—on the baseline population, from what we can see, it's consistent with what we've seen before. But obviously, we haven't fully evaluated the data to that, and that will only come when we do the interim analysis on the fully cleaned and completed data set. The—and on the Mirati decision, that decision had nothing to do with efficacy or safety that we saw in that trial. In fact, we have very little data from that trial so far. It’s more a financial and strategic decision to focus on the endometrial program as well as the NET program. We're really excited about the potential for nab-sirolimus in those indications. Thanks, Joe. Any other questions?

Thank you. One moment for our next question.

Thanks, Joe. We'll go on to the next question.

Our next question comes from Tara Bancroft with TD Cowen. Please go ahead.

Hi. Good morning. So just want to follow up on the last question that Joe asked. How much difference in cost savings can we expect now over the next year or two now that you're ending this agreement?

Sure. Scott, do you want to comment on outlook for spending?

Yes. Tara, thanks for the question. Yes, we haven't shared that information, specific information on the individual program. There will be savings, but we haven't shared that information.

Thanks, Tara. Anything else?

No, I'm good. Thank you very much.

Okay. Operator, we can move to any other questions.

Our next question comes from Ahu Demir with Ladenburg. Please go ahead.

Good morning. Thank you for taking my questions. Two from us. First one, a follow-up to Roger's question. Could you provide more guidance on the EEC program? What are the benchmarks? And what would success look like in this interim analysis for this setting?

Super. Thanks for the question, Ahu. Loretta, would you like to comment on that?

Sure. Good morning, Ahu. So the—this is a Simon's 2-stage design. The first cohort is 10 patients, and we're pretty far along in accruing those folks. The second portion will be an additional 19 patients for a total of 29 patients in the study. It's designed to show on the basis of overall response. We're looking for a response rate that exceeds 20%. Our expectation, of course, is that it may be higher, but that would give you the kind of guidance I think you're looking for.

That sounds great. Yes, thanks for that, Loretta. My second question is regarding the Mirati collaboration. Based on our scientific understanding, there's a strong rationale between albumin uptake also, therefore, nab-sirolimus uptake in RAS-mutated cancers. So curious if you will be obtaining the clinical data and do you plan to pursue this setting in the future? Any RAS-mutated cancers and any aspect on that side?

I think, Ahu, we'll see how the data comes in on the patients that were enrolled in the trial and make that decision at a later point in time. Right now, we have no plans to expand into that area.

Got it. Okay. Thanks for taking my questions.

Super. Thank you. Operator, any other questions?

I'm showing no further questions at this time. I'd like to turn it back to Dave for closing remarks.

Great. Thank you. Well, thanks, everyone, for joining the call this morning. Thanks to Scott, Loretta and Audrey for supporting this. I wanted to remind everyone that we really had great progress over the course of this year, particularly around our clinical study and development programs. We have now fully enrolled our PRECISION1 trial and look forward to our two-thirds interim analysis in the third quarter of this year, which will be a major milestone for us in determining where we go next with TSC1 and TSC2 mutant cancers, which are really large opportunities for us to expand the nab-sirolimus portfolio. We’re also really excited about the progress we’ve seen in EEC and NETs enrollment and look forward to early updates on those programs later this year. Finally, we expect to return to growth for FYARRO in Q2 of 2024 and look forward to sharing updates on that as we progress our commercial business. Otherwise, thank you for joining the call today, and we look forward to further updates as we go through the year. Thanks, everyone. Bye now.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.