For the first time, we highlight Aadi Bioscience, Inc. (NASDAQ:AADI). This little development firm’s stock is in the ‘Busted IPO’ area. However, the stock is trading considerably below analyst price targets. The following research looks at the company’s pipeline and prospects.

Overview of the Business

Aadi Biosciences, Inc. is a clinical-stage biotechnology company located just outside of Los Angeles, California. The company’s primary emphasis is on discovering and commercializing precision treatments for tumors with genetically identified changes in mTOR pathway genes. The stock is now trading just above $7 per share and has a market capitalization of about $175 million.

FYARRO (nab-sirolimus) is the brand name of the company’s only approved medicine on the market. This product is made up of protein-bound sirolimus particles for injectable suspension (albumin-bound).

It was approved in late 2021 for persons with locally advanced unresectable or metastatic perivascular epithelioid cell tumor (PEComa). It will go on sale in February 2022. This is a very rare condition that affects only a few hundred new people each year.

Celgene licensed the molecule, which consists of rapamycin coated with albumin. The tumor cells are able to absorb the tumor-killing chemical using this way. In this sense, FYARRO operates quite similarly to paclitaxel. FYARRO costs over half a million dollars and has quickly gained market share as the standard of therapy for this rare disease, in which patients live only an average of a year. FYARRO sold $21 million in its first 13 months on the market. This includes $5.9 million in the first quarter of this year, a 12% increase over 4Q2022.

FYARRO is also being tested in different malignancies with known mTOR pathway activation by Aadi Biosciences. These include indications that are tumor-agnostic and target specific genetic abnormalities that activate the mTOR pathway.

The company is now undertaking a PRECISION 1 trial. This is a Phase 2 registration-directed study of FYARRO in patients with solid tumors that have pathogenic inactivating mutations in the TSC1 or TSC2 genes. TSC1 and TSC2 work together to generate a tumor suppressor complex that inhibits mTOR activation. PRECISION 1 is a tumor-agnostic trial that includes over a dozen tumor forms, including bladder and kidney cancer.

It is worth noting that no current medicines for TSC1 and TSC2 mutations are approved, despite the fact that some case studies have showed long-term results. PRECISION 1 should have 40 patients recruited and some intermediate data available by the end of the year. The final goal is to recruit roughly 120 patients in this trial, which the business wants to finish by the end of the first quarter of 2024. The first participant in this study received their dose in the first quarter of 2022. PRECISION 1’s topline readout should be available in 2024.

Analyst Remarks & Balance Sheet

Five analyst firms, including Piper Sandler and Jefferies, have renewed Buy/Outperform ratings on the company thus far in 2023. The proposed price ranges from $30 to $45 per share.

 

Currently, around 7% of the outstanding float in the shares is held short. So far in the second quarter of this year, the company’s Executive Chairman has sold little over $900,000 in shares. So far in 2023, there has been no insider trading in the stock.

The corporation had just over $150 million in cash and marketable securities on its balance sheet after generating a net loss of $15.2 million in the first quarter. Aadi burned through $21.4 million in cash in the first quarter to cover all operations, and management has claimed that the finance in place will see the company through to 2025 with the present timetable of planned activities.

Verdict

According to the three research firms that provide earnings/sales predictions for the company, revenues will increase by 65% to just over $25 million in FY2023, resulting in a medium loss of $2.51 per share. Similar losses are expected in FY2024, as revenues increase to little more than $30 million.

Obviously, Aadi will not be profitable with its current approved indication for FYARRO. PRECISION 1 is aiming for a significantly larger potential market (10,000 to 15,000 people in the United States). The trial’s ultimate results will determine whether AADI is worthy of current analyst price targets. Given such an unbalanced risk/reward profile, the stock is only suitable for aggressive investors and should be included in a well-diversified biotech portfolio.

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