Greetings, and welcome to the Aadi Bioscience, Inc. First Quarter 2021 Earnings Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, Andrew Quan, VP of Business Development and Corporate Strategy. Thank you. You may begin.

I would like to welcome everyone to the first Aadi Bioscience Quarterly Results Call for Q1 2022. With us on the call today from Aadi Bioscience are Neil Desai, Founder, President and CEO, who will give a quick overview of the quarter; Brendan Delaney, Chief Operating Officer, who will provide early commercial uptake commentary and metrics; Dr. Loretta M. Itri, Chief Medical Officer, who will walk us through clinical development priorities and forthcoming updates; and Scott Giacobello, Chief Financial Officer, who will provide an overview of our financials this quarter. Before we get started, I would like to remind everyone that statements we make on this conference call 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, and 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, May 12, 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, let me turn the call over to Neil.

Thank you, Andrew. Good morning, everyone, and thank you for joining. The first quarter of 2022 was transformative for Aadi Bioscience. We successfully transitioned into a fully integrated biopharmaceutical company, commercializing and launching our first product, FYARRO, an albumin-bound mTOR inhibitor, also known as napsurolomus, for advanced malignant PEComa, on February 22 of this year. We delivered on our promise to begin enrolling patients in our new registration-directed tumor-agnostic trial known as PRECISION1 in March. In the first quarter, we have continued our company building and recruitment of high-quality talent in all areas of the organization. And our cash position remained strong at approximately $130 million, and is expected to continue funding our commercial and R&D operations into 2024. Our key priorities in 2022 are to maximize the clinical and commercial potential of FYARRO to further strengthen our ability to create long-term value. FYARRO is now the first and only FDA-approved treatment specifically indicated for advanced malignant PEComa patients and the first and only mTOR inhibitor approved for this indication. Even though advanced malignant PEComa is an ultra rare sarcoma with around 100 to 300 new patients per year in the U.S. the launch parameters for viral in advanced malignant PEComa are encouraging. While we are still early in our launch, it is clear that FYARRO has been well received by patients and their treating physicians alike. In 6 weeks since launch to the end of the first quarter, we achieved $2.3 million in net sales of FYARRO. We attribute this encouraging performance in part to both pent-up demand and transitioning of expanded access program and MPEG clinical trial patients to commercial products, and Brendan will discuss this further. In general, we are very pleased with the high level of awareness and interest among physicians, favorable payer sentiment and strong…

Thank you, Neil. It is an exciting time at Aadi Bioscience, and I'm thrilled to share results today from Aadi's first partial quarter as a commercial stage company as well as early insights regarding the launch of FYARRO in PEComa. It is important to consider that FYARRO became commercially available on February 22. So the results that will be shared today reflect 28 selling days over a 6-week time period. We are in the early days of the launch, so we will be discussing commercial trends on the call today. Even though early, we are very encouraged by the initial uptake trends of FYARRO. Underlying our success are the patients battling PEComa who truly needed access to this important treatment option. We are humbled to help these people as it is they that represent the most meaningful success story of this launch. Since making product available in the market on February 22 of this year, our launch has been driven by 3 strategic imperatives. First, we need to quickly establish FYARRO as a standard of care in the frontline PEComa setting. In order to accomplish that goal, our ability to accelerate brand awareness is paramount to success. It is too early to share meaningful brand awareness metrics. However, the breadth of ordering institutions and the early FYARRO uptake across treatment centers leads us to believe that our brand awareness metrics are tracking on target. Second, our teams have been focused on managing expectations for treatment and educating health care providers to ensure a positive first clinical experience. Based on feedback from first-time FYARRO prescribers when volunteered by these early adopters, they have expressed a positive overall experience when using the drug. Based on early experience, it appears that these new users can effectively initiate treatment and manage patients through multiple…

Thank you, Brendan. I'm proud to report important progress on several fronts in the last quarter. First, we have significantly strengthened our R&D group hiring high-quality talent and launching a fully operational clinical development division with all functions nearly completely staffed. This has enabled us to rapidly set up trial sites and facilitate patient recruitment while providing appropriate oversight of clinical trial conduct for the ongoing precision on tumor-agnostic trial. Second, we have enrolled our first patients in this trial at the Dana Farber Cancer Institute and MD Anderson Cancer Center, and have made great progress towards our goal of initiating the study in at least 20 major cancer centers in the United States by the end of this year. Next slide, please. Third, in order to ensure strong enrollment in the PRECISION 1 trial, we have partnered with the leading next-generation sequencing providers, including Foundation Medicine and Tempus. We are working closely with these and other NGS providers, who are helping to identify patients with TSC1 or TSC2 alterations, and also utilizing their physician networks to recommend participation of appropriate patients in the PRECISION 1 trial. Next slide, please. Importantly, we have also formed a partnership with the U.S. Oncology to leverage its entire physician network of more than 1,400 oncologists that includes more than 500 cancer treatment locations and more than 1.2 million patients participating in clinical trials annually. This partnership will help us target community centers as well as additional academic centers in our enrollment efforts. Using USO's STAR program, we can rapidly activate individual sites once the patient is identified who qualifies for the study. Taken together, this series of focused activities should augment enrollment into the PRECISION 1 trial by targeting both academic and community-based oncology practices and by rapidly identifying appropriate patients with TSC1…

Thanks, Loretta, and good morning. I'll now summarize financial results for the quarter ended March 31, 2022. A more detailed discussion of results will be provided in our 10-Q to be filed later today. We ended the quarter with cash and cash equivalents of $129.8 million. Based on our current plans, we expect cash and cash equivalents to fund operations into 2024. Total revenue for the quarter was $2.3 million, consisting entirely of net product sales of FYARRO following the February 22 launch. As Brendan mentioned, this number reflects AMPECT trial and EAP patients who transitioned to commercial product during the quarter, pent up patient demand related to the timing between for approval and launch and initial inventory build at the specialty distributors. Cost of product sales amounted to $0.2 million for the quarter, consisting primarily of royalties on FYARRO sales. Cost of sales is favorably impacted by FYARRO inventory costs incurred prior to FDA approval, which were expensed as research and development in the period incurred. Research and development expenses for the quarter were $6.8 million compared to $3.6 million in the prior year quarter. This increase is due primarily to costs related to the initiation of the PRECISION 1 trial and the build-out of the R&D organization. Selling, general and administrative expenses increased to $9.1 million in the quarter from $0.6 million in the prior year quarter. This substantial increase is mainly the result of expenses related to the build-out of our commercial operations and infrastructure, and increased marketing expenses to prepare for the commercial launch of FYARRO. Resulting net loss for the quarter was $13.9 million compared to $5.5 million for the prior year quarter. Thank you, and I'll now hand the call back to Neil.

Thank you, Scott. In summary, we are very pleased with the early acceptance of FYARRO by the physician and patient communities, and we remain encouraged by the trend seen so far. We are intently focused on enrollment in PRECISION 1, and look forward to maximizing the application of [indiscernible] to treat other cancer types. Before we open the call for Q&A, I'd like to take a moment and thank the entire team here at Aadi Bioscience for their impressive focus hard work and execution over this past quarter. Looking forward, I'm confident we are well positioned to continue to execute successfully, both on our FYARRO commercial launch, building on the momentum of our first partial quarter that we reported today, and on the R&D side, our continued execution of our PRECISION 1 tumor-agnostic trial. With that, operator, I'd like to open the call for questions.

[Operator Instructions]. Our first question comes from Boris Peaker with Cowen.

Congratulations on the progress. Can you hear me guys?

Yes, Boris, I can hear.

Fantastic. So my first question is you mentioned that the part of the revenue was inventory build. Can you comment approximately how much do you have an estimate or an estimate of end-user demand instead?

So this is Neil. Brendan, would you like to answer that question, please? A - Brendan Delaney Yes, yes, I can answer that. Thanks, Boris. Boris, it's hard to comment and quantify it. What I would say is that usually, obviously, it's expected in an oncology launch that you would have some built up inventory. I think here, you're probably a couple of weeks on hand above what we would expect. And I think that's a little bit of specialty distributors reacting to higher-than-anticipated volume early on, right? So I think that's part of it. It's hard to quantify, though, because there's multiple levels of inventory that we don't see. For example, a lot of the ordering, as you heard in the prepared remarks, was done by academic institutions, many of which are carrying some inventory as well in addition to the specialty distributors. So it's just introduces another level of complexity in trying to quantify it. I would say we're pretty excited about what we're seeing and extrapolating as underlying patient demand. But I will say also the pent-up demand in the situation where we launched in -- or received FDA approval in November and ultimately launched in February. I think patients were building at that time as well, and that certainly also contributed to, I think, an exciting start here.

Great. And just how long do you anticipate these patients to remain on treatment?

Again, hard to say, Boris. I think it's encouraging what we see as far as reorder patterns, right? But we don't have patient-level data to track individual patients. But I think when we see the accounts that ordered or reordering, it's certainly encouraging. But that's a loose kind of metric for duration at this point, which is going to be very difficult, not only in this early part, but for the next months ahead to really determine. But I think it's early, but we're encouraged by what we see. That's the best that I can...

Great. And my last question, for PRECISION 1, you mentioned the first in term is going to be in the first half of next year. Can you comment on what we should be expecting in terms of the number of patients or any other expectations for that interim update?

Boris, this is Neil. I can take that one. So as we've said before, this trial has just begun enrolling. And so the visibility into the enrollment rate, et cetera, will, of course, come, but that will come later in the year as many more centers get online. So in terms of the exact sort of nature of the update that we would provide in the first half, it's hard to predict exactly the number of patients. But that said, we expect a meaningful number of patients so that investors and analysts like yourself, you can look at the data and feel confident about the future of the drug. In terms of the other types of analysis or information that we would provide, we would probably give some color on the different tumor types that have been enrolled in the study and give some information about the outcomes in these patients at that time. But again, this is a bit early right now to predict exactly the nature of the outcome. We should also keep in mind that this is a registration trial. And so there are some limitations thereof. And secondly, and importantly, we're in the unusual situation that we have an approved drug that is being marketed for advanced PEComa, but we have to be very careful with off-label type promotion and how any data we put out there can be construed. So with those limitations, the goal, of course, is to give investors a look at what we're seeing in the trial early on.

Our next question comes from Ahu Demir with Ladenburg Thalmann.

Congratulations on the progress. I have 2 questions on the commercial side, then we'll go into the PRECISION 1. On the commercial side, could you please comment on the number of prescribers, and also payers coverage considering Medicare versus the commercial payers aspect?

Yes, sorry. Yes, so on the -- we don't have visibility on the prescribers. As you know, with an IV therapy once the vials are shipped from the distributors to the institutions, we lose visibility in many levels, including the patient level. So we don't have patient level or prescriber level type of information. the best we have is institution level, which we reported there that in the first 6 weeks, 35 institutions have ordered. And then your second question on the payer was the mix between commercial and Medicare?

That's correct. Yes, Brendan.

Yes. So we don't have a specific mix of what it is on the snapshot. The anticipated payer mix is around 50% to 60% commercial payer, and maybe in the 30% range on Medicare. Keep in mind, that's driven by the nature of PEComa, where it's more prevalent in females who are under the age of 65, so the payer mix makes sense. But as far as commenting on the mix, as it stood in the 6 weeks, it's very difficult to do. I would say that we've been very encouraged by the response we've had from payers, as I mentioned in the prepared remarks, with how quickly they're putting coverage policies in place, but also their policies without restrictions, and that's very encouraging. So on the payer front, it looks very positive as well.

My other question is on the PRECISION 1. What is -- how many sites are currently open? And how many additional sites are we expecting to open up this year?

Yes. Thanks, Ahu, this is Neil. Loretta, would you like to answer that question, please?

Sure. Currently, we have 6 sites open here in the United States, and you can take a look and see who they are on the clinicaltrials.gov website. We update that periodically. Our goal is to open at least 20 major cancer centers here in the United States by the end of the year. And of course, that will be augmented by our partnership with U.S. Oncology, et cetera. So that is our goal, and we're on target, and we have every intention of achieving that.

If I may, I have one last question. At the AACR presentation, the combination of strategy were disclosed at [indiscernible] and FGFR3 inhibitor combinations. I'm just curious if you could elaborate more on that, specifically FGFR3 since they are more specific to urethral cancer? Just curious on your comments.

Yes. So this is Neil. I can take that one. Again, the -- in the AACR presentation, the key information that we presented was the incidence of TSC1 and TSC2 relevant alterations in terms of number of patients on an annual basis in the U.S., which is about 12,000. It was also interesting to note that we looked at other type mutations that -- can occur. Overall, they were a small percent of the total TSC1, TSC2 population. But the suggestion there is that given the -- some co-mutations in the future as we analyze other strategies for combination therapies, we will be looking at strategies like that. So for example, which combination drugs can we use along with our drug? But we haven't finalized that yet, and that process of evaluation is ongoing as there's many types of very interesting combinations that we can get into. But that look and that presentation of data certainly helps us in finding populations that may be highly relevant in the future.

Our next question comes from Joe Catanzaro with Piper Sandler.

Congrats on the progress here. Maybe one first on the FYARRO launch. Wondering if maybe you could help us think about the rest of the year commercially. And speak to whether there are still any EAP patients left that need to make the transition as well as how we should think about the pace of new patient starts moving forward and following sort of this pent-up demand that you experienced?

Yes. Thanks, Joe. Brendan, would you like to take that, please?

Yes. Joe, I appreciate the question. It's really -- it's early at this point, as you know, and I don't necessarily want to make any kind of predictions because there's multiple levels of complexity here as you can probably appreciate. I think we're off to a good start. I think the -- some of that -- the new patients that have come over early on, we expect to have some duration on that. So that will obviously play out for the remainder of the year as well as new patient demand coming in. As far as the EAP patients, we don't have 100% visibility, but we feel pretty confident that the majority of those patients were transitioned successfully by the centers, and that we wouldn't expect any necessarily additional from either AMPECT or EAP coming in. Same with the pent-up demand that we're describing. I think that was patients building from November to February, and they were waiting for the drug to be available in the market and got on pretty quickly. Again, that's -- those are estimates. It's a little early to comment on what it looks like for the rest of the year. As I said, we're encouraged by what we're seeing, but I don't think we're at a steady state underlying demand and able to predict what happens in PEComa, given the ultra-rare nature of the disease. So I hope that helps.

Yes. No, no, that's helpful. Maybe another follow-up here. I think last you guys had mentioned that you were going through an EMA scientific advice process. Just wondering sort of where you guys are there? And what your current expectations are around a potential EMA filing?

Yes, Joe, this is Neil. I can take that one. So yes, we are in that process. And as we've mentioned before, we expect to receive that scientific advice later in the second half, probably later in the fall, just based on timing and backup of the EMA. They've indicated several times that they're very backed up in terms of the process. So hard to predict exactly when, but we expect that later in the fall, we would have gotten that advice. So we can update following that.

Okay. Got it. And then if I could maybe squeeze one in on Precision 1. I'm wondering if you just have any comments on the early experience screening patients for TSC1 and TSC2, and maybe your early ability to confidently call if the alteration is pathogenic or not?

Yes. I'll comment and then pass it on to Loretta. So in terms of screening, I'm not sure that we can provide any information at this point since the process is very early. But the patients go through the standard NGS screen and then we have a central reviewer. Loretta, would you like to add anything to that, please?

No, I'm really not clear on what the question is, but it has not been a problem. TSC1 and TSC2 are routinely included in virtually all NGS reports. So it's not hard to find them. The issue of whether or not they are inactivating, I think, maybe the question you're asking, the way we handle that is that we actually have provided sort of a cheat sheet to all of our participating institutions so that it enables them to translate the NGS report on their own [Technical Difficulty] by our central reviewer and we can confirm whether or not the TSC abnormality is indeed trending or inactivating we're a pretty fine-tuned machine at this point. We can turn them around very quickly. So that, at this point, does not appear like it's going to be any kind of obstacle for us.

[Operator Instructions]. Our next question comes from Roger Song with Jefferies.

Okay. Great. Congrats for the initial launch. A couple of questions from us. So the first question is, what is the current reimbursement process before the J-code? And how this J-code will facilitate the reimbursement? And sequentially, how do you expect the gross to net will evolve over time? What is the kind of steady state kind of growth to that you would imagine?

Yes. Roger, this is Neil. Thanks for joining. You were a little soft there. So if you don't mind just repeating the questions again, so we make sure we heard it clearly? A little bit louder?

Yes. Sorry about the voice. So can you hear me now?

Yes, I think that's better.

Okay. Great. So the question is, what is the current reimbursement process? And how will the J-code facilitate the future reimbursement? And specifically, how do you expect that the gross to net will evolve over time? What is the steady state growth to that will look like to your kind of a model?

Okay. We could hear that well. Brendan, would you like to take that, please?

Yes, Roger. I think on the J-code, it really just streamlines the process, right? So currently, a lot of payers have come on with, as I mentioned, positive policies with a prior authorization to label, which is not that restrictive. I think what -- a lot of this to the billing is done on the Medicare side through a temporary code, a miscellaneous J-code, and that leaves a lot of prescribers, especially if in the community setting, uneasy about getting reimbursement for the drug and some also sometimes things get held up, right? Because it may get confused is, and it creates kind of burden for the prescribers and the patients as far as their time to get on therapy. So what the permanent J-code does is assigned specific code for FYARRO so you don't have any of that perceived risk, and it's just much more streamlined because it has specific code in place. There's obviously a process to apply for that, and -- that we've executed on very well and we're getting the J-code at the earliest possible time. But this is all normal, Roger, for launch execution in oncology with an IV therapy. And I think we've executed on it very well. I don't think we've seen any type of as far as the current process with the miscellaneous J-code. We haven't seen any obstacles or heard any pushback in the field. Now part of that may be related to, as I mentioned, the majority of our use early on, which is expected is in the academic medical centers, and they have a lot more resources to make -- work the process, the reimbursement process seamlessly, even in the early days of launch. And then, Neil, did you want me to comment on the gross connect question as well?

Yes. Go ahead. And if Scott needs to add, he can certainly do that. Yes, I think we estimate now, Roger, but I think somewhere estimate within the 15% to 20% range for GTN is probably a safe estimate at this point. And hopefully, as time goes on, we'll get better information and see what that looks like. But I think right now, between 15% and 20% is probably a safe estimate. Scott, I don't know if you have anything else to add?

Yes. No, nothing really to add other than to say it's hard to say how it will evolve, Roger, obviously dependent on how the commercial mix shakes out over time. But yes, I agree with everything Brendan said on where ultimately we think it will probably end up.

Okay. Great. Maybe just squeeze one for PRECISION. Yes, I think you provided some really good color around the screening turnaround. And maybe just asked specifically, do you have estimated time line from the patient enrollment, send them a consent, and all the way to you can say definitively that the patients get this diagnosed, the TSC1 and TSC2, in activating mutation, what does the overall time line look like? I understand when you get an NGS to report, you can get the final diagnosis within 24 hours, but just curious about the whole process time line look like?

Yes. Thanks, Roger. Loretta, would you like to just comment on the question? Were you clear on the question, first of all? I think the question was time line from consent essentially to the time the patient officially gets on the study or receive the drug?

Well, by the time you get consent, the patient is really quite far along. They've been identified as having the abnormality. They have qualified for all of the inclusion, exclusion criteria. So for the most part, I would say from the time we can sent to patients, it's relatively short, I would say, 2 to 3 weeks before the patient actually goes on study. But these being patients who are seriously ill, you just never know what's going to happen. And so with COVID around, sometimes they will get a COVID infection, and that puts it back another 10 days. So it's variable -- highly variable. But in general, I would say 2 to 3, 4 weeks, about in that range. I don't know if that's helpful, but that's what we're seeing so far.

Thank you. At this time, I would like to turn the call back over to Dr. Neil Desai for closing comments.

Thank you. On behalf of the entire team at Aadi, I would really like to thank the investors and analysts for joining the call today. We certainly look forward to interacting with you in the future, and then providing any necessary updates as we continue to progress and build value in the company. And thanks very much again for joining, and we can close the call now.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation. Have a great day.