All right. Good morning, everyone. I'm Tara Bancroft, one of the senior biotech analysts at TD Cowen. Thank you much for joining the TD Cowen 45th Annual Healthcare Conference. For this session now, we have Aadi joining us. To present is Dave Lennon, the CEO. Dave, it's a privilege to have you here. Thank you so much. You can get started on the presentation whenever you're ready.
Thanks, Tara. Thank you to Cowen for inviting us to today's conference. Hi, everyone. Good morning. I'm Dave Lennon. I'm the CEO of Aadi Bioscience . We're extremely excited about the transformation that Aadi is undergoing, and we've laid out back in December. I'm eager to update you on those details today. As a reminder, I will make statements today that include forward-looking statements representing our view as of today, March 3rd, 2025. Now let's jump in.
I'll start with a reminder that Aadi's long-term vision has always been to make bold choices in applying technology to efficiently deliver improved precision oncology therapies for people living with difficult-to-treat cancers. The transactions that we've previously disclosed, while transformative for us as a company, are rooted in our legacy as a precision oncology biotech.
We've initiated, and now happy to say we're on the verge of closing three transformative transactions. The unique combination of these transactions will position us to further advance our mission for patients and create significant long-term shareholder value. First, we've entered an agreement to sell FYARRO and associated infrastructure to KAKEN Pharmaceuticals for $100 million that will allow for the continued distribution and growth of FYARRO in PEComa and potentially beyond with an innovative R&D-focused pharmaceutical company.
With KAKEN's stated desire to grow its commercial presence in the U.S., we think this is a really excellent home for FYARRO. Our second transaction, we entered an agreement to license three preclinical antibody drug conjugates, or ADCs, from WuXi Biologics, a leading global CRDMO that leverages an advanced linker payload technology from Hangzhou DAC, an ADC platform leader founded over a decade ago.
Acquisition to the rights of this portfolio resets Aadi's pipeline with three high-potential assets focused in precision oncology and the exciting field of antibody drug conjugates. Our third transaction furthers that strategy. We announced a PIPE financing of $100 million, ensuring sufficient capital to allow us to enter the clinic and deliver key clinical data on all three assets before we need additional financing.
In total, between cash on hand reported as $63 million at the end of Q3, $100 million from the sale of FYARRO, and $100 million from PIPE financing, we believe new Aadi starts with capital position giving us cash runway into 2028. Before we take a closer look at each of these transactions, I'm extremely pleased to share that all three of these transactions were approved during a special meeting of stockholders that took place this past Friday, February 28th, and we announced this morning.
As mentioned, KAKEN Pharmaceuticals and Aadi have entered the stock purchase agreement into which KAKEN will acquire FYARRO and its supporting infrastructure, including key employees supporting the product in the U.S. The terms of the agreement, KAKEN will pay $100 million in cash at closing. It is a 4x multiple on FYARRO's trailing four-quarter sales. At closing, KAKEN will take ownership of the Aadi trademark, New Jersey headquarters, and retain associated infrastructure, essentially a full acquisition of the subsidiary and associated Aadi infrastructure.
They will be retaining a majority of Aadi employees who support the FYARRO business today. This transaction is expected to close this quarter, subject to certain closing conditions. At the core of these strategic transactions is a pipeline revitalization. I am thrilled to announce the in-licensing of a thoughtfully selected portfolio from WuXi Biologics as we jump into this exciting and dynamic ADC space.
We were very deliberate in identifying promising tumor targets that were broadly expressed across multiple cancer types and plan to focus our initial development efforts on high-potential indications where first-generation ADCs against these targets have already shown proof of concept in Phase I clinical trials. By leveraging industry-leading monoclonal antibody capabilities of WuXi Biologics and this advanced linker payload platform from Hangzhou DAC, we believe our next wave ADC portfolio can overcome the limitations that hindered first-generation ADC therapeutics against the specific targets that we've identified.
The collaboration that initiated these efforts between WuXi and Hangzhou relies on the expertise of WuXi Biologics, who have a proven track record of manufacturing and developing monoclonal antibodies and ADCs, and have completed close to five deals since January 2023 aligned to the strategy that they've been executing.
Hangzhou DAC is a platform company founded from ImmunoGen scientists with expertise in ADCs that has been around for over a decade, founded in 2011. They are experienced collaborators in the ADC discovery and development space, as an example by their ongoing partnership with Johnson & Johnson in this field. Per the terms of the agreement, Aadi will pay an aggregate upfront payment of $44 million for in-licensing of three ADC programs.
Additionally, Aadi is obligated to pay cumulative development milestones of up to $265 million, cumulative commercial milestone payments of up to $540 million, and single-digit royalties on sales. I would note that these Biobucks payments are cumulative across all three assets combined, giving us significant financial flexibility down the road for further collaborations on these assets should it prove necessary or desired.
Turning to the PIPE financing, as previously mentioned, to support our ADC portfolio development, Aadi entered in the securities purchase agreement for the private investment in public equity, or PIPE financing. This financing round is expected to result in gross proceeds of $100 million. The PIPE included participation from top-tier investors, and we're really excited about the group we put together to support this portfolio going forward.
I'm pleased to say that the syndicate was led by Ally Bridge Group, who have significant ADC and China-based ADC experience, and with significant participation from multiple new investors, including OrbiMed, Invus, Kalehua Capital, and others. We were also supported by a existing investor group, including Avoro Capital, KVP Capital, and Acuta Capital Partners. This robust syndicate reflects our investor enthusiasm for Aadi 2.0 and our new ADC portfolio, the value with generating opportunity it represents.
Per the terms of the agreement, we'll be selling common stock at $2.40 per share, and our stock has traded above that level since the announcement of this deal. In transforming into an ADC company, we recognize the need to continue to bolster our ADC experience at the senior leadership level. We already boast one board member who is a former CEO and executive chairman of Immunomedics.
In December, we announced Baiteng Zhao was appointed to Aadi's board of directors, and we recently announced the appointment of David Dornan as Chief Scientific Officer. Many of you will know Baiteng as the co-founder, chairman, and CEO of ProfoundBio, a clinical stage next-gen ADC developer founded in 2018 and was subsequently acquired last year by Genmab.
Baiteng built a robust ADC company from scratch in the U.S. and China, delivering a pipeline of multiple innovative ADC assets and clinical development, including Rina-S, a promising folate receptor alpha ADC. As I mentioned, Profound was acquired earlier this year by Genmab from, sorry, last year by Genmab for $1.8 billion. Likewise, many of you will also know David Dornan as the former CSO of Elevation Oncology.
David contributes more than two decades of experience in oncology drug development and with deep expertise in ADCs and other targeted cancer therapies. He has a successful track record of shepherding many drugs from discovery stage into the clinic, particularly around advanced modalities, including ADCs encompassing numerous IND filings. His experience at Elevation is very relevant as he spearheaded the company's strategic pivot towards a portfolio of ADCs, including in-licensing and nomination of differentiated ADC assets.
With David, Baiteng, and our existing board, we believe we're putting together an excellent leadership team to continue to lead this portfolio forward in the exciting field of ADCs. As I said at the start of the call, we're thrilled with this in-licensing as it transforms Aadi, what we have been calling now Aadi 2.0. As you remember, in August, we announced a corporate update that included the discontinuation of our exploration of nab-sirolimus for genetically defined cancers following an interim analysis of the PRECISION1 trial and exploration of strategic options for the company.
It's important to note that after becoming CEO in 2023, one of my key priorities had been to explore opportunities to expand our portfolio through in-licensing. While the PRECISION1 outcome was disappointing, we were certainly ready to pivot and move to this aggressive new strategy of in-licensing. We had a running head start into that exploration of pipeline options, and I'm really excited about the path that we actually embark upon now.
As a result of a thorough review and of the availability of oncology assets across geographies and modalities, we identified a three-asset portfolio developed by the WuXi-Hangzhou collaboration I mentioned before. These assets aligned with our capabilities and met important criteria. We think those criteria are important for future success, particularly in today's market environment.
Each of these has previously established clinical validation from first-generation ADCs. As a development-focused company, we prioritize removing biology risk from our pipeline and focusing on validated tumor targets. Second, we looked for assets targeting high-potential indications with the ability to be clearly differentiated and competitive.
In selecting this portfolio, we're focusing on high-potential tumor targets with limited competitive sets within their markers and where we believe we can win. Three, importantly, we prioritize an ability to be in the clinic quickly. We believe all three of these assets can be filed as INDs in the next 9-18 months.
The three tumor targets we selected, PTK7, MUC16, and SEZ6, are widely expressed across various tumors. Importantly, each are validated by the first-generation ADC and have demonstrated promising efficacy in key indications, but were discontinued largely due to safety and lack of therapeutic index. We're coupling high-affinity antibodies for each of these targets with a next-generation foundational linker payload called CPT113. CPT113 is an advanced linker payload architecture based on a novel Topo I inhibitor payload and a highly stable linker design, which I'll describe in more detail shortly.
As you can see from this slide, our plan is to rapidly file INDs starting with our PTK7 directed asset in the second half of 2025 and followed closely by the MUC16 directed asset by the end of the year. The SEZ6 directed asset will be filed for an IND by the middle of 2026. We can accomplish this partly because of the existing CRDMO services from WuXi and Hangzhou, which allowed us to continue to work in parallel while we were closing the transactions without missing any time in transition of our ownership of these assets.
Noted on this slide are each of the cancer indications where these targets have precedent in clinical data from prior ADCs. You'll also note that there's significant expansion opportunity with this portfolio as these assets target proteins that are widely expressed across various tumors where there's significant unmet need, and the underlying significant market potential that exists for the entire portfolio is quite robust.
Importantly, each of the assets builds on each other because they're all based on the same CPT113 ADC platform. This consists, as I mentioned, of a highly stable, yet cleavable linker that delivers a topoisomerase I inhibitor payload. From our diligence, we believe that CPT113's platform linker stability and novel payload has the potential to be highly competitive amongst next-generation ADC platforms. Hangzhou has selectively designed and synthesized an advanced linker and payload that can support payload release, improve PK characteristics, and the associated ADCs' critical stability.
First-generation ADCs were challenged by high-free payload release in circulation, limiting their therapeutic window as high-free payload can generate significant off-target side effects. Our next-generation platforms like this one that are in development today are improving on this with significantly lower ratios of free payload release in circulation relative to the parent ADC.
Based on reported PK results across different ADC programs, CPT113 platform is on par or better with any of the latest generations or incarnations of various ADC linker payload constructs, demonstrating our competitive stability. Though not part of the in-license, it's important to note that Hangzhou DAC has two internally developed programs utilizing the same platform, so-called DXC006 and DXC1002, that have successful INDs and are currently in dose-escalating Phase I clinical trials in China. Now let's turn to the assets themselves, starting with PTK7.
PTK7, or protein tyrosine kinase 7, is an oncofetal pseudokinase that drives embryonic to early development. It is downregulated in adult tissues and then broadly upregulated and overexpressed in tumors, including a significant moderate to high expression. As you can see on the right-hand side, the number of different indications that show PTK7 positivity and moderate to high expression is quite robust across a whole range of cancer types.
There are no approved PTK7 ADCs today, though it is becoming a popular target for research given this broad and deep overexpression. Pfizer and AbbVie had a first-generation ADC program called Cofetuzumab Pelidotin, or COFEP, which provided proof of concept for PTK7 as a tumor target. They demonstrated efficacy in Phase I trial with responses seen across a range of tumor types tested, including ovarian, lung, and breast cancers.
Response rates were particularly robust in moderate and high-expressing subgroups with ORR up to 46%. This is an important finding as PTK7 is an ADC target which shows a high proportion of marker-positive patients expressing moderate to high levels, indicating the potential for very robust responses amongst those patients. Despite these encouraging signals, COFEP was limited by reduced dose intensity and narrow therapeutic index driven by toxicities consistent with the payload that product used in the MMAE class .
Our PTK7, so-called PTK7 CPT113, is differentiated from this first wave program. As a next wave PTK7 directed ADC, it's poised to become the first with an alternative Topo 1 inhibitor payload and a highly stable linker to enter the clinic. We're targeting to build on the initial ORR seen with first-generation ADCs and deliver superior outcomes for patients.
In fact, PTK7 CPT113 has already demonstrated superior tumor reduction versus COFEP in in vitro and in vivo preclinical models shown on the graph here. At similar doses, what you can see is that CPT113 PTK7 shows superior tumor reduction in a lung cancer model in mice. From a clinical development perspective, we plan to start our Phase 1 trial by the end of 2025 on non-small cell lung cancer and ovarian cancer, both clinically validated indications with high PTK7 expression, where we believe this product can demonstrate the potential for improved response rates that exceed precedent.
Because PTK7 is upregulated across such a broad spectrum of tumors following proof of concept in the initial tumor types, we have the opportunity to expand into novel indications with the potential for high impact, for example, NGI or other gynecological cancers. Now turning to MUC16.
Mucin 16, or MUC16, is a glycoprotein with low-level expression in normal bronchial, endometrial, ovarian, and corneal epithelial cells and is often overexpressed and shed from tumors of female origin, including ovarian, cervical, and endometrial cancers. Shed MUC16 is known as the biomarker CA125, which is an important biomarker for cancer screening and disease monitoring in gynecological cancers, especially ovarian cancer.
MUC16 is a widely utilized and clinically validated target for ovarian cancer, including with a program from Genentech, a first-generation ADC called DMUC4064A. This program showed a promising response rate in a phase I ovarian cancer trial but was discontinued due to limited therapeutic index. It was likely driven by two challenges: toxicities consistent with MMAE class effects like we saw with Cofetuzumab Pelidotin, and the fact that circulating CA125 may have actually hindered the effectiveness of this approach.
This is known as an antigen sink effect, and this phenomenon is depicted on Slide 16. Antigen sink occurs when MUC16 overexpressed tumor target is cleaved from the tumor cells and released into the circulation, where it's often used and measured as a biomarker. An ADC binding to this shed portion of the MUC16 protein in circulation is cleared from the patient more quickly rather than reaching the tumor.
In the case of DMUC4064A from Genentech, the ADC efficacy was dramatically hindered by this antigen sink effect. To overcome the antigen sink effect of the first-generation MUC16 ADCs, we have designed an ADC that targets the membrane-bound, the non-shed portion of MUC16. This allows our MUC16 CPT113 to bypass the antigen sink in circulation and get directly to the tumor. Preclinical data shows membrane-bound, or MUC16, demonstrates superior tumor growth inhibition in vivo compared to Genentech's original program.
In vitro and in vivo data suggest this next wave approach has the potential for improved response rates in ovarian cancer and other gynecological cancers. From a clinical development perspective, we plan to start our Phase 1 trial in ovarian cancer in 2026 with the potential to expand into additional cancers affecting women where we can have a significant impact, for example, endometrial and cervical cancer.
The third asset in our portfolio is directed at seizure protein 6, or SEZ6. This is a transmembrane protein expressed in neuronal dendrites that is responsible for dendritic branching and synapse formation during development and adulthood. SEZ6 is a CNS-limited protein overexpressed in tumors of neuroendocrine origin, including small cell lung cancer and other neuroendocrine neoplasias, as well as some CNS tumors. SCLC is an aggressive high-grade neuroendocrine carcinoma, which is with a limited target treatment options exist, and class competition is also limited.
Today, AbbVie is the only SEZ6 ADC in development. In an ongoing Phase I trial, AbbVie's next-generation ADC ABBV-706 demonstrated improved efficacy compared to the first-generation predecessor, reporting an ORR of 44% across different indications. While this is important progress, we believe there are opportunities to apply novel ADC engineering to provide a path for even greater gains.
What we've done here and what we plan to investigate is what we call a biparatopic ADC approach. Biparatopic antibodies, which bind to two different epitopes on the same protein, allow for transbinding to enhance receptor clustering and internalization, a key driver or key potential driver of ADC effectiveness. Biparatopic superiority in target specificity, binding, and internalization of ADCs, we believe, can translate into greater efficacy and/or greater safety gains for patients treated with those ADCs.
Our new biparatopic SEZ6, or bi-SEZ6 CPT113, is the only biparatopic ADC in development for small cell lung cancer and shows potential to outperform available treatment approaches and single epitope ADCs in development. We've seen this play out in preclinical models with bi-SEZ6 antibody showing superior binding and internalization compared to single epitope SEZ6 antibody counterparts, including the antibody used for ABBV-706.
We plan to explore the potential in our planned Phase I trial in small cell lung cancer and neuroendocrine tumors where there's significant need for new treatment options. We are enormously excited about the potential we have to deliver the next phase of Aadi with this ADC portfolio. To reiterate, these are three clinically validated, broadly overexpressed tumor targets, leveraging an advanced ADC linker payload architecture with stability and key features necessary to outperform first-generation ADCs.
We have significant opportunity across high potential indications, including lung and ovarian cancers, where these proteins are highly upregulated and overexpressed. We are moving quickly, targeting filing three U.S. INDs in the next 9-18 months, including PTK7 CPT113 in the second half of 2025 and MUC16 CPT113 by the end of 2025. With an experienced team and collaborative partners, we are singularly focusing on executing to ensure we meet these goals.
Lastly, importantly, post-closing, we expect to be well capitalized with cash and fund operations into 2028, including anticipated key clinical data. With that, I'll end my presentation here. Thank you.
We actually do have some more time for Q&A, so I think we could do that. Thank you for that very detailed presentation. Really, congrats on all the progress that you guys have made. This is a very exciting new chapter for Aadi 2.0. I guess what I'm curious about hearing more on is, what other assets were you looking at, and what was the goal that you wanted to achieve? I'm more so curious in hearing on what other possible assets that you would have considered and what made you choose ADCs over bi-specifics or any other modality, choosing to stay with oncology and these targets in particular. I mean, we have six minutes, so hopefully you can.
Sure. We did not do it that fast. I think, first, we are an oncology company. We wanted to stay an oncology company. We believe there are ups and downs in all therapeutic areas in terms of attractiveness, but oncology is, and we have not solved cancer, and it is an amazing unmet need that we have out there to help patients, and we believe that is our mission and our purpose. We stuck with oncology from that perspective, I think, first and foremost.
I think, secondly, we did look at a lot of different modalities that we could utilize within the space. I think one of the challenges when you think about what is happening generally across medicine today is we are going from what I would call discovery-driven identification of drugs to engineered drugs. Engineered drugs are things you can put together relatively quickly and get into and prove that they have effectiveness and are druggable in a sense quite quickly.
ADCs fit into this. You can design a lot of different ADCs. You can quickly show they work in preclinical models and move them into the clinic quickly. The challenge is that just because you can build it does not mean you should use it. It is not the field of dreams situation all the time. One of the things that we were looking at across modalities is what was our confidence in its ability to overcome or relate to established biology that existed.
I think our view was that ADCs at this point are the most proven of the technologies, and in many ways, we had the opportunity to come in at what I would say is the height of the engineering efficiency of these programs with highly stable linkers that improve the drug therapeutic index overall and with an ability with topoisomerase inhibitor to have a highly potent and effective molecule.
It's not to say there aren't other places that ADCs can still go, but I think in terms of what we're going to see over the next coming years, we thought this was the place that's really going to be a sweet spot for delivering on patient unmet need over the next few years and therefore where we chose to focus.
Maybe a little bit more on the competitive landscape. I know PTK7 is a target that is heating up a little bit. I mean, you have one in particular that just entered the clinic from Day One. They have a Topo PTK7 ADC. And MUC16 too, Regeneron has—I can't say that. I can't say it. Maybe just a little bit of positioning there, starting with PTK7 and then MUC16.
Yeah. I still think after the Pfizer program, we're relatively still in the early days of PTK7 competition. There's a Genmab program, which is an MMAE program that's actually from the Profound acquisition. Our board member is quite intimate with that program. Day One, Lilly has an earlier program also, point out as does Colyn.
I do think there's an opportunity right now where Day One might have a slight lead in terms of getting into the clinic now, but we are working every day to catch up to that. I think importantly, we're really confident in the profile that our linker payload has relative to others in the marketplace to be able to compete. It will be a bit of a race now in terms of generating data.
Also strategically, given it's such a broad indication, I think the development strategy that each company takes will give an opportunity for differentiation. We believe we'll be very smart about that, and we'll talk about that more at a later point. On the MUC16 side, there's not much competition on MUC16 directly in the ADC field, but certainly the Regeneron program is an interesting one and one that takes a similar strategy in targeting a membrane-bound portion of the molecule.
We think there is potential for some learnings based on what we see from that program in terms of that program's ability to build. Of course, that's a bispecific-based program, and therefore we'll have some clear differences between us and them. I think some interesting potential read-through opportunities there, for sure.
All right. Thank you so much for joining us and everyone for listening. I hope you guys enjoy the rest of your day.