Good day, and thank you for standing by. Welcome to the Aadi Bioscience fourth quarter 2022 earnings 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. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I will turn the call over to Marcy Graham, Senior Vice President of Investor Relations and Corporate Communications at Aadi Bioscience. Ms. Graham, please go ahead.
Thank you, Elizabeth. Good morning, welcome to the Aadi Bioscience conference call to review results of the fourth quarter and full year 2022 and to provide an update on our operations since the start of 2023. Joining me on the call today is Scott Giacobello, our CFO, and Interim President and CEO, who will provide an overview of financial and operational activity during the period, including an update on our continued commercial progress. Next will be our Chief Medical Officer, Dr. Loretta Itri, who will provide insights on our clinical developments and plans for 2023. We will open the line for questions at the end of the call following closing comments. Before we get started, 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 factor section of our annual and quarterly reports filed 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, March 28, 2023, and should not be re-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, I will turn the call over to Scott for his opening statement. Scott?
Thank you, Marcy, and hello, everyone. Thank you for joining us this morning to review our financial and operational results for the fourth quarter and full year 2022. As we said before, this past year was a transformational one for Aadi. Though there are many, the top-line accomplishments of 2022 began early in the year with the successful commercial launch of our first product, FYARRO, for the treatment of advanced malignant PEComa, a rare form of sarcoma with no prior standard treatment. Upon launch, FYARRO was added to the NCCN clinical practice guidelines as the only preferred treatment regimen for malignant PEComa, and we received a permanent J-code for FYARRO soon after, facilitating payer coverage and reimbursement. We achieved sales of $15.2 million in 2022, outperforming estimates for the year in just 10 months on the market.
This launch was closely followed by the initiation of our phase II registration-directed trial, PRECISION1, a study in patients with solid tumors that have TSC1 or TSC2 inactivating alterations in the mTOR pathway. We are excited about the potential for FYARRO to provide benefit for patients beyond PEComa. We believe in our prospects and look forward to sharing preliminary data on a meaningful number of patients in the PRECISION1 trial in the second quarter of 2023. We progressed on both the commercial and clinical fronts, we announced the completion of a PIPE financing of $72.5 million, extending our runway into 2025 and supporting our ongoing operations and further expansion of our initiatives.
This includes a collaboration with Mirati Therapeutics announced last fall for a new combination clinical study in patients with KRAS G12C mutations as part of our strategy to expand indications for FYARRO. Beyond these advancements, we are pleased with the continued adoption of FYARRO for patients with PEComa. We achieved $5.2 million in sales for the fourth quarter, which represents growth of 23% over Q3. We continued to see increased uptake in the community setting with roughly half of the business now coming from community clinics and hospitals.
We are encouraged by the acceptance in the market of FYARRO as a leading treatment option. At the end of the year, we had more than 120 unique ordering accounts, up 34% from the prior quarter with a reorder rate of more than 85%, underscoring the positive clinical experience conveyed by healthcare providers who are increasingly viewing FYARRO as the standard of care for their PEComa patients. Lastly, we just announced the addition of Dr. Mohamed Hermans to our board of directors, who brings a rich history of success in clinical development and operational expertise to the role, currently serving as the Chief Medical Officer of Avenzo Therapeutics following his role as CMO at Turning Point Therapeutics, acquired by BMS last year.
His impressive qualifications and broad expertise in clinical operations and experience at the companies like Medivation and Peloton complements the acumen of our existing board contributors. We are truly looking forward to working with them as we advance the current PRECISION1 trial and other new trials in the future. We are enthusiastic about what is to come in 2023, heading into another year of solid execution, thanks in no small part to our team here at Aadi, whose hard work is what made our achievements possible and whose continued dedication is what will drive our progress in the future. Loretta is up next to further discuss our progress and ongoing clinical activity. Loretta?
Thank you, Scott, and good morning, everyone. On the clinical front, progress continues in our ongoing PRECISION1 tumor-agnostic trial in patients with TSC1 or TSC2 inactivating alterations. The number of open sites has continued to increase along with access to patients, allowing us to achieve our goal of opening 120 sites by the end of 2022. Patient accrual remains on track, although we continue to deal with widespread staffing shortages as our sites work to recover from the impact of the COVID pandemic. The continuing commitment of our team and our maturing partnerships with the leading next-generation sequencing companies have played a strategic role in affording access to patients. This has been an important factor in enabling us to routinely identify eligible patients, particularly in community-based practices.
We appreciate our partnerships with U.S. Oncology, Tempus and Foundation Medicine as we work to identify patients who qualify for the trial. We believe that full patient enrollment into the study will be completed within 24 months from first patient treated in the spring of 2024. As presented at the recent Society of Gynecologic Oncology annual meeting just a few days ago in Tampa, Florida, a sub-analysis of the data from our pivotal AMPECT trial revealed excellent activity for nab-sirolimus in patients presenting with malignant uterine sarcoma. Our clinical team has been hard at work building relationships in the Gyn oncology community, interacting with clinicians in the field to consider the options made available by nab-sirolimus in treating these patients.
As we have previously mentioned, we continue to evaluate additional indications for nab-sirolimus beyond sarcoma and TSC1 or TSC2 inactivating alterations, either as a single agent or in combination. We will be providing an update on new potential studies later in the year. We are also progressing well in our clinical collaboration with Mirati. We evaluate the combination of adagrasib and nab-sirolimus in KRAS G12C mutant non-small cell lung cancer and other solid tumors. We expect that Mirati will dose the first patient in this trial during the second quarter of this year. You may recall, we presented preclinical data on the combination of KRAS inhibitors and nab-sirolimus last fall at the AACR-NCI-EORTC meeting that laid the foundation for our partnership on this combination strategy to treat non-small cell lung cancer and other solid tumors with a KRAS G12C mutation.
The team here at Aadi is very busy and energized about continuing to explore the further potential benefits of nab-sirolimus in the treatment of patients with additional oncologic indications. I will now turn it back over to Scott for a financial update. Scott?
Thanks, Loretta. We had a solid fourth quarter and end of the year of strong performance with approximately $172.6 million in cash equivalents, and short-term investments, including proceeds from the completion of our $72.5 million financing last fall. We begin 2023 well capitalized with a balance sheet that's expected to fund operations into 2025. Turning to our financial results, FYARRO net product sales amounted to $5.2 million for the fourth quarter and $15.2 million for 2022. As is typical at the end of the year, there was some inventory build with the specialty distributors in the quarter, and we expect this will normalize in the first quarter. Research and development expenses for the quarter increased to $9.4 million as compared to $7.2 million in the prior year quarter.
For the year, R&D expense amounted to $32.7 million as compared to $19.7 million last year. This increase is primarily related to the continued progress of the ongoing PRECISION1 trial and the build-out of the R&D organization. Selling general and administrative expenses for the fourth quarter were $11.1 million compared to $9.7 million in the same period in 2021. For the year, SG&A expenses totaled $40.2 million compared to $18.5 million in the prior year. This increase is mainly due to the build-out of our commercial operations and company infrastructure and increased marketing expenses related to the commercial launch of FYARRO. Net loss for the fourth quarter was $13.9 million compared to $16 million in the fourth quarter of 2021.
Net loss for the year was $60.5 million compared to $110.1 million in the prior year. The prior year included the non-cash impairment charge of $74.2 million related to the acquired contract intangible asset incurred in conjunction with the RPO merger. For more information on our financial performance for 2022, a detailed discussion of the results reported on this call will be provided in our 10-K to be filed later today. As you heard today, 2022 was a transformational year for us, one that will set the foundation for the advancements that lie ahead in 2023. Our focus remains on the patients we serve and on providing therapies that improve the lives of those who suffer from mTOR-driven diseases. We can now open the line for questions. Operator?
As a reminder, if you'd like to ask a question at this time, please press star one one on your telephone. Please stand by while we compile the Q&A roster.
Our first question comes from the line of Roger Song with Jefferies.
Great. Congrats for the, for the progress and thanks for taking the question. A couple of questions from us. The first one is the FYARRO sales. It looks pretty impressive in terms of the steady growth. Do you have any kind of anecdotal comments in terms of the patient characteristic you're getting on the treatment, such as the line of therapy and the duration on treatment, and when do you expect you will be able to provide more guidance in terms of the future sales? Thanks.
Great, Roger. Thanks for the question. Take the first one. For patient characteristics, I would say what we've seen, and I think we've mentioned this before, is early on in the launch of FYARRO and PEComa, we were kind of meeting patients where they were in their treatment plan and progress of therapy. What we've seen after being on the market and physicians being more comfortable and knowing more about the drug is we're moving closer to first line. As we do that, we expect that that's gonna have a positive impact on duration. Although I would say that we're still pretty early, just 10 months in on the market. You know, we still need a little more time to see how duration plays out.
I'd say we're probably still a ways away from guidance, but certainly very happy with the progress that we're seeing.
Yep. Thank you. In terms of the PRECISION1, this preliminary result in 2Q, I'm curious, what would you consider as the meaningful N, first of all, and also, kind of what kind of a venue, you will potentially report the data, it will be in the medical meeting or a company host to the event or press release? Thank you.
Sure. As far as a meaningful N, what we've said is it will not be single digits, so it will be patients in the double digits. As far as the venue, it will not be released at a scientific meeting, but rather a company press release or company event.
Excellent. Thank you. That's it from us. Congrats again.
As a reminder, that is star one one to ask a question. Our next question comes from the line of Ahu Demir with Ladenburg.
Good morning. Thank you so much for taking my question. I have two questions. First one is on the revenues. If you could provide more color on the percentage of patients' lives covered and also the prescription rate of FYARRO in patients.
Sure. From, from a reimbursement perspective, which I think is your first question, Ahu. What we're seeing from a lives covered perspective is that we're north of 85% of commercial lives covered at this point. Quality of access continues to be very strong, and we're seeing policies in place without restrictions, so we're very happy with that. Could you remind me again of your second question?
My question was how many patients re-prescribe or how many physicians re-prescribe FYARRO?
Yeah.
The prescription rate.
Remember, we don't get, we don't really get much in the way of script data, right? FYARRO is an IV therapy, we don't get patient-level data. The best measure we have is really the number of ordering institutions which you can loosely correlate to patients, that's a launch to date number. That would be the closest thing we have to actual patient data.
Okay. Thanks, Scott. My second question is on the SGO presentation or the relevance of TSC1 and TSC2 alterations in endometrial cancers. Could you maybe elaborate more on the relevance, like the maybe % of patients who had the TSC1, 2 alterations in the endometrial cancers? Is there any specific subtype that TSC1, 2 alterations occur in those endometrial cancer patients? Maybe the part of the follow-up question is what have you shown in the expanded access program for the, again, endometrial patients?
Okay. I'm gonna do is I'm gonna turn that first part of your question on the SGO data over to Loretta. Loretta, you wanna handle that one?
Sure. Can you hear me?
Yes.
Hi, Ahu. Off the top of my head, I can't recall the incidence rates of TSC1, TSC2 mutations. It is of the, of the different tumor types, it's one of the higher, I would say in the range of 3%-4% of endometrial cancers, express TSC1, TSC2 mutations. This sub-analysis that we performed was a relatively small subset of the AMPECT study. As you may be aware, there was literature to suggest
That PEComas that occurred in patients with endometrial cancer, had a relatively unfavorable response. Our data, in fact, showed a very favorable response of 43% in this population. I think we have shown rather definitively, at or at least in the best collection of patients of this type, that the effect of FYARRO in PEComas occurring in endometrial cancer is quite good. Did I answer your question?
Yes, you did. Is there any subtype of endometrial cancer, low grade, high grade, that TSC1/TSC2 alterations occur at a higher rate?
Unfortunately, the number of patients that we had data for would not allow us to say anything definitive in that regard.
I see. Thank you very much.
maybe this is Neil Desai. Hi, everyone. maybe I can just jump in here. The like Loretta said, you know, we don't have enough information at this point on the sort of copy number high versus low and the relative TSC1/TSC2 incidents, but that is an area we continue to look. I think you had another question on the EAP and as relates to endometrial. If you would recall, we did have endometrial cancer patients, and this was not PEComa, but endometrial cancer patients on the EAP data that we had disclosed in ASCO 2021. at least one of them...
I mean, it was a small number, but at least one of them, after many lines of therapy, had responded and done very well and went out for a long period of time, you know, when we did the cutoff for the ASCO data, which was, I believe, you know, over six months.
Very helpful. Thanks for taking my question.
Bye.
As a reminder, that is star one one to ask a question. We have a question from the line of Hangshi Yu with Cowen.
Hi, thank you for taking my question. This is Hangshi Yu for Boris P eaker. My first question is regarding PRECISION1. You mentioned you have some difficulty recruiting due to COVID or staffing shortage. Are we still expecting the final readout in 2024, or if you have any more precise timeline for that?
Sure. Loretta, you wanna take that one?
Sure. Good morning. We, as I believe I may have mentioned in my prepared remarks, we are very aware and our sites report that they are having continued problems relative to staffing related to the COVID pandemic. However, we have been able to continue accruing patients onto the trial as we planned. We do, at this point, still believe that we will meet our stated goal of completing enrollment in the spring of 2024. I don't think that there's anything different.
Thank you. My second question is regarding to the Mirati collaboration. Could you just give a little more color of, like, the data expectation?
Sure. Neil, you wanna take that one?
Yeah, sure. At this time, we haven't really spoken about the timing of data from that. As Scott mentioned and Loretta mentioned, the timing of the initiation of the trial is in Q2 at this point, and that's the information we have from Mirati. It is a phase I trial, where because it's a combination, the dose needs to be worked out. And so, you know, I think we can understand that that takes the usual amount of time for figuring out a combination. I don't think we expect any results this year, but it's possible we might get something next year. Again, that we have to hear from Mirati.
Thank you. Thank you for taking my questions.
That concludes today's question and answer session. I'd like to turn the call back to Scott Giacobello for closing remarks.
Yes, I wanna thank everyone, for joining us today. As you can see, we're very excited about 2023, and looking forward to, sharing more information later in the year. Thank you all.
This concludes today's conference call. Thank Thank you for participating. You may now disconnect.