WHWK

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended March 31, 2025, for Whitehawk Therapeutics, Inc. (formerly Aadi Bioscience, Inc.). The company is an oncology therapeutics firm that recently underwent a strategic transformation. On March 25, 2025, the company completed the divestiture of its legacy FYARRO business to KAKEN Investments Inc. for $102.4 million. Concurrently, the company changed its name and ticker symbol to "Whitehawk Therapeutics, Inc." (WHWK). The company is now a preclinical-stage biopharmaceutical company focused on a portfolio of three next-generation antibody drug conjugates (ADCs) licensed from WuXi Biologics.

Key Financial Metrics

Note: Revenue and operating expenses for Q1 2025 include activity from the FYARRO business prior to its divestiture on March 25, 2025.

Material Changes vs. Prior Period

• Net Income Surge: The company reported a net income of $73.0 million in Q1 2025, compared to a net loss of $18.3 million in Q1 2024. This reversal is primarily driven by a one-time $87.4 million gain on the sale of the FYARRO business.
• Liquidity Position: Cash and cash equivalents increased significantly from $28.7 million to $227.6 million. This increase was fueled by $101.4 million in proceeds from the FYARRO divestiture and $100.0 million in net proceeds from a Private Investment in Public Equity (PIPE) financing closed in March 2025.
• Operating Expenses: Total operating expenses decreased to $22.4 million from $24.9 million. Research and Development (R&D) expenses dropped by $4.8 million to $8.8 million, largely due to the cessation of the PRECISION1 trial and reduced personnel costs following restructuring. Selling, General, and Administrative (SG&A) expenses increased by $2.2 million to $12.8 million, driven by transaction costs related to the divestiture and PIPE financing.
• Balance Sheet Restructuring: Assets related to the FYARRO business (including inventory, accounts receivable, and property/equipment) were removed from the balance sheet upon divestiture, while cash balances surged.

Guidance, Outlook, and Risks

• Strategic Pivot: The company has transitioned from a commercial-stage entity to a preclinical-stage company. Future revenue generation depends entirely on the development and commercialization of three in-licensed ADC therapies targeting MUC16, PTK7, and SEZ6.
• Development Timeline: Management anticipates submitting Investigational New Drug (IND) applications for the ADC portfolio to the FDA by mid-2026, with the first submission expected in the fourth quarter of 2025.
• Liquidity Outlook: Management believes the current cash position of approximately $231 million (including short-term investments) is sufficient to fund operations into 2028.
• Key Risks:
  • Preclinical Stage: The company has no approved products and no revenue stream post-divestiture. Success depends on clinical trial outcomes which are inherently uncertain.
  • Third-Party Reliance: The company relies on WuXi Biologics (a Chinese entity) for the supply of linker-payloads and antibody manufacturing. This exposes the company to geopolitical risks, including potential U.S. legislation such as the BIOSECURE Act.
  • Capital Requirements: While current funds are projected to last until 2028, the company will require additional capital to complete development and commercialization, which may involve dilutive equity offerings.

Investor Verification Checklist

• Divestiture Finality: Confirm the final purchase price adjustments for the FYARRO sale to KAKEN and verify that all liabilities associated with the legacy business have been fully transferred.
• ADC License Terms: Review the specific diligence milestones and termination rights in the WuXi Biologics license agreement, particularly regarding the $38 million upfront payment made in April 2025.
• Geopolitical Exposure: Assess the potential impact of the proposed BIOSECURE Act on the company's ability to continue using WuXi Biologics and Hangzhou DAC for manufacturing and supply.
• Cash Burn Rate: Monitor the quarterly cash burn rate post-divestiture to validate the management's projection of funding operations through 2028.
• Equity Dilution: Track the exercise of the 20 million pre-funded warrants issued in the March 2025 PIPE financing and any future equity issuances.