Filing Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2021. The source filing identifies the registrant as Aadi Bioscience, Inc., not Whitehawk Therapeutics, Inc.; investors should verify the requested company identity. Aadi is a biopharmaceutical company developing and commercializing precision oncology therapies targeting mTOR-pathway alterations. Its lead product, FYARRO (nab-sirolimus), received FDA approval on November 22, 2021, for adults with advanced malignant PEComa and was launched in the United States in the first quarter of 2022.
In August 2021, Aadi completed a reverse merger with Aerpio Pharmaceuticals and raised $155.0 million in gross PIPE proceeds. The company operated as an early commercial-stage biopharmaceutical company at year-end and had 39 full-time or part-time employees.
Financial and Operating Metrics
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $1.1 million | $14.6 million |
| License revenue | $1.0 million | $14.0 million |
| Grant revenue | $0.1 million | $0.6 million |
| Research and development expense | $19.7 million | $15.0 million |
| General and administrative expense | $18.5 million | $2.1 million |
| Impairment of acquired contract intangible asset | $74.2 million | — |
| Loss from operations | $111.2 million | $2.5 million |
| Net loss | $110.1 million | $3.5 million |
| Net loss attributable to common stockholders per share | $12.41 | $1.76 |
| Net cash used in operating activities | $22.4 million | $12.7 million |
| Cash and cash equivalents at year-end | $149.0 million | $4.5 million |
| Total debt and convertible notes | No convertible notes outstanding; $5.8 million related-party payable | $10.1 million convertible notes plus $14.3 million current related-party payable |
Operating expenses increased to $112.3 million, primarily because of the $74.2 million non-cash impairment charge, higher commercial launch preparation costs, increased personnel and public-company costs, and higher clinical manufacturing and development spending. The company reported no product sales revenue through December 31, 2021.
Cash flow was supported by $145.4 million of net PIPE proceeds, $29.7 million of cash acquired in the merger, and $25.2 million of net investing cash inflows. Financing cash inflow was $141.8 million. The company had $21.5 million of total liabilities and $136.4 million of stockholders’ equity at year-end.
Material Changes Versus the Prior Comparable Period
- Revenue declined by $13.5 million, reflecting the absence of the $14.0 million EOC upfront license payment recognized in 2020. The 2021 license revenue consisted primarily of a $1.0 million FDA approval milestone.
- Research and development expense increased 31% to $19.7 million, driven by higher FYARRO manufacturing, external clinical development, personnel and consulting costs, partly offset by lower license fees.
- General and administrative expense increased more than eightfold to $18.5 million as the company expanded its commercial organization, prepared for the FYARRO launch and incurred public-company expenses.
- Net loss increased substantially because of the $74.2 million impairment charge and higher operating expenses.
- Cash increased by $144.5 million, primarily from the PIPE financing and merger-related cash proceeds.
- Convertible notes converted into common stock in connection with the merger and were no longer outstanding at December 31, 2021.
- The company paid $4.4 million of cumulative preferred-stock dividends and paid Celgene $5.8 million under an amended license obligation. A further $5.8 million related-party payment is due August 26, 2024, plus accrued interest at 4.0% per annum.
Guidance, Outlook, Risks and Unusual Items
Management stated that existing cash and cash equivalents were expected to fund planned operations into 2024. The company expects research and development expense to increase in 2022, particularly because of the PRECISION 1 registration-directed Phase 2 study in solid tumors with TSC1 or TSC2 alterations. Commercial, sales, marketing and public-company expenses are also expected to increase.
- FYARRO was launched commercially in the United States in the first quarter of 2022. The company is pursuing potential additional indications, including a tumor-agnostic TSC1/TSC2 program and combination studies.
- AMPECT produced an independently assessed overall response rate of 39% and disease control rate of 71% in advanced malignant PEComa. These results were from a small, open-label Phase 2 study and may not predict broader commercial or clinical outcomes.
- The company is dependent on a single-source manufacturer, Fresenius Kabi, for FYARRO. A January 2022 agreement includes minimum purchase quantities and potential payments if those quantities are not purchased; redundant supply arrangements were not yet in place.
- FDA approval carries post-marketing requirements and commitments. Failure to satisfy them, or the emergence of unexpected safety issues, could lead to labeling restrictions, penalties, recall or withdrawal.
- The company has incurred losses since inception, has an accumulated deficit of $142.7 million and expects significant future losses. Additional financing may be required, which could dilute stockholders or impose debt-related restrictions.
- Coverage, reimbursement, pricing pressure, limited patient populations, competition from other mTOR inhibitors, clinical-trial enrollment, COVID-19 disruptions, intellectual-property challenges and reliance on EOC Pharma in Greater China are material risks.
- The $74.2 million impairment reduced the acquired contract intangible asset to approximately $3.9 million. The asset relates to contingent proceeds from a legacy Aerpio license, of which 90% would be payable to contingent value-right holders; future proceeds are uncertain.
- No material legal proceedings were pending as of the filing date. Management reported effective disclosure controls and internal control over financial reporting, while the independent auditor was not engaged to provide an auditor attestation under Section 404(b).
Key Facts for Investors to Verify
- Confirm whether this filing belongs to Aadi Bioscience, Inc. rather than Whitehawk Therapeutics, Inc.
- Verify the timing and scope of FYARRO’s FDA approval, including the approved PEComa population and all post-marketing requirements.
- Assess cash burn, the stated cash runway into 2024 and the likelihood and terms of future financing.
- Evaluate the commercial launch trajectory, reimbursement access and actual product revenue after December 31, 2021.
- Review the Fresenius Kabi supply agreement, minimum purchase obligations and the absence of redundant manufacturing supply.
- Review the Celgene license economics, royalties, sublicense obligations and the $5.8 million payment due in August 2024.
- Validate the clinical evidence supporting FYARRO expansion, particularly the design, enrollment and endpoints of PRECISION 1.
- Consider the effect of the $74.2 million non-cash impairment and the contingent value-right obligations on reported earnings and future cash flows.