AARD

Business Context and Reporting Period

Aardvark Therapeutics, Inc. (AARD) is a clinical-stage biopharmaceutical company focused on developing small-molecule therapeutics for metabolic diseases, specifically targeting hunger-associated conditions via Bitter Taste Receptors (TAS2Rs). The reporting period covers the three months ended March 31, 2025. During this quarter, the Company completed its Initial Public Offering (IPO) in February 2025, converting all outstanding convertible preferred stock into common stock. The Company has no approved products and has not generated any revenue to date.

Key Financial Metrics

Material Changes vs. Prior Period

• IPO and Capital Raise: In February 2025, the Company completed its IPO, selling 6,120,661 shares at $16.00 per share. Net proceeds were approximately $87.5 million after underwriting discounts and transaction costs. Concurrently, 96.9 million shares of convertible preferred stock were converted into 11.4 million shares of common stock.
• Liquidity Position: Total cash, cash equivalents, and short-term investments increased significantly from $19.6 million at December 31, 2024, to $151.3 million at March 31, 2025, driven by IPO proceeds and investment activity.
• Expense Growth: Total operating expenses increased by $8.3 million (382%) compared to Q1 2024. R&D expenses rose by $6.5 million, primarily due to increased external costs for chemistry, manufacturing, controls (CMC), and clinical studies for the lead candidate ARD-101. G&A expenses increased by $1.9 million, reflecting higher professional fees and personnel costs associated with becoming a public company.
• Investing Activities: Net cash used in investing activities was $112.6 million, primarily due to the purchase of short-term investments ($124.7 million) offset by maturities ($12.0 million).

Outlook, Risks, and Management Commentary

• Operational Focus: The Company initiated a potentially pivotal Phase 3 clinical trial (HERO trial) for ARD-101 in hyperphagia associated with Prader-Willi Syndrome (PWS) in December 2024. Topline data is anticipated in early 2026. The Company also plans to evaluate ARD-101 in a Phase 2 trial for hypothalamic obesity.
• Liquidity Outlook: Management believes existing cash and investments ($151.3 million) are sufficient to fund operations into 2027. However, the Company expects expenses and operating losses to increase substantially as it advances clinical trials and builds commercial infrastructure.
• Material Weakness in Internal Controls: The Company identified a material weakness in internal control over financial reporting related to a lack of segregation of duties and insufficient qualified resources for financial reporting. A remediation plan is underway, including hiring additional personnel and implementing a new ERP system, but controls were deemed ineffective as of March 31, 2025.
• Risk Factors: Key risks include the uncertainty of clinical trial outcomes, the need for substantial additional financing, dependence on third-party manufacturers, and the potential inability to achieve profitability. The Company also faces risks related to intellectual property protection and regulatory changes.

Investor Verification Checklist

• Cash Runway: Verify the accuracy of the projection that $151.3 million will fund operations into 2027, given the rapid increase in R&D burn rate.
• Phase 3 Trial Status: Confirm enrollment progress and any potential delays in the HERO Phase 3 trial for ARD-101, as this is the primary value driver.
• Internal Control Remediation: Monitor the progress of remediation efforts for the identified material weakness in financial reporting to ensure future financial statement reliability.
• Dilution Risk: Assess the impact of future capital raises required to sustain operations beyond 2027 and the potential dilution to existing shareholders.
• Related Party Receivables: Review the status of the $1.4 million unreimbursed costs owed by Aardwolf Therapeutics, which have been written off as uncollectible.