AARD

Business Context and Reporting Period

Aardvark Therapeutics, Inc. (AARD) is a clinical-stage biopharmaceutical company developing small-molecule therapeutics targeting Bitter Taste Receptors (TAS2Rs) for metabolic diseases. The reporting period covers the quarter and six months ended June 30, 2025. In February 2025, the Company completed its Initial Public Offering (IPO) and converted all outstanding convertible preferred stock into common stock. The Company is currently focused on its lead candidate, ARD-101, for hyperphagia associated with Prader-Willi Syndrome (PWS), and ARD-201 for obesity-related conditions.

Key Financial Metrics

Note: The Company has no debt obligations. Liquidity is supported by cash and short-term investments totaling $141.8 million as of June 30, 2025.

Material Changes vs. Prior Period

• Capital Structure: The Company completed its IPO in February 2025, raising approximately $87.5 million in net proceeds. All 96.9 million shares of convertible preferred stock were converted into 11.4 million shares of common stock.
• Expense Growth: Total operating expenses increased by $18.1 million (219%) compared to the prior year period. R&D expenses rose by $15.7 million, driven by external costs for chemistry, manufacturing, controls (CMC), and clinical studies for ARD-101. G&A expenses increased by $2.5 million due to higher personnel costs and public company compliance costs.
• Investment Activity: Net cash used in investing activities was $103.2 million, primarily due to the purchase of short-term investments ($124.7 million) offset by maturities ($21.5 million).
• Related Party Write-offs: Credit losses related to a related party (Aardwolf Therapeutics) were $0 in the current period, compared to $0.1 million in the prior period, as the receivables were previously written off.

Guidance, Outlook, and Risks

• Clinical Pipeline:
  • HERO Trial (ARD-101): Phase 3 trial for PWS hyperphagia initiated in Q2 2025. Topline data expected in Q3 2026. Enrollment criteria were amended in August 2025 to include patients under 13 years of age.
  • HONOR Trial (ARD-101): Phase 2 trial for hypothalamic obesity planned for initiation in H2 2025.
  • POWER & STRENGTH Trials (ARD-201): Two Phase 2 trials replacing the EMPOWER trial. POWER (prevention of weight regain) expected to initiate in H2 2025; STRENGTH (weight reduction) expected in H1 2026.
• Liquidity Outlook: Management believes current cash resources ($141.8 million) are sufficient to fund operations into 2027. No revenue is expected until regulatory approval is obtained.
• 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. A remediation plan is underway, including hiring additional personnel and implementing a new ERP system. Disclosure controls were deemed ineffective as of June 30, 2025.
• Risk Factors: Significant risks include the failure of clinical trials, inability to secure additional funding, dependence on third-party manufacturers, and the potential for stock price volatility following the expiration of IPO lock-up agreements in August 2025.

Investor Verification Checklist

• Runway Validation: Verify the $141.8 million cash balance against projected burn rates to confirm the "into 2027" liquidity estimate.
• Internal Control Remediation: Monitor progress on the remediation plan for the material weakness in financial reporting to ensure future audit compliance.
• Clinical Enrollment: Track enrollment rates for the HERO trial, particularly given the expanded criteria for pediatric patients.
• Share Dilution: Assess the impact of the 15.5 million shares that became eligible for sale following the lock-up expiration on August 11, 2025.
• Related Party Exposure: Confirm the status of the $1.4 million unreimbursed costs and $1.0 million note receivable from Aardwolf Therapeutics, which are currently written off.