Bullish indicating open at $55-$60, IPO prices at $37
On Tuesday, Piper Sandler adjusted its stance on Aadi Bioscience Inc (NASDAQ:AADI), downgrading the biopharmaceutical company's stock from Overweight to Neutral.
The firm also reduced its price target for Aadi's shares from $5.00 to $1.75. This decision follows Aadi's announcement of the discontinuation of its PRECISION1 study for nab-sirolimus, which was aimed at treating various tumor types regardless of their origin.
The halted study was a significant setback for Aadi, as interim analysis indicated that response rates for both TSC1 and TSC2 mutations were unlikely to meet the regulatory threshold for approval. Despite this, Aadi continues exploratory studies in endometrial cancer and neuroendocrine tumors (NETs), although enrollment for these studies has been paused as a cost-saving measure.
Aadi Bioscience currently still operates its commercial Fyarro business, which focuses on a therapy approved for advanced malignant perivascular epithelioid cell tumors. Piper Sandler noted that the company is conducting a strategic review to maximize the potential value of this business. However, it was pointed out that the Fyarro business has largely plateaued, with a projected revenue of $24.3 million for fiscal year 2024, showing no year-over-year growth.
The downgrading of Aadi's stock reflects the challenges faced by the company following the inconclusive results of the PRECISION1 study. Piper Sandler's revised price target of $1.75 from the previous $5.00 is a direct consequence of the latest developments and the anticipated impact on the company's future prospects.
In other recent news, Aadi Bioscience has seen significant changes in its executive leadership and strategic direction. Top executives, Dr. Loretta Itri and Dr. Neil Desai, have announced their departures from their current roles, effective October 1, 2024. Despite these departures, both executives will remain involved with the company in advisory and board roles.
In addition, Aadi Bioscience reported a Q2 net loss of $14.6 million, despite a 15% increase in FYARRO sales, totaling $6.2 million. The company's cash reserve of $78.6 million is projected to sustain operations into the fourth quarter of 2025. Amid these developments, Jefferies downgraded Aadi Bioscience's stock from 'Buy' to 'Hold'.
The company has also halted the pivotal study of nab-sirolimus for TSC1/TSC2 tumors due to unmet efficacy thresholds. This has led to a pause in new patient enrollment in ongoing Phase 2 trials for endometrial cancer and neuroendocrine tumors, and an 80% reduction in its research and development workforce. These strategic shifts are expected to extend the company's financial runway into the second half of 2026.
Despite these changes, Aadi Bioscience remains committed to maximizing the potential of its existing treatments, with a focus on the commercial success of FYARRO, a treatment for a rare form of cancer. These are the recent developments in the company's trajectory.
InvestingPro Insights
As Aadi Bioscience Inc (NASDAQ:AADI) navigates through its recent challenges, the InvestingPro platform provides some insights that could be valuable to investors monitoring the company's performance. Aadi holds more cash than debt on its balance sheet, which can be a comforting sign of financial stability in turbulent times. However, analysts have flagged that the company is quickly burning through cash, which could raise concerns about its long-term sustainability if not managed effectively.
From the perspective of market performance, Aadi has experienced a significant return over the last week, yet the price has fallen considerably over the last year. This volatility may present opportunities for investors, but it also underscores the importance of staying informed about the company's financial health and market position. With a market cap of approximately $43.08M and a concerning gross profit margin of -128.4% for the last twelve months as of Q2 2024, Aadi's financial landscape appears challenging.
For those seeking further analysis, InvestingPro offers additional tips on Aadi Bioscience, which can be found at https://www.investing.com/pro/AADI. These tips delve deeper into the company's valuation, profitability expectations, and liquidity, which can guide investors in making more informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.