Aadi Bioscience has rebooted its operations, transforming from a commercial business into a preclinical biotech by offloading its approved product and licensing antibody-drug conjugates (ADCs) for $44 million upfront.
The Los Angeles-based company began looking for a new direction after Fyarro failed a solid tumor trial in August. Aadi responded to the setback, which torpedoed plans to expand the Fyarro label, by laying off 80% of its employees and starting a strategic review. The company shared the outcome of the review after the market closed Thursday, setting out its vision for a radical reengineering of the organization.
Going forward, Aadi will focus on three ADCs that were being developed by service provider WuXi Biologics and Chinese biotech Hangzhou DAC. Aadi is paying $44 million upfront and committing up to $265 million in development milestones and $540 million in commercial payments for global rights.
The deal has secured Aadi rights to preclinical ADCs against PTK7, MUC16 and SEZ6. Aadi sees PTK7 as a target that can unlock indications including non-small cell lung cancer, MUC16 as a protein that is relevant to cancers of female origin and SEZ6 as a way to attack neuroendocrine tumors. Other ADC developers have reached similar conclusions.
Genmab acquired a PTK7-directed ADC in its $1.8 billion takeover of ProfoundBio, which hustled the asset into the clinic in January. AbbVie is nearing the completion of a phase 1 trial of another PTK7 ADC that began in 2020. SEZ6 is another target of interest for AbbVie, which is assessing ABBV-706 in a phase 1 trial.
Aadi said the MUC16 asset is the first ADC to target the membrane-bound portion of the glycoprotein. Genentech began trialing a MUC16-directed ADC 10 years ago but later pulled the plug. Regeneron is among a clutch of companies targeting MUC16 with other modalities.
The Aadi assets are trailing rival candidates, but the biotech has the means to give chase. Alongside the deal for the ADCs, Aadi disclosed financing and an agreement to sell Fyarro and associated infrastructure to Kaken Pharmaceutical. The financing and Fyarro deal are each worth $100 million, giving Aadi a runway that extends into late 2028. Aadi expects to have clinical data before needing to raise more cash.