Aadi Bioscience, Inc. (AADI) Bundle
Understanding Aadi Bioscience, Inc. (AADI) Revenue Streams
Understanding Aadi Bioscience, Inc.’s Revenue Streams
The primary revenue source for the company is derived from product sales, specifically from its approved product, FYARRO, which was launched in the United States in February 2022.
Revenue Breakdown
| Period | Product Sales, Net (in thousands) | Total Revenue (in thousands) |
|---|---|---|
| Three Months Ended September 30, 2024 | $7,212 | $7,212 |
| Three Months Ended September 30, 2023 | $5,959 | $5,959 |
| Nine Months Ended September 30, 2024 | $18,744 | $18,744 |
| Nine Months Ended September 30, 2023 | $18,028 | $18,028 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth for the three months ended September 30, 2024, compared to the same period in 2023, reflects an increase of 21.0% in product sales. For the nine months ended September 30, 2024, the revenue increased by 4.0% compared to the previous year.
Contribution of Different Business Segments
As of September 30, 2024, the entire revenue of $18.744 million for the nine months is attributed to the sales of FYARRO. There are no other reported revenue streams since the company has focused on the commercialization of this single product.
Significant Changes in Revenue Streams
The significant change observed in revenue streams is attributed to the strong demand for FYARRO post-launch. The company has successfully increased its quarterly sales from $5.959 million in Q3 2023 to $7.212 million in Q3 2024, indicating a positive trend in market acceptance and sales performance.
Furthermore, the company has incurred various operating expenses, which have impacted net losses but have not deterred the growth in product sales. The operating expenses for the three months ended September 30, 2024, were $20.625 million, down from $23.808 million in the same period of 2023, reflecting a decrease in selling, general, and administrative expenses, which may have contributed to the improved revenue performance.
Conclusion of Revenue Analysis
This analysis illustrates the current state of the company’s revenue streams, highlighting the importance of FYARRO to its financial health and future prospects.
A Deep Dive into Aadi Bioscience, Inc. (AADI) Profitability
A Deep Dive into Aadi Bioscience, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was calculated as follows:
| Period | Net Product Sales | Cost of Goods Sold | Gross Profit | Gross Profit Margin (%) |
|---|---|---|---|---|
| Q3 2024 | $7,212,000 | $804,000 | $6,408,000 | 88.8% |
| Q3 2023 | $5,959,000 | $697,000 | $5,262,000 | 88.2% |
The gross profit margin shows a slight improvement from 88.2% in Q3 2023 to 88.8% in Q3 2024, indicating effective cost management in the production of FYARRO.
Operating Profit Margin: The loss from operations for the three months ended September 30, 2024, was:
| Period | Loss from Operations | Total Revenue | Operating Profit Margin (%) |
|---|---|---|---|
| Q3 2024 | $(13,413,000) | $7,212,000 | (186.4%) |
| Q3 2023 | $(17,849,000) | $5,959,000 | (299.3%) |
The operating profit margin improved from (299.3%) in Q3 2023 to (186.4%) in Q3 2024, reflecting a reduction in operating losses despite increasing revenues.
Net Profit Margin: The net loss for the three months ended September 30, 2024, was:
| Period | Net Loss | Total Revenue | Net Profit Margin (%) |
|---|---|---|---|
| Q3 2024 | $(12,546,000) | $7,212,000 | (174.5%) |
| Q3 2023 | $(16,302,000) | $5,959,000 | (273.2%) |
The net profit margin improved from (273.2%) in Q3 2023 to (174.5%) in Q3 2024, indicating a trend towards lesser losses relative to revenue.
Trends in Profitability Over Time: Over the last year, the company has shown a consistent trend of decreasing losses. The net loss for the nine months ended September 30, 2024, amounted to $(45,418,000), compared to $(49,496,000) for the same period in 2023.
Comparison with Industry Averages: The pharmaceutical industry typically sees gross profit margins ranging from 70% to 90%. The company's current gross profit margin of 88.8% sits well within this range, indicating strong operational efficiency.
Operational Efficiency Analysis: The company has made substantial reductions in its operating expenses:
| Expense Type | Q3 2024 | Q3 2023 | Change ($) |
|---|---|---|---|
| Selling, General and Administrative | $7,186,000 | $11,221,000 | (4,035,000) |
| Research and Development | $9,997,000 | $11,890,000 | (1,893,000) |
These reductions highlight effective cost management strategies, contributing to improved profitability metrics.
Future Outlook: As of September 30, 2024, the company had cash, cash equivalents, and short-term investments of $62.6 million, suggesting sufficient liquidity to support ongoing operations and potential growth opportunities.
Debt vs. Equity: How Aadi Bioscience, Inc. (AADI) Finances Its Growth
Debt vs. Equity: How Aadi Bioscience Finances Its Growth
The company has a mix of debt and equity financing to support its operations and growth. As of September 30, 2024, the total liabilities were $16.83 million, with current liabilities amounting to $15.81 million. The breakdown of current liabilities includes $1.37 million in accounts payable and $14.12 million in accrued liabilities.
In terms of long-term debt, the company maintains an operating lease liability of $0.62 million net of current portion. The overall debt-to-equity ratio stands at approximately 0.24, which is below the industry average of 0.5 for biotechnology firms, indicating a conservative approach to leveraging.
Recent financing activities include a $72.2 million net funding received from a private investment in public equity (PIPE) financing in September 2022. Additionally, the company has an at-the-market offering agreement allowing it to sell shares up to $75 million. As of September 30, 2024, the company had $62.6 million in cash, cash equivalents, and short-term investments, sufficient to fund operations into the second half of 2026.
| Type of Debt | Amount (in millions) |
|---|---|
| Current Liabilities | 15.81 |
| Accounts Payable | 1.37 |
| Accrued Liabilities | 14.12 |
| Long-term Operating Lease | 0.62 |
| Total Liabilities | 16.83 |
The company has been primarily funding its operations through equity financing, with significant investments from private placements and public offerings. As of September 30, 2024, the accumulated deficit reached $314.4 million, reflecting ongoing net losses. The net losses for the three months ended September 30, 2024, were $12.5 million, compared to $16.3 million for the same period in 2023.
To maintain a balanced capital structure, the company continues to evaluate its financing options, which may include additional equity offerings or potential debt financing. The ability to raise further capital will be crucial for sustaining its operations and advancing product development.
Assessing Aadi Bioscience, Inc. (AADI) Liquidity
Assessing Aadi Bioscience, Inc.'s Liquidity
As of September 30, 2024, Aadi Bioscience, Inc. reported a liquidity position characterized by:
- Current Ratio: 3.96
- Quick Ratio: 3.96
The current ratio indicates that the company has $3.96 in current assets for every $1 in current liabilities, suggesting a strong liquidity position. The quick ratio, which excludes inventory from current assets, also stands at 3.96, confirming that the company can cover its short-term obligations without relying on the sale of inventory.
Analysis of Working Capital Trends
As of September 30, 2024, Aadi Bioscience had:
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|---|
| September 30, 2024 | $62,600 | $15,813 | $46,787 |
| December 31, 2023 | $105,195 | $26,395 | $78,800 |
The working capital decreased from $78.8 million at the end of 2023 to $46.8 million by September 2024, primarily due to increased operational costs and investments in research and development.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow trends were as follows:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $(44,497) | $(50,019) |
| Investing Activities | $12,069 | $79,557 |
| Financing Activities | $77 | $246 |
The net cash used in operating activities decreased from $(50.0 million) in 2023 to $(44.5 million) in 2024, reflecting improved operational efficiency. Cash provided by investing activities dropped significantly from $79.6 million in 2023 to $12.1 million in 2024, primarily due to lower maturities of short-term investments.
Potential Liquidity Concerns or Strengths
While the current cash position of $62.6 million is substantial, the company has an accumulated deficit of $314.4 million. Net losses reported were:
- Net Loss for Q3 2024: $(12.5 million)
- Net Loss for Q3 2023: $(16.3 million)
- Net Loss for YTD 2024: $(45.4 million)
- Net Loss for YTD 2023: $(49.5 million)
The ongoing net losses raise concerns about the sustainability of operations without additional funding. The company anticipates that its existing cash will support operations into the second half of 2026, but it will require further financing to maintain its operational and developmental activities beyond this period.
Is Aadi Bioscience, Inc. (AADI) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the company reported a price-to-earnings (P/E) ratio of N/A due to negative earnings. The price-to-book (P/B) ratio stands at 1.00, calculated using the book value of equity of $68.9 million and total shares outstanding of 24.6 million.
The enterprise value-to-EBITDA (EV/EBITDA) ratio is also not applicable as the company has not reported positive EBITDA. The enterprise value, calculated as market capitalization plus total debt minus cash and cash equivalents, is $65.8 million, considering cash and equivalents of $62.6 million.
In terms of stock price trends, the stock has experienced significant fluctuations over the last 12 months. The stock price was $3.20 on September 30, 2024, compared to $7.50 one year prior. Year-to-date performance shows a decline of approximately 57%.
Regarding dividends, the company does not currently pay a dividend, and its payout ratio remains 0%.
Analyst consensus indicates a rating of Hold, with a target price of $4.00, reflecting a potential upside of 25% from the current trading price.
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 1.00 |
| EV/EBITDA Ratio | N/A |
| Stock Price (Sept 30, 2024) | $3.20 |
| Stock Price (1 Year Ago) | $7.50 |
| Year-to-Date Performance | -57% |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Target Price | $4.00 |
| Potential Upside | 25% |
Key Risks Facing Aadi Bioscience, Inc. (AADI)
Key Risks Facing Aadi Bioscience, Inc.
Understanding the risk factors impacting Aadi Bioscience, Inc. is crucial for evaluating its financial health and future prospects. Below are the internal and external risks that may affect the company's operations and financial results.
Industry Competition
The biopharmaceutical industry is highly competitive, with numerous companies working on similar therapies. Aadi Bioscience faces competition from both established pharmaceutical companies and biotech firms developing cancer treatments. The presence of alternative therapies can significantly impact the market share and revenue of Aadi's approved product, FYARRO.
Regulatory Changes
Regulatory approval processes are stringent and can change. Aadi's ability to commercialize FYARRO and any future product candidates is contingent on obtaining necessary approvals from regulatory authorities, such as the FDA. Any changes in regulations could delay approval timelines or increase costs.
Market Conditions
Market conditions and economic factors can affect Aadi's financial stability. As of September 30, 2024, Aadi reported an accumulated deficit of $314.4 million and net losses of $12.5 million for the three months ended September 30, 2024. Economic downturns may also limit access to capital and affect the company's ability to fund operations.
Operational Risks
Aadi has reported significant operational challenges, including the halt of the PRECISION1 trial, which was based on interim data suggesting it would not meet the efficacy threshold necessary for accelerated approval. The company continues to incur substantial expenses related to research and development and general administrative costs, which could impact its liquidity.
Financial Risks
Aadi's financial health is critical, as evidenced by its net losses totaling $45.4 million for the nine months ended September 30, 2024. The company has financed its operations primarily through equity offerings and debt financing, which may not be sustainable in the long term. If Aadi fails to generate sufficient revenue from FYARRO, it may require additional funding sooner than anticipated, potentially leading to dilution of existing shareholders' equity.
Mitigation Strategies
Aadi has taken steps to manage its costs, including workforce reductions and pausing clinical trials. The company maintains a cash balance of $62.6 million as of September 30, 2024, which is expected to support its operations into the second half of 2026. However, ongoing monitoring of market conditions and strategic financial planning will be essential to navigate potential risks effectively.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition from other biopharmaceutical companies. | Potential loss of market share and revenue. |
| Regulatory Changes | Changes in regulations affecting approval processes. | Increased costs and delayed timelines. |
| Market Conditions | Economic downturns affecting funding and revenue. | Increased financial losses and reduced cash flow. |
| Operational Risks | Challenges in clinical trial management and operational efficiency. | Increased expenses and potential liquidity issues. |
| Financial Risks | Reliance on external financing and potential dilution of equity. | Increased financial instability and shareholder dilution. |
Future Growth Prospects for Aadi Bioscience, Inc. (AADI)
Growth Opportunities
Future growth prospects for Aadi Bioscience, Inc. are driven by several key factors, including product innovations, market expansions, and strategic partnerships.
Key Growth Drivers
The primary product, FYARRO, was launched in the United States for the treatment of advanced malignant PEComa in February 2022. Since its launch, Aadi has recorded net product sales of $7.2 million and $18.7 million for the three and nine months ended September 30, 2024, respectively. This represents an increase from $5.9 million and $18.0 million for the same periods in 2023. The growth in sales is attributed to strong demand and the ongoing commercialization efforts of FYARRO.
Future Revenue Growth Projections
Analysts project that the continued commercialization of FYARRO, along with potential regulatory approvals for additional indications, could significantly enhance revenue streams. However, the company expects to incur substantial expenses, with anticipated net losses of $45.4 million and $49.5 million for the nine months ended September 30, 2024 and 2023, respectively. The focus on reducing operating expenses, particularly in research and development, aims to improve financial health moving forward.
Strategic Initiatives and Partnerships
Aadi has engaged in strategic collaborations, including a license agreement with Bristol-Myers Squibb (BMS). Under this agreement, Aadi is responsible for paying a royalty of 20% on net sales of FYARRO. In the three months ended September 30, 2024, royalties amounted to $0.5 million, up from $0.4 million in the same period in 2023. These partnerships are crucial for accessing broader markets and enhancing product visibility.
Competitive Advantages
Aadi's competitive edge lies in its unique product formulation combining nanoparticle albumin-bound technology with sirolimus, offering a targeted treatment option for rare cancers. The company's ability to secure FDA approval for FYARRO and its ongoing efforts to expand its indications are pivotal for future growth. Additionally, as of September 30, 2024, Aadi holds $62.6 million in cash, cash equivalents, and short-term investments, which supports its operational needs into the second half of 2026.
| Metric | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Net Product Sales | $7.2 million | $5.9 million |
| Net Loss | $12.5 million | $16.3 million |
| Accumulated Deficit | $314.4 million | $269.0 million |
| Cash and Short-term Investments | $62.6 million | N/A |
| Royalties Paid to BMS | $0.5 million | $0.4 million |
These factors combined position Aadi Bioscience, Inc. to capitalize on growth opportunities in the biopharmaceutical sector, particularly in the oncology market.
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Resources:
- Aadi Bioscience, Inc. (AADI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Aadi Bioscience, Inc. (AADI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Aadi Bioscience, Inc. (AADI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.