Aadi Bioscience Shares Surge on Licensing and Sales Agreements

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Aadi Bioscience Shares Surge on Licensing and Sales Agreements

Aadi Bioscience, Inc. (NASDAQ:AADI) shares rose 24% in pre-market trading on Friday following the company's announcement of a strategic licensing agreement and a significant asset sale. The biopharmaceutical company disclosed it has entered into an exclusive license agreement for its antibody-drug conjugates (ADCs) portfolio and agreed to sell its FYARRO® product and related infrastructure for $100 million to KAKEN Pharmaceutical.

The licensing agreement, made in partnership with WuXi Biologics and HANGZHOU DAC BIOTECHNOLOGY CO., LTD., grants Aadi exclusive rights to patents and know-how for three preclinical ADC programs. These programs are expected to target cancers with high unmet medical needs using HANGZHOU DAC's CPT113 binding payload technology. Aadi will make a $44 million upfront payment for the licensing agreement and could face development milestones of up to $265 million and commercial milestones of up to $540 million, along with single-digit sales royalties.

To finance these initiatives, Aadi secured a special private investment in public equity (PIPE) financing round expected to provide approximately $100 million in gross proceeds, subject to customary conditions and shareholder approval. The PIPE financing, expected to close in the first half of 2025, is led by Ally Bridge Group with participation from several new and existing investors.

David Lennon, the company’s President and CEO, expressed excitement about the partnership with WuXi Biologics and HANGZHOU DAC, highlighting the intentional selection of tumor targets and the potential of the next-generation ADC portfolio to improve cancer outcomes. The ADC assets utilize a platform with significant competitiveness among next-generation ADC platforms and address tumor targets where first-generation ADCs have demonstrated clinical efficacy.

In a separate transaction, KAKEN Pharmaceutical will acquire Aadi's FDA-approved treatment for PEComa, FYARRO®, along with the majority of employees supporting its related infrastructure and business. This agreement is also expected to close in the first half of 2025, subject to shareholder approval and other conditions.

The total revenue from the PIPE financing and the sale of FYARRO® is expected to finance Aadi's operations until late 2028, including the anticipated clinical data for the ADC portfolio, along with existing capital.

Additionally, Baiteng Zhao, co-founder and former CEO of ProfoundBio, has been appointed to Aadi's Board of Directors, bringing significant ADC expertise to the company. Zhao’s experience in next-generation ADC development is expected to be pivotal in advancing Aadi's new portfolio.

Aadi has engaged Leerink Partners as a financial advisor for the sale of FYARRO® and the licensing of the ADC portfolio, while Jefferies LLC serves as the exclusive placement agent for the PIPE financing. Legal advice for the transactions is provided by Wilson Sonsini Goodrich & Rosati, P.C., McDermott Will & Emery LLP, Cooley LLP, and Nomura Securities Co., Ltd.