Investing.com -- Aadi Bioscience, Inc. (NASDAQ:AADI) shares surged 24% in pre-open trading Friday following the company's announcement of a strategic licensing agreement and a significant asset sale. The biopharmaceutical company revealed it has entered into an exclusive license for a portfolio of antibody-drug conjugates (ADCs) and agreed to sell its FYARRO® product and associated infrastructure to KAKEN Pharmaceutical (TADAWUL:2070) for $100 million.
The license agreement, in collaboration with WuXi Biologics (HK:2269) 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 linker payload technology. Aadi will pay $44 million upfront for the licensing and could face up to $265 million in development milestones and $540 million in commercial milestones, along with single-digit sales royalties.
To fund these initiatives, Aadi has secured a private investment in public equity (PIPE) financing round, which should result in approximately $100 million in gross proceeds, subject to customary conditions and stockholder approval. The PIPE financing, expected to close in the first half of 2025, was led by Ally Bridge Group with participation from several new and existing investors.
The company's President and CEO, David Lennon, expressed enthusiasm about the partnership with WuXi Biologics and HANGZHOU DAC, highlighting the deliberate selection of tumor targets and the potential of the next-wave ADC portfolio to improve cancer outcomes. The ADC assets utilize a platform with the potential to be highly competitive among next-generation ADC platforms and address tumor targets where first-generation ADCs have shown clinical efficacy.
In a separate transaction, KAKEN Pharmaceutical will acquire Aadi's FYARRO®, an FDA-approved treatment for PEComa, along with related infrastructure and the majority of employees supporting the business. This deal is also anticipated to close in the first half of 2025, subject to stockholder approval and other conditions.
The combined proceeds from the PIPE financing and FYARRO® sale, along with existing capital, are expected to fund Aadi's operations into late 2028, including anticipated clinical data for the ADC portfolio.
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, particularly with next-gen ADC development, is expected to be instrumental 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 is the exclusive placement agent for the PIPE financing. Legal counsel for the transactions is provided by Wilson Sonsini Goodrich & Rosati, P.C., McDermott Will & Emery LLP, Cooley LLP, and Nomura Securities Co., Ltd.
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