Aduro (ADRO) Earnings Miss in Q2, Revenues Meet Estimates

Shares of Aduro BioTech, Inc. ADRO were down around 3.6% on Friday after it announced second-quarter 2019 results on Aug 1. In fact, so far this year, the stock has plunged 48.9%, underperforming the industry’s decrease of 1.8%.

Aduro incurred second-quarter 2019 loss of 23 cents per share, wider than the Zacks Consensus Estimate of a loss of 16 cents but narrower than the year-ago loss of 31 cents.

Revenues came in at $4.9 million, up 88.5% year over year, primarily owing to the recognition of the upfront payment received from the pharma giant Eli Lilly LLY during the first quarter of 2019. Meanwhile, sales almost came in line with the Zacks Consensus Estimate of $5 million.

Notably, last December, Aduro entered into an exclusive collaboration and license agreement with Eli Lilly to develop novel immunotherapies for autoimmune and other inflammatory diseases by leveraging its cGAS-STING inhibitor platform. The upfront payment received from this contract with Eli Lilly enhanced Aduro’s cash position at the end of the reported quarter.

Quarter in Detail

Research and development expenses declined 12.9% in the reported quarter to $16.9 million owing to lower stock-based compensation and reduced headcount plus decreased costs for deprioritized programs.

General and administrative expenses were $8 million, down9.1% year over year, primarily owing to strategic reset announced in January, which resulted in lower stock-based compensation and reduced headcount.

Pipeline Update

Aduro’s three distinct technology platforms, designed to harness the body's natural immune system, are being utilized to develop treatments for several cancer indications and show potential for label expansion into auto-immune and infectious diseases. The three well-defined platforms are the LADD technology, STING pathway activator and the B-select monoclonal antibody.

Aduro’s lead assets are STING agonist ADU-S100 and anti-APRIL antibody, BION-1301.

Aduro has a collaboration and license agreement with Novartis NVS for developing its lead STING Activator candidate ADU-S100.

In June this year, Aduro and Novartis presented data from the ongoing phase Ib study evaluating a combination of Aduro’s lead candidate ADU-S100 and Novartis’ PD-1 inhibitor spartalizumab in patients with advanced solid tumors or lymphomas.

However, investors seemed underwhelmed with response rates, which caused a plunge in share prices back then. Data from the study was presented at the annual meeting of the American Society of Clinical Oncology (ASCO).

We would like to remind investors that Aduro is currently enrolling patients in an early-stage study evaluating ADU-S100 in combination with Bristol-Myers’ Yervoy (ipilimumab) for relapsed/refractory melanoma. Another study to evaluate ADU-S100 in combination with Merck’s MRK Keytruda (pembrolizumab) for first-line head and neck cancer is expected to start in the second half of 2019.

Aduro initiated the phase I clinical study on BION-1301, evaluating healthy volunteers for treating IgA nephropathy, in first-quarter 2019. In May, the company announced that the first cohort in a phase I study on BION-1301 was cleared for recruiting patients to treat IgA nephropathy (IgAN) with initial data for healthy volunteers expected in the first half of 2020 and for IgAN patients, in the second half of 2020.

Meanwhile, as a result of the strategic reset in January, Aduro slashed its current workforce by almost 37% and redirected resources to focus on its core programs. The reduction in operating expenses is expected to strengthen the company’s cash, cash equivalents and marketable securities through 2022.

Aduro Biotech, Inc. Price, Consensus and EPS Surprise

Aduro Biotech, Inc. Price, Consensus and EPS Surprise

Aduro Biotech, Inc. price-consensus-eps-surprise-chart | Aduro Biotech, Inc. Quote

Zacks Rank

Aduro currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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