Aadi Bioscience Inc

Previous wording

Throughout this document we refer to FYARRO (nab-sirolimus, sirolimus protein-bound particles for injectable suspension (albumin-bound)) as FYARRO in the context of commercialization for the treatment of advanced malignant perivascular epithelioid cell tumor (PEComa), investigational use, our clinical trials, regulatory matters such as orphan drug designation, our license agreement with Bristol-Myers Squibb Company and collaboration agreement with Mirati Therapeutics, Inc., all further discussed throughout this document.

Current wording

Throughout this document we refer to FYARRO (nab-sirolimus, sirolimus protein-bound particles for injectable suspension (albumin-bound)) as FYARRO in the context of commercialization for the treatment of advanced malignant perivascular epithelioid cell tumor (PEComa), investigational use, our clinical trials, regulatory matters such as orphan drug designation, our license agreement with Bristol-Myers Squibb Company and our former agreements with Mirati Therapeutics, Inc. and EOC Pharma (Hong Kong) Limited, all further discussed throughout this document.

Previous wording

In November 2021, the U.S. Food and Drug Administration (the “FDA”) approved FYARRO sirolimus protein-bound particles for injectable suspension (albumin-bound) for the treatment of adult patients with locally advanced unresectable or metastatic malignant PEComa. On February 22, 2022, we launched FYARRO in the United States for treatment of advanced malignant PEComa and recognized net product sales of $5.4 million and $5.9 million for the three months ended March 31, 2024 and 2023, respectively. See “Results of Consolidated Operations” for further discussion of our results.

Current wording

In November 2021, the U.S. Food and Drug Administration (the “FDA”) approved FYARRO sirolimus protein-bound particles for injectable suspension (albumin-bound) for the treatment of adult patients with locally advanced unresectable or metastatic malignant PEComa. On February 22, 2022, we launched FYARRO in the United States for treatment of advanced malignant PEComa and recognized net product sales of $6.2 million and $11.5 million for the three and six months ended June 30, 2024, respectively. See “Results of Consolidated Operations” for further discussion of our results.

Previous wording

•Termination of the Mirati Collaboration. In May 2024, we announced that, at our request, we and Mirati Therapeutics, Inc. (“Mirati”) mutually agreed to terminate ourcollaboration and supply agreement. We entered into the agreement with Mirati in October 2022 to evaluate the combination of Mirati’s adagrasib (KRAZATI®), a KRAS G12C selective inhibitor, and FYARRO in KRAS G12C mutant non-small cell lung cancer ("NSCLC") and other solid tumors. The Phase 1/2 trial has been discontinuedas weprioritize the evaluation ofnab-sirolimus in Phase 2 trials for endometrioid endometrial cancer ("EEC") and in neuroendocrine tumors ("NETs").

Current wording

•Termination of the Mirati Collaboration. In May 2024, we announced that, at our request, we and Mirati Therapeutics, Inc. (“Mirati”) mutually agreed to terminate ourcollaboration and supply agreement. We entered into the agreement with Mirati in October 2022 to evaluate the combination of Mirati’s adagrasib (KRAZATI®), a KRAS G12C selective inhibitor, and FYARRO in KRAS G12C mutant non-small cell lung cancer ("NSCLC") and other solid tumors. Enrollment in Phase 1/2 trial has been discontinuedas weprioritize the evaluation ofnab-sirolimus in Phase 2 trials for endometrioid endometrial cancer ("EEC") and in neuroendocrine tumors ("NETs").

Previous wording

We have exclusive rights for certain patents and a non-exclusive license for certain technology and know-how pertaining to ABI-009 (which we refer to as FYARRO) pursuant to an amended and restated license agreement, dated November 15, 2019, as amended August 31, 2021 (the “BMS License Agreement”) with Abraxis BioScience, LLC, a wholly owned subsidiary of Celgene Corporation, which is a wholly owned subsidiary of BMS. Under the BMS License Agreement, BMS is entitled to receive certain development milestone payments, royalties on net sales from licensed products under the agreement and any sublicense fees. We recorded royalties on net product sales of $0.4 million during the three months ended March 31, 2024 and 2023, under the terms of this agreement. No development payments related to milestones under this agreement were paid during the three months ended March 31, 2024. See Note 7 to the condensed consolidated financial statements for more information about the BMS License Agreement.

Current wording

We have exclusive rights for certain patents and a non-exclusive license for certain technology and know-how pertaining to ABI-009 (which we refer to as FYARRO) pursuant to an amended and restated license agreement, dated November 15, 2019, as amended August 31, 2021 (the “BMS License Agreement”) with Abraxis BioScience, LLC, a wholly owned subsidiary of Celgene Corporation, which is a wholly owned subsidiary of BMS. Under the BMS License Agreement, BMS is entitled to receive certain development milestone payments, royalties on net sales from licensed products under the agreement and any sublicense fees. During the three months ended June 30, 2024 and 2023, royalties on net product sales were $0.5 million and $0.5 million, respectively under the terms of this agreement. During the six months ended June 30, 2024 and 2023, royalties on net product sales were $0.9 million and $0.9 million, respectively under the terms of this agreement. No development payments related to milestones under this agreement were paid during the three and six months ended June 30, 2024. See Note 7 to the condensed consolidated financial statements for more information about the BMS License Agreement.

Previous wording

Commerce’s International Court of Arbitration against us. The arbitration process is ongoing. We intend to defend ourselves vigorously in this matter and pursue all relief to which we are entitled. We are unable to estimate the possible loss or range of loss, therefore no amounts have been accrued as of March 31, 2024. See Notes 7 and 12 to the condensed consolidated financial statements for more information about the EOC License Agreement, its termination and pending arbitration.

Current wording

On June 27, 2022, we received written notice from EOC that EOC has elected to terminate the EOC License Agreement, effective immediately. On June 27, 2022, EOC filed a Request for Arbitration with the International Chamber of Commerce’s International Court of Arbitration against us. The arbitration process is ongoing and we expect a decision in the second half of 2024. We are defending ourselves vigorously in this matter and pursuing all relief to which we are entitled. We are unable to estimate the possible loss or range of loss, and therefore no amounts have been accrued as of June 30, 2024. See Notes 7 and 12 to the condensed consolidated financial statements for more information about the EOC License Agreement, its termination and pending arbitration.

Previous wording

In October 2022, we entered into a collaboration and supply agreement with Miratito evaluatethe combination of Mirati’s adagrasib and FYARRO in KRAS G12C mutant NSCLC and other solid tumors. In May 2024, we announced the mutually agreed upon termination of the collaboration and supply agreement with Mirati and the discontinuation of the Phase 1/2 study. Under the terms of the agreement, Mirati was responsible for sponsoring and operating the Phase 1/2 study and we supplied study drug and jointly shared the cost of the study.

Current wording

In October 2022, we entered into a collaboration and supply agreement with Miratito evaluatethe combination of Mirati’s adagrasib and FYARRO in KRAS G12C mutant NSCLC and other solid tumors. In May 2024, we announced the mutually agreed upon termination of the collaboration and supply agreement with Mirati. Enrollment in the Phase 1/2 study has been closed and the study is winding down. Under the terms of the agreement, Mirati was responsible for sponsoring and operating the Phase 1/2 study and we supplied study drug and jointly shared the cost of the study, which will continue during the winding down process.

Previous wording

•We have built a cross-functional commercial team consisting of marketing, market access and commercial operations and will continue to strategically build our sales and our commercial infrastructure with capabilities designed to scale when necessary to support future commercial launches. Expenses related to our commercialization of FYARRO, including personnel expenses, sales support, and marketing are included in selling, general and administrative expenses for the three months ended March 31, 2024. We expect these expenses to decrease, as compared to prior periods.

Current wording

•We have built a cross-functional commercial team consisting of marketing, market access and commercial operations and will continue to strategically build our sales and our commercial infrastructure with capabilities designed to scale when necessary to support future commercial launches. Expenses related to our commercialization of FYARRO, including personnel expenses, sales support, and marketing are included in selling, general and administrative expenses for the three and six months ended June 30, 2024. We expect these expenses to decrease, as compared to prior periods.

Previous wording

•We have built our research and development team and we expect our research and development costs will increase in 2024, relative to prior periods, as a result of significant expenses related to the PRECISION1 trial which was open to enrollment during the year ended December 31, 2023 and continued enrollment through the three months ended March 31, 2024, as well as our anticipated expenses related to clinical programs for FYARRO in EEC and in NETs. We are currently enrolling patients in (i) a Phase 2 open-label, multi-institutional study to evaluate the efficacy and safety of the combination of FYARRO with letrozole for the treatment of advanced or recurrent EEC and (ii) a Phase 2 multicenter, open-label, single-arm trial to evaluate FYARRO in adult patients with functional or non-functional, well-differentiated, locally advanced unresectable or metastatic NETs of the GI tract, lung, or pancreas who have received ≤2 prior lines of therapy, excluding somatostatin analogs (SSTa).

Current wording

EEC and in NETs. We are currently enrolling patients in (i) a Phase 2 open-label, multi-institutional study to evaluate the efficacy and safety of the combination of FYARRO with letrozole for the treatment of advanced or recurrent EEC and (ii) a Phase 2 multicenter, open-label, single-arm trial to evaluate FYARRO in adult patients with functional or non-functional, well-differentiated, locally advanced unresectable or metastatic NETs of the GI tract, lung, or pancreas who have received ≤2 prior lines of therapy, excluding somatostatin analogs (SSTa).

Previous wording

As of March 31, 2024, we had $88.3 million of cash, cash equivalents and short-term investments. Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will enable us to conduct our planned operations into the fourth quarter of 2025. We have incurred net losses in each year since inception and as of March 31, 2024, we had an accumulated deficit of $287.3 million. These losses have resulted principally from costs incurred in connection with research and development activities, selling, general and administrative costs associated with our operations, and costs associated with the Merger. We expect to continue to incur significant expenses and operating losses for the foreseeable future due to the cost of research and development, including conducting preclinical and clinical trials and identifying and designing product candidates, the regulatory approval process for FYARRO outside the United States and in additional indications and any other product candidates we may develop in the future and the commercial launch of FYARRO.

Current wording

As of June 30, 2024, we had $78.6 million of cash, cash equivalents and short-term investments. Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will enable us to conduct our planned operations into the fourth quarter of 2025. We have incurred net losses in each year since inception and as of June 30, 2024, we had an accumulated deficit of $301.8 million. These losses have resulted principally from costs incurred in connection with research and development activities, selling, general and administrative costs associated with our operations, and costs associated with the Merger. We expect to continue to incur significant expenses and operating losses for the foreseeable future due to the cost of research and development, including conducting preclinical and clinical trials and identifying and designing product candidates, the regulatory approval process for FYARRO outside the United States and in additional indications and any other product candidates we may develop in the future and the commercial launch of FYARRO.

Previous wording

During the three months ended March 31, 2024, and 2023, we recognized no income tax expense on the condensed consolidated statements of operations and comprehensive loss. Since our formation in 2011, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year or our earned tax credits, due to our uncertainty of realizing a benefit from those items.

Current wording

During the three and six months ended June 30, 2024 and 2023, we recognized no income tax expense on the condensed consolidated statements of operations and comprehensive loss. Since our formation in 2011, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year or our earned tax credits, due to our uncertainty of realizing a benefit from those items.

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of the Six Months Ended June 30, 2024 and 2023

Previous wording

Our product sales, net consist of sales of FYARRO since its launch in the United States on February 22, 2022. Product sales, net for the three months ended March 31, 2024 and 2023 were $5.4 million and $5.9 million, respectively. The decrease of sales is a result of distributor ordering patterns and fewer new patient initiations than the historical average.

Current wording

Our product sales, net consist of sales of FYARRO since its launch in the United States on February 22, 2022. Product sales, net for the three months ended June 30, 2024 and 2023 were $6.2 million and $6.2 million, respectively. For the six months ended June 30, 2024 and 2023, product sales, net were $11.5 million and $12.1 million, respectively. The decrease of sales for the six months ended is a result of distributor ordering patterns and fewer new patient initiations than the historical average.

Previous wording

Selling, general and administrative expenses for the three months ended March 31, 2024 and 2023, were $10.6 million and $11.2 million, respectively. The decrease of $0.6 million was largely driven by a reduction of $1.1 million in consulting expenses, $0.7 million in legal and other expenses, $0.1 million in commercial and marketing expense, offset by an increase of $1.3 million of personnel expenses primarily related to severance expense due to a workforce reduction primarily related to restructuring of our commercial, medical affairs, and corporate support functions.

Current wording

Selling, general and administrative expenses for the three months ended June 30, 2024 and 2023 were $7.9 million and $11.8 million, respectively. The $3.9 million decrease was primarily driven by a reduction of $1.3 million in commercial and marketing expense, $1.3 million in legal and other expenses, $1.0 million of personnel expenses, and $0.3 million of consulting and insurance expenses.

Previous wording

Research and development expenses for the three months ended March 31, 2024 and 2023 were $13.6 million and $11.0 million, respectively. The increase of $2.6 million was driven by a $1.7 million increase in clinical development expenses primarily related to the PRECISION1 trial and $1.4 million in clinical drug product manufacturing, offset by a decrease of $0.5 million in headcount, consultants, and other expenses.

Current wording

Research and development expenses for the six months ended June 30, 2024 and 2023 were $26.7 million and $24.3 million, respectively. The $2.4 million increase was primarily driven by a $2.8 million increase in clinical development expenses related to the PRECISION1 trial and $1.9 million in clinical drug product manufacturing, offset by a decrease of $2.3 million in headcount, consultants, and other expenses.

Previous wording

Other income, net for thethree months ended March 31, 2024 was $1.2 million, compared to other expense, net of $1.6 million for thethree months ended March 31, 2023. The change was primarily driven by a decrease in short-term investments held during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Current wording

Other income, net for thethree months ended June 30, 2024 was $1.0 million, compared to other income, net of $1.6 million for thethree months ended June 30, 2023. The change was primarily driven by a decrease in short-term investments held during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Previous wording

As of March 31, 2024 we had $88.3 million of cash, cash equivalents and short-term investments. Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will enable us to conduct our planned operations into the fourth quarter of 2025.

Current wording

As of June 30, 2024 we had $78.6 million of cash, cash equivalents and short-term investments. Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will enable us to conduct our planned operations into the fourth quarter of 2025.

Previous wording

We have incurred net losses in each year since inception and as of March 31, 2024, we had an accumulated deficit of $287.3 million. Our net losses were $18.3 million and $15.2 million for the three months ended March 31, 2024 and 2023, respectively. These losses have resulted principally from costs incurred in connection with research and development activities and selling, general and administrative costs associated with our operations. We expect to continue to incur significant expenses and operating losses for the foreseeable future due to the cost of research and development, including conducting preclinical studies and clinical trials, identifying and designing product candidates, the regulatory approval process for FYARRO outside the United States and in additional indications and any other product candidates we may develop in the future, and the continued commercialization of FYARRO. We expect our expenses, and the potential for losses, to increase as we conduct clinical trials of FYARRO in additional indications and seek to expand our pipeline.

Current wording

We have incurred net losses in each year since inception and as of June 30, 2024, we had an accumulated deficit of $301.8 million. Our net losses were $14.6 million and $18.0 million for the three months ended June 30, 2024 and 2023, respectively, and $32.9 million and $33.2 million for the six months ended June 30, 2024 and 2023, respectively. These losses have resulted principally from costs incurred in connection with research and development activities and selling, general and administrative costs associated with our operations. We expect to continue to incur significant expenses and operating losses for the foreseeable future due to the cost of research and development, including conducting preclinical studies and clinical trials, identifying and designing product candidates, the regulatory approval process for FYARRO outside the United States and in additional indications and any other product candidates we may develop in the future, and the continued commercialization of FYARRO. We expect our expenses, and the potential for losses, to increase as we conduct clinical trials of FYARRO in additional indications and seek to expand our pipeline.

Previous wording

The shares of our common stock to be offered and sold under the Sales Agreement will be issued and sold pursuant to our shelf registration statement on the Form S-3 (File No. 333-277018) (the “Shelf Registration Statement”), which was filed with the SEC on February 12, 2024 and which became effective April 30, 2024. No securities have yet been sold under the

Current wording

The shares of our common stock to be offered and sold under the Sales Agreement will be issued and sold pursuant to our shelf registration statement on the Form S-3 (File No. 333-277018) (the “Shelf Registration Statement”), which was filed with the SEC on February 12, 2024 and which became effective April 30, 2024. No securities have yet been sold under the Shelf Registration Statement. We filed a prospectus supplement with the SEC on May 3, 2024 in connection with the offer and sale of the shares pursuant to the Sales Agreement. The prospectus supplement offers up to an aggregate of $13.5 million in shares of our common stock. We will be required to file another prospectus supplement in the event we want to offer more than $13.5 million in shares of our common stock in accordance with the Sales Agreement.

Previous wording

On September 22, 2022, the Company entered into the Purchase Agreement for the 2022 PIPE Financing with the 2022 PIPE Investors for the sale of 3,373,526 shares of our common stock for a price of $12.50 per share and Pre-Funded Warrants to purchase an aggregate of 2,426,493 shares of our common stock, at a purchase price of $12.4999 per Pre-Funded Warrant. The Pre-Funded Warrants are exercisable at an exercise price of $0.0001 and will be exercisable until exercised in full. The 2022 PIPE Financing closed on September 26, 2022. Aggregated net proceeds, after deducting certain expenses incurred of $0.3 million related to the issuance of the shares were $72.2 million.

Current wording

On September 22, 2022, the Company entered into the Purchase Agreement for the 2022 PIPE Financing with the 2022 PIPE Investors for the sale of 3,373,526 shares of our common stock for a price of $12.50 per share and Pre-Funded Warrants to purchase an aggregate of 2,426,493 shares of our common stock, at a purchase price of $12.4999 per Pre-Funded Warrant. The Pre-Funded Warrants are exercisable at an exercise price of $0.0001 and will be exercisable until exercised in full. The 2022 PIPE Financing closed on September 26, 2022. Aggregate net proceeds, after deducting certain expenses incurred of $0.3 million related to the issuance of the shares, were $72.2 million.

Previous wording

For thethree months ended March 31, 2024, cash used in operating activities was $19.7 million and resulted from (i) our net loss of $18.3 million, (ii) a $4.8 million netincrease in our operating assets and liabilities, primarily driven by a decrease in accounts payable and accrued liabilities and a decrease in prepaid expenses and other current assets, accounts receivable, and inventory, and (iii) $3.4 million in non-cash adjustments, which were primarily related share based compensation, discount amortization on short-term investments, lease expense, depreciation and amortization.

Current wording

For thesix months ended June 30, 2024, cash used in operating activities was $28.8 million and resulted from (i) our net loss of $32.9 million, (ii) a$1.9 million netincrease in our operating assets and liabilities, primarily driven by a decrease in accounts payable and accrued liabilities and a decrease in prepaid expenses and other current assets and inventory, and (iii) $6.0 million in non-cash adjustments, which were primarily related to share based compensation, discount amortization on short-term investments, lease expense, depreciation and amortization.

Previous wording

For thethree months ended March 31, 2023, cash used in operating activities was $21.3 million and resulted from (i) our net loss of $15.2 million, and (ii) a $7.8 million net increase in our operating assets and liabilities, primarily driven by an increase in accounts receivable, prepaid expenses, inventory and a decrease in accounts payable and accrued liabilities, and other non-current assets, offset by net non-cash adjustments totaling $1.7 million, which was primarily related to share based compensation, discount amortization on short-term investments, lease expense, depreciation and amortization.

Current wording

For the six months ended June 30, 2023, cash used in operating activities was$38.1 million and resulted from (i) our net loss of$33.2 million, (ii) a$9.0 million netincrease in our operating assets and liabilities, primarily driven by a decrease in accounts payable and accrued liabilities and a decrease in prepaid expenses and other current assets, offset by an increase in accounts receivable and inventory, and (iii) $4.1 million in non-cash adjustments, which were primarily related to share based compensation, discount amortization on short-term investments, lease expense, depreciation and amortization.

Previous wording

Cash provided by investing activities for the three months ended March 31, 2024 related to maturities of short-term investments of $18.9 million, offset by purchases of short-term investments of $7.6 million and fixed assets of $0.7 million.

Current wording

Cash provided by investing activities for the six months ended June 30, 2024 was $7.0 million related to maturities of short-term investments of $34.8 million, offset by purchases of short-term investments of $26.6 million and fixed assets of $1.3 million.

Previous wording

Cash provided by investing activities for the three months ended March 31, 2023 related to maturities of short-term investments of $40.8 million, offset by purchases of short-term investments of $23.1 million and fixed assets of $1.4 million.

Current wording

Cash provided by investing activities for the six months ended June 30, 2023 was $66.9 million related to maturities of short-term investments of $92.0 million, offset by purchases of short-term investments of $23.1 million and fixed assets of $2.1 million.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2023 related to the exercise of stock options.

Current wording

Cash provided by financing activities for the six months ended June 30, 2023 was $0.3 million and related to the purchase of common stock under the employee stock purchase plan and exercise of stock options offset by financing costs related to the Sales Agreement.

Previous wording

Rent expense is being recorded on a straight-line basis. Rent expense related to the Pacific Palisades and Morristown leases was $0.1 million and $0.1 million for thethree months ended March 31, 2024 and 2023, respectively. See Note 6 to the condensed consolidated financial statements for details related to future lease payments.

Current wording

Rent expense is being recorded on a straight-line basis. Rent expense related to the Pacific Palisades and Morristown leases was $0.1 million for the three months ended June 30, 2024 and 2023, $0.2 million for the six months ended June 30, 2024 and 2023. See Note 6 to the condensed consolidated financial statements for details related to future lease payments.

Previous wording

In January 2022, we entered into the Fresenius Agreement with Fresenius Kabi, pursuant to which Fresenius Kabi will manufacture FYARRO for us and we will purchase FYARRO as a finished drug product from Fresenius Kabi, on a purchase order basis. The Fresenius Agreement contains specific activities such as non-cancellable commitments, minimum purchase commitments, or binding annual forecasts. Under the Fresenius Agreement, which is effective through July 31, 2024 (or such later date as may be agreed between the parties in writing), we may purchase FYARRO for either clinical or commercial purposes for use in the United States and Canada.

Current wording

In January 2022, we entered into a Negotiated Purchase Order Terms and Conditions for Clinical and Commercial Product, as amended effective as of August 1, 2022, March 31, 2024, and July 31, 2024 (the “Fresenius Agreement”) with Fresenius Kabi, LLC (“Fresenius Kabi”), pursuant to which Fresenius Kabi manufactures FYARRO for us and we purchase FYARRO as a finished drug product from Fresenius Kabi, on a purchase order basis. The Fresenius Agreement contains specific activities such as non-cancellable commitments, minimum purchase commitments, or binding annual forecasts. Under the Fresenius Agreement, which is effective through September 30, 2024, we purchase FYARRO for either clinical or commercial purposes for use in the United States and Canada.