Aadi Bioscience Inc

Previous wording

We are a biopharmaceutical company focused on developing and commercializing precision therapies for cancers with alterations in the mTOR pathway, a key regulator of cell growth and cancer progression. Our lead drug product, FYARRO®(sirolimus protein-bound particles for injectable suspension (albumin-bound); nab-sirolimus), combines two established technologies - nanoparticle albumin-bound (nab) technology and the anti-cancer agent, sirolimus. Nab-sirolimus is a potent inhibitor of the mTOR biological pathway with demonstrated anti-cancer activity in our lead indication, advanced malignant perivascular epithelioid cell tumor (“PEComa”), a rare cancer. We believe our approach to utilizing the novel combination of technologies has the potential to produce transformational therapies for patients with cancers beyond PEComa that have known mTOR pathway activation and/or cancers in which other mTOR inhibitors have not been fully exploited due to problems of pharmacology, effective drug delivery, safety, or effective targeting to the disease site. We exclusively license FYARRO, previously called ABI-009, nab-sirolimus, from Abraxis BioScience, LLC, a wholly owned subsidiary of Celgene Corporation, which is a wholly owned subsidiary of Bristol-Myers Squibb Company (“BMS”).

Current wording

We are a biopharmaceutical company focused on developing and commercializing precision therapies for cancers with alterations in the mTOR pathway, a key regulator of cell growth and cancer progression. Our lead drug product, FYARRO®(sirolimus protein-bound particles for injectable suspension (albumin-bound); nab-sirolimus), combines two established technologies - nanoparticle albumin-bound (nab) technology and the anti-cancer agent, sirolimus. Nab-sirolimus is a potent inhibitor of the mTOR biological pathway with demonstrated anti-cancer activity in our lead indication, advanced malignant perivascular epithelioid cell tumor (“PEComa”), a rare cancer. We exclusively license FYARRO, previously called ABI-009, nab-sirolimus, from Abraxis BioScience, LLC, a wholly owned subsidiary of Celgene Corporation, which is a wholly owned subsidiary of Bristol-Myers Squibb Company (“BMS”).

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 $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.

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 perivascular epithelioid cell tumor (“PEComa”). On February 22, 2022, we launched FYARRO in the United States for treatment of advanced malignant PEComa and recognized net product sales of$7.2 million and$18.7 million for the three and nine months ended September 30, 2024, respectively. See “Results of Consolidated Operations” for further discussion of our results.

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. 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.

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 September 30, 2024 and 2023, royalties on net product sales were $0.5 million and $0.4 million, respectively under the terms of this agreement. During the nine months ended September 30, 2024 and 2023, royalties on net product sales were $1.4 million and $1.3 million, respectively under the terms of this agreement. No development payments related to milestones under this agreement were paid during the three and nine months ended September 30, 2024. See Note 7 to the condensed consolidated financial statements for more information about the BMS License Agreement.

Previous wording

On August 30, 2021, the Company and BMS entered into Amendment No. 1 (the "BMS Amendment") to the BMS License Agreement. Under the terms of the BMS Amendment, we paid BMS $5.8 million, representing 50% of the previously outstanding payment obligation under the agreement, following the effective time of our 2021 private investment in public equity (PIPE) financing ("2021 PIPE Financing") that occurred in connection with the closing of the reverse merger of Aerpio Pharmaceuticals, Inc. whereby Aspen Merger Subsidiary, Inc., our wholly-owned subsidiary (“Merger Sub”), merged with and into Aadi Subsidiary, Inc. (formerly known as Aadi Bioscience, Inc. (“Private Aadi”)), with Private Aadi surviving as our wholly-owned subsidiary (the “Merger”). Pursuant to the terms of the BMS Amendment, the remaining portion of the previously outstanding payment obligation ($5.8 million), which is recorded on our condensed consolidated balance sheets as due to licensor, is due on the third anniversary of the effective time of the 2021 PIPE Financing (i.e., August 26, 2024), plus any accrued and unpaid interest due thereon.

Current wording

On August 30, 2021, the Company and BMS entered into Amendment No. 1 (the “Amendment”) to the BMS License Agreement. Under the terms of the Amendment, we paid BMS $5.8 million, representing 50% of the previously outstanding payment obligation under the agreement, following the effective time of our 2021 private investment in public equity (PIPE) financing ("2021 PIPE Financing") that occurred in connection with the closing of the reverse merger of Aerpio Pharmaceuticals, Inc. whereby Aspen Merger Subsidiary, Inc., our wholly-owned subsidiary (“Merger Sub”), merged with and into Aadi Subsidiary, Inc. (formerly known as Aadi Bioscience, Inc. (“Private Aadi”)), with Private Aadi surviving as our wholly-owned subsidiary (the “Merger”). Pursuant to the terms of the amendment, the remaining portion of the previously outstanding payment obligation ($5.8 million), was paid by the third anniversary of the effective time of the 2021 PIPE Financing (i.e., August 26, 2024).

Previous 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.

Current wording

On June 27, 2022, we received written notice from EOC that EOC 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. On September 26, 2024, the arbitration panel issued a Final Award which, among other things, found and concluded that we did not breach the EOC License Agreement and accordingly we are not liable for any damages to EOC. See Notes 7 and 12 to the condensed consolidated financial statements for more information about the EOC License Agreement, its termination and the arbitration proceedings.

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 and six months ended June 30, 2024. We expect these expenses to decrease, as compared to prior periods.

Current wording

•We had built a cross-functional commercial team consisting of marketing, market access and commercial operations. Expenses related to our commercialization of FYARRO, including personnel expenses, sales support, and marketing are included in selling, general and administrative expensesfor the three and nine months ended September 30, 2024. We expect these expenses to decrease, as compared to prior periods, due to our workforce reductions in 2024.

Previous wording

•Under the BMS License Agreement, as described above, we expect to make a payment of $5.8 million to BMS no later than August 26, 2024.

Current wording

•Under the BMS License Agreement, as described above, we made a payment of $5.8 million to BMS on August 26, 2024.

Previous 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.

Current wording

As of September 30, 2024, we had$62.6 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 second half of 2026.

Previous 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.

Current wording

We have incurred net losses in each year since inception and as of September 30, 2024, we had an accumulated deficit of$314.4 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 continued commercialization of FYARRO.

Previous wording

The ultimate impact of these global and national events and circumstances, either individually or in aggregate, is highly uncertain and subject to change. To the extent possible, we are conducting business as usual, with necessary or advisable modifications to mitigate potentially negative impacts to our business. For example, during the COVID-19 pandemic, our clinical trials were affected by the closure of offices, lack of resources and closure of borders, among other measures being put in place around the world and we made certain modifications to employee travel, with masking and vaccination requirements in our offices, and with our employees working remotely fully or intermittently. Any inability to travel and conduct face-to-face meetings, as well as constraints surrounding hospital infrastructure and staff, can also make it more difficult to enroll and maintain patients in ongoing or planned clinical trials. We will continue to actively monitor the rapidly evolving situation related to these global and national events, and may take further actions to mitigate potential negative impacts to our business, and that may alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business. At this point, the extent to which these global or national events and circumstances may affect our future business, operations and development timelines and plans, including the resulting impact on our expenditures and capital needs, remains uncertain. We will continue to evaluate the impact that these events could have on our operations, financial position, results of operations and cash flows in fiscal year 2024.

Current wording

The ultimate impact of these global and national events and circumstances, either individually or in aggregate, is highly uncertain and subject to change. To the extent possible, we are conducting business as usual, with necessary or advisable modifications to mitigate potentially negative impacts to our business. For example, during the COVID-19 pandemic, our clinical trials were affected by the closure of offices, lack of resources and closure of borders, among other measures being put in place around the world and we made certain modifications to employee travel, with masking and vaccination requirements in our offices, and with our employees working remotely fully or intermittently. Any inability to travel and conduct face-to-face meetings, as well as constraints surrounding hospital infrastructure and staff, can also make it more difficult to enroll and maintain patients in clinical trials. We will continue to actively monitor the rapidly evolving situation related to these global and national events, and may take further actions to mitigate potential negative impacts to our business, and that may alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business. At this point, the extent to which these global or national events and circumstances may affect our future business, operations and development timelines and plans, including the resulting impact on our expenditures and capital needs, remains uncertain. We will continue to evaluate the impact that these events could have on our operations, financial position, results of operations and cash flows in fiscal year 2024.

Previous wording

Costs for certain activities, such as manufacturing, nonclinical studies and clinical trials are generally recognized based on the evaluation of the progress of completion of specific tasks using information and data provided by our vendors and collaborators. Research and development activities are central to our business. We expect to increase our investment in research and development in order to advance FYARRO in additional indications through clinical trials. As a result, we expect that our research and development expenses will increase in the foreseeable future as we continue to invest in research and development activities, pursue clinical development of FYARRO in additional indications and any other product candidates we may develop in the future and expand our product candidate pipeline.

Current wording

Costs for certain activities, such as manufacturing, nonclinical studies and clinical trials are generally recognized based on the evaluation of the progress of completion of specific tasks using information and data provided by our vendors and collaborators. Research and development activities are central to our business. We expect to decrease our investment in research and development as a result of our halt and subsequent wind-down of the PRECISION1 study following interim data results and the pause of our two Phase 2 trials of FYARRO in patients with EEC and NETs, respectively. As a result, we expect that our research and development expenses will decrease in the foreseeable future.

Previous 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.

Current wording

During the three and nine months ended September 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

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.

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 and nine months ended September 30, 2024 were$7.2 millionand $18.7 million, respectively. For the three and nine months ended September 30, 2023, product sales, net were $6.0 million and $18.0 million, respectively. The increase in the three and nine months ended September 30, 2024 compared to the same period in the prior year was primarily due to strong demand.

Previous wording

Selling, general and administrative expenses for the six months ended June 30, 2024 and 2023 were $18.5 million and $23.0 million, respectively. The $4.5 million decrease was primarily driven by a reduction of $2.4 million of commercial and marketing expenses, $2.0 million of legal and other expenses, and $0.3 million of consulting and insurance expenses, offset by an increase of $0.2 million of personnel expense primarily related to severance expense.

Current wording

Selling, general and administrative expenses for the three months ended September 30, 2024 and 2023 were $7.2 million and $11.2 million, respectively. The $4.0 million decrease was primarily driven by a reduction of $2.3 million in personnel expenses, $1.5 million in commercial and marketing expenses, and $0.3 million of legal and other expenses, offset by an increase of $0.1 million related to consulting expenses.

Previous 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.

Current wording

Selling, general and administrative expenses for the nine months ended September 30, 2024 and 2023 were $25.7 million and $34.2 million, respectively. The $8.5 million decrease was driven by a reduction of $4.0 million in commercial and marketing expenses, $2.3 million in legal and other expenses, $2.1 million in personnel expenses, and $0.1 million of consulting and insurance expenses.

Previous wording

Research and development expenses for the three months ended June 30, 2024 and 2023 were $13.1 million and $13.3 million, respectively. The decrease of $0.2 million was primarily driven by a $1.8 million decrease in headcount, consultants, and other expenses, offset by an increase of $1.2 million of clinical development expenses related to clinical programs for FYARRO in EEC and in NETs, and $0.4 million in clinical drug product manufacturing.

Current wording

Research and development expenses for the three months ended September 30, 2024 and 2023 were$10.0 million and $11.9 million, respectively. The $1.9 million decrease was primarily driven by a $2.8 million decrease in personnel expense, consulting expense, and other expenses, offset by an increase of $0.9 million of clinical drug product manufacturing.

Previous 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.

Current wording

Research and development expenses for the nine months ended September 30, 2024 and 2023 were $36.7 millionand $36.2 million, respectively. The $0.5 million increase was primarily driven by a $2.9 million increase in clinical development expenses related to the EEC, NET, and PRECISION1 trials, and $2.7 million in clinical drug product manufacturing, offset by a decrease of $5.1 million in personnel expense, consulting expense, and other expenses.

Previous wording

Cost of goods sold for the three months ended June 30, 2024 and 2023 was$0.8 million and $0.7 million, respectively. Cost of goods sold for the six months ended June 30, 2024 and 2023 was $1.4 million and$1.2 million, respectively. The increase of cost of goods sold of $0.1 million and $0.2 million for the three and six months ended June 30, 2024 compared to the same period in 2023 was primarily driven by an increase of costs incurred on sales of FYARRO and costs to manufacture and prepare the product for sale.

Current wording

Cost of goods sold for the three months ended September 30, 2024 and 2023 was $0.8 millionand $0.7 million, respectively. Cost of goods sold for the nine months ended September 30, 2024 and 2023 was $2.2 million and $1.9 million, respectively. The increase of cost of goods sold of $0.1 million and $0.3 million for the three and nine months ended September 30, 2024 compared to the same period in 2023 was primarily driven by an increase of costs incurred on sales of FYARRO and costs to manufacture and prepare the product for sale.

Previous 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.

Current wording

Other income, net for thethree months ended September 30, 2024 was $0.9 million, compared to other income, net of $1.5 million for thethree months ended September 30, 2023. The change was primarily driven by a decrease in short-term investments held during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Previous wording

Other income, net for the six months ended June 30, 2024 was$2.2 million, compared to other income, net of$3.2 millionfor the six months ended June 30, 2023. The change was primarily driven by a decrease in short-term investments held during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Current wording

Other income, net for the nine months ended September 30, 2024 was $3.1 million, compared to other income, net of$4.7 million for the nine months ended September 30, 2023. The change was primarily driven by a decrease in short-term investments held during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Previous 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.

Current wording

We have incurred net losses in each year since inception and as of September 30, 2024, we had an accumulated deficit of $314.4 million. Our net losses were $12.5 million and $16.3 million for the three months ended September 30, 2024 and 2023, respectively, and $45.4 million and $49.5 million for the nine months ended September 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 any other product candidates we may develop in the future, and the continued commercialization of FYARRO. We expect our expenses to decrease given the recent headcount reductions, the halting and wind-down of the PRECISION1 trial and the pausing of the trials in EEC and NETs.

Previous wording

On March 17, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”), with respect to an “at the market offering” pursuant to which we may offer and sell, from time to time at our sole discretion, shares of our common stock having aggregate gross proceeds of up to $75.0 million through Cowen as our sales agent. Under the Sales Agreement, we will set the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales are requested to be made, limitations on the number or dollar value of shares that may be sold in any one trading day and any minimum price below which sales may not be made. We will pay Cowen 3.0% of the aggregate gross proceeds from each sale of shares of common stock under the Sales Agreement. As of June 30, 2024, no shares of common stock had been sold under the Sales Agreement.

Current wording

On March 17, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”), with respect to an “at the market offering” pursuant to which we may offer and sell, from time to time at our sole discretion, subject to limitations under applicable securities laws, shares of our common stock having aggregate gross proceeds of up to $75.0 million through Cowen as our sales agent. Under the Sales Agreement, we will set the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales are requested to be made, limitations on the number or dollar value of shares that may be sold in any one trading day and any minimum price below which sales may not be made. We will pay Cowen 3.0% of the aggregate gross proceeds from each sale of shares of common stock under the Sales Agreement. As of September 30, 2024, no shares of common stock had been sold under the Sales Agreement.

Previous wording

The following table summarizes our cash flows for the periods indicated (in thousands):

Current wording

The following table presents our cash flows for the periods indicated (in thousands):

Previous wording

Our cash used in operating activities primarily results from our net loss adjusted for non-cash expenses, changes in working capital components, amounts due to contract research organizations to conduct our clinical programs and employee-related expenditures for research and development and selling, general and administrative activities. Our cash flows from operating activities will continue to be affected by spending to advance and support FYARRO in additional indications in the clinic and other operating and general administrative activities, including operating as a public company.

Current wording

Our cash used in operating activities primarily results from our net loss adjusted for non-cash expenses, changes in working capital components, amounts due to contract research organizations to conduct our clinical programs and employee-related expenditures for research and development and general and administrative activities. Our cash flows from operating activities will continue to be affected by spending to advance and support FYARRO and other operating and general administrative activities, including operating as a public company, and may fluctuate significantly from quarter-to-quarter and year-to-year, depending on our strategic review and the ultimate outcome of that process.

Previous 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.

Current wording

For thenine months ended September 30, 2024, cash used in operating activities was $44.5 million and resulted from (i) our net loss of $45.4 million, (ii)$7.5 million net increase 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) $8.4 million in non-cash adjustments, which were primarily related to share based compensation, discount amortization on short-term investments, lease expense, and depreciation.

Previous 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.

Current wording

For the nine months ended September 30, 2023, cash used in operating activities was $50.0 million and resulted from (i) our net loss of $49.5 million, (ii) $7.2 million net increase 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 asset, and (iii) non-cash adjustments totaling $6.7 million, which was primarily related share based compensation, discount amortization on short-term investments, lease expense, and depreciation.

Previous 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.

Current wording

Cash provided by investing activities for the nine months ended September 30, 2024 was $12.1 million related to maturities of short-term investments of $50.0 million, offset by purchases of short-term investments of $36.5 million, and fixed assets of $1.5 million.

Previous 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.

Current wording

Cash provided by investing activities for the nine months ended September 30, 2023 was $79.6 million related to maturities of short-term investments of$133.3 million, offset by purchases of short-term investments of $50.5 million, andfixed assets of$3.2 million.

Previous wording

Cash provided by financing activities for the six months ended June 30, 2024 was $0.1 million and related to the purchase of common stock under the employee stock purchase plan offset by financing costs related to the Sales Agreement.

Current wording

Cash provided by financing activities for the nine months ended September 30, 2024 was $0.1 million related to the purchase of common stock under the employee stock purchase plan offset by financing costs related to the Sales Agreement.

Previous 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.

Current wording

Cash provided by financing activities for the nine months ended September 30, 2023 was $0.2 million related to the issuance 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

In August 2021, we entered into an amendment to extend the lease of our 2,760 square feet of office space in Pacific Palisades, California. We exercised an option, under our prior lease agreement, to extend the term of the lease for an additional three-year period. Included in the renewal were nine months of rent abatement and a rent escalation clause.

Current wording

In August 2021, we entered into an amendment to extend the lease of our 2,760 square feet of office space in Pacific Palisades, California. We exercised an option, under our prior lease agreement, to extend the term for an additional period of three (3) years and six (6) months, until February 28, 2025, with an option to renew for an additional three (3) years in accordance with the terms of the Pacific Palisades Lease. Included in the renewal were nine months of rent abatement and a rent escalation clause.

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 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.

Current wording

Rent expense is being recorded on a straight-line basis. Rent expense related to the Pacific Palisades and Morristown leases for the nine months ended September 30, 2024 and 2023 was$0.3 million. See Note 6 to the condensed consolidated financial statements for details related to future lease payments.

Previous 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.

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 manufactured FYARRO for us and we purchased FYARRO as a finished drug product from Fresenius Kabi, on a purchase order basis. The Fresenius Agreement contained specific activities such as non-cancellable commitments, minimum purchase commitments, or binding annual forecasts. Under the Fresenius Agreement, which was effective through September 30, 2024, we purchased FYARRO for either clinical or commercial purposes for use in the United States and Canada. Although we believe we presently have sufficient supply of FYARRO for at least the next two years based on our estimated demand and are seeking to enter into a new agreement with Fresenius Kabi for the manufacture of FYARRO, if we are unable to enter into a new agreement on favorable terms or at all, our business could be materially adversely affected.

Previous wording

We also have contracts with various organizations to conduct research and development activities, including clinical trial organizations to manage clinical trial activities and manufacturing companies to manufacture the drug product used in the clinical trials. The scope of the services under these research and development contracts can be modified and the contracts cancelled by us upon written notice. In the event of a cancellation, we would be liable for the cost and expenses incurred to date as well as any close out costs of the service arrangement.

Current wording

We also have contracts with various organizations to conduct research and development activities, including clinical trial organizations to manage clinical trial activities and manufacturing companies to manufacture the drug product used in the clinical trials. The scope of the services under these research and development contracts can be modified and the contracts cancelled by us upon written notice. In the event of cancellation, we would be liable for the cost and expenses incurred to date as well as any close out costs of the service arrangement.

Previous wording

Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. We believe that the estimates, judgments and assumptions are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. Historically, revisions to our estimates have not resulted in a material change to our financial statements.

Current wording

Our condensed consolidated financial statements are prepared in accordance with GAAP. These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. We believe that the estimates, judgments and assumptions are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. Historically, revisions to our estimates have not resulted in a material change to our financial statements.