What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 147 added, 121 removed, 576 unchanged (32% of the section changed)

27 unchanged sentences

Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized;

issued and outstanding as of March 31, 2024 and December 31, 2023

issued and outstanding as of June 30, 2024 and December 31, 2023

Common stock, $ 0.0001 par value;

300,000,000 shares authorized;

shares issued and outstanding as of March 31, 2024 and December 31, 2023

and 24,554,205 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 380,651 374,129

7 unchanged sentences

(In thousands, except share data and earnings per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Product sales, net $ 6,179 $ 6,202 $ 11,532 $ 12,069

12 unchanged sentences

Net loss $ ( 14,583 ) $ ( 17,971 ) $ ( 32,872 ) $ ( 33,194 )

Other comprehensive (loss) income:

Other comprehensive loss:

Unrealized (loss) income on available-for-sale debt securities ( 19 ) ( 12 ) ( 54 ) 71

6 unchanged sentences

(In thousands, including share amounts)

For the Three Months Ended March 31, 2024

For the Three and Six Months Ended June 30, 2024

Stockholders' Equity

8 unchanged sentences

Balance at March 31, 2024 24,554 $ 2 $ 377,718 $ ( 8 ) $ ( 287,252 ) $ 90,460

For the Three Months Ended March 31, 2023

Share-based compensation expense — — 2,839 — — 2,839

Issuance of shares under the employee stock purchase plan 61 — 94 — — 94

Unrealized loss on investments, net of tax — — — ( 19 ) — ( 19 )

Net loss — — — — ( 14,583 ) ( 14,583 )

Balance at June 30, 2024 24,615 $ 2 $ 380,651 $ ( 27 ) $ ( 301,835 ) $ 78,791

For the Three and Six Months Ended June 30, 2023

Stockholders' Equity

9 unchanged sentences

Balance at March 31, 2023 24,437 $ 2 $ 364,437 $ ( 32 ) $ ( 218,421 ) $ 145,986

Share-based compensation expense — — 3,054 — — 3,054

Issuance of common stock upon exercise of stock options 34 68 — — 68

Issuance of shares under the employee stock purchase plan 49 294 294

Unrealized loss on investments, net of tax ( 12 ) ( 12 )

Net loss — — — — ( 17,971 ) ( 17,971 )

Balance at June 30, 2023 24,520 $ 2 $ 367,853 $ ( 44 ) $ ( 236,392 ) $ 131,419

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

2 unchanged sentences

Share-based compensation expense 6,428 5,794

Discount amortization on short-term investments ( 422 ) ( 1,200 )

Amortization of premiums and discounts on short-term investments, net ( 809 ) ( 2,062 )

Non-cash interest expense 58 58

Non-cash lease expense 230 231

Depreciation and amortization expense 50 38

Depreciation 99 81

Changes in operating assets and liabilities:

13 unchanged sentences

Issuance of common stock upon exercise of stock options — 76

Proceeds from issuance of common stock under employee stock purchase plan 94 294

Deferred offering costs paid for financing ( 17 ) ( 49 )

Net cash (used in) provided by financing activities ( 10 ) 8

Net decrease in cash, cash equivalents and restricted cash ( 9,108 ) ( 4,973 )

Cash, cash equivalents and restricted cash at beginning of period 62,952 39,083

Net cash provided by financing activities 77 321

Net (decrease) increase in cash, cash equivalents and restricted cash ( 21,749 ) 29,143

Cash, cash equivalents and restricted cash, beginning of year 62,952 39,083

Cash, cash equivalents and restricted cash, end of period $ 41,203 $ 68,226

16 unchanged sentences

The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding before sustainable revenues and profit from operations are achieved.

Merger with Aerpio Pharmaceuticals, Inc.

On August 26, 2021 (the “Closing Date”), Aadi Bioscience, Inc., a Delaware corporation (f/k/a Aerpio Pharmaceuticals, Inc.), completed its business combination with Aadi Subsidiary, Inc.

(f/k/a as Aadi Bioscience, Inc., or “Private Aadi”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated May 16, 2021, by and among Aadi, Aspen Merger Subsidiary, Inc.

(“Merger Sub”) and Private Aadi (the “Merger Agreement”), pursuant to which Merger Sub merged with and into Private Aadi, with Private Aadi surviving as a wholly owned subsidiary of ours (the “Merger”).

Since inception, the Company has devoted substantially all of its resources to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations and has only recently begun to realize revenues from its planned principal operations commencing with the commercial sale of FYARRO.

The Company has experienced net losses since its inception and expects to continue to incur net losses into the foreseeable future.

The Company had an accumulated deficit of $ 287.3 million as of March 31, 2024 and a net loss of $ 18.3 million and $ 15.2 million for the three months ended March 31, 2024 and 2023, respectively.

The Company had an accumulated deficit of $ 301.8 million as of June 30, 2024.

For the three months ended June 30, 2024 and 2023 , the Company had a net loss of $ 14.6 million and $ 18.0 million, respectively.

For the six months ended June 30, 2024 and 2023 , the Company had a net loss of $ 32.9 million and $ 33.2 million, respectively.

To date, these operating losses have been funded primarily from outside sources of invested capital through the issuance of convertible promissory notes, grant funding, the sale of securities, and proceeds from license agreements.

The Company had cash, cash equivalents and short-term investments of $ 88.3 million at March 31, 2024.

The Company had cash, cash equivalents and short-term investments of $ 78.6 million at June 30, 2024.

Management believes the Company’s current cash, cash equivalents and short-term investments will provide sufficient funds to enable the Company to meet its obligations for at least twelve months from the filing date of this report.

4 unchanged sentences

Any sales under the Sales Agreement may result in dilution to existing shareholders.

As of March 31, 2024 , no shares of common stock had been sold under this Sales Agreement.

As of June 30, 2024 , no shares of common stock had been sold under this Sales Agreement.

Summary of Significant Accounting Policies

1 unchanged sentence

The unaudited condensed consolidated financial statements, and the related disclosures, have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and U.S.

Securities and Exchange Commission ("SEC") regulations and, in the opinion of management include all adjustments necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows for each period presented.

Securities and Exchange

Commission ("SEC") regulations and, in the opinion of management include all adjustments necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows for each period presented.

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

3 unchanged sentences

Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted.

Accordingly, the accompanying unaudited interim financial statements should be

read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2024.

Accordingly, the accompanying unaudited interim financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2024.

Comprehensive Loss

16 unchanged sentences

The Company has not experienced any losses on deposits since inception.

The Company’s accounts receivable is derived from customers located in the United States.

The Company’s accounts receivable are derived from customers located in the United States.

The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses on customers’ accounts when deemed necessary.

3 unchanged sentences

Customer Concentration

For the three months ended March 31, 2024, two customers represented 48 % and 52 % of the Company’s revenue.

For the three months ended March 31, 2023, two customers represented 51 % and 48 % of the Company’s revenue.

Additionally, two customers accounted for 51 % and 49 % of net accounts receivable as of March 31, 2024.

For the three months ended June 30, 2024 and 2023, two customers represented 58 % and 41 %, and 55 % and 45 % of the Company's revenue, respectively.

For the six months ended June 30, 2024 and 2023, two customers represented 55 % and 44 % , and 53 % and 46 % of the Company’s revenue, respectively.

Additionally, two customers accounted for 38 % and 62 % of net accounts receivable as of June 30, 2024.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid marketable securities purchased with original maturities of three months or less at the time of purchase date to be cash equivalents.

Restricted cash consists of a letter of credit secured by restricted cash in connection with one of the Company's office leases described in Note 6, and is included in other assets on the condensed consolidated balance sheets.

Restricted cash consists of a letter of credit secured by restricted cash in connection with one of the Company's office leases and is included in other assets on the condensed consolidated balance sheets.

Refer to Note 6 for further information over the Company's leases.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 41,139 $ 62,888

21 unchanged sentences

Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of investments sold.

The Company classifies short-term investments with remaining maturities greater than one year as current assets because such short-term investments are available to fund the Company’s current operations.

The Company classifies

short-term investments with remaining maturities greater than one year as current assets because such short-term investments are available to fund the Company’s current operations.

At each balance sheet date, the Company assesses available-for-sale securities in an unrealized loss position to determine whether the decline in fair value below amortized cost is a result of credit losses or other factors, whether the Company expects to recover the amortized cost of the security, the Company's intent to sell and if it is more likely than not that the Company will be required to sell the securities before the recovery of amortized cost.

The Company records changes in allowance for expected credit loss in other income (expense).

The Company records changes in allowance for expected credit loss in other income (expense), net.

There has been no allowance for expected credit losses recorded during any of the periods presented.

4 unchanged sentences

The Company estimates the allowance for credit losses based on existing contractual payment terms, actual payment patterns of its customers, individual customer circumstances and credit loss.

Receivables are recorded to an allowance for credit loss when it is probable that amounts will not be collected based on

terms of the customer contracts.

Accounts receivable are net of $ 0.1 million and $ 0.2 million, of customer allowances for chargebacks as of March 31, 2024 and December 31, 2023, respectively.

There were no allowances for credit losses and no receivables were written off for the periods ended March 31, 2024 and December 31, 2023.

Receivables are recorded to an allowance for credit loss when it is probable that amounts will not be collected based on terms of the customer contracts.

As of June 30, 2024 and December 31, 2023, recorded customer allowances for chargebacks were $ 0.1 million and $ 0.2 million, respectively.

There were no allowances for credit losses and no receivables were written off for the periods ended June 30, 2024 and December 31, 2023, respectively.

Inventory is stated at the lower of cost or estimated net realizable value.

3 unchanged sentences

Details of inventory are presented as follows (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Raw materials $ 3,989 $ 4,640

7 unchanged sentences

Details of property and equipment are presented as follows (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Computers and software $ 470 $ 464

7 unchanged sentences

Construction in process mainly consists of lab, production, and testing equipment.

Depreciation expense on property, plant, and equipment amounted to $ 50,000 and $ 38,000 for the three months ended March 31, 2024 and 2023, respectively.

Depreciation expense on property, plant, and equipment amounted to $ 50,000 and $ 43,000 for the three months ended June 30, 2024 and 2023, respectively.

Depreciation expense on property, plant, and equipment amounted to $ 99,000 and 81,000 for the six months ended June 30, 2024 and 2023, respectively

At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time.

6 unchanged sentences

Operating lease assets represent a right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease.

Operating lease liabilities with a term greater than one year and their

corresponding right-of-use assets are recognized at the commencement date of the lease based on the present value of lease payments over the expected lease term.

Operating lease liabilities with a term greater than one year and their corresponding right-of-use assets are recognized at the commencement date of the lease based on the present value of lease payments over the expected lease term.

Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

8 unchanged sentences

When no amount within the range is a better estimate than any other amount the Company accrues the minimum amount in the range.

The Company has no t recorded any such liabilities as of March 31, 2024 and December 31, 2023 .

The Company has not recorded any such liabilities as of June 30, 2024 and December 31, 2023 .

Revenue Recognition and Related Allowances

12 unchanged sentences

On February 22, 2022, the Company launched sales of FYARRO to specialty distributors (“SDs”) and a specialty pharmacy (“SP”).

The Company recognizes product sales when the SDs and SP obtain control of the product.

The Company recognizes product sales when the SDs

and SP obtain control of the product.

Product sales are recorded at the net sales price, which includes provisions for the following allowances which are reflected either as a reduction to the related account receivable or as an accrued liability, depending on how the allowance is settled:

10 unchanged sentences

The SDs and SP charge back to the Company the difference between the price initially paid by the SDs and SP and the discounted price paid to the SDs and SP by these entities.

If actual future

chargebacks vary from these estimates, the Company may need to adjust prior period accruals, which would affect product sales in the period of adjustment.

If actual future chargebacks vary from these estimates, the Company may need to adjust prior period accruals, which would affect product sales in the period of adjustment.

Co-Payment Assistance:

8 unchanged sentences

In arriving at its estimate, the Company also considers historical product returns, the underlying product demand, and industry data specific to the specialty pharmaceutical distribution industry.

The total amount deducted from gross product sales for the allowances described above for the three months ended March 31, 2024, and 2023, was $ 1.1 million and $ 1.0 million, respectively.

The total amount deducted from gross product sales for the allowances described above for the three months ended June 30, 2024, and 2023, was $ 1.9 million and $ 1.1 million, respectively, and for the six months ended June 30, 2024 and 2023 was $ 3.0 million and $ 2.1 million, respectively.

The following table sets forth the changes in the accrued revenue allowances (in thousands):

As of March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Balance at beginning of period $ 857 $ 1,916 $ 1,065 $ 1,434

6 unchanged sentences

The Company is required to estimate the amount of services provided but not yet invoiced and include these expenses in accrued expenses on the condensed consolidated balance sheets and within research and development expenses in the condensed consolidated statements of operations and comprehensive loss.

These expenses are a significant component of the Company’s research and development expenses and require significant estimates and judgments.

These expenses are a significant component of the Company’s research and development expenses

and require significant estimates and judgments.

The Company accrues for these expenses based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers.

17 unchanged sentences

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period.

Basic and diluted weighted average shares of common stock outstanding for the three months ended March 31, 2024, includes the weighted average effect of 2,426,493 Pre-Funded Warrants, which were issued in September 2022, for the purchase of shares of common stock, for which the remaining unfunded exercise price is $ 0.0001 per share.

Basic and diluted weighted average shares of common stock outstanding for the three and six months ended June 30, 2024, includes the weighted average effect of 2,426,493 Pre-Funded Warrants, which were issued in September 2022, for the purchase of shares of common stock, for which the remaining unfunded exercise price is $ 0.0001 per share.

See Note 8 for more information on the Pre-Funded Warrants.

3 unchanged sentences

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:

Three Months Ended March 31,

Six Months Ended June 30,

Options to purchase common stock 5,451,333 4,085,366

Restricted Stock Units to purchase common stock 341,258 —

Restricted Stock Units to acquire common stock 333,848 —

Warrants to purchase common stock 29,167 29,167

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, “ Debt – Debt with Conversion and Other Options” (Subtopic 470-20) and “Derivatives and Hedging – Contracts in Entity’s Own Equity” (Subtopic 815-40).

This new guidance is intended to reduce the complexity of accounting for convertible instruments.

The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments.

Entities may adopt ASU 2020-06 using either a partial retrospective or fully retrospective method of transition.

This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years for smaller reporting companies.

ASU 2020-06 is not applicable to the Company’s consolidated financial position and results of operations.

In December 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.

The new standard requires a company to disclose incremental segment information on an annual and interim basis, including significant segment expenses and measures of profit or loss that are regularly provided to the chief operating decision maker.

The standard is effective for the Company beginning in fiscal year 2024 and interim periods within fiscal year 2025, with early adoption permitted.

The standard is not expected to have a material impact to the Company's condensed consolidated financial statements.

The standard is effective for the Company beginning in fiscal year 2024 and interim periods

within fiscal year 2025, with early adoption permitted.

The standard does not have an impact to the Company's condensed consolidated financial statements.

In December 2023, the FASB also issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.

6 unchanged sentences

The following table sets forth the recurring fair value of the Company’s financial assets and liabilities, allocated into the Level 1, Level 2 and Level 3 hierarchy that were measured at fair value on a recurring basis (in thousands):

Fair Value Measurements as of March 31, 2024

Fair Value Measurements as of June 30, 2024

Level 1 Level 2 Level 3 Total

13 unchanged sentences

(1) Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

(2) Includes $ 1.1 million of corporate bonds in cash and cash equivalent in the accompanying consolidated balance sheet.

As of March 31, 2024, net unrealized loss on investments was $ 8,000 .

All marketable securities had a contractual maturity of less than one year as of March 31, 2024.

(2) Includes investments classified as cash and cash equivalents in the accompanying consolidated balance sheets.

All marketable securities had a contractual maturity of less than one year as of June 30, 2024.

Short-Term Investments and Cash Equivalents

The following table summarizes the Company's short-term investments (in thousands):

As of March 31, 2024

As of June 30, 2024

Maturity (In Years) Amortized Cost Unrealized Gains Unrealized Losses Fair Value

33 unchanged sentences

The following table summarizes information related to the Company’s leases (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Operating lease right-of-use assets $ 982 $ 1,169

2 unchanged sentences

Total operating lease liabilities $ 1,056 $ 1,267

Rent expense for the three months ended March 31, 2024 and 2023 is presented on the following table (in thousands):

Three Months Ended March 31,

Operating lease rent expense $ 115 $ 116

Cash paid for leases and included in operating cash flows for the three months ended March 31, 2024 and 2023 is presented on the following table (in thousands):

Three Months Ended March 31,

Rent expense for the three and six months ended June 30, 2024 and 2023 is presented on the following table (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Operating leases rent expense $ 115 $ 115 $ 230 $ 231

Cash paid for leases and included in operating cash flows for the six months ended June 30, 2024 and 2023 is presented on the following table (in thousands):

Six Months Ended June 30,

Cash paid included in operating cash flows $ 254 $ 250

The future minimum lease payments required under the operating leases as of March 31, 2024, are summarized below (in thousands):

The future minimum lease payments required under the operating leases as of June 30, 2024, are summarized below (in thousands):

Future Minimum Lease Payments:

11 unchanged sentences

On April 9, 2014, the Company entered into a license agreement (as amended the “BMS License Agreement”) with BMS for exclusive rights for certain patents and a non-exclusive license for certain technology and know-how pertaining to FYARRO.

The BMS License Agreement will remain in effect from the effective date of April 9, 2014 until expiration of all milestone and royalty payment obligations under the agreement, unless terminated by either of the parties pursuant to the terms of the BMS License Agreement, including providing advance notice as specified in the agreement.

The BMS License Agreement will remain in effect from the effective date of April 9, 2014 until expiration of all milestone and royalty payment obligations under the agreement, unless terminated by either of the parties upon giving advance notice as specified in the BMS License Agreement.

Under the terms of the BMS License Agreement, BMS agreed to supply the Company with licensed products of FYARRO necessary for clinical or non-clinical development.

Under the terms of the BMS License Agreement, BMS is entitled to receive royalties on net sales from licensed products under the agreement and any sublicense fees.

During the three months ended March 31, 2024 and 2023, royalties on net product sales were $ 0.4 million.

No payments related to sublicense fees were paid during the three months ended March 31, 2024 or 2023.

Under the terms of 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.

During the six months ended June 30, 2024 and 2023, royalties on net product sales were $ 0.9 million and $ 0.9 million, respectively.

No payments related to sublicense fees were paid during the three and six months ended June 30, 2024 or 2023.

On August 30, 2021, the Company and BMS entered into Amendment No.

1 (the “Amendment”) to the BMS License Agreement related to certain intellectual property rights of BMS pertaining to the compound known as FYARRO.

Under the terms of the Amendment, the Company paid BMS $ 5.8 million representing 50 % of the previously outstanding payment obligation under the terms of the BMS License Agreement, following the effective time of the 2021 private investment in public equity financing (the “2021 PIPE Financing”).

Under the terms of the Amendment, the Company paid BMS $ 5.8 million representing 50 % of the previously outstanding payment obligation under the terms of the BMS License Agreement, following the effective time of the Company's 2021 private investment in public equity financing (the “2021 PIPE Financing”).

Pursuant to the terms of the Amendment, the remaining previously outstanding payment obligation of $ 5.8 million is due on the third anniversary of the effective time of the 2021 PIPE Financing, or August 26, 2024, plus any accrued and unpaid interest due thereon (the “Balloon Payment”).

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Preferred Stock

As of March 31, 2024 and December 31, 2023 , under the Company’s certificate of incorporation, as amended and restated, the Company has 10,000,000 shares of preferred stock, par value $ 0.0001 per share, in authorized capital with no shares outstanding.

As of June 30, 2024 and December 31, 2023 , under the Company’s certificate of incorporation, as amended and restated, the Company has 10,000,000 shares of authorized preferred stock, par value $ 0.0001 per share, with no shares outstanding.

Common Stock and Pre-Funded Warrants

As of March 31, 2024 and December 31, 2023, the Company had 300,000,000 shares of authorized common stock, par value of $ 0.0001 per share, under the Company's certificate of incorporation, as amended and restated.

As of March 31, 2024 and December 31, 2023, the shares of common stock outstanding were 24,554,205 .

As of June 30, 2024 and December 31, 2023, the Company had 300,000,000 shares of authorized common stock, par value of $ 0.0001 per share under the Company's certificate of incorporation, as amended and restated.

As of June 30, 2024 and December 31, 2023, the shares of common stock outstanding were 24,614,834 and 24,554,205 , respectively.

In March 2022, the Company entered into a Sales Agreement (the "Sales Agreement") with Cowen and Company LLC (“Cowen”) , with respect to an “at the market offering” program pursuant to which the Company may offer and sell, from time to time at its sole discretion, shares of common stock having aggregate gross proceeds of up to $ 75.0 million through Cowen as its sales agent .

The Company will pay Cowen 3.0 % of the aggregate gross proceeds from each sale of shares of common stock under the Sales Agreement.

As of March 31, 2024 , no shares of common stock had been sold pursuant to the Sales Agreement.

As of June 30, 2024 , no shares of common stock had been sold pursuant to the Sales Agreement.

On September 22, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) for a private investment in public equity financing (the “2022 PIPE Financing”) with certain investors (the “2022 PIPE Investors”) for the sale by the Company of (i) 3,373,526 shares of the Company’s common stock for a price of $ 12.50 per share and (ii) pre-funded warrants to purchase an aggregate of 2,426,493 shares of the Company's common stock (the "Pre-Funded Warrants") at a purchase price of $ 12.4999 per Pre-Funded Warrant.

5 unchanged sentences

On September 26, 2022, the Company and the 2022 PIPE Investors entered into a Registration Rights Agreement (the “2022 PIPE Registration Rights Agreement”) providing for the registration for resale of the securities sold under the Purchase Agreement, including the shares issuable upon the exercise of the Pre-Funded Warrants, that are not then registered on an effective registration statement, pursuant to a registration statement filed with the SEC.

The Company filed a Form S-3 registration statement to register the resale of such securities on October 26, 2022, which became effective on November 4, 2022.

The Pre-Funded Warrants meet the criteria to be classified within stockholders’ equity.

As of March 31, 2024, all Pre-Funded Warrants are still outstanding.

As of June 30, 2024, all Pre-Funded Warrants are still outstanding.

The holders of common stock are entitled to receive cash dividends, if and when declared by the board of directors of the Company (the “board of directors”).

6 unchanged sentences

The Private Aadi Plan allowed for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock unit awards and other stock awards.

In connection with the closing of the Merger and the adoption of the 2021 Plan (as defined below), no further awards will be issued under the Private Aadi Plan.

In connection with the closing of the Merger and the adoption of the 2021 Plan (as defined below), no further awards may be issued under the Private Aadi Plan.

The options that are granted from the Private Aadi Plan are exercisable at various dates as determined upon grant and will expire no more than ten years from their date of grant.

2 unchanged sentences

In connection with the closing of the Merger, the Company assumed the Aerpio 2011 Equity Incentive Plan (the “2011 Plan”) and the Aerpio 2017 Stock Option and Incentive Plan (the “2017 Plan,” and together with the 2011 Plan, the “Prior Plans”).

No new awards will be granted under the Prior Plans effective as of the closing of the Merger and the adoption of the 2021 Plan (as defined below).

No new awards may be granted under the Prior Plans effective as of the closing of the Merger and the adoption of the 2021 Plan (as defined below).

At the closing of the Merger, the Company adopted the Aadi Bioscience, Inc.

2021 Equity Incentive Plan (the “2021 Plan”), which permits the award of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance grants to employees, members of the board of directors, and outside consultants.

Subject to the adjustment provisions contained in the 2021 Plan and the evergreen provision described below, a total of 2,070,784 shares of common stock were initially reserved for issuance pursuant to the 2021 Plan.

Subject to the adjustment provisions contained in the 2021 Plan and the evergreen provision described below, a total of 2,070,784 shares of common stock was initially reserved for issuance pursuant to the 2021 Plan.

In addition, the shares reserved for issuance under the 2021 Plan include any shares of common stock (i) subject to awards of stock options or other awards granted under the Prior Plans that expire or otherwise terminate without having been exercised in full and shares of common stock granted under the Prior Plans that are forfeited or repurchased by the Company, and (ii) any shares of common stock subject to stock options or similar awards granted under the Private Aadi Plan that were assumed in the Merger (provided that the maximum number of shares that may be added to the 2021 Plan pursuant to this sentence is 764,154 shares).

3 unchanged sentences

• such number of shares as the board of directors or its designated committee may determine.

As a result of the evergreen increase, a total of 982,168 shares of common stock were added to the 2021 Plan on January 1, 2024 and 977,400 shares of common stock were added to the 2021 Plan on January 1, 2023.

As a result of the evergreen increase, a total of 982,168 shares were added to the 2021 Plan on January 1, 2024 and 977,400 shares of common stock were added to the 2021 Plan on January 1, 2023.

Shares issuable under the 2021 Plan are authorized, but unissued, or reacquired shares of common stock.

3 unchanged sentences

The Company reserved 600,000 shares of common stock for issuance under the Inducement Plan.

only persons eligible to receive awards under the Inducement Plan are individuals who are new employees and satisfy the standards for inducement grants under applicable Nasdaq listing rules.

As of March 31, 2024, 256,456 , 37,921 , 4,929,768 , and 490,000 shares were outstanding under the 2014 Private Aadi Plan, 2017 Plan , 2021 Plan, and 2023 Inducement Plan, respectively.

As of March 31, 2024, no shares were outstanding under the 2011 Plan.

The following table summarizes the stock option activity during the three months ended March 31, 2024:

The only persons eligible to receive awards under the Inducement Plan are individuals who are new employees and satisfy the standards for inducement grants under applicable Nasdaq listing rules.

As of June 30, 2024, 256,456 , 37,921 , 5,000,804 , and 490,000 shares were outstanding 2014 Private Aadi Plan, 2017 Plan , 2021 Plan, and 2023 Inducement Plan, respectively.

As of June 30, 2024, no shares were outstanding under the 2011 Plan.

The following table summarizes the stock option activity during the six months ended June 30, 2024:

Shares Weighted Average

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Expired/cancelled ( 590,041 ) 11.41

Outstanding as of March 31, 2024 5,372,887 $ 11.68 8.56 $ 504

Options exercisable as of March 31, 2024 2,285,885 $ 13.92 8.02 $ 244

Vested and expected to vest as of March 31, 2024 5,372,887 $ 11.68 8.56 $ 504

As of March 31, 2024, there was $ 21.3 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of 2.32 years.

The total intrinsic value of the options exercised during the three months ended March 31, 2024, and 2023, was $ 0 and $ 16,000 , respectively

As of March 31, 2024, and December 31, 2023, 647,974 and 657,734 shares were reserved for issuance under the 2021 Plan, respectively.

As of March 31, 2024 and December 31, 2023, 110,000 shares were reserved for issuance under the 2023 Inducement Plan.

Outstanding as of June 30, 2024 5,451,333 $ 11.05 8.40 $ 16

Options exercisable as of June 30, 2024 2,478,035 $ 13.97 7.81 $ 16

Vested and expected to vest as of June 30, 2024 5,451,333 $ 11.05 8.40 $ 16

As of June 30, 2024, there was $ 18.3 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of 2.1 years.

The total intrinsic value of the options exercised during the three months ended June 30, 2024, and 2023, was $ 0 and $ 0.2 million, respectively.

The total intrinsic value of the options exercised during the six months ended June 30, 2024 and 2023 was $ 0 and $ 0.2 million, respectively.

As of June 30, 2024, and December 31, 2023, 466,938 and 657,734 shares were reserved for issuance under the 2021 Plan, respectively.

As of June 30, 2024 and December 31, 2023, 110,000 shares were reserved for issuance under the 2023 Inducement Plan.

Restricted Stock Units

Restricted stock consists of restricted stock unit awards (RSUs) which have been granted to employees.

The value of an RSU award is based on the Company’s stock price on the date of grant.

The value of restricted stock unit awards (RSUs) is based on the Company’s stock price on the date of grant.

Employee grants vest over four years .

of RSUs are recognized as they occur.

Forfeitures of RSUs are recognized as they occur.

The shares underlying the RSU awards are not issued until the RSUs vest.

Upon vesting, each RSU converts into one share of the Company’s common stock.

Activity with respect to the Company’s restricted stock units during the three months ended March 31, 2024 is as follows:

Activity with respect to the Company’s restricted stock units during the six months ended June 30, 2024 is as follows:

Shares Weighted Average

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Nonvested shares at current period end 333,848 $ 2.15

As of March 31, 2024, there was $ 0.7 million of unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted average period of 3.55 years.

As of June 30, 2024 there was $ 0.6 million of unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted average period of 3.45 years.

Compensation Expense Summary

The Company recognized the following compensation cost related to employee and non-employee share-based compensation activity for the periods presented (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Selling, general and administrative $ 1,772 $ 1,846 $ 4,114 $ 3,486

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The calculation was based on the following assumptions:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Weighted average grant date fair value (per share) $ 1.27 $ 6.07 $ 1.39 $ 7.95

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3.47 % - 3.85 %

4.13 % - 4.29 %

3.42 % - 4.17 %

Expected volatility 89.96 % - 90.53 %

91.54 % - 99.29 %

89.22 % - 91.46 %

89.94 % - 99.29 %

Expected term (in years) 5.50 - 6.06

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Expected Dividend – The expected dividend yield is assumed to be zero because the Company has never paid dividends and does not have current plans to pay any dividends on its common stock.

Expected Term – The Company estimates the expected term of its stock options granted to employees and non-employee directors using the simplified method, whereby, the expected term equals the average of the vesting term and the original

contractual term of the option.

The Company utilizes this method since it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

Merger Warrants to Purchase Common Stock

The Company had warrants outstanding for the purchase of 29,167 shares of the Company’s common stock at both March 31, 2024, and December 31, 2023.

The Company had warrants outstanding for the purchase of 29,167 shares of the Company’s common stock at both June 30, 2024, and December 31, 2023.

These warrants were assumed in the Merger and were issued by Aerpio in October 2019, for the purchase of 40,000 shares (after taking into account the reverse stock split of the Company’s common stock at a ratio of 15:1 effected on August 26, 2021 immediately prior to the closing of the Merger (the "Reverse Stock Split")) of the Company’s common stock at an exercise price of $ 7.29 per share (after taking into account the Reverse Stock Split).

These warrants were fully vested as of the date of the Merger and expire on October 24, 2024.

No warrants were exercised during the three months ended March 31, 2024.

No warrants were exercised during the six months ended June 30, 2024.

At the grant date, the fair value of these awards was determined using a Black-Scholes option pricing model.

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An aggregate of 519,563 shares of common stock was initially reserved for issuance under the 2021 ESPP.

The number of shares of common stock available for issuance under the 2021 ESPP is increased on the first day of each fiscal year beginning with the 2022 fiscal year in an amount equal to the least of (i) 310,617 shares of common stock, (ii) one percent ( 1 %) of the outstanding shares of all classes of common stock on the last day of the immediately preceding fiscal year, or (iii) an amount to be determined by the board of directors or its designated committee no later than the last day of the immediately preceding fiscal year.

(iii) an amount to be determined by the board of directors or its designated committee no later than the last day of the immediately preceding fiscal year.

On January 1, 2024, 245,542 shares of common stock were added to the 2021 ESPP.

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The calculation was based on the following assumptions:

Three Months Ended March 31, 2024

Three and Six Months Ended June 30, 2024 Three and Six Months Ended June 30, 2023

Strike price (per share) $ 1.56 - $ 4.00

$ 5.98 - $ 11.40

Risk-free interest rate 5.40 % - 5.41 %

4.40 % - 5.24 %

Expected volatility 60.99 % - 140.00 %

105.68 % - 176.11 %

Expected term (in years) 0.5 0.5

Expected dividend yield — —

As of March 31, 2024, and December 31, 2023, 904,688 and 659,146 shares of common stock were available for issuance under the 2021 ESPP, respectively.

The Company had an outstanding liability of $ 0.2 million and $ 0.1 million as of March 31, 2024, and December 31, 2023 , respectively, which will be recognized over six months .

No shares were issued under the 2021 ESPP during the three months ended March 31, 2024, and 2023 , respectively.

The Company recorded income tax expense of zero for the three months ended March 31, 2024 and 2023, respectively.

As of June 30, 2024, and December 31, 2023, 844,059 and 659,146 shares of common stock were available for issuance under the 2021 ESPP, respectively.

The Company had an outstanding liability of $ 43,000 and $ 0.1 million as of June 30, 2024, and December 31, 2023, respectively, which will be recognized over six months .

For the six months ended June 30, 2024 and December 31, 2023, 60,629 and 77,565 shares were issued under the 2021 ESPP, respectively.

The Company recorde d no income tax expense for the three and six months ended June 30, 2024 and June 30, 2023.

The Company continues to maintain a full valuation allowance.

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As a result, EOC is seeking monetary damages.

The arbitration process is ongoing.

The Company intends to defend itself vigorously in this matter and pursue all relief to which the Company is entitled.

The Company is unable to estimate the possible loss or range of loss.

No amounts have been accrued as of March 31, 2024.

The arbitration process is ongoing and the Company expects a decision in the second half of 2024.

The Company is defending itself vigorously in this matter and pursuing all relief to which the Company is entitled.

The Company is unable to estimate the possible loss or range of loss, therefore no amounts have been accrued as of June 30, 2024.

See Note 7 for more information about the EOC License Agreement and its termination.

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These contracts are generally cancellable, with notice, at the Company’s option.

The Company recorded accrued expenses of $ 4.7 million and $ 5.7 million for expenditures incurred by clinical and contract manufacturing vendors as of March 31, 2024, and December 31, 2023, respectively.

At March 31, 2024, the Company was party to a Negotiated Purchase Order Terms and Conditions for Clinical and Commercial Product, as amended effective as of August 1, 2022 and March 31, 2024 (the "Fresenius Agreement"), with Fresenius Kabi that contains specific activities including non-cancellable commitments, minimum purchase commitments, and binding annual forecasts.

As of March 31, 2024, there were non-cancellable purchase commitments related to the purchase of inventory for $ 3.8 million to be paid in 2024.

The Company recorded accrued expenses of $ 6.5 million and $ 5.7 million for expenditures incurred by clinical and contract manufacturing vendors as of June 30, 2024, and December 31, 2023, respectively.

At June 30, 2024, the Company was party to a Negotiated Purchase Order Terms and Conditions for Clinical and Commercial Product, as amended effective as of August 1, 2022 and March 31, 2024 (the "Fresenius Agreement"), with Fresenius Kabi that contains specific activities including non-cancellable commitments, minimum purchase commitments, and binding annual forecasts.

As of June 30, 2024, there were non-cancellable purchase commitments under the Fresenius Agreement related to the purchase of inventory for $ 4.6 million to be paid in 2024.

Mirati Collaboration

In October 2022, the Company entered into a collaboration and supply agreement with Mirati Therapeutics, Inc.

(“Mirati”) to evaluate the combination of Mirati’s adagrasib, a KRAS G12C selective inhibitor, and FYARRO in KRAS G12C mutant non-small cell lung cancer (NSCLC) and other solid tumors.

(“Mirati”) to evaluate the combination of Mirati’s adagrasib, a KRAS G12C selective inhibitor, and FYARRO in KRAS G12C mutant non-

small cell lung cancer (NSCLC) and other solid tumors.

In May 2024, the Company 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 the Company supplied study drug and jointly shared the cost of the study.

The primary objective of this multi-center, single-arm, open-label Phase 1/2 trial was to determine the optimal dose and recommended Phase 2 dose for the combination of adagrasib and FYARRO in patients with KRAS G12C mutant solid tumors.

In addition, the study was intended to investigate the safety, tolerability and efficacy of adagrasib and FYARRO in combination in patients both with and without prior exposure to a KRAS G12C inhibitor.

The trial was built on preclinical data showing enhanced anti-tumor efficacy with the combination of adagrasib and FYARRO relative to either agent alone.

For the three months ended March 31, 2024 and 2023, the Company incurred $ 0.2 million and $ 0.4 million in expenses related to the Mirati collaboration, respectively.

Under the terms of the agreement, Mirati was responsible for sponsoring and operating the Phase 1/2 study and the Company supplied study drug and jointly shared the cost of the study, which will continue during the winding down process.

For the three months ended June 30, 2024 and 2023, the Company incurred $ 0.5 million and $ 0.2 million in expenses related to the Mirati collaboration, respectively.

For the six months ended June 30, 2024 and 2023, the Company incurred $ 0.7 million and $ 0.5 million in expenses related to the Mirati collaboration, respectively

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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• our financial performance;

• statements regarding the legal proceedings related to the termination of the EOC License Agreement (as defined herein);

• statements regarding the legal proceedings related to the termination of the EOC License Agreement (as defined herein), including our expectations regarding the timing of the arbitration decision;

• our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements