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Aerpio Pharmaceuticals, Aadi Bioscience to Merge; Aim to Raise $155 in PIPE Financing

NEW YORK – Aerpio Pharmaceuticals and Aadi Bioscience on Monday announced that they will merge in order to advance Aadi's therapies targeting cancers with mTOR pathway genetic alterations.

The combined public company will be listed on the Nasdaq as Aadi Bioscience and will focus on advancing Aadi's lead product candidate, the mTOR inhibitor nab-sirolimus (Fyarro), as a treatment for a rare sarcoma and other tumors harboring TSC1 and TSC2 inactivating alterations.

Along with the merger, Aerpio has entered agreements to raise $155 million in a private investment in public equity financing round. The PIPE financing is led by Acuta Capital Partners and KVP Capital, and included Avoro Capital Advisors, Avoro Ventures, Venrock Healthcare Capital Partners, BVF Partners, Vivo Capital, Alta Bioequities, Rock Springs Capital, RTW Investments, Acorn Bioventures, and Serrado Capital.

Before the PIPE financing is transacted, the terms of the merger agreement stipulate that Aadi shareholders will receive shares of newly issued Aerpio common stock. Aadi shareholders will own around 66.8 percent of the combined firm, while Aerpio shareholders will own around 33.2 percent once the merger completes in Q3. After the PIPE financing closes, Aerpio shareholders will own approximately 14.7 percent of the combined company, subject to adjustment based on Aerpio's cash balance at closing.

Los Angeles-headquartered Aadi will use the funds to commercialize nab-sirolimus as a treatment for advanced, malignant perivascular epithelioid cell tumors, or PEComa, that are enriched for TSC1 and TSC2 alterations. The firm submitted a rolling new drug application with the US Food and Drug Administration for nab-sirolimus in this indication last June. The Phase II AMPECT trial showed 39 percent of patients with advanced, malignant PEComa saw their tumors shrink on nab-sirolimus. The trial also included an exploratory analysis, which showed that 8 out of 9 PEComa patients with TSC2 mutations responded to the drug.

The raised funds will also support a registrational trial of nab-sirolimus to treat other types of cancers harboring TSC1 or TSC2 inactivating alterations, which the firm expects to begin by the end of this year.

In January, Aadi licensed nab-sirolimus to Shanghai-based EOC Pharma to develop and commercialize the drug in China, Hong Kong, Macau, and Taiwan.

The combined company will be led by Aadi CEO Neil Desai and maintain headquarters in Los Angeles. Anupam Dalal, Aerpio's board chair, and Aerpio CEO Caley Castelein will be members of the combined firm's board of directors. Also, Behzad Aghazadeh, managing partner of Avoro Capital Advisors and Avoro Ventures, will also join the merged company's board. The companies expect the PIPE financing, along with each company's cash at closing, will fund the combined firm's operations through 2024.