Aadi Bioscience, Inc. agreed to acquire Aerpio Pharmaceuticals, Inc. (NasdaqCM:ARPO) in a reverse merger transaction on May 16, 2021. Under the terms of the agreement, shareholders of Aadi will receive shares of newly issued Aerpio common stock. The terms of the merger agreement contemplate that a non-transferable contingent value right (a “CVR”) will be distributed to Aerpio shareholders as of immediately prior to the effective time of the merger, entitling CVR holders to receive net proceeds received by Aerpio, if any, associated with Aerpio's legacy assets. On a pro forma basis, shareholders of Aadi will own approximately 66.8% and shareholders of Aerpio will own approximately 33.2% of the combined company upon the closing of the merger, prior to the additional Private Investment in Public Equity (PIPE) financing transaction. Following the closing of the concurrent PIPE financing, Aerpio shareholders will own approximately 14.7% of the combined company. The actual allocation is subject to adjustment based on Aerpio's cash balance at the time of closing. Additionally, Aerpio has entered into subscription agreements to raise $155 million in PIPE financing led by Acuta Capital Partners and KVP Capital and including Avoro Capital Advisors; Avoro Ventures; Venrock Healthcare Capital Partners; BVF Partners, L.P.; Vivo Capital; Alta Bioequities, L.P.; Rock Springs Capital; RTW Investments, LP; Acorn Bioventures; and Serrado Capital LLC as well as other undisclosed institutional investors. The PIPE financing is expected to be consummated concurrently with the closing of the merger. Proceeds from the PIPE financing are intended to be used for commercialization of FYARRO. Together with the cash expected from both companies at closing, the net proceeds of the PIPE financing are expected to fund the company into 2024. In connection with the merger, Aerpio will seek to amend its certificate of incorporation to affect a reverse split of Aerpio Common Stock at a ratio to be determined by Aerpio and Aadi. Following the completion, Aerpio will change its name to “Aadi Bioscience, Inc.” and the combined public company will focus on advancing Aadi's lead product candidate, FYARROTM. Under certain circumstances, Aerpio would be required to pay Aadi a termination fee of $2 million.

The proposed Chairman of the combined company is Caley Castelein current Board Member of Aerpio. Upon closing of the transaction, the combined company will be led by Aadi's Chief Executive Officer, Neil Desai. Aadi's Board Members Neil Desai and Richard Maroun; Aadi's Board observer Karin Hehenberger; and current Aerpio Board Members Anupam Dalal and Caley Castelein will be Members of the Board of Directors of the combined company. In addition, Behzad Aghazadeh, Managing Partner of Avoro Capital Advisors and Avoro Ventures, will also join the Board of the combined company upon the closing of the transaction. The combined company will be headquartered in Los Angeles, California.

The transaction is subject to approval by Aerpio's shareholders, approval of Aadi's shareholders, the completion of the PIPE financing, approval of the listing of the additional shares of Aerpio's common stock on Nasdaq shall have been obtained, any waiting period applicable to the consummation of the merger under the HSR Act shall have expired or been terminated, net cash shall not be less than $10 million as of the closing, Aerpio shall have taken all actions necessary to cause the members of the Aerpio Board immediately following closing, to be constituted by the proposed individuals, and customary closing conditions. The PIPE financing is expected to close concurrently with, and is conditioned upon, the closing of the merger. The merger agreement has been unanimously approved by the Boards of Directors of both Aerpio and Aadi. The Aerpio Board recommends that Aerpio's stockholders to vote FOR the transaction. As of August 17, 2021, the transaction has been approved by the shareholders of Aerpio Pharmaceuticals. The transaction is expected to close in the third quarter of 2021.

Ladenburg Thalmann & Co. Inc. acted as financial advisor; and Danielle M. Lauzon and Andrew H. Goodman of Goodwin Procter LLP acted as legal advisors to Aerpio. Perella Weinberg Partners LP and Piper Sandler & Co. acted as financial advisors; and Dan Koeppen, Bridget Balisy, Ethan Lutske, Gwen Karanadze, David Lee, Miranda Biven, John Krocak, Brandon Gantus, Christopher Williams, Myra Sutanto Shen, Nika Antonikova, David Hoffmeister, Eva Yin and Ryan Greecher of Wilson Sonsini Goodrich & Rosati, P.C acted as legal advisors to Aadi. Jefferies LLC; Cowen and Company, LLC; and Piper Sandler & Co. are acting as placement agents for the PIPE financing.

Aadi Bioscience, Inc. completed the acquisition of Aerpio Pharmaceuticals, Inc. (NasdaqCM:ARPO) for approximately $100 million in a reverse merger transaction on August 26, 2021. Concurrent to the closing of the merger, the combined company also closed $155 million Private Investment. Upon completion of the merger, taking into consideration the reverse stock split and the exchange ratio, the combined company has approximately 20.8 million shares of common stock outstanding with pre-merger Aadi stockholders collectively owning or holding rights to acquire approximately 29.2% of the combined company, on a fully-diluted basis, pre-merger Aerpio stockholders collectively owning or holding rights to acquire approximately 15.2% of the combined company, on a fully-diluted basis, and the PIPE Investors collectively owning approximately 55.6% of the combined company. Shares of the combined company, which is operating under the name Aadi Bioscience, Inc. will commence trading on the Nasdaq Global Select Market under the ticker symbol “AADI” on August 27, 2021. Pursuant to the merger, Aerpio issued 5.8 million shares after giving effect to the Reverse Stock Split of 15:1. Lance Thibault was appointed as interim Chief Financial Officer of the combined company.